Category: Economy and Policy

(Reuters) – U.S. stock futures edged lower on Wednesday after President Donald Trump at his State of the Union speech raised the prospect of another shutdown should his demand for border wall funding not be met.

The benchmark S&P 500, which has notched five straight days of gains, now stands about 7 percent away from its record closing high in September, after having fallen about 20 percent from that level last year.

The strong rally in stocks has been supported by optimism of a U.S.-China trade truce, the Federal Reserve’s signal of ending its monetary policy tightening and a largely positive earnings season.

About 71 percent of more than half of the S&P 500 companies that have reported earnings, have topped profit expectations, according to IBES data from Refinitiv.

At the State of the Union address on Tuesday, the President outlined his political priorities without providing specific policy details and reiterated his vow to build a wall along the U.S.-Mexico border.

On the trade front, Trump said a deal was possible with China if Beijing agrees to “real structural change”.

Next week senior U.S. and Chinese officials are poised to start another round of trade talks in Beijing to push for a deal to protect American intellectual property and avert a March 2 increase in U.S. tariffs on Chinese goods, two people familiar with the plans said on Tuesday.

At 6:59 a.m. ET, S&P 500 e-minis were down 0.11 percent. Dow e-minis were down 0.14 percent and Nasdaq 100 e-minis were down 0.06 percent.

Walt Disney Co rose 0.8 percent after the company topped Wall Street estimates helped by its booming theme park business and growth at its ABC broadcast network.

Snap Inc jumped 25.0 percent after the company said the number of people using its Snapchat app would remain at current levels this quarter, easing worries it would continue to lose users to rival Facebook Inc’s Instagram.

Videogame maker Electronic Arts Inc tumbled 15.7 percent as the company cut its yearly revenue outlook after its newest “Battlefield” title sold about a million fewer units than expected. Rival Activision Blizzard Inc fell 2.4 percent. On the other hand, Take-Two Interactive Software Inc rose 1.3 percent though in lighter volumes after the company raised its full-year adjusted revenue forecast, boosted by solid sales of its “Red Dead Redemption 2” and “NBA 2K19” titles.

A Commerce Department report due at 8:30 a.m. ET is expected to show that November trade deficit narrowed to $54 billion, down from $55.5 billion in October.

Also on deck is Fed Chairman Jerome Powell’s address at 7:00 p.m. ET (0000 GMT) in Virginia.

Feb 6 (Reuters) – Britain’s biggest drugmaker GlaxoSmithKline Plc on Wednesday said it expects full-year adjusted profit to be hurt by new competition for its blockbuster asthma drug Advair.

GSK reported adjusted earnings per share of 31.2 pence on sales of about 8.20 billion pounds ($10.62 billion) in the fourth quarter.

Analysts had expected earnings of 27.7 pence and sales of 7.95 billion pounds, according to a company-provided consensus here of 11 analysts.

The company said it expects adjusted earnings per share to decline 5 percent to 9 percent, reflecting recent approval of a generic competitor to Advair in the United States. ($1 = 0.7722 pounds) (Reporting by Ankur Banerjee and Pushkala Aripaka in Bengaluru; Editing by Bernard Orr)

Feb 6 (Reuters) – Cognizant Technology Solutions Corp on Wednesday beat Wall Street estimates for quarterly revenue, benefiting from higher spending by clients in the healthcare and financial industries.

The company also said Francisco D’Souza, its chief executive officer since 2007, will give up the role and become executive vice chairman. Brian Humphries, CEO of Vodafone Business, will replace D’Souza, effective April 1.

The consulting and outsourcing services provider reported net income of $648 million, or $1.12 per share, in the fourth quarter ended Dec. 31, compared with a net loss of $18 million, or 3 cents per share, a year earlier

Revenue rose to $4.13 billion from $3.83 billion and narrowly beat the average analyst estimate of $4.11 billion, according to IBES data from Refinitiv. (Reporting by Akanksha Rana in Bengaluru; Editing by Arun Koyyur)

Feb 6 (Reuters) – Videogame publisher Take-Two Interactive Software Inc on Wednesday raised its full-year adjusted revenue forecast and reported better-than-expected revenue for the third quarter, boosted by solid sales of its “Red Dead Redemption 2” and “NBA 2K19” titles.

New York-based Take-Two now expects full-year adjusted revenue at between $2.89 billion and $2.94 billion, compared with its previous forecast of $2.80 billion and $2.90 billion.

On an adjusted basis, the company reported revenue of $1.57 billion for the third quarter ended Dec. 31, beating the average analyst estimate of $1.50 billion.

Take-Two launched its highly awaited Western adventure game “Red Dead Redemption 2” in October after multiple previous delays. The game made over $725 million in worldwide retail sales during its opening weekend.

To date, “Red Dead Redemption 2” has sold-in more than 23 million units worldwide.

Launched to rave reviews, the game is set in 1899 and follows Arthur Morgan and his gang of outlaws as they fight their way across America following a botched robbery.

According to research firm NPD, “Red Dead Redemption 2” was the best-selling game of 2018.

Rival Electronic Arts cut its yearly revenue outlook on Tuesday after its newest “Battlefield” title sold about a million fewer units than expected, amid rising competition from games like “Red Dead Redemption”.

Take-Two’s net income rose to $179.9 million, or $1.57 per share, from $25.1 million, or 21 cents per share, a year earlier.

Take-Two also benefited from continued strength of its “GTA” franchise. “GTA V”, launched in 2013 by the company’s Rockstar Games studio, has been driving Take Two’s revenue since then. It has sold nearly 100 million units so far, making it one of the best-selling games ever. (Reporting by Arjun Panchadar in Bengaluru and Kenneth Li in New York; Editing by Maju Samuel)

* Vale supply concerns boost nickel

* LME nickel stocks down

* GRAPHIC-2019 asset returns: tmsnrt.rs/2jvdmXl (Updates throughout, changes dateline from SINGAPORE)

By Zandi Shabalala

LONDON, Feb 6 (Reuters) – Nickel touched its highest in more than four months on Wednesday on market concerns that a force majeure by Brazil’s Vale on some iron ore contracts could lead to restrictions in its nickel supply.

Benchmark nickel on the London Metal Exchange (LME) touched $13,350 per tonne, its highest since Aug. 30, easing 0.2 percent to $13,010 by 1140 GMT as the dollar firmed.

A Brazilian court forced production to stop at Vale’s iron ore mine after a tailings dam burst last month, killing more than 300 people and compelling Vale to tell clients it could not deliver on some iron ore contracts.

“The strength in nickel has been largely on worries that Vale’s nickel supply might be impacted after the iron ore force majeure,” said ING commodities strategist Warren Patterson.

“Whether that is justified though is the question, maybe the market is getting ahead of itself on the nickel side.”

Vale is the world’s top producer of nickel, which is mainly used in stainless steel.

“The company said that none of its nickel mining operations utilise the upstream method dams which have caused issues in its iron ore operations,” ANZ said in a note.

POSITIONS: Traders said nickel and other metals were also benefiting from an unwinding of short positions. Nickel now sits at a “marginal” net long of 1.8 percent of open interest, said broker Marex Spectron.

STOCKS: Total inventories of nickel in warehouses registered with the LME stood at 200,754 tonnes, down about 45 percent since the beginning of 2018.

HOLDINGS: Exacerbating concerns of the metal’s scarcity was a single entity that held between 50 and 79 percent of LME nickel warrants.

TRADE TALKS: Senior U.S. and Chinese officials are poised to start another round of trade talks in Beijing next week to push for a deal to protect American intellectual property and avert a March 2 increase in U.S. tariffs on Chinese goods, two people familiar with the plans said on Tuesday.

FACTORY ACTIVITY: China’s factory activity shrank by the most in almost three years in January as new orders slumped further and output fell, a private survey showed, reinforcing fears that a slowdown in the world’s second-largest economy is deepening.

OTHER METALS: Copper inched up 0.1 percent to $6,240.50 per tonne after touching a two-month high and aluminium was steady at $1,920, having scaled its highest since Dec. 24.

Zinc retreated from a seven-month high touched on Tuesday, down 0.5 percent at $2,726, lead slipped 0.2 percent to $2,098 while tin held at $20,840.

Feb 6 (Reuters) – U.S. health insurer Humana Inc reported a 7.4 percent rise in its fourth-quarter revenue on Wednesday, as more customers enrolled in its government-backed Medicare Advantage health plans.

Humana said its net income rose to $355 million, or $2.58 per share, in the quarter ended Dec. 31, from $184 million, or $1.29 per share, a year earlier.

Total revenue rose to $14.17 billion from $13.19 billion. (Reporting by Aakash Jagadeesh Babu and Manas Mishra in Bengaluru; Editing by Arun Koyyur)

(Reuters) – Capri Holdings Ltd, formerly Michael Kors, reported holiday-quarter revenue on Wednesday that fell short of Wall Street estimates, hurt by lower sales at its retail stores.

Total revenue remained largely flat at $1.44 billion, missing the average analyst estimate of $1.46 billion, according to IBES data from Refinitiv.

Net income attributable to the company fell to $199.6 million, or $1.33 per share, in the third quarter ended Dec. 29, from $219.4 million, or $1.42 per share, a year earlier.

Feb 6 (Reuters) – Eli Lilly and Co posted better-than-expected fourth-quarter revenue on Wednesday, helped by higher sales of its newer drugs such as diabetes treatment Trulicity and psoriatic arthritis medication Taltz.

Revenue rose 4.5 percent to $6.44 billion, beating the average analyst estimate of $6.29 billion, according to IBES data from Refinitiv.

The company posted net income of $1.13 billion, or $1.10 per share, in the fourth quarter ended Dec. 31, compared with a net loss of $1.66 billion, or $1.58 per share, a year earlier, when it recorded charges related to the U.S. tax overhaul.

(Reuters) – Private equity firm Carlyle Group LP on Wednesday reported a 35 percent rise in distributable earnings for the final three months of 2018, supported by a rise in the fees it earns on the money it manages for investors.

Pre-tax distributable earnings (DE) – the cash available for paying dividends – totaled $211 million for the fourth quarter, up from $156 million a year earlier.

The amount Carlyle earned in performance fees from exiting investments fell 63.5 percent year-on-year to $43 million. This was more than made up for by fee-related earnings, what Carlyle earns from management fees, which surged to $175 million, from $27 million a year earlier.

Carlyle’s assets under management rose to $216.5 billion from $212.3 billion in the prior quarter and were 11 percent higher than 12 months earlier.

“In 2018, Carlyle delivered a record level of fee-related earnings, raised over $33 billion in new capital, and produced attractive returns for our fund investors,” Co-Chief Executives Kewsong Lee and Glenn Youngkin said in a statement.

Like its peers, Carlyle has said it will no longer focus on economic net income, a non-GAAP metric traditionally used by private equity firms to measure bottom-line performance.

Under generally accepted accounting principles (GAAP), Carlyle reported a loss to common unitholders of $16 million. This echoed the performance of peers Apollo Global Management, Blackstone Group LP and KKR & Co, which last week all reported GAAP losses on the back of turbulent financial markets.

The benchmark S&P 500 index had its biggest quarterly loss in more than seven years at the end of 2018, hitting private equity firms that use public peers to value their private investments.

Carlye said its corporate private equity funds depreciated in value by 2 percent in the quarter. This was better than peers, with KKR, Blackstone and Apollo reporting declines of 8.3 percent, 2.9 percent and 10.9 percent, respectively.

BELFAST/BRUSSELS (Reuters) – British Prime Minister Theresa May tried to break the deadlock over Brexit on Wednesday by thrashing out alternative proposals for the Irish border with political parties in Northern Ireland.

The United Kingdom is on course to leave the European Union on March 29 without a deal unless May can convince the bloc to reopen the divorce deal she agreed in November and then sell it to sceptical British lawmakers.

As companies and governments across Europe step up preparations for the turmoil of a no-deal exit, diplomats and officials said the United Kingdom now faces three main options: a no-deal exit, a last-minute deal or a delay to Brexit.

At meetings in Belfast, May tried to tackle the biggest obstacle to getting a deal ratified by the British parliament – an insurance policy covering the possible future arrangements for the border between EU-member Ireland and the British province of Northern Ireland.

“We will find a way to deliver Brexit that honours our commitments to Northern Ireland,” May said on Tuesday.

May said she would seek an alternative arrangement which avoids the need for a hard border or legally binding changes to the border backstop to introduce a time limit or create an exit mechanism.

Brexit has snagged on the 310-mile (500-km) frontier because there is disagreement on how to monitor trade without physical checks on the border, which was marked by military checkpoints before a 1998 peace deal ended three decades of sectarian conflict.

MAY TO BRUSSELS

As a way to prevent a hard border, Brussels and London agreed a so-called backstop – basically a promise that unless the sides come up with a better idea then the United Kingdom would remain bound by EU market and customs rules so that goods would not have to be checked.

But the Northern Irish party which props up May’s minority government says it could endanger the province’s place in the United Kingdom, while Brexit supporters in May’s Conservative Party worry it would lock the country into EU rules for the long term.

British ministers, The Sun newspaper said, have been examining a plan drawn up by Japan’s Fujitsu to track trade across the border, while the Telegraph said ministers had discussed delaying Brexit by eight weeks.

May is due to meet European Commission President Jean-Claude Juncker and then European Council President Donald Tusk in Brussels on Thursday.

While the EU has been clear it does not want to reopen the divorce deal, German Chancellor Angela Merkel said a creative solution could break the impasse.

But diplomats in Brussels said they had heard no new proposals from London and the risk of a no-deal exit was increasing. EU leaders, diplomats said, were frustrated at May’s failure to build a consensus on Brexit.

Delaying Brexit would extend rather than resolve the uncertainty that is hurting the economy, Britain’s business minister Greg Clark told a parliament committee on Wednesday.