Australia – Wall Street Observer

Strong German data helps European shares recover; Wall Street futures subdued

Posted on Wed, Feb 24, 2021, 7:38amWed, Feb 24, 2021, 7:41am by Reuters

By Elizabeth Howcroft

LONDON (Reuters) – European shares rose but U.S. stocks futures pointed to a further tech sell-off in Wall Street, as market participants weighed up signs of economic recovery against fears of inflation.

Falling tech stocks pulled Asian markets lower overnight, as recent gains in U.S. Treasury yields put lofty valuations under pressure.

In his testimony before the U.S. Senate on Tuesday, Federal Reserve Chair Jerome Powell did not seem too worried about rising yields, telling Congress they were a statement on the market’s confidence in the pandemic recovery.

“Powell’s comments reinforce our view that the increase in inflation expectations is most likely transitory and that higher Treasury yields primarily reflect optimism over the economic recovery and the reflation trade,” wrote UBS chief investment officer for global wealth management, Mark Haefele, in a note to clients.

“Investors should expect an extended period in which interest rates remain below inflation.”

European indexes recovered some recent losses, with the STOXX 600 up 0.3% at 1150 GMT, but still down almost 2% from the one-year high it hit last week.

Germany’s DAX was up 0.7%, helped by stronger-than-expected GDP gains in Europe’s largest economy. The FTSE 100 was up 0.1%.

The MSCI world equity index, which tracks shares in 49 countries, was down 0.3%.

U.S. futures pointed to a mixed open for Wall Street, with S&P 500 e-minis up 0.1% but futures for the tech-heavy Nasdaq in decline for the seventh consecutive day.

“We’re seeing a modest recovery at this point, so there’s still clearly a lot of caution,” said Craig Erlam, senior market analyst at OANDA, who said the stock market falls this week were largely a “blip”.

“I think central banks are going to continue to talk down tightening prospects,” he added.

The 10-year U.S. Treasury yield rose, although it was below the one-year high it reached on Monday.

Tech stocks are particularly sensitive to rising yields because their value rests heavily on earnings in the future, which are discounted more deeply when bond returns go up.

Bitcoin recovered somewhat, up 3.3% at around $50,481 at 1202 GMT.

“I suspect we are in a bubble in certain places, that stimulus cheques will provide more fire to that at some point but that risk assets are going to be constantly buffeted by the risk of higher yields and inflation regardless of whether it has any structural roots or not,” wrote Deutsche Bank strategist Jim Reid in a note to clients.

But, one year on from the start of the COVID-19 market crash, financial market participants were generally upbeat about the prospect of vaccine rollouts, lockdowns ending and economies re-opening.

Strong exports and solid construction activity helped the German economy to grow by a stronger-than-expected 0.3% in the final quarter of last year, the Federal Statistics Office said on Wednesday, revising up an earlier estimate.

U.S. consumer confidence increased in February and Britons rushed to book foreign holidays after the government laid out plans to relax restrictions. But EU government leaders will agree on Thursday to maintain curbs on non-essential travel within the bloc.

OANDA’s Craig Erlam said that market consensus is that there will be no further lockdowns in Europe and the United States after the summer.

“Markets are working on the assumption that we are at the end of the tunnel, we’re right near the end of the tunnel, and we’re not going back in,” he said.

The dollar was broadly flat against a basket of currencies , while euro-dollar was slightly up at $1.2166 <EUR=EBS>.

The benchmark 10-year German Bund was steady.

Elsewhere, oil prices rose, although a surprise build-up in U.S. inventories last week limited the gains.

Brent and U.S. West Texas Intermediate (WTI) crude futures have both risen by around 28% so far in 2021.

Graphic: Up and away: global bond yields on the rise – https://fingfx.thomsonreuters.com/gfx/mkt/qzjpqgobnpx/bondyields2302.png

(Reporting by Elizabeth Howcroft; Editing by Nick Macfie and Chizu Nomiyama)

Exclusive: CDP consortium’s bid to value Atlantia unit at 9 billion euros – sources

Posted on Wed, Feb 24, 2021, 2:23amWed, Feb 24, 2021, 2:53am by Reuters

By Francesca Landini and Giuseppe Fonte

MILAN (Reuters) – Cassa Depositi e Prestiti (CDP) on Tuesday gave the go-ahead to submit an offer to buy Atlantia’s 88% stake in Autostrade per l’Italia unit, CDP said, after two sources told Reuters the bid would value 100% of Autostrade at 9 billion euros.

Italian state lender CDP, which will file its binding bid with its investment fund partners Macquarie and Blackstone, did not disclose the financial details of the bid due to be presented by Wednesday.

CDP said the consortium could purchase up to 100% of Autostrade if the motorway company’s minority shareholders – Germany’s Allianz and funds DIF, EDF Invest and China’s Silk Road Fund – exercise their right to sell their 12% under the same conditions that will be accepted by Atlantia.

A previous non-binding bid for Autostrade in December was pitched at an 8 billion-euro valuation, one of the sources said.

“The offer has been improved since December and is based on a value for the whole of Autostrade of 9 billion euros,” the source said.

Barring last-minute surprises, the offer is not likely to include conditions protecting the buyers from the legal risks linked to the deadly collapse in 2018 of a bridge run by Autostrade, the source said.

The negotiations are part of an effort to end a political dispute over Autostrade’s motorway concession triggered by the bridge disaster, which killed 43 people on Aug. 14, 2018.

CDP unit CDP Equity will hold the 51% of the vehicle that will acquire the stake, with Macquarie and Blackstone holding 24.5% each, CDP said in the statement. The CDP unit will have the option to sell part of its shares to other institutional investors.

Atlantia, which is controlled by the Benetton family, will hold a board meeting on Friday to assess the offer and could decide to call a shareholders’ meeting to vote on the proposal if it deems it interesting.

As an alternative, Atlantia’s board may reject it and press on with a plan to demerge the motorway unit from the group, betting on a better offer in the coming months.

Minority investors in Atlantia, including hedge fund TCI, have criticized the involvement of CDP in the sale of the unit, adding the value of Autostrade is more than 12 billion euros.

A government change in Italy, with a new cross-party ruling coalition headed by former European Central Bank Chief Mario Draghi, could also have an impact on the strategy of state lender CDP and its plans for Autostrade.

($1 = 0.8226 euro)

(This story adds dropped word “at” in first paragraph)

(Reporting by Francesca Landini and Giuseppe Fonte in Milan; Additional reporting by Stephen Jewkes in Milan; Editing by Mark Potter and Matthew Lewis)

Australia’s competition chief claims victory after Facebook standoff

Posted on Wed, Feb 24, 2021, 1:58amWed, Feb 24, 2021, 2:53am by Reuters

By Byron Kaye and Colin Packham

CANBERRA (Reuters) – The architect of Australian media reforms being watched around the world claimed victory on Wednesday, even as critics said concessions to the laws forcing Big Tech to pay for news content have given Facebook and Google a get-out clause.

The Australian government made late changes to the laws after Facebook last week blocked news content in Australia, escalating a dispute over the proposed legislation and catching international attention.

The amended legislation is expected to pass the Senate this week, despite opposition from some minor opposition parties and independent politicians who argue it disadvantages smaller news companies.

Rod Sims, the chairman of the Australian Competition and Consumer Commission (ACCC), told Reuters the bargaining power imbalance he was tasked with correcting had been addressed.

“The changes the government’s done are things that either don’t matter much or are just to clarify things that, at least in Facebook’s mind, were unclear,” said Sims, who led the drafting of the legislation.

“Whatever they say, they need news. It keeps people on their platform longer – they make more money.”

With Australia’s reforms serving as a model for other nations to adopt, Facebook was also keen to claim a win.

Facebook Vice President of Global News Partnerships Campbell Brown stressed the company had retained the ability to decide if news appeared on its platform and could sidestep the forced negotiation for content payment under the original legislation.

In a key amendment to the legislation, Treasurer Josh Frydenberg was given the discretion to decide that either Facebook or Google need not be subject to the code, if they make a “significant contribution to the sustainability of the Australian news industry.”

The original legislation had required Facebook and Alphabet Inc’s Google to submit to arbitration if they could not reach a commercial deal with Australian news companies for their content, effectively allowing the government to set a price.

Facebook, which contends news accounts for just 4% of traffic on its site in Australia, said it would restore news on Australian pages in the coming days.

“This isn’t a must-carry regime,” said Sims. “We never said we’re forcing Facebook to keep showing news.”

SMALL MEDIA, BIG CONCERNS

While the Senate is expected to pass the legislation, with the main opposition Labor Party supporting the ruling Liberal Party, some politicians and media companies have expressed concern about the amendments.

“This changes the bill significantly,” independent senator Rex Patrick, who plans to vote against the amended bill, told Reuters.

“The big players could successfully negotiate with Facebook or Google. The minister then doesn’t designate them, and all the little players miss out.”

Lee O’Connor, owner and editor of regional newspaper The Coonamble Times, agreed the amendments favoured big media groups.

“It’s the vagueness of the language that’s the main concern, and the minister’s discretion is part of that,” O’Connor said.

Frydenberg has said he will give Facebook and Google time to strike deals with Australian media companies before deciding whether to enforce his new powers.

CONTENT DEALS

The code was designed by the government and competition regulator to address a power imbalance between the social media giants and publishers when negotiating payment for news content displayed on the tech firms’ sites.

After first threatening to withdraw its search engine from Australia, Google has instead struck a series of deals with several publishers, including a global news deal with News Corp.

Television broadcaster and newspaper publisher Seven West Media on Tuesday said it had signed a letter of intent to reach a content supply deal with Facebook within 60 days.

Rival Nine Entertainment Co also revealed on Wednesday it was in negotiations with Facebook.

“At this stage, we’re still obviously proceeding with negotiations,” Nine chief executive Hugh Marks told analysts at a company briefing on Wednesday. “It is really positive for our business and positive particularly for the publishing business.”

(Reporting by Colin Packham and Byron Kaye; writing by Jonathan Barrett; editing by Jane Wardell)

Facebook ‘refriends’ Australia after changes to media laws

Posted on Tue, Feb 23, 2021, 8:18amTue, Feb 23, 2021, 8:31am by Reuters

By Byron Kaye and Colin Packham

CANBERRA (Reuters) – Facebook will restore Australian news pages, ending an unprecedented week-long blackout after wringing concessions from the government over a proposed law that will require tech giants to pay traditional media companies for their content.

Both sides claimed victory in the clash, which has drawn global attention as countries including Canada and Britain consider similar steps to rein in the dominant tech platforms and preserve media diversity.

While some analysts said Facebook had defended its lucrative model of collecting ad money for clicks on news it shows, others said the compromise – which includes a deal on how to resolve disputes – could pay off for the media industry, or at least for publishers with reach and political clout.

“Facebook has scored a big win,” said independent British technology analyst Richard Windsor, adding the concessions it made “virtually guarantee that it will be business as usual from here on.”

Australia and the social media group had been locked in a standoff after the government introduced legislation that challenged Facebook and Alphabet Inc’s Google’s dominance in the news content market.

Facebook blocked Australian users on Feb. 17 from sharing and viewing news content on its popular social media platform, drawing criticism from publishers and the government.

But after talks between Treasurer Josh Frydenberg and Facebook CEO Mark Zuckerberg, a concession deal was struck, with Australian news expected to return to the social media site in coming days.

“Facebook has refriended Australia, and Australian news will be restored to the Facebook platform,” Frydenberg told reporters in Canberra.

Frydenberg said Australia had been a “proxy battle for the world” as other jurisdictions engage with tech companies over a range of issues around news and content.

Australia will offer four amendments, which include a change to the proposed mandatory arbitration mechanism used when the tech giants cannot reach a deal with publishers over fair payment for displaying news content.

‘UNTESTED’

Facebook said it was satisfied with the revisions, which will need to be implemented in legislation currently before the parliament.

“Going forward, the government has clarified we will retain the ability to decide if news appears on Facebook so that we won’t automatically be subject to a forced negotiation,” Facebook Vice President of Global News Partnerships Campbell Brown said in a statement online.

The company would continue to invest in news globally but also “resist efforts by media conglomerates to advance regulatory frameworks that do not take account of the true value exchange between publishers and platforms like Facebook.”

Analysts said while the concessions marked some progress for tech platforms, the government and the media, there remained many uncertainties about how the law would work.

“Retaining unilateral control over which publishers they do cash deals with as well as control over if and how news appears on Facebook surely looks more attractive to Menlo Park than the alternative,” said Rasmus Nielsen, head of the Reuters Institute for the Study of Journalism, referring to Facebook headquarters.

Any deals that Facebook strikes are likely to benefit the bottom line of News Corp and a few other big Australian publishers, added Nielsen, but whether smaller outlets win such deals remains to be seen.

Tama Leaver, professor of internet studies at Australia’s Curtin University, said Facebook’s negotiating tactics had dented its reputation, although it was too early to say how the proposed law would work.

“It’s like a gun that sits in the Treasurer’s desk that hasn’t been used or tested,” said Leaver.

COOLING-OFF PERIOD

The amendments include an additional two-month mediation period before the government-appointed arbitrator intervenes, giving the parties more time to reach a private deal.

It also inserts a rule that an internet company’s existing media deals be taken into account before the rules take effect, a measure that Frydenberg said would encourage internet companies to strike deals with smaller outlets.

The so-called Media Bargaining Code has been designed by the government and competition regulator to address a power imbalance between the social media giants and publishers when negotiating payment for news content used on the tech firms’ sites.

Media companies have argued that they should be compensated for the links that drive audiences, and advertising dollars, to the internet companies’ platforms.

A spokesman for Australian publisher and broadcaster Nine Entertainment Co Ltd welcomed the government’s compromise, which it said moved “Facebook back into the negotiations with Australian media organisations.”

Major television broadcaster and newspaper publisher Seven West Media Ltd said it had signed a letter of intent to strike a content supply deal with Facebook within 60 days.

A representative of News Corp, which has a major presence in Australia’s news industry and last week announced a global licensing deal with Google, was not immediately available for comment.

Frydenberg said Google had welcomed the changes. A Google spokesman declined to comment.

Google also previously threatened to withdraw its search engine from Australia but later struck a series of deals with publishers.

The government will introduce the amendments to Australia’s parliament on Tuesday, Frydenberg said. The country’s two houses of parliament will need to approve the amended proposal before it becomes law.

(Reporting by Colin Packham and Byron Kaye; additional reporting by Renju Jose, Kate Holton and Douglas Busvine; Writing by Jonathan Barrett; Editing by Sam Holmes and Mark Potter)

Australia says no further Facebook, Google amendments as final vote nears

Posted on Mon, Feb 22, 2021, 9:17pmMon, Feb 22, 2021, 9:45pm by Reuters

By Colin Packham

CANBERRA (Reuters) – Australia will not alter legislation that would make Facebook and Alphabet Inc’s Google pay news outlets for content, a senior lawmaker said on Monday, as Canberra neared a final vote on whether to pass the bill into law.

Australia and the tech giants have been in a stand-off over the legislation widely seen as setting a global precedent.

Other countries including Canada and Britain have already expressed interest in taking some sort of similar action.

Facebook has protested the laws. Last week it blocked all news content and several state government and emergency department accounts, in a jolt to the global news industry, which has already seen its business model upended by the titans of the technological revolution.

Talks between Australia and Facebook over the weekend yielded no breakthrough.

As Australia’s senate began debating the legislation, the country’s most senior lawmaker in the upper house said there would be no further amendments.

“The bill as it stands … meets the right balance,” Simon Birmingham, Australia’s Minister for Finance, told Australian Broadcasting Corp Radio.

The bill in its present form ensures “Australian-generated news content by Australian-generated news organisations can and should be paid for and done so in a fair and legitimate way”.

The laws would give the government the right to appoint an arbitrator to set content licencing fees if private negotiations fail.

While both Google and Facebook have campaigned against the laws, Google last week inked deals with top Australian outlets, including a global deal with Rupert Murdoch’s News Corp.

“There’s no reason Facebook can’t do and achieve what Google already has,” Birmingham added.

A Facebook representative declined to comment on Monday on the legislation, which passed the lower house last week and has majority support in the Senate.

A final vote after the so-called third reading of the bill is expected on Tuesday.

Lobby group DIGI, which represents Facebook, Google and other online platforms like Twitter Inc, meanwhile said on Monday that its members had agreed to adopt an industry-wide code of practice to reduce the spread of misinformation online.

Under the voluntary code, they commit to identifying and stopping unidentified accounts, or “bots”, disseminating content; informing users of the origins of content; and publishing an annual transparency report, among other measures.

(Reporting by Byron Kaye and Colin Packham; Editing by Sam Holmes and Hugh Lawson)

Factbox: Winners and losers in energy sector from Texas cold snap

Posted on Mon, Feb 22, 2021, 6:55pmMon, Feb 22, 2021, 8:38pm by Reuters

(Reuters) – A winter storm that hit parts of the southern United States over the past week led several energy companies to report stronger-than-expected results after they were called on to provide more power at higher prices, while others faced millions of dollars in losses.

Here is a look at the winners and losers in the energy sector from the storm:

WINNERS:

Gas producers:

Comstock Resources said the last week was “like hitting the jackpot,” adding it was able to sell at “super-premium prices” a material amount of production at anywhere from $15 per million cubic feet of gas (mcf) to as much as around $179 per mcf.

EQT Corp said last week that it also benefited from high prices in regions affected by the cold snap. The company mainly produces gas out of the Marcellus and Utica shale regions in Pennsylvania and Ohio.

Australia’s Macquarie Group, the second biggest gas marketer in North America after oil major BP, lifted its profit guidance on Monday due to the effects of the extreme winter weather. It expects 2021 profit to rise by 10%, after earlier anticipating earnings to drop.

Other natural gas weighted production companies, including Cabot Oil & Gas, Southwestern Energy Co, Range Resources Corp and Antero Resources, may benefit from the freeze, Morgan Stanley analysts said in a note.

Refiners with limited exposure to Texas markets:

Shares of refiners such as HollyFrontier Corp and Valero Energy Corp rose after the freezing temperatures knocked a large swath of U.S. Gulf Coast refining offline, said Bob Yawger, director of energy futures at Mizuho. Eurozone refiners, including Shell and Total, are positioned to benefit as they ramp up their shipments of gasoline into New York Harbor, he said.

LOSERS

Utilities:

Just Energy on Monday raised doubt about its ability to continue as a going concern, after it forecast a $250 million loss from the Texas winter storms.

Innergex Renewable Energy Inc forecast a financial impact of up to C$60 million on its Texas wind farms.

Algonquin Power & Utilities Corp said on Friday it expects the potential hit to adjusted core earnings for this year to be between $45 million and $55 million after bad weather restricted production at its Renewable Energy Group’s Texas-based wind facilities.

Atmos Energy said on Friday it purchased natural gas for an extra $2.5 billion to $3.5 billion due to higher cost of the fuel, adding it was evaluating financing options to pay for the additional purchase cost.

Oilfield Services:

Solaris said on Monday last week’s weather would have an impact on first quarter financials, but did not quantify the hit.

Shale oil producers:

Shale oil producers in the southern United States could take at least two weeks to restart the more than 2 million barrels per day of crude output that shut down. Some production may never return, analysts said.

Diamondback Energy said it expects the weather to wipe off up to five days of production in the current quarter.

Cimarex Energy Inc said it expects an up to 7% hit to production volume in the quarter.

Occidental Petroleum forecast first-quarter Permian production of 450,000 barrels of oil equivalent per day to 460,000 boepd, including a 25,000 boepd hit from downtime related to the winter storm.

Laredo Petroleum said its Permian Basin operations were affected for the last 12 days and estimated the combined impact of shut-in production and completions delays to reduce first-quarter total output by about 8,000 boepd and oil production by about 3,000 bpd.

Gulf refiners:

Refiners with oil processing facilities along the Gulf Coast, the main U.S. refining hub, such as Phillips 66 and Exxon Mobil, were forced to halt operations. By Thursday last week, the historic sub-zero temperatures in Texas and Louisiana shut at least 3.5 million barrels per day, or about 19%, of U.S. refining capacity.

(Compiled by Arundhati Sarkar and Arathy S Nair in Bengaluru, Laila Kearney and Devika Krishnakumar in New York and Rod Nickel in Calgary; Editing by Sonya Hepinstall and Arun Koyyur)

Australia’s Macquarie reaps windfall profits from U.S. winter freeze

Posted on Mon, Feb 22, 2021, 6:38pmMon, Feb 22, 2021, 8:38pm by Reuters

By Paulina Duran and Jonathan Barrett

SYDNEY (Reuters) – Macquarie Group earned big profits off the winter storms sweeping across Texas and other U.S. states, with the gains from its trading operations single-handedly changing the Australian bank’s outlook for the year.

The company is the second-largest gas marketer in North America behind oil major BP, and the week of big trading revenue has by itself boosted the bank’s overall profit outlook for the year by 10%.

The windfall comes after nearly a week of frigid temperatures that knocked out power for millions of people in the United States, particularly in Texas, forcing many to spend several nights without heat or electricity.

Some consumers are facing exorbitant utility bills in coming months as a result of Texas’s largely unregulated system. The deadly winter storm meant electricity generators had to compete for natural gas supplies, pushing up prices sharply in the deregulated market.

Real-time natural gas prices surged more than 300 times during the storms, with power prices reaching $8,800 per megawatt-hour in some parts of Texas, compared with an average of roughly $26 per MWh.

Macquarie on Monday said it expects fiscal 2021 profits to jump by as much as 10% after warning just two weeks ago that earnings would be “slightly down.”

“Extreme winter weather conditions in North America have significantly increased short-term client demand for Macquarie’s capabilities in maintaining critical physical supply across the commodity complex,” the company said in a statement.

The company’s energy business unit trades large quantities of gas to meet unexpected consumer demand, and it could boost the bank’s overall profit by about A$400 million ($317 million), analysts said. Macquarie purchases natural gas and moves it along pipelines and grids, typically from areas where usage is low to high-demand markets.

“Macquarie appears to be capitalising well on volatility and financial market dislocation,” Bank of America Securities analysts said in a note, as it increased its earnings forecasts for the Sydney-headquartered company.

U.S. politicians have vowed to investigate how some companies profited so handsomely from the storm even as some natural gas providers celebrated their gains. “This week is like hitting the jackpot, as some of these incredible prices,” said Roland Burns, president at Comstock.

Macquarie’s shares closed up 3.5% to A$147.15 on Monday, the highest level in a year, outperforming the broader market that was flat.

Macquarie’s performance hurt last year by the pandemic, with subdued deal-making and deteriorating economic conditions leading to a rise in impairment charges.

But a strong initial public offering of its majority-owned data analytics software business, Nuix, late last year and a fillip in the energy business have helped push its share price back to pre-pandemic levels.

The company, which also operates Australia’s largest asset manager and investment banking business, is set for an extra boost from a rebound in local M&A activity this year.

Earlier this month, the Sydney-based financial conglomerate had forecast full-year earnings for the group to be “slightly” lower than in fiscal 2020.

Macquarie’s Commodities and Global Markets division contributes close to 40% of its group earnings. Analysts had previously raised concerns that the pandemic could erode profits from the division if high energy-use industries shuttered.

(Reporting by Paulina Duran and Jonathan Barrett; Additional reporting by Shriya Ramakrishnan and Scott DiSavino; Editing by Jane Wardell, Shri Navaratnam and Lisa Shumaker)

World shares dip as bond yields, commodities surge

Posted on Mon, Feb 22, 2021, 7:31amMon, Feb 22, 2021, 8:27am by Reuters

By Ritvik Carvalho

LONDON (Reuters) – World shares sank on Monday as expectations for faster economic growth and inflation battered bonds and boosted commodities, while rising real yields made equity valuations look more stretched in comparison.

MSCI’s All Country World Index, which tracks shares across 49 countries, was down 0.25% by midday in London.

The pan-European STOXX 600 index was down 0.6%, hitting its lowest in 10 days. Germany’s DAX and France’s CAC 40, and Britain’s FTSE 100 fell 0.5% each. Spain’s IBEX 35 index and Italy’s FTSE MIB lost 0.6% each.

S&P 500 futures fell to their lowest since Feb. 5, down 0.85% on the day.

Bonds have been bruised by the prospect of a stronger economic recovery and greater borrowing as President Joe Biden’s $1.9 trillion stimulus package progresses.

Federal Reserve Chair Jerome Powell delivers his semi-annual testimony before Congress this week and is likely to reiterate a commitment to keeping policy super easy for as long as needed to drive inflation higher.

“The coming week is relatively thin on the international data agenda, but after the recent rise in long bond yields, Fed Chairman Powell’s hearings in both chambers of Congress (Tuesday / Wednesday) will be attracting great interest,” said Elisabet Kopelman, U.S. economist at SEB.

“The fact that the most recent rise in long bond yields has been driven by higher real interest rates and not just inflation expectations increases the probability of a dovish message.”

European Central Bank President Christine Lagarde is also expected to sound dovish in a speech later Monday.

Yields on 10-year Treasury notes have already reached 1.38%, breaking the 1.30% level and bringing the rise for the year so far to a steep 43 basis points.

Analysts at BofA noted 30-year bonds had returned -9.4% in the year to date, the worst start since 2013.

“Real assets are outperforming financial assets big in ’21 as cyclical, political, secular trends say higher inflation,” the analysts said in a note. “Surging commodities, energy laggards in vogue, materials in secular breakouts.”

Earlier in Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1.18%, after slipping from a record top last week as the jump in U.S. bond yields unsettled investors.

Japan’s Nikkei recouped 0.8% and South Korea 0.1%, but Chinese blue chips lost 1.4%.

A COPPER-PLATED RECOVERY

One of the stars has been copper, a key component of renewable technology, which shot up 7.7% last week to a nine-year peak. The broader LMEX base metal index climbed 5.5% on the week.

Oil prices have gone along for the ride, aided by tightening supplies and freezing weather, giving Brent gains of 22% for the year so far.

On Monday, Brent crude futures were up 0.7% at $63.33 a barrel. U.S. crude added 0.7% to $59.65.

All of that has been a boon for commodity-linked currencies, with the Canadian, Australian and New Zealand dollars all higher for the year so far.

Sterling reached a three-year top of $1.4050, aided by one of the fastest vaccine rollouts in the world. England will ease lockdown restrictions in five-week intervals, Sky News reported on Monday, hours before Prime Minister Boris Johnson is due to announce details of his roadmap for re-opening the country.

The U.S. dollar index has been relatively range-bound, with downward pressure from the country’s expanding twin deficits balanced by higher bond yields. The index was last at 90.342, not far from where it started the year at 90.260.

Rising Treasury yields has helped the dollar gain against the yen to 105.60, given the Bank of Japan is actively restraining yields at home.

The euro was steady at $1.2135, corralled between support at $1.2021 and resistance around $1.2169.

One commodity not doing so well is gold, partly due to rising bond yields and partly as investors question if crypto currencies might be a better hedge against inflation.

Gold stood at $1,795 an ounce, having started the year at $1,896. Bitcoin was off 5.8% on Monday at $54,127, off a record high of $58,354.

(Reporting by Ritvik Carvalho; additional reporting by Wayne Cole in Sydney; editing by Larry King)

Facebook has ‘tentatively friended’ us again, Australia says

Posted on Fri, Feb 19, 2021, 11:21pmFri, Feb 19, 2021, 11:26pm by Reuters

By Colin Packham

CANBERRA (Reuters) – Facebook Inc is back at the negotiating table, Australian Prime Minister Scott Morrison said on Saturday after the tech giant this week blocked news on its site in the country.

Facebook’s abrupt decision to stop Australians from sharing news on the site and strip the pages of domestic and foreign news outlets also erased several state government and emergency department accounts, causing widespread anger.

The company has “tentatively friended us again,” Morrison told a news conference in Sydney. “What I’m pleased about it that Facebook is back at the table again.”

Facebook has publicly indicated no change in its opposition to a proposed law requiring social media platforms to pay for links to news content. Morrison was not asked about that.

Australia’s Treasurer Josh Frydenberg said on Friday he had spoken with Facebook CEO Mark Zuckerberg and further talks were expected over the weekend. It was not clear whether those talks have happened.

A Facebook spokeswoman and representatives for Frydenberg did not immediately respond to requests for comment.

The stand-off comes as Australia’s vows to press ahead with the landmark legislation, which could set a global precedent as countries like Canada express interest in taking similar action.

The Australian law, which would force Facebook and Alphabet Inc’s Google to reach commercial deals with Australian publishers or face compulsory arbitration, has cleared the lower house of parliament and is expected to be passed by the Senate within the next week.

Simon Milner, Facebook’s Asia-Pacific policy director of policy for the Asia-Pacific region, was quoted on Saturday as telling the Sydney Morning Herald the company had three main objections to the legislation.

Facebook objects to being barred from discriminating between different news outlets that ask for money, to arbitration models that allow an independent body to select one payment over another, and to the obligation to enter commercial negotiations with Australian media companies, Milner said.

Facebook declined to make Milner available to speak with Reuters.

Australia’s legislation is being widely watched overseas.

Canadian Heritage Minister Steven Guilbeault said on Thursday his country would adopt the Australian approach as it crafts its own legislation in coming months.

Google, which has initially threatened to close its search engine in Australia, has announced host of preemptive licensing deals over the past week, including a global agreement with News Corp.

Facebook’s move had an immediate impact on traffic to Australian new sites, according to early data from New York-based analytics firm Chartbeat.

Total traffic to the Australian news sites from various platforms fell from the day before the ban by around 13% within the country.

(Reporting by Colin Packham; Editing by William Mallard)

Citigroup considering divestiture of some foreign consumer units – Bloomberg Law

Posted on Fri, Feb 19, 2021, 6:32pmFri, Feb 19, 2021, 6:40pm by Reuters

(Reuters) – Citigroup Inc is considering divesting some international consumer units, Bloomberg Law reported on Friday, citing people familiar with the matter.

The discussions are around divesting units across retail banking in the Asia-Pacific region, the report https://bit.ly/3pD57WP said.

“As our incoming CEO Jane Fraser said in January, we are undertaking a dispassionate and thorough review of our strategy,” a Citigroup spokesperson told Reuters.

“Many different options are being considered and we will take the right amount of time before making any decisions.”

The move, part of Fraser’s attempt to simplify the bank, can see units in South Korea, Thailand, the Philippines and Australia being divested, the Bloomberg report said.

However, no decision has been made, according to the report.

Revenue from Citi’s consumer banking business in Asia declined 15% to $1.55 billion in the fourth quarter of 2020.

The divestitures could be spaced out over time or the bank could end up keeping all of its existing units, the Bloomberg report said.

The firm is also reviewing consumer operations in Mexico, though a sale there is less likely, the report said, citing one of the people.

Last month, New York-based Citigroup beat profit estimates but issued a gloomy forecast for expenses. Finance head Mark Mason said the lender’s expenses could rise in 2021 in the range of 2% to 3%, weighing on its operating margins. (https://reut.rs/2ZwXRB1)

(Reporting by Niket Nishant in Bengaluru; Editing by Maju Samuel)