Author: fortraders

HSBC, Citi, Deutsche Bank, Morgan Stanley and Royal Bank of Canada are being investigated by the UK’s Competition and Markets Authority (CMA) for allegedly breaking competition law by exchanging sensitive information on government bond trading activities in one-to-one online chats.

The CMA alleges that the banks shared details on pricing and other aspects of their trading strategies between 2009 and 2013. Deutsche Bank and Citi have admitted to involvement in anti-competitive activity, while HSBC, Morgan Stanley and Royal Bank of Canada have not admitted any wrongdoing.

Michael Grenfell, Executive Director of Enforcement at the CMA, said: “These alleged activities are very serious and warrant the detailed investigation we have undertaken. This could have denied taxpayers, pension savers and financial institutions the benefits of full competition for these products, including the minimisation of borrowing costs.”

The CMA will now consider further representations from the banks before reaching a final decision on next steps.

Japan’s benchmark stock indexes retreated on Wednesday, extending declines into a second session as investors locked in profits and questioned how high stocks could run after reaching 33-year highs. The Nikkei 225 index fell 0.8%, while the broader TOPIX index shed 0.2%.

The recent rally was driven by strong first-quarter earnings, dovish signals from the Bank of Japan, and an endorsement for Japanese stocks by Warren Buffett. Analysts also cited improved corporate governance measures by the Tokyo Stock Exchange and a weak yen as factors behind the rally.

However, a Reuters poll forecast some consolidation in Japan’s benchmark index this year, with the Nikkei expected to slide 4% from 33-year highs to the 30,000 level by end-2023. Markets are also concerned about a potential U.S. debt default and weakness in China, which is a major export market for Japan.

On the other hand, the Japanese economy benefited from reopening its borders as demand for tourism shot up and supported the country’s services sector. This also saw the economy grow more than expected in the first quarter of 2023, albeit slightly.

This year’s boom in artificial intelligence (AI) has created a lot of hype and anxiety about its potential impact on jobs, productivity, and profit margins. Bank of America’s strategists have even referred to the stock market craze around it as a “baby bubble”. McKinsey Global Institute’s study into the sustainability of two decades of debt-fueled asset-price gains suggests that accelerating productivity may be the only way to keep income and wealth growing over coming decades.

However, there are doubts about the potential of AI to lead to widespread job losses. Goldman Sachs estimates that 300 million jobs worldwide could be at risk from automation, while Deutsche Bank strategists are sceptical that this time is different and it will lead to widespread job losses.

Humans are ambitious and will always seek new opportunities when technology closes off previous areas. Governments and corporations should strive towards accelerated productivity growth, which is the only way to achieve strong growth in income and wealth over the long term. This requires productive capital allocation and investment, as well as rapid adoption of digital tools.

European stock markets are expected to open lower Wednesday as investors await the outcome of talks to raise the U.S. debt ceiling and key economic data. U.S. President Joe Biden and House Speaker Kevin McCarthy held “productive” talks on Monday, but there was little sign of progress yesterday. Germany’s Ifo survey of current business conditions, due later in the session, will be closely watched for clues of sentiment in the region’s largest economy. U.K. inflation slowed in April, with the annual figure coming in at 8.7%, still above expectations. Bank of England Governor Andrew Bailey and ECB President Christine Lagarde are both scheduled to speak later Wednesday. Oil prices rose Wednesday after industry data registered a sharp drop in U.S. inventories, while gold futures rose 0.3% to $1,980.15/oz. EUR/USD traded 0.1% higher at 1.0785.

The U.S. Federal Trade Commission is investigating whether baby-formula makers Abbott Laboratories and Nestle colluded on bids for attractive state contracts. The antitrust agency is looking into whether the companies have “engaged in collusion or coordination with any other market participant regarding the bidding” for the Women, Infants and Children (WIC) formula-supply program.

In February, Abbott said it received a civil investigative demand from the FTC related to a probe of the companies participating in bids for WIC formula contracts. Nestle, which makes the Good Start line of infant formulas, has also responded to the FTC.

The FTC, Abbott, and Nestle did not immediately respond to Reuters requests for comment. The investigation is ongoing and the outcome is yet to be determined.

Sony Group Corp is reaping the rewards of its decision to remain an independent content provider to streaming services. The Japanese tech entertainment conglomerate has seen hits such as “The Last Of Us” on HBO Max, “Cobra Kai” on Netflix and “For All Mankind” on Apple TV+.

Platform operators are coming under pressure to demonstrate profitability, leading to pressure on production budgets and a repositioning as content suppliers. Sony Pictures is in a strong position to provide content to any and all partners and platforms.

The company also owns anime streaming service Crunchyroll and is looking to capitalise on growing global enthusiasm for such content. Higher Crunchyroll sales along with more theatrical releases are forecast to drive an 11% growth in sales to 1.52 trillion yen ($11.26 billion) this year.

Upcoming movie releases include Ridely Scott’s “Napoleon” which will screen in theatres before streaming on Apple TV+. Sony Group Corp is well-positioned to take advantage of the streaming industry’s growth and profitability.

The U.S. National Transportation Safety Board (NTSB) has called for increased investment in aviation safety technology solutions following a series of close-call runway incidents this year. NTSB Chair Jennifer Homendy said that technology systems that detect aircraft and ground vehicles at airports need to be upgraded and all other commercial airports need additional technology.

Transportation Secretary Pete Buttigieg said the rate of runway incursions is coming closer to normal levels and the FAA has taken steps to improve air traffic control, convening a safety summit and issuing a safety alert. The FAA has also announced an investment of $100 million in 12 airports for improvements to taxiways and lighting to reduce runway incursions.

Homendy highlighted a near-miss incident in Austin in February between a FedEx cargo plane and a Southwest Airlines Boeing 737 that came within about 115 feet of each other in poor visibility conditions. She said the crew of the FedEx plane did a great job in aborting their planned landing. Other near-miss incidents have occurred in Boston, Florida and New York’s JFK airport between a Delta Air Lines plane and an American Airlines Boeing 777.

The U.S. has not had a major fatal U.S. passenger airline crash since February 2009. With increased investment in aviation safety technology solutions, the NTSB hopes to ensure that this record continues.

Lenovo Group, the world’s largest PC maker, reported a 24% decline in revenue for the January-March quarter, meeting market expectations. The result marked the third consecutive quarter of on-year decline and the first annual decline since 2019. Global PC shipments across the industry declined 29% in the same period.

To improve profit margins, Lenovo has been expanding non-PC businesses, such as in smartphones, servers and IT services. For the full year through March, its non-PC businesses grew 7% and now make up about 40% of total revenue. Overall net income attributable to shareholders in January-March fell 72% to $114 million. The price of Lenovo shares fell 3.7% in morning trade before the earnings results were released.