DAILY MARKET REPORTS
- Wall Street indexes rose on Monday, helped by gains in technology stocks after President Donald Trump softened his stance on Chinese technology company ZTE Corp, signaling easing U.S.-China trade tensions.
- Trump on Sunday pledged to help ZTE “get back into business, fast” nearly a month after the U.S. Commerce Department banned American companies from selling to the firm for violating an agreement.
- Trump’s comments came ahead of trade talks between Chinese Vice Premier Liu He and U.S. officials this week to resolve escalating trade disputes and drove big gains in the shares of U.S. suppliers to ZTE.
- Also helping the mood was news that China had resumed its review of chipmaker Qualcomm’s proposed $44 billion takeover of NXP Semiconductors. NXP surged 10.3% and Qualcomm 3.3%.
- Xerox tumbled 7.9% after the U.S. photocopier giant scrapped a planned $6.1 billion deal with Fujifilm Holdings.
- In Europe, political pressures remain high as Italian populists near completion of a government plan, Britain faces a crunch week over Brexit, and the U.S. formally moves its embassy to Jerusalem.
- Elsewhere, oil traded below $71 a barrel as the United Arab Emirates said OPEC has enough spare production capacity to mitigate any impact on crude markets if the U.S. re-imposes sanctions on Iran.
US FINANCIAL MARKET
OPEC Output Rises on Higher Crude Production in Saudi Arabia
- In its closely watched monthly oil market report, the Organization of the Petroleum Exporting Countries said the group’s total crude output rose by 12,000 barrels a day in April, month-on-month, to average 31.9 million barrels a day.
- The report comes roughly six weeks ahead of OPEC’s semiannual official meeting in Vienna, at which the cartel and partner producers are expected to assess a joint agreement to rebalance the oil market by cutting crude production.
- The world’s total oil supply continued to accelerate in April, climbing by 120,000 barrels a day month-on-month, to average 97.89 million barrels a day, almost all of which was driven by non-OPEC production.
- OPEC raised its global oil demand forecast for 2018 by 25,000 barrels a day, to increase by 1.65 million barrels a day and average 98.85 million barrels a day.
Tesla Considered Adding Eye Tracking and Steering-Wheel Sensors to Autopilot System
- Long before the fatal crash of a Tesla car in March, some developers of the vehicle’s Autopilot system expressed concern there weren’t enough safeguards to ensure drivers remained attentive, people familiar with the discussions said.
- Tesla’s engineers repeatedly discussed adding sensors that would ensure drivers look at the road or keep their hands on the wheel both before and after the driver-assistance system was introduced in 2015.
- Tesla executives including Chief Executive Elon Musk rejected the ideas because of costs and concerns that the technology was ineffective or would annoy drivers with overly sensitive sensors that would beep too often.
- The March 23 crash of a Tesla Model X sport-utility vehicle occurred south of San Francisco while Autopilot was activated, killing the driver. The crash is under investigation by U.S. transportation-safety agencies.
Lilly to buy cancer drug developer AurKa Pharma
- Eli Lilly will buy AurKa Pharma in a deal potentially worth up to $575 million, seeking access to the privately-held firm’s experimental cancer treatment for solid tumors.
- AurKa Pharma will receive $110 million upfront and is eligible to earn up to $465 million more if it achieves regulatory and sales milestones.
- The deal is Lilly’s second in less than a week that aims to broaden its portfolio of lucrative cancer drugs. On Thursday, Lilly said it would buy Armo BioSciences for about $1.6 billion.
Facebook suspends 200 apps over data misuse investigation
- Facebook has so far suspended around 200 apps in the first stage of its review into apps that had access to large quantities of user data, in a response to a scandal around political consultancy Cambridge Analytica.
- Zuckerberg had said the social network will investigate all apps that had access to large amounts of information before the company curtailed data access in 2014.
Ford could reopen two U.S. truck plants next Friday: source
- Ford Motor could resume production of its best-selling F-150 pickups as early as Friday, May 18 in Dearborn and Kansas City, according to a source familiar with the automaker’s plans.
- Ford shut truck plants in Michigan, Missouri and Kentucky earlier this week because of parts shortages caused by a supplier fire in Michigan.
- Ford said it was working with Chinese-owned Meridian to shift production of the affected parts to other suppliers until the fire-damaged plant can be repaired and production resumed.
Lyft claims it now has more than one-third of the US ride-sharing market
- For the first time, Lyft is disclosing internal market-share numbers, and they show its momentum isn’t letting up after it capitalized on Uber’s disastrous 2017.
- Lyft says it has 35% of the national ride-sharing market, up from 20% 18 months ago. That would represent growth of 75%.
- The start-up says its market share is over 40% in 16 U.S. markets and that it enjoys majority share in “multiple” markets, although it wouldn’t disclose where.
JPMorgan Plans to Take Controlling Stake in Chinese Venture
- The U.S. bank on Monday said its asset-management arm is hoping to increase its ownership of China International Fund Management—a mutual-fund joint venture in which JPMorgan has owned a minority stake since 2004—to 51% from 49% currently.
- If successful, the move would make JPMorgan the first Western financial institution to majority-own a fund-management arm able to sell mutual funds to Chinese customers.
- China’s securities regulator in April released guidelines permitting foreign companies to control 51% of local securities, asset-management and insurance joint ventures, part of its yearlong efforts to open up the country’s financial sector.
US ECONOMY & POLITIC
U.S. Embassy Opens in Jerusalem as Dozens of Palestinians Killed in Protests
- The U.S. on Monday opened its embassy in Jerusalem, a historic moment for Israel-U.S. relations that was overshadowed by clashes that left 37 Palestinian protesters dead by Israeli military gunfire.
- The death toll at the Gaza Strip’s fence with Israel was the largest in a single day since the Israeli army fought a conflict with Gaza rulers Hamas in 2014.
- The Gaza protests are expected to reach their height on Tuesday, on what Palestinians call Nakba Day, or Day of the Catastrophe, marking the day after the anniversary of Israel’s founding on May 14, 1948.
Trump Extends Lifeline to Sanctioned Tech Company ZTE
- President Donald Trump said he was working with Chinese President Xi Jinping to keep ZTE in business, throwing an extraordinary lifeline to the Chinese telecommunication giant that has been laid low by U.S. moves to cut off its suppliers.
- The surprise intervention comes less than a month after ZTE was hit with an order banning U.S. companies from selling components to the Chinese business.
- Mr. Trump said in a tweet that he is working with Mr. Xi to get ZTE “a way to get back into business, fast. Too many jobs in China lost.” He said the Commerce Department has been instructed to “get it done!”
U.S. Ready to Impose Sanctions on European Companies in Iran, Bolton Says
- National security adviser John Bolton warned Sunday that the U.S. is prepared to impose sanctions on European companies if their governments don’t heed President Donald Trump’s demand to stop dealing with Iran.
- His comments are the latest in the campaign to put economic pressure on Iran and America’s European allies to accept a new agreement that would impose tougher restrictions on Iran’s nuclear activities, constrain its missile program and roll back its support for militant groups.
- European officials have said they are looking for ways to help their companies escape the brunt of the U.S. sanctions.
- France’s foreign minister said Friday he had asked for exemptions or longer grace periods for the exit of French companies such as oil-and-gas giant Total and car maker Peugeot that have returned to the Iranian market since the 2015 nuclear accord.
Supreme Court Ruling for New Jersey Opens Door to Sports Betting
- The Supreme Court on Monday opened the door for states to allow betting on sporting events, invalidating a federal law that prohibited such wagers in most of the U.S.
- The court, in an opinion by Justice Samuel Alito, sided with a challenge brought by the state of New Jersey, which has waged a six-year battle to allow sports betting within its borders.
- The state has been unable to do so because of the 1992 Professional and Amateur Sports Protection Act, a federal law that says states can’t “sponsor, operate, advertise, promote, license, or authorize” sports gambling.
- The high court said the 1992 law exceeded the powers of Congress. Congress can regulate sports gambling directly, the court said, but it can’t direct states on how to regulate their own citizens.
EUROPE & WORLD
Apple supplier Foxconn posts 14.5% drop in first-quarter net profit, lags forecasts
- Taiwan’s Foxconn, the world’s largest contract electronics maker and supplier to Apple, posted a 14.5% fall in first-quarter net profit, lagging estimates despite a strong quarter for the U.S. iPhone maker.
- Net profit for the first three months of 2018 for the company known formally as Hon Hai Precision Industry reached T$24.08 billion ($809 million), it said in a filing to the Taiwan stock exchange.
- That was down 14.5% from T$28.168 billion a year earlier, according to Reuters’ calculations.
NXP shares jump after report China resumes Qualcomm deal review
- NXP Semiconductors’ shares jumped more than 10% on Monday after a report that China has resumed its review of U.S. chipmaker Qualcomm’s proposed $44 billion buyout of the Dutch semiconductor company.
- China’s commerce ministry has been asked to speed up the review of the deal and Qualcomm’s proposed remedies to protect local companies, Bloomberg reported, citing people familiar with the matter.
- Clinching the NXP deal, the biggest in the semiconductor sector, is crucial to Qualcomm, which is seeking to diversify its customer base and become the leading chip supplier to the fast-growing automotive market.
- Approval of the deal is not definite and still could be delayed, the report said, citing the sources.
Xerox abandons planned deal with Fujifilm in victory for Icahn and Deason
- Xerox has scrapped a planned $6.1 billion deal with Fujifilm Holdings in a settlement with activist investors Carl Icahn and Darwin Deason that also hands control of the U.S. photocopier giant to new management.
- The two companies agreed in January to a complex deal that would have merged Xerox into their Asia joint venture Fuji Xerox and given Fujifilm control.
- Fujifilm was quick to take a combative stance, saying it disputes Xerox’s right to terminate the deal and would look at all options including legal action seeking damages.
Air France-KLM to name interim CEO on Tuesday
- Air France-KLM’s board meets on Tuesday morning to appoint an interim chief executive for the Franco-Dutch airline, who will have to tackle French unions emboldened after the departure of previous boss Jean-Marc Janaillac.
- The unions have suspended their strike action while Air France-KLM replaces Janaillac. So far, 15 days of walkouts this year have cost Air France-KLM around 400 million euros, while rising oil prices are adding to the pressure on the company.
- The French government, Air France-KLM’s largest shareholder with a 14% stake, has said it would like someone with experience of the aviation industry.
- Although the unions have said they feel vindicated in their strike action by Janaillac’s resignation, the signals are that change is coming for Air France.
EU Sees $23.5 Billion in Revenue from Financial-Transaction Tax
- A proposed tax on financial transactions in 10 European Union countries could generate about 19.6 billion euros ($23.5 billion) of annual revenue, though Brexit could make collection more difficult, according to a new estimate.
- The European Commission, the EU’s executive arm, proposed the tax in 2011 to make sure the industry made a “fair contribution” after taxpayers bore the costs of the financial crisis.
- Derivatives account for more than half of the projected revenue, with 6.2 billion euros coming from exchange-traded contracts and 6.1 billion euros from over-the-counter trades, according to documents prepared for a meeting this week of officials from the 10 countries.
- Those totals assume that the tax could be collected abroad, including in the U.K. after Brexit, on transactions involving a counterparty from one of the participating countries.
TODAY in HISTORY
- The Lewis and Clark expedition set out from St. Louis. (1804)
- The Olympic Games were held in the United States for the first time, in St. Louis, Missouri. (1904)
- British rule in Palestine came to an end as The Jewish National Council proclaimed the State of Israel. Within hours, Israel was under attack from Arab forces. (1948)
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