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Business

Wall Street ends up with help from Nike, FedEx and consumer sentiment

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  • Consumer confidence rebounds in December
  • Data shows November home sales decline
  • Nike jumps on strong second-quarter results
  • FedEx soars on cost-cutting plans
  • Indexes up: Dow 1.60%, S&P 1.49%, Nasdaq 1.54%

Dec 21 (Reuters) – Wall Street’s three main stock indexes closed higher on Wednesday for their biggest daily gains so far in December with help from upbeat Nike (NKE.N) and FedEx (FDX.N) quarterly earnings, as well as improving consumer confidence and easing inflation expectations from investors.

Nike Inc shares soared 12% after beating profit expectations for its second quarter on strong holiday demand from North American shoppers, while FedEx finished up 3.4% and shares in cruise operator Carnival Corp (CCL.N) jumped 4.7% after posting a smaller-than-expected quarterly loss.

FedEx Corp (FDX.N), which sparked a market selloff in September after pulling financial forecasts, provided financial guidance and announced plans for $1 billion cost cuts.

Also, U.S. consumer confidence rose to an eight-month high in December as inflation retreated and the labor market remained strong while 12-month inflation expectations fell to 6.7%, the lowest since September 2021.

“We’re seeing a broad rally. It’s been helped by upbeat corporate commentary and an improvement in consumer confidence,” said Angelo Kourkafas, investment strategist at Edward Jones in St. Louis referring to Nike and FedEx.

The Dow Jones Industrial Average (.DJI) rose 526.74 points, or 1.6%, to 33,376.48, the S&P 500 (.SPX) gained 56.82 points, or 1.49%, to 3,878.44 and the Nasdaq Composite (.IXIC) added 162.26 points, or 1.54%, to 10,709.37.

Energy firms (.SPNY) were the biggest gainers among the S&P’s 11 major industry sector, adding 1.89%, as oil futures rose.

The smallest gainer among the sectors was consumer staples (.SPLRCS), which finished up 0.8%.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., December 7, 2022. REUTERS/Brendan McDermid

Still, Wednesday’s data also showed that U.S. existing home sales slumped 7.7% to a 2-1/2-year low in November as the housing market was hurt by higher mortgage rates. But the data may be fuelling investor hope that the Fed could ease up on its tightening policy.

“At the macro level you have economic weakness but at the micro level you have companies that are resilient and delivering positive expectations from an earnings perspective,” said Brian Price, head of investment management for Commonwealth Financial Network in Waltham, Mass. “That combination is going to be positive.”

Fears of a recession following the U.S. central bank’s prolonged interest rate hikes have weighed heavily on equities and these fears have put the S&P on track for its biggest annual decline since 2008 and a decline for December.

“There’s still a lot of uncertainty and we’re likely to see a lot of volatility early in the year as we could be in a mild recessionary environment,” said Edward Jones’ Kourkafas but he believes the market has already priced in a weaker economy.

“We still have some headwinds ahead but maybe we don’t have to price in a recession twice. So far what we’ve seen this year has already priced in a mild recession.”

AMC Entertainment Holdings Inc (AMC.N) finished up 4.3% after the cinema-chain operator said it suspended talks to acquire certain assets of bankrupt Cineworld Group (CINE.L).

Advancing issues outnumbered declining ones on the NYSE by a 3.43-to-1 ratio; on Nasdaq, a 2.10-to-1 ratio favored advancers.

The S&P 500 posted 5 new 52-week highs and 3 new lows; the Nasdaq Composite recorded 69 new highs and 268 new lows.

On U.S. exchanges 9.81 billion shares changed hands, compared with the 11.16 billion average for the last 20 sessions.

Reporting by Sinéad Carew in New York, Shubham Batra, Amruta Khandekar, Ankika Biswas and Johann M Cherian in Bengaluru; Editing by Shounak Dasgupta, Maju Samuel and Aurora Ellis

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Business

Musk delivers first Tesla truck, but no update on output, pricing

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  • Tesla ships first Semi to PepsiCo five years after unveiling it
  • No details on orders or capacity for electric truck
  • Semi uses existing Tesla motors, to feature new Supercharger

Dec 1 (Reuters) – Tesla Inc (TSLA.O) Chief Executive Elon Musk delivered the company’s first heavy-duty Semi on Thursday to PepsiCo (PEP.O) without offering updated forecasts for the truck’s pricing, production plans or how much cargo it could haul.

Musk, who appeared onstage at an event at Tesla’s Nevada plant, said the battery-powered, long-haul truck would reduce highway emissions, outperform existing diesel models on power and safety and spin-off a fast-charging technology Tesla would use in its upcoming Cybertruck pickup.

“If you’re a trucker and you want the most badass rig on the road, this is it,” Musk said, noting that it was five years since Tesla had announced it was developing the all-electric truck. Still, industry experts remain skeptical that battery electric trucks can take the strain of hauling hefty loads for hundreds of miles economically.

At Musk’s first Tesla reveal since taking over Twitter – an acquisition some investors worry has become a distraction – the company did not announce pricing for the Semi, provide details on variants of the truck it had initially projected or supply a forecast for deliveries to PepsiCo or other customers. Tesla said it would begin using the Semi to ship parts to its plant in Fremont, California.

In 2017, Tesla had said the 300-mile range version of the Semi would cost $150,000, and the 500-mile version $180,000, but Tesla’s passenger electric vehicle prices have increased sharply since then.

Robyn Denholm, chair of Tesla, recently said the automaker might produce 100 Semis this year. Musk has said Tesla would aim to produce 50,000 of the trucks in 2024.

PepsiCo, which completed its first cargo run with the Tesla truck to deliver snacks for those attending the Nevada launch event, had ordered 100 trucks in 2017.

Brewer Anheuser-Busch (ABI.BR), United Parcel Service Inc (UPS.N) and Walmart Inc (WMT.N) were among other companies that had reserved the Semi. Tesla did not provide details on orders or deliveries to customers, nor an estimate on what the total cost of ownership for future buyers would be compared to diesel alternatives.

‘NOT IMPRESSIVE’

Musk said the Semi has been doing test runs between Tesla’s Sparks, Nevada factory and its plant in Fremont, California. Tesla said it had completed a 500-mile drive on a single charge, with the Semi and cargo weighing in at 81,000 pounds in total.

Tesla did not disclose the weight of an unloaded Semi, one key specification analysts had hoped to learn and an important consideration for the efficiency of electric trucks.

Musk has spoken in the past about the prospect of fully autonomous trucks. Tesla did not provide details on how Tesla’s driver assistance systems would function in the Semi it unveiled on Thursday or future versions.

[1/5] Tesla Chief Executive Elon Musk waves near Tesla Semi electric trucks during a live-streamed unveiling in Nevada, U.S. December 1, 2022, in this still image taken from video. Tesla/Handout via REUTERS

The Semi delivery presentation ended without Musk taking questions, as he often does at Tesla events.

“Not very impressive – moving a cargo of chips (average weight per pack 52 grams) cannot in any way be said to be definitive proof of concept,” said Oliver Dixon, senior analyst at consultancy Guidehouse.

Tesla had initially set a production target for 2019 for the Semi, which was first unveiled in 2017. In the years since, rivals have begun to sell battery-powered trucks of their own.

Daimler’s (MBGn.DE) Freightliner, Volvo (VOLVb.ST), startup Nikola (NKLA.O) and Renault (RENA.PA) are among Tesla’s competitors in developing alternatives to combustion-engine trucks.

Walmart (WMT.N), for instance, has said it has been testing Freightliner’s eCascadia and Nikola’s Tre BEV trucks in California.

‘LIKE A CHEETAH’

The Semi is capable of charging at 1 megawatt and has liquid-cooling technology in the charging cable in an updated version of Tesla’s Supercharger that will be made available to the Cybertruck, Musk said. The Cybertruck is scheduled to go into production in 2023.

Trucks in Semi’s category represent just 1% of U.S. vehicle sales but 20% of overall vehicle emissions, Tesla said.

Tesla said other, future vehicles would use powertrain technology developed for the Semi without providing details. The Semi uses three electric motors developed for Tesla’s performance version of its Model S, with only one of them engaged at highway speed and two in reserve for when the truck needs to accelerate, a feature that makes the truck more energy-efficient, Musk said.

“This thing has crazy power relative to a diesel truck,” Musk said. “Basically it’s like an elephant moving like a cheetah.”

In a slide displayed as part of Musk’s presentation, Tesla showed an image of a future “robotaxi” in development with a mock-up of the future car covered under a tarp.

The presentation took place after Tesla shares closed at $194.70. The stock has fallen about 45% so far this year, losing about $500 billion in market capitalisation, down to about $615 billion.

Among factors cited by investors have been Musk’s sales of Tesla shares to finance his takeover of Twitter, signs that a slowing global economy has started to cut into demand for Tesla’s premium-priced cars, and a warning by the company that it might not meet its target to grow deliveries by 50% this year.

Reporting by Akash Sriram in Bengaluru and Hyunjoo Jin in San Francisco; Editing by Kenneth Maxwell

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World

‘Malicious and targeted’ sabotage halts rail traffic in northern Germany

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BERLIN, Oct 8 (Reuters) – Cables vital for the rail network were intentionally cut in two places causing a near three-hour halt to all rail traffic in northern Germany on Saturday morning, in what authorities called an act of sabotage without identifying who might be responsible.

The federal police are investigating the incident, Interior Minister Nancy Faeser said, adding the motive for it was unclear.

The disruption raised alarm bells after NATO and the European Union last month stressed the need to protect critical infrastructure after what they called acts of sabotage on the Nord Stream gas pipelines.

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“It is clear that this was a targeted and malicious action,” Transport Minister Volker Wissing told a news conference.

A security source said there were a variety of possible causes, ranging from cable theft – which is frequent – to a targeted attack.

Omid Nouripour, leader of the Greens party, which is part of Chancellor Olaf Scholz’s federal coalition, said anyone who attacked the country’s critical infrastructure would receive a “decisive response”.

“We will not be intimidated,” he wrote on Twitter.

CHAOS BEFORE ELECTION DAY

“Due to sabotage on cables that are indispensable for rail traffic, Deutsche Bahn had to stop rail traffic in the north this morning for nearly three hours,” the state rail operator said in a statement.

Deutsche Bahn (DB) had earlier blamed the network disruption on a technical problem with radio communications. Spiegel magazine said the communications system was down at around 6:40 a.m. (0440 GMT). At 11:06 a.m, DB tweeted that traffic had been restored, but warned of continued train cancellations and delays.

The disruption affected rail services through the states of Lower Saxony and Schlewsig-Holstein as well as the city states of Bremen and Hamburg, with a knock-on effect to international rail journeys to Denmark and the Netherlands.

They came the day before a state election in Lower Saxony where Scholz’s Social Democrats are on track to retain power and the Greens are seen doubling their share of the vote, according to polls.

Queues rapidly built up at mainline stations including Berlin and Hanover as departure boards showed many services being delayed or canceled.

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Reporting by Sarah Marsh; Additional reporting by Andreas Rinke and Christian Ruettger; Editing by David Holmes and Mark Potter

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Business

Ford stock has biggest daily drop since 2011 after inflation warning

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The Ford logo is pictured at the 2019 Frankfurt Motor Show (IAA) in Frankfurt, Germany. REUTERS/Wolfgang Rattay

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Sept 20 (Reuters) – Ford Motor Co’s (F.N) stock tumbled over 12% on Tuesday in its deepest one-day decline in over a decade after the automaker said inflation-related costs would be $1 billion more than expected in the current quarter and that parts shortages had delayed deliveries.

The stock ended at $13.09, making its percentage decline for the session its largest since January 2011.

Ford’s preliminary third-quarter results, released late on Monday, sent shares of rival General Motors Co (GM.N)down 5.6% as analysts said it might take more time for automakers to recover from chip shortages.

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“It appears that across the industry, chip and components shortages may be improving at a slower pace than anticipated,” Deutsche Bank analyst Emmanuel Rosner said.

In July, Ford said it expected commodity costs to rise $4 billion for the year. read more

The greater Detroit manufacturer’s warning comes less than a week after delivery company FedEx Corp (FDX.N) withdrew its financial forecast due to slowing global demand. read more

Ford’s inflation troubles and FedEx’s weak demand highlight the bind the Federal Reserve finds itself in ahead of the U.S. central bank’s policy-making meeting on Wednesday.

The Fed is widely expected to hike rates by 75 basis points in its battle against decades-high inflation. Its aggressive monetary policy campaign has battered the U.S. stock market in recent weeks, with investors worried the Fed’s measures could hobble the economy.

Ford also estimated it would have 40,000 to 45,000 vehicles in inventory lacking parts.

Ford, which is set to report third-quarter results on Oct. 26, affirmed 2022 adjusted earnings before interest and taxes forecast of $11.5 billion to $12.5 billion.

It was unclear if chip and parts supply will normalize by the end of the year, Deutsche Bank’s Rosner said.

Ford’s shares are down 37% in 2022, well over the S&P 500’s (.SPX) 19% decrease.

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Reporting by Kannaki Deka in Bengaluru and Noel Randewich in Oakland, Calif.; Editing by Shounak Dasgupta, Richard Chang and David Gregorio

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Business

Biden, unions, rail executives struggle for deal as shutdown looms

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DETROIT/LOS ANGELES, Sept 14 (Reuters) – Biden administration officials hosted labor contract talks late on Wednesday to avert a potential rail shutdown that could disrupt cargo shipments and impede food and fuel supplies, but one small union rejected a deal and Amtrak canceled all long-distance passenger trips.

Railroads including Union Pacific (UNP.N), Berkshire Hathaway’s (BRKa.N) BNSF and Norfolk Southern (NSC.N) have until a minute after midnight on Friday to reach deals with three holdout unions representing about 60,000 workers before a work stoppage affecting freight and Amtrak could begin.

Talks between labor unions and railroads, which started at 9 a.m, were still underway more than 12 hours later after 9 p.m. ET on Wednesday at the U.S. Labor Department’s headquarters in Washington.

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The talks are being overseen by Labor Secretary Marty Walsh, with input from other U.S. officials. The parties ordered in Italian food for dinner Wednesday in order to continue discussions.

“Everybody is going to have to move a little in order to get a deal done,” Buttigieg told reporters on the sidelines of the Detroit auto show.

A union representing about 4,900 machinists, mechanics and maintenance personnel said on Wednesday its members voted to reject a tentative deal.

Rail workers have gone three years without a raise amid a contract dispute, while rail companies have recorded robust profits.

In the current talks, the industry has offered annual wage increases from 2020 to 2024, equal to a 24% compounded hike. Three of 12 unions, representing about half of the 115,000 workers affected by the negotiations, are asking for better working conditions.

Two of those 12 unions, representing more than 11,000 workers, have ratified deals, the National Carriers’ Conference Committee (NCCC), which is bargaining on behalf of railroads, said on Wednesday.

Unions are enjoying a surge of public and worker support in the wake of the pandemic, when “essential” employees risked COVID-19 exposure to keep goods moving and employers reaped hefty profits, labor and corporate experts say.

A shutdown could freeze almost 30% of U.S. cargo shipments by weight, stoke inflation, cost the U.S. economy as much as $2 billion per day and unleash a cascade of transportation woes affecting the U.S. energy, agriculture, manufacturing and retail sectors.

A cargo train is seen near the border between the U.S. and Mexico, in Laredo, Texas U.S. June 3, 2019. REUTERS/Carlos Jasso

White House spokeswoman Karine Jean-Pierre told reporters aboard Air Force One that a shutdown of the freight rail system would be an “unacceptable outcome for our economy and the American people and all parties must work to avoid just that.”

HIGH STAKES FOR BIDEN

President Joe Biden’s administration has begun making contingency plans to ensure deliveries of critical goods in the event of a shutdown.

The stakes are high for Biden, who has vowed to rein in soaring consumer costs ahead of November elections that will determine whether his fellow Democrats maintain control of Congress.

“Unless they reach a breakthrough soon, rail workers will go on strike this Friday. If you don’t think that will have a negative impact on our economy … think again,” said U.S. Senator John Cornyn, a Republican and Biden critic.

Senator Bernie Sanders late on Wednesday objected to a Republican bid to unanimously approve legislation to prevent a rail strike, noting the profits the rail industry has made.

If agreements are not reached, employers could also lock out workers. Railroads and unions may agree to stay at the bargaining table, or the Democratic-led U.S. Congress could intervene by extending talks or establishing settlement terms. read more

House of Representatives Speaker Nancy Pelosi said it was not clear whether Congress would step in, noting that the main issue is a lack of sick leave for workers.

Amtrak, which uses tracks maintained by freight railways, said it would cancel all long-distance trips on Thursday and some additional state-supported trains. read more

Rail hubs in Chicago and Dallas were already clogged and suffering from equipment shortages before the contract showdown. Those bottlenecks are backing up cargo at U.S. seaports by as much as a month. And, once cargo gets to rail hubs in locations such as Chicago, Dallas, Kansas City and Memphis, Tennessee, it can sit another month or longer.

Package delivery company United Parcel Service (UPS.N), one of the largest U.S. rail customers, and U.S. seaports said they are working on contingency plans.

Meanwhile, factory owners are fretting about idling machinery while automakers worry that a shutdown could extend vehicle buyer wait times. Elsewhere, food and energy companies warn that additional service disruptions could create even sharper price hikes.

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Reporting by David Shepardson and Lisa Baertlein; Additional reporting by Jeff Mason aboard Air Force One; Joe White in Detroit; Chris Walljasper in Chicago and Abhijith Ganapavaram in Bengaluru; Editing by Will Dunham, Jonathan Oatis, Bill Berkrot and Michael Perry

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World

Slovakia sends its air defence system to Ukraine

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  • Slovakia first to donate air defence system to Ukraine
  • Ukraine has appealed to West to boost its defence capabilities
  • Slovakia to replace donated S-300 system by Patriot from U.S.

PRAGUE, April 8 (Reuters) – Slovakia has donated its S-300 air defence system to Ukraine, Prime Minister Eduard Heger said on Friday, a day after the United States said it and 30 other countries were stepping up military aid to Kyiv.

Ukraine has repeatedly appealed to Western nations for air defence weaponry and heavy ground military equipment to help repel a Russian military onslaught now in its second month.

“I can confirm that Slovakia donated the S-300 air defence system to Ukraine based on its request to help in self defence due to armed aggression from the Russian Federation,” Heger said in an emailed statement.

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NATO member Slovakia has been operating one battery of the Soviet-designed S-300 air defence system which it inherited after the break-up of Czechoslovakia in 1993.

Heger, who was visiting Kyiv on Friday, also said that Slovakia’s own defence was secured.

The Slovak donation is the first known case of a country sending an air defence system to Ukraine since the start of the Russian invasion on Feb. 24.

In March, NATO allies Germany and Netherlands brought three batteries of the Patriot air defence system to Slovakia, which Bratislava said at the time would complement, rather than replace, the S-300, and that it would consider giving up the S-300 if it secured a replacement. read more

Heger said Slovakia would receive additional equipment from NATO allies to make up for the donation. Defence Minister Jaroslav Nad subsequently announced that Slovakia would receive the fourth Patriot system from the United States next week.

Russia has said that it considered western military shipments to Ukraine legitimate targets. Moscow calls its actions in Ukraine a “special military operation” to disarm and “denazify” Ukraine. Ukraine and allies say Russia invaded without provocation.

U.S. Secretary of State Antony Blinken said on Thursday the United States and 30 other countries were sending weapons to Ukraine and that the process would intensify. He spoke of “new systems” that have so far not been provided by NATO allies, but declined to go into details. read more

Ukrainian Foreign Minister Dmytro Kuleba asked for planes, land-based anti-ship missiles, armoured vehicles and air defence systems at a special session at NATO headquarters on Thursday. read more

Slovakia had planned to modernise its S-300 several years ago but the effort had not been completed. The Slovak army website said the S-300 battery had range of 75 km and could strike targets up to 27 km above ground.

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Reporting by Robert Muller; Editing by Jason Neely and Raissa Kasolowsky

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Business

Nike, IKEA close Russian stores as sanctions, trade restrictions bite

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March 3 (Reuters) – Sneaker maker Nike and home furnishings firm IKEA shut down stores in Russia on Thursday, as trade restrictions and supply shutdowns added to political pressure for companies to stop business in Russia because of its invasion of Ukraine.

French bank Societe Generale (SOGN.PA) said it was working to cut its risks in Russia, fearing a tit-for-tat response by Moscow to Western sanctions, as more companies from vodka maker Diageo (DGE.L) to IKEA suspended business in the country.

Globally known companies including Apple, Ford and Shell have condemned Russia’s attack, but some of the announcements on Thursday were more practical, focused on supplies and sanctions as shipping routes closes and governments banned exports to Russia.

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Boeing Chief Executive David Calhoun, in a note to staff, acknowledged the violence in Ukraine but avoided politics.

“Moving forward, Boeing will continue to follow the lead of the U.S. government and strictly adhere to the export controls and restrictions that have been announced governing work in Russia,” he said in the note seen by Reuters, which described suspension of work in Russia and Ukraine.

Brazilian plane-maker Embraer (EMBR3.SA) joined Airbus and Boeing in halting parts supplies to Russian airlines.

Home furnishings retailer IKEA (IKEA.UL) said it would close outlets in Russia and Russian ally Belarus, affecting 15,000 workers, and described its shutdowns in non-political terms.

“The war has both a huge human impact and is resulting in serious disruptions to supply chain and trading conditions, which is why the company groups have decided to temporarily pause IKEA operations in Russia,” IKEA said in a statement. read more

Nike Inc said it was “deeply troubled by the devastating crisis in Ukraine” and described its closing of stores in this way: “Given the rapidly evolving situation, and the increasing challenges of operating our business, Nike will be pausing operations in Russia.”

Some companies and investors added up the costs of their actions.

Norway’s $1.3 trillion wealth fund said its Russian assets, worth around $3 billion before the invasion, have now become effectively worthless. read more “They are pretty much written off,” CEO Nicolai Tangen told Reuters.

TJX Cos Inc (TJX.N) said on Thursday it would sell its 25% stake in Russian low-cost apparel retailer Familia, which cost it $225 million in 2019. Because of a decline in the rouble and TJX said it may take an impairment charge due to the sale.

SANCTIONS RISKS

A man wearing a protective face mask amid the outbreak of the coronavirus disease (COVID-19) walks past a Nike brand store in central Kyiv, Ukraine December 10, 2020. REUTERS/Valentyn Ogirenko

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Underscoring the challenges global companies are facing as they comply with sanctions against Russia, Societe Generale said on Thursday it could see an “extreme scenario” where Russia strips the bank of its local operations. The lender has a $20 billion exposure to Russia. read more

Citigroup Inc (C.N) said on Wednesday it could face billions of dollars in losses on its exposure to Russia and was looking to exit Russian assets. Bank shares have taken a drubbing in recent days amid fears of possible writedowns and weaker economies. read more

Western sanctions, including shutting out some Russian banks from the SWIFT global financial network, new export controls, and closure of air space, have led dozens of global companies to pause operations in the country, hammered the rouble and forced the central bank to jack up interest rates. read more

Spanish fashion retailer Mango said on Thursday that it was temporarily closing its shops and its online sale website in Russia, and Spirits company Diageo (DGE.L), the maker of Smirnoff vodka and Guinness, said it had paused exports to Ukraine and Russia. read more

Accenture said it was discontinuing its Russian business, which had nearly 2,300 employees. read more

Britain said on Thursday it will ban Russian companies from the London insurance market, the world’s largest commercial and specialty insurance centre. read more

Hundreds of Russian soldiers and Ukrainian civilians have been killed and more than one million people have fled Ukraine in the week since President Vladimir Putin ordered the attack. read more

Russia calls its actions in Ukraine a “special operation” that it says is not designed to occupy territory but to destroy its southern neighbour’s military capabilities and capture what it regards as dangerous nationalists.

SCRAMBLED SUPPLIES

With a shortage of components, more carmakers are halting production at their factories in Russia, including Russia’s biggest carmaker, Avtovaz (AVAZI_p.MM) – controlled by France’s Renault (RENA.PA) – which said it would close two plants on Saturday and from March 9 to 10 due to shortage of electronic components. read more

Nissan Motor Co <7201.T > said on Thursday it has suspended vehicle exports to Russia, while Japanese peer Toyota (7203.T) said it would halt production at its Russian factory from Friday and indefinitely stop vehicle exports to the country.

The world’s biggest shipping lines, MSC and Maersk (MAERSKb.CO) have suspended container shipping to and from Russia, with Maersk saying food and medical supplies to Russia risk being damaged or spoiled due to delays at ports and customs. read more

Japan Airlines (9201.T) and ANA Holdings (9202.T), which normally use Russian airspace for their Europe flights, said they would cancel all flights to and from Europe on Thursday, joining other carriers that have canceled or rerouted flights between Europe and north Asia. read more

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Reporting by Tassilo Hummel in Paris, Jamie Freed in Sydney, Gwladys Fouche in Oslo, Illona Wissenbach in Frankfurt, Anna Ringstrom in Stockholm, Richa Naidu in London
Additional reporting by Tim Hepher in Paris, Satoshi Sugiyama in Tokyo, Mehr Bedi, Chavi Mehta, Praveen Paramasivam, Uday Sampath in Bengaluru, Megan Davies in New York, and in Madrid by Emma Pinedo
Writing by Peter Henderson, Sayantani Ghosh and John Revill
Editing by Lincoln Feast, Simon Cameron-Moore, Tomasz Janowski, Frances Kerry and Nick Zieminski

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Business

Boeing, Exxon, Apple join Western firms spurning Russia over Ukraine

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  • Ford suspends operations in Russia
  • Apple stops iPhone sales in Russian market
  • ESG investors press Western firms to act

March 2 (Reuters) – Boeing (BA.N) suspended maintenance and technical support for Russian airlines and U.S. energy firm Exxon Mobil (XOM.N) said it would exit Russia, joining a growing list of Western companies spurning Moscow over its invasion of Ukraine.

U.S. tech giant Apple (AAPL.O) said it had stopped sales of iPhones and other products in Russia, while Ford Motor (F.N) joined other automakers by suspending operations in the country.

Western nations have steadily ratcheted up sanctions on Russia since it invaded Ukraine last week, including shutting out some Russian banks from the SWIFT global financial network.

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The measures have hammered the rouble and forced the central bank to jack up interest rates, while Moscow has responded to the growing exodus of Western investors by temporarily restricting Russian asset sales by foreigners.

Russian firms, meanwhile, have felt increasingly squeezed. Sberbank (SBER.MM), Russia’s largest lender, said on Wednesday it was leaving the European market because its subsidiaries faced large cash outflows. It also said the safety of its employees and property was threatened. read more

Signalling there would be no let up from the West, U.S. President Joe Biden said in his State of the Union address on Tuesday that his Russian counterpart Vladimir Putin “has no idea what’s coming” as he joined European states and Canada in closing U.S. airspace to Russian planes. read more

With international shippers such as Maersk (MAERSKb.CO), Hapag Lloyd (HLAG.DE) and MSC suspending bookings to and from Russia, the country has become increasingly shut out of world commerce. Sanctions are also squeezing Russia’s aviation sector.

Boeing’s said on Tuesday it was suspending operations as other aviation companies face growing European and U.S. restrictions on dealings with Russia clients, affecting leasing planes, exporting new aircraft and providing parts.

CHORUS OF CONDEMNATION

Exxon said it would not invest in new developments in Russia and was taking steps to exit the Sakhalin-1 oil and gas venture, after similar moves to dump assets by Britain’s BP , Russia’s biggest foreign investor, and Shell Plc (SHEL.L).

However, French firm TotalEnergies (TTEF.PA) stopped short of saying it would exit Russia, only saying it would not put in new cash. read more

Logo at an Apple store in Washington, U.S., January 27, 2022. REUTERS/Joshua Roberts

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Apple, which halted sales in Russia, said it was making changes to its Maps app to protect civilians in Ukraine.

It also joined a growing chorus of Western companies openly condemning Russian actions.

“We are deeply concerned about the Russian invasion of Ukraine and stand with all of the people who are suffering as a result of the violence,” Apple said.

“We deplore Russia’s military action that violates the territorial integrity of Ukraine and endangers its people,” Exxon said, while Ford said in its condemnation: “The situation has compelled us to reassess our operations in Russia.”

Motor cycle maker Harley-Davidson Inc suspended shipments of its bikes to Russia.

The increasing focus of investors in environmental, social and governance (ESG) issues has added pressure on companies to act swiftly in ending ties with Russia and Russian entities.

“The only course of action for many is simply divestment,” said TJ Kistner, vice president at Segal Marco Advisors, a large U.S. pension consultant.

Big Western technology companies said they were continuing efforts to stop Russia from taking advantage of their products.

Apple said it had blocked app downloads of some state-backed news services outside of Russia.

Google, owned by Alphabet Inc (GOOGL.O), said it had blocked mobile apps connected to Russian state-funded publisher RT from its news-related features, including the Google News search.

Google also barred RT and other Russian channels from receiving money for ads on websites, apps and YouTube videos, mirroring a move made by Facebook (FB.O).

Microsoft (MSFT.O) said it would remove RT’s mobile apps from its Windows App store and ban ads on Russian state-sponsored media.

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Reporting by Paresh Dave in Oakland, Ross Kerber in New York, Dawn Chmielewski in Los Angeles; Writing by Peter Henderson and Sayantani Ghosh; Editing by Lincoln Feast and Edmund Blair

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Business

BP exit opens new front in West’s campaign against Russia

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  • BP to abandon Rosneft stake at cost of up to $25 billion
  • Companies with Russian assets coming under growing pressure
  • EU industry chief tells Alphabet to ban war propaganda accounts
  • Battle between Russia and big tech companies expected to deepen
  • Financial sanctions designed to isolate Russian economy

Feb 28 (Reuters) – Energy major BP opened a new front in the West’s campaign to isolate Russia’s economy, with its decision to quit the oil-rich country the most aggressive move yet by a company in response to Moscow’s invasion of Ukraine.

Western allies have ramped up efforts to punish Russia with new sanctions including shuttering their airspace to Russian aircraft, cutting some of its banks off the SWIFT financial network and limiting Moscow’s ability to deploy its $630 billion foreign reserves – measures that are expected to pulverize the country’s economy. read more

The rouble plunged nearly 30% to an all-time low against the dollar on Monday. read more

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BP, the biggest foreign investor in Russia, said it was abandoning its stake in state oil company Rosneft (ROSN.MM) at a cost of up to $25 billion, shrinking its oil and gas reserves in half. read more

The British company’s abrupt move puts the spotlight on other Western corporations with operations in Russia amid growing pressure from governments to tighten the financial screws on Moscow after it launched the biggest assault on a European country since World War Two. read more

Energy group Equinor (EQNR.OL), which is majority owned by the Norwegian state, said on Monday it will start divesting its joint ventures in Russia. Norway’s sovereign wealth fund, the world’s largest, will also divest its Russian assets, worth around 25 billion Norwegian crowns ($2.80 billion). read more

In a video call on Sunday, the European Union’s internal market chief told the chief executives of Alphabet (GOOGL.O) and its YouTube unit to ban users pushing war propaganda as part of measures to halt disinformation on Ukraine.

A 3D printed natural gas pipeline is placed in front of displayed BP logo in this illustration taken February 8, 2022. REUTERS/Dado Ruvic/Illustration

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The EU has banned the Russian media outlets RT and Sputnik and Alphabet’s Google has barred Russia’s state-owned media outlet RT and other channels from receiving money for ads on their websites, apps and YouTube videos, similar to a move by Facebook after the invasion. read more

A NO-GO ZONE

In an unprecedented step, European nations and Canada moved to shut their airspace to Russian aircraft and the United States is mulling similar action, according to U.S. officials.

U.S.-based United Parcel Service Inc (UPS.N) and FedEx Corp (FDX.N), two of the world’s largest logistics companies, have said they are halting delivery service to Russia and Ukraine. read more

Large parts of the Russian economy will be a no-go zone for Western banks and financial firms after the decision to cut some of its banks off from SWIFT, a secure messaging system used for trillions of dollars’ worth of transactions around the world.

Even neutral Switzerland will likely follow the European Union in sanctioning Russia and freezing Russian assets, its president said on Sunday. read more

Russians queued at ATMs over the weekend worried that the new sanctions will trigger cash shortages and disrupt payments. read more

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Reporting by Ron Bousso and Dmitry Zhdannikov in London and Foo Yun Chee in Brussels: Writing by Carmel Crimmins: Editing by Grant McCool

Our Standards: The Thomson Reuters Trust Principles.

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Business

Qatar seals Boeing freighter deal with surprise 737 order

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WASHINGTON/SEATTLE, Jan 31 (Reuters) – Qatar Airways handed Boeing Co (BA.N) a record launch order for 34 new 777X freighters and added at least 25 Boeing 737 MAX jets on Monday in a $30 billion-plus package during a Washington diplomatic visit, deepening U.S. economic links to the Gulf.

The deal is a boost for Boeing at a time when the U.S. planemaker is battling industrial and financial constraints, and reflects upheaval in the jet market after Qatar Airways engaged in a contractual and safety dispute with Europe’s Airbus SE (AIR.PA).

Boeing shares rose almost 5% after the freighter order was unexpectedly topped up by an order for the Boeing 737 MAX. The deal was timed to coincide with a visit to Washington by Qatar’s emir in which the United States hailed the Gulf state as a major ally. read more

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That followed days of frantic negotiations after Airbus revoked an order for 50 competing A321neo aircraft as part of a heated dispute with Qatar Airways over flaws in a larger jet.

Qatar Airways Chief Executive Akbar Al Baker said negotiators had “lost a lot of sleep” in the intervening two weeks and took a swipe at Airbus.

“We like to build long-term relationships with trusted partners where both parties work together towards a common purpose,” he told a White House signing ceremony attended by leaders from Boeing and engine maker General Electric Co .

Airbus declined comment.

The provisional order for up to 50 of the 737-10, the largest member of the MAX family, makes Monday’s deal a potential 100-plane package including options for later add-ons. Reuters reported the 737 MAX deal earlier on Monday. read more

The cargo part of the deal represents the first order for a freighter version of the world’s largest twin-engine passenger plane, the 777X, whose entry to service has been pushed back by more than three years to late 2023 or beyond.

Boeing is banking on sales of the huge freighter to shore up its leadership of the cargo market and head off a recent challenge from Airbus, with a freighter version of its A350.

“(The 777X) will be an absolute world-beater,” Boeing Chief Executive Dave Calhoun said at Monday’s signing ceremony.

ORDER CONVERSIONS

Boeing agreed to convert a third of Qatar’s existing order for 60 777X passenger planes, for which there is currently less demand, to freighters in order to win the order.

Speaking on the sidelines of high-level meetings on energy security amid the Ukraine crisis, Al Baker trumpeted support for the U.S. economy from Qatar Airways, which has faced trade complaints from U.S. carriers over alleged subsidies.

“I am especially pleased that the aircraft order will further emphasise Qatar Airways’ support for the U.S. economy and U.S. jobs,” he said.

For Boeing, the deal marks a respite from a recent safety crisis over the MAX and delays with the 777X passenger jet and 787 Dreamliner, and a chance to win points for its own economic contribution after intense regulatory and political scrutiny.

Boeing said the freighter order would sustain more than 35,000 U.S. jobs with an annual economic impact of $2.6 billion.

Boeing has dominated air freight for years through its 767, 777 and 747 cargo jets, though it will be urgently pressing for more orders for the new freighter flagship.

About half of global cargo by value travels by air, and in turn half of that usually goes in the belly of passenger planes.

During the pandemic, many airlines have been forced to park unused passenger jets, driving up demand for cargo space on dedicated freighters at a time when e-commerce has been a lifeline for many during COVID-19 lockdowns.

But economists warn the trends could start to unravel as the pandemic eases.

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Reporting by David Shepardson in Washington
Additional reporting by Tim Hepher in Paris and Alexander Cornwell in Dubai
Writing by Tim Hepher, Eric M. Johnson
Editing by Tomasz Janowski and Matthew Lewis

Our Standards: The Thomson Reuters Trust Principles.

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