LOGO
  • Home
  • Analytics
  • Analysts Opinions

Investors in Asia batten down ahead of UK vote, Comey testimony and ECB

Asian stocks steadied on Wednesday but investors were wary ahead of an election in Britain, a European Central Bank meeting, and testimony at a Senate Intelligence Committee hearing by James Comey, the former FBI chief fired by President Donald Trump.

MSCI's broadest index of Asia-Pacific shares outside Japan (MIAPJ0000PUS) crept up 0.1 percent, with Hong Kong and mainland China stocks leading the region higher.

European stocks are set to mirror the cautious tone with major index stock futures suggesting a tepid start. (FFIc1)

Japanese stocks (N225) were the main laggards as investors lightened holdings after the key index hit a near-two year high last Friday in thin trading.

Hong Kong (HSI), however, benefited from sustained buying by mainland Chinese investors.

All the events scheduled for Thursday are fraught with risk for investors, but testimony by former FBI chief James Comey posed a potential danger to Trump's economic agenda, and perhaps even his presidency.

"The market is especially focused on Comey's testimony," said Hikaru Sato, a senior technical analyst at Daiwa Securities.

Reports suggest Comey plans to reveal conversations in which Trump allegedly pressured him to drop his investigation into former National Security Adviser Mike Flynn, who was fired for failing to disclose conversations with Russian officials.

Risk-off sentiment pushed government bond prices up and yields lower, while propping up gold and the Japanese yen.

Ten-year U.S. Treasury yields (US10YT=RR) briefly fell to seven-month lows of 2.129 percent, the lowest since Nov. 10, before recovering to 2.16 percent.

The shrinking U.S. bond yields further weakened a dollar, already handicapped by heightened political uncertainty.

The dollar wallowed near a six-week low against the safe-haven yen , quoted around 109.44 yen.

Sterling firmed to 1.2905 per dollar, but held in a tight trading range ahead of Thursday's vote.

Earlier opinion polls suggested the opposition Labour Party were virtually neck-and-neck with the ruling Conservatives, but a poll released on Tuesday put Prime Minister Theresa May on course to increase her parliamentary majority.

The euro also held firm at $1.12665 against the dollar.

The ECB policy meeting could lead to some discussion of dropping some of the central bank's pledges to ramp up stimulus if needed, four people with direct knowledge of the discussions told Reuters last week. In this high risk environment, gold was in favor, quoted around the $1,294 per ounce. It has gained nearly 7 percent in the past month.

The Australian dollar strengthened to a one-month high of $0.7540 after first-quarter growth numbers forced short covering by those investors who had expected a weaker performance.

Oil prices remained weak, with Brent crude futures struggling around $50 per barrel, despite tensions between Gulf Arab producers and falling U.S. inventories.

Brent crude futures (LCOc1) were trading at $50.06 per barrel down 0.1 percent. U.S. West Texas Intermediate (WTI) crude futures (CLc1) were at $48.12 per barrel, down 0.1 percent.

Oil dips on glut concerns, but Mideast tension supports

Oil prices dipped on Wednesday, with Brent crude futures falling below $50 per barrel, as fuel markets remained oversupplied, although tension in the Middle East and falling U.S. inventories lent some support.

Brent crude futures (LCOc1) were at $49.95 per barrel at 0710 GMT, down 17 cents, or 0.3 percent, from their last close. Brent is almost 8 percent below its open on May 25, when OPEC and other producers agreed to extend oil output cuts through to the first quarter of 2018.

U.S. West Texas Intermediate (WTI) crude futures (CLc1) were at $48.02 per barrel, also down 17 cents, or 0.3 percent, from the previous close, and more than 6 percent below their May 25 open.

Traders said an ongoing fuel glut was keeping prices under pressure despite a pledge by Organization of the Petroleum Exporting Countries (OPEC) and other producers to cut almost 1.8 million barrels per day (bpd) of output.

"Disappointed that the oil cartel and Russia could not come up with a bolder plan to reduce the global crude surplus, market participants have been selling into every bounce," said Fawad Razaqzada, analyst at futures brokerage Forex.

World fuel production and consumption is roughly in balance, at almost 98 million bpd, although inventories remain bloated, the U.S. Energy Information Administration (EIA) said on Tuesday.

"Where oil (price) ultimately goes is going to be driven by inventories," said Greg McKenna, strategist at AxiTrader, another futures brokerage.

OPEC's efforts to tighten the market could be undermined by U.S. production , which the EIA said could hit a record 10 million bpd next year, up from 9.3 million bpd now. That would nearly match the output level of top exporter Saudi Arabia.

In the near-term, however, the market was supported by escalating tensions in the Middle East and by signs of a gradual drawdown of bloated U.S. fuel inventories.

A campaign by leading Arab nations, including Saudi Arabia, Egypt and the United Arab Emirates, to isolate Qatar is disrupting trade, including oil.

"Port restrictions on Qatari flagged vessels are going to cause loading disruptions," said Jeffrey Halley, analyst at brokerage OANDA.

"That said, the disruptions are seen as inconvenient rather than systematic and thus will maybe only put a floor on crude in the short-term rather than starting a panic rally," he added.

In the United States, official inventory data from the EIA will be published later on Wednesday, with expectations of falling stocks.

"Any further sharp reductions in U.S. stocks could put a floor under oil prices in the short-term," said Razaqzada.

Oil slips on worries Mideast rift could undermine OPEC cuts

Oil prices fell further below $50 a barrel on Tuesday on concerns that a diplomatic rift between Qatar and several Arab states including Saudi Arabia could undermine efforts by OPEC to tighten the market.

Benchmark Brent crude oil (LCOc1) was 15 cents a barrel lower at $49.32 by 0755 GMT, down around 8 percent from the open of futures trading on May 25, when an OPEC-led policy to cut oil output was extended into the first quarter of 2018.

U.S. light crude (CLc1) was down 15 cents at $47.25.

Leading Arab powers including Saudi Arabia, Egypt and the United Arab Emirates cut ties with Qatar on Monday, accusing it of support for Islamist militants and Iran.

Steps taken include preventing ships coming from or going to the small peninsular nation from docking at Fujairah, in the UAE, used by Qatari oil and liquefied natural gas (LNG) tankers to take on new shipping fuel.

"The measures by the anti-Qatar alliance signal commitment to forcing a complete change in Qatari policy or creating an environment for leadership change in Doha," said Ayham Kamel, head of Middle East and North Africa research for Eurasia Group.

With oil production of about 620,000 barrels per day (bpd), Qatar is one of the smallest crude producers in the Organization of the Petroleum Exporting Countries, but some investors fear tension within the cartel could weaken its agreement to hold back production in order to prop up prices.

Greg McKenna, chief market strategist at futures brokerage AxiTrader, said there was "a real chance" OPEC solidarity surrounding its production cuts may fracture.

But other analysts said these fears were exaggerated.

"The OPEC agreement stands and is highly unlikely to change because of tension with Qatar. Crude production in the Middle East will not change because of Qatar," said Oystein Berentsen, managing director for oil trading company Strong Petroleum.

David Wech, managing director of Vienna-based consultancy JBC Energy, agreed: "We do not see too much cause for concern at this point regarding potential risk to the OPEC-led supply accord currently in effect."

Rising U.S. production is also putting pressure on oil.

U.S. crude output has jumped more than 10 percent since mid-2016 to 9.34 million bpd, industry figures show.

"The relentless increase in U.S. oil production appears to have the market worried that the OPEC cuts will be completely nullified by the increased U.S. production," said William O'Loughlin, analyst at Rivkin Securities.

Dollar hits seven-month low, stocks, oil retreat as caution reigns

Escalating tensions in the Middle East, the impending testimony of the former FBI director, British elections and a European Central Bank meeting this week, all took their toll on Asian stocks, oil and the dollar on Tuesday.

Oil fell back following a brief recovery after Saudi Arabia and several other Arab states severed ties with Qatar, accusing it of supporting extremism and undermining regional stability.

"A potential risk to monitor might be that Qatar will view this as being provided with less encouragement to comply with the agreed production quota," said Jameel Ahmad of futures brokerage FXTM.

Stocks in Qatar plunged more than 8 percent overnight to their lowest since January 2016.

U.S. crude (CLc1) was 0.6 percent lower at $47.12 a barrel on Tuesday, after falling 0.55 percent on Monday.

Global benchmark Brent (LCOc1) retreated 0.6 percent to $49.17, extending Monday's 1 percent slide.

The dollar index touched a seven-month low ahead of testimony before Congress from former FBI director James Comey on Thursday.

It has been reported that Comey plans to testify to conversations in which U.S. President Donald Trump pressured him to drop his investigation into former National Security Advisor Mike Flynn, who was fired for failing to disclose conversations with Russian officials.

"The dollar is already on the defensive after Friday's jobs data, and now it's facing potential geopolitical risk in the form of Comey's testimony," said Bart Wakabayashi, Tokyo Branch Manager of State Street Bank.

The dollar index (DXY), which tracks the greenback against a basket of trade-weighted peers, fell to its lowest level since the November U.S. election and was last down 0.2 percent at 96.623.

The dollar slid 0.6 percent to 109.85 yen on Tuesday, close to the six-week low hit earlier in the session.

News on Monday of U.S. services sector activity slowing in May as new orders tumbled also hit the dollar.

The dollar also came under pressure from a stronger euro, on expectations the European Central Bank will take a less dovish tone at its Thursday meeting.

The ECB may even discuss dropping some of its pledges to ramp up stimulus if needed, four sources with direct knowledge of the discussions told Reuters last week.

The common currency was 0.1 percent higher at $1.127 on Tuesday.

Sterling advanced 0.1 percent to $1.292 on Tuesday.

The lead of British Prime Minister Theresa May over the opposition Labour Party ahead of Thursday's general election has narrowed to just 1 percentage point, according to a poll conducted before the attacks in London on Saturday.

Other polls in recent days have found bigger leads for the Conservatives of up to 11 and 12 points.

"Even if May does just about enough to increase the majority - that could still potentially be sterling positive," said ING currency strategist Viraj Patel.

MSCI's broadest index of Asia-Pacific shares outside Japan (MIAPJ0000PUS) lost 0.2 percent, pulling back from a two-year high hit on Monday.

Japan's Nikkei (N225) dropped 0.5 percent, tripped by a stronger yen.

South Korean markets were closed for a holiday.

Australian shares (AXJO) tumbled 1.1 percent, while the Australian dollar slipped 0.2 percent to $0.7471 after the current account deficit narrowed to its smallest in more than 15 years last quarter - but still disappointed investors who had hoped for a surplus.

Investors are awaiting the Reserve Bank of Australia policy decision later on Tuesday, when its benchmark rate is expected to be held at a record low 1.5 percent.

Chinese shares (CSI300) and Hong Kong shares (HSI) bucked the trend, rising 0.1 percent and 0.3 percent respectively.

Overnight, Wall Street indexes slipped between 0.1 percent and 0.2 percent, with Apple Inc. (O:AAPL) leading losses on the Dow Jones Industrial Average (DJI).

Oil jumps as Qatar ditched, London attacks hurt sterling

Oil jumped after Saudi Arabia, Egypt, the United Arab Emirates and Bahrain cut ties with Qatar on Monday while sterling slipped after the weekend attacks in London that killed at least seven people and wounded 48, just days before Britain's general national election.

The coordinated move by the Middle Eastern countries, accusing the wealthy Gulf Arab state of supporting terrorism, dramatically escalates a simmering dispute over Qatar's support for the Muslim Brotherhood, the world's oldest Islamist movement.

Saudi Arabia is the world's biggest exporter of crude oil. Abu Dhabi in the UAE is also a major oil exporter.

Qatar is the biggest supplier of liquefied natural gas (LNG) and a major seller of condensate - a low-density liquid fuel and refining product derived from natural gas.

Global benchmark Brent> (LCOc1) advanced 1.1 percent to $50.48 a barrel. U.S. oil (CLc1) also climbed 1 percent to $48.17.

Dubai's stock index (DFMGI) dropped 0.6 percent in early trade.

Sterling fell as much as 0.3 percent before paring the losses to trade down 0.2 percent at $1.2868 on Monday. Attackers rammed a van into pedestrians on London Bridge on Saturday and then stabbed revelers in nearby bars.

Police shot dead three male assailants in London's Borough Market within eight minutes of receiving the first emergency call, and have since detained several people.

But British stocks (FTSE) are unlikely to see much adverse impact from the third terrorist attack in the country in as many months, with financial spreadbetter CMC Markets expecting the FTSE 100 (FTSE), which touched a record high on Friday, to open slightly higher.

Prime Minister Theresa May said Thursday's election would go ahead as planned.

May is expected to resume campaigning on Monday. Polls now show the election is much tighter than previously predicted. A close election could throw Britain into political deadlock just days before formal Brexit talks with the European Union are due to begin on June 19.

"Today and tomorrow, I am guessing that sterling will move in a range ahead of the UK election, as I think no one can accurately forecast the outcome," said Masashi Murata, currency strategist for Brown Brothers Harriman in Tokyo.

"Brexit has taught us not to believe polls, and not to take aggressive positions ahead of UK events."

France and Germany are closed for a holiday on Monday. Germany's DAX (GDAXI) touched an all-time high on Friday.

MSCI's broadest index of Asia-Pacific shares outside Japan (MIAPJ0000PUS) reversed earlier losses to climb 0.1 percent.

Japan's Nikkei (N225) also added 0.1 percent as the yen surrendered some of its gains.

Chinese shares (CSI300) fell 0.5 percent, with news of service-sector activity rising in May at the fastest pace in four months failing to lift sentiment.

Australian shares (AXJO) slid 0.8 percent and South Korea's KOSPI (KS11) was little changed.

Taiwan shares (TWII) bucked the trend, hitting their highest level since 2000 for a second straight session, and last trading up 0.5 percent.

The dollar index (DXY), which tracks the greenback against a basket of six major peers, was up 0.1 percent at 96.82 after sinking on Friday to its lowest level since the U.S. presidential election in November.

U.S. nonfarm payrolls increased 138,000 in May, severely undershooting the forecast of 185,000, suggesting the labor market was losing momentum despite the unemployment rate falling to a 16-year low of 4.3 percent.

The number of jobs created in March and April was also revised down.

The dollar gained 0.2 percent to 110.67 yen , after losing 0.8 percent on Friday.

The U.S. 10-year Treasury bond yield recovered to 2.1695 on Monday, having plunged from Thursday's close of 2.217 before the jobs data was released.

"The reaction in the 10-year yield implies that the market sees a third rate hike in 2017 as diminishing although still a very real possibility," James Woods, global investment analyst at Rivkin Securities in Sydney, wrote in a note.

The euro fell 0.2 percent to $1.1264 on Monday, holding on to most of Friday's 0.6 percent gain.

On Friday, all three major Wall Street indexes (DJI) (SPX) (IXIC) hit all-time highs, with gains in technology and industrial stocks more than offsetting the subdued jobs report.

Gold rose to a six-week high on Monday, driven by the weaker dollar. It was last steady at $1,280.24 an ounce.

Dollar steadies, sterling jolted by London attack

The dollar recovered from last week's seven-month lows on Monday, edging up against the euro and yen, but still looking exposed to any renewed optimism from a European Central Bank policy meeting this week.

Sterling, on a rollercoaster ride driven by diverging opinion polls ahead of Thursday's national election, also steadied after a van and knife attack on pedestrians in central London on Saturday spurred a sharp drop in early Asian trade.

Services data from the data are the main set-piece of the European morning on Monday, but dealers say the week should be dominated by the UK election and the ECB meeting, eyed for signs of the bank turning toward tighter policy later this year.

Coming at a time when political risk in Europe has eased, U.S. economic data has worsened and expectations for more rises in Federal Reserve rates have fallen, that prospect pushed the euro to a seven-month high on Friday.

"Overall we think the risks are skewed toward a more cautious stance (from the ECB) than the market is expecting," said Barclays (LON:BARC) strategist Nick Sgouropoulos, pointing to more downbeat messages sent by other major central banks in recent weeks.

"It would be a very big message for the ECB to go ahead of everybody else. They want to be very cautious about how they change the wording of their statement. We don't think the euro goes further (up) from here."

The euro fell just over 0.1 percent to $1.1270, still very close to Friday's high of $1.1285.The dollar was also 0.1 percent stronger at 110.48 yen.

Other moves among the G10 group of major developed world currencies, however, kept the dollar index almost flat compared to Friday's close at 96.756 (DXY).

The pound's trade-weighted value has fallen by 3 percent in just under 4 weeks as Prime Minister Theresa May's bid for a landslide electoral victory that would strengthen her hand in talks on leaving the European Union ran into trouble.

It was not immediately clear how the events on Saturday would impact the election, though the issue of security has been thrust to the forefront of the campaign after the London Bridge and Manchester attacks.

Polls have given widely varying results, but some indicate the election could be close, possibly throwing Britain into political deadlock just days before formal Brexit talks with the European Union are due to begin on June 19.

"The pound has made an impressive recovery in early trading after a torrid weekend," said City Index analyst Kathleen Brooks.

"Although the Tory lead has been eroded, if the FT's poll of polls is correct then it would suggest that the Conservatives will win this election, but maybe not by such a comfortable majority as was expected a month ago."

WTI oil futures extends gains after large draw in crude inventories

After a knee-jerk reaction lower, West Texas Intermediate oil quickly recovered and extended gains in North American trade on Thursday, after data showed that oil supplies in the U.S. registered a much larger-than-expected inventory draw. Crude oil for July delivery on the New York Mercantile Exchange gained 61 cents, or 1.26%, to trade at $48.93 a barrel by 11:10AM ET (15:10GMT) compared to $48.66 ahead of the report. The U.S. Energy Information Administration said in its weekly report that crude oil inventories fell by 6.428 million barrels in the week ended May 26. Market analysts' had expected a crude-stock draw of 2.517 million barrels, while the American Petroleum Institute late Wednesday reported a supply draw of 8.670 million barrels. Supplies at Cushing, Oklahoma, the key delivery point for Nymex crude, decreased by 0.747 million barrels last week, the EIA said. Total U.S. crude oil inventories stood at 509.9 million barrels as of last week, according to press release, which the EIA considered to be “in the upper half of the average range for this time of year”. The report also showed that gasoline inventories decreased by 2.858 million barrels, compared to expectations for a draw of 1.091 million barrels, while distillate stockpiles rose by 0.394 million barrels, compared to forecasts for a decline of 0.755 million. The report came out one day later than usual due to Monday's Memorial Day holiday. Elsewhere, on the ICE Futures Exchange in London, Brent oil for August delivery traded up 43 cents, or 0.85%, to $51.19 by 11:12AM ET (15:12GMT), compared to $50.95 before the release. Meanwhile, Brent's premium to the WTI crude contract stood at $2.27 a barrel by 11:15AM ET (16:15GMT), compared to a gap of $2.44 by close of trade on Wednesday. Oil prices traded more than 1% lower in May as the extension of output curbs by the Organization of the Petroleum Exporting Countries (OPEC) and other producing countries announced last Thursday disappointed investors who had hoped for larger cuts. At last week's meeting in Vienna, OPEC and some non-OPEC producers, led by Russia, agreed to extend supply cuts of 1.8 million barrels per day until the end of the first quarter of 2018. While OPEC's move had been widely expected, some oil market investors had hoped producers would agree to longer or deeper cuts to drain a global glut of crude supplies. The cartel next meets in November. So far, the production-cut agreement has had little impact on global inventory levels due to rising supply from producers not participating in the accord, such as Libya and Nigeria. In fact, a Reuters survey released Wednesday showed that OPEC oil output rose in May, the first monthly increase this year as higher supply from two OPEC states exempt from a production-cutting deal, Nigeria and Libya, offset improved compliance with the accord by others. Meanwhile, a relentless increase in U.S. shale oil output also worked to counteract the 1.8 million barrel per day production cut agreement. Data from energy services company Baker Hughes showed on Friday that U.S. drillers the previous week had added rigs for the 19th week in a row, the second-longest such streak on record, implying that further gains in domestic production are ahead. The U.S. rig count rose by 2 to 722, extending an 11-month drilling recovery to the highest level since April 2015. Apart from supply, it will also be vital to keep an eye on global demand as the U.S. driving season kicks off.

Oil prices drop amid glut concerns, U.S. withdrawal from climate deal

Oil prices tumbled below $50 on Friday amid worries that U.S. President Donald Trump's decision to abandon a global climate pact could spark more crude drilling in the United States, stoking a persistent glut in global supply.

Global benchmark Brent crude futures (LCOc1) was down 1.7 percent, or 80 cents, at $49.75 a barrel, as of 0725 GMT.

U.S. West Texas Intermediate crude (CLc1) futures dropped 87 cents, or 1.81 percent, to $47.46 per barrel.

Commodity markets were absorbing news the United States would withdraw from the landmark 2015 global agreement to fight climate change, a move that fulfilled a major campaign pledge but drew condemnation from U.S. allies.

"This could lead to a drilling free-for-all in the U.S. and also see other signatories waver in their commitments," said Jeffrey Halley, senior market analyst, OANDA.

"This outcome could increase the supply-side equation from the United States and complicate OPEC's forward projections. A scenario that would not be favorable to oil prices."

Surging U.S. production has put a strain on OPEC members' efforts to curb production to drain a global crude supply overhang.

A week ago, the Organization of the Petroleum Exporting Countries (OPEC) and some non-OPEC members met in Vienna to roll over an output cut deal to reduce 1.8 million barrels per day (bpd) until the end of next March.

Russian Deputy Prime Minister Arkady Dvorkovich said on Friday he did not think that the global output cut agreement would be altered should prices go lower.

Russia's Rosneft CEO Igor Sechin also said the market cannot stabilize unless all producers cut output.

Oil prices are down some 7.5 percent since OPEC's May 25 decision to extend the cuts.

Faced with lingering glut woes, the oil cartel also discussed last week reducing output by a further 1 to 1.5 percent, and could revisit the proposal should inventories remain high, according to sources.

But oil markets were offered some support by official data that showed crude inventories in the United States, the world's top oil consumer, fell sharply last week as refining and exports surged to record highs.

Crude stockpiles were down by 6.4 million barrels in the week to May 26, beating analyst expectations for a decrease of 2.5 million barrels.

However, U.S. crude production rose to 9.34 million bpd last week, up nearly 500,000 bpd from a year ago.

"We may or may not see more huge draws. But crude production is slowly but surely going to neutralize the (OPEC-led)production cut," said Sukrit Vijayakar, director of energy consultancy Trifecta.

Rising output from Nigeria and Libya, which are exempted from the deal, is also undercutting oil producers' attempt to limit production.

China May factory activity contracts for first time in nearly a year: Caixin PMI

China's manufacturing activity unexpectedly contracted in May for the first time in 11 months and companies shed more jobs as demand weakened and shrinking factory prices dented profits, a private survey showed on Thursday.

The Caixin/Markit Manufacturing Purchasing Managers' index (PMI) fell to 49.6, below the 50-point mark which demarcates growth and contraction on a monthly basis.

That was less than economists' forecast of 50.1 and April's 50.3, extending a streak of declines to three months since a reading of 51.7 in February.

The findings sharply contrast with official readings on Wednesday which showed steady manufacturing growth, but the Caixin report tends to focus on smaller firms which are not believed to be benefiting as much from a construction boom as large state-owned companies and industries such as steel mills.

The divergence may suggest that much of China's recent economic strength remains strongly dependent on heavy industry and continued government stimulus, with other sectors facing more challenging business conditions.

"China's manufacturing sector has come under greater pressure in May and the economy is clearly on a downward trajectory," Zhengsheng Zhong, director of macroeconomic analysis at CEBM Group, said in a note accompanying the Caixin survey.

Demand faltered in May as total new orders fell to 50.3 - the lowest level in 11 months - from the previous month's 51.0. The rate of expansion in new export orders also weakened significantly, showing only marginal growth.

Slower sales saw inventories of finished goods expand for the first time since December 2016, suggesting companies have stopped actively restocking, CEBM Group's Zhong said.

PRESSURE FROM PRICES

Production rose at the slowest pace since June 2016, just hovering above the no-change mark.

Adding to the pressure were falling input and output prices, which fell for the first time since June and February 2016 respectively, reflecting a decline in raw material prices and casting doubts over sustained profitability down the road.

The survey showed Chinese manufacturers cut jobs at the fastest rate in eight months to reduce costs, with declines in staffing seen across all three main market groups.

Small and medium-sized firms (SMEs), forming the bulk of the country's private investors, contribute about 60 percent of China's industrial output and create 80 percent of China's jobs.

To be sure, the official National Bureau of Statistics survey on Tuesday showed the PMI for small enterprises reached its highest level since February 2012 at 51.0, from 50.0 in April, but their performance still lagged that of bigger firms.

Profits for private firms rose 14.3 percent in the period of Jan-April from a year ago, compared to a 58.7 percent profit rise enjoyed by state-owned enterprises (SOEs), Saturday's official NBS data showed.

Despite a slowing trend in growth that has worried some market observers, Chinese manufacturers were, on balance, optimistic about the 12-month outlook for production, the survey noted, although the sentiment was unchanged from April's four-month low.

Walgreens seen taking Rite Aid fight to court

  • Walgreens Boots Alliance (NASDAQ:WBA) is likely to take the FTC to court if the proposed merger with Rite Aid (NYSE:RAD) is blocked, according to Cowen and Company.
  • The investment firm works out the math on Outperform-rated Rite Aid to derive a $9.21 valuation off of synergies of $7.65 per share and a $2 standalone value subtracted by $0.44 in divestitures.
  • Source: Bloomberg
  • In premarket action, WBA is up 0.10% and RAD is 1.16% higher to $3.50. Keep an eye on Fred's (NASDAQ:FRED) as well to move off the latest drugstore sector news.
  • Now read: Should Walgreens Leave Rite Aid At The Merger Altar?