DAILY MARKET REPORTS
- Wall Street surged on Monday as upbeat manufacturing data out of the United States and China, as well as further hints of progress in U.S.-China trade talks helped extend last quarter’s buoyant mood.
- U.S. stocks ended the first quarter on a strong note on Friday, with the S&P 500 logging its best quarter since 2009 as investors bet the United States and China will strike a deal to end their protracted trade war.
- Spurring gains in global stock markets, China’s manufacturing sector unexpectedly returned to growth for the first time in four months in March, in a sign that government stimulus measures may be slowly gaining traction.
- The report offered investors some reassurances about the world’s second-largest economy, although data released Monday pointed to a further loss of momentum among major manufacturers like Germany, Japan and South Korea.
- U.S. manufacturing numbers also came in better-than-expected, helping investors overlook soft retail sales data.
- China’s State Council said on Sunday it would continue to suspend additional tariffs on U.S. vehicles and auto parts after April 1, in a goodwill gesture following a U.S. decision to delay tariff hikes on Chinese imports.
- Lyft shares tumbled below their IPO price Monday, a sharp reversal after they surged last week in their public debut.
- Shares were recently down 9.6% at $70.80, below Friday’s opening price of $72.
US FINANCIAL MARKET
U.S., Ethiopian Investigators Tussle Over 737 MAX Crash Probe
- Tension is simmering between U.S. and Ethiopian officials as investigators prepare to release in the coming days an interim report about the Boeing 737 MAX that nose-dived after takeoff from Addis Ababa, according to people from both countries.
- U.S. investigators, according to people familiar with their thinking, have privately complained that Ethiopian authorities have been slow to provide data retrieved from the black-box recorders of Ethiopian Airlines Flight 302.
- American air-safety officials also have described what they view as an aloof attitude among the Ethiopians toward other investigators and say the Ethiopians have provided often limited access to relevant crash information, these people said.
- The preliminary crash report is expected to say that data analyzed so far indicates the Ethiopian accident bears important similarities to the crash of a Lion Air plane that went down in Indonesia less than five months earlier, including activation of an automated stall-prevention system and related features.
Aramco Emerges Ahead of Apple as World’s Most Profitable Company
- Saudi Aramco’s net income surged nearly 50% to $111 billion last year as global oil prices rose, according to a bond prospectus issued to investors, revealing that the oil and gas firm is the most profitable company in the world.
- According to the prospectus, Aramco’s revenues were $355 billion in 2018, and its operating profit was $212 billion.
- The three years of financial information contained in the prospectus illustrate how tightly Aramco’s profits are tied to oil prices.
- Aramco reported a significantly lower net profit in 2016 of $13.2 billion, when prices fell to a monthly low of $31.90.
- The figures released Monday by ratings firms indicate a much lower potential valuation for Aramco, up to about $1.4 trillion according to analysts, significantly below the roughly $2 trillion original goal.
Apple slashes iPhone prices in China
- Apple has cut prices for several of its most important products on its official Chinese online store by nearly 6%.
- The price cuts affect products including iPhones, iPads, Macs and AirPods, according to Apple’s online store in China.
- Monday’s price cut may be in response to a recent value-added tax cut in China that took effect on April 1.
- The value-added tax for manufacturers, like Apple, was cut to 13% from 16%, according to Caixin.
U.S. Airlines Report Delays Caused by System Fault
- Airlines across the U.S. reported delays to departures early Monday, blaming a system fault.
- In a brief statement, the Federal Aviation Administration said it was aware that several airlines were experiencing issues with a flight-planning program, and later added that the issue had been resolved.
- Delta Air Lines said some regional flights were impacted and United also reported flight delays to parts of its network.
- American said that its main operations were unaffected but that some of its smaller feeder carriers were suffering delays. The FAA also said JetBlue Airways and Alaska Air were also experiencing disruptions.
Discovery Aims to Be the Netflix of Nonfiction Streaming, From Food to Natural History
- Discovery has expanded its push into subscription streaming TV with a new natural-history-themed video service, part of the media company’s bet that consumers will pay a few dollars a month for the nonfiction programming they love.
- The company, home to TV channels including Discovery, Food Network and HGTV, plans to slice and package its content into streaming plans catering to everyone from foodies to home-improvement junkies.
- The natural-history service, unveiled Monday, includes content from the British Broadcasting Corp., creating a combined library with titles such as “Planet Earth” and “Blue Planet.”
OPEC oil output hits four-year low on Saudi cuts, Venezuela blackouts
- OPEC oil supply sank to a four-year low in March, a Reuters survey found, as top exporter Saudi Arabia over-delivered on the group’s supply-cutting pact while Venezuelan output fell further due to sanctions and power outages.
- The 14-member Organization of the Petroleum Exporting Countries pumped 30.40 million barrels per day (bpd) last month, the survey showed on Monday, down 280,000 bpd from February and the lowest OPEC total since 2015.
- The survey suggests that Saudi Arabia and its Gulf allies are pressing ahead with even larger supply cuts than called for by OPEC’s latest deal, shrugging off pressure from U.S. President Donald Trump to increase supply.
- Crude oil is trading above $68 a barrel, close to a 2019 high, boosted by the Saudi move and involuntary supply curbs in Venezuela and Iran, which are both under U.S. sanctions that limit their exports.
Johnson & Johnson’s baby shampoo samples fail Indian quality test; company rejects findings
- Johnson & Johnson’s baby shampoo samples failed quality tests conducted by the northwestern Indian state of Rajasthan, according to a public notice from the state’s drugs watchdog, findings that were rejected by the U.S. drugmaker.
- The Rajasthan Drugs Control Organisation’s notice said that the samples of J&J’s baby shampoo taken from two batches had failed the quality test as they contained “harmful ingredients”. It did not elaborate.
- A J&J spokeswoman said that the results it received from the watchdog indicated that formaldehyde had been discovered in the samples. Formaldehyde, used in making building materials, is a known carcinogen.
US ECONOMY & POLITICS
China Announces Trade Concessions as Liu He Heads to U.S.
- The Chinese government said it will extend a suspension of retaliatory tariffs on U.S. autos and include the opioid fentanyl in a list of controlled substances, two steps that could generate a positive atmosphere for trade negotiations due to resume this week.
- Beijing temporarily scrapped the 25% tariff imposed on vehicles as a tit-for-tat measure on Jan. 1, after the White House delayed a rise in tariffs on $200 billion of products that had been due that day.
- The Ministry of Finance announced an extension of the suspension on Sunday, without giving a specific end date.
- Chinese officials also pledged to tighten regulation on fentanyl from next month, a promise President Xi Jinping already made to President Donald Trump at a December meeting in Argentina.
- The inclusion of the drug as a controlled substance in a category of non-medicinal narcotic drugs and psychotropic substances will start May 1, according to the China National Narcotics Control Commission.
U.S. Retail Sales Dropped 0.2% in February
- Retail sales, a measure of purchases at stores, restaurants and online, declined a seasonally adjusted 0.2% in February from a month earlier, the Commerce Department said Monday.
- Economists had estimated a 0.2% increase for February.
- Retail sales for January were revised higher, to a 0.7% increase from an earlier reading of a 0.2% gain.
- February department store sales slipped 0.5% on the month and were down 4% from February 2018.
- Sales at nonstore retailers, which includes internet merchants, were up 0.9% from January and up 10% from a year earlier.
Manufacturing activity rebounds in March
- U.S. manufacturing activity rebounded a bit more than expected in March, according to an industry report released on Monday, as production, new orders and hiring all picked up.
- The Institute for Supply Management (ISM) said its index of national factory activity rose to 55.3 from 54.2 in February, which had marked the lowest level since November 2016, and was slightly above expectations of 54.5.
- The employment index rose to 57.5 from 52.3 a month earlier. Expectations called for a reading of 52.4.
- The new orders index rose to 57.4 from 55.5 in February. The prices paid index rose to 54.3, indicating that prices producers are paying for materials rose for the first time since December.
- Production also picked up, with that index at ticking up to 55.8 from 54.8 the month before.
Construction spending hits 9-month high
- U.S. construction spending increased for a third straight month in February, boosted by gains in both private and public construction projects, offering some good news on the economy following a string of weak reports.
- Construction spending rose 1.0% to a nine-month high after an upwardly revised 2.5% surge in January.
- Economists had forecast construction spending falling 0.2% in February after a previously reported 1.3% jump in January.
- Construction spending increased 1.1% on a year-on-year basis in February.
Gasoline Prices Creep Toward $3 a Gallon
- Gasoline prices typically move higher this time of year. But the seasonal rise is even more pronounced thanks to flooding in the Midwest and dwindling oil production out of Venezuela.
- U.S. drivers now pay $2.71 for a gallon on average, up 28 cents from a month ago and nearly 50 cents higher since early January.
- Gasoline prices typically climb this time of year as refiners shift to producing more expensive, summer-grade fuel, but have also been boosted by a rapidly rebounding oil market and operational disruptions at some key refineries.
- Drivers so far seem to be shrugging off the price hikes. A strong economy has made refilling tanks somewhat less painful.
- Some say they remember a decade ago when prices averaged almost $4 a gallon, or nearly $5 in states such as California. That makes current levels seem more manageable.
More than 1 million acres of U.S. cropland ravaged by floods
- At least 1 million acres (405,000 hectares) of U.S. farmland were flooded after the “bomb cyclone” storm left wide swaths of nine major grain producing states under water this month, satellite data analyzed by Gro Intelligence for Reuters showed.
- Farms from the Dakotas to Missouri and beyond have been under water for a week or more, possibly impeding planting and damaging soil.
- The floods, which came just weeks before planting season starts, will likely reduce corn, wheat and soy production this year.
- Fields are strewn with everything from silt and sand to tires and some may not even be farmed this year. The water has also destroyed billions of dollars of old crops that were in storage, as well as damaging roads and railways.
EUROPE & WORLD
Brexit in disarray: May under pressure to go for soft Brexit
- Parliament will again try to take control of Britain’s departure from the European Union on Monday, with some lawmakers hoping to force Prime Minister Theresa May to drop her Brexit strategy and pursue close economic ties with the bloc.
- Three days after the date on which Britain was originally due to leave the EU, it was still uncertain how, when or even if the United Kingdom would ever say goodbye to the bloc it first joined 46 years ago.
- Parliament will vote on different Brexit options on Monday, possibly showing a majority backing for a customs union, and then May could try one last roll of the dice by bringing her deal back to a vote in parliament as soon as Wednesday.
Euro-Area Inflation Slows as Core Gauge Reaches 11-Month Low
- Inflation in the euro area unexpectedly slowed in March and a core measure of prices fell to the lowest in almost a year, underscoring the case for more European Central Bank stimulus.
- The report, showing a headline rate of 1.4% and a gauge stripping out volatile components at 0.8%, puts the ECB further away from reaching its inflation goal.
- Inflation in the region remains weak despite a continuous improvement in the labor market. Unemployment in the euro-area stayed at 7.8% in February, the lowest in more than a decade.
China Manufacturing Gauge Hits Six-Month High
- Factories showed a pickup in activity almost across the board, from new orders to production, according to the official purchasing managers index released Sunday.
- The index rose to a six-month high of 50.5 in March from 49.2 in February, well above the forecasts of many economists.
- In the March index, a subindex for production rose to 52.7—well above the 50 mark that separates expansion from contraction—and up from 49.5 in February.
- The new orders subindex climbed to 51.6 from 50.6, while exports rose to 47.1 from 45.2, although still showing contraction.
- A separate official purchasing managers index for nonmanufacturing businesses edged up to 54.8 in March from 54.3 in February, as construction activities accelerated.
Global factory activity weak in March as clouds gather
- Factory activity remained weak around the world last month, reinforcing worries of a global slowdown as forward-looking indicators pointed to gloomy times ahead, surveys showed on Monday.
- Factory activity in Germany, France, Japan, South Korea, Malaysia, and Taiwan shrank further, adding to expectations of a dovish turn from central bankers.
- IHS Markit’s March final manufacturing Purchasing Managers’ Index (PMI) for the euro zone declined for an eighth month, coming in at 47.5 from February’s 49.3, its lowest reading since April 2013.
- South Korea’s factory activity in March contracted for a fifth straight month.
- Japanese manufacturing activity contracted at a slower pace in March, but output fell at the sharpest rate in nearly three years.
Japan’s business confidence hits two-year low as trade war stings
- Japan’s business mood slumped to a two-year low in the March quarter, a central bank survey showed, underscoring concerns that Sino-U.S. trade tensions and softening global demand were taking a toll on the export-reliant economy.
- The gloom was most pronounced among big manufacturers, where sentiment soured at the fastest pace in more than six years, stoking fears that uncertainty over the global outlook could discourage companies from spending on wages and expenditure.
- The headline index for big manufacturers’ sentiment stood at plus 12 in March, worse than plus 19 marked three months ago and a median market forecast of plus 14, the BOJ’s closely-watched quarterly “tankan” survey showed on Monday.
- The index for non-manufacturers fell to plus 21 from plus 24 in the December survey, hitting the lowest level since March 2017 and undershooting a market forecast of plus 22.
Samsung C&T, Samsung Electronics almost double cost of finishing new chip line
- Samsung C&T and Samsung Electronics have almost doubled the size of a contract related to the construction of a semiconductor production line, taking the project’s total cost to 1.46 trillion won ($1.29 billion).
- The contract covers finishing work on the line at Samsung Electronics’ Hwaseong plant on South Korea’s west coast.
- Samsung C&T is the construction arm and defacto holding company of the Samsung Group.
Fake News Runs Wild on WhatsApp as India Elections Loom
- In India, viral fake news is lighting up Facebook’s WhatsApp messaging app as the world’s biggest democracy prepares for national elections in the coming weeks.
- Efforts by WhatsApp and the government to stop the spread of misinformation are having little effect, according to fact-checking groups and analysts.
- That is a challenge for Facebook, as well as policy makers and voters grappling with digital falsehoods in India, a country of 1.3 billion people where mobile internet access has exploded in recent years.
Turkey Elections Loosen Erdogan’s Grip on Power With Losses in Ankara, Istanbul
- The party of President Recep Tayyip Erdogan appeared to have lost the mayoral race in its historical bastion, Istanbul, a stinging setback for a leader who has towered over Turkish politics for the past 16 years.
- The municipal votes, widely viewed as a referendum on President Erdogan’s economic policies amid high inflation and slowing growth, sent the Turkish lira down nearly 2% early Monday.
- Preliminary results showed a dramatic loss of steam for Mr. Erdogan’s ruling Justice and Development Party, or AKP.
- Although vote counting was still under way in Istanbul, the national election board said the AKP was nearly 28,000 votes behind rival Republican People’s Party, or CHP, in the Turkish megalopolis, where some nine million took part in the ballot.
TODAY in HISTORY
- Steve Wozniak and Steve Jobs founded Apple Computer. (1976)
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