Closing Stock Market SummaryThe S&P 500 gained 0.5% on Tuesday, although it ran into some resistance at its 200-day moving average (2741.76) during the session. The Dow Jones Industrial Average gained 0.7%, the Nasdaq Composite gained 0.7%, and the Russell 2000 gained 0.2%.
The S&P 500 information technology (+0.9%) and consumer discretionary (+1.0%) sectors were consistent leaders throughout the session, which contributed to an early risk-on trading mentality that helped lift the benchmark index near its 200-day moving average.
The key technical level provided the broader market with some resistance, as the S&P 500 coughed up its gains and returned to its flat line around 1:00 p.m. ET.
Investors were undeterred and bought the dip, which was indicative of a trend that has helped the stock market bounce the way it has from its Dec. 24 low.
Strikingly, the rebound effort coincided with Alphabet (GOOG 1145.99, +13.19, +1.2%) swinging into positive territory for the first time.
Alphabet was down as much as 1.6% intraday following its earnings report. The company delivered some solid growth in the fourth quarter, but a contraction in its operating margin and a 29% year-over-year decline in cost per click invited some profit taking interest.
Investors regrouped, though, with renewed buying interest driving the stock, which helped the communication services sector (+0.9%) close near session highs.
The S&P 500 closed near its session high, finishing just below its 200-day moving average ahead of tonight's State of the Union speech from President Trump.
The heavily-weighted financials (-0.1%) and health care (-0.1%) sectors did not provide much support for the broader market. The former was pressured by weakness in the bank stocks, which lagged as the yield curve flattened a bit, while the latter was weighed down by the specter of the president pushing the need to reduce drug prices and health care costs in tonight's speech.
Some story stocks from Tuesday included Ralph Lauren (RL 124.16, +9.61, +8.4%) and Estee Lauder (EL 152.02, +15.85, +11.6%), both of which impressed investors with strong earnings reports and/or guidance. On the downside, Church & Dwight (CHD 60.46, -4.91, -7.5%) and Archer-Daniels (ADM 41.85, -2.64, -5.9%) disappointed investors with their results.
U.S. Treasuries edged higher, pushing yields lower across the curve. The 2-yr yield decreased one basis point to 2.52%, and the 10-yr yield decreased two basis points to 2.70%. The U.S. Dollar Index increased 0.2% to 96.03. WTI crude lost 1.6% to $53.75/bbl.
Reviewing Tuesday's sole economic report, the ISM Non-Manufacturing Index for January:
- The ISM Non-Manufacturing Index checked in at 56.7% for January (consensus 57.0%), down from an upwardly revised 58.0% (from 57.6%) in December. The dividing line between expansion and contraction is 50.0%. Accordingly, the non-manufacturing sector expanded in January, but at a slower pace.
- The key takeaway from the report is that non-manufacturing sector activity slowed in the face of concerns about the partial government shutdown, yet respondents reportedly remain mostly optimistic about overall business conditions. According to the ISM, the past relationship between the non-manufacturing index and the overall economy indicates the January reading corresponds to a 2.8% increase in real GDP on an annualized basis.
Looking ahead, investors will receive the Trade Balance report for November, the preliminary readings for Q4 Productivity and Unit Labor Costs, and the weekly MBA Mortgage Applications Index on Wednesday.
- Russell 2000 +12.7% YTD
- Nasdaq Composite 11.6% YTD
- S&P 500 +9.2% YTD
- Dow Jones Industrial Average +8.9% YTD
BT pressured to cut price to sell troubled Italian business - sources
15:50:06 BT pressured to cut price to sell troubled Italian business - sources - Reuters News
05-Feb-2019 15:49:03
By Pamela Barbaglia, Stephen Jewkes and Agnieszka Flak
LONDON/MILAN, Feb 5 (Reuters) - BT Group BT.L may have to cut the price tag of its troubled Italian arm as bidders are mainly interested in parts of the business rather than the whole division, which suffered an accounting scandal in 2017, sources told Reuters.
Four bidders, including Telecom Italia (TIM) TLIT.MI and telecom services provider Retelit, have been shortlisted to carry out due diligence on the business, two years after the accounting problems forced BT to take a 530 million pound write-down.
Mobile operator Wind Tre and voice and data provider VueTel are also taking part in the second round of the auction while Vodafone VOD.L has walked away, the sources said.
Indicative bids fell short of BT's expectations, the sources said, and bidders were still assessing the merits of buying the business in the light of the accounting scandal.
BT Group, Telecom Italia, Retelit, Wind Tre and Vodafone declined to comment while VueTel confirmed interest in the process.
BT Italia reported overall debt of 509 million euros for the financial year ending in March 2018. The Italian business's overall sales fell more than 20 percent to 669 million euros between 2017 and 2018.
"There is a disconnect on price and none of the bidders would go crazy to buy this business," one of the sources said.
He said Retelit would gain the most strategic advantage by taking on BT Italia's corporate client network and the deal would be a "game changer" for the Milan-based company, but management was still aiming to buy it on the cheap.
Binding bids for the business are due at the end of March and some bidders including Telecom Italia are only targeting specific assets, a second source said.
A third source familiar with the matter said Retelit had yet to decide whether to bid for all or part of the business, pointing to declining sales as a major deterrent.
Credit Suisse CSGN.S, which is handling the sale, has been trying to lure all the main telecoms firms active in Italy to the negotiating table since September.
But interest remains lukewarm and no one is willing to rush on this deal.
"It's a soft process because it requires plenty of due diligence," the first source said.
BT Italia employs more 800 people and serves about 80,000 corporate clients in Italy including insurer Assicurazioni Generali GASI.MI and fashion house Armani.
BT former boss Gavin Patterson, in charge during the accounting scandal, stepped down on Jan. 31 handing over to Philip Jansen.
Jansen, a former Worldpay chief executive, will need to see through a major restructuring of the whole group to cut costs and tackle financial and operational underperformance.
U.S. Investigating Saudi Arabia Giving U.S. Weapons to Al-Qaida and Iran in Yemen, Report Says
CNN concludes the transactions are 'exposing some of America's sensitive military technology to Tehran and potentially endangering the lives of U.S. troops in other conflict zones'
Gapping up
In reaction to strong earnings/guidance:
- AKTS +10.8%, EL +9.2%, ALLT +8.1%, MESA +4.3%, BP +3.6%, CNC +3.3%, AME +3.2%, ACM +2.8%, ENTG +2.7%, HIG +2.4%, BDX +2.4%, VSH +1.9%, OLN +1.7%, SBH +1.3%, PBI +0.7%
Select marijuana stocks trading higher:
- APHA +5.2%, ACB +3.7%, PYX +2.6%, TLRY +2.3%, CRBP +1.7%, NBEV +1.5%, MJ +1.3%
Other news:
- CDXS +16.4% (Codexis will install CodeEvolver protein engineering tech upgrades into Merck's (MRK) platform license installation and will maintain for a multi-year term; Financial terms of the agreement are undisclosed)
Analyst comments:
- RGNX +7.9% (upgraded to Strong Buy from Outperform at Raymond James)
- BOX +5.5% (initiated with a Buy at Goldman)
- BKNG +0.9% (upgraded to Buy from Hold at Deutsche Bank)
Gapping down
In reaction to disappointing earnings/guidance:
- CTRL -16.3%, GLUU -11.8%, HLIT -9.8%, LMNX -7.5%, PRA -7%, AEIS -6.7%, CHD -6.6%, RTEC -6.2%, STX -6.1%, LITE -4.1%, BZH -4%, GILD -3.7%, IT -3%, GOOG -2.2%, QGEN -1.8%, ADM -1.8%, VIAB -1%, LAZ -0.8%
Other news:
- OPK -15.3% (to offer $200 million aggregate principal amount of Convertible Senior Notes due 2025 )
- DHX -4.7% (TCS has determined not to pursue a possible transaction involving the Company at this time)
- GILD -3.7% (Endpoint News discusses Gilead's write-down of Kite's multiple myeloma program)
- IVR -3.3% (announces public offering of 14 mln shares of its common stock; expects core EPS of $0.45-0.47 vs. $0.41 S&P Capital IQ Consensus)
- AMD -2.9% (Abu Dhabi's Mubadala Investment Co sells 34.9 mln common equity shares alongside conversion of 75 mln warrants into equity shares)
- WDC -1.7% (following STX results)
- MCS -0.5% (prices 1.5 mln secondary common stock offering at $40.25 per share)
Analyst comments:
- CTL -4.1% (downgraded to Sell from Neutral at Citigroup)
- GNTX -2.4% (downgraded to Neutral from Buy at Longbow)
- ITW -1.9% (downgraded to Underperform from Neutral at BofA/Merrill)
- ALB -1.8% (downgraded to Neutral from Buy at Citigroup)
- EFX -1% (downgraded to Hold from Buy at Deutsche Bank)
- KHC -1% (downgraded to Hold from Buy at Deutsche Bank)
Early premarket gappersGapping up:
- AKTS +10.8%, CDXS +9.6%, APHA +5.7%, ALLT +4.9%, CRON +4.1%, HIG +2.4%, OLN +1.7%, MESA +1.6%, QTNA +0.5%, ENTG +0.5%
Gapping down:
- OPK -13.9%, GLUU -10.3%, HLIT -9.8%, CTRL -9.6%, LMNX -7.5%, PRA -7%, AEIS -6.7%, RTEC -6.2%, LM -5.2%, DHX -4.7%, STX -4.5%, VSM -4.4%, IVR -4%, BZH -4%, GILD -3.8%, GOOG -2.2%, QGEN -1.6%, WDC -1.4%, FN -0.9%, MU -0.7%
Secret No-Deal Brexit Plan To Slash Tariffs On All Imports
British businesses fear the move could ruin their industries.
Ministers are secretly planning to unilaterally cut tariffs on all imports to zero in the event of a no-deal Brexit, in a move that could flood the market with cheap goods and “ruin” industry, HuffPost UK has learnt.
Trade Secretary Liam Fox wants to use executive powers – reserved only for ministers – to make a last-minute change to the Trade Bill which would allow the government to dramatically slash tariffs on all foreign goods.
It has been described by manufacturing union the GMB as “the ultimate Brexit betrayal”.
Fox revealed his strategy to industry leaders in behind-closed-doors meetings this week, blaming fears that inflation could see prices sky-rocket if Britain crashes out of the EU on March 29.
Business chiefs are “deeply concerned” the Brexiteer minister risks “wrecking” homegrown industry, including farming and potteries, in one fell swoop, but Fox claims consumers will benefit.
Labour, meanwhile, said unilaterally switching all tariffs to zero would be an act of “sheer lunacy” which would give Brussels no motive to negotiate a future trade deal with the UK.
Industry leaders’ only hope of protecting firms from being undercut by competition from emerging economies, such as China and Brazil, was to demonstrate they has a “special case” by lobbying the trade secretary personally, it was also claimed.
A spokesman for Fox confirmed the government is exploring the plan.
Potteries industry leader Dr Laura Cohen disclosed details of the “foolhardy” plan as she feels British ceramics firms, most of which are in the Brexit heartland city of Stoke, will suffer.
“We are deeply concerned about the possibility of the UK unilaterally removing import tariffs on our foreign competitors’ goods,” said Cohen, chief executive of the British Ceramic Confederation, who met Fox in London on Monday.
“Liam Fox is concerned about the inflationary impact of Brexit, but this sort of foolhardy action in response could ruin British ceramic manufacturing by wrecking our home market
“Moreover, it would massively weaken the UK’s hand in making free trade deals with other countries, including a lasting settlement with the EU.”
It comes just days after Prime Minister Theresa May and Fox visited Stoke in January.
It is the ultimate Brexit betrayal that just weeks after Theresa May visited Stoke her cabinet ministers are preparing to sell such an industry here down the riverJohn Brimble, GMB union
“I think the British people are ready for us to move on; to move beyond division and come together; to move beyond uncertainty into a brighter future,” the PM said in a speech in the Leave-backing city, where nearly 70% of voters opted for Brexit.
Jude Brimble, national secretary for manufacturing with the GMB union, said: “Liam Fox’s plot risks smashing the UK ceramics sector into pieces.
“It is the ultimate Brexit betrayal that just weeks after Theresa May visited Stoke her cabinet ministers are preparing to sell such an industry here down the river.”
She added: “The Tories are so desperate to slash tariffs and sign trade deals with China and the USA that they will sell out our ceramics workers in the process. Ministers wants to slash tariffs left, right and centre but instead they will be ripping the heart out of our industry and communities. We need parliament to halt this ideologically-driven industrial sabotage.”
Describing the move as “sheer lunacy”, shadow trade secretary Barry Gardiner said: “Reducing all tariffs on imports to zero would undermine our domestic producers in their home markets and risk serious job losses in key industries from ceramics to farming.
“That is bad enough. But the secretary of state appears not to understand the basic logic of trade negotiations: your side wants the other to liberalise their markets and reduce tariffs on the goods you export to them. If you have already reduced all your tariffs to zero you have nothing to negotiate with.”
'A no deal would be absolutely savage for us, I cannot imagine how bad it will look' - National Farmers' Union president @Minette_Batters says she has had no written assurances from the government over their plans post-Brexit.
#Ridge
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Gardiner said the proposal would “drive job losses and undermine the UK’s bargaining power in any trade negotiations including with the EU”.
“He is not just shooting himself in the foot, he is shooting himself in both feet,” he added.
The president of the National Farmers’ Union, Minette Batters said in an interview on Sunday that it would be “absolutely savage” if Britain’s market was flooded with cheap imports post-Brexit.
“I cannot imagine how bad it will look,” she said, as she warned as she said the NFU had not been reassured in writing that the government would curb imports which could destroy British farming.
“It is a question that absolutely must be answered before we leave on march 29,” she said.
A spokesperson for Fox said: “No decision has been taken and the government is currently considering all options in the event of a no-deal with the EU.”