Stocks Head Lower in US as Health Care, Energy Sector Lag

12:44 PM, Mar 16, 2017 — The main US markets were declining on Thursday afternoon with health care leading the losses on the Standard & Poor’s 500 and energy weaker amid lower oil prices.

Stocks were unable to maintain the rally they posted a day earlier after the Federal Open Market Committee raised interest rates as expected, while signalling that members see a total of three hikes this year, unchanged from the outlook given in December.

Investors were looking at the Donald Trump budget proposals released on Thursday, which includes $5.8 billion in spending cuts to the National Institutes of Health. The health care sector on the S&P 500 fell 1.1% in the steepest decline among the 11 groups, while Merck (MRK) and Pfizer (PFE) retreated 0.7% each to be among two-thirds of the Dow Jones Industrial Average blue chips that weakened.

Energy lost 0.6% on the S&P 500 as West Texas Intermediate, the main US oil variety, fell 0.6% to $48.57 a barrel. Chevron (CVX) fell about 1% and Transocean (RIG) shed 2.6%.

In company news, Oracle (ORCL) advanced 7.5% after fiscal third quarter earnings beat estimates and the company guided fourth quarter earnings in line to above the Wall Street view. Nucor (NUE) gained 2.9% after the steelmaker said it expects first quarter earnings to improve sequentially to a range that is well above Street expectations.

The day’s economic data had the Job Openings and Labor Turnover surveys report showing openings rose 87,000 to 5.63 million in January after declining 92,000 to 5.54 million in December. Housing starts rebounded 3% to 1.288 million in February after sliding to 1.251 million in January. Single family starts rose 6.5%, though multifamily starts were down 3.7%. Permits declined 6.2%.

In afternoon trading, the Dow and the S&P 500 were both about 0.1% lower while the Nasdaq was little changed.

Globally, the Hang Seng jumped 2.1%, the FTSE 100 added 0.6%, the Nikkei 225 rose 0.1% and the Shanghai Composite advanced 0.8%.

US markets

Stocks Fall as Fed Meeting Starts With Oil Slide Hitting Energy Shares

12:57 PM, Mar 14, 2017 — US markets were in the red on Tuesday afternoon at the start of the two-day Federal Open Market Committee meeting, which is expected to end with an interest-rate increase, while a retreat in oil futures weighed on the energy sector.

The energy group shed 1.2% to lead losses on the Standard & Poor’s 500. West Texas Intermediate, the main US oil variety, dropped 1.8% to $47.52 a barrel and Brent, the international standard, shed 1.3% to $50.70. That’s after the Organization of Petroleum Exporting Countries reported a rise in global crude stocks and an increase in production from Saudi Arabia, according to Reuters.

On the Dow Jones Industrial Average, Chevron (CVX) fell 1.6% in the steepest loss amid the declines in its group. Wal-Mart Stores (WMT) rose 1.6% in the best gain among the blue chips, although fewer than a third of the components advanced.

The FOMC meeting will end with its rate decision announcement, economic projections and a press conference with Chair Janet Yellen. While the probability of a hike stands at 93% on the CME Group’s FedWatch tool, investors will be looking closely at the accompanying statements for indications on the pace of more hikes in 2017. In economic data, the producer price index rose 0.3% in February, higher than the expected 0.1% increase.

In company news, Ruby Tuesday (RT) jumped 17% after saying late Monday it will explore strategic alternatives in order to maximize shareholder value and position the business for long-term success.

Lifetime Brands (LCUT) gained 9.3% after shareholder Mill Road Capital made an offer to buy all the shares it doesn’t own for $20 per share, or a 5.8% premium to the closing price Monday. Valeant Pharmaceuticals (VRX) plunged 11% after hedge fund manager Bill Ackman reportedly sold his position in the company.

In afternoon trading, the Nasdaq and the S&P 500 were both down about 0.5%, while the Dow fell 0.3%.

Globally, the FTSE 100 slipped 0.1%, the Nikkei 225 was also down 0.1%, the Hang Seng was little changed and the Shanghai Composite rose 0.1%.

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Adidas Boosts Sales, Profit Targets Through 2020 After Record Financial Results

7:34 AM, Mar 8, 2017 — Athletic apparel retailer adidas (ADS.DE) has raised its sales and profit targets through 2020 after posting record results for the full year 2016 which were buoyed by strong performance in the brand’s Sport Performance unit.

Revenues increased 18% on a currency-neutral basis to 19.3 billion euros ($20.37 billion) while net income from continuing operations increased 41% to 1.02 billion euros, the company reported on Wednesday. Currency-neutral revenues for the company’s adidas brand increased 22%, supported by double-digit sales increases in the company’s Sport Performance unit as well as at the adidas Originals and adidas neo units.

At the Reebok brand, currency-neutral sales were up 6% versus the prior year, reflecting double-digit sales increases in Classics as well as mid-single-digit growth in the company’s training and running categories, according to the results.

Adidas said that it expects revenue adjusted for currency fluctuation to increase between 10% and 12% on average per year through 2020, rather than increasing it at a high-single-digit rate which was the previous goal. Kasper Rorsted, the chief executive who took over in October, sees net income from continuing operations growing between 20% and 22% on average per year through 2020. The previous target called for an increase by around 15% on average.

“Following an exceptionally successful 2016 financial year, adidas is significantly increasing its long-term guidance,” the company said. “The company intends to strongly accelerate sales and earnings growth until 2020 as part of its long-term strategic business plan.”

The company estimates that e-commerce revenues from its adidas.com and reebok.com websites will increase to 4 billion euros ($4.22 billion) by 2020 from 1 billion euros in 2016. The previous plan called for an increase to 2 billion euros by 2020.

Management seeks to reach the new targets by “harmonizing and simplifying business processes”, including reducing the number of articles offered and overhauling marketing activities, Adidas said. The company plans to step up investment into its US business, to strengthen its position in the world’s largest sportswear market.

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WPP Presents Cautious Outlook Despite Record Revenue, Profit in 2016

8:23 AM, Mar 3, 2017 — Advertising and public relations company WPP (WPP.L, WPP) has projected single-digit like-for-like growth in revenue and net sales this year against a backdrop of what it described as ‘tepid’ economic expansion despite posting its sixth consecutive year of record results for 2016 which were helped by an increase in billings.

The company, which employs more than 198,000 people in 113 countries, said that it generated 14.39 billion pounds ($17.60 billion) in revenue last year, 17.6% more than one year earlier, according to results published on Friday. Pre-tax profit rose by 26.7% to 1.89 billion pounds while profit after tax was 20.6% higher at 1.50 billion pounds over the same time frame. The company’s billings were 16% higher at 55.25 billion pounds and up by 3.3% on a like-for-like basis.

The highest proportion of WPP’s revenue came from North America, with 5.28 billion pounds, followed by the region encompassing Asia Pacific, Latin America, Africa and the Middle East and Central and Eastern Europe, with 4.30 billion pounds. West Continental Europe generated 2.94 billion pounds and the UK accounted for 1.87 billion pounds.

Referring to ‘tepid economic growth’, the company described competition within the industry as “fierce”, saying that there had been several examples of “major groups” being prepared to offer clients up-front discounts as an inducement to renew contracts and heavily reduced creative and media fees and cash or pricing guarantees for media purchasing commitments recently.

Going forward, the company said that its budgets for 2017 had been prepared “on a cautious basis” projecting like-for-like revenue and net sales growth of “around 2%” and a headline operating margin target improvement on net sales of 0.3 margin points, in constant currency.

“In 2017, our prime focus will remain on growing revenue and net sales faster than the industry average, driven by our leading position in horizontality, faster growing geographic markets and digital, premier parent company creative and effectiveness position, new business and strategically targeted acquisitions,” the company’s statement said.

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market data

European Stocks Mixed in Morning Trade as Oil Prices, Financials Advance

6:17 AM, Feb 27, 2017 — European equity markets were mixed on Monday morning as financials gained, oil prices rose and traders sought to digest fresh developments on several major mergers.

West Texas Intermediate crude oil, the main US oil benchmark, was 0.6% higher at $54.32 per barrel while Brent crude, the main international gauge, was up by 0.8% at $56.76 per barrel at the time of writing. The movements come despite government data showing last week that US inventories of crude oil rose for a seventh consecutive week in the prior week period.

In equities, Deutsche Boerse declined 5% and shares in the London Stock Exchange (LSE) fell 3.2% after the operator of the London bourse said it was “highly unlikely” it would be able to meet additional antitrust conditions set by European antitrust regulators. Its European rival, Euronext, fell 3.5%. The LSE last month said it agreed to sell the French arm of the clearing house LCH to Euronext in order to gain regulatory approval for the planned tie-up with the German exchange operator.

Intesa Sanpaolo, Italy’s biggest lender, gained more than 5% after it abandoned plans for a merger with insurer Generali, saying the combination would not create value for its shareholders, according to news reports. Generali fell 4.3%. UK homebuilder Persimmon fell 0.7% even after saying underlying profit before tax increased 23% in 2016 to 782.8 million pounds ($973 million.)

Associated British Foods, which owns the network of Primark fashion stores, fell 0.8% in London even after the company said in a trading update that in the half year ending on March 4 it expects “excellent progress” in adjusted operating profit and adjusted earnings per share for the group.

German sportswear maker Adidas gained 3.5% and Vonovia, Germany’s largest housing association, dropped 1% in Frankfurt. French lenders Credit Agricole and Sociate Generale advanced 1.4% and 1% in Paris, respectively.

The pan-European STOXX 600 index fell 0.2% and the euro-region blue-chip STOXX 50 index was flat. The DAX in Frankfurt rose 0.1% and the FTSE 100 in London increased 0.2%. The CAC 40 in Paris was little moved.

Oil Rigs

European Equity Gauges Head South Amid Mixed Earnings, Falling Oil Prices

5:00 AM, Feb 24, 2017 — European equity gauges were lower on Friday morning as financials and auto-makers edged south against a backdrop of mixed earnings reports and a slide in oil prices.

In economic news, Spain posted its highest annual rate of change in industrial prices in more than five years as surging energy prices pushed its index higher. The nation’s annual industrial price index rose by 4.6 points to 7.5 in January, according to the national statistics agency INE. The index reading was 1.9% higher when compared to the previous months.

In Germany, economic data was more rosy; a 0.5% increase was registered in price-adjusted new orders in the nation’s construction industry in December when compared to the previous month, according to German federal statistics office, Destatis.

Oil prices were edging lower in recent trade after data published on Thursday showed that US stockpiles of crude oil rose for a seventh consecutive week last week. West Texas Intermediate (WTI) crude oil, the main US oil benchmark, was 0.6% lower at $54.13 per barrel while Brent crude, the main international oil gauge, was 0.7% lower at $56.21 per barrel.

US inventories of oil rose by 0.6 million barrels to 518.7 million barrels in the week ended February 17, according to the Energy Information Administration’s (EIA) weekly oil report. This compared to a 9.5 million barrel weekly increase registered the previous week and an 884,000 barrel weekly contraction which had been projected by the American Petroleum Institute (API) on Wednesday.

In equities, Royal Bank of Scotland was among the biggest decliners on London’s FTSE 100 Index, down by 2.2% after posting a loss of 6.96 billion pounds ($8.73 billion) in 2016, compared to a loss of 1.98 billion pounds in the prior year. The bulk of the loss included litigation and conduct costs, worth 5.87 billion pounds, as well as restructuring costs. Software company Micro Focus International was 1.8% lower, Ashtead Group, an equipment rental company, was down by 1.8% and CRH, a manufacturer of construction materials, was 1.7% lower.

On Frankfurt’s DAX, media company ProSiebenSat1Media was 3.0% lower, followed by BASF, a chemical company, down by 2.2% and Commerzbank, 1.2% lower. Kidney dialysis company Fresenius and Fresenius Medical Care were 1.0% and 0.7% lower, respectively. And, on Paris’ CAC-40, Vivendi, which is engaged in media and content businesses, was 4.3% lower, Compagnie de Saint Gobain, a producer of materials and packaging, was down by 1.5% and car-maker Peugeot was also down by the same amount.

The pan-European Stoxx 600 Index was 0.14% lower, London’s FTSE 100 Index was down by 0.09%, Frankfurt’s DAX was 0.27% lower and Paris’ CAC-40 was down by 0.26% at the time of writing.

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BAE Systems

BAE Systems Profit Jumps in 2016, Further Growth Seen on Brighter Outlook for Defense Budgets

7:32 AM, Feb 23, 2017 — British defense company BAE Systems (BA.L) has projected that its underlying earnings will increase by up to 10% in 2017 amid improved outlooks for defense budgets in several markets after posting a gain in its operating profit last year which was buoyed by higher order intakes.

The company, which employs more than 80,000 people in 40 countries, generated sales of 19 billion pounds ($23.70 billion) in 2016, up from 17.90 billion pounds in the prior year, according to preliminary results published on Thursday. Underlying earnings per share were worth 40.3 pence, 7% higher than the adjusted underlying earnings per share of 37.8 pence in 2015 and in line with the company’s guidance. Underlying earnings before interest, tax, depreciation and amortization (EBITDA) rose to 1.91 billion pounds from 1.68 billion pounds in the previous year.

Operating profit as defined by the International Financial Reporting Standards (IFRS) measure increased to 1.74 billion pounds year-on-year, up 10% on a constant currency basis. The company’s order intake rose to 22.44 billion pounds from 14.92 billion pounds in the prior year while the order backlog advanced to 42 billion pounds from 36.8 billion pounds over the same time frame.

The group said that in the US there had been signs of a return to growth in defense budgets, with it saying that the new administration is “expected to further increase defense and security spending”. The group said that it is targeting growth of 5-to-10% in its underlying earnings per share this year and said that it has recommended a final dividend of 12.7 pence per share making a total of 21.3 pence per share for the year, an increase of 2% compared to 2015.

Ian King, chief executive of BAE Systems, said: “2016 was a good year for BAE Systems. Our strategy is well defined; we have a large order backlog, long-term program positions, strong program execution and a well-balanced portfolio. With an improved outlook for defense budgets in a number of our markets, we are well placed to continue to generate attractive returns for shareholders.”

Oil pipes

More US, Canada, Russia Heavy Crude Finds a Home In China as OPEC Cuts Hit

4:05 AM, Feb 21, 2017 — Heavy crude shipments from the U.S., Canada and Russia to China have picked up for April delivery as OPEC cartel members dial back on supplies to meet requirements to trim sales under a coordinated oil pact with non-OPEC nations led by Russia, shipping sources said on Tuesday in Asia.

Another 1 million barrels of Mars heavy crude pumped offshore of the U.S. Gulf Coast is heading to China in April, shippers said, building on supplies that started making their way in January at about 600,000 barrels as small refiners in China favor the heavy grades for lower cost and resulting higher margins on export shipments.

As well, China has deals with Venezuela for heavy supplies that have been short recently as the country struggles to maintain production during an economic crisis and Saudi Arabia has reduced its offerings as part of the oil curb back to trim nearly 1.8 million barrels per day of crude overall from global markets.

Demand has grown for heavy grades in Asia, which has seen higher refinery output as planned maintenance at several key refineries in the region gets completed ahead of increased summer demand expectations. Russia, which is part of the production pact, has seen better prices for its heavy grades on the Saudi and Venezuela reductions, making shipments possible.

military chopper

British Defense Group Cobham Lowers Profit Forecast for 2016, Signals Tough Year Ahead

8:15 AM, Feb 16, 2017 — British aerospace and defense group Cobham (COB.L) has lowered its forecast for group underlying trading profit in the full year 2016 after an internal review revealed negative adjustments arising from bad debt charges, additional amortization on amounts capitalized in prior years and expenditure on IT security compliance.

The group, which employs 11,000 people, said that it expects its group underlying trading profit to be 225 million pounds ($281 million) for the 2016 year, 20 million pounds lower than its last forecast, which was given in January, according to a trading update published on Thursday. January’s projection also marked a revision, from a previous range of 250 million pounds to 275 million pounds that had been predicted by management in October.

The 20 million pound reduction from its January forecast included 6 million pounds of additional amortization on amounts capitalized in prior years, 4 million pounds relating to expenditure on IT security compliance, 2 million pounds being the sum of several year end accruals not booked in the draft management accounts and 8 million pounds of bad debt charges and other sundry items, according to the update.

The group added that there would be further amounts that would be recognized as exceptional items and excluded from underlying trading profit, saying that it would recognize a total non-cash impairment of goodwill and other intangible fixed assets of 574 million pounds. It said that a charge of 33 million pounds had also been taken against other assets in the balance sheet following a revision of the carrying value of these assets. It will also absorb a charge of 179 million taken against certain contracts reflecting increased estimates of costs to complete and, in some cases, lower recovery from customers. This includes a 150 million-pound charge taken on work related to Boeing’s KC-46 tanker program, the update stated.

“2016 was an incredibly turbulent and disappointing year for Cobham,” David Lockwood, Cobham’s chief executive, said in the statement. “Execution failure in many businesses led us to miss expectations badly and provides a poor entry point into 2017.”

The group said it has difficulty forecasting performance for 2017. “Whilst market uncertainties undoubtedly exist, the ability of the group to forecast performance is also not as strong as it should be,” the group said. “The group has many operational issues which require attention in addition to reversing the current negative performance trajectory.” It signaled that delivering a similar performance this year to that of 2016 “may be challenging.”

Shares in the group were 15% lower in London at the time of writing.

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Industrial Production

UK Industrial Production, Construction Output Beats Forecasts as Economy Holds up Following Brexit Vote

7:33 AM, Feb 10, 2017 — Monthly UK industrial production and construction output rose by more than expected in December as Britain’s economy proved to be more robust than projected following the nation’s surprise vote to leave the European Union (EU) last year.

Industrial production rose by 1.1% in December from November, according to data published by the Office for National Statistics (ONS) on Friday. This beat expectations for a 0.2% monthly gain from economists in an investing.com survey but was below the 2% monthly gain reported in November, which was the fastest monthly increase since April 2016.

The increase, which includes oil and gas extraction, was attributed to gains in manufacturing, especially pharmaceuticals which increased by 8.3% from the previous month, and basic metals, where output rose by 4.5%, the ONS said. The statistics office added that output by drugmakers is “highly erratic”.

Manufacturing production, which strips out oil and gas production, increased by 2.1%, beating the average estimate of economists for a 0.5% increase, according to investing.com. It was also up from a 1.4% monthly increase in November.

From a year earlier, industrial output was up by 4.3% while manufacturing was 4% higher, the ONS data showed.

The UK economy has held up better than anticipated by most economists since the nation’s June vote to withdraw from the EU. The Bank of England (BOE) had expected gross domestic product to barely grow in the second half of last year when it cut rates to a record low 0.25% in August. In fact, the UK economy expanded by 0.6% in the final quarter of last year, the same pace as in the previous two quarters, data from the ONS subsequently showed.

The BOE left its monetary policy and benchmark interest rate unchanged earlier in the month while sharply upgrading its forecast for economic growth in 2017, raising it to 2% from a previous projection made in November for 1.4%.

In a separate report, the ONS said on Friday that construction output in the UK rose by 1.8% in December from November, when it gained 0.4% on the month. Economists in an investing.com survey predicted a 1% increase. From a year earlier construction work increased 0.6%, beating economists’ expectations for a 0.5% decline.