Aurelia Butler

1. Futures subduedU.S. stock futures were subdued on Tuesday, as investors awaited the release of fresh earnings from several big-name companies, a bevy of key economic data, and a major Federal Reserve policy decision.By 05:30 ET (10:30 GMT), the Dow futures contract had shed 44 points or 0.1%, S&P 500 futures had fallen by 2 points or 0.1%, and Nasdaq 100 futures were mostly flat.The main averages on Wall Street climbed in the prior session, with the benchmark S&P 500 in particular surging by 0.8% to a fresh record high close. The tech-heavy Nasdaq Composite jumped by 1.12% and the 30-stock Dow Jones Industrial Average added 0.6%.In individual stocks, shares in iRobot (NASDAQ:IRBT) slumped by 8.8% after the robot vacuum maker and Amazon (NASDAQ:AMZN) announced they had mutually agreed to terminate a planned merger due to opposition from EU antitrust regulators. Elsewhere, SoFi Technologies (NASDAQ:SOFI) soared by 20.2% after the online personal finance group posted better-than-anticipated quarterly profit.2. Microsoft, Alphabet earnings aheadTech giant Microsoft and Google-parent Alphabet are set to unveil their latest quarterly earnings after the close of trading in New York on Tuesday, in the first wave of potentially market-moving corporate results this week.For Microsoft, the figures come after the Redmond, Washington-based company’s stock market value topped $3 trillion for the first time ever last week.Undergirding this sky-high valuation is Microsoft’s investment in OpenAI, whose ChatGPT chatbot has become one of the focal points of recent growing enthusiasm over generative artificial intelligence. Analysts will likely be paying close attention to any comments from the firm’s executives regarding how they hope to deploy the nascent technology, particularly at its crucial Azure cloud computing division.Alphabet, meanwhile, has recently launched its own advanced AI play, dubbed Gemini. The YouTube-owner has lauded this model as a sophisticated tool for crunching disparate pieces of information like video, text, and audio, with Chief Executive Sundar Pichai calling it “one of the biggest science and engineering efforts we’ve undertaken.”AI will also be front-and-center for Advanced Micro Devices (NASDAQ:AMD) when the chipmaker posts results after the bell later today. Analysts already hiked their price target for the semiconductor group earlier this month, citing the benefits of elevated demand for AI-powered chips.3. Boeing withdraws request for 737 Max 7 safety exemptionBoeing has confirmed that it is withdrawing its request for a safety exemption for a new series of its popular 737 Max planes, as the jetmaker wrangles with the continuing fallout from a dangerous mid-air door plug breach earlier this month.The exemption would have allowed U.S. regulators to expedite the process of approving Boeing’s upcoming 737 Max 7. Investors had widely anticipated that it would receive the official green light in the first half of this year.More doubt now surrounds the timeline for the much-anticipated certification of both the Max 7 and Boeing’s larger Max 10. According to Reuters, the company may be forced to roll out design changes more quickly than it had originally planned.Boeing’s decision also comes after it faced heavy pressure from U.S. lawmakers last week to withdraw its application for the exemption. U.S. Senator and aviation subcommittee chair Tammy Duckworth took a particularly strong stance against the request, arguing that it could have “catastrophic consequences on passenger safety.”4. BYD shares slip after disappointing profit forecastBYD (SZ:002594), the Warren Buffett-backed group that recently dethroned Tesla (NASDAQ:TSLA) as the world’s biggest electric vehicle (EV) maker by sales volume, has forecast full-year profit that missed analyst expectations, sending shares lower on Tuesday.The Chinese EV company said it now expects to report annual profit of between 29 billion yuan and 31 billion yuan, implying a rise of as much as 86.49% versus the prior year. However, the pace would be far slower than its 2022 net earnings growth of 446%.Analysts at Nomura noted that the outlook was 4% to 10% below their projections, the Wall Street Journal reported, citing a research note.BYD flagged that it was facing “fierce competition” in China’s EV industry, which has contributed to an intensifying price war among domestic automakers desperate to entice cost-wary consumers. Even still, the Shenzhen-based company said it has demonstrated “strong resilience” to these pressures, adding that it has been boosted by “rapid” expansion in overseas sales and expense reductions in its supply chain.5. Crude inches up amid Middle East tensionsOil prices inched up on Tuesday after the previous session’s losses, as escalating geopolitical tensions in the Middle East fueled supply concerns.By 05:01 ET, the U.S. crude futures contract traded 0.5% higher at $77.13 a barrel, while the Brent contract climbed by $82.15 per barrel.Crude markets are on edge after the U.S. vowed to take “all necessary actions” to defend its troops following a deadly drone attack in Jordan by Iran-backed militants, potentially resulting in regional energy supply disruptions in the oil-rich Middle East.The crude contracts fell over $1 on Monday as a deepening real estate crisis contributed to worries about demand from China, the world’s biggest crude consumer.Upgrade your investing with our groundbreaking, AI-powered InvestingPro+ stock picks. Use coupon PROPLUSBIYEARLY to get a limited time discount on our Pro and Pro+ subscription plans. 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“The biggest mission for my administration is to revive the economy,” Kishida told the lower house plenary in a policy speech marking the start of the regular parliament sessions.”The economy, particularly wage hikes, is an urgent issue.”While he did not announce any new policies, the premier stressed the need to regain public trust in politics amid a funding scandal that has sent support for his ruling Liberal Democratic Party (LDP) to its lowest in more than a decade.Achieving sustainable wage growth and stable inflation is a focus of this year’s spring wage talks between employers and workers and could pave the way for the Bank of Japan to depart from its unconventional monetary stimulus.Last year, Japan’s blue chip firms offered a 3.6% wage hike, the highest in three decades, and economists now expect 2024 wage hikes could beat that at nearly 3.9%, reflecting a labour crunch and corporate cash pile of 343 trillion yen ($2.33 trillion).However, small firms, which employ seven out of 10 workers, lag their larger peers in offering generous wage hikes.Analysts are watching to see if there is any correlation between the end of deflation and the timing of the BOJ’s policy change.While Japan’s economy is no longer in deflation, risks that price declines return have prevented authorities from declaring a decisive end to deflation.Kishida said his administration has lifted minimum wages and sought to raise pay for public-sector workers in medical and welfare services as well as truck drivers, and the class of non-regular workers including part-timers and contract workers.The premier said on top of wage hikes, temporary cuts in income and resident taxes of 40,000 yen ($269.96) per individual would be available from June, boosting disposable income.”By achieving rises in wages and disposable income through public and private-sector coordination, we will build a positive mindset in society that it’s natural for wages to rise,” he added.Kishida and Finance Minister Shunichi Suzuki both stressed the need to tackle fiscal reform.”Japan’s fiscal situation will become even more severe due to several rounds of extra stimulus budgets in response to the COVID-19 pandemic and rising inflation,” Suzuki told parliament.He referred to planned issuance of government bonds (JGBs) of around 182 trillion yen for the fiscal year ending March 2025.”We must secure market confidence in Japan’s fiscal sustainability by tackling fiscal reform in the medium to long term,” Suzuki said. “We will press ahead with expenditure and revenue reform with the aim of the primary budget surplus in fiscal 2025 by normalising spending structure.”($1 = 147.2200 yen) More

The BOK held its benchmark rate at 3.50% for an eighth meeting in January and hinted it may pivot towards monetary easing along with its global peers, an outcome correctly forecast by all 38 economists polled by Reuters.”It is necessary to maintain a tightening stance until there is confidence that inflation is settling at the target level,” one of the six board members said.While overall inflation is cooling, measures stripping out more volatile food and energy prices have come down more slowly and policymakers pointed out upside from supply-side risks persist amid a war in Ukraine. South Korea’s annual consumer inflation eased for a second month in December to 3.25% and came in below market expectations, backing policymakers’ outlook that price pressures will gradually ease through 2024.The consensus from analysts is that the BOK will start cutting rates in the third quarter of this year, but as price pressures soften, some are betting on an earlier start to policy easing.One other board member said while the economy faces risks from project financing loans going sour amid the debt crisis at builder Taeyoung Engineering & Construction, any jitters related to the sector need to be dealt with targeted support measures outside monetary policies. More

BUDAPEST/PRAGUE (Reuters) – The sickly state of the German economy is the next big challenge for the export-reliant countries of central Europe, which are still recovering from some of the world’s worst inflation spikes in the wake of the COVID-19 pandemic.Close trade ties with Germany and its once-mighty auto sector were for years a boon for the region since the collapse of communism. But now those ties risk becoming a drag on the economies of Hungary, Czech Republic and Slovakia.Already, some local companies reliant on ties with Germany are trying to tap deeper into other overseas markets and branch into industries like defence to mitigate the weakness of their large western neighbour, where another year of near-recession looms.However such efforts come at a time of major geo-political uncertainties, with the Ukraine war, Middle East conflict and rising protectionism. Despite the push into the defence sector, all of these factors could hamper the efforts of the region’s companies.”Economic disruption in the region’s most important trade partner, and persistent weakness in the auto sector, pose additional risks of economic setback to the CEE region,” said Dawn Holland, Director, Economic Research at Moody’s (NYSE:MCO) Analytics.Central Europe’s inflation surge, led by eye-watering levels at 25% in Hungary last year, has prompted central banks to lift borrowing costs to their highest in two decades, with Czechs enduring the most sustained fall in real wages, now spanning eight successive quarters.German companies had annual turnover of some 250 billion euros ($270 billion) in central Europe in 2021, employing about 1 million people directly and many more through suppliers, according to Germany’s Bundesbank.The Czech Republic and Hungary rely on Germany for a third and a quarter of their exports respectively, with Slovakia sending a fifth of its exports there based on a tally by S&P Global. Poland is seen less exposed because of the strength of its more diversified domestic economy, with its exports less dependent on car manufacturing.The best scenario for most companies interviewed by Reuters would be stagnation in turnover this year, though some did not rule out an outright decline in revenue and possible job cuts.Building on feedback from clients, Hungary’s DGA Gepgyarto es Automatizalasi Kft, which makes steel structures, welded components and custom manufactured machinery, had been planning a 50% capacity expansion to meet the expected growth in demand over three years from 2023 to 2025.”This (higher) demand had evaporated,” Tamas Tornai, Executive Director of the holding company that controls DGA told Reuters. Even so, DGA is going ahead with its 2.5 billion forint ($6.95 million) expansion to serve the booming defence industry.WIPED OUTGermany’s car sector is not only struggling with weak sales in its U.S. and European markets but obstacles ranging from high energy prices to the global shift to e-mobility that is forcing a rethink of the future of internal combustion engines.Within central Europe, Hungary has led a charge in attracting investments in battery and electric car manufacturing from China, positioning itself as a meeting point for Eastern and Western investors.”There is a very strong decline in car sector demand, caused by inflation, interest rates and economic uncertainty, which nearly wiped out private buyers from the market,” said Tamas Mogyorosi, Business Development Manager at Alap Group.He said the company, which provides quality management and other services for car sector, aerospace and electronics industry clients, tried to make up for a decline in western European markets by ramping up orders from Asian clients.Otto Danek, vice-chairman of the Czech Exporters’ Association, said the sector has seen a sharp cooling since the second half of 2023 due to the weakness in Germany.    “A relatively small drop in demand from this territory has a significant impact on the entire export segment,” said Danek, who owns Atas Elektromotory Nachod, a company making small electric motors.”We are looking for new markets, more so in Europe … but such a shortfall cannot be replaced in half a year.”    Agrikon KAM, which makes components for agricultural machinery, serving mostly German clients, projects a 10% fall in revenue in 2024, which could lead to a 5% to 10% fall in its headcount by the middle of the year. It says a possible rise in sales to the U.S. will not fully offset the weakness in Europe.Rating agencies say that weakness could complicate efforts to rein in budget deficits, which S&P Global says will remain “exceptionally wide” in historical terms for the region this year.”The more protracted weakness in Germany is one of the top risks we see for CEE,” said Karen Vartapetov, Director, Lead Analyst for CEE & CIS Sovereign Ratings at S&P Global.”It could weigh on medium-term growth in CEE and further undermine what already appear to be challenging fiscal consolidation plans.”($1 = 0.9241 euros)($1 = 359.56 forints) More

Climate campaigners rejoiced last week when US President Joe Biden froze approvals for new liquefied natural gas terminals that export the fuel. But the White House hopes that the “pause” in LNG permitting will win it political kudos with a much bigger group: American consumers worried about the price of heating and electricity. “We will take a hard look at the effects of LNG exports on energy costs, America’s energy security, and our environment,” the president said in announcing the halt, which will stop progress for at least 17 export projects awaiting authorisation while the US Department of Energy undertakes a review of its approval processes. The US has over the past eight years become the world’s largest exporter of LNG, as developers built projects along the Gulf and Atlantic coasts to funnel the country’s sudden bounty of shale gas into oceangoing vessels. The US’s seven operating terminals can now produce as much as 87mn tonnes of LNG a year — enough to satisfy the combined gas needs of Germany and France — and five more projects already approved and under construction will add another 63mn tonnes of capacity. With yet more projects still in line for approval, climate activists set their sights on the multibillion-dollar industrial sites as charged symbols of fossil fuels. But unlike opposition to oil pipelines and drilling that the energy industry often blames for higher petrol prices, they argued that limiting LNG exports could lower fuel costs for US households. “The most elemental economic analysis will tell you that if you’re exporting a lot of something, the prices are going to go up for people back home,” said Bill McKibben, co-founder of 350.org, a climate campaign group, who was one of the most vocal advocates of the freeze. “Very few Americans are eager to have their country fracked in order to sell cheap gas to China.” The focus on costs comes as Biden’s approval ratings continue to suffer from inflation that soared during the coronavirus pandemic. The consumer price index was 3.4 per cent in December, well above policymakers’ long-term targets. Before Cheniere Energy sent out the first ship full of condensed shale gas in 2016, there were significant fears that the trade would drive up domestic gas prices, prompting a flurry of studies into the subject. The first of these, released in 2012, suggested that over the two decades from 2015 to 2035, LNG exports would add 3-9 per cent to consumers’ gas bills and between 1-3 per cent to electricity bills, depending on the volume and pace of exports. Further studies were carried out in 2015 and 2018. But the studies generally concluded that the impact of rising exports on US prices would be limited. That has proven to be the case: prices in the Henry Hub market alongside the Louisiana coast averaged $3.37 a million British thermal unit in the seven years since 2016, compared with $3.48 in the seven years beforehand, according to the Energy Information Administration. “If they do what was done twice in the last decade of looking at exports and seeing whether they have harmed America’s energy security or driven up costs for American consumers, they will find out that which is patently obvious to everyone, which is we have so much energy security we are exporting it to other countries,” said Jason Bennett, a partner at law firm Baker Botts. The rapid growth of the export industry has also provided an outlet for US gas as production breaks records. “LNG exports offtake provide actually a couple of useful benefits for the US — one is that it makes it easier to produce oil in gassy formations, because it gives the gas a place to go,” said Kevin Book at ClearView Energy Partners, a Washington consultancy. There is nevertheless some domestic concern about the effects of shipping gas abroad. “More exports equal more reliability and price risk,” said Paul Cicio, president of the Industrial Energy Consumers of America, which represents manufacturing companies. He pointed to the fallout from a brutal winter storm in 2021 that drove a surge in demand, sending Henry Hub prices briefly to more than $12/million Btu.“It is a real serious problem when US natural gas inventories are low during the winter months, because in the winter months we have peak demand due to the weather. And so if you add on top of that accelerating increases in exports . . . that peak gets bigger and bigger with time,” Cicio said. ‘We will take a hard look at the effects of LNG exports on energy costs,’ US President Joe Biden said More

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