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January 16, 2023 – rdspinvestments

January 16, 2023

Asian stocks rally on China stimulus, Japan hit by BOJ uncertainty

Stock Markets 2 hours ago (Jan 16, 2023 12:42AM ET)

Asian stocks rally on China stimulus, Japan hit by BOJ uncertainty© Reuters.

By Ambar Warrick

Investing.com — Most Asian stock markets surged on Monday, with Chinese indexes in the lead after the government rolled out more stimulus measures, while fears of more hawkish moves from the Bank of Japan saw local stocks tumble.

China’s blue-chip index was the best performer in Asia, rallying 2% to a near five-month high after the People’s Bank of China injected more liquidity into the banking system. The move comes ahead of an expected increase in liquidity during the lunar new year holiday.

Markets took the liquidity injection as a sign that the Chinese government plans to roll out more spending measures as the country grapples with its worst-yet COVID-19 outbreak.

The Chinese economy is also expected to recover eventually this year after the relaxing of most anti-COVID measures, with the country having reopened its borders last week. Local stocks have been on a tear since December on that notion.

The index added 1.6%, while Hong Kong’s index rose 0.7% to a six-month high.

Other China-exposed markets also rose. The index rose 0.6%, while Australia’s index rose 0.8%.

On the other hand, Japan’s index sank 1.2% as spiked in anticipation of a this week. Pressure is growing on the central bank to tighten policy as local inflation surged to over 40-year highs during December.

The bank had unexpectedly struck a hawkish tone in December, which saw investors positioning for a similar move later this week.

Data on Monday showed that hit a 41-year high in December, with data due later this week expected to show a similar trend.

Broader Asian stocks rose, also taking support from continued bets that the in the coming months.

Focus now turns to a slew of major economic data due later this week. While China’s economy is expected to recover this year, markets are wary of a slowdown in other major economies, especially as the effects of sharp monetary policy tightening through 2022 are felt.

Fourth-quarter corporate earnings reports are also in focus, with markets looking to gauge if weakening economic trends hurt the bottom line of major companies.

European stock futures mixed; German ZEW sentiment data, BOJ, Davos in focus

Stock Markets 3 hours ago (Jan 16, 2023 01:59AM ET)

European stock futures mixed; German ZEW sentiment data, BOJ, Davos in focus© Reuters.

By Peter Nurse 

Investing.com – European stock markets are expected to trade in a mixed fashion at the open Monday, at the start of a week that includes important inflation data, a policy-setting meeting by the Bank of Japan as well as the return of the World Economic Forum to Davos.

At 02:00 ET (07:00 GMT), the contract in Germany traded 0.2% lower, the contract in the U.K. fell 0.1%, while in France climbed 0.2%.

Trading volumes are likely to be lighter in Europe Monday, with the U.S. stock market closed for the Martin Luther King Jr. Day holiday. 

Economic data released earlier Monday showed fell 1.6% on the month in December, a welcome retreat. That said, the early focus this week is likely to be on the release of Germany’s for January on Tuesday.

This is expected to show an improvement to -15.5 from -23.3 in December, and European equities have benefited from this boosted sentiment, with both the and the over 8% higher so far this year.

This has largely been as a result of signs that inflation is on the retreat, allowing central banks to ease back from their aggressive monetary tightening.

Data late last week showed that fell for the first time in over two-and-a-half years in December, and investors will focus on a final reading of for December later this week, as well as one from , for confirmation that the worst of the global price squeeze is over.

The has been the major outlier, largely maintaining its very accommodative monetary stance even as its main peers tightened interest rates drastically.

However, this may be changing after the BOJ stunned markets last month by widening the band around its 10-year bond yield target, a move that investors saw as a prelude to a future rate hike.

This places Wednesday’s policy-setting meeting firmly in focus amid speculation that it could make further adjustments to its yield curve control policy, the first stage of phasing out its massive stimulus.

The World Economic Forum returns to the Swiss ski resort of Davos this week, with European Central Bank President Christine Lagarde and German Chancellor Olaf Scholz among the dignitaries expected to attend the glitzy affair after a pandemic-influenced three year absence.

Oil prices fell Monday, handing back some of last week’s strong gains at the start of a week that includes a plethora of economic data as well as demand forecasts from OPEC and the IEA.

The Organization of Petroleum Exporting Countries releases its latest analysis on Tuesday, followed by the International Energy Agency the following day. Traders will be looking to see what the agencies say about China’s oil demand after the world’s top crude importer removed COVID-19 curbs in late 2022 after years of strict lockdowns. 

By 02:00 ET, futures traded 1.1% lower at $79.22 a barrel, while the contract fell 0.9% to $84.55. Both contracts gained over 8% last week on optimism over China’s opening and following signs of cooling U.S. inflation, hitting the .

Additionally, fell 0.2% to $1,917.70/oz, while traded 0.1% higher at 1.0838.

European stocks higher; German inflation data offers hope

Stock Markets 18 hours ago (Jan 16, 2023 03:30AM ET)

European stocks higher; German inflation data offers hope© Reuters

By Peter Nurse 

Investing.com – European stock markets traded higher Monday, at the start of a week that includes important inflation data, a policy-setting meeting by the Bank of Japan as well as the return of the World Economic Forum to Davos.

At 03:30 ET (08:30 GMT), the in Germany traded 0.2% higher, the in France rose 0.1% and the in the U.K. climbed 0.1%.

Trading volumes are lighter in Europe Monday, with the U.S. stock market closed for the Martin Luther King Jr. Day holiday. 

There was some positive news early Monday as German fell 1.6% on the month in December, a welcome retreat. On the year the rose by 12.8%, compared with a November reading of 14.9%. Wholesale price growth peaked in April, with a 23.8% year-on-year increase.

That said, the early focus this week is likely to be on the release of Germany’s for January on Tuesday.

This is expected to show an improvement to -15.5 from -23.3 in December, and European equities have benefited from this boosted sentiment, with both the DAX and the CAC 40 over 8% higher so far this year.

This has largely been as a result of signs that inflation is on the retreat, allowing central banks to ease back from their aggressive monetary tightening.

The has been the major outlier, largely maintaining its very accommodative monetary stance even as its main peers tightened interest rates drastically.

However, this may be changing after the BOJ stunned markets last month by widening the band around its 10-year bond yield target, a move that investors saw as a prelude to a future rate hike.

This places Wednesday’s policy-setting meeting firmly in focus amid speculation that it could make further adjustments to its yield curve control policy, the first stage of phasing out its massive stimulus.

The World Economic Forum returns to the Swiss ski resort of Davos this week, with European Central Bank President Christine Lagarde and German Chancellor Olaf Scholz among the dignitaries expected to attend the glitzy affair after a pandemic-influenced three year absence.

Corporate earnings are set to pick up as the week progresses, but as far as Monday is concerned, ITM Power (LON:), the U.K.-based maker of hydrogen fuel cells, warned of lower revenue and a wider loss in the current fiscal year. Its stock fell 14%. 

Airbus (EPA:) stock fell 0.8% after analysts at Berenberg downgraded their outlook for the European planemaker to ‘hold’ from ‘buy’, warning that recently high inflation and ongoing supply chain challenges will likely impact the company in 2023.

Oil prices fell Monday, handing back some of last week’s strong gains at the start of a week that includes a plethora of economic data as well as demand forecasts from OPEC and the IEA.

The Organization of Petroleum Exporting Countries releases its latest analysis on Tuesday, followed by the International Energy Agency the following day. Traders will be looking to see what the agencies say about China’s oil demand after the world’s top crude importer removed COVID-19 curbs in late 2022 after years of strict lockdowns. 

By 03:30 ET, futures traded 1.3% lower at $79.06 a barrel, while the contract fell 1% to $84.39. Both contracts gained over 8% last week on optimism over China’s opening and following signs of cooling U.S. inflation, hitting the .

Additionally, fell 0.4% to $1,914.85/oz, while traded 0.2% lower at 1.0809.

Dollar finds its footing near seven-month low, all eyes on yen

Dollar finds its footing near seven-month low, all eyes on yen© Reuters. FILE PHOTO: Examples of Japanese yen banknotes are displayed at a media event in Tokyo, Japan, November 21, 2022. REUTERS/Kim Kyung-Hoon/File Photo

By Rae Wee and Alun John

SINGAPORE/LONDON (Reuters) – The dollar started the week on the back foot, hitting a seven-month low against a basket of major peers in Asian trade before steadying, with the yen in particular focus due to traders’ bets the Bank of Japan will tweak its yield control policy further.

The euro hit a fresh nine-month top of $1.0874 in early trade before retreating to last stand 0.16% lower at $1.0816, while the Australian dollar breached the key $0.7000 level for the first time since August, before dipping back to $0.6962.

Thanks also to early strength from sterling and the Japanese yen, the , which tracks the greenback against a basket of currencies, slumped to a seven-month trough of 101.77, extending its selloff from last week after data showed that U.S consumer prices fell for the first time in more than 2-1/2 years in December.

With decades-high inflation in the world’s largest economy showing signs of cooling, investors are now growing increasingly confident that the Fed is nearing the end of its rate-hike cycle, and that rates will not go as high as previously feared.

The Fed’s aggressive rate increases were a main driver of the dollar index’s 8% surge last year, before signs that inflation was peaking brought it back down.

The dollar has largely traded steady against most currencies since last week’s data.

“It’s too soon to imagine a significant dollar downtrend, we’ve had some dollar repricing certainly, but for broad-based dollar weakness you’ll need to really see Fed expectations roll over materially and the Fed potentially cutting rates at some point, and we are not at this point,” said Samy Chaar, chief economist at Lombard Odier.

Markets are now pricing in a 91% chance of a 25-basis-point increase when the Fed announces its policy decision in February, with a 9% chance of a 50-bp hike.

The dollar steadied in European trading, regaining ground against the pound which was last down 0.3% at $1.2195.

MARKETS CHALLENGE BOJ

A particular focus for currency markets this week is the Japanese yen, due to speculation that the Bank of Japan will make further tweaks to, or fully abandon, its yield control policy at a meeting scheduled to conclude Wednesday.

The dollar slipped to a more than seven-month low on the yen in early trading, before recovering and was last at 128.4 yen, up 0.4%.

“I think the whole world will be focused on Wednesday … and probably the week in G10 (currencies) will be defined by what happens to the yen and yen crosses, out of that,” said Ray Attrill, head of FX strategy at National Australia Bank (OTC:) (NAB).

“I don’t think (the BOJ) has the luxury of time to say that they’re going to assess and wait until Q2 or Kuroda to see out his term without making any further changes.”

BOJ Governor Haruhiko Kuroda will step down in April.

Investors have been pressing for the BOJ to shift away from its ultra-easy monetary policy, which caused the yield on Japan’s benchmark 10-year government bonds to breach the central bank’s new ceiling for two sessions.

U.S. markets are closed on Monday for a holiday, making for thin trading.

Debt ceiling battle, gas prices tumble, Didi relieved – what’s moving markets

Debt ceiling battle, gas prices tumble, Didi relieved - what's moving markets© Reuters.

By Geoffrey Smith 

Investing.com — House Speaker Kevin McCarthy calls for spending cuts at the start of a week when the U.S. is set to bump against the federal debt ceiling. The World Economic Forum begins at Davos but there are big China- and Russia-shaped holes in the delegate lists. U.S. stocks are closed for the MLKD holiday but China and Europe advance as natural gas prices plummet and regulators cut more slack to China’s beleaguered tech sector. Here’s what you need to know in financial markets on Monday, 16th January. 

1. U.S. braces for debt ceiling battle 

The U.S. House of Representatives is bracing for a bitter struggle over the federal debt ceiling. While the issue is usually one of political theater that tends to be resolved before the country shoots itself in the foot with a voluntary default, things may turn out a little differently this time.

Toughness on spending plans and debt levels was one of the conditions extracted from new House Speaker, Kevin McCarthy, in return for the support of Republican hard-liners.  

The government will hit the Congressionally-approved ceiling on Thursday, Treasury Secretary Janet Yellen told both parties in a formal letter last week. After that, it will implement emergency measures to continue operating, but these will be exhausted by June. That timeline suggests nearly five months of effective paralysis on Capitol Hill as the two parties indulge in their usual game of trying to shift the blame.

McCarthy said at the weekend the GOP, which took back control of the House in November’s mid-term elections, will require spending cuts in return for agreeing to raise the ceiling.

2. A depopulated Davos 

The World Economic Forum begins in Davos, with a line-up that reflects the setbacks suffered by globalization in the last couple of years.

The glitzy gabfest for business and political leaders will feature no delegations from either China or Russia, a result of the U.S.’s increasing estrangement from the former and the breaking of most diplomatic bridges with the West by the latter with its invasion of Ukraine.

A resolution to the Ukraine conflict seems as far away as ever after a Russian missile strike on a residential building in Dnipro at the weekend killed 35 civilians.

There were also signs that Ukraine’s western allies were moving closer to sending it main battle tanks, a step that they have so far shied away from for fear of escalating the conflict further. The U.K. announced it will send 12 Challenger 2 tanks, while Germany’s Defense Minister Christine Lambrecht – who has resisted approving the dispatch of Leopard 2 tanks to Ukraine – resigned.

3. Stocks in Europe and China advance; U.S. shut for MLK day

Global stocks were mixed in the absence of a clear lead from the U.S., something likely to last all day due to the Martin Luther King Day holiday there.

By 06:25 ET (11:25 GMT), the was up less than 0.1% while the broader index was up 0.2%.

Hopes that Europe will avoid an economic contraction this year have risen in recent days as natural gas prices have collapsed and the and have strengthened, two factors that will greatly reduce the pressure from imported inflation and reduce the need for more aggressive interest rate hikes from the and .

4. Didi back in Beijing’s good graces

Chinese stock indices rose strongly again overnight, with most of the main boards gaining around another 1.5% after ride-hailing business Didi (OTC:) said it had received permission from Beijing to start registering new customers again. The Technology index, which has gained over 60% in the last three months, nonetheless paused for breath, losing 1.1%.

The ban on new customers, imposed by the Cyberspace Administration of China 18 months ago, had been a key moment in China’s clampdown on the wealth and power of China’s Internet moguls, forcing Didi into an ignominious delisting from the New York Stock Exchange only a few months after its IPO there.

The reversal of the ban is the latest evidence of Beijing easing the pressure on the Tech sector in recent weeks, and follows such steps as the granting of permission for financial services Ant Group to proceed with capital raising measures.

5. Oil edges down as European gas prices slump again

prices fell on signs that the expected pickup in Chinese demand may take a little longer to materialize than thought, although the trigger related to a slightly different market.

Reports suggested that Chinese gas traders are diverting cargoes of liquefied natural gas to Europe amid high levels of storage that point to subdued industrial demand at home.

The same reports drove benchmark European gas prices sharply lower again. The contract fell 11.2% to a new 16-month low of €57.61 a megawatt-hour (€1=$1.0827), as German Vice-Chancellor and Energy Minister ruled out a repeat of last year’s spike.

Apple earnings: Date, Street expectations and analyst comments

Investing.com - Financial Markets Worldwide

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Stock Markets 22 hours ago (Jan 16, 2023 08:24AM ET)

Apple earnings: Date, Street expectations and analyst commentsApple (AAPL): Date, Street expectations and analyst comments

By Senad Karaahmetovic

Apple (NASDAQ:) is due to report its FQ123 results after the market close on February 2, 2023. The conference call to discuss results is scheduled for February 2, at 14:00 PT/17:00 ET (22:00 GMT). The Street is looking for Apple to earnings per share (EPS) of $1.98 on revenue of $123.39 billion.

Apple stock lost about 17% in the final weeks of 2022 on reports the Cupertino-based titan is experiencing weakening demand for its hardware products. As a result, several analysts slashed their FQ1 estimates for Apple, leading to lower stock price targets as well.

Sell-side analysts cited soft demand and prior supply issues as Apple’s major supplier Foxconn (TW:) was fighting worker protests and strict COVID-19 lockdowns.

Apple shares fell to $124.17 on the first trading day this year, marking the lowest level seen since June 2021. However, softer-than-expected wage growth in the U.S. helped improve the sentiment for tech stocks, paving the way for Apple stock to rally about 8.5% from its January low.

Apple also announced that its annual meeting for shareholders will be held virtually on March 10, at 09:00 PT/12:00 ET (17:00 GMT).

What are Street analysts saying about Apple stock?

Rosenblatt (cuts price target to $165, reduces FQ1 estimates): “We expect better trends in later periods, reflective of a more normalized environment… We assume Apple can deliver MSD LT sales/EBITDA growth, with repo driving ~10% in EPS. The company’s brand leadership, and innovation opportunities (EV cars, AR/VR, financial/media services) we believe will allow it to retain a premium 20x P/ FCF in 10 yrs, NPV’d to $165 in year, with estimate cuts driving the 13% PT reduction.”

Barclays (cuts price target to $133, lowers FQ1 and FQ2 estimates): “We did another round of checks with China channel and supply chain partners in the last few days. What started out as production-driven cuts has moved to demand weakness across product categories… At a 20% premium to the S&P 500, we see the stock as fairly valued at best. Manufacturing issues aside, we believe we are witnessing the catch-up from strong COVID performance across product categories. Service revenues have been decelerating as well. We see pressure to estimates and PE multiple in 2023.”

Wedbush (cuts price target to $175): “The core iPhone 14 Pro demand appears to be more stable than feared and is still coming out of the supply chain abyss seen in November/December due to the zero COVID lockdowns in China/Foxconn. While March and June could see some cutting of iPhone orders (iPhone 14 Plus remains a major strikeout), we believe the overall demand environment is more resilient than the Street is anticipating and thus we believe baked into the stock is a massive amount of bad news ahead.”

KeyBanc (reaffirms Buy): “Consensus expects a lower growth quarter than AAPL’s historical average. Consensus Hardware revenue estimates have come down (iPhone revenue/units are -5%/6%, respectively, since the end of Oct.) in response to the impacts to supply and demand for iPhone, though we believe there is still room for further downside risk, and we would expect buy-side expectations to be conservative.”

Morgan Stanley (reaffirms Overweight, sees $115-120 as a near-term floor for Apple stock): “We 1) have not picked up any recent readjustment to product orders in our supply chain checks, 2) have already baked in what we believe in an appropriately conservative near-term forecast, and 3) believe that bigger picture, the core drivers of Apple’s model remain unchanged.”

Evercore ISI (reaffirms Outperform): “Growth rates should continue to improve through 2023 as comps get easier and we should see mid-single digit or better growth every quarter in 2023. In addition to the easier comp and China recovery, the drivers of the improvement this month likely also include a weaker dollar and the price increase pushed through by Apple starting in early October.”

EUR/USD 2023 forecast, as per forex strategists

EUR/USD 2023 forecast, as per forex strategists© Reuters.

By Senad Karaahmetovic

Investing.com — price has had a strong couple of months. The major hit a 20-year low in September 2022 when it traded in the low 0.95s. EUR/USD has hit a major resistance line in recent days, signaling a pullback may be occurring soon. 

As of January 16, 09:05 ET (14:05) GMT, EUR/USD trades at 1.0816.

Here we look at the EUR/USD forecast for 2023, including comments from highly-rated FX strategists. 

Strong rally to end 2022

Increasing bets that the Fed will slow down the pace of has yielded a strong rebound with EUR/USD price rallying over 14% since September. 

The strong end to 2022 has also paved the way for outperformance in the first two weeks of this year. The problem for EUR/USD bulls is that the zone around $1.09 offers a very strong resistance, in the context of an ascending trend line connecting two major lows (January 2017 and March 2020).

Given how strong it acted as support on the way down, analysts expect this area to pose strong resistance to EUR/USD bulls as they attempt to recoup all losses from 2022. EUR/USD opened in 2022 just below the 1.14 handle.

Morgan Stanley raises EUR/USD 2023 forecast

Morgan Stanley FX strategists slashed their 2023 year-end forecast for the USD. They now see the finishing the year at 98 with the greenback especially struggling against the euro.

“Global growth is showing signs of buoyancy, macro and inflation uncertainty are waning and the USD is rapidly losing its carry advantage,” FX strategists wrote in a note.

Morgan Stanley’s new forecast sees EUR/USD at 1.15 by year-end, a substantial revision to their previous forecast of 1.08.

Elsewhere, Morgan Stanley FX strategists also expect the British to record negative returns for 2023, citing domestic growth challenges. 

“Within emerging markets, we see an approximately 5% total return until the end of the year… Outperformers include those that will likely be sensitive to a recovery in the Chinese economy, including those currencies which were underperformers in 2022 such as the Chilean peso,” strategists wrote in a note, according to Reuters.

Bank of America sees a stronger EUR in 2023

Bank of America FX strategists told the firm’s clients in a recent note that they expect the EUR to strengthen against the dollar in 2023. 

“We expect EURUSD to strengthen to 1.10 by end-2022 and to 1.15 in 2024, towards its long-term equilibrium, but with many risks. EURUSD has already moved to the consensus end-2023 forecast and very close to ours. The periphery remains a concern for the EUR, as the ECB has now turned hawkish. Energy prices could increase again. The war in Ukraine remains a known unknown. China’s reopening is proving challenging,” the strategists wrote to clients.

From the valuation standpoint, the EUR is “undervalued,” the strategists added. While the recent run-up in EUR/USD price has made the picture more balanced i.e. EUR/USD not “excessively” undervalued, the BofA FX strategists see EUR start moving towards its equilibrium this year.

“EUR positioning is long, the longest in G10, and longer than a year ago, but we do not find it stretched. Both Hedge Funds and Real Money are long EUR, but their flows have recently diverged. Following the recent USD selling, we think the latest FX positioning would more easily support a near-term EURUSD correction lower, as per our forecast,” the strategists added.

They also highlighted 1.09 as an “inflection point” for EUR/USD.

“By reaching the 1.09s euro will be backtesting this line with potential for it to be again serve as a pivot point for a correction lower. Possibly a correction to 1.05 before any further strength can occur such as to each markets 200wk SMA’s in the 1.12s and 97s.”

EUR/USD undervalued at current levels – ING

EUR/USD should continue moving higher in 2023, according to ING FX strategists. They see a “more benign environment” that could pave the way for the pair to trade “substantially higher” in 2023 and 2024.

ING’s mid-term fair value sees EUR/USD at around 1.15.

“The EUR/USD fair value has spiked. At the current 1.08 level, we estimate that EUR/USD is approximately 7-8% undervalued in real terms,” they wrote in a blog post.

More precisely, the strategists believe that Q223 could especially prove to be strong for EUR/USD on expectations that the U.S. core inflation would fall sharply.

“2Q should also be the period when China re-opening trends gain a further leg higher. However, 3Q and 4Q could prove trickier for EUR/USD: the third quarter on the basis that the extension of the US debt ceiling could become a very contentious political debate around that period and be bad for the risk environment and the fourth on the basis that higher energy prices could again hit the euro,” the strategists added.

All-in-all, the new ING’s EUR/USD forecasts see the pair trading between 1.08 and 1.15 this year before extending to 1.18 in 2024.

Conclusion

More and more FX strategists are calling for the dollar to continue weakening in 2023 on expectations that the Fed will pivot from its ultra-aggressive hawkish approach. Some FX strategists, including ING, revised their EUR/USD 2023 forecast which now calls for higher levels in the pair.

6 big deal reports: Microsoft eyes $10B OpenAI investment

Stock Markets Jan 16, 2023 11:00AM ET

6 big deal reports: Microsoft eyes $10B OpenAI investment© Reuters.

Among the 6 biggest deal dispatches this past week, Microsoft is reportedly in talks to invest billions in ChatGPT owner OpenAI. Here’s the full list, as covered in real time on InvestingPro. Sign up to get this news first.

Microsoft in talks to take big stake in OpenAI: report

Microsoft (NASDAQ:) is said to be in discussions to invest up to $10 billion in OpenAI, the creator of the ChatGPT platform, according to a report by Semafor. The funding round will also include other venture capital firms, and values OpenAI at around $29 billion.

As part of the deal, Microsoft will reportedly take in 75% of OpenAI’s profits until the initial investment is recouped. After that point, Microsoft will hold a 49% stake in OpenAI, while other investors will also hold a 49% stake, and OpenAI’s nonprofit parent will hold a 2% stake.

The report comes amid speculation that Microsoft is planning to incorporate OpenAI’s technology into its Office and email software products. According to previous reports, Microsoft had invested around $1 billion in cash and cloud credits into OpenAI in 2019, and has been considering increasing its investment in the company.

Microsoft shares rose 5.5% for the week.

Heavy M&A action in health and biotech

CinCor Pharma (NASDAQ:) rocketed some 150% after AstraZeneca (NASDAQ:) agreed to buy out the company for $26 per share, or $1.3 billion, a 121% premium over CinCor’s most recent close. The deal also includes a contingent value right of $10 per share in cash, or $500 million, “payable upon a specified regulatory submission of a baxdrostat product.” CinCor closed the week at $28.95.

Amryt (NASDAQ:) shares soared 107% after Chiesi Farmaceutici agreed to buy the Ireland-based biopharma for $14.50 per American depositary share (ADS), or $1.25 billion in cash, plus contingent value rights worth up to another $2.50 per ADS – or $225 million – if certain milestones are achieved. Amryt ended the week at $14.72.

Oak Street Health (NYSE:) shares gained more than 27% last Monday after Bloomberg News reported that CVS Health (NYSE:) is in advanced talks to acquire the company and is prepared to pay more than $10 billion to close the deal in the coming weeks.

Rounding out last week’s hot deals

Also on Monday, Duck Creek Technologies (NASDAQ:) shares surged more than 46% after the company announced it has agreed to be acquired by Vista Equity Partners for $19.00 per share in an all-cash transaction valued at approximately $2.6 billion.

And in that same session, Paya Holdings (NASDAQ:) shares gained more than 24% on news it had agreed to be purchased by Nuvei (NASDAQ:) in an all-cash transaction at $9.75 per share, or some $1.3 billion.

***

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Davos 2023: Big Oil in sights of climate activist protests

5/5

Davos 2023: Big Oil in sights of climate activist protests© Reuters. Climate activists display a banner during a protest ahead of the World Economic Forum (WEF) 2023 in the Alpine resort of Davos, Switzerland, January 15, 2023. REUTERS/Arnd Wiegmann

2/5

By Maha El Dahan

DAVOS, Switzerland (Reuters) -Big oil firms came under pressure at the start of the World Economic Forum (WEF) from activists who accused them of hijacking the climate debate, while a Greta Thunberg-sponsored “cease and desist” campaign gained support on social media.

Major energy firms including BP (NYSE:), Chevron (NYSE:) and Saudi Aramco (TADAWUL:) are among the 1,500 business leaders gathering for the annual meeting in the Swiss resort of Davos, where global threats including climate change are on the agenda.

“We are demanding concrete and real climate action,” said Nicolas Siegrist, the 26-year-old organiser of the protest who also heads the Young Socialists party in Switzerland.

The annual meeting of global business and political leaders opens in Davos on Monday.

“They will be in the same room with state leaders and they will push for their interests,” Siegrist said of the involvement of energy companies during a demonstration attended by several hundred people on Sunday.

The oil and gas industry has said that it needs to be part of the energy transition as fossil fuels will continue to play a major role in the world’s energy mix as countries shift to low carbon economies.

On Monday, a social media campaign added to the pressure on oil and gas companies, by promoting a “cease and desist” notice sponsored by climate activists Thunberg, Vanessa Nakate and Luisa Neubauer, through the non-profit website Avaaz.

It demands energy company CEOs “immediately stop opening any new oil, gas, or coal extraction sites, and stop blocking the clean energy transition we all so urgently need”, and threatens legal action and more protests if they fail to comply.

The campaign, which had been signed by more than 660,000 people, had almost 200,000 shares on Monday morning.

Sumant Sinha, who heads one of India’s largest renewable energy firms, said it would be good to include big oil companies in the transition debate as they have a vital role to play.

“If oil people are part of these conversations to the extent that they are also committing to change then by all means. It is better to get them inside the tent than to have them outside the tent,” Sinha, chairman and CEO of ReNew Power, told Reuters, saying that inclusion should not lead to “sabotage”.

Rising interest rates have made it harder for renewable energy developments to attract financing, giving traditional players with deep pockets a competitive advantage.

As delegates began to arrive in Davos, Debt for Climate activists protested at a private airport in eastern Switzerland, which they said would be used by some WEF attendees, and issued a statement calling for foreign debts of poorer countries to be cancelled in order to accelerate the global energy transition.

Analysis-Russia’s falling oil revenues could create vicious circle for budget, rouble

Analysis-Russia's falling oil revenues could create vicious circle for budget, rouble© Reuters. FILE PHOTO: A model of the natural gas pipeline is placed on Russian Rouble banknote and a flag in this illustration taken, March 23, 2022. REUTERS/Dado Ruvic/Illustration/File Photo

By Darya Korsunskaya

(Reuters) – Russia’s attempts to plug its budget deficit by selling foreign currency reserves could lead to a vicious circle that pushes the rouble higher and further reduces the Kremlin’s crucial export revenues, analysts say.

Russia’s finance ministry and central bank said last week they would restart interventions in foreign exchange markets for the first time in almost a year, selling 54.5 billion roubles worth of yuan ($793 million) from the National Welfare Fund. The sales started on Jan. 13 and will run for three weeks.

Russia has been using the rainy-day fund, which stood at $186.5 billion as of Dec. 1, to finance its widening budget deficit and stabilise the economy in the face of increasingly tough Western sanctions on Russian energy sales.

The Kremlin relies on export taxes from hydrocarbon sales to fund its domestic spending, which has increased sharply to cover accelerating costs for the Ukraine war, now in its 11th month.

But analysts say foreign currency sales will push the Russian rouble higher, thus further reducing Russia’s income in roubles since revenues from oil and gas exports are largely based on global benchmark prices that are traded in dollars.

That process could trigger a cycle of weaker export revenues, requiring more foreign currency sales and leading to an even stronger rouble, exacerbating the budget hole.

Vasily Karpunin, an analyst at BCS Express, says there is a risk Russia’s revenue from energy exports will dip even further in February and March, after the next stage of the G7’s price cap – on petroleum products – kicks in on Feb. 5.

The revenue gap could be 2-3 times higher than the 54.5-billion rouble shortfall in January, CentroCreditBank economist Evgeny Suvorov estimates.

“This will require an increase in foreign currency sales, and through exchange rate dynamics (strengthening of the rouble) that may further worsen actual oil and gas revenues,” Rosbank analysts wrote in a recent research note.

The rouble has gained more than 4% against the U.S. dollar since the plan was announced, and was trading at around 68 per dollar on Monday.

BUDGET HOLE

Russia posted a 3.3 trillion rouble deficit in 2022, equivalent to 2.3% of GDP – one of its worst performances since President Vladimir Putin came to power over two decades ago.

Finance minister Anton Siluanov said in December that the price cap imposed on its oil could mean Russia’s budget deficit is wider than current plans for 2% of GDP in 2023. Government officials have also publicly said they would like to see a weaker rouble – something the foreign currency interventions seem likely to prevent.

Analysts at Alfa Bank said it was “puzzling” the finance ministry would restart FX sales while the Kremlin is also aiming for a weaker rouble.

Russia’s budget for this year is based on a Urals blend price of around $70.10 a barrel, though Russia’s main blend is currently trading at around $50 a barrel.

In roubles, that is a two-year low, according to Reuters calculations.

“If the relatively low prices for Urals last for a long time, and the rouble remains relatively strong, then the budget hole will inflate,” said Anton Tabakh, Chief Economist of RA Expert.

State-owned bank Sberbank estimates that if the average price for Russia’s Urals blend was $55 per barrel, and the rouble continued trading around 67 against the U.S. dollar, the government will be required to sell $1.5 billion – or 100 billion roubles – of foreign exchange holdings every month to cover the gap.

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