Economy

Storm clouds hovering over the economy have kept demand for CME’s hedging products steady, even as hopes of a soft landing boost sentiment in markets. “Market participants continued turning to our markets to mitigate their business risks amid accelerating geopolitical uncertainty,” Chief Executive Terry Duffy said in a statement. The company, known mainly for its futures products tied to commodities trading, registered revenue growth of 9% to $1.34 billion from last year. Clearing and transaction revenue rose 8.7% to $1.09 billion, while revenue for market data and information services climbed 8.6% to $167.6 million.Higher demand for hedging has allowed CME to register three consecutive years of revenue growth. CME Group’s (NASDAQ:CME) average daily volume was steady at 22.3 million in the quarter, slightly below 22.4 million last year.Last week, Duffy told Reuters that CME is in a strong position to make acquisitions, armed with low debt and robust earnings. On an adjusted basis, the company’s net income rose to $807.8 million, or $2.25 per share, for the quarter ended Sept. 30, from $710.0 million, or $1.98 per share, a year earlier. More

(Reuters) -Thermo Fisher Scientific on Wednesday forecast full-year profit and sales below Wall Street estimates, hurt by lower-than-expected demand for its services used to make therapies and vaccines as well as higher raw material costs for the year.The medical equipment maker’s shares fell more than 1% in premarket trading as it cut its annual adjusted profit expectations for the second straight quarter.The impact of the macroeconomic conditions that the industry has experienced through the year increased in the third quarter, Thermo Fisher (NYSE:TMO) said.The company has been expanding its range of services through deals in recent years, in a bid to become a one-stop shop for its biotech and large pharmaceutical clients.Thermo Fisher’s outlook cut is “more or less” expected and focus will now shift to how this will impact the company in 2024, J.P.Morgan analyst Rachel Vatnsdal said.The company and rival Danaher (NYSE:DHR) have previously warned of soft demand for their bioprocessing services used to make therapies and vaccines, as biotechs become more cautious about their drug development spending.Rising interest rates have squeezed funding needed for drug development programs, weighing on demand for contract research services offered by Thermo Fisher and Danaher.Thermo Fisher cut its revenue expectations for the year to $42.7 billion, from its previous outlook of $43.4 billion to $44 billion.The company now expects to earn $21.50 per share, excluding items, for 2023, down from its previous outlook of $22.28 to $22.72 per share.Analysts were expecting full-year adjusted profit of $22.28 per share and revenue of $43.49 billion, according to LSEG data.Thermo Fisher reported third-quarter revenue of $10.57 billion, missing analysts’ estimates of $10.60 billion.On an adjusted basis, the company earned $5.69 per share, beating estimates of $5.61. More

BEIJING (Reuters) – China President Xi Jinping will meet California Governor Gavin Newsom, Chinese state media said on Wednesday.Newsom is also expected to meet several other high-ranking officials to discuss climate cooperation, promote bilateral economic development and tourism and encourage cultural exchanges. More

(Reuters) -Microsoft is outstripping Alphabet (NASDAQ:GOOGL) in the race to make money from generative artificial intelligence through early bets on OpenAI and focus on big clients, raising worries that the Google parent could lose share in the cloud-computing market.Cloud spending by businesses preparing to roll out AI features powered a rebound in growth for Microsoft (NASDAQ:MSFT)’s Azure platform in its first quarter, lifting the shares of the Windows maker up nearly 4% on Wednesday. But in a sharp contrast, growth at Alphabet’s cloud unit hit a near three-year low as its big exposure to smaller clients dampened growth, sending the company’s shares tumbling more than 6%.In the battle to tap the next growth driver for the cloud business, Microsoft has focused on its core business clients that already use many of its software services, while Google has turned to startups. “Demand for artificial intelligence drove Microsoft’s growth. Demand among Google’s larger clients was similar, but the firm is more exposed to high-growth and startup clients, which have been more aggressive with cost-control efforts,” Morningstar analyst Ali Mogharabi said.If share losses hold, Alphabet was set to erase more than $100 billion from its market value, underscoring fears that its focus on startups and slower roll out of AI services was delaying the boost from the technology.Gains in the shares of Microsoft were set to add about $90 billion to its market capitalization.”Microsoft is using its incumbent software relationships, whereas Google is coming in as a little bit of a challenger here,” said Krishna Chintalapalli, portfolio manager at Parnassus Investments, an investor in Alphabet and Microsoft.The results show cloud spending is coming from enterprise clients, whereas smaller businesses are reducing their expenditure, he said.Strong AI use was responsible for a 3 percentage point boost to the Microsoft’s cloud business in the September quarter. CEO Satya Nadella said about 40% of the Fortune 500 companies were using the test version of its “Copilot” AI service, which is powered by OpenAI’s technology.The company will launch the $30-a-month offering next month for its 365 service that can summarize a day’s worth of emails into a quick update. Analysts said that will further drive up adoption of its AI services. Alphabet has also deployed AI in products such as its flagship Pixel phones and had more recently tested adding generative AI to its search engine. “Unlike many others who are touting their AI story, Microsoft is capable of delivering meaningful AI products to their customers,” brokerage D.A. Davidson said.At least 19 brokerages raised their price targets on the software giant, pushing their median view to $400. That was 16% higher than the company’s premarket share price of $342.78.Many analysts were also optimistic about strength in Alphabet’s core search business, but they warned the weakness in the cloud business would continue.”It’s unclear just how widespread Google Cloud optimization efforts are and how far along customers are in the journey, but expect these headwinds to persist for at least a few more quarters,” Bernstein analysts said. AI is expected to become more of a growth driver in 2023 for Alphabet after the expected roll out of Gemini, which is a collection of large-language models.”Early results are very promising (for Gemini),” CEO Sundar Pichai said.Microsoft trades at 28.5 times its 12-month forward earnings estimates, compared with the Google parent’s 24.93. More

FRANKFURT (Reuters) -Deutsche Bank on Wednesday promised more share buybacks next year and said it may return more capital to investors than it had previously envisaged, sparking a jump in its shares.The outlook on potential payouts came as Germany’s largest lender posted a better-than-expected 8% drop in third-quarter profit and previewed staff cuts with the CEO saying “we will further reduce” jobs.Revenue from investment banking slumped but grew in the lender’s retail and corporate divisions on higher interest rates. Deutsche was also slightly more optimistic on its revenue outlook for the full year. Deutsche Bank shares were up nearly 7% in midday Frankfurt trade as analysts cited positive news on potential buybacks and dividends.In an unexpected move, Deutsche said it would potentially return more capital to investors than the 8 billion euros it had envisaged through 2025.James von Moltke, chief financial officer, told journalists there was “upside” to the 8 billion, but “how much remains to be seen”.Analysts at Mediobanca (OTC:MDIBY) said the shares “should be rewarded for additional capital return”.Deutsche’s net profit attributable to shareholders was 1.031 billion euros, beating the around 937 million expected by analysts.Though earnings dropped, Deutsche recorded its 13th consecutive profitable quarter, a notable streak after years of hefty losses.”These results demonstrate strong and sustained business growth momentum combined with continued cost discipline,” CEO Christian Sewing said.He also told analysts staff reductions were in the offing: “We have seen the peak in our workforce and we will further reduce.”The earnings come as the investment bank faces uncertain business prospects in the coming quarters and as the retail division draws the scorn of regulators after it botched the integration of its Postbank arm, leaving customers complaining that they were locked out of their accounts and unable to reach call centres.The bank’s retail business was again the biggest revenue generator. Analysts expect the unit, which is undergoing a strategy review under new leadership, will overtake the investment bank as the main revenue driver for the full year, overturning the investment bank’s pole position over the previous three years.Investment banking revenue dropped 4%, better than an expected 5% drop. A 21% increase in revenue at the corporate bank slightly beat expectations and the retail division’s 3% rise came in below forecasts of 5%.Revenue for fixed-income and currency trading, one of the bank’s largest businesses, fell 12% after a strong year-ago quarter as lower market volatility dampened clients’ enthusiasm for trading.In comparison, similar trading at Goldman fell 6% in the quarter, while JPMorgan’s was up by 1%. Barclays reported a 13% fall in such revenue. Deutsche’s origination and advisory business was a bright spot, with revenue tripling to 323 million euros from a very low level a year earlier.Analysts with RBC capital markets called the earnings “mixed” in a note to investors.($1 = 0.9433 euros) More

The People’s Bank of China (PBOC) has expanded its basket of structural policy tools, including relending and rediscount facilities and other low-cost loans, but analysts say it is constrained now in how much it can ease monetary policy for fears of stoking capital flight and hurting the yuan. In order to support the economic recovery after it lost steam following a brief COVID rebound, the PBOC in September cut the amount of cash that banks must hold as reserves for the second time this year to boost liquidity.Thanks to a slew of policy support, the world’s second-largest economy staged a faster than expected growth in the third quarter, increasing the chances Beijing can meet its growth target of around 5% this year. China’s top parliament body approved 1 trillion yuan in sovereign bond issuance on Tuesday which official said will bolster the economic recovery, as policymakers still need to deal with multiple headwinds including persistent drag from the property sector. ($1 = 7.3162 Chinese yuan renminbi) More

The United States suspended import tariffs of 25% on EU steel and 10% on EU aluminium for two years from January 2022, replacing the tariffs imposed by former President Donald Trump with a tariff rate quote (TRQ) system. The TRQ allows up to 3.3 million metric tons of EU steel and 384,000 tons of aluminium into the United States tariff-free, reflecting past trade levels, with the tariffs applying for any further amounts. “We have never threatened to let TRQs expire and reinstate the 25% tariff on EU steel,” ambassador Mark Gitenstein told a group of reporters.”From the beginning, we have made clear to the EU that we intend to roll over our TRQs at the beginning of the year if we needed more time to negotiate,” he added.The United States and the European Union had sought to agree measures to address excess metal production capacity in non-market economies, such as China, and to promote greener steel.They also wanted a deal on critical minerals in time for a joint summit last week. However, they failed on both fronts.Gitenstein said the U.S. and the EU had made substantial progress in talks on steel and aluminium in the past two years and were committed to finding a solution in the coming months.The transatlantic partners were also seeking an agreement under which electric vehicles using cobalt, graphite, lithium, manganese or nickel extracted or processed in the EU would qualify for U.S. tax breaks. Gitenstein said the U.S. was committed to continuing these discussions too. More

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