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Business

Brazil court grants bankruptcy protection for retailer Americanas

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SAO PAULO, Jan 19 (Reuters) – A Rio de Janeiro court on Thursday accepted Brazilian retailer Americanas SA’s (AMER3.SA) bankruptcy protection request, days after the company disclosed nearly $4 billion in accounting inconsistencies that have sparked a legal feud with creditors and investors.

Americanas, a 93-year-old company with stores all over Brazil and a major e-commerce unit, said in a securities filing that it would restructure debts of about 43 billion reais ($8.2 billion).

Shares in the company plunged about 42.5% to 1.00 real following news of the filing, extending its year-to-date drop to around 90%.

The firm, backed by the billionaire trio that founded 3G Capital, said the move had come “despite the efforts and measures that the management has been taking in the past few days alongside its financial and legal advisers to protect the company from the effects” of the accounting scandal.

Investors had expected the decision, with some deeming it unavoidable, especially after lender BTG Pactual (BPAC3.SA) obtained on Wednesday a court decision overturning part of the firm’s protection from creditors.

Americanas is also facing seven different investigations launched by securities regulator CVM, as well as an arbitration process requesting compensation of 500 million reais to the firm and the trio that founded 3G Capital.

In a document filed with the court, law firms Basilio Advogados and Salomao Kaiuca Abrahao attributed the urgency in filing for bankruptcy to the creditors’ decision to seize the companies’ assets.

The retailer also mentioned a debt downgrade by ratings agencies, which prevented any new loans from being extended. S&P, Moody’s and Fitch all downgraded Americanas’ credit ratings following the accounting scandal.

Earlier, Americanas had said that its current cash position stood at only 800 million reais, down from a previously reported 7.8 billion.

Lucas Pogetti, a partner at M&A advisers RGS Partners, said a large part of Americanas’ previously disclosed cash position was linked to the prepayment of receivables or deposited with creditors.

“Naturally, when the banks became aware of the company’s real situation they began to adopt a more aggressive posture to protect themselves, consequently restricting access to resources,” Pogetti said.

In the filing, Americanas asks to exclude its fintech, Ame, from the bankruptcy protection, as it is regulated by the central bank, and for authorization to increase its capital.

Americanas’ stores are ubiquitous at Brazilian shopping malls. It e-commerce unit, which traded as a separate company before a recent restructuring, is one of the country’s top online retailers.

Chief executive Sergio Rial resigned last week, less than two weeks after taking the job, citing the discovery of “accounting inconsistencies” totaling 20 billion reais.

Rial, the former head of Banco Santander’s Brazilian arm (SANB3.SA), attributed the inconsistencies to differences in accounting for the financial cost of bank loans and debt with suppliers.

Chief financial officer Andre Covre, who had just joined Americanas as well, also left the firm, which has Brazilian billionaires Jorge Paulo Lemann, Carlos Alberto Sicupira and Marcel Telles as reference shareholders.

Americanas said the reference shareholders intended to maintain the company’s liquidity at levels that allowed for a “good operation” of its stores, digital channel and other entities.

($1 = 5.2226 reais)

Reporting by Gabriel Araujo, Tatiana Bautzer and Peter Frontini in Sao Paulo and Carolina Pulice in Mexico City; Editing by Rosalba O’Brien and Bradley Perrett

Our Standards: The Thomson Reuters Trust Principles.

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World

China COVID peak to last 2-3 months, hit rural areas next -expert

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  • Peak of COVID wave seen lasting 2-3 months – epidemiologist
  • Elderly in rural areas particularly at risk
  • People mobility indicators tick up, but yet to fully recover

BEIJING, Jan 13 (Reuters) – The peak of China’s COVID-19 wave is expected to last two to three months, and will soon swell over the vast countryside where medical resources are relatively scarce, a top Chinese epidemiologist has said.

Infections are expected to surge in rural areas as hundreds of millions travel to their home towns for the Lunar New Year holidays, which officially start from Jan. 21, known before the pandemic as the world’s largest annual migration of people.

China last month abruptly abandoned the strict anti-virus regime of mass lockdowns that fuelled historic protests across the country in late November, and finally reopened its borders this past Sunday.

The abrupt dismantling of restrictions has unleashed the virus onto China’s 1.4 billion people, more than a third of whom live in regions where infections are already past their peak, according to state media.

But the worst of the outbreak was not yet over, warned Zeng Guang, the former chief epidemiologist at the Chinese Center for Disease Control and Prevention, according to a report published in local media outlet Caixin on Thursday.

“Our priority focus has been on the large cities. It is time to focus on rural areas,” Zeng was quoted as saying.

He said a large number of people in the countryside, where medical facilities are relatively poor, are being left behind, including the elderly, the sick and the disabled.

Authorities have said they were making efforts to improve supplies of antivirals across the country. Merck & Co’s (MRK.N) molnupiravir was made available in China from Friday.

The World Health Organization this week also warned of the risks stemming from holiday travelling.

The UN agency said China was heavily under-reporting deaths from COVID, although it is now providing more information on its outbreak.

“Since the outbreak of the epidemic, China has shared relevant information and data with the international community in an open, transparent and responsible manner,” foreign ministry official Wu Xi told reporters.

Health authorities have been reporting five or fewer deaths a day over the past month, numbers which are inconsistent with the long queues seen at funeral homes and the body bags seen coming out of crowded hospitals.

China has not reported COVID fatalities data since Monday. Officials said in December they planned to issue monthly, rather than daily updates, going forward.

Although international health experts have predicted at least 1 million COVID-related deaths this year, China has reported just over 5,000 since the pandemic began, one of the lowest death rates in the world.

DIPLOMATIC TENSIONS

Concerns over data transparency were among the factors that prompted more than a dozen countries to demand pre-departure COVID tests from travellers arriving from China.

Beijing, which had shut its borders from the rest of the world for three years and still demands all visitors get tested before their trip, objects to the curbs.

Wu said accusations by individual countries were “completely unreasonable, unscientific and unfounded.”

Tensions escalated this week with South Korea and Japan, with China retaliating by suspending short-term visas for their nationals. The two countries also limit flights, test travellers from China on arrival, and quarantine the positive ones.

Japan’s Chief Cabinet Secretary Hirokazu Matsuno said on Friday Tokyo will continue to demand transparency, labelling Beijing’s retaliation as extremely “regrettable.”

Parts of China were returning to normal life.

In the bigger cities in particular, residents are increasingly on the move, pointing to a gradual, though so far slow, rebound in consumption and economic activity.

An immigration official said on Friday 490,000 daily trips on average were made in and out of China since it reopened on Jan. 8, only 26% of the pre-pandemic levels.

Singapore-based Chu Wenhong was among those who finally got reunited with their parents for the first time in three years.

“They both got COVID, and are quite old. I feel quite lucky actually, as it wasn’t too serious for them, but their health is not very good,” she said.

CAUTION

While China’s reopening has given a boost to financial assets globally, policymakers around the world worry it may revive inflationary pressures.

However, December’s trade data released on Friday provided reasons to be cautious about China’s recovery pace.

Jin Chaofeng, whose company exports outdoor rattan furniture, said he has no expansion or hiring plans for 2023.

“With the lifting of COVID curbs, domestic demand is expected to improve but not exports,” he said.

Data next week is expected to show China’s economy grew just 2.8% in 2022, its second-slowest since 1976, the final year of Mao Zedong’s decade-long Cultural Revolution, according to a Reuters poll.

Some analysts say last year’s lockdowns will leave permanent scars on China, including by worsening its already bleak demographic outlook.

Growth is then seen rebounding to 4.9% this year, still well below the pre-pandemic trend.

Additional reporting by the Beijing and Shanghai newsrooms; Writing by Marius Zaharia; Editing by Raju Gopalakrishnan

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World

Chinese fret over elderly as WHO warns of holiday COVID surge

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  • Two billion trips expected over Lunar New Year
  • Virus spreading from cities to vulnerable villages
  • WHO says China response challenged by lack of data
  • China’s grand reopening marred by Japan, Korea spat

BEIJING, Jan 12 (Reuters) – People in China worried on Thursday about spreading COVID-19 to aged relatives as they planned returns to their home towns for holidays that the World Health Organization warns could inflame a raging outbreak.

The Lunar New Year holiday, which officially starts on Jan. 21, comes after China last month abandoned a strict anti-virus regime of mass lockdowns that prompted widespread frustration and boiled over into historic protests.

That abrupt U-turn unleashed COVID on a population of 1.4 billion which lacks natural immunity, having been shielded from the virus since it first erupted in late 2019, and includes many elderly who are not fully vaccinated.

The outbreak spreading from China’s mega-cities to rural areas with weaker medical resources is overwhelming some hospitals and crematoriums.

With scant official data from China, the WHO on Wednesday said it would be challenging to manage the virus over a holiday period considered the world’s largest annual migration of people.

Other warnings from top Chinese health experts for people to avoid aged relatives during the holidays shot to the most-read item on China’s Twitter-like Weibo on Thursday.

“This is a very pertinent suggestion, return to the home town … or put the health of the elderly first,” wrote one user. Another user said they did not dare visit their grandmother and would leave gifts for her on the doorstep.

“This is almost the New Year and I’m afraid that she will be lonely,” the user wrote.

More than two billion trips are expected across China over the broader Lunar New Year period, which started on Jan. 7 and runs for 40 days, according to the transport ministry. That is double last year’s trips and 70% of those seen in 2019 before the pandemic emerged in the central Chinese city of Wuhan.

“I will stay at home and avoid going to very crowded places,” said Chen, a 27-year-old documentary filmmaker in Beijing who plans to visit her home town in the eastern province of Zhejiang.

Chen said she would disinfect her hands before meeting elderly relatives, such as her grandmother, who has managed to avoid infection.

LACK OF DATA CRITICISED

The WHO and foreign governments have criticised China for not being forthright about the scale and severity of its outbreak, which has led several countries to impose restrictions on Chinese travellers.

China has been reporting five or fewer deaths a day over the past month, numbers that are inconsistent with the long queues seen at funeral homes. The country did not report COVID deaths data on Tuesday and Wednesday.

Liang Wannian, the head of a COVID expert panel under the national health authority, told reporters that deaths could only be accurately counted after the pandemic was over.

Although international health experts have predicted at least a million COVID-related deaths this year, China has reported just over 5,000 since the pandemic began, a fraction of what other countries have reported as they removed restrictions.

Looking beyond the death toll, investors are betting that China’s reopening will reinvigorate a $17 trillion economy suffering its lowest growth in nearly half a century.

That has lifted Asian stocks to a seven-month peak, strengthened China’s yuan currency against the U.S. dollar and bolstered global oil prices on hopes of fresh demand from the world’s top importer.

China’s growth is likely to rebound to 4.9% in 2023, according to a Reuters poll of economists released on Thursday. GDP likely grew just 2.8% in 2022 as lockdowns weighed on activity and confidence, according to the poll, braking sharply from 8.4% growth in 2021.

TRAVEL CHALLENGES

After three years of isolation from the outside world, China on Sunday dropped quarantine mandates for inbound visitors in a move expected to eventually also stimulate outbound travel.

But concerns about China’s outbreak has prompted more than a dozen countries to demand negative COVID test results from people arriving from China.

Among them, South Korea and Japan have also limited flights and require tests on arrival, with passengers showing up as positive being sent to quarantine.

In a deepening spat between the regional rivals, China has in turn stopped issuing short-term visas and suspended transit visa exemptions for South Korean and Japanese nationals.

Despite Beijing’s lifting of travel curbs, outbound flight bookings from China were at only 15% of pre-pandemic levels in the week after the country announced it would reopen its borders, travel data firm ForwardKeys said on Thursday.

Low airline capacity, high air fares, new pre-flight COVID-19 testing requirements by many countries and a backlog of passport and visa applications pose challenges as the industry looks to recovery, ForwardKeys Vice President Insights Olivier Ponti said in a statement.

Hong Kong Airlines on Thursday said it does not expect to return to capacity until mid-2024.

Reporting by Bernard Orr, Liz Lee, Eduardo Baptista and Jing Wang in Beijing; Writing by John Geddie; Editing by Lincoln Feast and Nick Macfie

Our Standards: The Thomson Reuters Trust Principles.

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World

China imposes transit curbs for S.Korea, Japan in growing COVID spat

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  • New curbs for S.Korea, Japan nationals transiting China
  • China says visa suspensions for S.Korea, Japan “reasonable”
  • Escalating diplomatic spat may complicate economic relations
  • Social media users lash out at S.Korea’s “insulting” COVID curbs

BEIJING, Jan 11 (Reuters) – China introduced transit curbs for South Korean and Japanese nationals on Wednesday, in an escalating diplomatic spat over COVID-19 curbs that is marring the grand re-opening of the world’s second-largest economy after three years of isolation.

China removed quarantine mandates for inbound travellers on Sunday, one of the last vestiges of the world’s strictest regime of COVID restrictions, which Beijing abruptly began dismantling in early December after historic protests.

But worries over the scale and impact of the outbreak in China, where the virus is spreading unchecked, have prompted more than a dozen countries to demand negative COVID test results from people arriving from China.

Among them, South Korea and Japan have also limited flights and require tests on arrival, with passengers showing up as positive being sent to quarantine. In South Korea, quarantine is at the traveller’s own cost.

In response, the Chinese embassies in Seoul and Tokyo said on Tuesday they had suspended issuing short-term visas for travellers to China, with the foreign ministry slamming the testing requirements as “discriminatory.”

That prompted an official protest from Japan to China, while South Korean foreign minister Park Jin said that Seoul’s decision was based on scientific evidence, not discriminatory and that China’s countermeasures were “deeply regrettable.”

In a sign of escalating tensions on Wednesday, China’s immigration authority suspended its transit visa exemptions for South Koreans and Japanese.

The spat may affect economic relations between the three neighbours as well.

Japanese department store operator Isetan Mitsukoshi Holdings Ltd (3099.T) and supermarket operator Aeon Co (8267.T) said they may have to rethink personnel transfers to China depending on how long the suspension lasts.

“We won’t be able to make short-term business trips, but such trips had dwindled during COVID anyway, so we don’t expect an immediate impact. But if the situation lasts long, there will be an effect,” said a South Korean chip industry source who declined to be identified, as the person was not authorised to speak to media.

China requires negative test results from visitors from all countries.

COUNTING DEATHS

Some of the governments that announced curbs on travellers from China cited concerns over Beijing’s data transparency.

The World Health Organization has said China was underreporting deaths.

China’s health authorities have been reporting five or fewer deaths a day over the past month, numbers that are inconsistent with the long queues seen at funeral homes. In a first, they did not report COVID fatalities data on Tuesday.

China’s Center for Disease Control and Prevention and the National Health Commission did not immediately respond to requests for comment.

Without mentioning whether daily reporting had been discontinued, Liang Wannian, head of a COVID expert panel under the national health authority, told reporters deaths can only be accurately counted after the pandemic is over.

China should ultimately determine death figures by looking at excess mortality, Wang Guiqiang, the head of the infectious diseases department at Peking University First Hospital said at the same news conference.

Although international health experts have predicted at least one million COVID-related deaths this year, China has reported just over 5,000 since the pandemic began, a fraction of what other countries have reported as they reopened.

China says it has been transparent with its data.

State media said the COVID wave was already past its peak in the provinces of Henan, Jiangsu, Zhejiang, Guangdong, Sichuan and Hainan, as well as in the large cities of Beijing and Chongqing – home to more than 500 million people combined.

‘INSULTING’

On Wednesday, Chinese state media devoted extensive coverage of what they called as “discriminatory” border rules in South Korea and Japan.

Nationalist tabloid Global Times defended Beijing’s retaliation as a “direct and reasonable response to protect its own legitimate interests, particularly after some countries are continuing hyping up China’s epidemic situation by putting travel restrictions for political manipulation.”

Chinese social media anger mainly targeted South Korea, whose border measures are the strictest among the countries that announced new rules.

Videos circulating online showed special lanes coordinated by soldiers in uniform for arrivals from China at the airport, with travellers given yellow lanyards with QR codes for processing test results.

One user of China’s Twitter-like Weibo said singling out Chinese travellers was “insulting” and akin to “people treated as criminals and paraded on the streets.”

Annual spending by Chinese tourists abroad reached $250 billion before the pandemic, with South Korea and Japan among the top shopping destinations.

Repeated lockdowns have hammered China’s $17 trillion economy. The World Bank estimated its 2022 growth slumped to 2.7%, its second-slowest pace since the mid-1970s after 2020.

It predicted a rebound to 4.3% for 2023, but that is 0.9 percentage points below its June forecast because of the severity of COVID disruptions and weakening external demand.

($1 = 6.7666 Chinese yuan renminbi)

Additional reporting by Beijing Newsroom; Kaori Kaneko, Mari Shiraki and Elaine Lies in Tokyo; Joyce Lee, Hyunsu Yim and Heekyong Yang in Seoul
Writing by Marius Zaharia; Editing by Gerry Doyle and Kim Coghill

Our Standards: The Thomson Reuters Trust Principles.

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Business

S&P 500 near flat as investors weigh chances of less aggressive rate hikes

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  • Tech shares gain
  • Macy’s, Lululemon drop on holiday-quarter warnings
  • Indexes: Dow down 0.3%, S&P 500 down 0.1%, Nasdaq up 0.6%

NEW YORK, Jan 9 (Reuters) – The S&P 500 index (.SPX) erased early gains to close nearly flat on Monday as expectations that the Federal Reserve will become less aggressive with its interest rate hikes were offset by lingering worries about inflation.

The Dow ended lower, and the Nasdaq Composite (.IXIC) ended well off the day’s highs.

Investors are awaiting comments Tuesday from Fed Chair Jerome Powell, who some strategists expect could say more time is needed to show inflation is under control.

Money market bets were showing 77% odds of a 25-basis point hike in the Fed’s February policy meeting.

A consumer prices report due Thursday could be key for rate expectations, said Quincy Krosby, chief global strategist, LPL Financial in Charlotte, North Carolina. “The CPI report this week is going to be essential for fine-tuning the Fed funds futures market.”

Investors also may have sold some shares after recent strong market gains, said Paul Nolte, portfolio manager at Kingsview Investment Management in Chicago. “You’re seeing a little bit of profit-taking ahead of the CPI number due out this week.”

The technology sector (.SPLRCT) gained as Treasury yields fell. Consumer discretionary stocks (.SPLRCD) also rose, with Amazon.com Inc (AMZN.O) up 1.5% after Jefferies said it saw cost pressures easing for the e-commerce giant in the second half of the year.

Also, S&P 500 companies are about to kick off the fourth-quarter earnings period, with results from top U.S. banks expected later this week.

Traders work on the trading floor at the New York Stock Exchange (NYSE) in New York City, U.S., January 5, 2023. REUTERS/Andrew Kelly

The Dow Jones Industrial Average (.DJI) fell 112.96 points, or 0.34%, to 33,517.65, the S&P 500 (.SPX) lost 2.99 points, or 0.08%, to 3,892.09 and the Nasdaq Composite (.IXIC) added 66.36 points, or 0.63%, to 10,635.65.

Shares of Broadcom Inc (AVGO.O) fell in late trading to end down 2% after Bloomberg, citing people familiar with the matter, reported that Apple Inc (AAPL.O) plans to drop a Broadcom chip in 2025 and use an in-house design instead.

Friday’s jobs report, which showed a moderation in wage increases, lifted hopes that the Fed might become less aggressive in its rate-hike push to reduce inflation.

Tesla Inc (TSLA.O) shares rose 5.9% after the electric-vehicle maker indicated longer waiting times for some versions of the Model Y in China, signaling the recent price cuts could be stoking demand.

Macy’s Inc (M.N) fell 7.7% and Lululemon Athletica Inc (LULU.O) dropped 9.3% after both retailers issued disappointing holiday-quarter forecasts.

Volume on U.S. exchanges was 11.35 billion shares, compared with the 10.90 billion average for the full session over the last 20 trading days.

Advancing issues outnumbered decliners on the NYSE by a 1.85-to-1 ratio; on Nasdaq, a 1.48-to-1 ratio favored advancers.

The S&P 500 posted 13 new 52-week highs and two new lows; the Nasdaq Composite recorded 129 new highs and 32 new lows.

Additional reporting by Shubham Batra, Amruta Khandekar and Ankika Biswas in Bengaluru; Editing by Shounak Dasgupta and Richard Chang

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Business

S&P 500 slips as hawkish rate view, labor data weigh

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  • Fed’s Bullard backs more rate hikes
  • Cisco rises after co raises full-year outlook
  • Macy’s jumps on profit forecast raise
  • Indexes: Dow up 0.07%, S&P down 0.23%, Nasdaq down 0.09%

Nov 17 (Reuters) – The S&P 500 fell modestly on Thursday as hawkish comments from a U.S. Federal Reserve official and data showing the labor market remained tight led some investors to worry about more aggressive interest rate hikes.

Equities fell sharply early in the session and then rebounded, with the Dow last edging higher, supported by an upbeat earnings outlook from Cisco Systems (CSCO.O).

Stocks have retreated in recent days after a strong month-long rally after softer-than-expected inflation reports raised hopes the Fed would temper its rate hikes.

“Hope springs eternal in the equity market, and the markets have been fighting the Fed,” said Sameer Samana, senior global market strategist at Wells Fargo Investment Institute in St. Louis.

“You have had these reversals, you have had these spectacular rallies. But yet, when you look back at the full year 2022, you have had lower highs and lower lows and there’s nothing to suggest that we have broken that pattern.”

The Dow Jones Industrial Average (.DJI) rose 22.8 points, or 0.07%, to 33,576.63, the S&P 500 (.SPX) lost 9.27 points, or 0.23%, to 3,949.52 and the Nasdaq Composite (.IXIC) dropped 9.73 points, or 0.09%, to 11,173.93.

St. Louis Fed President James Bullard said the central bank needs to keep raising rates given that its tightening so far “had only limited effects on observed inflation.”

Data showed the number of Americans filing new claims for unemployment benefits fell last week, suggesting the labor market remained tight, after a report on Wednesday detailed strong retail sales growth last month that indicated the economy has weathered rate hikes.

Bets from traders of a 75 basis point hike at the Fed’s next meeting climbed to 19% from about 15% a day earlier, according to the CME Group’s FedWatch tool, with the remaining odds placed on a smaller 50 basis point increase.

Cisco shares rose over 4% after the company raised its full-year revenue and profit forecast with supply chain hurdles easing. The stock helped drive a 0.3% increase in the heavyweight S&P 500 information technology sector (.SPLRCT).

Most S&P 500 sectors were lower, however, with utilities (.SPLRCU) and materials (.SPLRCM) both dropping about 1.4%.

In other company news, shares of Macy’s (M.N) surged over 14% after the department store chain raised its annual profit forecast on resilient demand for high-end clothes and beauty products.

Declining issues outnumbered advancing ones on the NYSE by a 2.54-to-1 ratio; on Nasdaq, a 1.83-to-1 ratio favored decliners.

The S&P 500 posted no new 52-week highs and 1 new lows; the Nasdaq Composite recorded 28 new highs and 144 new lows.

Reporting by Lewis Krauskopf in New York, Bansari Mayur Kamdar, Ankika Biswas and Amruta Khandekar in Bengaluru; Editing by Vinay Dwivedi, Arun Koyyur and David Gregorio

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Business

Credit Suisse looking at cutting around 5,000 jobs -source

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A logo is pictured on the Credit Suisse bank in Geneva, Switzerland, June 9, 2022. REUTERS/Denis Balibouse

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ZURICH, Sept 2 (Reuters) – Credit Suisse (CSGN.S) is considering cutting around 5,000 jobs, about one position in 10, as part of a cost reduction drive at Switzerland’s second-biggest bank, a source with direct knowledge of the matter told Reuters.

The scale of the potential job cuts underlines the challenge facing Credit Suisse and new chief executive Ulrich Koerner, who is seeking to put the bank back on an even keel after a string of scandals.

The bank declined to comment beyond repeating that it would give an update on its strategy review with its third-quarter earnings, saying that any reporting on outcomes was speculative.

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Credit Suisse has dubbed 2022 a “transition” year with a change of guard, restructuring to curtail risk-taking in investment banking and bulking up wealth management.

The Zurich-based bank has dismissed speculation that it could be bought or broken up.

The discussions about job cuts are ongoing and the number of reductions could still change, the source said. Swiss newspaper Blick earlier reported that more than 3,000 jobs would be shed.

Credit Suisse has already said it will cut costs below 15.5 billion Swiss francs ($15.8 billion) in the medium term, versus an annualised 16.8 billion francs this year.

So far, it has not outlined job cuts.

Koerner, promoted to CEO just over a month ago, has been given the task of paring back investment banking and cutting more than $1 billion in costs to help the bank recover from a string of setbacks and scandals.

His strategic review, the second in less than a year, will evaluate options for the bank, while reaffirming its commitment to serving wealthy customers.

The Swiss lender is under increasing pressure to turn around the business and improve its financial resilience.

“Cutting cost is the easiest immediate step it can take. But it’s not a strategy,” said Andreas Venditti, an analyst with Vontobel. “You can end up in a vicious circle, where jobs are cut, service declines and customers leave.”

Venditti highlighted another conundrum: “Should restructuring costs, including from job cuts, run into the billions, the bank may also need to raise more capital.”

Analysts at Deutsche Bank estimate that it may need to bolster capital by 4 billion Swiss francs to shore up its buffers and fund the revamp.

Koerner, 59, a restructuring expert, succeeded Thomas Gottstein as CEO in August after a tumultuous two years punctuated by huge losses, a rare court conviction for the bank in Switzerland and a 40% plunge in its shares.

Between April and June, the bank chalked up a 1.59 billion Swiss franc loss, as legal costs mounted. Its investment bank alone lost 1.12 billion Swiss francs before tax.

Twin hits – a $5.5 billion loss on the default of U.S. family office Archegos Capital Management and the shuttering of $10 billion of supply chain finance funds linked to collapsed British financier Greensill – have also beset the bank.

In June, Credit Suisse was also convicted of failing to prevent money laundering by a Bulgarian cocaine trafficking gang in Switzerland’s first criminal trial of one of its major banks. It is appealing against the conviction.

In a sign that Credit Suisse expects an improvement in its fortunes, a senior executive told Reuters that it is still betting big on China and plans to launch a wealth business there next year. read more

The bank aims to start offering wealth management services in China next year on the back of securing full ownership of its local securities venture.

($1 = 0.9825 Swiss francs)

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Reporting by Oliver Hirt, writing by Michael Shields; Editing by Elisa Martinuzzi, John O’Donnell, Alexander Smith and Jane Merriman

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Business

Wall Street ends mixed after punishing week

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  • Ross Stores plunges after cutting 2022 forecast
  • S&P 500 +0.01%, Nasdaq -0.30%, Dow +0.03%

May 20 (Reuters) – Wall Street ended mixed on Friday after a volatile session that saw Tesla slump and other growth stocks also lose ground.

The S&P 500 and the Nasdaq logged their seventh straight week of losses, their longest losing streak since the end of the dotcom bubble in 2001.

The Dow (.DJI) suffered its eighth consecutive weekly decline, its longest since 1932 during the Great Depression.

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Worries about surging inflation and rising interest rates have pummeled the U.S. stock market this year, with danger signals from Walmart Inc (WMT.N) and other retailers this week adding to fears about the economy.

The S&P 500 spent most of the session in negative territory and at one point was down just over 20% from its Jan. 3 record high close before ending down 18% from that level and flat for the day.

Closing down 20% from that record level would confirm the S&P 500 has been in a bear market since reaching that January high, according to a common definition.

The tech-heavy Nasdaq (.IXIC) was last down about 27% from its record close in November 2021.

S&P 500 bear markets

Weighing heavily on the S&P 500, Tesla (TSLA.O) tumbled 6.4% after Chief Executive Elon Musk denounced as “utterly untrue” claims in a news report that he sexually harassed a flight attendant on a private jet in 2016. read more

Other megacap stocks also fell, with Apple Google-owner Alphabet Inc (GOOGL.O) down 1.3% and Nvidia (NVDA.O) losing 2.5%.

Shares of Deere & Co (DE.N) dropped 14% after the heavy equipment maker posted downbeat quarterly revenue. read more

A trader works on the trading floor at the New York Stock Exchange (NYSE) in Manhattan, New York City, U.S., May 19, 2022. REUTERS/Andrew Kelly

Pfizer (PFE.N) rose 3.6%, helping the S&P 500 avoid a loss for the day.

Recent disappointing forecasts from big retailers Walmart, Kohl’s Corp (KSS.N) and Target Inc (TGT.N) have rattled market sentiment, adding to evidence that rising prices have started to hurt the purchasing power of U.S. consumers.

On Friday, Ross Stores (ROST.O) plunged 22.5% after the discount apparel retailer cut its 2022 forecasts for sales and profit, while Vans brand owner VF Corp (VFC.N) gained 6.1% on strong 2023 revenue outlook.

Traders are pricing in 50-basis point rate hikes by the U.S. central bank in June and July.

The S&P 500 edged up 0.01% to end the session at 3,901.36 points.

The Nasdaq declined 0.30% to 11,354.62 points, while the Dow Jones Industrial Average rose 0.03% to 31,261.90 points.

S&P 500’s busiest trades

For the week, the S&P 500 fell 3.0%, the Dow lost 2.9% and the Nasdaq declined 3.8%.

About two thirds of S&P 500 stocks are down 20% or more from their 52-week highs.

Volume on U.S. exchanges was 13.0 billion shares, compared with a 13.5 billion average over the last 20 trading days.

Declining issues outnumbered advancing ones on the NYSE by a 1.16-to-1 ratio; on Nasdaq, a 1.24-to-1 ratio favored decliners.

The S&P 500 posted 1 new 52-week highs and 48 new lows; the Nasdaq Composite recorded 11 new highs and 353 new lows.

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Reporting by Amruta Khandekar and Devik Jain in Bengaluru, and by Noel Randewich in Oakland, Calif.; Editing by Shounak Dasgupta, Arun Koyyur and Grant McCool

Our Standards: The Thomson Reuters Trust Principles.

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World

China’s Tianjin outbreak grows as Omicron spreads to Dalian

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BEIJING, Jan 13 (Reuters) – China’s northern port city of Tianjin reported an increase in COVID-19 infections on Thursday as it stepped up efforts to rein in an outbreak that has spread the highly transmissible Omicron variant to another city.

Omicron has brought new challenges for China’s strategy to quickly stamp out outbreaks, which has taken on urgency ahead of the Winter Olympics set to start from Feb. 4, while the busy Lunar New Year travel season begins this month.

Volkswagen Group’s (VOWG_p.DE) China unit said it had shut a vehicle plant run jointly with FAW Group in Tianjin, as well as a component factory since Monday due to the outbreak. read more

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Tianjin, located about 100 km (62 miles) from the capital Beijing, reported 41 domestically transmitted infections with confirmed symptoms on Wednesday, up from 33 a day earlier, National Health Commission data showed.

Dalian in the northeast also reported an individual arriving from Tianjin had tested positive for Omicron, city officials said. It said the virus situation was “largely controllable”.

Anyang in the central province of Henan reported 43 local symptomatic cases on Wednesday, after two Omicron infections on Monday. It traced the flare-up to a student from Tianjin. read more

Case numbers in Tianjin and Anyang are tiny compared with outbreaks in many other countries, though the number of local Omicron infections is unclear. Still, officials imposed curbs on movement within the cities and outside.

Several cities across China have ordered quarantine for recent visitors to the two cities. Beijing is among the many cities urging people to stay put during the Lunar New Year holiday.

Citing the Omicron risk and the need to keep the Olympics Games safe, officials in the capital encouraged commuters from satellite towns to work from home.

People line up at a nucleic acid testing site during the second round of mass testing for the coronavirus disease (COVID-19), after local cases of the Omicron variant were detected in Tianjin, China January 12, 2022. Picture taken January 12, 2022. China Daily via REUTERS

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There were no new deaths on Wednesday, leaving the toll since the virus was first found two years ago in China unchanged at 4,636.

IMPORTED INFECTIONS

Zhang Wenhong, director of a COVID-19 treatment team in Shanghai, said on Thursday the public health clinic in the commercial hub faced a record number of infections arriving from overseas.

Imported cases in Shanghai during the first 10 days of this month have already exceeded December’s total, Reuters calculations showed. How many were caused by Omicron is unclear.

China has suspended more U.S. flights after a surge in numbers of infected passengers.

Its tough measures against local outbreaks included punishment for officials, with 11 people held to account in Anyang by Wednesday for failing to properly control the virus.

On Thursday, city authorities in the ancient town of Xian ordered two hospitals to suspend operations for three months for failures in providing medical care during the outbreak.

The move drove down shares of their owner, XiAn International Medical Investment Co (000516.SZ), by 10%, or the maximum permitted daily percentage change.

One of the hospitals apologised for rigid virus controls that delayed treatment for a patient who suffered a heart attack and died.

The story of a pregnant woman who lost her unborn baby after waiting for two hours outside the other hospital provoked anger on Chinese social media and brought punishment for city officials. read more

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Reporting by Roxanne Liu, Ella Cao and David Stanway; Editing by Tom Hogue and Clarence Fernandez

Our Standards: The Thomson Reuters Trust Principles.

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