Stock Futures Leap On Uptick In China Growth; Dow Jones Stock Nears Buy Point - Investor's Business Daily

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1. Stock Futures Leap On Uptick In China Growth; Dow Jones Stock Nears Buy Point  Investor's Business Daily
2. Dow rises more than 150 to start off the quarter on strong China data, trade progress  CNBC
3. Wall Street set to rally on China data, trade hopes  Reuters
4. Dow Jones Futures Rise On China Data; Current Stock Market Rally — 4 Reasons To Be Bullish  Investor's Business Daily
5. Wall Street opens higher on trade progress, China data  Investing.com
6. View full coverage on Google News

https://www.investors.com/market-trend/stock-market-today/stock-futures-leap-on-uptick-in-china-growth-dow-jones-stock-nears-buy-point/

2019-04-01 13:00:44Z
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Gold Prices Jump Modestly Following Weaker Than Expected Feb U.S. Retail Sales - Kitco News

(Kitco News) - The gold market is closed to unchanged levels as U.S. consumers spent less than expected in February.

Monday, U.S. retail sales fell 0.2% in February according to the latest data from the U.S. Commerce Department. Economists were expecting to see a 0.3% increase in retail sales.

Core sales, which strips out vehicle sales dropped 0.4% last month, up from January’s of 0.9% increase. Economists were expecting to see a 0.4% increase.

Meanwhile, the control group, which excludes autos, gas, building materials, and food services dropped 0.2% last month, beating the expected rise of 0.3%.

The gold market, which was under pressure ahead of the data is seeing some buying momentum in initial reaction. June gold futures last traded at $1,298.80 an ounce, unchanged on the day.

Avery Shenfeld, senior economist at CIBC World Markets said that the latest retail sales numbers should be taken with a grain of salt as February’s weak data was counterbalanced with strong revisions to January’s data.

“Today's retail sales data for the US reminded us to treat these "advance" figures with due skepticism,” he said. “Total retail sales dropped 0.2%, but that now comes after a 0.7% January gain that had previously been reported as only a 0.2% gain. We're going to hear a lot about the "polar vortex" (previously known as "winter") in explaining away these data and weak Q1 earnings coming up for US companies, as well as the government shutdown, and we do still expect the economy to do better in the spring.”

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2019-04-01 12:34:00Z
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Retail sales fell in February on lower spending on building materials, electronics, and groceries - CNBC

U.S. retail sales fell in February, as consumers pulled back their spending on building materials, groceries, furniture, electronics, and clothing declined amid signs of a slowing economy.

The Commerce Department said Monday that retail sales fell 0.2 percent in February, after posting an upwardly revised gain 0.7 percent in January. Over the past year, retail sales have roughly kept pace with inflation by increasing a slight 2.2 percent.

The recent dip in consumer spending suggests that more Americans are anticipating a weaker economy this year, as global growth has declined and the stimulus from President Donald Trump's tax cuts at the end of 2017 are waning.

Sales at building materials stores plunged 4.4 percent in February. Electronics retailers and grocers posted declines of more than 1 percent.

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2019-04-01 12:30:36Z
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Shares surge on China's factory rebound, trade optimism - Investing.com

© Reuters. The German share price index DAX graph at the stock exchange in Frankfurt

By Ritvik Carvalho

LONDON (Reuters) - Global stocks surged on Monday, extending gains from their best quarter since 2010, as strong Chinese factory activity data and signs of progress in U.S.-China trade negotiations gave investors reason to cheer.

European stocks posted their best daily gains since mid-February, with the pan-European index up 0.8 percent. Germany's trade-sensitive outperformed with a 1 percent rise, helped by gains in auto maker stocks. ()

MSCI's All-Country World Index, which tracks shares in 47 countries, was up 0.4 percent on the day. It had just posted its best quarter since 2010. were up about 0.7 percent, indicating a higher open on Wall Street. ()

"Investors' sentiment seems to be tilting to the side of optimism at the beginning of the second quarter, following a robust manufacturing report from China," said Konstantinos Anthis, head of research at ADSS.

China's official purchasing managers' index (PMI) released on Sunday showed factory activity unexpectedly grew for the first time in four months in March. A private business survey, the Caixin/Markit PMI, released on Monday, also showed manufacturing.

"This news helps ease market participants' worries over the odds of an upcoming recession on a global scale, even though there are plenty of signs suggesting caution," Anthis said.

Recent signals from bond markets have alerted investors to the possibility of an slowdown in the global economy. Yields on short-dated government bonds in the United States had fallen below those of longer-dated bonds - a phenomenon known as yield curve inversion, which has preceded every major recession.

"We don't see recession in 2019 or early 2020 — we believe the Federal Reserve unambiguously ending three years of tightening, and other central banks’ dovish tilts, have extended the cycle," wrote Bob Michele, CIO and head of global fixed income at J.P. Morgan Asset Management in a note to clients.

"We left the probability of recession unchanged at 10 percent, although even a minor policy error could raise that."

The 3-month-to-10-year yield spread has since pulled back from negative territory and stood around 3 basis points.

TRADE OPTIMISM

Earlier in Asia, MSCI's broadest index of Asia-Pacific shares outside Japan added 1 percent and the rallied 2.6 percent.

Australian stocks climbed 0.6 percent, South Korea's gained 1.3 percent and Japan's advanced 1.4 percent.

"The rebound (in the Chinese data) likely reflects both the resumption of production after the Chinese New Year break and renewed stimulus and policy easing," UBS strategists wrote in a note to clients.

"We expect China to continue easing policy, with signs of economic stabilization backing our overweight position on offshore Chinese equities in our Asia portfolios."

Stocks in Asia also took their cues from Wall Street, with the posting its best quarterly gain in a decade on Friday amid trade optimism.

The United States and China said they made progress in trade talks that concluded on Friday in Beijing. Washington called the negotiations "candid and constructive".

In currencies, the dollar fell 0.18 percent against a basket of currencies to 97.112.

Sterling was over half a percent higher to the dollar at $1.3104 on Monday as investors prepared for British parliament to vote on a series of Brexit options. Some hoped the current uncertainty will end in a softer Brexit than Prime Minister Theresa May's defeated withdrawal agreement.

The Australian dollar advanced as much as 0.45 percent to $0.7127, also benefiting from the China data. The is sensitive to shifts in the economic outlook for China, the country's main trading partner. It last traded 0.25 percent higher at $0.7113.

The euro rose 0.1 percent to $1.1230.

Oil rose, building on its largest first-quarter gains in nearly a decade, as tight supply and positive signs for the global economy supported prices.

U.S. West Texas Intermediate futures gained 0.95 percent to $60.71 per barrel. was 1.3 percent higher at $68.47 per barrel.

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2019-04-01 11:36:00Z
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Aramco Emerges Ahead of Apple as World’s Most Profitable Company - The Wall Street Journal

By

Rory Jones and

Rory Jones
The Wall Street Journal
• Biography
• @RoryWSJ
• Rory.Jones@wsj.com

Summer Said

Summer Said
The Wall Street Journal
• Biography
• @summer_said
• summer.said@wsj.com

Updated April 1, 2019 6:29 a.m. ET

DUBAI—Saudi Aramco’s net income surged nearly 50% to $111 billion last year as global oil prices rose, according to a bond prospectus issued to investors, revealing that the oil and gas firm is the most profitable company in the world.

Aramco plans to issue a $10 billion bond sale as soon as this week to help fund the acquisition of a stake in Saudi Arabia’s national petrochemicals firm. The bond prospectus is the first look under the hood at the oil firm, whose financials have largely been a state secret since the once-American-run firm was nationalized in 1988.

Related

• Aramco Plans $10 Billion Bond, Casting Light on Its Finances for First Time (March 28, 2019)
• Saudi Aramco to Buy Majority Stake in Petrochemicals Producer Sabic for $69.1 Billion (March 27, 2019)
• Saudi Arabia’s Economic Overhaul Is Backfiring (March 23, 2019)
• Saudi Arabia Approves Economic Reform Program (April 25, 2016)

The oil firm’s 2018 net income shot up from 284 billion riyals, or the equivalent of $75.9 billion, in 2017. By comparison, Apple Inc.’s equivalent profit was roughly $60 billion in its last full year; Amazon.com Inc. was $10 billion and Exxon MobilCorp. was $21 billion.

The three years of financial information contained in the prospectus illustrate how tightly Aramco’s profits are tied to oil prices. Aramco reported a significantly lower net profit in 2016 of $13.2 billion, the prospectus said, when prices fell to a monthly low of $31.90.

According to the prospectus, Aramco’s revenues were $355 billion in 2018, and its operating profit, before interest and tax, was %$212 billion

The numbers allow investors to evaluate the oil firm ahead of what could be the world’s biggest ever initial public offering. Saudi Crown Prince Mohammed bin Salman wants to attract capital to the kingdom as part of his plan to diversify its oil-dependent economy and has said he intends to list Aramco in 2021 after years of delays.

Prince Mohammed previously announced he would list 5% of Aramco in 2018 at a valuation of roughly $2 trillion, though that process was delayed due to concerns, among other issues, that the worth of the company wasn’t close to the royal’s estimate.

The figures released Monday by ratings firms indicate a much lower potential valuation for Aramco, up to about $1.4 trillion, according to analysts.

Aramco posted the massive earnings last year numbers despite taxes of roughly 50% to the government, which is highly reliant on contributions from the oil firm. Aramco also pays a royalty to the government of 20% of revenues up to $70 a barrel of oil, and the rate increases on a sliding scale at prices above that level. Fitch estimates that from 2015-2017, Aramco accounted for around 70% of the country’s revenues.

Aramco has chosen banks including JPMorgan Chase & Co. and Morgan Stanley to manage its first debt offering and hold a roadshow beginning Monday in at least eight cities in the U.S., Europe and Asia, according to people familiar with the matter. Investment bank Lazard is also an independent adviser on the bond sale.

The financial information issued by the ratings firms is the first look under the hood at Aramco, whose financials have been a state secret since the once-American-run firm was nationalized in 1988.

Saudi Crown Prince Mohammed bin Salman is pushing the kingdom and its oil firm to become more financially transparent as part of his wider social and economic reform plan. Prince Mohammed wants to attract capital to the kingdom to diversify the oil-dependent economy and had planned to IPO Aramco in 2018. That process has since stalled due to valuation concerns among other factors, and officials have pivoted to a bond issuance.

An Aramco oil tank is seen at Saudi Aramco’s Shaybah oilfield in Saudi Arabia. Photo: ahmed jadallah/Reuters

The proceeds from the bond would be used for as a down payment on its $69.1 billion purchase of 70% of Saudi Basic Industries Corp., with the remainder of the acquisition paid in installments over time, The Wall Street Journal has reported. The ratings firms said Monday that installments would be paid up to 2021, according to their discussions with Aramco management.

Aramco is buying the 70% stake from Saudi Arabia’s sovereign-wealth fund, Public Investment Fund, which is expected to use the proceeds to drive Prince Mohammed’s agenda. The fund is developing new cities and entire industries in Saudi Arabia and has invested or committed nearly $100 billion to partnerships such as SoftBank Group Corp.’s Vision Fund and stakes in technology firms such as Uber Technologies Inc.

Ahead of the Aramco bond sale, agencies published ratings on the oil firm for the first time. Fitch rated Aramco at A+, the fifth-highest investment grade level and the same as Saudi Arabia’s sovereign bonds. The firm also said it assessed the company’s stand-alone credit profile, ignoring sovereign-related risks, at AA+, or one notch above the level at which the Saudi government itself can raise debt.

Moody’s likewise rated Aramco A1, a similar level to Fitch, and noted that the oil firm’s ties to the government meant it couldn’t be assessed higher.

Exxon Mobil Corp. is rated AAA by Moody’s, its highest level.

“Saudi Aramco’s rating is constrained by the rating of the government of Saudi Arabia given the broad credit linkages between the two,” Moody’s said on Monday, adding that a sovereign credit upgrade or downgrade would impact Aramco’s rating.

Analysts have long waited to see Aramco’s financials and information about its reserves. In 2018, Aramco reported $355.9 billion in revenue and other income related to sales and $111.1 billion in net income, Moody’s said. Its operating profit, before interest, tax and depreciation, was $224 billion, Fitch said. The rating agency didn’t publish a net income figure.

Saudi Aramco also has a strong liquidity position, according to the ratings firms. As of year-end 2018, the company had $48.8 billion in cash compared with $27 billion of group debt. Fitch said it forecasts Saudi Aramco’s net debt rising to around $35 billion by 2021, after incorporating the Sabic transaction. Sabic will contribute around $8 billion a year to Aramco’s income from operations, Fitch said.

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Saudi Aramco is the world’s largest oil producer by volume, Fitch said. The oil firm’s 2018 total hydrocarbon production averaged 13.6 million barrels of oil equivalent a day, including natural gas output, ahead of global and regional producers such as Abu Dhabi National Oil Company, Royal Dutch Shell PLC, Total SA and BP PLC, the ratings agency said.

Saudi Aramco estimates its proved liquids reserves at 227 billion barrels and its total hydrocarbon reserves at 257 billion barrels of oil equivalent. Aramco’s net cash position at the end of last year was $48.8 billion and total borrowings were $27 Billion, according to the bond prospectus. It made 69% of revenues last year from upstream oil and gas and the remainder from so-called downstream operations.

Write to Rory Jones at rory.jones@wsj.com and Summer Said at summer.said@wsj.com

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2019-04-01 10:29:00Z
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All eyes now turn to eurozone PMI's - ForexLive

ECB on a dovish tilt

The Euro is on the ropes with economic growth being scaled back and the ECB making concerned noises about its future path. The revised growth forecasts out earlier this month on March 7 were:

• 2020 GDP 1.6% vs 1.7% prior
• 2021 GDP 1.5% vs 1.5% prior

Inflation:

• 2019 1.2% vs 1.6% prior
• 2020 1.5% vs 1.7% prior
• 2021 1.6% vs 1.8% prior

This was on the back of growth forecasts scaled back in December 2018 too. Draghi on Wednesday 27 March last week gave a catchy sound bite to sum up where the ECB were at. He said that the situation was 'delayed, not derailed'. He also spoke about the resilience of the economy as well as 'risks being tilted to the downside'. A series of cheap loans to eurozone banks was implemented by the ECB. Known as LTRO's (Long term refinancing options), the loans provide funding to eurozone banks which the ECB have used in the past and became popular during the financial crisis of 2008. Here was Draghi speaking on the loans on March 27:

The Governing Council also decided to launch a new series of targeted longer-term refinancing operations (TLTRO-III) in order to preserve favourable bank lending conditions and maintain the efficient bank-based transmission of our policy.

These decisions ensure that our policy stance remains accommodative in the face of a weaker growth outlook. And the calibration of the remaining parameters of the TLTRO-III will reflect the evolving macroeconomic conditions. A slew of Eurozone data out shortly will give us an indication of where the dust has settled for now with the poor recessionary PMI readings. Remember how Germany's poor PMI reading of 44.7 sparked concerns around the middle of March on Friday (March 22). Here was Justin's instantly insightful comments at the time as he gave the heads up on just how bad a miss that reading was:

Boom! That's a massive miss on manufacturing/factory sentiment and it is sending the euro to session lows on the day. It's a third straight contraction for manufacturing PMI but the size of the miss here is really what is driving the euro lower at the moment.For some context, the manufacturing print is the lowest since August 2012 while the composite print is dragged lower as a result to its weakest print since June 2013.

All eyes now turn to the euro PMI's.

ForexLive

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2019-04-01 06:04:19Z
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Shares in Shenzhen pop as Chinese economic activity sees unexpected bounce - CNBC

Stocks in Shenzhen surged on Thursday after a series of data released on Sunday and Monday showed Chinese economic activity improved unexpectedly in March.

By the market close, the Shenzhen component jumped around 3.64 percent to 10,267.70 and the Shenzhen composite soared 3.571 percent to 1,755.67.

Meanwhile, the CSI 300, which tracks the largest stocks listed on the mainland, advanced 2.62 percent to 3,973.93.

Those moves came after both the private Caixin/Markit Manufacturing Purchasing Managers' Index and the official Purchasing Managers' Index (PMI) for March expanded unexpectedly, surprising analysts.

The Caixin/Markit Manufacturing Purchasing Managers' Index (PMI) came in at 50.8 for March. Analysts had expected it to come in at 49.9 for a second month, according to a Reuters poll of economists. A reading below 50 signals contraction, while a reading above that level indicates expansion.

That came on the back of Sunday's release of the official PMI in China, which rose to 50.5 in March from February's three-year low of 49.2. It marked the first expansion in four months, according to data released by China's National Bureau of Statistics.

"Our view is the impact of policy easing is gradually kicking in, pushing up sequential growth indicators such as PMI first," economists from Bank of America-Merrill Lynch said in a note.

In particular, they said, the "larger-than-expected tax/fee cuts and improving financial conditions" likely provided a boost to business sentiment in the country's manufacturing space. Furthermore, demand for industrial restocking could also have risen as commodity and raw material prices experienced a rebound.

"I think this is indeed a good number," Tan Min Lan, head of the Asia Pacific chief investment office at UBS Wealth Management, told CNBC's "Street Signs" on Monday.

"It is a critical number because (I) recall that a couple of weeks back one of the key concern(s) of the market is that when factories shut during the Chinese New Year period, they may not (reopen) if orders do not materialize," she said.

"I think this set of data, it's critical, it's important because it suggests that production did not fall over the cliff and that the fears over industrial deflation and the fears over an unemployment surge may have been overplayed," Tan added.

The manufacturing numbers come amid ongoing tariff talks between the U.S. and China aimed at resolving their trade differences. High-level trade negotiations between the two economic powerhouses are set to resume in Washington this week following last week's talks in Beijing.

— Reuters and CNBC's Huileng Tan contributed to this report.

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2019-04-01 05:46:25Z
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