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FILE PHOTO: Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., April 8, 2019. REUTERS/Brendan McDermid
April 18, 2019
By Amy Caren Daniel
(Reuters) – U.S. stock index futures were muted on Thursday, as weak manufacturing data out of Europe underscored concerns of a global slowdown, while investors stayed on the sidelines ahead of the release of a long-awaited Mueller report.
French and German surveys of purchasing managers for April showed that manufacturing activity in euro zone’s two biggest economies continued to contract.
Special Counsel Robert Mueller’s report on Russia’s role in the 2016 U.S. election will be released on Thursday, providing the first public look at the findings of an inquiry that has cast a shadow over Donald Trump’s presidency.
Attorney General William Barr will hold a news conference at 9:30 a.m. to discuss the report, ahead of the release.
At 6:59 a.m. ET, Dow e-minis were down 27 points, or 0.1%. S&P 500 e-minis were down 1.75 points, or 0.06%, and Nasdaq 100 e-minis were down 4.25 points, or 0.06%.
On trade, Washington and Beijing set a tentative timeline for a fresh round of face-to-face meetings ahead of a possible signing ceremony in late May or early June, according to a Wall Street Journal report.
Honeywell International Inc shares rose 1.9% after reporting a better-than-expected quarterly profit and raising its full-year financial forecast.
Of the 54 S&P 500 companies that have posted earnings so far, 79.6% have beaten consensus, according to Refinitiv data.
Analysts now expect first-quarter profits for S&P 500 companies to have dropped 1.8% year-on-year, an improvement from recent estimates, but would still be the first earnings decline since 2016.
Honeywell International Inc shares rose 1.9% after reporting a better-than-expected quarterly profit and raising its full-year financial forecast.
Kinder Morgan Inc rose 1.3 percent after Chief Executive Steven Kean said the company has begun internal discussions about building a third natural gas pipeline in the Permian Basin.
Investors are also awaiting the hotly-anticipated debut of online scrapbook company Pinterest Inc, the first high-profile initial public offering of a “tech unicorn” after Lyft Inc’s struggles.
Commerce Department report, due at 8:30 a.m. ET, is likely to show U.S. retail sales rebounded 0.9 percent in March after a 0.2 percent decline in February.
(Reporting by Amy Caren Daniel in Bengaluru; Editing by Sriraj Kalluvila)
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Taiwan’s President Tsai Ing-wen speaks during an event that marks the 40th anniversary of the Taiwan Relations Act, in Taipei, Taiwan April 16, 2019. REUTERS/Tyrone Siu
April 18, 2019
TAIPEI (Reuters) – China was stepping up a campaign to exert influence over Taiwan, including its upcoming presidential election, a senior U.S. official said on Thursday, at a time of heightened tension between the self-ruled island and Beijing.
China has increased military and diplomatic pressure on Taiwan, whose president, Tsai Ing-wen, Beijing suspects of pushing for the island’s formal independence, a red line for China which has never renounced the use of force to bring Taiwan under its control.
The island is gearing up for a presidential election in January that could shake up the political landscape, with contenders including Terry Gou, chairman of Apple supplier Foxconn.
“They’ve obviously stepped up campaigns of disinformation and direct influence against Taiwan,” James Moriarty, chairman of the American Institute in Taiwan, told Reuters.
Moriarty, the most senior U.S. official in charge of Taiwan relations, said Beijing’s attempts to influence Taiwan were a concern for the United States.
“I do worry greatly about attempts to influence Taiwan’s democratic processes and I believe many Taiwanese share that concern,” he said.
Tsai, whose pro-independence Democratic Progressive Party suffered a major poll defeat in November, warned last year that Beijing was exerting pressure on the island to influence its politics.
The United States has no formal ties with Taiwan but is bound by law to help provide the island with the means to defend itself and is its main source of arms.
Beijing regards Taiwan as its sacred territory and regularly calls it the most sensitive and important issue in ties with the United States.
Chinese bombers and warships again conducted drills around Taiwan on Monday. The United States denounced the exercises as “coercion” and a threat to stability in the region.
(Reporting by Yimou Lee; Editing by Robert Birsel)
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WASHINGTON — In the rebalancing of Sino-American relations that’s underway, the usual roles are reversed: China’s normally deft President Xi Jinping appears to have badly overreached in seeking advantage. And President Trump, who often seems tone-deaf on foreign policy, is riding a bipartisan consensus that it’s time to push back against Beijing.
The two nations will probably make a trade deal soon, patching together a working relationship that has been frayed by a year of tariffs and economic brinksmanship. Experts predict an agreement that will boost U.S. exports to China, improve market access for American firms and reduce the power of Chinese state-owned enterprises — and offer some modest new legal protections for American companies whose commercial secrets have been plundered by Beijing for a half-century.
But as Xi jockeyed for position against America, many U.S. experts argue that he misplayed his hand. After decades of what was known as a “hide and bide” strategy of cautious cooperation, the Chinese leader moved to directly challenge American primacy in technology. This eventually triggered a sharp, bipartisan American response, which Trump has harvested.
“In an incredibly divided Washington, one of the only areas of agreement is that China policy needs to be less accommodating and more resolute toward Beijing,” says Kurt Campbell, who oversaw Asia policy in the Obama administration. He credits Trump for recognizing Xi’s weakness: “China is not yet ready to take on the U.S., and Trump recognizes this.”
The Chinese-American confrontation is partly a spy story, but very different than the cloak-and-dagger escapades of the Cold War: China operates its espionage net partly through universities, research institutes and benign-sounding recruitment plans. Until recently, American companies often didn’t realize that their pockets had been picked until it was too late.
China’s over-aggressive strategy dates back to the 2008 financial crisis, which Beijing saw as “a strategic window of opportunity for China to become a global superpower,” according to Greg Levesque, managing director of Pointe Bello consultants. Using internal Chinese documents, he recently explained to a congressional commission how China targeted “key core technologies” in the West.
An innovative early feature was the “Thousand Talents Plan,” established by Beijing in 2008. The program sought to recruit “global experts,” in particular those with Chinese ancestry, to join what the plan’s website called “National Key Scientific and Technological Projects.” By 2014, says the website, more than 4,180 overseas experts had been recruited.
The strategy was formalized in a 2017 speech by Xi. “Made in China 2025” is a roadmap for dominating key technologies such as artificial intelligence, quantum computing and biopharmaceuticals. Xi mobilized China’s nominally private companies through an approach known as “Military-Civil Fusion.”
The system for recruiting overseas talent was explained by an article posted April 16, 2018, by a Communist Party organization at Wuhan University People’s Hospital, describing how cadres there created an “Overseas Talent Recruitment Station” at a gathering in Dallas of Chinese-American medical researchers.
A Wuhan party official told the Dallas group that he “hoped that more overseas talent would return to the motherland and develop” high-tech projects. (The article was shared with me by a U.S. security-consulting firm.)
Bill Priestap, the FBI’s former head of counterintelligence, described the “Thousand Talents Program” in congressional testimony last December as an example of “non-traditional espionage.” He said the goal was “luring both Chinese overseas talent and foreign experts alike to bring their knowledge and experience to China, even if that means stealing proprietary information.”
The problem for the Chinese is that this so-called “brain gain” effort was so aggressive that it backfired. The New York Times reported this week that the FBI has recommended denying visas to some Chinese academics suspected of having ties to Chinese intelligence. The Energy Department recently banned anyone involved in China’s talent-recruiting programs from working in DOE laboratories.
There’s blowback in the trade negotiations, too. Lorand Laskai of the Council on Foreign Relations noted last year that the Trump administration mentioned “Made in China 2025” more than 100 times in its Section 301 trade complaint against Beijing. A newly wary China has stopped referring to the Thousand Talents Plan or mentioning award recipients, according to recent reports by Bloomberg News and Nature, respectively.
The Trump administration still doesn’t have a consistent, comprehensive strategy for dealing with China. Among other things, it lacks a coherent regional economic framework, like the Trans-Pacific Partnership agreement that Trump scuttled. But now is the right time to confront China’s bad behavior, before Beijing gets any stronger, and Trump has the political wind at his back.
(c) 2019, Washington Post Writers Group
FILE PHOTO: A Tencent sign is seen during the fourth World Internet Conference in Wuzhen, Zhejiang province, China, Dec. 4, 2017. REUTERS/Aly Song
April 18, 2019
SHANGHAI (Reuters) – China’s Guangdong provincial authority has given the green light to Tencent Holdings to distribute the Nintendo Switch “New Super Mario Bros. U Deluxe” game, according to a statement published on the local government’s website on Thursday.
Nintendo’s Switch console has to date not been officially released in the country.
(Reporting by Brenda Goh, Pei Li and Beijing Monitoring Desk; Editing by Himani Sarkar)
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FILE PHOTO: A man checks a Byton Concept T car during a media preview at the Auto China 2018 motor show in Beijing, China April 25, 2018. REUTERS/Jason Lee
April 18, 2019
By Yilei Sun and Brenda Goh
SHANGHAI (Reuters) – Chinese electric vehicle (EV) maker Byton, which is facing a management shake-up and questions about funding an expansion, said it has received over 50,000 orders globally for its new SUV model and plans to start production at the end of this year.
“We plan to launch our first production car this July,” Daniel Kirchert, Byton’s co-founder and CEO told Reuters in an interview on Thursday, adding that the company aims to manufacture 10,000 units by the first half of 2020.
Byton’s backers include Chinese retailer Suning, automaker FAW and Contemporary Amperex Technology Co.
Kirchert’s comments, coinciding with the Shanghai Autoshow, come just days after chairman and co-founder Carsten Breitfeld quit Byton.
German daily Handelsblatt said Breitfeld is joining Byton’s domestic rival Iconiq. Another German publication, Manager Magazin, said earlier that Breitfeld’s looming departure was due to trouble funding its planned expansion in the Chinese market, causing tensions inside the company.
Kirchert confirmed the former chairman’s departure and said: “Byton has already got very strong resources, and there are 1,800 employees working on different areas including internet connectivity, engineering research and development.
“We are in the middle of a new round of fundraising, which will be of similar amount to B round. We aim to finish C round around the middle of this year.” Byton had raised $500 million in the series B round last year.
Byton, which runs offices in China, the United States and Germany, is one of several largely Chinese-funded EV startups betting on the benefits of local production to compete with Tesla Inc and other auto giants.
Its local rivals include Nasdaq-listed NIO Inc and Xpeng Motors, backed by Alibaba Group.
Byton aims to hit the 100,000 unit production level around 2021-2022, he said. The 10,000 and 100,000 unit marks are widely regarded as key production milestones for electric vehicle makers.
“Only by large-scale production can we reduce costs and provide affordable prices” he said.
Byton is building its first plant in Nanjing in eastern China with a planned annual capacity of 150,000 units in its initial phase.
China’s auto sales contracted for the first time last year since the 1990s amid a broader economic slowdown but sales of new energy vehicles (NEVs), which include electric vehicles, have remained a bright spot. In March, NEV sales rose 85.4 percent.
(Reporting by Yilei Sun and Brenda Goh; Editing by Muralikumar Anantharaman)
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FILE PHOTO: China’s Ministry of Commerce spokesperson Gao Feng attends a news conference in Beijing, China April 6, 2018. REUTERS/Thomas Peter
April 18, 2019
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FILE PHOTO: A man looks at an electronic board showing the Nikkei stock index outside a brokerage in Tokyo, Japan, January 7, 2019. REUTERS/Kim Kyung-Hoon/File Photo
April 18, 2019
By Daniel Leussink
TOKYO (Reuters) – Asian shares were subdued on Thursday after a negative performance on Wall Street, with caution ahead of business surveys in Europe and Japan, and the Good Friday and Easter holidays keeping investors on the sidelines.
MSCI’s broadest index of Asia-Pacific shares outside Japan inched up 0.08 percent, trading just below its highest since late July 2018 brushed on Wednesday.
Australian shares advanced a quarter of a percent while Japan’s Nikkei was a shade lower.
“We’re in this kind of hiatus in the global economy,” said Chris Weston, head of research at foreign exchange brokerage Pepperstone in Melbourne.
“People are starting to believe that we’re going to see better times in the second quarter and probably into the third quarter as well, and that perhaps the first quarter has been that trough.”
Wall Street shares ended in the red on Wednesday, with the S&P 500 falling 0.2 percent as a drop in healthcare equities outweighed upbeat economic data from the United States and China.
The U.S. trade deficit fell to an eight-month low in February as imports from China plunged, data on Wednesday showed.
Separate figures from China earlier in the day showed the world’s second-largest economy grew at a steady 6.4 percent pace in the first quarter, defying forecasts for a slowdown. Attention is now turning to how much more stimulus Beijing will apply without triggering more financial risks.
Investors’ immediate focus turned to the release of Purchasing Managers Indexes (PMIs) for the manufacturing and service sectors in Europe later on Thursday to provide more clues on the strength of the euro zone economy.
“It’s going to be interesting to see if we see some stabilization there in line with what we’ve been seeing in the stabilization in the Chinese data flow,” said Pepperstone’s Weston.
A flash manufacturing reading will also be released for Japan.
YEN NEAR 2019 LOW
Market participants are also eyeing signs of progress in U.S.-China trade negotiations.
Washington and Beijing set a tentative timeline for a fresh round of face-to-face meetings ahead of a possible signing ceremony in late May or early June, according to a Wall Street Journal report.
Attorney General William Barr is set to hold a news conference at 1330 GMT to discuss the release of Special Counsel Robert Mueller’s report on Russian interference in the 2016 U.S. presidential race.
“The lack of love for the yen, I suppose, is just telling us that people aren’t seeing this as a general risk event,” said Pepperstone’s Weston.
“It’s probably worth keeping a beady eye in case something really does come out that shocks market into life.”
In the currency market, the safe-haven yen was slightly up at 112.00 yen per dollar, sitting just above a near four-month low of 112.17 brushed overnight.
The euro ticked up to $1.1297, while the Australian dollar was 0.1 percent lower at $0.7173 ahead of job data (0130 GMT).
The dollar index held steady at 97.019 after ending the previous session basically unchanged.
In commodity markets, oil prices were slightly lower as U.S. government data overnight showed inventories drew down less than an industry report had suggested on Tuesday.
U.S. crude was last down 8 cents at $63.68 a barrel, while global benchmark Brent crude futures dipped 7 cents to $71.55.
Spot gold held steady at $1,274.60 per ounce, hovering near its lowest for the year.
(Editing by Kim Coghill)
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FILE PHOTO: A container ship is shown at port in Long Beach, California, U.S. July 16, 2018. REUTERS/Mike Blake
April 17, 2019
WASHINGTON, (Reuters) – The U.S. trade deficit fell to an eight-month low in February as exports to China surged, helping to eclipse a rebound in overall imports, which could boost economic growth estimates for the first quarter.
The Commerce Department said on Wednesday the trade deficit dropped 3.4 percent to $49.4 billion, the lowest level since June 2018. January’s trade gap was unrevised at $51.1 billion.
Economists polled by Reuters had forecast the trade shortfall would widen to $53.5 billion in February. The goods trade deficit declined 1.7 percent to $72.0 billion, also the lowest level since last June.
The trade data have been volatile in recent months amid big swings between exports and imports because of the United States’ conflicts with trading partners, including China.
Washington last year imposed tariffs on $250 billion worth of goods imported from China, with Beijing retaliating with duties on $110 billion worth of American products. U.S. President Donald Trump has delayed tariffs on $200 billion worth of Chinese imports and talks to end the trade impasse continue.
The politically sensitive goods trade deficit with China – a focus of Trump’s “America First” agenda – decreased 28.2 percent to $24.8 billion in February as imports from the world’s No. 2 economy tumbled 20.2 percent. Exports to China jumped 18.2 percent in February.
When adjusted for inflation, the overall goods trade deficit fell $1.8 billion to $81.8 billion in February. The average goods trade deficit for January and February is below the fourth-quarter average. This suggests that trade could provide a boost to gross domestic product in the first quarter after being neutral in the October-December period.
Growth estimates for the January-March quarter are in a 1.5 percent to 2.3 percent annualized range, largely reflecting an accumulation of inventories amid slowing domestic demand. The economy grew at a 2.2 percent rate in the fourth quarter, slowing from the July-September period’s brisk 3.4 percent pace.
The trade deficit in February was pushed down by a 1.1 percent jump in exports to $209.7 billion. Exports of services were the highest on record.
Goods exports increased 1.5 percent to $139.5 billion in February. The surge in goods exports is a hopeful sign for global economic growth, which has showed signs of slowing in recent months.
Exports of motor vehicles and parts increased by $0.6 billion in February. Shipments of civilian aircraft soared by $2.2 billion in February. But commercial aircraft exports are likely to decline in the months ahead following Boeing’s decision to suspend deliveries of its troubled 737 MAX aircraft.
The MAX planes have been grounded indefinitely following two deadly crashes.
In February, imports rose 0.2 percent to $259.1 billion. Consumer goods imports increased by $1.6 billion in February, led by a $2.1 billion rise in imports of cellphones and other household goods. Imports of industrial supplies and materials fell by $1.2 billion.
Crude oil imports fell to 173.7 million barrels, the lowest since March 1992, from 223.1 million barrels in January. An increase in domestic production has seen the United States become less dependent on foreign oil. Imported oil prices averaged $46.89 per barrel in February, up from $42.59 in January.
(Reporting by Lucia Mutikani Editing by Paul Simao)
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FILE PHOTO: New cars are seen at a parking lot in Shenyang, Liaoning province, China, January 16, 2017. REUTERS/Stringer
April 17, 2019
SHANGHAI (Reuters) – China’s car market will return to growth in the second half of this year due to government support although the days of high single or double-digit growth are over and consolidation is likely, senior automotive executives said on Tuesday.
The predictions from executives including the head of Mitsubishi Motors on the first day of the Shanghai Autoshow point to a vehicle market that is heading for more balanced growth, especially if the trade war with the U.S. is resolved.
Automotive sales in China contracted for the first time last year since the 1990s as a slowing economy and the trade friction between Beijing and Washington affected consumer sentiment.
Recent moves by the Chinese government to cut taxes, carmakers’ plans for new model launches as well as the hopes that the U.S.-China trade spat will soon be resolved could start to turn things around, the executives said.
“We predict there will be negative growth in the first half this year, even double digit,” said Guangzhou Automobile Group Co Ltd’s (GAC) general manager Feng Xingya.
“But due to government subsidies, carmakers’ discounts and better macroeconomic conditions, sales will turn to positive in the second half,” he said.
The decline in Chinese automotive sales has already started to slow. They fell by 5.2 percent in March, the smallest decline since August 2018.
“It’s only natural for the China market to transition to slower growth,” Mitsubishi Motors’ Chief Executive Osamu Masuko told Reuters in an interview, saying that the market was showing some “level of maturity.”
“Going forward the market still has more growth left in it, but it will likely grow moderately. Growth of 5-6 percent a year on a consistent basis might not be that easy to achieve.”
UNEVEN GROWTH
The opening day of the autoshow was marked by launches of new sports utility vehicles from carmakers such as General Motors Co and Daimler, aimed at rejuvenating customer interest with fresh designs in the fast-growing market segment.
Some firms were more optimistic with luxury carmaker Rolls-Royce Motor Cars saying that it would likely achieve double digit sales-growth in China again this year, although below 2018 levels.
But others predicted that more pressure is to come as Beijing institutes tough rules to transform the industry which could kick off a round of consolidation or prompt some to leave the Chinese market.
“That’s more likely to happen to small, non state-owned players who really don’t have a whole lot to offer,” said GM’s China President Matt Tsien, adding that it could extend to some foreign players.
The government has this year tightened the screw on makers’ ability to add manufacturing capacity and is instituting electric car production quotas for automakers to combat pollution.
“But I don’t believe the number is going to be significant, Tsien said. “Because at the end of the day this is still one of the most attractive markets in the world. And everybody wants to be here.”
(Reporting by Norihiko Shirouzu, Yilei Sun, Joseph White, Aditi Shah and Edward Taylor; Writing by Brenda Goh; Editing by Aaron Sheldrick)
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FILE PHOTO: Newly manufactured cars are seen at the automobile terminal in the port of Dalian, Liaoning province, China July 9, 2018. REUTERS/Stringer/File Photo
April 17, 2019
BEIJING (Reuters) – China is considering plans to relax controls over the issuance of new car licenses in major cities to boost flagging auto sales, financial magazine Caixin reported on Wednesday, citing a draft document by the country’s state planner.
Caixin said China’s National Development and Reform Commission (NDRC) had issued a document containing the proposals on April 11, without saying how the magazine had obtained it. Copies of the document were widely circulated on Chinese social media on Wednesday.
According to the document, the NDRC is considering plans to increase the number of newly issued automobile licenses in big cities including Beijing, Shanghai and Guangzhou by 50 percent this year, and double that next year, from current 2018 levels, Caixin said.
It also said local governments should not implement traffic restrictions and curbs on buying electric vehicles, and should remove relevant measures if already taken.
Efforts by Reuters to reach the NDRC for comment were unsuccessful outside business hours. Caixin said people close to NDRC’s policymaking department did not deny the authenticity of the document.
Beijing has been trying to boost consumption of goods ranging from eco-friendly appliances to big-ticket items such as cars to fire up growth, as the world’s second-largest economy is expected to slow further in 2019.
Auto sales in China, the world’s largest car market, contracted for the first time last year since the 1990s but executives told Reuters this week that they expect the market to return to growth this year thanks to government support.
Official data showed earlier on Wednesday China’s economy grew at a steady 6.4 percent pace in the first quarter, defying expectations for a further slowdown, as industrial production jumped sharply and consumer demand showed signs of improvement.
(Reporting by Lusha Zhang and Brenda Goh; Editing by Dale Hudson)
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