Crude prices fall on concerns of U.S. riots, even as OPEC meeting advanced

NEW YORK (Reuters) – Oil prices fell due to concerns about riots in major U.S. cities that could staunch demand after trading higher on optimism that OPEC would extend or enhance production cuts at a meeting in June.

Riots over the weekend engulfed major U.S. cities on Saturday night, and more violence was feared Sunday over the death of George Floyd in police custody.

What began as peaceful demonstrations over the death of Floyd, who died as a white Minneapolis police officer knelt on his neck, have become a wave of outrage sweeping a politically and racially divided nation. [L1N2DD04L]

Cities have responded with curfews and other measures to stem the violence and some retailers that were beginning to ramp up operations after curtailments due to the coronavirus have pulled back in certain locations due to concerns of looting.

West Texas Intermediate crude futures CLc1 for July delivery traded at $35.25 a barrel, down 24 cents, at 7:35 p.m. EST (21:35 GMT). The contract jumped $1.78, or 5.3%, on Friday.

Brent crude LCOc1 traded down 16 cents a barrel at $37.68 a barrel, in the first day of August trading as the front month. The August contract climbed $1.81, or roughly 5%, on Friday.

Still, expectations of OPEC and its allies advancing the timeline for its June meeting lent support to the market, putting a floor in place, analysts said.

“Rumors of additional production cuts and the earlier meeting date led the market higher,” said Phil Flynn, a senior analyst at Price Futures in Chicago.

Russia has no objection to the next meeting of OPEC and its allies, known as OPEC+, being brought forward to June 4 from the following week, three OPEC+ sources familiar with the meeting’s preparations told Reuters on Sunday.

Algeria, which currently holds the presidency of the Organization of the Petroleum Exporting Countries (OPEC), has proposed the meeting planned for June 9-10 be brought forward to facilitate oil sales for countries such as Saudi Arabia, Iraq and Kuwait.

Both benchmarks saw steep monthly rises due to falling global production and expectations for demand growth as parts of the United States, including New York City, and other countries move to reopen after coronavirus-related lockdowns.

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Wall Street ends mostly higher as U.S.-China spat simmers

(Reuters) – U.S. stocks finished mostly higher on Friday after President Donald Trump announced measures against China in response to new security legislation that were less threatening to the U.S. economy than investors had feared.

The Dow ended the session slightly lower, but all three indexes rose for the week and registered a second straight month of gains. The S&P 500 added 17.8% for April and May, its biggest two-month percentage gain since 2009.

The S&P 500 initially extended losses after Trump said he was directing his administration to begin the process of eliminating special treatment for Hong Kong in response to China’s plans to impose new security legislation in the semi-autonomous territory.

But Trump made no mention of any action that could undermine the Phase One trade deal that Washington and Beijing struck early this year, a concern that had cast a cloud over the market throughout the week.

“He began speaking in a very tough tone,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance in Charlotte, North Carolina. “The market was worried he was going to announce something substantial, something detrimental to the U.S. economy. Then, as he spoke, it became clear the actions being taken were not going to be as dramatic as originally feared.”

Trump also said the United States is terminating its relationship with the World Health Organization, something he had threatened to do earlier this month.

S&P 500 technology shares .SPLRCT gave the index its biggest boost, while financials .SPSY were the biggest drag.

The latest confrontation between the U.S. and China has fueled concern that worsening tensions between the two world’s largest economies could derail the recent sharp gains in the stock market.

Expectations of a quick economic recovery from the coronavirus pandemic have driven the S&P 500 .SPX up more than 30% from its March lows.

The Dow Jones Industrial Average .DJI fell 17.53 points, or 0.07%, to 25,383.11, the S&P 500 .SPX gained 14.58 points, or 0.48%, to 3,044.31, and the Nasdaq Composite .IXIC added 120.88 points, or 1.29%, to 9,489.87.

For the month, the Dow added 3.9%, the S&P 500 gained 4.5%, and the Nasdaq rose 6.8%. For the week, the Dow and S&P 500 each rose more than 3%, and the Nasdaq gained 1.8%.

New York Governor Andrew Cuomo said Friday that New York City is “on track” to enter phase one of reopening on June 8, and he said five upstate regions will now transition to phase two.

Federal Reserve Chair Jerome Powell, speaking in a webcast organized by Princeton University Friday, reiterated the U.S. central bank’s promise to use its tools to shore up the economy amid the coronavirus pandemic.

Twitter (TWTR.N) was down 2% and Facebook Inc (FB.O) shares slipped 0.2%, a day after Trump signed an order threatening social media firms with new regulations over free speech.

Upscale department store chain Nordstrom Inc (JWN.N) slumped 11% after it reported a near 40% fall in quarterly sales due to pandemic-led store closures.

Salesforce.com Inc (CRM.N) slipped 3.5% as the cloud-based business software maker cut its annual revenue and profit forecasts.

Declining issues outnumbered advancing ones on the NYSE by a 1.04-to-1 ratio; on Nasdaq, a 1.04-to-1 ratio favored advancers.

The S&P 500 posted 17 new 52-week highs and no new lows; the Nasdaq Composite recorded 60 new highs and 14 new lows.

Volume on U.S. exchanges was 13.62 billion shares, compared to the 11.3 billion average for the full session over the last 20 trading days.

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S&P 500, Dow dip on jitters over Trump's China response

(Reuters) – The S&P 500 and Dow slipped on Friday as investors were nervous ahead of a U.S. response to China’s national security law on Hong Kong that threatens to take the shine off another month of strong gains for the stock market.

President Donald Trump, who has warned of a tough response to China’s move, is expected to make an announcement later in the day.

“Tensions between the world’s two largest economies are as high as they’ve been in memory, higher than last year’s trade war that was economically focused,” Cantor Fitzgerald analyst Sachin Raghavan said.

Adding to the downbeat mood, economic data showed U.S. consumer spending dropped by a record in April as the COVID-19 pandemic undercut demand, buttressing expectations that the economy could contract in the second quarter at its steepest pace since the Great Depression.

Financial stocks .SPSY, the best performing S&P sector this week, were the biggest drag on the benchmark index.

Still, Wall Street’s main indexes were set to end May with a second straight month of gains on hopes of a return to economic normalcy after a coronavirus-led slump.

At 9:54 a.m. ET, the Dow Jones Industrial Average .DJI was down 65.18 points, or 0.26%, at 25,335.46, and the S&P 500 .SPX was down 2.31 points, or 0.08%, at 3,027.42.

But the Nasdaq Composite .IXIC was up 45.26 points, or 0.48%, at 9,414.25, with technology-focused firms Microsoft Corp (MSFT.O), Facebook Inc (FB.O), Amazon.com Inc (AMZN.O) and Netflix Inc (NFLX.O) being a bright spot.

A day after Trump signed the order threatening social media firms with new regulations over free speech, Twitter Inc (TWTR.N) hid a tweet from the President and accused him of breaking its rules by “glorifying violence”.

Twitter shares were down 2.8%.

Focus is also on Federal Reserve Chair Jerome Powell who will speak in a public webcast, where he is expected to detail the central bank’s next phase of coronavirus response. The event is slated to start at 11:00 a.m. ET (1500 GMT).

Salesforce.com Inc (CRM.N) slipped 4.8% as the cloud-based business software maker cut its annual revenue and profit forecasts.

Declining issues outnumbered advancers nearly 2-to-1 on the NYSE and 1.43-to-1 on the Nasdaq.

The S&P index recorded four new 52-week highs and no new low, while the Nasdaq recorded 23 new highs and four new lows.

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Futures tick lower on jitters over Trump's China response

(Reuters) – The S&P 500 and the Dow were set to open lower on Friday as investors braced for a U.S. response to China’s national security law on Hong Kong, threatening to take the shine off another month of strong gains for Wall Street.

President Donald Trump is due to make an announcement later in the day and has vowed a tough response to China’s move, which many fear could erode some of the U.S. economic privileges that Hong Kong enjoys.

U.S. stocks sold off in the closing hours of Thursday’s session as worries about worsening relations between the world’s two biggest economies and an expected executive order related to social media companies weighed on the sentiment.

“If Trump decides to proceed with mild action, like travel and/or financial sanctions on Chinese officials, we don’t expect equities to tumble much,” said Charalambos Pissouros, Cyprus-based senior market analyst at JFD Group.

“In case the U.S. response is a bolder one, like scrapping the ‘Phase One’ trade deal and/or imposing fresh tariffs, the slide in risk assets could be larger, bringing into question further recovery in the broader sentiment.”

Hopes of a quick post-pandemic economic recovery have driven the S&P 500 .SPX to a near three-month-high as it heads for its second straight month of gains.

A day after Trump signed the order threatening social media firms with new regulations over free speech, Twitter Inc (TWTR.N) hid a tweet from the President and accused him of breaking its rules by “glorifying violence”.

Twitter shares were down 0.8% in premarket trading.

At 8:32 a.m. ET, Dow e-minis 1YMcv1 were down 151 points, or 0.59%. S&P 500 e-minis EScv1 were down 11.5 points, or 0.38% and Nasdaq 100 e-minis NQcv1 were up 2.25 points, or 0.02%.

Focus is also on Federal Reserve Chair Jerome Powell who will speak in a public webcast, where he is expected to detail the central bank’s next phase of coronavirus response. The event is slated to start at 11:00 a.m. ET (1500 GMT).

Among stocks, Salesforce.com Inc (CRM.N) slipped 3.4% as the cloud-based business software maker cut its annual revenue and profit forecasts.

Technology-focused companies Facebook Inc (FB.O), Amazon.com Inc (AMZN.O) and Netflix Inc (NFLX.O) rose between 0.7% and 0.9%, after their rally lost steam in late May.

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Volkswagen pumps 2 billion euros into China electric vehicle bet

BEIJING/HONG KONG (Reuters) – Volkswagen AG (VOWG_p.DE) plans to boost its electric push in China, the world’s biggest auto market, by pumping 2.1 billion euros in two Chinese electric vehicle players.

The deals come as global rivals such as General Motors (GM.N), Toyota (7203.T) and Tesla Inc (TSLA.O) seek to expand electric sales in the Chinese car market.

Volkswagen said it will invest 1 billion euros to take a 50% stake in the state-owned parent of Anhui Jianghuai Automobile Group (JAC Motors) (600418.SS), also taking full management control of the its existing electric vehicle joint venture with JAC by raising its stake to 75% from 50%.

Volkswagen’s China chief Stephan Woellenstein told reporters on Friday the venture planned to revamp one existing JAC plant and launch its first electric model based on its MEB platform, an architecture enabling efficient production of various EV models, in 2023.

The joint venture will launch five more electric models by 2025, when the German giant aims to sell 1.5 million new energy vehicles (NEV) – including battery electric cars as well as plug-in hybrid and hydrogen fuel-cell vehicles – a year in China.

In a separate transaction, Volkswagen will pay 1.1 billion euros to acquire 26.5% of Guoxuan High-tech Co Ltd (002074.SZ), a maker of electric vehicle batteries, becoming its biggest shareholder. Volkswagen said Guoxuan, based in Hefei like JAC, will supply batteries to its EV models in China.

Woellenstein said Anhui province, where Hefei is located, will be Volkswagen’s EV manufacturing hub in China. The Wolfsburg-based automaker has not changed its EV strategy in China after the global gasoline market tumbled, he said.

He added China’s overall auto sales in the second half of this year will be level with same period last year. Volkswagen China’s full-year sales will be lower than last year due to the sales loss in the first months.

Reuters exclusively reported on Wednesday that VW was in final talks to invest in the two companies.

China has set a target of 25% of 2025 annual vehicle sales to be made up of NEVs. More than 25 million vehicles were sold in China last year.

Friday’s moves also make Volkswagen the latest foreign automaker to increase ownership of operations in China since the government started to relax rules in 2018, with German peer BMW AG (BMWG.DE) quick to take control of its main local venture.

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  • Volkswagen says it will have full control of JAC-VW Chinese venture

Tesla last year became the first foreign automaker to wholly own a car plant in China.

Volkswagen also has ventures with state-owned China FAW Group Corp Ltd [SASACJ.UL] and SAIC Motor Corp Ltd (600104.SS).

Shares in both JAC and Guoxuan climbed their maximum daily limit of 10% on Friday morning. Volkswagen’s shares fell 3%.

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Renault to restructure French factories in bid to slash costs

PARIS (Reuters) – Renault said on Friday it was launching talks with unions to restructure several French car plants, potentially leading to closures, as it confirmed plans to cut around 15,000 jobs worldwide.

Faced with a slump in demand that has been exacerbated by the coronavirus crisis, Renault is aiming to find 2 billion euros ($2.22 billion) in savings over the next three years as it shrinks production and hones in on key car models.

“We thought too big in terms of sales,” Interim Chief Executive Clotilde Delbos told a conference call, adding the firm was “coming back to its bases” after investing and spending too much in recent years.

The company plans to trim its global production capacity to 3.3 million vehicles in 2024 from 4 million now, focusing on areas such as small vans or electric cars as it freezing manufacturing expansion in countries like Romania.

The company – due to bring ex-Volkswagen executive Luca de Meo on board as CEO in July – said it would also slash costs by cutting the number of subcontractors in areas such as engineering, reducing the number of components it uses and shrinking gearbox manufacturing worldwide.

NISSAN

Japanese partner Nissan, alongside which it hopes to find additional savings by producing more cars jointly, this week also outlined a plan to become smaller and more efficient.

Renault said the restructuring measures, including job cuts and employment transfers that would affect just under 10% of its global workforce, would cost 1.2 billion euros.

The group, which is 15% owned by the French state, said some plants like the one in Flins, close to Paris, where it makes its electric Zoe models, could cease to assemble cars and centre on recycling activities, instead.

Six sites in all, including a component factory in Brittany and the Dieppe factory where the group’s Alpine cars are made, will be under review.

Unions in France have said they feared the measures could lead four sites to shut, though outright closures are likely to lead to a public backlash.

The government has said it will not sign off on a planned 5 billion euro state loan for Renault until management and unions conclude talks over jobs and factories in France.

Renault was already under pressure when the coronavirus pandemic hit, posting its first loss in a decade in 2019. Like its peers, it is now trying to juggle a slump in revenue with industry-wide changes such as investment needed to produce more environmentally friendly vehicles.

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U.S. judge orders 15 banks to face big investors' currency rigging lawsuit

NEW YORK (Reuters) – A U.S. judge on Thursday said institutional investors, including BlackRock Inc (BLK.N) and Allianz SE’s (ALVG.DE) Pacific Investment Management Co, can pursue much of their lawsuit accusing 15 major banks of rigging prices in the $6.6 trillion-a-day foreign exchange market.

U.S. District Judge Lorna Schofield in Manhattan said the nearly 1,300 plaintiffs, including many mutual funds and exchange-traded funds, plausibly alleged that the banks conspired to rig currency benchmarks from 2003 to 2013 and profit at their expense.

“This is an injury of the type the antitrust laws were intended to prevent,” Schofield wrote in a 40-page decision.

The banks, which sometimes controlled more than 90% of the market, included Bank of America, Barclays, BNP Paribas, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, JPMorgan Chase, Morgan Stanley, Royal Bank of Canada, Royal Bank of Scotland, Societe Generale, Standard Chartered and UBS or various affiliates.

In their complaint, the plaintiffs accused the banks of improperly sharing confidential orders and trading positions, and using chat rooms with such names as “The Cartel,” “The Mafia” and “The Bandits’ Club.”

Banks were also accused of using deceptive trading tactics such as “front running,” “banging the close” and “taking out the filth.”

The banks countered that the plaintiffs pointed to no transactions where the alleged manipulation caused losses.

Schofield dismissed portions of some the claims, and dismissed some Allianz plaintiffs from the case.

Lawyers for the plaintiffs did not immediately respond to requests for comment.

The litigation began in November 2018, after the plaintiffs “opted out” of similar nationwide litigation that had resulted in $2.31 billion of settlements with most of the banks.

Those settlements followed regulatory probes worldwide that led to more than $10 billion of fines for several banks, and the convictions or indictments of some traders.

Investors typically opt out of litigation when they hope to recover more by suing on their own.

The case is Allianz Global Investors GMBH et al v Bank of America Corp et al, U.S. District Court, Southern District of New York, No. 18-10364.

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LATAM's bankruptcy filing to delay its Brazil bailout to at least July: sources

RIO DE JANEIRO (Reuters) – LATAM Airlines Group’s (LTM.SN) U.S. bankruptcy filing this week will delay its potential bailout in Brazil to at least July and also push back aid to its rivals at least through the end of June, two sources said on Thursday.

The delays will add further strain to Brazil’s airlines, which were already in weak shape before the pandemic. Rivals Azul SA (AZUL.N) and Gol Linhas Aereas Inteligentes SA (GOLL4.SA) are also negotiating bailouts.

“The bailout will happen; what could happen is that it may be staggered due to LATAM’s situation,” said one source.

Neither LATAM nor Brazil’s state development bank, BNDES, which is coordinating the bailout, had an immediate comment.

LATAM’s bankruptcy filing this week has caused private banks to worry about the viability of Brazil’s airlines after the pandemic, the sources said.

LATAM’s Brazil subsidiary is not part of the U.S. bankruptcy, although executives acknowledge it is possible it might also go through a court restructuring.

Government and private banks are also worried layoffs will be unavoidable, which could have negative political implications, the sources said.

LATAM does not dispute it will lay off workers. LATAM’s Brazil CEO, Jerome Cadier, told Reuters this week the company will undergo downsizing and that layoffs are not prohibited under the government’s current draft of bailout conditions.

He added that if layoffs were banned, the rescue program would have to be much bigger. Currently, the bailout is valued at 6 billion reais.

LATAM’s bankruptcy has also raised questions about the collateral on any bailout loans.

One source said the Brazilian government is still figuring out how best to lend to LATAM considering its parent company is in bankruptcy protection. Usually the development bank asks for collateral from parent companies.

“What we would want is for that collateral to have priority over the rest of the company’s debts,” the source said.

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Masks, cleaning, filtration better than blocking middle seats: United CEO

(Reuters) – United Airlines Holdings Inc (UAL.O) Chief Executive Scott Kirby said on Thursday that facial masks, aircraft cleaning and air filtration systems are better measures for preventing the spread of the coronavirus on airplanes than trying to social distance.

“You can’t be 6 feet (1.83 meters) apart on an airplane, middle seat or not,” Kirby said at a conference.

While some rivals are capping the number of seats sold on an aircraft, United is giving passengers the option to re-book if their flight is full or nearly full.

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Senator sees U.S. sticking to trade deal with China despite pandemic concerns

WASHINGTON (Reuters) – U.S. Senate Finance Committee Chairman Chuck Grassley on Thursday said he did not expect President Donald Trump to walk away from a Phase 1 trade deal with China despite concerns over Beijing’s handling of the coronavirus pandemic.

Grassley, a strong backer of the trade agreement signed in January, told reporters he felt reassured that Trump would stick to the deal after a private conversation with his fellow Republican late last week.

“I was very satisfied with his answer and you know I wouldn’t be satisfied … if I didn’t feel like the president was going to maintain that trade agreement with China,” the senator said during a regular call with agriculture reporters.

Trump has stepped up criticism of China recently over its handling of the coronavirus outbreak and a national security law that would reduce the separate legal status of Hong Kong, sparking questions about the U.S.-China trade deal’s future.

White House economic adviser Larry Kudlow on Tuesday said the Phase 1 trade deal with China was intact for now, but that Trump was so “miffed” with Beijing over the novel coronavirus and other matters it was not as important to him as it once was.

Grassley said he discussed the trade deal with Trump during last week’s phone call, and told him that he believed U.S. concerns over China’s lack of transparency about the virus should not interfere with the trade agreement.

The trade deal, which took effect in mid-February, calls for China to purchase $200 billion in additional U.S. goods and services over two years.

The U.S. Trade Representative’s office and the U.S. Department of Agriculture last week said they saw positive signs in dealings with Beijing over agricultural products as part of the Phase 1 trade agreement, and certain U.S. farm products could now be exported to China.

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