Global Economic and Market Udates: Greece has now Started Negotiations with the IMF
Greece has now started negotiations with the IMF over a plan to exchange its sovereign debt for growth-linked bonds, as new PM Alexis Tsipras and Finance Minister Yanis Varoufakis continue a European tour to drum up support for their proposal. “We will start the entire repayment once solid growth starts in Greece,” Varoufakis told Italian newspaper La Repubblica. The plan got a skeptical reception from euro zone officials on Tuesday.
Oil prices are on the decline as renewed concerns over global demand brought an end to a rally that pushed up prices by about 19% over the past four sessions. Growth concerns in China have especially prompted renewed concern for demand, after the HSBC China services PMI reported a six-month low of 51.8 in January, compared with 53.4 in December. Crude futures -3.2%to $51.41, as investors ask if oil has really found a bottom.
The eurozone economy seems to have started 2015 on a far more solid footing than previously estimated, after Markit reported that its purchasing managers’ index increased to 52.6 in January from 51.4 in December, exceeding a Jan. 23 preliminary reading of 52.2. Measures for Germany, Italy and Spain signaled accelerating growth, while French output shrank for a ninth month. “The move to full-scale QE by the ECB should help drive even stronger growth in coming months,” said Chris Williamson, chief economist at Markit.
Sony says its net loss for 2014 is likely less than previously forecast as higher-than-expected sales of its image sensors and PlayStation 4 products helped lift its Q3 profit. The company now forecasts a preliminary full-year net loss of ¥170B, narrower than its October forecast for a net loss of ¥230B. Preliminary results also show that net profit more than tripled during the quarter to ¥89B from ¥26.4B a year earlier, although Sony (NYSE:SNE) wasn’t able to complete its books for its Hollywood studio division due to the recent cyber attack.
Walt Disney’s quarterly profit blew past Wall Street’s estimates as its blockbuster animated film Frozen heated up home entertainment and toy sales. Disney (NYSE:DIS) also announced plans to open its Shanghai Disneyland theme park in the spring of 2016, while reporting strong performances across its TV networks, theme parks and movie studio. Net profit rose to $2.18B, or $1.27 per share, in the quarter, from $1.03 per share a year earlier. DIS +4.1% premarket.
Yahoo has decided to spin off its Small Business unit, which helps small enterprises set up and run their businesses online, as part of the spinoff of its $40B stake in Alibaba (NYSE:BABA). “We’re mapping out additional investments now for our platform and services,” Yahoo (NASDAQ:YHOO) Small Business announced on its Tumblr page. “We expect the completion of the transaction to occur in Q4 2015.”
Brazil’s President Rousseff has accepted an offer by Petrobras (NYSE:PBR) CEO Maria das Graças Foster to step down this month, setting in motion a plan to replace senior management at the company, Reuters reports, citing a government source. The news of a management shake-up led Petrobras shares to close up almost 14% yesterday, after tumbling 35% in the past 52 weeks due to the company’s widening corruption scandal.
Ford is adding 1,500 workers across four plants to build the new F-150 pickup truck and plans on shifting hundreds of union-represented workers from entry-level wages to the pay veteran plant workers make, in the coming weeks. As Ford (NYSE:F) adds the new workers, it will exceed the quota of employees it can categorize in its second-tier pay bracket, and therefore will need to increase the paychecks of as much as 1% of its hourly workforce.
Toyota raised its fiscal year profit forecast today as a weaker yen increased the value of sales overseas, making up for slumping demand at home. Net income for the year ending March 31 may now climb to a record ¥2.13T ($18.1B), compared to Toyota’s (NYSE:TM) previous guidance of ¥2T in profit. Net income rose to ¥600B for the quarter ended December, exceeding the ¥549.2B forecast by analysts.
Saudi Arabia’s Kingdom Holding, owned by Saudi billionaire Prince Alwaleed Bin Talal, has cut its stake in Rupert Murdoch’s News Corp. (NASDAQ:NWS), reducing its shareholding in Class B shares to 1% from 6.6%. The bourse statement announcing the news stated that the sale generated “705M riyals ($187.9M)”, which will be used for other investments.
J.M. Smucker is acquiring Big Heart Pet Brands from its P-E owners for about $5.8B, including debt, in a bid to expand into a fast-growing $21B business. Big Heart (formerly known as Del Monte before unloading its consumer products division) owns brands like Milk-Bone, Kibbles ’n Bits and Meow Mix, among others. The deal could also help revive Smucker’s (NYSE:SJM) sales, which have been relatively flat since 2012.