- BP (BPE5 TH) +2.2%
- Shell Says It Isn’t in Talks to Take Over Oil Rival BP (1)
- Babcock (BW3 TH) +2.2%
- Yesterday, Babcock Gains on New Margin Target, Share Buyback: Street Wrap
- National Grid (NNGF TH) +1.7%
- IAG (INR TH) +1.7%
- Fuchs (FPE3 TH) +1.7%
- Henkel (HEN3 TH) +1.6%
- BAE (BSP TH) +1.6%
- NOTE: BAE Rated New Underperform at Mediobanca SpA; PT 2,000 pence
- RENK Group (R3NK TH) +1.5%
- Adyen (1N8 TH) +1.4%
- Aker BP (ARC TH) -1.1%
- Continental (CON TH) -2.6%
- Continental, Opmobility Cut at Morgan Stanley, Valeo Upgraded
DAX:
- Henkel (HEN3 TH) +1.6%
- Continental (CON TH) -2.6%
- Continental, Opmobility Cut at Morgan Stanley, Valeo Upgraded
MDAX:
- Fuchs (FPE3 TH) +2.8%
- Fuchs Rated New Buy at Jefferies; PT 50 euros
- RENK Group (R3NK TH) +1.4%
SDAX:
- Indus Holding (INH TH) +3.1%
- Formycon (FYB TH) +2.3%
- Deutsche Euroshop (DEQ TH) +2.2%
- Siltronic (WAF TH) +1.1%
- MLP (MLP TH) -2.8%
After Hours Summary: MU +2.2%, WS +13.7%, MLKN +9.9% higher on earnings; SCS -3.4%, JEF -2.7% lower on earnings; KTOS -5.5% on stock offering
After Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: WS +13.7%, MLKN +9.9%, FUL +6.6%, MU +2.2%
Companies trading higher in after hours in reaction to news: GLNG +1% ($500 mln convertible notes offering), ASAN +0.4% (names new CEO), TEM +0.4% (study validates accuracy of the Ambry CARE Program), STX +0.2% (in sympathy with MU earnings), WDC +0.1% (in sympathy with MU earnings)
After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: SCS -3.4%, JEF -2.7%
Companies trading lower in after hours in reaction to news: BTBT -6.4% (submits draft registration for IPO of WhiteFiber; to become pure play Ethereum staking and treasury co), KTOS -5.5% ($500 mln stock offering), NATR -4% (stock offering by selling shareholder), KYMR -3.9% ($250 mln stock offering), NUS -2.8% (expands and repackages ageLOC Tru Face Line), SOLV -1.2% (SOLV and TMO amend purchase agreement; now excludes SOLV's drinking water filtration business), CODI -1% (updates financial statements), TMO -0.2% (SOLV and TMO amend purchase agreement; now excludes SOLV's drinking water filtration business), LMT -0.1% (awarded a $250 mln modification to previously awarded US Navy contract)
Bezos and Blue Origin Try to Capitalize on Trump-Musk Split
Jeff Bezos and his space company talked to Trump in recent weeks
The simmering feud between President Trump and Elon Musk is producing a potential winner: Jeff Bezos.
The Blue Origin founder talked to Trump at least twice this month, and the space company’s CEO, Dave Limp, came to the White House to meet with Trump’s chief of staff, according to people familiar with the matter. In at least some of the conversations with Trump and his staff, Bezos and other Blue Origin executives have appealed for more government contracts, the people said.
The outreach came just days after the spectacular, early June breakup of Trump and Musk, who served as one of the president’s top advisers and owns his own rocket company, SpaceX.
Musk and Bezos have been space rivals for years, but SpaceX has pulled far ahead of Blue Origin, launching rockets at a record pace and becoming the dominant contractor at the National Aeronautics and Space Administration.
Blue Origin executives worried since last summer about Musk’s proximity to Trump and how that could affect access to government contracts, some of the people said.
Trump’s falling out with Musk created a potential opening.
In May, Trump rescinded his nomination of a Musk-backed nominee for the head of NASA. After Musk criticized Trump-backed legislation on X in early June and floated the idea of a new political party, the president suggested that Musk’s businesses could suffer. “The easiest way to save money in our Budget, Billions and Billions of Dollars, is to terminate Elon’s Governmental Subsidies and Contracts. I was always surprised that Biden didn’t do it!”
Limp, the Blue Origin CEO, met with White House chief of staff Susie Wiles in mid-June, the people said, a meeting that was bookended by calls with Bezos and Trump. Trump has discussed with Bezos his desire to see a crewed mission to the moon during his term in office, the people said.
Bezos has sought to charm Trump in recent months, even inviting Trump to his celebrity-filled wedding scheduled for this weekend in Venice, White House officials said. The president isn’t expected to attend because of to scheduling conflicts, people close to him said.
A White House spokeswoman declined to comment. A spokeswoman for Blue Origin declined to comment. Musk and SpaceX didn’t immediately respond to requests for comment.
A big challenge for Blue Origin in winning government business over SpaceX is simply demonstrating it can fly its own powerful orbital rocket reliably and regularly. In January, Blue Origin launched its New Glenn rocket for the first time, reaching orbit on the first try. But the company had hoped to conduct a second mission this spring and missed that goal. It is now looking to launch New Glenn again in mid-August.
Executives at SpaceX, whose Falcon rockets are a workhorse for government clients, have said the company is looking to launch 170 times this year. Many of those flights will be for Starlink, SpaceX’s satellite network.
SpaceX has reeled in bigger and more government contracts than Blue Origin, given its lead on launch and in-space operations. In April, a Space Force command awarded SpaceX a $5.9 billion deal for 28 flights planned for the years ahead. Another provider, United Launch Alliance, received a bit less than SpaceX for 19 missions. Blue Origin was awarded $2.4 billion for seven launches.
Limp, Blue Origin’s chief executive, has been pushing the company to move faster and focus on scaling up operations. Blue Origin hopes to launch a cargo vehicle to the moon this year and land it on the lunar surface.
SpaceX and Blue Origin might square off over several important government deals, including space-related work tied to Trump’s “Golden Dome” missile-defense effort and Mars projects the White House has proposed that NASA pursue.
For his part, Musk had started to see some wins after bankrolling Trump’s re-election with a super political-action committee—mostly funded with his own money—that spent more than $250 million to get Trump back in the White House.
He was particularly involved during the transition and weighed in on top picks for different agencies, persuading Trump to name Jared Isaacman to run NASA before the president later pulled the nomination. Isaacman personally invested in SpaceX and flew into orbit on a spacecraft operated by the company. Musk has long had a goal of getting people to Mars using SpaceX. In his inauguration speech, Trump said he would launch Americans to “plant the Stars and Stripes on the planet Mars.”
Trump criticized Bezos in much of his first term, accusing him of using the Washington Post, which he bought in 2013, to unfairly assail his presidency. He also claimed that Bezos’ Amazon was a monopoly, and commissioned an investigation into Amazon’s use of the Postal Service, alleging that the company was getting rates that hurt the financial viability of the institution.
This term, Bezos has managed to repair his relationship with Trump. He became friendly with Trump’s daughter, Ivanka, and her husband, Jared Kushner, and defended the Washington Post’s decision not to endorse a candidate in the election, after the editorial board had prepared an argument on behalf of Vice President Kamala Harris, the Democratic presidential nominee. Trump has praised Bezos privately for blocking the endorsement, according to Trump advisers, and people close to both men describe a warm relationship now.
Amazon, where Bezos is executive chairman, also paid $40 million for first lady Melania Trump’s documentary, paying nearly triple the amount of the next closest bidder for the project. More than 70% of the sum will go to Melania Trump, The Wall Street Journal reported. Amazon also gave $1 million to the inauguration, where Bezos and his fiancée Lauren Sánchez sat prominently behind the president.
The Hong Kong property developer rushing to refinance billions of dollars in loans
New World’s negotiations with banks come after years of ambitious debt-fuelled expansion
One of Hong Kong’s biggest property developers is in talks to refinance billions of dollars in bank loans following years of ambitious debt-fuelled expansion, adding to pressures in the Chinese territory’s struggling real estate market.
New World Development borrowed money for projects that people inside and outside the company have characterised as “aggressive”. They include a HK$20bn (US$2.6bn) retail and office space near Hong Kong’s airport and several mainland Chinese developments, including a $1.3bn mixed-use complex in Shenzhen.
This week the company said it was “actively engaged with its creditors in relation to the refinancing of its existing loans”. It is also under pressure to repay bondholders, with net debt at HK$124.6bn as of the end of last year. Interest expenses exceeded operating profits in the second half of last year, a sign of financial distress.
The refinancing talks are being closely watched by financial institutions and investors because of New World’s size — with assets totalling HK$427.6bn — and the exposure for major lenders.
Bank loans to New World account for 7 per cent of all commercial real estate loans in Hong Kong, according to Barclays analysts, who said in a note that the company’s “systemic importance” to the city was almost twice that of collapsed developer Evergrande to mainland China.
Failure in the negotiations would further hit sentiment in the city’s already faltering real estate market and risk contagion into the weak mainland Chinese property market.
One of the latest warning signs was the company’s deferral of interest payments due this month for perpetual bonds. While it was able to make other interest payments due this month to bondholders, market concerns over a possible default remain. Shares are down 22 per cent on the year, and its market capitalisation has fallen to HK$14bn.
Adrian Cheng, a grandson of New World’s founder, stepped down as chief executive in September, on the same day his company reported its first annual loss in two decades of nearly HK$20bn.
“New World Development’s leverage is high, and its capital structure is not sustainable,” said Zerlina Zeng, head of Asia strategy at CreditSights, the credit research unit of Fitch Solutions. “The company has taken a lot of debt to expand in mainland China, which didn’t bear much fruit due to the property downturn there.”
New World is one of Hong Kong’s largest conglomerates, and the family behind it has interests spanning retail, travel and luxury. A visitor to the city might stay in the Cheng family’s Rosewood hotel, eat lunch in New World’s Victoria Dockside complex and buy a souvenir from jeweller Chow Tai Fook, the family’s first business.
Epitomising New World’s woes is 11 Skies, billed as Hong Kong’s answer to Singapore’s success in turning Changi airport into a retail destination. The 3.8mn-sq-ft complex next to Hong Kong airport’s second terminal, which includes a mall and offices, was meant to attract travellers and locals.
But the property has been hampered by a delay in the expanded terminal’s completion and a softening of Chinese tourism into Hong Kong as consumers in the mainland curb spending in the wake of a property crash. K11, New World’s premium mall brand, has struggled in mainland China with weak consumer sentiment.
Cheng previously told the Financial Times that the company had to face challenges including “high interest rates” and “uncertain market conditions”, but he believed “this game of patience, paired with consistency and dedication, will eventually get us to our goals”.
Since Cheng’s departure, New World has gone through two chief executives. The ongoing refinancing talks involve HK$87.5bn in bank loans, Bloomberg has reported.
“Bondholders don’t have much clue on what’s going with NWD’s bank loan refinancing or other refinancing plans,” said Zeng. “They stopped talking with bondholders . . . we couldn’t get hold of NWD since November last year.”
New World told the Financial Times: “We do not comment on market rumours, and do not have any comments other than what we have already disclosed to the market.”
The company has pledged key assets, including Victoria Dockside, as collateral in talks with banks to transform unsecured loans into secured ones, according to people familiar with the matter. It has sold several completed residential projects at a discount in recent months.
Hong Kong authorities are keen to avoid a property crisis that could drag down real estate prices and affect the wider economy, with the city’s de facto central bank informally guiding lenders over the past year to be more flexible on distressed property loans, according to people familiar with the discussions.
“It is the HKMA’s long-standing supervisory policy that banks must ensure appropriate and timely loan classification and provisioning at all times,” the Hong Kong Monetary Authority told the FT, adding that it did not see any concentration risk at the borrower level and that lenders were well capitalised.
Adrian Cheng now oversees the K11 Concepts brand, while his siblings lead different arms of the family empire, with Sonia looking after Chow Tai Fook Jewellery and Rosewood, Brian taking care of CTF Services, and Christopher as co-chief executive of CTFE.
The family’s private investment vehicle, Chow Tai Fook Enterprises, has not directly injected cash into New World, but it has selectively bought assets from the property group, including an equity interest in Hong Kong’s Kai Tak Sports Park in November and a stake in a Shenzhen office tower last June.
Europe’s green steel ambitions falter as energy costs take toll
Industry leaders warn climate targets are at risk without more state support and protection from cheaper imports
The push to decarbonise European steelmaking suffered a fresh blow last week as ArcelorMittal turned down more than €1bn in public subsidies to convert its German plants to run on greener hydrogen.
The company blamed the prohibitively high cost of energy, just as Swedish steel producer SSAB also admitted to delays at its flagship low-emission steel mill inside the Arctic Circle, citing issues with reliability of the power grid.
Energy costs are among the myriad challenges faced by manufacturers that have looked to “green steel” as a way of cutting their emissions, with others ranging from the billions in upfront capital required to a lack of hydrogen infrastructure and underwhelming demand for costlier low-carbon products.
“The business case for green steel is not there in Europe,” said Axel Eggert, head of steel industry body Eurofer. While some were “hoping and betting” on a bright future for the product, others were saying: “I don’t have time for this,” he added.
Indeed, some leading executives privately admit that having committed to projects, they must continue regardless of the cost.
Thyssenkrupp is sticking with its green steel plans despite the “crisis” in the industry that “makes it even more difficult to make big investment decisions”, the German steel producer’s chief transformation officer Marie Jaroni told a Financial Times event this week.
Steel is a critical industry for Europe, accounting for about 7 per cent of world production, with revenue of €191bn and employing more than 300,000 direct jobs.
But it is also one of the continent’s biggest emitters, with EU steel plants pumping out 200mn tonnes of CO₂ every year. This is bigger than the annual emissions of the Netherlands and roughly 5 per cent of the bloc’s total emissions.
Under the EU’s emissions trading system launched 20 years ago, steel companies must buy permits to cover carbon dioxide emissions, pushing prices up and theoretically incentivising greener production.
But executives say they have been brutally undercut by lower-cost, more carbon-emitting imports, mainly from China.
The overcapacity of last year’s steel glut, prompted by Chinese overproduction and a demand slump, equated to more than four times the EU’s annual steel production, according to European Commission figures.
Markus Krebber, chief executive of the German power giant RWE, said decarbonisation had fallen down the list of priorities in favour of affordability. “In the end, we will also have to discuss how quickly the transformation can take place, because the speed largely determines the cost,” he told a conference on Monday.
This week, Europe’s 10 largest steelmakers wrote to the commission to demand it do more to protect the industry, arguing that “our climate ambitions and dozens of EU steel decarbonisation projects are at risk” without urgent action.
Decarbonising steel production involves either converting the facility to run on hydrogen or electrifying the process to remove the need for coke or coal.
About 40 per cent of EU steel is made in electric-powered furnaces, but fewer than 1 per cent is fuelled by green hydrogen, and most of those are at the pilot phase. The EU wants the steel industry to cut emissions by at least 30 per cent by 2030, compared with 2018.
Cutting energy use will be critical to achieving this. Energy accounts for about 17 per cent of the production cost of European steel, according to the commission.
But here Europe is at a disadvantage, with EU electricity prices at least double those of the US, according to Brussels, squeezing the margins of electric furnace operators.
Of the $1.6tn pipeline of announced global clean industrial projects, such as green steel and ammonia plants, only 10 per cent are in the EU, according to a report this month from the non-profit Mission Possible Partnership.
Lord Adair Turner, who chairs the Energy Transitions Commission, a global coalition of businesses, investors, NGOs and experts, warned that this could lead to Europe one day losing its capacity to produce basic types of steel to countries such as Morocco, which has the capability to generate abundant solar power.
Sweden has attracted two of the EU’s most advanced green steel projects thanks to plentiful hydropower, but both have also run into difficulties.
Stegra, an industrial start-up backed by the likes of the Agnelli, Maersk and Wallenberg families as well as Spotify chief executive Daniel Ek and Mercedes-Benz, is aiming to start production in northern Sweden towards the end of next year, two years behind schedule.
Hybrit, a rival project backed by three state-controlled groups LKAB, SSAB and Vattenfall, has also been hit by delays.
Henrik Henriksson, Stegra chief executive, said the green steel industry needed to “change the narrative” by underlining the “geopolitical . . . stability” and security of supply that came from not needing energy or iron ore from outside the region.
Brussels plans to announce export support for steelmakers in the coming weeks, which could involve changes to the bloc’s carbon border tax. On Wednesday, it laid out state aid guidance for the bloc’s governments that should incentivise carbon-cutting investments.
Steelmakers, including ArcelorMittal, say the carbon border tax fails to protect the EU’s energy intensive industries from being undercut by dirtier external competition such as China.
Europe is not alone is struggling with the switch to green steel. Todd Tucker, director of industrial policy and trade at the Roosevelt Institute, pointed out that US producers were struggling with similar problems, despite the cheaper cost of energy.
He said governments needed to pursue an “all of the above” strategy that encompassed climate, industrial and economic policy as a way of generating “the supply and demand needed to transition a highly emitting industry like steel”.
Eggert agreed, saying that policymakers could achieve a reversal of recent decisions to delay projects, but only through “swift and effective” action.
“We can still make it to green steel in Europe,” he said.
German watchdog says Wirecard mistakes have made it more willing to ‘step on toes’
BaFin was criticised for badly mishandling one of Europe’s biggest accounting frauds
The German financial watchdog that was criticised for badly mishandling one of Europe’s biggest accounting frauds said it has become much more active and “willing to step on toes” in the five years since Wirecard collapsed.
“We didn’t meet all the expectations placed on a supervisor,” said Mark Branson, the head of BaFin who joined from Swiss regulator Finma in 2021, a year after the payments group collapsed in June 2020. But, he added in an interview with the Financial Times, the regulator had changed and was now a “more active, bolder institution”.
BaFin in 2019 banned short selling of Wirecard shares in a move interpreted as a vote of confidence in the company. It also filed a criminal complaint against two Financial Times journalists who reported on suspected accounting fraud.
Just over a year later, Wirecard collapsed into insolvency after disclosing that half of its revenue and €1.9bn in cash did not exist.
Branson said BaFin had sent “mixed signals into the market” about Wirecard, adding this had been “unfortunate and didn’t help clarify what was really going on”.
“We are talking today with the benefit of hindsight, about an unclear situation with conflicting information. That said, broadly speaking, your institution [the FT] got it right; ours got it wrong.”
He acknowledged that the Wirecard scandal had done serious damage to trust in German capital markets. But it had also led to a regulatory overhaul that gave BaFin more powers to supervise companies and to more structured handling of information and whistleblowers.
London-based short seller Matthew Earl, who co-wrote a 2016 report outlining suspicious activity at Wirecard, told a parliamentary inquiry that BaFin was not interested when he called its whistleblower hotline.
The regulator also gave the European Securities and Markets Authority selective and incomplete information when it made its case for the ban on shorting Wirecard shares.
“I’m confident that, faced with something similar, we would react differently”, Branson said, adding: “Our ambition is to be a world-class supervisor.”
In the past four years, BaFin has sent special monitors into German businesses from Deutsche Bank to fintech Solaris, issued millions of euros in fines, and imposed unprecedented restrictions on client numbers at online-only bank N26.
It has also become more willing to publish details of individual corporate wrongdoing and its response, said Branson.
He insisted BaFin had not become overzealous. “The institutions that have problems with us are problematic institutions,” he said. The regulator’s approach these days was “not just about being stricter, but about stepping on the right toes at the right time”.
BaFin’s top priorities now include cryptocurrencies and stablecoins — digital currencies backed often by the dollar.
Branson pointed to its recent decision to deny a licence to stablecoin Ethena after finding “serious deficiencies” in the company’s business organisation as well as “infringements” of regulatory requirements.
“When I talk about that with our international colleagues, there’s nobody who’s further ahead of the curve,” he said of BaFin’s approach to stablecoin supervision.
Branson also said the regulator was prepared to axe “unnecessary” red tape that “doesn’t support supervisory goals”. He singled out reporting and compliance requirements being the same for smaller and larger banks.
“We’re not shy of telling both the German and European legislators where there are things that we think are no longer necessary.” But he was also adamant that there should be no cuts to capital or liquidity requirements for smaller banks.
“This is about smarter regulation, not deregulation.”
Fears over US debt load and inflation ignite exodus from long-term bonds
Investors have exited funds at fastest rate since 2020 at height of Covid pandemic
Investors are fleeing long-term US bond funds at the swiftest rate since the height of the Covid-19 pandemic five years ago as America’s soaring debt load tarnishes the appeal of one of the world’s most important markets.
Net outflows from long-dated US bond funds spanning government and corporate debt have hit nearly $11bn so far in the second quarter, according to Financial Times calculations based on EPFR data.
The second-quarter exodus is on track to be the heaviest since severe market turbulence in early 2020, and marks a powerful shift from the average inflows in the previous 12 quarters of about $20bn.
The redemptions from long-term bond funds, which are widely used by institutional investors, come at a time of growing jitters over America’s fiscal path. Fund flows capture only a sliver of the vast US bond market, but they provide a proxy for investor sentiment.
“It’s a symptom of a much bigger problem. There is a lot of concern domestically and from the foreign investor community about owning the long end of the Treasury curve,” said Bill Campbell at bond-focused investment firm DoubleLine, referring to the funds flows.
President Donald Trump’s “big, beautiful” tax bill, which is under consideration in Congress, is forecast by independent analysts to add trillions of dollars to US debt over the next decade, something that would force the Treasury department to sell a huge amount of bonds. The White House has countered that tariffs and higher growth would cut the debt.
At the same time, market participants are bracing themselves for the administration’s tariffs on major trading partners to stoke higher inflation, one of the biggest scourges for bond investors.
Lotfi Karoui, chief credit strategist at Goldman Sachs, said that the outflow “reflects concerns over the longer-run outlook for fiscal sustainability”.
“It’s a volatile environment, with inflation still above target and heavy government supply as far as the eye can see,” added Robert Tipp, head of global bonds at asset manager PGIM, referring to the Federal Reserve’s 2 per cent inflation goal. “This is driving a skittishness about the long end of the yield curve, and a general uneasiness.”
Longer-dated bonds are particularly sensitive to inflation, because higher growth in prices erodes the value of fixed interest payments paid over long periods of time.
The jitters have also been reflected in the price performance of long-term US debt, which has fallen about 1 per cent this quarter, clawing back steeper losses after Trump’s April tariff announcements spooked markets, according to a broad Bloomberg index.
By contrast, money has continued to pour into funds that hold US bonds maturing in the near future — with more than $39bn flooding into short-dated strategies this quarter, EPFR figures show. These funds are paying juicy yields since the Fed has held short-term rates at elevated levels this year.
Andrzej Skiba, head of BlueBay US fixed income at RBC Global Asset Management, added that investors might opt to diversify their bond holdings more internationally at this point, but “we don’t think it’s the end of the Treasury market, and the role of Treasuries as a core holding in global fixed income portfolios”.
Still, he said market participants could start demanding “more compensation to invest further out the curve” when it comes to buying new Treasury bonds. “Even though we don’t see an earthquake coming, you could see tremors.”