DAILY MARKET REPORTS
- U.S. stocks ticked higher on Thursday on signs that Washington may dial back on plans for tariffs on European cars, soothing some worries about trade even as China looked set to face U.S. tariffs.
- Technology stocks led the gains, with chipmakers Qualcomm, Micron and Qorvo among the top gainers. Micron said a temporary ban on some sales in China would hurt its quarterly revenue by just 1%.
- Washington offered to abandon threatened levies on European cars in return for concessions, with German Chancellor Angela Merkel responding by saying she would back lowering European Union tariffs on U.S. car imports.
- The Trump administration’s tariffs on $34 billion of Chinese imports are due to go into effect at 0401 GMT on Friday and Beijing said it would respond in equal measure on U.S. goods ranging from cars to soybeans the instant U.S. measures go into effect.
- The U.S. Federal Reserve is also set to release minutes from its June 12-13 policy meeting at 2:00 p.m. ET, where it raised interest rates for a second time this year and flagged that more are likely.
- The ADP National Employment Report showed private employers added 177,000 jobs in June, below Reuters’ consensus of an increase of 19,000. That comes ahead of the more comprehensive non-farm payroll report on Friday.
US FINANCIAL MARKET
Micron confirms China blocking some chip sales, but says injunction will have minor impact on revenue
- Micron confirmed a court in China has granted a preliminary junction that bans its Chinese subsidiaries from manufacturing and selling some of its products in the Asian country.
- United Microelectronics Corporation (UMC) and Jinhua sought the sales ban, alleging that Micron violated its patent rights in China. UMC and Micron have gone back and forth in the courts, alleging various intellectual property violations.
- The company said the affected products represent “slightly more than 1%” of its annual sales. Micron added the injunction will hurt its current fiscal quarter revenue by “approximately” 1%, but the chipmaker continues to expect sales to be within the previously guided range of $8 billion to $8.4 billion.
Boeing to buy control of Embraer’s $4.75 billion commercial jet unit
- Boeing will buy a controlling stake in the commercial aircraft arm of Brazilian planemaker Embraer under a new $4.75-billion joint venture, the companies said on Thursday, cementing a global passenger jet duopoly.
- The deal values Embraer’s commercial aircraft operations, the world’s third-largest, at $4.75 billion and Boeing’s 80-percent ownership stake in the joint venture at $3.8 billion. Boeing is expected to pay for its share of the venture in cash.
- Embraer will hold the remaining 20% of the venture and keep control of its defense and business jet operations. Concern over U.S. influence in Brazilian military programs had raised red flags in Brasilia, which can still veto the deal.
Ford says no plans to hike China prices despite new tariffs
- Ford said it has no plans for now to hike prices of imported Ford and Lincoln models in China, despite additional tariffs on U.S. vehicles due to be applied from Friday.
- Ford’s move, which would mean it taking a hit on margins on imported cars, makes it the first foreign automaker to address pricing issues ahead of the new tariffs that will affect around $34 billion of U.S. imports from soybeans and cars to lobsters.
- Last year, it shipped about 80,000 vehicles to China from North America, more than half of them its upper-end Lincolns.
- All Lincoln vehicles that Ford sells in China are imported from North America. Last year the brand sold 54,124 vehicles in China, the world’s largest auto market, up 66% from 2016.
General Motors’s China vehicle sales growth rate eases in second-quarter
- U.S. automaker General Motors said its second-quarter sales in China increased 0.7% to 858,344 vehicles compared with the same period a year ago.
- However, the second-quarter growth rate of vehicle sales in China eased compared with the January-March quarter, which saw an increase of 8%. The slowdown was mainly due to lean sales of Buick brand vehicles in the April-June period.
- Buick sales dived 16% to 230,454 vehicles in the second quarter compared with a year-ago period. Sales of Cadillac, Chevrolet and other brands climbed in the second quarter from a year ago.
Netflix turns to Bollywood to script India growth story
- Netflix premiered its first original series in India in a sheen of Bollywood glitter on Wednesday, upping the stakes in its battle with streaming rival Amazon Prime for a chunk of the country’s more than 1 billion potential viewers.
- A Hindi-language thriller set in Mumbai, “Sacred Games” launches less than a month after the success of its Indian film “Lust Stories” and comes at a time when fellow U.S. heavyweights Comcast and Walt Disney are vying for control of Indian pay TV network Tata Sky as part of their fight for Twenty-First Century Fox.
- With China’s heavily censored market proving a hard nut to crack, India is at the heart of Netflix’s growth. Netflix plans to release another three original shows there this year compared to Amazon’s planned 10 while both have also been battling to sign some of the country’s leading stand-ups for specials.
Trump to OPEC: ‘Reduce pricing now!’
- U.S. President Donald Trump again accused the Organization of the Petroleum Exporting Countries of driving gasoline prices higher on Wednesday and urged the oil producer group to do more.
- The Republican president has lashed out at OPEC in recent weeks. Rising gasoline prices could create a political headache for Trump before November mid-term congressional elections by offsetting Republican claims that his tax cuts and rollbacks of federal regulations have helped boost the U.S. economy.
- Iranian OPEC Governor Hossein Kazempour Ardebili said on that Trump had raised oil prices through his tweets. “Your tweets have increased the prices by at least $10. Please stop this method,” the Iranian oil ministry’s news agency, SHANA, quoteds.
US ECONOMY & POLITIC
U.S. private payrolls miss expectations; weekly jobless claims up
- U.S. private payrolls rose less than expected in June while the number of Americans filing for unemployment benefits unexpectedly rose last week, but that did little to change perceptions that labor market conditions continued to tighten.
- The ADP National Employment Report showed private employers hired 177,000 workers in June, less than market expectations for a 190,000 gain. Private payrolls increased by 189,000 jobs in May.
- In a separate report, initial claims for state unemployment benefits increased 3,000 to a seasonally adjusted 231,000 for the week ended June 30. Claims data for the prior week was revised to show 1,000 more applications received than previously reported.
- Economists had forecast claims falling to 225,000 in the latest week. Claims could become volatile in the coming weeks as automobile manufacturers close assembly lines for annual retooling.
FCC Plan Would Hurt the Poor, Huawei Says, as It Fights to Keep U.S. Foothold
- Huawei is fighting to hang on to one of its last footholds in the U.S. market, hitting back against a measure that would restrict rural carriers from buying the Chinese company’s telecommunications equipment.
- Large U.S. carriers such as AT&T have long stayed away from gear made by Huawei, the world’s biggest maker of cellular equipment like base stations and routers. As a result, Huawei mainly supplies gear in the U.S. to a small niche of rural carriers.
- The FCC proposal would limit those carriers from accessing gear made by Chinese suppliers like Huawei. It would do so by restricting the carriers from using $9 billion in federal subsidies to buy equipment made by the Chinese companies, saying these firms pose a national security threat.
China keeps LNG off tariff list for now, could be trade weapon later
- China’s omission of liquefied natural gas (LNG) from its vast list of U.S. products that face hefty import duties from Friday has preserved a potential weapon should the trade war with Washington deepen.
- It also underscores Beijing’s desire to ensure supplies of gas as it pushes to switch millions of households and businesses away from using coal as a key part of its ‘war on pollution’.
- Although U.S. LNG supplies to China have so far been tiny in volume and value compared with the around $12 billion per year of U.S. crude that arrives in the country, analysts say those levels could be set to shoot up as Beijing forges ahead with its battle to clear its skies.
- Morgan Stanley has estimated annual Chinese imports of U.S. LNG could rise to as much as $9 billion within two or three years, from $1 billion in 2017. The amount could be even larger if the United States resolves a logistics bottleneck.
Trump Winnows Down Supreme Court Picks, Focusing on Three
- President Donald Trump’s search for a Supreme Court justice to succeed Anthony Kennedy is focusing on a trio of federal judges, with a decision expected this week in anticipation of an announcement on Monday, people familiar with the search said.
- Following a brisk round of interviews Monday and Tuesday, the three front-runners at this late stage in the president’s search are all U.S. appeals court judges: Brett Kavanaugh of Maryland, of the D.C. Circuit; Raymond Kethledge of Michigan, of the Sixth Circuit; and Amy Coney Barrett of Indiana, of the Seventh Circuit.
- Since Justice Kennedy was often a swing vote, Mr. Trump’s selection could tip the balance when it comes to some of the most divisive issues the court faces: abortion rights, health care and the limits of executive power, among them.
‘We are the casualty:’ US pig farmers brace for second round of pork tariffs from China, Mexico
- U.S. pork producers are about to be bitten by a second batch of hefty retaliatory tariffs from China and Mexico — and that has some large producers predicting they could lose big money and be forced to invest overseas.
- One in 4 hogs raised in the U.S. is sold overseas, and the Chinese are the world’s top consumers of pork.
- China also is set to add tariffs this week on U.S. soybeans, corn, wheat, cotton, whiskey and dairy, as well as U.S. autos. Nearly $20 billion in U.S. agricultural exports went to China last year, with the more than half of that amount coming from soybeans.
Trump Administration to Rescind Obama Guidelines on Race in College Admissions
- The Trump administration will begin directing schools and colleges to adopt race–neutral admissions standards, the Education Department said Tuesday, reversing Obama-era guidelines that encouraged the use of race to promote diversity.
- The Obama guidelines, issued jointly by the Education and Justice departments, laid out legal recommendations for schools looking to use race as an admissions factor. The reversal is among the highest-profile actions by the Trump administration to undo President Barack Obama’s approach to race and affirmative action.
- Trump administration officials and critics of affirmative action said the Obama guidelines, published between 2011 and 2016, went beyond Supreme Court precedent, actively encouraged racial bias and led schools to believe that legal affirmative action is simpler to achieve than the law allows.
EUROPE & WORLD
U.K. Calls on Russia for Information After New Nerve-Agent Poisoning
- Britain urged Russia to provide fresh details about the poisoning of a former double agent and his daughter in March after two U.K. nationals were sickened by the same Soviet-era nerve agent nearby last weekend.
- On Saturday, a man and a woman were admitted to a hospital in critical condition after collapsing at their home in Amesbury, 7 miles from the city of Salisbury, where former spy Sergei Skripal and his daughter Yulia were poisoned in March.
- The government’s assumption is that the two people came into contact with the nerve agent Novichok in a different location than the Skripals, and are working to figure out how this may have happened four months after the initial poisoning.
- The U.K. called on the Kremlin to fill in further clues about the March attack—which Britain has blamed on Russia but Moscow has denied—to help U.K. authorities keep members of the public safe.
Jaguar says ‘bad Brexit’ would mean it could not stay in UK
- Britain’s biggest carmaker Jaguar Land Rover said a so-called “hard Brexit” would cost it 1.2 billion pounds a year, curtailing its future operations in the United Kingdom.
- JLR joins a growing list of companies which have raised concerns about potential disruption to business if Britain crashes out of the bloc next March without a trading agreement with the European Union, a so-called hard Brexit.
- The comments come ahead of a meeting on Friday between Prime Minister Theresa May and her cabinet ministers to decide on strategy for Britain to negotiate its way out of the European Union, ending a 40-year trading relationship.
Samsung’s second quarter profit may flag as smartphone innovation dries up
- Samsung Electronics is expected to post its smallest profit growth in more than a year in the second quarter, as lackluster sales of its premium Galaxy smartphones overshadow its highly profitable chip business.
- Samsung’s latest Galaxy S9 flagship phone, launched in mid-March, boasts lots of software but little in the way of technological wizardry. It is on track to sell less in its launch year than its predecessor Galaxy S8 series sold in 2017 after its debut.
- Samsung is also expected to issue guidance for the April-June quarter on Friday, giving estimates for revenue and operating profit. It will disclose detailed results in late July.
Hifood Group slumps 11%, leading slide in shares of HNA’s HK-listed units
- Shares of jewelry maker Hifood Group, an indirect unit of HNA Group, fell 11% on Thursday to all-time lows, leading the slide in Hong Kong-listed stocks related to HNA whose co-chairman died in an accident two days ago.
- The aviation-to-financial services conglomerate’s Co-Chairman Wang Jian died during a business trip in France on July 3 in what local police said appeared to be an accidental fall from a wall while posing for a photograph.
China’s ethanol push in doubt as U.S. trade dispute widens
- China’s ambitious push to use biofuel in cars nationwide by 2020 is in doubt amid concerns about supplies of raw material such as corn, complicated by an escalating trade dispute with Washington, producers and analysts say.
- In September last year, the government outlined radical plans to roll out the use of ethanol in gasoline nationally by 2020, in part to digest its huge corn stocks. But since then, only one major project – SDIC’s 300,000 tonnes per year plant in Liaoning province in China’s northeast – has received the go-ahead to start construction.
- The slowdown comes as a brewing trade dispute with the United States intensifies, raising the threat of further tariffs that could make imports of U.S. corn or ethanol to meet any shortfall in domestic supplies uneconomic.
Singapore proposes fines on Grab, Uber, says merger harms competition
- Singapore’s anti-trust body proposed fines on ride-hailing firms Grab and Uber, provisionally finding that their merger had reduced competition and suggesting remedies such as the sale of their car-leasing businesses.
- The Competition and Consumer Commission of Singapore (CCCS) also warned that it may require the companies to unwind the merger depending on whether the remedies are successful but added a reversal may not be feasible, citing Uber’s exit from the market after the deal.
- Uber sold its Southeast Asian business to bigger regional rival Grab in March in exchange for a stake in the Singapore-based firm, following similar deals by the U.S. firm in China and Russia.
China says no tariffs on U.S. goods before U.S. tariffs on China goods
- China’s finance ministry said it will not fire the first shot on implementation of tariffs in a trade dispute with the United States.
- The ministry, in a statement, said it would not implement its tariffs on U.S. goods set to take effect on July 6 before the United States imposes its tariffs on Chinese goods.
TODAY in HISTORY
- Venezuela became the first South American country to declare independence from Spain. (1811)
- Elvis Presley recorded “That’s All Right,” his first commercial record. (1954)
- Dolly, the first sheep cloned from adult cells, was born. (1996)
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