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Business

Wall St edges up with earnings, rate-cut expectations in focus

Traders work on the floor of the NYSE in New York

By Johann M Cherian and Ankika Biswas

(Reuters) – Wall Street’s main indexes inched higher on Tuesday as investors parsed big-ticket earnings and awaited commentary from policymakers for clues on the timing of the Federal Reserve’s first interest-rate cut.

Eli Lilly jumped 3.5% after forecasting 2024 profit above estimates, driven by demand for its blockbuster weight-loss drug Zepbound and diabetes medicine Mounjaro.

GE HealthCare Technologies gained 8.0% after the medtech firm posted better-than-expected fourth-quarter earnings.

The S&P 500 healthcare sector was up 0.6%, scaling a record high. The materials index gained 1.4%, as chemicals firm DuPont de Nemours jumped 6% after beating fourth-quarter profit estimates, announcing a new $1 billion share-repurchase program and hiking its dividend.

With around half of the S&P 500 companies having reported earnings, 80.4% have surpassed expectations, according to LSEG data last week. Overall S&P 500 earnings are now expected to have risen 7.8% in the fourth quarter from the year-ago quarter.

Investors are actively monitoring forecasts from businesses against a backdrop of high borrowing costs and persistent slowdown concerns.

“Companies are telling us they see growth in six months to a year out and it could be growth in earnings or in the top line. But it’s definitely growth, and it’s not the recession that people were looking for last year,” said Kim Forrest, chief investment officer at Bokeh Capital Partners.

“Certainly there have been winners and losers in certain categories, but overall, we’re getting an economy that’s growing.”

Wall Street started the week on a glum note in the previous session on the heels of a blistering rally in the S&P 500, which notched 13 weekly gains out of 14. The benchmark index was aided by largely positive corporate earnings and optimism that a rate cut might be imminent.

However, Fed officials, including Chair Jerome Powell, have actively talked down market expectations of a quick start to policy easing, a key theme in the central bank’s interest-rate decision last week. Strong labor market and economic activity data have also fed into rate-cut anxieties.

Remarks from the Fed’s policymakers through the day, including voting member Cleveland’s Loretta Mester, will be on investors’ watch list.

Traders are betting with a nearly 65% chance that at least a 25-basis-point rate cut could be delivered in May, with the odds standing at around 94% for the first cut in June, according to the CME FedWatch Tool.

At 9:53 a.m. ET, the Dow Jones Industrial Average was up 130.09 points, or 0.34%, at 38,510.21, the S&P 500 was up 9.50 points, or 0.19%, at 4,952.31, and the Nasdaq Composite was up 16.48 points, or 0.11%, at 15,614.16.

Palantir Technologies jumped 26.3% after the data analytics firm forecast annual profit above estimates, while FMC Corp tumbled 8.1% after forecasting downbeat first-quarter profit.

Gartner lost 2.9% after the research and advisory firm forecast annual results below estimates.

Advancing issues outnumbered decliners by a 3.23-to-1 ratio on the NYSE and by a 2.19-to-1 ratio on the Nasdaq.

The S&P index recorded 14 new 52-week highs and eight new lows, while the Nasdaq recorded 42 new highs and 57 new lows.

(Reporting by Johann M Cherian and Ankika Biswas in Bengaluru; Editing by Pooja Desai)

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Business

Lilly expects strong 2024 profit on rising weight-loss drug demand

Eli Lilly logo is shown on one of their offices in San Diego

By Patrick Wingrove and Bhanvi Satija

(Reuters) -Eli Lilly on Tuesday forecast 2024 profit above Wall Street estimates on soaring demand for its recently approved weight-loss drug, and said the treatment helped reduce symptoms of a common, difficult to treat fatty liver disease in a mid-stage trial.

The company said it expects 2024 revenue of $40.4 billion to $41.6 billion, and adjusted earnings of $12.20 to $12.70, putting the midpoint ahead of analysts’ estimates of $12.43 per share, according to LSEG data.  .

Sales of obesity drug Zepbound reached $175.8 million in the first few weeks of its launch, after it was approved by the U.S. Food and Drug Administration in November.

Shares of the Indianapolis-based drugmaker rose about 3% in premarket trading after gaining about 11% in January, making Lilly the eighth largest company in the U.S. by market capitalization and most valuable healthcare company.

“I guess, (I was) most surprised by the sales of Zepbound. I wouldn’t have expected near that much,” said Troy Harmon, Chief Investment Officer at Henssler Financial.

Lilly said it will expand manufacturing capacity, but expects demand for its diabetes and obesity drugs Mounjaro and Zepbound to outpace supply in 2024.

Explosive demand for Mounjaro, which had also been used off label for weight loss, and now Zepbound, has led to a buying spree of Lilly’s stock, propelling the drugmaker’s market value to over $600 billion.

The company and its main rival in the obesity market, Novo Nordisk, are both testing their treatments for other health benefits such as obstructive sleep apnea and chronic kidney disease, which could expand insurance coverage for the medicines.

Lilly said tirzepatide, the active ingredient in Zepbound and Mounjaro, met the main goal in a study for a type of fatty liver disease formerly known as NASH and now called metabolic dysfunction-associated steatohepatitis, or MASH.

Lilly said the drug helped up to 74% of patients achieve absence of the disease with no worsening of liver scarring at 52 weeks, compared to 13% of patients on placebo. A clinical trials database said patients in the study had stage 2 or 3 fibrosis.

Two analysts said they wanted to see more data on the benefit of tirzepatide on liver scarring. Lilly called the results “clinically meaningful” but did not provide further detail on whether they were statistically significant, they said.

Still, the data sent shares of other companies developing drugs for the fatty liver disease tumbling, including Madrigal Pharmaceuticals, Akero Therapeutics and 89Bio, which dropped between 19% and 22%.

The company has been investing in manufacturing facilities in the U.S. and Europe to ramp up supply of tirzepatide, announcing in November it would build its first plant in Germany for 2.3 billion euros ($2.47 billion).

Lilly reported sales of Mounjaro for the quarter rose to $2.21 billion from $279.2 million last year, easily outpacing expectations of $1.8 billion, according to BMO Capital Markets.

Fourth-quarter profit of $2.49 per share on an adjusted basis, beat Wall Street expectations by 27 cents.

(Reporting by Bhanvi Satija and Leroy Leo in Bengaluru and Patrick Wingrove in New York; Editing by Arun Koyyur and Bill Berkrot)

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Business

Wall Street equities fall with interest rates, earnings in focus

Traders work on the floor of the NYSE in New York

By Sinéad Carew and Johann M Cherian

(Reuters) -Wall Street’s main indexes closed lower on Monday after Federal Reserve Chair Jerome Powell pushed back firmly against speculation that rate cuts would be imminent, while investors assessed a mixed bag of U.S. earnings reports.

In an interview aired on Sunday, Powell said more evidence on a sustainable downtrend in inflation was needed to warrant lower rates, while Minneapolis Fed President Neel Kashkari wrote in an essay published on Monday that a resilient economy could defer rate cuts for some time.

Fresh data from the Institute for Supply Management showed the U.S. services sector’s growth picked up in January, with a measure of input prices rising to an 11-month high.

This added to doubts about rate cuts, already kindled by Friday’s data, which signaled the labor market’s resilience in the face of tight credit conditions.

Adding pressure was U.S. Treasuries, with 10-year yields up for second day straight and hitting their highest level since late January. [US/]

“Chairman Powell threw a wet blanket over trading today, taking any chance of a March rate cut off the table,” said Jack Ablin, chief investment officer at Cresset Capital in Chicago.

But with all three of Wall Street’s major indexes paring losses as the session wore on, Ablin said investors are likely conflicted since positive economic data supports higher rates.

“Equity investors are torn between the higher rates and the stronger growth. They’re no longer sure that good is bad news,” he said. “Stronger growth on the economic front gives the Fed more flexibility to keep rates higher and know they’re not going to kill the economy but still have a potent weapon against inflation.”

And since Monday’s decline followed record high closing levels in the benchmark S&P 500 and the blue-chip Dow on Friday, Carol Schleif, chief investment officer at BMO family office in Minneapolis, Minnesota, saw it as a potential opportunity for investors who had been on the sidelines.

“The market had gotten way out over its skis, especially coming out of November, December,” Schleif said, adding that she was “not viewing this as the start of a major pullback.”

The Dow Jones Industrial Average fell 274.30 points, or 0.71% , to 38,380.12, the S&P 500 lost 15.80 points, or 0.32%, to 4,942.81 and the Nasdaq Composite lost 31.28 points, or 0.20%, to 15,597.68.

The S&P 500 materials sector was the biggest sector decliner, ending down 2.5%, dragged down by a 15.6% decline in Air Products after the industrial gas manufacturer forecast 2024 profit below estimates.

Of 11 major S&P sectors, only two gained ground with technology adding 0.6% and a 0.3% gain in healthcare.

Results were in from nearly half of the S&P 500 firms and fourth-quarter earnings estimates were improving sharply, with about 80% of the reports beating expectations, according to LSEG data on Friday.

“Mostly earnings season has been pretty mixed bag. It’s been more stock specific than industry specific,” said BMO’s Schleif.

Caterpillar closed up 2% after hitting a record high following its report of a higher quarterly profit, while Estee Lauder shares surged 12% as the MAC lipstick maker aims to cut about 3% to 5% of its workforce.

Boeing shares slipped 1.3% after it said a new quality glitch in some 737 MAX planes would delay some deliveries.

Tesla shares closed down 3.7% after touching its lowest level since May during the session. Piper Sandler slashed the stock’s price target.

Nvidia hit a fresh record high following a price-target raise by Goldman Sachs and closed up 4.8%.

Catalent shares soared 9.7% on Novo Nordisk parent Novo Holdings’ plans to buy the contract drugmaker in an $11.5-billion all-cash deal.

Declining issues outnumbered advancers by a 4.2-to-1 ratio on the NYSE. There were 142 new highs and 124 new lows on the NYSE.

On the Nasdaq 1,167 stocks rose and 3,136 fell as declining issues outnumbered advancers by about a 2.7-to-1 ratio.

The S&P 500 posted 29 new 52-week highs and 11 new lows while the Nasdaq recorded 86 new highs and 209 new lows.

On US exchanges 10.99 billion shares changed hands compared with the 11.58 billion moving average for the last 20 sessions.

(Reporting by Johann M Cherian and Ankika Biswas in Bengaluru; Editing by Pooja Desai, Maju Samuel and Aurora Ellis)

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Business

AbbVie raises 2027 sales forecast for new immunology drugs to $27 billion

Test tubes are seen in front of a displayed Abbvie logo in this illustration

By Leroy Leo and Patrick Wingrove

(Reuters) -AbbVie on Friday raised its 2027 forecast for sales of its immunology drugs Skyrizi and Rinvoq to $27 billion, up $6 billion from its previous prediction.

The Chicago-based drugmaker has been counting on revenues from its newer immunology medicines to help make up for declining sales of blockbuster arthritis drug Humira.

AbbVie said during an investor call its new prediction was based on growth seen for Skyrizi and Rinvoq, and that it expected the drugs to bring in $16 billion in sales this year.

The drugmaker predicted 2024 Skyrizi revenue of $10.5 billion and Rinvoq sales of $5.5 billion.

Shares of AbbVie rose 1.6% in early trading.

The new Skyrizi and Rinvoq forecast “will likely remove pricing concerns and help people model high-single-digit growth till end of the decade,” Wells Fargo analyst Mohit Bansal said.

Rinvoq sales of $1.26 billion beat expectations of $1.17 billion in the fourth quarter of 2023, while Skyrizi sales of $2.39 billion were in line with estimates.

Humira, once the world’s top-selling medicine, faced U.S. competition for the first time last year after nine close-copies of the drug, called biosimilars, entered the market.

The loss of exclusivity forced AbbVie to concede on net price to maintain market share. Humira U.S. sales last year plunged by 35% to $12.16 billion, the company said on Friday.

AbbVie said during its investor call that it expected Humira to make $9.6 billion in 2024, taking into account U.S. erosion of roughly 36%.

Sales of the drug fell 41% to $3.30 billion in the fourth quarter, but beat estimates of $3.28 billion. Humira sales also fell less than expected in the third quarter, buttressed by favorable positions on insurance drug coverage lists.

The company said during its investor call that Humira would lose some insurance coverage in the U.S. year over year, but would maintain broad coverage on pharmacy benefit manager (PBM) formularies in 2024.

PBMs act as middlemen for employers and health plans. They negotiate rebates and fees with drug manufacturers, and create lists, or formularies, of medications that are covered by insurance, and reimburse pharmacies for patients’ prescriptions.

For 2024, AbbVie forecast an adjusted profit in the range of $11.05 to $11.25 per share.

The average expectation for annual profit was $11.24, according to LSEG data, but some analysts said the consensus only partially accounted for the 32-cent hit from its acquisitions of drug developers ImmunoGen and Cerevel Therapeutics last year.

Botox brought in sales of $1.49 billion, ahead of combined estimates of $1.43 billion.

Botox has been facing increased competition from newer anti-wrinkle injections from Revance Therapeutics, Evolus and others.

AbbVie reported a quarterly adjusted profit of $2.79 per share, beating estimates by 2 cents.

(Reporting by Leroy Leo in Bengaluru and Patrick Wingrove in New York; Editing by Maju Samuel, Mark Potter, Nick Zieminski and David Ljunggren)

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Cannabis

US labor market sizzles with blowout job growth, solid wage gains

FILE PHOTO: A “Help Wanted” sign hangs in a restaurant window in Medford

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. job growth accelerated in January and wages increased by the most in nearly two years, signs of persistent strength in the labor market that could make it difficult for the Federal Reserve to start cutting interest rates in May as currently envisaged by financial markets.

The closely watched employment report from the Labor Department on Friday also showed the unemployment rate at 3.7% last month, remaining below 4% for two consecutive years, the longest such stretch in more than 50 years. More jobs were created in 2023 than previously estimated. January’s blowout job count and large wage gains dashed prospects of a rate cut next month. Financial markets lowered the odds of a May cut.

Resilient demand and strong worker productivity are likely encouraging businesses to hire and retain more employees, a trend that could shield the economy from a recession this year.

“Given the Fed now wants strong job growth, as (Fed Chair) Jerome Powell told us just two days ago, this report should not discourage the Fed from cutting rates,” said Chris Low, chief economist at FHN Financial in New York. “By the same token, however, it is not going to encourage them to rush into rate cutting.”

Nonfarm payrolls increased by 353,000 jobs last month, the largest gain in a year, the Labor Department’s Bureau of Labor Statistics said. The economy added 126,000 more jobs in November and December than previously reported. Payrolls shrugged off the drag from winter storms, which reduced the average workweek.

Though annual “benchmark” revisions showed 266,000 fewer jobs were created in the 12 months through March 2023 than previously reported, employment gains last year totaled 3.1 million. Before the revisions, the job count for 2023 had been estimated at 2.7 million.

Economists polled by Reuters had forecast payrolls increasing 180,000 last month. Estimates ranged from 120,000 to 290,000. Job growth in January was above the monthly average of 255,000 in 2023. Roughly 100,000 jobs per month are needed to keep up with growth in the working age population.

The report suggested that economic growth momentum from the fourth quarter spilled over into the new year. It also challenged the notion that the economy was heading for a “soft-landing.” President Joe Biden welcomed the report saying “America’s economy is the strongest in the world.”

Average hourly earnings increased 0.6% last month, the biggest gain since March 2022, after rising 0.4% in December. In the 12 months through January, wages increased 4.5% after advancing 4.3% in December.

Wage growth is running ahead of the 3.0% to 3.5% range that most policymakers view as consistent with the U.S. central bank’s 2% inflation target, supporting views that the Fed will not move quickly to lower borrowing costs.

Financial markets now see a less than 60% chance of the Fed cutting rates at its April 30 and May 1 meeting. The Fed left interest rates unchanged on Wednesday, but Chair Jerome Powell told reporters that rates had peaked. Since March 2022, the central bank has raised its policy rate by 525 basis points to the current 5.25% to 5.50% range.

Stocks on Wall Street were trading higher. The dollar rose against a basket of currencies. U.S. Treasury prices fell.

BROAD GAINS

Most economists were dismissive of recent high-profile layoffs, including 12,000 job cuts announced by United Parcel Service this week, arguing that the focus should be on worker productivity, which has exceeded a 3% annualized growth pace for three straight quarters, and cooling labor costs.

Employers are generally wary of sending workers home following difficulties finding labor during and after the COVID-19 pandemic. But some companies, which enjoyed a boom in business during the pandemic, are laying off workers as conditions return to normal.

“We know that most layoffs in recent years were from cost cutting and not from weaker demand,” said Jeffrey Roach, chief economist at LPL Financial in Charlotte, North Carolina. “This means businesses are in a good position despite the macro headwinds and uncertainty about growth expectations.”

Employment gains last month were across the board, with nearly two-thirds of industries adding jobs, the most in a year. Professional and business services added 74,000 jobs. Temporary help services employment, a harbinger for future hiring rebounded by 3,900, ending 21 straight months of declines.

Healthcare payrolls rose by 70,000 jobs, spread across ambulatory, hospitals as well as nursing and residential care facilities. Retail trade employment increased by 45,000 jobs, while manufacturing hired 23,000 more workers. Government payrolls increased by 36,000, driven by federal government hiring as well as local government, excluding education.

There were also job gains in construction, transportation and warehousing, utilities, leisure and hospitality sectors. But the mining and logging industry shed 6,000 jobs.

The average workweek declined by 0.2 hour to 34.1 hours. Outside the pandemic recession, that was the shortest since June 2010. Some economists viewed this as a sign that layoffs were imminent, but others blamed the winter storms. About 553,000 people did not report for work in mid-January because of bad weather, the largest for any January since 2011.

The unemployment rate was at 3.7% in January. New population estimates were incorporated into the household survey, from which the unemployment rate is derived, creating a break in the series. The population controls had no impact on the jobless rate, which was at 3.7% in December.

There was also no impact on the labor force participation rate, or the proportion of working-age Americans who have a job or are looking for one, which held at 62.5%. But the size of the civilian labor force was reduced by 299,000. There was an uptick in the number of people working part-time for economic reasons and those experiencing longer spells of unemployment.

“The overall picture looks to be one of a still quite strong labor market, and an economy starting 2024 with plenty of forward momentum,” said Michael Feroli, chief U.S. economist at JPMorgan in New York.

(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Andrea Ricci)

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Money

Hong Kong billionaire Richard Li seeks to sell asset manager PineBridge -sources

FILE PHOTO: Richard Li, Hong Kong businessman and younger son of tycoon Li Ka-shing, waves as he arrives to vote during the election for Hong Kong's next Chief Executive in Hong Kong

By Selena Li and Kane Wu

HONG KONG (Reuters) -Hong Kong investment firm Pacific Century Group (PCG), founded by billionaire Richard Li, is seeking to sell its majority stake in asset manager PineBridge Investments, according to four people with knowledge of the matter and a deal document seen by Reuters.

PCG has hired JPMorgan to run the sales process and has held preliminary discussions with a number of financial institutions, said two of the sources. All of the sources declined to be named because the information is confidential.

PineBridge managed assets worth about $157 billion at the end of 2023, according to its website.

Li’s PCG acquired the New York-headquartered business from U.S. insurer American International Group in 2010 for $277 million, at a time when it managed $87.3 billion of assets.

PineBridge and JPMorgan declined to comment.

A spokesperson for PCG on Friday declined to comment on its move to offloading a stake in PineBridge at the group level.

However, the spokesperson added PCG doesn’t plan to sell stakes in PineBridge’s joint venture with Huatai in China and PCG remains committed to the market.

A profitable China joint venture, Huatai-PineBridge Fund Management accounted for about one-third of the parent’s total assets under management, according to the sales document.

The divestment, if successful, would see PCG exit from a fund house that has had mixed financial results in recent years amid heightened market volatility and intense competition in the asset management business.

Close to 60% of PineBridge’s portfolio exposure is to the Asia-Pacific region, according to the deal document shared with potential bidders. Rising interest rates and geopolitical tensions have roiled regional asset prices.

PineBridge managed about 25% of the assets of Hong Kong-based FWD, an insurance business owned by PCG, as of end-September, according to the sale document.

The asset manager swung to a loss of $78 million in 2022 from a $15 million profit the prior year and a net loss of $45 million in 2020, according to the document.

In 2023, the asset manager’s net profit after tax was over $40 million, according to one of the sources. PCG declined to comment on the financial performance.

PineBridge has more than 700 employees across 25 offices, including 230 investment professionals.

While PCG has a controlling stake in PineBridge and is looking to exit all of its holding, the asset manager’s management, employees and advisers together hold small minority interests.

PCG’s other businesses include FWD, which has failed three times to float its shares, telecom and media group PCCW, Hong Kong 5G provider HKT, and property developer Pacific Century Premium Developments.

FWD’s latest application to list in Hong Kong expired in September, filings from Hong Kong bourse showed. FWD declined to comment.

(Reporting by Selena Li and Kane Wu; editing by Jamie Freed and David Evans)

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Crypto

Illicit crypto addresses received at least $24.2 billion in 2023 – report

Illustration of bitcoin

By Elizabeth Howcroft

LONDON (Reuters) – At least $24.2 billion worth of crypto was sent to illicit crypto wallet addresses in 2023, including addresses identified as sanctioned or linked to terrorist financing and scams, crypto research firm Chainalysis said on Thursday.

Cryptocurrencies enable people to send money around the world without using the mainstream financial system. The underlying blockchain technology creates a record of transactions where senders and receivers are identified only by their wallet addresses, which are a string of letters and numbers.

Chainalysis said the $24.2 billion number is almost certainly an underestimation and will rise as it identifies more illicit addresses. It also said it had doubled its 2022 estimate to $39.6 billion from $20.6 billion.

Chainalysis’ data only includes crypto-related crime. It said it was impossible to determine from blockchain data alone the volume of cryptocurrency that is the proceeds of non-crypto-related crime, for example when cryptocurrency is the means of payment in drug trafficking.

Instead, the firm counted crypto sent to wallet addresses identified as illicit, plus the volume of funds stolen in crypto hacks.

Chainalysis said sanctioned entities and jurisdictions together accounted for a combined $14.9 billion worth of illicit transaction volume in 2023, which represents 61.5% of all illicit transaction volume it measured on the year.

Of this total, most came from crypto services sanctioned by the U.S. or located in U.S.-sanctioned jurisdictions where U.S. sanctions are not enforced.

Revenue from crypto scamming and hacking fell in 2023, Chainalysis said, but ransomware and darknet markets saw revenues rise.

Various other types of illicit addresses were identified in the report, including those linked to terrorist financing, cybercrime and child abuse material.

The U.S. has said it will crack down on crypto firms which fail to block and report illicit money flows. Last year, the founder of crypto exchange Binance pleaded guilty to breaking U.S. anti-money laundering laws.

A United Nations report on Monday said that unregulated cryptocurrency exchanges have become “foundational pieces” of financial architecture used by organised crime in Southeast Asia.

Bitcoin was the top cryptocurrency used by cybercriminals in 2021, but stablecoins have become more dominant in the last two years, now accounting for the majority of all illicit transaction volume, Chainalysis said.

(Reporting by Elizabeth Howcroft; Editing by Tommy Reggiori Wilkes and Jane Merriman)

Categories
Business Technology

Volvo Cars sees ‘tremendous growth’ in EVs, CEO says

Volvo Cars launches EX30 electric SUV in Milan

By Divya Chowdhury and Savio Shetty

DAVOS, Switzerland (Reuters) -Volvo Cars remains confident of “tremendous growth” in the electric vehicles market, CEO Jim Rowan told the Reuters Global Markets Forum in Davos on Wednesday, countering gloomier projections from rivals.

The carmaker, which aims for electric vehicles (EVs) to contribute half its sales volume by mid-decade and to sell only EVs by 2030, said the growth in demand for its premium brand was stronger than that of mass-market rivals.

“We have much more pricing power and people have got more disposable income so they can afford it if they want to drive an EV,” Rowan said.

The Volvo Cars CEO said that, in contrast to others, he saw good growth globally for electric cars, with particular strong demand in Europe.

Over the past year, many automakers have warned that the anticipated growth of EVs has been slow to emerge due to poor demand, heavy price cuts, lower subsidies, and supply chain issues.

Volvo has previously said that it has no intention of participating in the Tesla-ignited price war due to its position as a premium brand and saw good margins on its electric cars.

Higher costs caused by disruptions on shipping in the Red Sea would also not affect customers, the CEO said, who stated that any additional costs would be absorbed by Volvo.

Last week, Volvo said it would halt production at its factory in Belgium for three days as a result of a delivery of gearboxes being delayed due to the disruption.

The CEO also told Reuters that he had high ambitions for India in the next five years with plans to launch the more affordable EX30 there in 2025.

(Join the GMF, a chat room hosted on LSEG Messenger, for live interviews: )

(Reporting by Divya Chowdhury in Davos and Savio Shetty in Mumbai, writing by Marie Mannes, editing by Stine Jacobsen, Terje Solsvik, Elaine Hardcastle)

Categories
Energy

US power and natgas prices soar as extreme freeze hits natgas supplies

FILE PHOTO: First winter storm of 2024 in the U.S. Northeast, in Worcester

By Scott DiSavino

(Reuters) -U.S. natural gas and power prices hit multi-year highs on Friday ahead of extreme cold that was expected to bring record gas demand while also cutting supplies by freezing wells.

Lower gas supplies at a period of surging demand could test power systems in hard-hit areas. Winter storms in 2021 and 2022 caused widespread damage and power outages in part because many power plants lacked sufficient fuel to operate.

U.S. gas output was on track to drop by 3.7 billion cubic feet per day (bcfd), or 3.4%, over the past five days to a preliminary 10-week low of 104.5 bcfd on Friday, according to financial firm LSEG. [NGA/]

That decline so far was small compared with gas supply losses of around 19.6 bcfd during a winter storm in December 2022, and 20.4 bcfd during another winter storm in February 2021, according to LSEG data.

Still, U.S. gas demand, including exports, was on track to reach 165.9 bcfd on Jan. 15, 174.3 bcfd on Jan. 16 and 172.9 bcfd on Jan. 17, according to LSEG.

Those daily demand forecasts would top the current all-time high of 162.5 bcfd set on Dec. 23, 2022, according to federal energy data from S&P Global Commodities Insights.

“TAKE EXTRA CARE”

The freeze is expected to move from the U.S. Pacific Northwest to the central and eastern parts of the country over the next few days. Power grid operators in its path have already told generator owner members to prepare their units to run before electric demand starts to increase.

In a sign of what may be coming, next-day power prices at the Mid Columbia hub in the Pacific Northwest soared to a record high of around $1,075 per megawatt hour, according to LSEG data going back to 2010. That compares with averages of $81 in 2023 and $52 from 2018 to 2022.

“Generator owners must take extra care to maintain equipment so that it doesn’t freeze in the cold … particularly as natural gas pipelines may become constrained as the cold spell progresses,” PJM Interconnection said in a release.

PJM is the nation’s largest grid operator covering parts of 13 states from Illinois to New Jersey.

Grid operator Southwest Power Pool (SPP) and the Electric Reliability Council of Texas (ERCOT) have also issued weather advisories.

Projected overnight temperatures in Midland, Texas, in the Permian shale, the nation’s biggest oil and second biggest gas producing basin, will drop below freezing every night from Jan. 13-16, falling to a low of 6 degrees Fahrenheit (minus 14 degrees Celsius) on Jan. 15, according to meteorologists at AccuWeather.

Freezing weather can lead to so-called freeze-offs, which can reduce oil and gas production.

GAS PRICES JUMP

Spot gas prices at the Eastern Gas South hub jumped from around $2.45 per million British thermal units (mmBtu) on Thursday to $10.40 on Friday, their highest since July 2008, according LSEG data.

That compares with averages of $1.68 per mmBtu in 2023 and $2.96 from 2018 to 2022.

Other next-day gas prices soared to their highest since the February freeze in 2021, including the U.S. Henry Hub benchmark in Louisiana at $13.20 per mmBtu, Waha in West Texas at $17.23 and Chicago at $23.35.

In Canada, meanwhile, next-day gas prices at the AECO hub in Alberta soared to around $9.71 per mmBtu, their highest since February 2014. The Alberta grid operator on Friday asked electricity users to conserve power, following record demand Thursday.

(Reporting by Scott DiSavinoEditing by Marguerita Choy and Chris Reese)

Categories
Technology

ABB buys tech company to give industrial robots eyes and brains

An ABB autonomous robot navigates around a warehouse

By John Revill

ZURICH (Reuters) – ABB has bought a company specializing in boosting the mobility of industrial robots – by using artificial intelligence and 3D vision to move around factories and warehouses.

The deal to buy Sevensense, a Swiss start-up, is the latest robotics investment by ABB and follows growing demand for industrial robots that can move and work independently.

Zurich-based Sevensense develops and makes sensor and AI systems that effectively give factory robots – which carry components to production lines – the eyes and brains to maneuver around plants.

“In the past, robots which supplied production lines usually followed fixed magnetic strips, They took a long time to install and weren’t very flexible,” Sami Atiya, ABB’s head of robotics and discrete automation told Reuters.

“Now we have robots which can go all over the factory, but with eyes and a brain.”

Each robot – which comes equipped with six cameras – can shift 2 tons of materials at speeds of 1.5 meters per second.

“Under the old system when you needed to change a production line of 100 meters, adding a new production cell for example, it was impossible to divert the robot,” Atiya added.

“Now we can do that easily,” he said.

The market for autonomous mobile robots (AMR) is expected to grow by around 20% per year up to 2026, according to ABB estimates, expanding from $5.5 billion in 2023 to $9.5 billion by 2026.

This rate is faster than the one anticipated for conventional fixed robots, where ABB sees annual growth of 8%.

The deal to buy Sevensense is the latest investment by ABB, which competes with Japan’s FANUC and Germany’s Kuka in industrial robots and follows its expansion of its U.S factory last year and the purchase of ASTI Mobile Robotics in 2021.

Terms of the acquisition were not disclosed.

The company’s technology is now being integrated into ABB’s products, with customers including automaker Ford which has bought 300 robots for its plant in Tennessee in the United States, as well as French tire maker Michelin.

(Reporting by John Revill; Editing by Miranda Murray and Tomasz Janowski)

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