Pence Financial Markets News
US FINANCIAL MARKET
WALL STREET FALLS AGAIN AMID CHINA-INDUCED SELLOFF
- As China weakened its currency further for a second day in a row, Markets are down over 1% respectively.
- Fed President William Dudley said it was “too early to judge what is happening with Chinese currency policy”.
- Alibaba fell 5.6 % to $73.05 after the retailer’s revenue growth slowed to its lowest rate in more than three years.
- Macy’s posted Q2 profit that missed analysts’ estimates after resorting to discounts to clear slow-selling inventory.
- UK unemployment rose in the Q2
- Greece faces two years of recession as it implements sharp budget cuts and policy overhauls mandated by its $94.97 billion international bailout program.
- Demand for oil is increasing at its fastest pace in five years, boosted by an oil-price drop below $50 a barrel.
Oil Demand Growing at Fastest Pace in Five Years, Says IEA
- Drop a blow to OPECs’ strategy to defend its market share, ICE said lower oil prices would only start to dent rival production next year.
- Global oil demand would grow by 1.6 million barrels a day this year, an upward revision of 200,000 barrels a day from its previous forecast.
- Expected to keep rising by 1.4 million barrels a day next year.
- Brent is hovering around $50 a barrel and refining margins have soared in 2015, reaching highest levels in 2.5 years.
- ICE gasoil delivery rises in Aug to 173,500 tonnes.
Alibaba Revenue Disappoints; Company Plans $4 Billion Stock Buyback
- Reported a softer-than-expected 28% increase in revenue in the latest quarter to $3.26 billion.
- Authorized a $4 billion stock-buyback program that will be spread over two years, aimed to offset dilution from compensation programs.
- Profit surged 148% to $4.97 billion mainly because of a gain from the deconsolidation of Alibaba Pictures.
- The number of active users on Alibaba’s mobile platforms grew to 307 million at the end of the quarter from 289 million in March.
- Alibaba announced a deal earlier this week to invest $4.5 billion in Chinese electronics retailer Suning Commerce Group Ltd.
Macy’s Profit Trails Estimates on Discounts to Move Products
- Macy’s net income fell 26 % to $217 million, or 64 cents per share, in the quarter ended Aug. 1.
- Net sales declined 2.6 % to $6.10 billion, the fourth drop in six quarters.
- Strong dollar “significantly” reduced spending by foreign tourists in the US and company discounted to clear merchandise delayed due to West Coast port strikes.
- The retailer said it would start selling its products online in China later this year through Alibaba Group Holdings Ltd’s Tmall Global.
- First US department store to list on Tmall.
GE to Sell Health-Care Lending Operations to Capital One for $9 Billion
- Deal marks a new direction by the firm better known for its credit cards than for lending money to hospitals.
- As part of the deal, Capital One will get $8.5 billion worth of GE’s existing health-care loans.
- GE will have sold roughly $78 billion of financial assets toward its goal of shrinking its banking business by $100 billion this year.
- Capital One said it expects to complete the acquisition by the Q4.
FIS to Buy Financial-Tech Firm SunGard for $9.1 Billion, Including Debt
- That acquisition will end plans by SunGard’s private-equity owners to take it public.
- The acquisition is made up of a combination of cash and stock, and FIS said it intends to refinance SunGard’s debt.
- With SunGard’s annual revenue of $2.8 billion and 13,000 employees, the combined company is expected to have more than $9.2 billion in revenue and more than 55,000 employees.
- FIS, offers banking and payments technology services and said SunGard offers complementary services.
AbbVie to Seek FDA Approval for Leukemia Drug After Trial Success
- Its’ experimental treatment for a form of leukemia associated with a gene mutation met its primary goal in a mid-stage trial.
- Company will seek US approval of the medicine.
- AbbVie is developing the drug venetoclax with Switzerland’s Roche Holding AG.
- Will unveil data from Phase II trial at an upcoming medical meeting.
- Brokerage Cowen and Co has predicted the medicine, if approved, could capture annual sales of $2 billion by 2020.
Kraft Heinz to cut 2,500 jobs in U.S., Canada
- It will cut 2,500 jobs in the United States and Canada.
- This is part of its cost cutting initiatives following the creation of the company through the $46-billion merger of ketchup maker H.J. Heinz with Kraft Foods.
- The company expects to save about $1.5 billion in annual costs by the end of 2017.
- Kraft combined with Heinz creates the third-largest NA food company.
US ECONOMY & POLITICS
US Steelmakers Again Ask for Tariffs on Imports
- American steelmakers on Tuesday filed another petition demanding tariffs on imports of foreign steel.
- Warned that China’s devaluation of the yuan could have severe repercussions on their industry.
- Six of the nation’s biggest steelmakers— U.S. Steel Corp., Nucor Corp., AK Steel Holdings Corp., ArcelorMittal USA LLC, SSAB Enterprises LLC and Steel Dynamics Inc.—filed their third trade complaint of the summer
- The request targeted imports of hot-rolled coil—used in making cars—from Australia, Brazil, Japan, South Korea, the Netherlands, Turkey and the U.K.
EUROPE & WORLD
Greece Faces Two-Year Recession Amid Bailout Cuts
- Economy expected to shrink3% this year, followed by a 1.3% contraction next year.
- Sharp budget cuts and policy overhauls mandated by its $94.97 billion international bailout program puts Greece in this position.
- Only in 2017 is the economy expected to return to growth, expanding 2.7% that year followed by 3.1% growth in 2018.
- Greece will have to limit its primary deficit, which strips out interest payment, to 0.25% of gross domestic product.
Eurozone Industrial Production Falls in June
- Production at factories, mines and utilities fell for a second straight month in June, down 4% from May.
- Data comes ahead of Friday’s GDP estimates.
- WSJ expected a monthly decline of 0.1%.
UK Jobless Pickup May Signal Uneven Labor Market Recovery
- The number of people looking for work increased 25,000 to 1.85 million while employment declined by 63,000 in the period.
- The jobless rate held at 5.6 %, while the employment rate rose from a year earlier, to 73.4 %.
- Total pay, which includes bonuses, rose an annual 2.4 % in the second quarter, down from 3.2 % the previous month.
China Intervenes to Support Tumbling Yuan
- Their attempts to ease markets failed, forcing PBOC to instruct state-owned Chinese banks to sell dollars on its behalf in the last 15 minutes of trading.
- The intervention came in final moments of trading came after the yuan had weakened nearly 2%.
- 2% is the maximum allowed in mainland China, where $1 would buy about 6.45 yuan.
- A cheaper yuan reduces the competitiveness of companies outside of China making their goods and services more expensive, while reducing the value of revenue they generate in the country.
TODAY in HISTORY
- At the Battle of Ascalon 1,000 Crusaders, led by Godfrey of Bouillon, route an Egyptian relief column heading for Jerusalem, which had already fallen to the Crusaders. (1099)
- President Franklin Roosevelt signs the Social Security Bill. (1935)
- Space shuttle Enterprise makes its first free flight and landing (1977)
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