Author: Soumya Joy

Business

REUTERS: Futures tracking the S&P 500 and the Dow Jones indexes edged higher on Monday following a selloff on Wall Street last week as investors weighed hopes of more stimulus and improving data against a resurgence in global coronavirus cases.

Wall Street’s major indexes had tumbled more than 2per cent on Friday as several U.S. states imposed business restrictions in response to the surge in COVID-19 cases. Stocks in Asia and Europe were muted overnight as the global death toll from the respiratory illness crossed half a million on Sunday.

The benchmark S&P 500 has rallied since a coronavirus-driven crash in March, up about 16per cent since April and set for its best quarter since 1998, partly on a raft of U.S. fiscal and monetary stimulus.

This week, investors will focus on employment, consumer confidence and manufacturing data for June for signs of whether the U.S. economy will continue to rebound after indications of a pickup in May.

At 6:44 a.m. ET, Dow e-minis were up 54 points, or 0.22per cent, S&P 500 e-minis were up 1.75 points, or 0.06per cent and Nasdaq 100 e-minis were down 30 points, or 0.3per cent.

Among stocks, Boeing Co rose 3.2per cent in premarket trade after the Federal Aviation Administration confirmed on Sunday it had approved key certification test flights for the grounded 737 MAX that could begin as soon Monday.

Facebook Inc looked set to extend declines from Friday as a report said PepsiCo Inc was set to join a growing number of companies pulling ad dollars from the social media platform.

(Reporting by Pawel Goraj in Gdansk; Editing by Saumyadeb Chakrabarty)

Business

SAO PAULO/BRASILIA: Brazil’s central bank effectively suspended a newly-launched system allowing users of Facebook Inc’s WhatsApp messaging service to send money via chats, ordering Visa and Mastercard to halt payments and transfers via the system.

The central bank said in a statement that rolling out the service without previous analysis by the monetary authority could damage the Brazilian payments system in the areas of competition, efficiency and data privacy.

The system, launched last week in a nationwide rollout, allowed users to transfer funds to individuals or local businesses within a chat, attaching payments as they would a photo or video.

The central bank’s move is the latest setback in payments for owner Facebook, which pared back its plans for a global payments system called Libra after meeting stiff resistance from regulators. WhatsApp has over 120 million users in Brazil, its second-largest market behind India, where it has also struggled to roll out a payments system.

If Visa and Mastercard do not comply with the order, they would be subject to fines and administrative sanctions, the statement said.

A WhatsApp spokesperson said the messaging service would continue working with “local partners” and the central bank to provide digital payments for its users in Brazil using a business model open to more participant, which would address regulators concerns on market concentration.

Earlier on Tuesday, before Visa and Mastercard operations with WhatsApp were suspended, the central bank issued regulation saying it could require market participants to receive previous approval to operate in payments.

WhatsApp launched its Brazil services without requesting central bank authorization, as it was operating as an intermediary between consumers and financial institutions.

Some observers called the regulator’s decision an overreaction, while others said WhatsApp presented a potential risk in terms of market concentration and privacy.

“It is a bit odd that the central bank decided to suspend WhatsApp as the regulator is already able to oversee all market participants which joined WhatsApp,” said Carlos Daltozo, co-head of equities at Eleven Financial. “Besides that, WhatsApp is open to form new partnerships.”

WhatsApp started its operations in Brazil in partnership with fintech Nubank, state-controlled lender Banco do Brasil SA , Visa, Mastercard and lender Sicredi.

In a separate setback for the venture on Tuesday, Brazil’s antitrust watchdog, Cade, blocked WhatsApp’s partnership with credit and debit card operator Cielo to process the payments.

As Cielo is already Brazil’s largest payment processor, a partnership with the biggest messaging service could pose a market concentration risk, Cade said. Shares in Cielo soared 30per cent on the day WhatsApp announced payments service in Brazil.

The central bank’s move comes as the regulator prepared to launch its own instant payments system in November, called Pix, joining more than 980 participants.

“It is complicated when the regulator also becomes a player and seems to be more worried about its own payment system,” said a source at a financial institution that has partnered with WhatsApp.

The WhatsApp spokesperson said it was committed to working with the central bank to integrate systems once Pix became available.

Private banks have also been wary about opening valuable client data to tech giants such as Facebook. Some executives have also pointed to security issues as well as a lack of accountability if a transaction goes wrong.

Mastercard said it would comply with the central bank ruling and continue to develop an innovative payment environment.

Facebook and Visa did not immediately reply to requests for comment. Cielo declined to comment.

(Reporting by Carolina Mandl, in Sao Paulo, and Isabel Versiani, in Brasilia; Additional reporting by Tatiana Bautzer, Gabriela Mello, Aluisio Alves, Katie Paul and Gabriel Pontes; Editing by Lisa Shumaker and Sam Holmes)

Business

TOKYO: Oil futures edged lower on Wednesday, extending losses from the previous day, after U.S. crude stockpiles grew more than expected, adding to worries about oversupply, although a fall in gasoline stocks kept the decline in check.

Brent crude was down 2 cents at US$42.61 a barrel by 0045 GMT, while U.S. West Texas Intermediate (WTI) crude futures fell 4 cents, or 0.1per cent, to US$40.33 a barrel.

U.S. crude inventories rose by a much bigger than expected 1.7 million barrels last week, according to industry group the American Petroleum Institute (API), well ahead of analysts’ expectations for a 300,000-barrel build.

However, U.S. gasoline and distillate inventories fell, the data showed, feeding optimism that fuel consumption is picking up as some economies ease lockdowns imposed to contain the coronavirus pandemic.

U.S. government data will be released on Wednesday.

Global oil consumption has started to recover as economies emerge from lockdown, while the Organization of the Petroleum Exporting Countries (OPEC) and allied producers have slashed output and U.S. shale producers have shut in wells.

On Tuesday, both Brent and WTI contracts traded at their highest levels since prices collapsed in early March.

Still, the market remains concerned about a rising number of coronavirus cases in the United States and elsewhere, said Kazuhiko Saito, chief analyst at Fujitomi Co.

New cases of COVID-19 rose 25per cent in the United States in the week ended June 21 compared to the previous seven days, a Reuters analysis found.

China, the world’s top crude importer, is also expected to slow crude imports in the third quarter, after record purchases in recent months, as higher oil prices hurt demand and refiners worry about a second virus outbreak.

(Reporting by Yuka Obayashi; editing by Richard Pullin)

Business

NEW YORK: Asian stocks were expected to come under pressure on Wednesday, as a spike in new coronavirus infections weighed on sentiment, although U.S. assurances that the China trade deal was intact and upbeat economic data provided some reasons for optimism.

Kyle Rodda, market analyst at IG Markets, said late selling seen in Wall Street suggested a “soggy start” for Asian markets.

“We expect something of a positive start for Asian trade, but we will have overhanging concern about the virus itself and a second wave unfolding,” said Kyle Rodda, market analyst at IG Markets. “The market is clinging on to a recovery as much as it can.”

Australian S&P/ASX 200 futures rose 0.15per cent in early trading.

Japan’s Nikkei 225 futures fell 0.02per cent. Hong Kong’s Hang Seng index futures lost 0.01per cent.

On Wall Street, the Dow Jones Industrial Average ended 0.5per cent higher, the S&P 500 gained 0.43per cent and the Nasdaq Composite added 0.74per cent.

However, the three major indexes pared gains from highs of more than 1per cent earlier in the session on Tuesday.

Coronavirus cases in the U.S. surged 25per cent in the week ended June 21 compared from the week before, according to a Reuters analysis.

U.S. states including Texas and Arizona set records in their outbreaks. The European Union is prepared to bar U.S. travellers because of the surge of cases in the country, putting it in the same category as Brazil and Russia, the New York Times reported on Tuesday.

“For now markets are having trouble with the implications given the high bar to re-imposing restrictions,” according to a research note from the National Australia Bank.

Remarks from U.S. Treasury Secretary Steven Mnuchin helped boost the mood on Wall Street. He said the next U.S. stimulus bill will focus on getting people back to work quickly and that he would consider a further delay of the tax filing deadline.

MSCI’s gauge of stocks across the globe gained 0.90per cent.

The euro jumped to one week highs after positive economic data on Tuesday, and other high-risk currencies strengthened.

The dollar index fell 0.228per cent, with the euro up 0.01per cent to US$1.1307.

Oil prices pulled back after hitting their highest since early March, on expectations that U.S inventories will hit a record high for a third week in a row.

U.S. crude recently fell 0.89per cent to US$40.01 per barrel and Brent was flat on the day.

(Reporting by Jessica DiNapoli in New York; Editing by Sam Holmes)

Business

DETROIT: Electric vehicle maker Tesla Inc wants to start building a large vehicle assembly plant in the southwestern United States as early as the third quarter of this year, the company told Texas officials in documents made public this week.

But the company is still pitting Texas and Oklahoma against each other in an effort to secure tax breaks, the documents show. The plant would build Tesla’s electric pickup truck and Model Y SUV, according to reports.

Tesla told officials in Travis County, Texas, the automaker wants to invest about US$1 billion to build a 4 million to 5 million square foot vehicle assembly plant employing 5,000 people on the grounds of what is now a cement operation near Austin. But it needs tax breaks to make the site competitive with an alternative location in Oklahoma, according to documents filed with Texas officials.

The Austin-American Statesman reported details of the company’s filings.

Tesla officials could not immediately be reached for comment, but Tesla Chief Executive Elon Musk previously hinted about a Texas plant, and Texas Governor Greg Abbott has spoken with Musk about the possibility.

Tesla’s sole U.S. vehicle assembly plant in Fremont, California, covers 5.3 million square feet – a large plant, but not large enough for the growing company. Tesla has had to build cars under a tent adjacent to the plant.

Musk clashed with California officials after Alameda county officials ordered the Fremont factory to halt production and comply with coronavirus stay-at-home orders that took effect in March. He threatened to move future operations to Texas or Nevada. The California plant has since reopened.

(Reporting By Joe White, additional reporting by Andrea Shalal in Washington and Ben Klayman in Detroit; Editing by Nick Zieminski and Tom Brown)

Business

FRANKFURT: Lufthansa’s biggest shareholder, German billionaire Heinz Hermann Thiele, has reached out to Berlin politicians for talks, Handelsblatt said, the latest step in a standoff over the airline’s 9 billion euro (US$10.1 billion) bailout.

Lufthansa shareholders need to approve the rescue package but Thiele, who has ammassed a 15per cent Lufthansa stake, has criticised bailout terms and is raising more cash by selling down 760 million euros worth of shares in rail and commercial vehicle supplier Knorr-Bremse .

Thiele and Knorr-Bremse declined to comment.

The entrepreneur is against Germany taking a stake of up to 20per cent in the airline, terms which Lufthansa and the German government have agreed to as part of the planned rescue of the company.

Lufthansa fears that Thiele’s lack of approval for a bailout deal could bring down the rescue package at next week’s Annual General Meeting on June 25.

(Reporting by Holger Hansen in Berlin and Joern Poltz in Munich; Writing by Edward Taylor, editing by Thomas Escritt)

Business

DETROIT: Ford Motor Co next week will show the next generation of its brawny F-150 pickup truck that offers a new sleeper-seat feature and over-the-air software updates in a machine Ford is counting on to help pay off coronavirus-related debts.

The new F-150, part of the best-selling vehicle line in the United States, accounts for US$50 billion in annual revenue, and a significant share of Ford’s annual profit. While Tesla Inc and General Motors Co have moved faster on over-the-air software upgrades and high-speed in-vehicle data networks, the new F-150 will bring such technology squarely into the mainstream.

The new truck, expected to launch later this year, is a critical plank in Chief Operating Officer Jim Farley’s plan to slash US$5 billion in warranty costs, speed Ford’s push into vehicle connectivity and add to the No. 2 U.S. automaker’s already-strong position in the North American commercial vehicle market.

Ford has borrowed more than US$20 billion to ride out the economic shock from the coronavirus pandemic. Profit from the new F-150 will be key to paying that money back.

Ford is not taking big risks with the exterior look of the new truck given its sales dominance, instead focusing on improving the interior, according to those who have seen it. Ford is scheduled to publicly show for the first time the new F-150 online on June 25.

“It’s really about technology and productivity,” Farley said at a Deutsche Bank conference on June 10.

One prominent feature will be the lay-flat passenger seat like those seen in first-class cabins on some planes, said a person familiar with the plans who asked not to be identified. “You can basically live in the truck,” the person said.

Ford’s nicer interior, including a larger display screen, follows a similar move by Fiat Chrysler Automobiles NV with its new Ram truck, which received enthusiastic reviews for its stylish interior and optional 12-inch display screen.

“Ram taught everybody a little bit of a lesson,” said Rhett Ricart, owner of Ricart Ford in Columbus, Ohio. “The old 5-inch screen for your navigation and radio controls is gone. They’re all going to be 10-, 12-, 15-inch screens. That was started by Tesla.”

The F-150’s new electrical architecture will allow Ford to provide over-the-air updates to key modules controlling the vehicle, replacing trips to the dealership.

The new truck’s connectivity also will help Ford boost sales to commercial customers, and reduce warranty costs, Farley told investors.

The F-Series truck has been around since 1948, while the F-150 debuted in 1975. Sales of the current version have remained strong despite its age, and the new model could help Ford hold or even build its position in the segment, said Sandy Munro, chief executive of Michigan-based consulting firm Munro & Associates.

“If they add the same stuff as what Ram did and if they can add more stuff like Tesla’s doing, there’ll be a gigantic gap between Ford, and Ram and Chevy,” he said.

The key for Ford will be to avoid the kinds of costly production problems that hobbled the launch of the new Explorer SUV last year. Ford acknowledged it erred in trying to launch the Explorer and Lincoln Aviator simultaneously while breaking in a new assembly line at its 95-year-old plant in Chicago.

Farley has been visiting the plants in Dearborn, Michigan, and Kansas City, Missouri, that will build the new F-150. Despite delays related to the virus, he said the launch is in “really good shape.”

(Reporting by Ben Klayman in Detroit; Editing by Matthew Lewis)

Business

BRUSSELS: EU industry commissioner Thierry Breton said on Monday it was for Facebook to adapt to Europe’s standards, not the other way round, as he criticized the U.S. social media giant’s proposed internet rules as insufficient.

The blunt comments came after a short meeting with Facebook CEO Mark Zuckerberg and two days before Breton is due to present the first of a raft of rules to rein in U.S. tech giants and state-aided Chinese companies.

“It’s not for us to adapt to this company, it’s for this company to adapt to us,” Breton, a former CEO at French telecoms provider Orange and French technology company Atos, told reporters after the meeting.

Zuckerberg had earlier told reporters he had a good, wide-ranging conversation with Breton.

Breton also said he would decide by the end of the year whether to adopt tough rules as part of the digital services act to regulate online platforms and set out their responsibilities.

He dismissed a discussion paper issued by Facebook on Monday that rejects what it calls intrusive regulations and suggests looser rules whereby companies would periodicially report content and publish enforcement data.

“It’s not enough,” Breton said, adding that Facebook had omitted any mention of its market dominance and also failed to spell out its responsibilities.

FORCE FOR GOOD OR BAD?

EU justice chief Vera Jourova, who also met Zuckerberg, was equally adamant on Facebook’s role in the fight against online hate speech, disinformation and election manipulation.

“Facebook cannot push away all the responsibility. Facebook and Mr Zuckerberg have to answer themselves a question ‘who do they want to be’ as a company and what values they want to promote,” she said in a statement.

“It will not be up to governments or regulators to ensure that Facebook wants to be a force of good or bad.”

Breton will announce proposals on Wednesday aimed at exploiting the EU’s trove of industrial data and challenging the dominance of Facebook, Google and Amazon. It will announce rules to govern the use of artificial intelligence too, which will also affect companies such as Facebook.

Referring to the possibility that the EU may hold internet companies responsible for hate speech and other illegal speech published on their platforms, Facebook in its discussion document said this ignored the nature of the internet.

It urged regulators to understand the capabilities and limitations of technology in assessing content and allow internet companies the flexibility to innovate.

Zuckerberg’s visit came on the heels of visits by Alphabet Chief Executive Sundar Pichai and Microsoft President Brad Smith to Brussels last month.

(Reporting by Foo Yun Chee; Editing by Alison Williams and Gareth Jones)