U.S. wary of EU proposal for investment court in trade pact
By Krista Hughes and Philip Blenkinsop
- The United States is wary of a European Union proposal for a new court system to settle investment disputes as part of the world's biggest free-trade agreement, U.S. Trade Representative Michael Froman said.
- A Pacific trade deal agreed earlier this month amended rules allowing foreign companies to take legal action against governments to add more safeguards, he said, and Washington was open to discussing other reforms as part of a proposed trade deal with the EU.
- But he was not sure about the EU's idea for a new court system with an appeal tribunal, proposed after concerns that U.S. multinationals could use private arbitration rules in the Transatlantic Trade and Investment Partnership (TTIP) to challenge European food and environmental laws.
- "Because of the high standards and safeguards in our agreements, there have been very few cases against the U.S., and to date, the government has never lost," Froman said in an interview Wednesday, in comments approved for release on Thursday.
By Krista Hughes and Philip Blenkinsop
"It's not obvious to me why you would want to give companies a second bite of the apple."
- Investor-state rules aim to protect foreign companies from unfair treatment by host governments and provide compensation if assets are appropriated. But critics have also noted a trend towards challenges over regulations, such as Marlboro maker Philip Morris's (N:PM) action against Australian laws mandating plain packaging for cigarettes.
- Froman said Washington's baseline for TTIP included both model U.S. investor-state rules adopted in 2012 and a revised version contained in the 12-nation Trans-Pacific Partnership (TPP). Details of that agreement are yet to be released.
- TPP safeguards included no forum shopping, to prevent companies going back to domestic courts if they lose challenges in special investor-state dispute forums, he said.
- They also enshrined governments' right to regulate for health safety and the environment, put the burden of proof on the claimant to prove there is a violation of the standard, and stopped companies suing on lost profit expectations or because of an expectation that regulations would remain static, he said.
- Froman said there was every chance TTIP, which seeks to harmonize regulations as well as cut tariffs on exports, could be wrapped up in 2016.
- "I don't think there's any reason it can't get done before this administration is over. I think that's in our mutual interest," he said.
Top 5 Things to Know About Economic Condition
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1. Fed leaves the door wide open for December rate hike
- The Federal Reserve left interest rates unchanged following a two-day policy meeting on Wednesday, as widely expected, but surprised the market with a hawkish statement, which included a direct reference to its next policy meeting in December.
- "In determining whether it will be appropriate to raise the target range at its next meeting, the committee will assess progress - both realized and expected - toward its objectives of maximum employment and 2% inflation," it said.
- The central bank's statement did not repeat that global risks would have a likely impact on the U.S. economy, as it warned at its prior meeting in September.
- The hawkish statement boosted the probability that the Fed will raise rates at its next meeting in December for the first time since 2006. 2. U.S. third quarter GDP due before the opening bell
- The Commerce Department will release its preliminary estimate of U.S. economic growth for the third quarter at 8:30AM ET, at the same time as the weekly jobless claims report.
- The report was expected to show that the economy expanded 1.6% in the three months ended September 30, slowing from growth of 3.9% in the second quarter, as a weaker global economy took its toll.
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3. Global markets mostly lower after hawkish Fed
- Asian equities were mostly lower in choppy trade Thursday, as a positive handover from Wall Street did little to help sentiment.
- In Europe, equity markets declined as investors digested a raft of quarterly earnings reports and after signals that the Federal Reserve could raise interest rates as soon as December.
- Meanwhile, U.S. stock futures pointed to losses at the open, as investors looked ahead to key U.S. third-quarter growth data due at 8:30AM ET for further clues on the strength of the economy. 4. U.S. earnings season continues
- Ahead of the market open, Time Warner Cable (N:TWC), ConocoPhillips (N:COP), Mastercard (N:MA) and Altria Group (N:MO) will report earnings. After the market closes, Starbucks (O:SBUX), LinkedIn (N:LNKD), Expedia (O:EXPE), Electronic Arts (O:EA) and Western Union (N:WU) are on the earnings docket. 5. Gold, oil take a hit from stronger dollar
- Gold and oil prices pushed lower on Thursday, as the U.S. dollar surged to a two-month high against a basket of major currencies after the Federal Reserve hinted at a possible rate hike in December.
- Gold was last down $16.50, or 1.4%, to trade at $1,159.60 an ounce, while U.S. crude dropped 35 cents, or 0.76%, to $45.59 a barrel and Brent shed 52 cents, or 1.05%, to $48.53 a barrel.
- A stronger dollar reduces demand for raw materials as an alternative investment and makes dollar-priced commodities more expensive for holders of other currencies.
Crude oil falls after U.S. growth figures disappoint
By Aaron Sheldrick
- TOKYO (Reuters) - Crude futures dropped in Asian trading on Friday after the release of a report showing that U.S. economic growth had slowed sharply, reinforcing concerns about sluggish demand in a world awash with oil.
- U.S. economic growth braked sharply in the third quarter as businesses cut back on restocking warehouses to work off an inventory glut, data showed.
- Both of the main crude benchmarks are on track to post their first weekly gains in three weeks, but with oil still being added to inventories, prices are likely to be rangebound in the coming weeks, traders and analysts said.
- U.S. crude was down 45 cents at $45.89 a barrel at 0739 GMT. The benchmark is on track to post a gain of 2.4 percent this week.
By Aaron Sheldrick
- Brent crude fell 32 cents to $48.48 a barrel and is heading for an increase of 1 percent this week.
- The sluggish U.S. growth figures and weak home sales numbers have tempered the market's positive reaction to government figures earlier in the week showing oil stockpiles last week had increased by 3.4 million barrels, which was below the estimate from an industry group.
- That had sent prices sharply higher with U.S. crude rallying nearly $3 a barrel.
- Trading is likely to be muted heading into the weekend before China's closely watched Purchasing Manager Indices are released next week.
- "Clearly China demand is a key question for energy markets at the moment. With the manufacturing PMI due Monday I wouldn't expect anyone to getting too carried away," said Michael McCarthy, chief market strategist at CMC Markets in Sydney.
- The 50 percent slide in oil prices since last year is gradually pushing the oil industry into the red with little relief in sight.
- The fall in prices and dim outlook took its heaviest toll yet in the third quarter as oil companies again reported a dramatic drop in income, with some falling to a loss. Impairment charges totaled about $25 billion in the first nine months of the year.
World stocks on course for best month in four years
By Jamie McGeever
- World shares rose on Friday and were on course for their best month in four years, led by Europe's best month in over six years, as global central banks kept stimulus policies intact and many hinted at further steps to reenergize their economies.
- That has helped soothe concern over higher borrowing costs in the United States as the Federal Reserve prepares to tighten rates, possibly by the end of the year.
- Corporate earnings also boosted sentiment, with results from France's Renault (PA:RENA), BNP Paribas (PA:BNPP) and Airbus (PA:AIR) in particular getting the thumbs up from investors.
- In early trade, the pan-European index of leading 300 shares was up 0.2 percent at 1,487 points (FTEU3), putting it on course for a rise of 8.5 percent over the course of October. That would be its best month since July 2009.
- France's CAC 40 (FCHI) and Germany's DAX (GDAXI) were both up 0.4 percent, while Britain's FTSE 100 (FTSE) was flat as investors reacted negatively to earnings from Royal Bank of Scotland (L:RBS) and British Airways operator IAG (L:ICAG).
- The dollar slipped for a second day, notably against the yen after the Bank of Japan left policy unchanged. Government bond yields also slipped back after two days of Fed-fueled increases.
- "Continued expectation of easier central bank policy has helped underpin equity markets after a turbulent few months," said Michael Hewson, chief market analyst at CMC Markets in London.
- "Investors are veering between confidence that the U.S. economy is still performing well enough to withstand a rate rise, to an expectation that if it's not, the Fed will remain on hold," he said.
- MSCI's broadest index of Asia-Pacific shares outside Japan (MIAPJ0000PUS) was down 0.1 percent but poised to gain more than 7 percent for October, its best showing since January 2012.
- MSCI's leading global equity index (MIWD00000PUS) was up 0.2 percent on Friday, bringing its monthly gain up to 8 percent, its biggest since October 2011.
- Japan's Nikkei stock index (N225) ended up 0.8 percent, its highest in more than two months, buoyed by a media report that the government is considering a supplementary budget of over $25 billion. YIELDS YIELD
- The BOJ's decision to keep monetary policy steady was in line with most expectations, but some investors had speculated the central bank would deliver some additional steps to support Japan's economy.
- The BOJ also trimmed its price and growth forecasts on Friday, and many still expect it to eventually deliver more easing.
By Jamie McGeever
- "The BOJ will probably wait to see whether the Fed may move in December, before deciding to ease further ... (maybe) in January at the earliest, but it will more likely happen in April," said Hiromachi Shirakawa, chief economist at Credit Suisse (VX:CSGN) Securities Japan.
- U.S. stock futures pointed to a higher open on Wall Street, which is poised for its best monthly performance in four years. (N) (ESc1)
- U.S. data released overnight showed U.S. gross domestic product in July-September increased at a 1.5 percent annual rate. That was just shy of the consensus forecast for 1.6 percent growth and slowing from a 3.9 percent rise in the second quarter.
- But solid consumer spending kept alive the possibility that the Fed could deliver an interest rate increase in December.
- Although the U.S. central bank held policy steady on Wednesday, it left the door open to raise interest rates for the first time since 2006 when it meets Dec. 15-16.
- In currencies, the dollar fell against the yen after the BOJ policy decision, slipping to an intraday low of 120.29, and was last down about 0.4 percent at 120.65 yen .
- The euro also regained ground from the dollar, rising 0.3 percent to $1.1005 but down about 1.5 percent for the month, after European Central Bank chief Mario Draghi took a surprisingly dovish stance that suggested further monetary easing steps were possible in December.
- China's yuan chalked up its biggest daily rise against the dollar since its one-off revaluation in July 2005, after suspected intervention by the Chinese central bank through state banks. It rose around 0.5 percent, pushing the dollar down to 6.3180 yuan . Benchmark U.S. Treasury yields also slipped back from this week's highs.
- The 10-year yield was down nearly three basis points at 2.14 percent (US10YT=RR), having climbed 15 basis points on Wednesday and Thursday. The two-year yield was down a basis point at 0.72 percent (US2YT=RR).
- Crude oil futures slipped after mixed U.S. economic data exacerbated fears of oversupply and as investors took profits following a rally. They were still on track to end a volatile week with gains.
- U.S. crude (CLc1) was down 1 percent at $45.61 a barrel, while Brent (LCOc1) slipped about 0.5 percent to $48.53.
Dollar slips lower on U.S. data, more reports ahead
- The dollar slipped lower against the other major currencies on Friday, as the previous session's downbeat U.S. data continued to weigh and as investors eyed the release of additional U.S. reports later in the day. The dollar was lower against the yen, with USD/JPY down 0.54% at 120.48.
- The dollar came under pressure after the Commerce Department reported on Thursday that U.S. gross domestic product grew at an annual rate of 1.5% in the three months to September, missing expectations for growth of 1.6%.
- In addition, the U.S. National Association of Realtors said its pending home sales index dropped 2.3% last month, disappointing expectations for a gain of 1.0%.
- The greenback had strengthened broadly after Wednesday’s Federal Reserve statement said that officials might make a decision to raise interest rates at their December meeting.
- Market participants were now looking ahead to reports on employment costs and U.S. personal spending due later in the day, for further indications on the strength of the economy.
- Meanwhile, the yen gained ground after the Bank of Japan refrained from adding additional monetary easing measures at its monthly policy meeting on Friday.
EUR/USD rose 0.26% to trade at 1.1005.
- Eurostat, the statistical body of the European Union, reported that the annual rate of inflation in the euro zone was flat in September, compared to expectations for a 0.1% uptick, after a 0.1% dip the previous month.
- Data also showed that the single currency bloc's unemployment rate slipped to 10.8% last month from 10.9% in August, whose figure was revised from a previously estimated 11.0%. Analysts had expected the unemployment rate to remain at 11.0% in September.
- Elsewhere, the dollar was lower against the pound, with GBP/USD up 0.24% at 1.5347 and with USD/CHF slipping 0.17% to 0.9877.
- In Switzerland, the KOF Economic Barometer came in at 99.8 this month, below expectations for 100.0 and down from a revised reading of 100.3 in September.
- The Australian and New Zealand dollars were stronger, with AUD/USD up 0.40% at 0.7102 and with NZD/USD climbing 0.81% to 0.6749.
- Data earlier showed that the ANZ Business Confidence Index for New Zealand fell to 10.5 in October from 18.9 the previous month, compared to expectations for a drop to 10.0. Meanwhile, USD/CAD fell 0.17% to trade at 1.3150.
- The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.31% at 97.06, still close to Wednesday's two-and-a-half month highs of 97.89.
Pound edges higher against softer dollar
- The pound edged higher against the U.S. dollar on Friday, as sentiment on the greenback remained vulnerable following the previous session's downbeat U.S. data and as investors eyed the release of additional reports later in the day.
- GBP/USD hit 1.5359 during European morning trade, the pair's highest since October 27; the pair subsequently consolidated at 1.5330, adding 0.13%.
- Cable was likely to find support at 1.5240, Thursday's low and resistance at 1.5382, the high of October 16.
- The dollar came under pressure after the Commerce Department reported on Thursday that U.S. gross domestic product grew at an annual rate of 1.5% in the three months to September, missing expectations for growth of 1.6%.
- In addition, the U.S. National Association of Realtors said its pending home sales index dropped 2.3% last month, disappointing expectations for a gain of 1.0%.
- The greenback had strengthened broadly after Wednesday’s Federal Reserve statement said that officials might make a decision to raise interest rates at their December meeting.
- Market participants were now looking ahead to reports on employment costs and U.S. personal spending due later in the day, for further indications on the strength of the economy. Sterling was fractionally lower against the euro, with EUR/GBP easing up 0.08% to 0.7177.
- In the euro zone, a preliminary report showed that Spanish GDP expanded by 0.08% in the third quarter, in line with expectations and down from a growth rate of 1.0% in the three months to June.
- A separate report showed that German retail sales were flat in September, disappointing expectations for a 0.4% gain.
Chinese court orders ConocoPhillips to pay $266,000 over 2011 oil spills
- A Chinese court has ordered ConocoPhillips (N:COP) to pay compensation to nearly two dozen aquaculture farmers who said their livelihoods were hurt by oil spills off China's northeastern coast in 2011.
- The U.S. oil company was told to pay 1.68 million yuan ($266,000) to the 21 farmers, who did not participate in a previous settlement reached in 2012 with ConocoPhillips and its partner, Chinese state-owned oil major China National Offshore Oil Corporation (CNOOC), the Tianjin Maritime Court said in a statement on its website.
- The farmers were seeking more than 141 million yuan ($22 million) from the two oil companies over leaks that were first discovered in June 2011 at the Penglai 19-3 oilfield, a joint exploration project by the two.
- The leaked oil spread across as much as 6,200 sq km of water in Bohai Bay, according to court documents. The spills were sealed in October 2011, and the field, with daily production of about 160,000 barrels, was restarted in February 2013.
- ConocoPhillips has a 49-percent stake in the field, which is 51-percent owned by CNOOC Ltd (HK:0883), the Hong Kong-listed flagship of CNOOC.
The court laid responsibility for compensation solely with ConocoPhillips, the operator of the oilfield.
The two companies previously agreed to give one billion yuan in compensation for losses in the fishing industry, and 1.68 billion yuan for ecological damages in a settlement with Chinese authorities. Roughly 4,500 affected households signed onto the settlement, the court said.
ConocoPhillips could not immediately be reached for comment.
Another maritime court, in the coastal city of Qingdao, said in July that it will hear a landmark case brought by a nonprofit organization against ConocoPhillips and CNOOC over the spills.
($1 = 6.3180 Chinese yuan)
support by ZATco & 20news
China's rail freight continues to decline
- China's railway freight volume, a key indicator of economic activity, dropped in the first three quarters of 2015, the country's top economic planner said on Monday.
- The railways transported 2.53 billion tons of cargo from January to September, down 11.4 percent year on year, compared with a decrease of 10.9 percent in the first eight months, and a 10.1 percent drop in the first half, according to the National Development and Reform Commission.
- In September alone, railways transported 270 million tons of cargo, down 15.6 percent year on year.
- The figures came as China's factory activity fell into contraction territory in September, the fourth time this year.
- China's official purchasing managers' index (PMI) came in at 49.8 in September. A reading above 50 indicates expansion, while that below 50 represents contraction.
- The country's economy posted a 6.9-percent growth year on year in the third quarter of 2015, lower than 7 percent in the first half of the year, which is the first time the quarterly growth rate had dropped under 7 percent since the second quarter of 2009. support by ZATco & 20news
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Oil prices lower as oversupply fears weigh
- Investing.com - Oil prices fell on Tuesday, extending losses into a third week, on worries over a supply glut and with U.S. inventory data expected to show another increase in crude stocks.
- U.S. crude was down 1.42%, at $43.36 a barrel while Brent fell 0.77% to $47.18 a barrel at 8.38AM ET.
- An expected further build in U.S. crude stocks and a glut of refined products again raised concerns of an oversupplied market.
- A report from the U.S. Energy Information Administration on Wednesday was expected to show that commercial crude stockpiles rose for a fifth straight week, by an average of 3 million barrels to 479.6 million.
- Also weighing on prices was news that U.S. congressional leaders had proposed to sell 58 million barrels of oil from U.S. emergency reserves to help pay for a budget deal, although the sales would happen only between fiscal years 2018 and 2025.
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Apple earnings highlights - EPS $1.96 vs $1.88 est
Q4 results from Apple
Here are the highlights for the iPeople:
- Sees Q1 revenue $75.5B-$77.5B versus $77.1B est
- Q4 revenue $51.5B vs $51.08B exp
- iPads sold 9.88m vs 10.2m in Q3
- iPhones sold 48.05m vs 48.5m exp
- Mac sales 5.7m vs 4.8m in Q3
- 'Other products' (which includes watch) 3.05B revenue vs 2.64B in prior quarter
- China sales $12.52B vs $13.23B in Q3
- Gross margin 39.9% vs 39.3% exp Looks like a disappointment at first blush. They beat on EPS but the market has been conditioned to expected better.
- For the broader global macro picture, I want to highlight China sales because that's indicative of a broader slowdown in the economy. A 2-3% decline in the yuan isn't enough to account for that kind of slowdown in a '+6.9% growth' economy.
- However, Apple executives said "We have not seen any signs of an economic slowdown" in China.
- Despite the 'miss', the company still made $11.1 billion in the quarter and shares are up 1.9% in the after-market.
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