Indonesia's central bank will conduct three foreign exchange swap auctions this week to ensure there is enough rupiah liquidity in the market following the hike in its key rate, the 7-day reverse repo rate by 25 bps to 4.50%
The overnight contract for the Jakarta Interbank Offered Rate rose to 4.22528 percent on average the following day, from 4.02500 percent.
The rupiah has been under pressure in past weeks as U.S. Treasury yields rose and the dollar rallied. The currency continued to fall despite BI's rate hike and on Monday it softened further to trade at 14,195 to the dollar, its weakest since October 2015.
The supposedly bullish news of a power-sharing agreement between Italy's Five Star Movement and The League isn't doing much to help that country's market for government debt, and chatter about a eurozone break up is again entering the conversation.
Italy's 10-year government bond has exploded higher by 18 basis points today to 2.40%. Against Germany, it looks even worse, as 10-year Bund yields are down six basis points.
Italian stocks are the worst performers on the Continent as well, with the FTSE MIB down 1.5% vs. the Stoxx 600's 0.3% advance.
Checking another peripheral name, Spanish 10-year yields are up 7.5 basis points to 1.50%, and the IBEX 35 is off 0.45%.
"Carmen Reinhart dropped an interesting stink bomb on the markets last week," JPMorgan Asset Management Global CIO Bob Michele tells Bloomberg.
Economist Reinhart took note of higher debt levels in emerging markets, as well as the increased exposure of that debt to foreign currency.
Michele agrees: "These economies have levered up and it’s not clear they can absorb higher funding rates going forward." 2016's taper tantrum ended up being a nothing-burger, says Michele, but this time, monetary tightening is the real deal - QE is over and a central bank rate hike cycle shows no signs of slowing.
Altice (OTCPK:ALLVF) is off 1.8% in U.S. trading after word from MSCI that it will delete Altice A shares from its global standard and large-cap indexes.
The move is effective May 22, the day the stock goes ex-dividend for a separation of Altice USA (ATUS -3.3%), where Altice shareholders will get 0.4163 share of Altice USA for each share of Altice held.
Shares of Altice Class A are down 7.8% in Amsterdam.
WestJet Airlines (OTC:WJAFF, OTC:WJAVF) responds on Twitter to reports of works disruptions and a potential strike by pilots.
"We have not received any notification of labour action and remain actively engaged in negotiations. We will provide additional updates should this change as they become available," tweets the airline.
Stocks, oil prices and the dollar are all getting a boost, with the Dow set to leap 228 points, amid easing U.S.-China tensions that have roiled global markets this year. Dow +0.9%; S&P 500 +0.6%; Nasdaq +0.7%.
"We are putting the trade war on hold. Right now, we have agreed to put the tariffs on hold while we try to execute the framework,” Treasury Secretary Steven Mnuchin told Fox News.
Trade Representative Robert Lighthizer still cautioned that tariffs remained an important tool to "protect our technology."
Oil is up 0.4% at $71.65/bbl, gold is 0.6% lower at $1284/ounce and the 10-year Treasury yield is flat at 3.07%.
The company's subsidiary Cogeco Connexion was the successful bidder on the licenses of 2500 MHz and 2300 MHz spectrum, mainly in the Ontario and Quebec wireline footprint.
“As stated in the past, the company has an interest in entering the mobile market only to the extent that it can operate a profitable business within its financial means," says Chief Technology and Strategy Officer Luc Noiseux.
"A wireless offering would be complementary to Cogeco Connexion’s current offering to its customers. This is a first positive step in the exploration of our options in the mobile wireless market.”
The European Union tries to save the Iran nuclear deal and protect EU companies investing in the country by launching a process to activate its blocking statute that bans any EU company from complying with U.S. sanctions and does not recognize court rulings that enforce U.S. penalties.
The measure has been threatened but never implemented, and is viewed as a political weapon more than a regulation because its rules are vague and difficult to enforce; the global reach of the U.S. financial system and the U.S. presence of many European companies also raise questions about its effectiveness.
EU officials say the blocking statute will be revamped to encompass Pres. Trump’s decision to revive Iran-related sanctions, including sanctions aimed at Iran’s oil sector and transactions with its central bank.
European firms with major operations in the U.S., such as oil and gas producers Royal Dutch Shell (RDS.A, RDS.B) and Total (NYSE:TOT), are seeking waivers from sanctions on a case-by-case basis.
North Korea has suspended talks with the South over joint military exercises with the U.S. as the rhetoric between the nations ratchets up once again.
Speaking in the Oval Office, President Trump said Kim Jong-un could remain in power if the two sides reached a deal to rid the North of nuclear weapons. Otherwise, the country should expect "total decimation."
Although they have yet to agree on a prime minister, Italy's Five Star Movement and the League have struck a deal on a common platform to bring a populist government to the eurozone's third largest economy.
Key points: Universal basic income of €780 per person per month, no mention of a referendum on membership of either the EU or the euro, and no plans to ask the ECB to cancel debt.
The crude rally towards $80 a barrel is being seen as a short-term spike driven by geopolitics rather than any supply shortage, according to four OPEC delegates, a sign the group is not rushing yet to rethink its output cut agreement.
Saudi Arabia is meanwhile discussing concerns over volatile oil prices with other OPEC members and Russia amid supply worries following the U.S. withdrawal from the 2015 Iran nuclear deal.
Greece and neighboring Macedonia are close to resolving a decades-old naming dispute that has prevented the latter from joining the EU.
The former part of Yugoslavia, then known as the Socialist Republic of Macedonia, adopted the shortened version Macedonia when it became independent in 1991, but Greece has since blocked accession talks as it contains a region with the same name.
A deal would likely see the Balkan nation go by "Upper Macedonia."
"The NAFTA countries are nowhere near close to a deal," U.S. Trade Representative Robert Lighthizer declared, pointing to "gaping differences" on issues like intellectual property, agricultural access, labor and energy.
It comes as House Speaker Paul Ryan said there could still be a few weeks of "wiggle room" for a deal to be considered by the current Congress, but stressed even that seemed uncertain.
Trade talks in Washington... China has reportedly extended an olive branch to the U.S. by dropping an anti-dumping probe into imports of American sorghum, which effectively halted a trade worth roughly $1.1B last year.
Beijing also offered to slash the U.S. trade deficit by up to $200B, which is seen as benefiting U.S. aircraft maker Boeing (NYSE:BA) and producers of U.S. farm products including fruit, nuts, pork and wine.
Update: China's Foreign Ministry has shot down reports of the $200B trade surplus cut.
StellarCloud is a shared platform designed to extend its existing content delivery network services to Infrastructure as a Service; it's intended to help companies in their transition to cloud services.
Coinciding with that announcement, it said iQiyi (IQ -1.1%) had joined in a strategic cooperation deal regarding StellarCloud.
Meanwhile, Xunlei says ThunderChain is high-performance blockchain infrastructure that can hit more than a million transactions per second.
NetEase (NASDAQ:NTES) is 9.1% lower and at its lowest point since January 2017 after an earnings miss exacerbated by foreign exchange and the prospect of ongoing rising costs.
Analysts are responding to the report with caution. Jefferies has slashed its price target to $276 from $310, pointing to an "across the board" increase in operating expenses in the miss. The company should be able to expand its addressable base of gamers with new genres, but that move could carry "lower margin on higher marketing spend and lower average revenue per unit," the firm says. (h/t Bloomberg)
A smaller target reduction comes from Benchmark, which has reduced to $340 from $355. It's maintaining a Buy rating.
And Barclays reiterated its Hold stance with a price target of $280.
Singapore Telecommunications (OTCPK:SGAPY) fell slightly short on revenues though underlying profit was in line in the company's fourth quarter earnings.
Group revenue of S$4.33B ticked up just 0.4% Y/Y but was up 2.8% in constant currency.
EBITDA of S$1.235B compared to expecations for S$1.23B despite falling nearly 6% from the prior year.
Free cash flow was S$800M, up 4.8%.
For 2019, the company's expecting revenues to grow in low single digits, and for EBITDA to be stable. Free cash flow is projected at S$1.9B; cash capex and accrued capex is forecast at S$2.2B (A$1.4B for Optus, S$0.8B for the rest of Singtel).
In first-quarter earnings, NetEase (NASDAQ:NTES) fell well short of profit expectations while revenues came in at the high side thanks to heavy gains outside its core gaming business.
Shares are down 4.1% in after-hours trade.
Net revenues of 14.2B yuan (about $2.3B) were up 3.9% Y/Y.
Non-GAAP net income, meanwhile, fell to 1.3B yuan (about $213.2M) from last quarter's 1.9B yuan and the prior year's 4.3B yuan; NetEase took a heavier foreign exchange loss of 375.1M yuan (vs. last quarter's 159.1M yuan and last year's 48.5M yuan) due mainly to unrealized exchange losses from dollar-denominated bank deposits and short-term loan balances.
Adjusted earnings per ADR were $1.61, below expectations for $2.15.
Revenue by segment: Online game services, 8.8B yuan (about $1.4B, down 18.4% in yuan terms); E-commerce, 3.7B yuan (about $595M, up 101%); Advertising services, 462M yuan (about $73.7M, up 3.8%); E-mail and others, 1.2B yuan ($194.1M, up 102%).
Liquidity came to 43.5B yuan (about $6.9B), up slightly from 43.2B yuan as of Dec. 31. Cash flow from operations was 1.9B yuan, down from last quarter's 3.9B yuan and last year's 4B yuan.
BT Group (NYSE:BT) is 1.8% lower on NYSE and at a seven-year low following a loss of faith from bullish Bernstein, throwing in the towel with a downgrade to Market Perform.
The firm sees "signs of a business in turmoil" in dim guidance and a restructuring program, and shares are likely to stay at low levels for a while, the firm says. There's a "dramatic erosion" of earnings capacity and flat outlook for growth ahead. (h/t Bloomberg)
The firm has cut its price target to £2.15 from £3.05; shares closed in London at £2.03 today.
KeyBanc has downgraded to Sector Weight from Overweight, pointing to "uncertain visibility of T/J contributions [those from partners Tencent and JD.com] and secular margin pressure" that more than make up for possible growth re-acceleration and multiple expansion. (h/t Bloomberg)
The bank cut its price target to $13 from $20; shares have jumped to $12.54 on NYSE today.
Meanwhile, Daiwa has downgraded the shares to Hold as well, with a price target cut to $16 from $25.
Sea Limited (NYSE:SE) is up 10.1% in NYSE trading following Q1 earnings where it added new growth in its gaming unit and exponentially increased its e-commerce wing.
Digital Entertainment adjusted revenues grew 42.6% and EBITDA rose 48.6% to $55M. Quarterly active users hit 126.7M, up 125% Y/Y and up 44.3% Q/Q. Average revenue per users was $1.2, vs. a year-ago $1.8.
In E-commerce, gross merchandise value was $1.9B, a tripling of last year's total and up 23% Q/Q. Gross orders were up 217% to 111.4M. EBITDA, though, was -$179.6M vs. a year-ago -$62.7M.
Revenue by segment: Digital Entertainment, $110.7M (up 26.3%); E-commerce, $27.3M (up from $34,000); Digital Financial Services, $3.7M (up 81.9%).
The company boosted full-year revenue guidance to $780M-$820M (40.9%-48.1% growth Y/Y) from a previous range of $730M-$770M. It also sees e-commerce GMV at $8.2B-$8.7B, up from $7.5B-$8B.
Tencent (OTCPK:TCEHY, OTCPK:TCTZF) reports Q1 net profit of 23.29B yuan (consensus: 17.5B), which represents a 61% Y/Y growth. Revenue grew 48% to 73.53B yuan (consensus: 71.04B).
Revenue breakdown: VAS business, 46.9B yuan (+34%); Online game, 28.8B yuan; Smartphone game, 21.7B yuan (+68%); Social networks, 18.1B (+47%); Online ad business, 10.7B (+55%); Social and others ad, 7.4B (+69%); Other businesses, 15.96B (+111%).
Key metrics: Capital expenditure, 6.3B yuan (+200%); Adjusted EBITDA, 30.9B (+45%); FCF, 13M (-46% Y/Y); net debt, 14.5B.
Margin improvement: Operating margin was 39%, up 42% on the year and 8% on the quarter. Tencent’s operating margin fell in Q4 and earlier this year, the company said it was focusing on investments over short-term margins.
North Korea is expanding on its threat to cancel the June 12 summit between Kim Jong-un and President Trump.
Besides protesting the joint air force drills taking place in South Korea, Pyongyang said the U.S. must stop insisting it "unilaterally" abandon its nuclear program and lashed out at national security advisor John Bolton, who talked about a disarmament similar to "Libya 2004."
SoftBank (OTCPK:SFTBF, OTCPK:SFTBY) CEO Masayoshi Son says it’s “just a matter of time” before the company launches the second version of its Vision Fund.
Son doesn’t provide a potential launch date beyond “in the near future.”
The $100B Vision Fund launched about a year ago and has acquired stakes in ARM Holdings, Nvidia, and WeWork. The fund also provides cushioning for some SoftBank investments like ride-hailing companies Uber and Didi.
Fund investors include Apple, Qualcomm, and the sovereign-wealth funds of Saudi Arabia and Abu Dhabi.
In other SoftBank news, the company plans to open a Saudi Arabian office, according to Reuters sources.
A top shareholder has taken sides against a key investor advisory firm in the fight over the fate of the chairman's seat at ad giant WPP.
Glass Lewis has recommended shareholders vote against the re-election of Roberto Quarta as chairman.
But Harris Associates partner David Herro tells Bloomberg "We do not agree with Glass Lewis ... In our view, the release of the conduct report is not a critical issue. We are more concerned with an orderly succession process and the selection of an excellent and capable CEO."
Harris is WPP's No. 3 shareholder, Bloomberg says, with just under 8% of shares.
Eurozone economy slowed slightly to an annualized 2.5% in the first quarter, compared to the consensus of 2.7%, following 2.7% annual growth in the fourth quarter.
Speaking after the bank’s latest policy meeting in April, ECB President Mario Draghi acknowledged that the pace of the euro area recovery had moderated since the start of the year, but signaled no change in monetary policy.
Draghi said his overall assessment was one of “caution tempered by an unchanged confidence” that inflation is moving towards the ECB’s target of just below 2%.
Current ION president Basil Alwan will continue as a member of the Group Leadership Team as a co-president of that business and adviser to the CEO.
Reddy played a key role in building the IP routing business from the ground up, Nokia says; he led the IP Software Engineering team for more than 10 years before leading the IP Routing business unit for the past five.
As for the responsibility split, Reddy will mainly handle day-to-day operational matters and jointly manage strategy and overall performance.
"I am pleased to see the bench strength of great leaders at Nokia, which allows us to benefit from the capabilities of all our team members," says CEO Rajeev Suri.
Seven Stars Cloud (NASDAQ:SSC) is off 5.1% after revenue more than quintupled Y/Y in its Q1 earnings -- a 461% jump the company attributes to expanding business in crude oil trading in October -- but the company said it would need to work on gross profitability.
Costs of revenue grew in line with that jump, and gross profit fell to $0.4M from a year-ago $3.8M. Much of the prior-year total was one-time consulting fees, it says.
The company swung to a net loss of $0.06/share from year-ago gains of $0.04/share.
Cash was $3.9M, not including $40M subscription agreement funds from recent private placement.
For the full year, it's sticking with previous guidance of $280M (despite the record $186M in Q1) and $35M in EBITDA.
Malaysian Prime Minister Mahathir Mohamad plans to remain in power for one or two years following his shock election win, but expects criminal charges to be filed against former leader Najib Razak following an investigation into the 1MDB scandal.
Questions over how long he plans to stay in power risk undermining an agenda that include cutting spending, scrapping a goods-and-services tax and reviewing large infrastructure projects.
Washington and Beijing are still "very far apart" on trade, U.S. Ambassador to China Terry Branstad announced as trade talks kick off today between the world's two largest economies.
The Trump administration wants a timetable on how China will open up its markets to U.S. exports, and meet pledges with regards to the insurance and financial services sector, as well as reduce auto tariffs.
Turkey's lira is in trouble. The currency slid to its weakest level ever against the dollar, down 13% to 4.3990 YTD, after President Erdogan revealed plans to take greater control of the economy.
He said the central bank was independent, but it cannot ignore signals from the head of the executive following the switch to a new presidential system next month that will grant him sweeping authority.
That's payable to stockholders of record at the close on May 22, and the payment date for the dividend is set two business days prior to the separation date planned for Altice USA's total separation from Altice NV (OTCPK:ATCEY), so the exact payment date will be set when the separation date is finalized.
Some 78.6% of the divident (or $1.60/share) will be taxable and the other 21.4% as a return of capital, Altice USA says.
Phoenix New Media (NYSE:FENG) is 5.7% lower after hours following Q1 earnings with a narrower loss than expected but light revenue guidance for the current quarter.
Revenues fell 3.4% in renminbi terms; net advertising revenues grew 0.7% to 242.9M yuan and paid services revenues fell 22.2% to 41.6M yuan. The company adopted ASC 606 standards as of Jan. 1.
Gross profit grew to 156.2M yuan (about $24.9M) from 132M yuan a year ago. Gross margin was 54.9%, up from a year-ago 44.8%.
Loss from operations was 54.4M yuan vs. a year-ago loss of 31.8M yuan. Net loss widened to 57.5M yuan (about $9.2M) from a prior-year loss of 32.2M yuan.
For Q2 (and considering new ASC 606 standards), the company's guiding to revenue of 361.4M-376.4M yuan (about $57M-$59.4M). Net advertising revenues are forecast at 320.5M-330.5M yuan, and paid services revenues are seen at 40.9M-45.9M yuan.
Under the old ASC 605 standard, guidance would be for revenues of 396.8M-411.8M yuan (about $62.6M-$64.97M, below consensus for $65.5M); net advertising revenues of 353.5M-363.5M yuan and paid services of 43.3M-48.3M yuan.