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France hit by new wave of strikes against Macron’s pension reform

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  • Reform would raise retirement age to 64
  • Schools, transport networks, refinery deliveries hit
  • Macron: Reform vital to ensure viability of pension system

SAINT-NAZAIRE, France, Jan 31 (Reuters) – Striking workers disrupted French refinery deliveries, public transport and schools on Tuesday in a second day of nationwide protests over President Emmanuel Macron’s plan to make people work longer before retirement.

Crowds marched through cities across France to denounce a reform that raises the retirement age by two years to 64 and which is a test of Macron’s ability to push through change now that he has lost his working majority in parliament.

On the rail networks, only one in every three high-speed TGV trains were operating and even fewer local and regional trains. Services on the Paris metro were thrown into disarray.

Buoyed by their success earlier in the month when more than a million people took to the streets, trade unions which have been battling to maintain their power and influence urged the public to turnout en masse.

“We won’t drive until we’re 64!” bus driver Isabelle Texier said at a protest in Saint-Nazaire on the Atlantic coast, adding that many careers involved tough working conditions.

Others felt resigned ahead of likely bargaining between Macron’s ruling alliance and conservative opponents who are more open to pension reform than the left.

“There’s no point in going on strike. This bill will be adopted in any case,” said 34-year-old Matthieu Jacquot, who works in the luxury sector.

Unions said half of primary school teachers had walked off the job. TotalEnergies (TTEF.PA) said 55% of its workers on morning shifts at its refineries had downed tools, a lower number than on Jan. 19. The hard-left CGT union said the figure was inaccurate.

For unions, the challenge will be maintaining a strike movement at a time when high inflation is eroding salaries.

At a local level, some announced “Robin Hood” operations unauthorised by the government. In the southwestern Lot-et-Garonne area, the local CGT trade union branch cut power to several speed cameras and disabled smart power meters.

“When there is such a massive opposition, it would be dangerous for the government not to listen,” said Mylene Jacquot, secretary general of the CFDT union’s civil servants branch.

[1/16] Protesters attend a demonstration against French government’s pension reform plan in Paris as part of a day of national strike and protests in France, January 31, 2023. REUTERS/Gonzalo Fuentes

Opinion polls show a substantial majority of the French oppose the reform, but Macron intends to stand his ground. The reform was “vital” to ensure the viability of the pension system, he said on Monday.

A street march in Paris takes place later in the day.

‘BRUTAL’

The pension system reform would yield an additional 17.7 billion euros ($19.18 billion) in annual pension contributions, according to Labour Ministry estimates.

Unions say there are other ways to raise revenue, such as taxing the super rich or asking employers or well-off pensioners to contribute more.

“This reform is unfair and brutal,” said Luc Farre, the secretary general of the civil servants’ UNSA union. “Moving (the pension age) to 64 is going backwards, socially.”

French power supply was down by 4.5% or 3 gigawatts (GW), as workers at nuclear reactors and thermal plants joined the strike, data from utility group EDF (EDF.PA) showed.

TotalEnergies said deliveries of petroleum products from its French sites had been halted because of the strike, but that customers’ needs were met.

The government made some concessions while drafting the legislation. Macron had originally wanted the retirement age to be set at 65, while the government is also promising a minimum pension of 1,200 euros a month.

Prime Minister Elisabeth Borne has said the 64 threshold is “non-negotiable”, but the government is exploring ways to offset some of the impact, particularly on women.

Hard-left opposition figure Jean-Luc Melenchon, a vocal critic of the reform, said parliament would on Monday debate a motion calling for a referendum on the matter.

“The French are not stupid,” he said at a march in Marseille. “If this reform is vital, it should be possible to convince the people.”

Reporting by Forrest Crellin, Benjamin Mallet, Sudip Kar-Gupta, Leigh Thomas, Blandine Henault, Michel Rose, Dominique Vidalon, Benoit Van Overstraeten; Writing by Ingrid Melander and Richard Lough; Editing by Janet Lawrence

Our Standards: The Thomson Reuters Trust Principles.

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Business

Exclusive: Bed Bath & Beyond preparing to file bankruptcy as soon as this week -sources

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NEW YORK, Jan 30 (Reuters) – Bed Bath & Beyond Inc (BBBY.O) is preparing to seek bankruptcy protection as soon as this week, and has lined up liquidators to close additional stores unless a last-minute buyer emerges, four people familiar with the matter said on Monday.

The timing of any bankruptcy filing was in flux Monday evening, with the U.S. home goods retailer’s advisers locked in meetings exploring any remaining options to avoid it, another person familiar with the matter said.

Bed Bath & Beyond is negotiating a loan to help it navigate bankruptcy proceedings, with investment firm Sixth Street in talks to provide some funding, two of the people said. The firm loaned Bed Bath & Beyond $375 million last year.

The chain, once considered a category killer in home goods like dinnerware and small appliances, has lined up liquidators who are readying store closing sales that could be launched as soon as this weekend, two of the people said.

The people spoke on condition of anonymity because the talks are not public.

The chain has said it is closing 87 Bed Bath & Beyond stores and five buybuy BABY stores, in addition to 150 closures announced last year. It is also shutting its health and beauty discount chain Harmon.

The people cautioned that a last-minute buyer for the chain could emerge, or it could still ink a deal for its brands such as buybuy BABY. Prospective buyers sometimes wait until a company files for bankruptcy before agreeing to purchase assets, hoping to negotiate more favorable terms.

Bed Bath & Beyond said in a statement to Reuters that it continued to work with its advisers to consider “multiple paths” but declined to comment on any bankruptcy planning.

The company has previously said it was exploring a range of options to address plunging sales, including selling assets, raising financing and declaring bankruptcy.

Sixth Street declined to comment.

Bed Bath & Beyond said last week it defaulted on a loan, bringing it closer to bankruptcy. Sources have also told Reuters that Bed Bath & Beyond is considering skipping debt payments due on Feb. 1, a typical move that distressed companies take to conserve cash.

Retailers in distress often decide to file for bankruptcy protection after the holiday season to take advantage of the cash cushion provided by recent sales.

Toys R Us liquidated in March 2018 in one of the largest failures to date of a specialty retailer.

As of February 2022, Bed Bath & Beyond had 953 locations, including buybuy BABY.

Bed Bath & Beyond for years had been considered a go-to shopping destination for couples making wedding registries and planning for new babies, but it lost its footing when it tried to expand into store brands.

The retailer’s management has since reversed course and aimed to bring in national brands shoppers knew the chain for. But the strategy has not gained traction with shoppers.

Earlier this month, the company raised doubts about its ability to continue as a going concern and said it would cut jobs.

Bed Bath & Beyond reported a loss of about $393 million after sales plunged 33% for the quarter ending Nov. 26.

Reporting by Jessica DiNapoli and Mike Spector; Editing by Cynthia Osterman and Jamie Freed

Our Standards: The Thomson Reuters Trust Principles.

Jessica DiNapoli

Thomson Reuters

New York-based reporter covering U.S. consumer products spanning from paper towels to packaged food, the companies that make them and how they’re responding to the economy. Previously reported on corporate boards and distressed companies.

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Business

Adani’s $2.5 bln share offer backed by investors, despite short-seller attack

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MUMBAI, Jan 31 (Reuters) – Indian billionaire Gautam Adani’s $2.5 billion share sale inched closer to full subscription on Tuesday as investors pumped in funds after a tumultuous week for his group in which its stocks were pummeled by a scathing short-seller report.

The secondary share sale of flagship Adani Enterprises (ADEL.NS) was subscribed 93% on Tuesday, including the anchor investor portion, Indian stock exchange data showed. The share sale needed at least 90% subscription to go through.

By Monday, the book building process of the country’s largest share sale had received only 3% in bids, amid swirling concerns that the share sale could struggle due to a market rout in Adani’s stocks in recent days.

The share sale is critical for Adani, not just because it is India’s largest follow-on offering and will help cut debt, but also because its success will be seen as a stamp of confidence by investors at a time the tycoon faces one of his biggest business and reputational challenges of recent times.

The offer closes days after Adani’s public faceoff with Hindenburg Research, which on Jan. 24 flagged concerns about the use of tax havens and “substantial debt” at the group. It added that shares in seven Adani listed companies have an 85% downside due to what it called “sky-high valuations”.

That has since sparked $65 billion in cumulative losses for stocks of the Adani group, which called the report baseless.

The support for Adani’s share sale came even as the flagship’s shares were trading at 2,967 rupees, up nearly 2.5% but below the lower end of the share sale price band of 3,112 rupees.

“It looks down to the wire with just a few hours remaining on the last day, but the offering should go through. Institutions seem to be subscribing to capitalise on opportunity to buy in bulk quantities outside the open market,” said Dipan Mehta, founder director of Elixir Equities.

Adani Group’s total gross debt in the financial year ended March 31, 2022, rose 40% to 2.2 trillion rupees ($26.83 billion). Adani said on Sunday – while responding to Hindenburg’s allegations – that over the past decade the group has “consistently de-levered”. Hindenburg later said Adani’s “response largely confirmed our findings and ignored our key questions.”

Reuters Graphics

The group had in recent days repeatedly said investors were standing by its side and the share offering would go through, amid rising concerns that may not happen. Bankers at one point had considered tweaking the pricing of the issue, or extending the sale, Reuters had reported.

Adani even said the Hindenburg report was a “calculated attack” on the country and its institutions while its CFO compared the market rout of its stocks to a colonial-era massacre.

Demand from retail investors remained muted, garnering bids only worth around 10% of the shares on offer for that segment. On Tuesday, demand mostly came from foreign institutional investors, as well as corporates who bid in excess of 1 million rupees each, data showed.

Over the weekend and through Monday, Adani’s firm held extensive discussions with investment bankers and institutional investors to attract subscriptions, according to two sources with direct knowledge of the talks.

Abu Dhabi conglomerate International Holding Company (IHC.AD) said it will invest $400 million in the issue.

“The follow-on public offering has to go through to restore investor confidence,” said V. K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

The Hindenburg report and its fallout have drawn global attention. Adani is now the world’s eighth richest person, down from third ranking on Forbes’ rich list last week.

Adani Transmission (ADAI.NS) rose 1.6% on Tuesday, after losing 38% since the Hindenburg report, while Adani Ports and Special Economic Zone (APSE.NS) climbed 3.2%.

Adani Total Gas (ADAG.NS) languished at its 10% lower price limit, while Adani Power (ADAN.NS) and Adani Wilmar (ADAW.NS) were down 5% each.

Reuters Graphics

Global index publisher FTSE Russell said on Tuesday it continues to monitor publicly available information on the group, in particular from the Indian regulatory authorities.

Hindenburg said in its report it had shorted U.S.-bonds and non-India traded derivatives of the Adani Group. On Tuesday, U.S. dollar-denominated bonds issued by Adani Ports and Special Economic Zone continued their fall into a second week.

($1 = 82.0025 Indian rupees)

Reporting by M. Sriram and Chris Thomas; Editing by Aditya Kalra and Muralikumar Anantharaman

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World

Australian nuclear body joins search for missing radioactive capsule

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MELBOURNE, Jan 31 (Reuters) – Australia’s nuclear safety agency said on Tuesday it had joined the hunt for a tiny radioactive capsule missing somewhere in the outback, sending a team with specialised car-mounted and portable detection equipment.

Authorities have now been on a week-long search for the capsule which is believed to have fallen from a truck that made a 1,400 km (870 mile) journey in Western Australia. The loss has triggered a radiation alert for large parts of the vast state.

The capsule, part of a gauge used to measure the density of iron ore feed, had been entrusted by Rio Tinto Ltd (RIO.AX) to a specialist contractor to transport. Rio apologised on Monday for the loss, which happened sometime in the past two weeks.

The Australian Radiation Protection and Nuclear Safety Agency said it was working with the Western Australian government to locate the capsule. It added that the Australian Nuclear Science and Technology Organisation has also sent radiation services specialists as well as detection and imaging equipment.

The truck travelled from Rio’s Gudai-Darri mine, north of Newman, a small town in the remote Kimberley region, to a storage facility in the suburbs of Perth – a distance longer than the length of Great Britain.

State emergency officials on Tuesday issued a fresh alert to motorists along Australia’s longest highway to take care when approaching the search parties, as vehicles carrying the radiation detectors are travelling at slow speeds.

“It will take approximately five days to travel the original route, an estimated 1400kms, with crews travelling north and south along Great Northern Highway,” Department of Fire and Emergency Services Incident Controller Darryl Ray said in a statement late on Monday.

The gauge was picked up from the mine site on Jan. 12. When it was unpacked for inspection on Jan. 25, the gauge was found broken apart, with one of four mounting bolts missing and screws from the gauge also gone.

Authorities suspect vibrations from the truck caused the screws and the bolt to come loose, and the capsule fell out of the package and then out of a gap in the truck.

The silver capsule, 6 mm in diameter and 8 mm long, contains Caesium-137 which emits radiation equal to 10 X-rays per hour.

People have been told to stay at least five metres (16.5 feet) away as exposure could cause radiation burns or radiation sickness, though driving past the capsule is believed to be relatively low risk, akin to taking an X-ray.

Reporting by Melanie Burton in Melbourne; Editing by Muralikumar Anantharaman and Edwina Gibbs

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Business

U.S. stops granting export licenses for China’s Huawei – sources

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Jan 30 (Reuters) – The Biden administration has stopped approving licenses for U.S. companies to export most items to China’s Huawei, according to three people familiar with the matter.

Huawei has faced U.S. export restrictions around items for 5G and other technologies for several years, but officials in the U.S. Department of Commerce have granted licenses for some American firms to sell certain goods and technologies to the company. Qualcomm Inc (QCOM.O) in 2020 received permission to sell 4G smartphone chips to Huawei.

A Commerce Department spokesperson said officials “continually assess our policies and regulations” but do not comment on talks with specific companies. Huawei and Qualcomm declined to comment. Bloomberg and the Financial Times earlier reported the move.

One person familiar with the matter said U.S. officials are creating a new formal policy of denial for shipping items to Huawei that would include items below the 5G level, including 4G items, Wifi 6 and 7, artificial intelligence, and high-performance computing and cloud items.

Another person said the move was expected to reflect the Biden administration’s tightening of policy on Huawei over the past year. Licenses for 4G chips that could not be used for 5g, which might have been approved earlier, were being denied, the person said. Toward the end of the Trump administration and early in the Biden administration, officials had still granted licenses for items specific to 4G applications.

American officials placed Huawei on a trade blacklist in 2019 restricting most U.S. suppliers from shipping goods and technology to the company unless they were granted licenses. Officials continued to tighten the controls to cut off Huawei’s ability to buy or design the semiconductor chips that power most of its products.

But U.S. officials granted licenses that allowed Huawei to receive some products. For example, suppliers to Huawei got licenses worth $61 billion to sell to the telecoms equipment giant from April through November 2021.

In December, Huawei said its overall revenue was about $91.53 billion, down only slightly from 2021 when U.S. sanctions caused its sales to fall by nearly a third.

Reporting by Chavi Mehta in Bengaluru, Stephen Nellis in San Francisco, and Alexandra Alper and Karen Freifeld in Washington; Additional reporting by David Kirton in Shenzhen; Editing by Shailesh Kuber and Stephen Coates

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Business

U.S. court rejects J&J bankruptcy strategy for thousands of talc lawsuits

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Jan 30 (Reuters) – A U.S. appeals court on Monday shot down Johnson & Johnson’s (JNJ.N) attempt to offload tens of thousands of lawsuits over its talc products into bankruptcy court. The ruling marked the first major repudiation of an emerging legal strategy with the potential to upend U.S. corporate liability law.

J&J is among four major companies that have filed so-called Texas two-step bankruptcies to avoid potentially massive lawsuit exposure. The tactic involves creating a subsidiary to absorb the liabilities and to immediately file for Chapter 11.

The court ruled the healthcare conglomerate improperly placed its subsidiary into bankruptcy even though it faced no financial distress. J&J’s two-step sought to halt more than 38,000 lawsuits from plaintiffs alleging the company’s baby powder and other talc products caused cancer. The appeals court ruling revives those lawsuits.

Reuters last year detailed the secret planning of Texas two-steps by Johnson & Johnson and other major firms in a series of reports exploring corporate attempts to evade lawsuits through bankruptcies.

Monday’s decision by the U.S. 3rd Circuit Court of Appeals in Philadelphia dismissed the bankruptcy filed by the J&J subsidiary in 2021. Before the filing, J&J had faced costs of $3.5 billion in verdicts and settlements.

J&J shares closed down 3.7% – the biggest one-day percentage decline in two years. The company said in a statement that it would challenge the ruling and that its talc products are safe.

Plaintiffs attorneys and some legal experts have argued the two-step could set a dangerous precedent, providing a blueprint for any corporation to easily avoid undesirable litigation. The appeals court decision could force companies considering the strategy to more carefully consider its risks, two legal experts said.

“It is a push back on the notion that any company anywhere can use the same tactic to get rid of their mass tort liability,” said Lindsey Simon, a professor at University of Georgia School of Law.

Bankruptcy filings typically suspend litigation in trial courts, forcing plaintiffs into often time-consuming settlement negotiations while leaving them unable to pursue their cases in the courts where they originally sued.

The 3rd Circuit ruling does not directly impact three other Texas two-step bankruptcies, filed by subsidiaries of Koch Industries-owned Georgia Pacific, global construction giant Saint-Gobain(SGOB.PA), and Trane Technologies (2IS.F). Those cases fall under the jurisdiction of the 4th Circuit appeals court. 3M (MMM.N) attempted a similar maneuver, which is currently pending in the 7th Circuit.

Those companies did not comment on the 3rd Circuit ruling or did not immediately respond to inquiries. All have previously defended the bankruptcies as the best way to fairly compensate claimants. Plaintiffs’ attorneys have countered that the Texas two-step is an improper manipulation of the bankruptcy system. The strategy uses a Texas law to split an existing company in two, creating the new subsidiary meant to shoulder the lawsuits.

New Jersey-based Johnson & Johnson, valued at more than $400 billion, said its subsidiary’s bankruptcy was initiated in good faith. J&J initially pledged $2 billion to the subsidiary to resolve talc claims and entered into an agreement to fund an eventual settlement approved by a bankruptcy judge.

“Resolving this matter as quickly and efficiently as possible is in the best interests of claimants and all stakeholders,” J&J said.

A three-judge panel on the appeals court rejected J&J’s argument, finding the company’s subsidiary, LTL Management, was created solely to file for Chapter 11 protection but had no legitimate need for it. Only a debtor in financial distress can seek bankruptcy, the panel ruled. The judges pointed out that J&J assured that it would give LTL plenty of money to pay talc claimants.

“Good intentions – such as to protect the J&J brand or comprehensively resolve litigation – do not suffice alone,” the judges said in a 56-page opinion. “LTL, at the time of its filing, was highly solvent with access to cash to meet comfortably its liabilities.”

‘PROJECT PLATO’

The decision could force J&J to fight talc lawsuits for years in trial courts. The company has a mixed record fighting the suits so far. While the firm was hit with major judgments in some cases before filing bankruptcy, more than 1,500 talc lawsuits have been dismissed and the majority of cases that have gone to trial have resulted in verdicts favoring J&J, judgments for the company on appeal, or mistrials, according to its subsidiary’s court filings.

A December 2018 Reuters investigation revealed that J&J officials knew for decades about tests showing that the company’s talc sometimes contained traces of carcinogenic asbestos but kept that information from regulators and the public. J&J has said its talc does not contain asbestos and does not cause cancer.

Facing unrelenting litigation, J&J enlisted law firm Jones Day, which had helped other companies execute Texas two-step bankruptcies to address asbestos-related lawsuits.

J&J’s effort, as Reuters reported last year, was internally dubbed “Project Plato,” and employees working on it signed confidentiality agreements. A company lawyer warned them to tell no one, including their spouses, about the plan.

Jones Day did not immediately respond to a request for comment.

The Texas two-step has garnered criticism from Democratic lawmakers in Washington, and inspired proposed legislation that would severely restrict the practice.

Senator Sheldon Whitehouse, a Democrat from Rhode Island, cheered Monday’s appeals court decision. Whitehouse chaired the first congressional hearing scrutinizing two-step bankruptcies in February of last year.

“Bankruptcy is meant to give honest debtors in unfortunate circumstances a fresh start,” he said, not to allow “large, highly profitable corporations” to avoid accountability for wrongdoing with a legal “shell game.”

Reporting by Tom Hals in Wilmington, Delaware; Mike Spector in New York; and Dan Levine in San Francisco; additional reporting by Dietrich Knauth and Chuck Mikolajczak in New York; editing by Bill Berkrot and Brian Thevenot

Our Standards: The Thomson Reuters Trust Principles.

Tom Hals

Thomson Reuters

Award-winning reporter with more than two decades of experience in international news, focusing on high-stakes legal battles over everything from government policy to corporate dealmaking.

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Business

Unilever names former Heinz exec Schumacher as CEO

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  • To become CEO July 1
  • Activist shareholder says met Schumacher when at Heinz
  • First outsider CEO since Paul Polman appointed in 2008
  • Unilever shares outpace FTSE 100

LONDON, Jan 30 (Reuters) – Unilever on Monday appointed Hein Schumacher to replace Alan Jope as chief executive from July in a move that was welcomed by investors including board member and activist shareholder Nelson Peltz.

Schumacher, 51, rejoined Unilever in October last year as non-executive director and is currently the chief of Dutch dairy business FrieslandCampina.

He worked at Unilever more than 20 years ago before working for retailer Royal Ahold NV and packaged food maker H.J. Heinz in the United States, Europe and Asia.

One of the biggest consumer companies in the world with more than 400 brands ranging from detergent to ice cream, Unilever said in September said that Jope planned to retire at the end of 2023.

Billionaire activist investor Nelson Peltz, who heads investor Trian Partners, said he strongly supports Schumacher “as our new CEO and look(s) forward to working closely with him to drive significant sustainable stakeholder value.”

Peltz become a Unilever board member in July after it was revealed early last year that he had built a stake in the company.

“I first met Hein when I served as a director at the H.J. Heinz Company from 2006 to 2013 and was impressed by his leadership skills and business acumen,” Peltz said.

Peltz, through his Trian Fund, holds a nearly 1.5% stake in Unilever, making him the fourth largest shareholder, according to Refinitiv Eikon data.

Unilever shares were up 0.56% versus a FTSE 100 (.FTSE) index down 0.1% as of 1032 GMT.

The move was also cheered by other investors and analysts, who have felt in recent years that Unilever needed an outsider’s touch.

“Positive that he’s an external appointment,” Jack Martin, a fund manager at Unilever shareholder Oberon Investments, said. “Good CV from what I read, hopefully provides the impetus the company requires.”

‘ESG SAVVY, PRAGMATIC’

Unilever’s shares have underperformed European consumer staples and discretionary indices during CEO Jope’s tenure, which began in January 2019.

Reuters Graphics

His failed bids for GlaxoSmithKline’s (GSK.L) consumer healthcare business last year lost him some good faith among investors, including influential British billionaire Terry Smith, owner of Fundsmith.

Smith said at the time that Jope needed to focus less on sustainbility and more on building Unilever’s core business.

“Hein is ideal for Unilever — he’s got roots at the company but at the same time he’s external,” Allan Leighton, former CEO of British food retailer Asda and ex-chair of Britain’s Royal Mail, told Reuters.

Leighton, who worked with Schumacher on the board of C&A AG, described him as “ESG savvy but in a pragmatic and commercial way.”

Tineke Frikee, a fund manager at Unilever shareholder Waverton Investment Management, said: “It is good Schumacher has plenty of industry experience outside Unilever, particularly international.”

“I note though that his background is mainly in food, rather than beauty and personal care. This may lead the market to reduce the probability of a potential food spin-off.”

Unilever’s food business includes Ben & Jerry’s ice cream, Colman’s mustard, Hellman’s mayonnaise and Knorr stock cubes.

Some investors and analysts have speculated over the past year that Unilever might spin off what they feel is a weaker food business to focus on personal goods, beauty and home care.

“Why hire a food exec, if you are planning to sell the food business?” Bernstein analyst Bruno Monteyne said, adding that selling the food business “will always be on the cards, but I doubt that it is top priority in the short term.”

But Monteyne pointed out that some investors were hoping Unilever would name someone more well-established, globally.

“Investors we spoke to in recent weeks were hopeful for a more familiar name from a successful U.S.-based FMCG (fast-moving consumer goods) turnaround.”

Unilever had been considering internal and external candidates for the role.

Sources told Reuters in October that the candidates included finance chief Graeme Pitkethly, personal care division boss Fabian Garcia and Hanneke Faber, who heads the company’s nutrition group.

Reporting by Yadarisa Shabong and Richa Naidu; editing by Matt Scuffham and Jason Neely

Our Standards: The Thomson Reuters Trust Principles.

Richa Naidu

Thomson Reuters

London-based reporter covering retail and consumer goods, analysing trends including coverage of supply chains, advertising strategies, corporate governance, sustainability, politics and regulation. Previously wrote about U.S. based retailers, major financial institutions and covered the Tokyo 2020 Olympic Games.

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Business

Shares and bonds nervy as rate-hike week looms

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  • Fed seen hiking 25 bps, ECB and BOE by 50 bps
  • Technology giants lead host of earnings results
  • Shares edge down after robust January rally

LONDON, Jan 30 (Reuters) – Stock markets worldwide halted their January rally on Monday, pausing for breath at the start of an agenda-setting week of central bank rate hikes and data releases that will clarify if progress has been made in the battle against inflation.

Investors expect the Federal Reserve will raise rates by 25 basis points on Wednesday, followed the day after by half-point hikes from the Bank of England and European Central Bank, and any deviation from that script would be a real shock.

Europe’s benchmark STOXX index fell 0.8% on Monday morning, echoing a slight dip in MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS), which has surged 11% in January so far as China’s reopening bolsters sentiment.

The U.S. Nasdaq index is likewise on course for its best January since 2001, a rally that will be tested by earnings updates from tech giants this week.

U.S. stocks were set to follow the nervous Monday mood with S&P 500 futures down 1% and Nasdaq futures falling 1.3%, as investors await guidance later in the week on the Federal Reserve’s policy.

Analysts expect a hawkish tone suggesting that more needs to be done to tame inflation. read more

“With U.S. labour markets still tight, core inflation elevated and financial conditions easing, Fed Chair Powell’s tone will be hawkish, stressing that a downshifting to a 25bp hike doesn’t mean a pause is coming,” said Bruce Kasman, chief economist at JPMorgan, who expects another rise in March.

“We also look for him to continue to push back against market pricing of rate cuts later this year.”

There is a lot of pushing to do given futures currently expect rates to peak at 5% in March and to fall back to 4.5% by year end.

Europe offered a brisk reminder that the fight against rising prices is far from over, as bond yields in the region rose sharply on Monday in the wake of stronger-than-expected Spanish inflation data.

The data showing inflation rose 5.8% year-on-year in January, against expectations of 4.7%, pushed up the zone’s benchmark German 10-year government bond yield 7 basis points (bps) to 2.3190%, its highest since Jan. 10.

Italian and Spanish yields also inched up.

The dollar index was flat ahead of the week’s key data, on course for a fourth straight monthly loss of more than 1.5% on growing expectations that the Fed is nearing the end of its rate-hike cycle.

APPLE’S CORE

Yields on 10-year notes have fallen 33 basis points so far this month to 3.50%, essentially due to easing financial conditions even as the Fed talks tough on tightening.

That dovish outlook will also be tested by data on U.S. payrolls, the employment cost index and various ISM surveys.

Reading on EU inflation could be important for whether the ECB signals a half-point rate rise for March, or opens the door to a slowdown in the pace of tightening. read more

As for Wall Street’s recent rally, much will depend on earnings from Apple Inc (AAPL.O), Amazon.com (AMZN.O), Alphabet Inc (GOOGL.O) and Meta Platforms (META.O), among many others.

“Apple will give a glimpse into the overall demand story for consumers globally and a snapshot of the China supply chain issues starting to slowly abate,” wrote analysts at Wedbush.

“Based on our recent Asia supply chain checks we believe iPhone 14 Pro demand is holding up firmer than expected,” they added. “Apple will likely cut some costs around the edges, but we do not expect mass layoffs.”

Market pricing of early Fed easing has been a burden for the dollar, which has lost 1.6% so far this month to stand at 101.85 against a basket of major currencies.

The euro is up 1.5% for January at $1.0878 and just off a nine-month top. The dollar has even lost 1.3% on the yen to 129.27 despite the Bank of Japan’s dogged defence of its ultra-easy policies.

The drop in the dollar and yields has been a boon for gold, which is up 5.8% for the month so far at $1,930 an ounce .

The precious metal was flat on Monday ahead of the slew of key central bank moves and data releases.

China’s rapid reopening is seen as a windfall for commodities in general, supporting everything from copper to iron ore to oil prices.

Oil steadied on Monday after earlier losses, with prices bolstered by rising Middle East tension over a drone attack in Iran and hopes of higher Chinese demand.

Brent crude rose 10 cents, or 0.12%, to $86.76 a barrel by 1200 GMT while U.S. West Texas Intermediate crude added 4 cents, or 0.05%, to $79.72.

Reporting Lawrence White and Wayne Cole; Editing by Christopher Cushing, Arun Koyyur and Christina Fincher

Our Standards: The Thomson Reuters Trust Principles.

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World

Rio Tinto apologises for loss of tiny radioactive capsule in Australian outback

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MELBOURNE, Jan 30 (Reuters) – Rio Tinto Ltd (RIO.AX) apologised on Monday for the loss of a tiny radioactive capsule that has sparked a radiation alert across parts of the vast state of Western Australia.

The radioactive capsule, believed to have fallen from a truck, was part of a gauge used to measure the density of iron ore feed which had been entrusted to a specialist contractor to transport. The loss may have occurred up to two weeks ago.

Authorities are now grappling with the daunting task of searching along the truck’s 1,400 kilometre (870 mile) journey from north of Newman – a small town in the remote Kimberley region – to a storage facility in the northeast suburbs of Perth – a distance longer than the length of Great Britain.

The task, while akin to finding the proverbial needle in a haystack, is “not impossible” as searchers are equipped with radiation detectors, said Andrew Stuchbery who runs the department of Nuclear Physics & Accelerator Applications at the Australian National University.

“That’s like if you dangled a magnet over a haystack, it’s going to give you more of a chance,” he said.

“If the source just happened to be lying in the middle of the road you might get lucky…It’s quite radioactive so if you get close to it, it will stick out,” he said.

The gauge was picked up from Rio’s Gudai-Darri mine site on Jan. 12. When it was unpacked for inspection on Jan. 25, the gauge was found broken apart, with one of four mounting bolts missing and screws from the gauge also gone.

Authorities suspect vibrations from the truck caused the screws and the bolt to come loose, and the radioactive capsule from the gauge fell out of the package and then out of a gap in the truck.

“We are taking this incident very seriously. We recognise this is clearly very concerning and are sorry for the alarm it has caused in the Western Australian community,” Simon Trott, Rio’s iron ore division chief, said in a statement.

The silver capsule, 6 millimetres (mm) in diameter and 8 mm long, contains Caesium-137 which emits radiation equal to 10 X-rays per hour.

Authorities have recommended people stay at least five metres (16.5 feet) away as exposure could cause radiation burns or radiation sickness, though they add that the risk to the general community is relatively low.

“From what I have read, if you drive past it, the risk is equivalent to an X-ray. But if you stand next to it or you handle it, it could be very dangerous,” said Stuchbery.

The state’s emergency services department has established a hazard management team and has brought in specialised equipment that includes portable radiation survey meters to detect radiation levels across a 20-metre radius and which can be used from moving vehicles.

Trott said Rio had engaged a third-party contractor, with appropriate expertise and certification, to safely package and transport the gauge.

“We have completed radiological surveys of all areas on site where the device had been, and surveyed roads within the mine site as well as the access road leading away from the Gudai-Darri mine site,” he said, adding that Rio was also conducting its own investigation into how the loss occurred.

Analysts said that the transport of dangerous goods to and from mine sites was routine, adding that such incidents have been extremely rare and did not reflect poor safety standards on Rio’s part.

The incident is another headache for the mining giant following its 2020 destruction of two ancient and sacred rock shelters in the Pilbara region of Western Australia for an iron ore mine.

Reporting by Melanie Burton; Editing by Edwina Gibbs

Our Standards: The Thomson Reuters Trust Principles.

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World

New Zealand counts cost of Auckland floods, more rain forecast

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WELLINGTON, Jan 30 (Reuters) – Flood-ravaged Auckland is forecast to receive further heavy rain in the coming days, authorities in New Zealand’s largest city said on Monday, as insurers counted the costs of what looks likely to be the country’s most expensive weather event ever.

Four people lost their lives in flash floods and landslides that hit Auckland over the last three days amid record downpours. A state of emergency remains in place in Auckland. A state of emergency in the Waitomo region south of Auckland was lifted.

Flights in and out of Auckland Airport are still experiencing delays and cancellations, beaches around the city of 1.6 million are closed and all Auckland schools will remain closed until Feb. 7.

“There has been very significant damage across Auckland,” New Zealand Prime Minister Chris Hipkins told state-owned television station TVNZ on Monday. “Obviously there were a number of homes damaged by flooding but also extensive earth movements.”

Currently, around 350 people were in need of emergency accommodation, he added.

LOOMING CLOUDS

Metservice is forecasting further heavy rains to hit the already sodden city late on Tuesday.

“We have more adverse weather coming and we need to prepare for that,” Auckland Emergency Management duty controller Rachel Kelleher told a media conference.

Fire and Emergency services received 30 callouts overnight Monday, including responding to a landslide when a carport slid down a hill.

The council has designated 69 houses as uninhabitable and has prevented people from entering them. A further 300 properties were deemed at risk, with access restricted to certain areas for short periods.

The north of New Zealand’s North Island is receiving more rain than normal due to the La Nina weather event.

The National Institute of Water and Atmospheric Research (NIWA) said Auckland has already recorded more than eight times its average January rainfall and 40% of its annual average rainfall.

INSURERS FACE HEFTY BILL

The cost of the clean up is expected to top the NZ$97 million ($63 million) bill for flooding on the West Coast in 2021 but will not be anywhere near as expensive as the estimated NZ$31 billion insured costs of two major earthquakes in Christchurch in 2010-2011, said Insurance Council of New Zealand spokesperson Christian Judge.

Insurance Australia Group’s (IAG.AX) New Zealand divisions have received over 5,000 claims so far and Suncorp Group (SUN.AX) said it received around 3,000 claims across the Vero and AA Insurance Brands. New Zealand’s Tower (TWR.NZ) said it had received around 1,900 claims.

“The number of claims is expected to rise further over the coming days, with the event still unfolding and as customers identify damage to their property,” IAG said in a statement.

Economists say the recovery and rebuild could add to inflationary pressures in New Zealand as vehicles and household goods need to be replaced and there is an increase in construction work needed to repair or rebuild houses and infrastructure damaged by the flooding.

($1 = 1.5385 New Zealand dollars)

Reporting by Lucy Craymer; Editing by Aurora Ellis and Lincoln Feast

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