Gazprom has signed a long-awaited gas-supply agreement with China in a deal that is likely to be a blow to long-term Western efforts to contain Russia's expansionist plans. Following the turmoil in Ukraine, the West has started to consider how to cut reliance on energy from Russia, which is a major part of its economy. The Gazprom (OTCQX:GZPFY) deal with China - unofficially valued at over $400B - reduces any future leverage the U.S. and its allies might have hoped for.
The Bank of Japan has left its key interest rate at 0.1% and maintained its program of expanding the monetary base by ¥60-70T ($580-680B) a year. In a press conference, Governor Haruhiko Kuroda indicated that he doesn't see much need for further stimulus anytime soon.
Japan's trade deficit narrowed to ¥844.62B in April from ¥1.63T in March as export growth strengthened to 5.1% from 1.8% and imports slowed to +3.4% from +18.1%. The high increase in March was due to a last-minute shopping spree before the sales tax rose on April 1. Exports have disappointed over the past year or so despite the weak yen, prompting fears for Japan's economic recovery, although Haruhiko Kuroda remains optimistic.
The Bank of England's minutes have taken on a bit more of a hawkish tone, indicating that some policy makers are moving closer to voting for an increase in interest rates, although all of them first want the slack in the U.K. economy to ease. The BOE's Monetary Policy Committee voted unanimously, as expected, to keep interest rates at 0.5% and against more quantitative easing at a meeting earlier this month.
U.K. retail sales grew at the fastest rate since May 2004 in April, jumping 6.9% on year vs 4.8% in March and beating consensus of 5.2%. While the U.K. government will probably welcome the figures, the data raises questions about how balanced the country's economic recovery is.
China will allow 10 municipalities - including those of Shanghai and Beijing - to sell bonds as part of a pilot scheme as the central government looks to clean up an estimated $3T of public debt. Until now, municipalities weren't allowed to borrow, so the central government would do it for them, or they would use opaque and murky financing vehicles that would take loans on their behalf.
Lenovo's FY net profit leapt 29% to $817M and met forecasts as revenue climbed 14% to $38.71B. Lenovo's (OTCPK:LNVGF) smartphone shipments surged 72% to over 50M units, "driven by the strong growth in China and emerging markets," while personal-computer shipments grew 5% to 55M units despite the broader market contracting. However, Lenovo's overall Chinese sales rose just 1.3%.
U.S. authorities want BNP Paribas to pay over $5B in fines and plead guilty to wrongdoing to settle federal and state probes into the French bank's dealings with sanctioned countries such as Sudan and Iran, Bloomberg reports. The figure is notably above the $3.5B that the newswire service bandied about just last week and the more than $1.1B that BNP (OTCQX:BNPQF) has set aside.
Google needs $20-30B of its foreign earnings to finance overseas acquisitions, which is why it has parked $35B abroad as at the end of March. The search giant, which provided the information yesterday, also plans to use $2-4B for capex and $12-14B for an R&D cost-sharing agreement. Google's (GOOG, GOOGL) disclosure of its thinking comes amid controversy about how U.S. corporations keep large funds overseas in order to avoid American taxes.
Woodside Petroleum has dropped an agreement to acquire a 25% stake in the massive Leviathan natural-gas field off the coast of Israel for up to $2.7B. One reason for the withdrawal was a dispute over exports: the existing owners, which include Noble Energy (NYSE:NBL), mainly want to pipe the gas to nearby countries such as Jordan and Turkey, whereas Woodside (OTCPK:WOPEF) would prefer to use its LNG expertise to sell to more distant markets. Another problem was a tax dispute with the Israeli government.
Netflix intends to enter France, Germany and four other European countries later this year, adding to online movie and TV subscription services that the company provides in the U.K., Scandinavia and the Netherlands. Netflix (NASDAQ:NFLX) will be jumping into crowded markets, with Amazon's (NASDAQ:AMZN) Lovefilm set to be a major rival in Germany, while France has tough regulation.
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In Asia, Japan -0.2% to 14042. Hong Kong flat at 22837. China +0.8% to 2025. India -0.3% to 24298.
In Europe, at midday, London -0.1%. Paris flat. Frankfurt +0.2%.
Futures at 6:20: Dow +0.2%. S&P +0.3%. Nasdaq +0.3%. Crude +0.8% to $103.13. Gold -0.1% to $1293.
Ten-year Treasury Yield +2 bps to 2.53%.
Today's economic calendar:
7:00 MBA Mortgage Applications
10:00 Fed's Williams: "Job gains and Economic Conditions"
10:30 EIA Petroleum Inventories
11:30 Janet Yellen speech
12:50 PM Fed's George: "U.S. Economy and Banking"
1:30 PM Fed's Kocherlakota Speech
2:00 PM FOMC minutes
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