Author: Reuters

(Reuters) -Chesapeake Energy beat Wall Street estimates for fourth-quarter profit on Tuesday as the U.S. natural gas producer tackled weak commodity prices with lower operating expenses.

Chesapeake shares fell about 2% in aftermarket trading as the company forecast a 20% drop in spending on baseline production this year. Its fourth-quarter shareholder returns also fell sharply versus earlier quarters.

Share buybacks and dividends totaled about $117 million in the final quarter, down from an average of $242.6 million per quarter in the first nine months.

The Oklahoma-based company reported fourth-quarter output fell to 3.43 billion cubic feet equivalent (bcfe) per day, from 4.05 bcfe per day the previous year. Its capital spending plan will fund about 2.7 bcfe per day in volumes this year, the company said.

Average natural gas prices dipped over 50% in the fourth quarter compared with last year, and have fallen to a three-and-one-half year low this month.

“We continue to show the resilience of this organization and assets in the midst of lower commodity prices,” said CEO Nick Dell’Osso said in the earnings release.

Adjusted profit was $1.31 per share for the three months ended Dec. 31, compared with analysts’ average estimate of 73 cents per share, according to LSEG data.

The business generated $470 million in operating cash flow in the quarter, down from $1.05 billion in the year ago period.

Chesapeake said in January it had agreed to buy rival Southwestern Energy in an all-stock deal valued at $7.4 billion, making it the largest independent U.S. natural gas producer.

(Reporting by Saikeerthi in Bengaluru; additional reporting by Gary McWilliams in Houston; Editing by Pooja Desai and Stephen Coates)

(Reuters) -Chesapeake Energy beat Wall Street estimates for fourth-quarter profit on Tuesday as the U.S. natural gas producer tackled weak commodity prices with lower operating expenses.

Chesapeake shares fell about 2% in aftermarket trading as the company forecast a 20% drop in spending on baseline production this year. Its fourth-quarter shareholder returns also fell sharply versus earlier quarters.

Share buybacks and dividends totaled about $117 million in the final quarter, down from an average of $242.6 million per quarter in the first nine months.

The Oklahoma-based company reported fourth-quarter output fell to 3.43 billion cubic feet equivalent (bcfe) per day, from 4.05 bcfe per day the previous year. Its capital spending plan will fund about 2.7 bcfe per day in volumes this year, the company said.

Average natural gas prices dipped over 50% in the fourth quarter compared with last year, and have fallen to a three-and-one-half year low this month.

“We continue to show the resilience of this organization and assets in the midst of lower commodity prices,” said CEO Nick Dell’Osso said in the earnings release.

Adjusted profit was $1.31 per share for the three months ended Dec. 31, compared with analysts’ average estimate of 73 cents per share, according to LSEG data.

The business generated $470 million in operating cash flow in the quarter, down from $1.05 billion in the year ago period.

Chesapeake said in January it had agreed to buy rival Southwestern Energy in an all-stock deal valued at $7.4 billion, making it the largest independent U.S. natural gas producer.

(Reporting by Saikeerthi in Bengaluru; additional reporting by Gary McWilliams in Houston; Editing by Pooja Desai and Stephen Coates)

(Reuters) -Chesapeake Energy beat Wall Street estimates for fourth-quarter profit on Tuesday as the natural gas producer saw a steep decline in its operating expenses.

However, shares were down about 3% in aftermarket trading as the firm reported a fall in its fourth-quarter production.

The company, which is based out of Oklahoma, said fourth-quarter production fell to 3.43 billion cubic feet equivalent (bcfe) per day, from 4.05 bcfe per day the previous year.

Average natural gas prices dipped over 50% in the fourth quarter compared with last year, after demand was pressured by milder-than-expected weather.

Prices also eased from sky-high levels in 2022, when Russia’s invasion of Ukraine boosted demand for U.S. liquefied natural gas (LNG).

Adjusted profit was $1.31 per share for the three months ended Dec. 31, compared with analysts’ average estimate of 73 cents per share, according to LSEG data.

Chesapeake said in January it had agreed to buy smaller rival Southwestern Energy in an all-stock deal valued at $7.4 billion, making it the largest independent U.S. natural gas producer.

(Reporting by Saikeerthi in Bengaluru; Editing by Pooja Desai)

By Herbert Lash and Alun John

NEW YORK/LONDON (Reuters) -The dollar eased and a gauge of global stock performance fell on Tuesday as fading optimism that central banks will soon cut interest rates dampened sentiment, leaving key pan-European and Japanese stock indices just below their all-time highs.

Europe’s broad STOXX 600 benchmark and Japan’s Nikkei remain about 1% off their peaks, while a weeks-long rally on Wall Street stalled, despite stellar results from Walmart that lifted its shares to a record high.

Hotter-than-expected U.S. inflation data last week pushed back expectations for an imminent start to the Federal Reserve’s easing cycle. A rate cut is now expected in June, according to a slim majority of economists polled by Reuters, who also flagged risk of a further delay in the first cut.

The call for further deflation has depended on below-trend economic growth, but the structural foundation for that outlook is wrong as there is little slack in the U.S. economy, said Phillip Colmar, global strategist at MRB Partners in New York.

“The whole Goldilocks soft-landing scenario was also wrong,” he said. “We like Goldilocks. But our experience is she doesn’t visit for very long and the risk to the Goldilocks scenario was that we weren’t going to have a soft landing with enough slack in the economy building up to bring down inflation.”

The dollar index, a measure of the U.S. currency against six others, fell 0.24%, while MSCI’s gauge of stocks across the globe shed 0.35%.

The STOXX 600 index closed down 0.10% as markets ignored European Central Bank data that showed the annual growth in negotiated wages across the euro area slowing to 4.5% in the fourth quarter last year, down from 4.7% in the prior period.

The ECB has pointed to wages as the biggest risk to its 1-1/2 year crusade against inflation. An ECB analysis of salary agreements indicates wage growth will remain high this year, while the number of companies that expect price increases is rising again, Commerzbank’s senior economist Marco Wagner said in a note.

The tech-heavy Nasdaq led losses on Wall Street as chipmaker Nvidia, which reports results after markets close on Wednesday, fell 4.4%. On Wall Street, the Dow Jones Industrial Average fell 0.17%, the S&P 500 lost 0.60% and the Nasdaq Composite dropped 0.92%. The response to the interest rate outlook from asset classes other than bonds has been muted so far, but U.S. economic growth compared to elsewhere will likely change the lock-step move for central bank expectations, said Marvin Loh, senior global macro strategist at State Street in Boston.

Since mid-January the market has reduced rate cut expectations by 60 basis points for the Fed, the same for the Bank of Canada, 37 basis points for the ECB and 57 basis points for the Bank of England, he said.

“This change in the U.S. rates market is an economy that is performing in a way that we’re not seeing in a lot of the other developed markets. Eventually you’re going have to start seeing more separation,” Loh said.

The two-year Treasury yield, which reflects interest rate expectations, fell 4.8 basis points to 4.608%, while the yield on the benchmark 10-year note was down 2.4 basis points at 4.271%.

Germany’s 10-year Bund yield, which moves inversely to its price, was down 0.7 basis points at 2.378%, while the euro was 0.29% higher at $1.0811.

Germany’s rate-sensitive two-year yield has risen about 40 bps year to date.

CHINESE RATE CUT

China’s five-year loan prime rate was lowered by 25 basis points to 3.95%, bigger than the five to 15 bp cuts forecast by economists. The one-year rate was left at 3.45%, helping blue chips to finish the day up 0.2%, after an earlier fall, and Hong Kong’s Hang Seng index to rise 0.6%. [.SS]

The yuan touched its lowest in three months in early trade before steadying at 7.1925. [CNY/]

The dollar weakened after China cut rates in a bid to prop up its struggling property market, raising hopes of additional stimulus that would boost global growth.

The yen gained but stayed below the 150.88 per dollar level reached last Monday, its weakest in 11 weeks, as investors focus on whether renewed weakness in the Japanese currency is likely to prompt intervention.

Oil prices fell more than 1%, with worries about global demand offsetting price support from the Israel-Hamas conflict.

Brent futures settled down $1.22 to $82.34a barrel. The six-month spread for Brent onTuesday was at its highest since October, a sign of a tightermarket.

U.S. West Texas Intermediate (WTI) crude for March delivery, which expires Tuesday, settled down $1.01 at $78.18 a barrel. The more actively traded April WTI contract settled down $1.30 at $77.04 a barrel.

Gold prices climbed to their highest level in more than a week as the dollar retreated.

U.S. gold futures settled 0.8% higher at$2,039.80 an ounce.

(Reporting by Herbert Lash; additional reporting by Alun John in London, Tom Westbrook in Singaoor; editing by Ros Russell, Chizu Nomiyama, Chris Reese and Deepa Babington)

By Laura Sanicola

(Reuters) -Oil prices settled lower on Tuesday, with worries about global demand offsetting price support from the Israel-Hamas conflict.

Brent futures settled down $1.22, or 1.5%, to $82.34 a barrel. The six-month spread for Brent on Tuesday was at its highest since October, a sign of a tighter market.

U.S. West Texas Intermediate (WTI) crude for March delivery <CLc1>, which expires Tuesday, settled down $1.01, or 1.3%, to $78.18 a barrel. The more actively traded April WTI contract settled down $1.30, or 1.4%, to $77.04 a barrel.

There was no settlement for WTI on Monday due to a U.S. public holiday.

The premium for prompt U.S. crude futures to the second-month contract more than doubled, hitting a high of $1.71 a barrel – its widest in roughly four months. This encourages energy companies to sell now rather than paying to store product for future months.

Crude markets were “marginally lower” in “quiet trading over the Presidents’ Day holiday in the U.S. and as demand concerns offset ongoing Middle Eastern geopolitical tensions,” IG market analyst Tony Sycamore said in a note.

The U.S again vetoed a draft United Nations Security Council resolution on the Israel-Hamas war, blocking a demand for an immediate humanitarian ceasefire as it instead pushes the 15-member body to call for a temporary ceasefire linked to the release of hostages held by Hamas. The U.N. has warned an assault “could lead to a slaughter.”

Shipping has suffered as Iran-aligned Houthis, in support of Palestinians, have increased attacks on shipping lanes in the Red Sea and Bab al-Mandab Strait. Drone and missile strikes have hit at least four vessels since Friday.

Despite the conflict in the Middle East, one of the world’s major oil-producing regions, investors appear more worried about flagging global demand.

China announced its biggest ever reduction in the benchmark mortgage rate, the largest since the reference rate was introduced in 2019 and far more than analysts had expected.

“The fact that the crude market hasn’t responded more positively shows you the depths of the oil demand problems in China,” said John Kilduff, partner at Again Capital LLC in New York.

An International Energy Agency (IEA) report last week revised the 2024 oil demand growth forecast downward, to almost a million barrels a day less than producer group OPEC’s outlook.

The IEA estimated global oil demand will grow by 1.22 million barrels per day (bpd) this year. OPEC’s growth forecast is 2.25 million bpd.

The two disagree about the shift to renewable and cleaner energy. The IEA, which represents industrialized countries, predicts oil demand will peak by 2030 while OPEC expects oil use to keep rising for the next two decades.

U.S. oil refiners are running at weak levels due to seasonal maintenance and unplanned outages, but warmer winter weather may prompt refiners to ramp up rates, analysts said.

U.S. crude inventories were seen up last week, a preliminary Reuters poll showed, while the rate of refinery utilization USOIRU=ECI was expected to increase 1.1 percentage point from 80.6% of total capacity in the previous week.

“A much larger increase should not be ruled out given this year’s weather uncertainties,” said Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois.

(Additional reporting by Paul Carsten in London and Colleen Howe in Beijing and Florence Tan in Singapore; Editing by Kirsten Donovan, Will Dunham, David Evans, Susan Fenton and David Gregorio)

BERLIN (Reuters) – Tesla’s ambitions to expand its German plant hit a roadblock when citizens voted against a motion to raze down trees and make way for the larger site, the mayor of Gruenheide said to Reuters on Tuesday.

While not binding, the vote is a further obstacle for the U.S. EV maker’s plans to double the site’s capacity to 100 gigawatt hours of battery production and 1 million cars per year, setting it up to dominate Europe’s EV market.

The plant’s current capacity is around 500,000 cars a year, but its production ramp-up has slowed. The carmaker produced 6,000 cars in a week for the first time in January, after hitting the milestone of 5,000 cars per week in March.

Citizens in Gruenheide voted against the motion on Tuesday to clear enough forest for the company to build extra logistical spaces like a train station and warehouses, leaving it to local authorities to decide how to proceed.

Tesla was not immediately available for comment.

(Reporting by Victoria Waldersee; Editing by Chizu Nomiyama)

By Savyata Mishra and Abigail Summerville

(Reuters) -Macy’s is facing a board challenge from Arkhouse Management after the investment firm nominated nine director candidates just weeks after the retailer rejected a go-private bid from Arkhouse and its partner Brigade Capital.

Arkhouse on Tuesday announced its nominees, including executives with retail, real estate and capital markets experience, to the department store’s 14-member board.

“The Board’s history of poor performance and continued refusal to engage constructively with our credible and motivated buyer group have led us to the decision to nominate a slate of highly qualified, independent directors to reconstitute Macy’s Board,” Arkhouse said in a statement.

Arkhouse said that it and its affiliates have an economic exposure of 4.4% to Macy’s.

The move comes after Macy’s announced on Jan. 22 it had rejected the $5.8 billion offer from Arkhouse and Brigade, on concerns over valuation, and that it was in talks with them for more information on deal financing.

Arkhouse said on Tuesday that it had provided additional financing details, including names of highly regarded equity partners – which have more than $75 billion in combined assets under management – for the 50% equity component of the transaction.

Macy’s, which owns Bloomingdale’s, is struggling with weak demand as customer cut back spending due to elevated inflation and high borrowing costs.

But the company beat market expectations for quarterly results in November on efforts to trim inventory and strong demand for its beauty products. Macy’s new CEO Tony Spring also just took the helm on Feb. 4 after leading Bloomingdale’s and Bluemercury.

Macy’s signaled that it is prepared for a proxy fight. Since proxy contests can be expensive and time consuming many companies try to find ways to settle the fight before investors are asked to vote on who should sit on their board.

At the same time, some analysts think new blood could be helpful for the company.

“Macy’s parts could be worth more than the whole under fresh activist management and new direction with much value to be unlocked from the real estate it sits on,” said Michael Ashley Schulman, chief investment officer at Running Point Capital Advisors.

The company, famous for its annual Thanksgiving Day parade, said it would evaluate Arkhouse’s director candidates and that it was committed to “long-term value creation.”

Shares of the New York-based company, which is yet to decide on a date for its 2024 annual meeting, were down 1.4% on Tuesday. Shares are down around 7% in the last year.

(Reporting by Savyata Mishra in Bengaluru and Abigail Summerville in New York; Editing by Arun Koyyur and Andrea Ricci)

CHICAGO (Reuters) – United Airlines will rely more on Boeing 737 MAX 9 and Airbus A321 aircraft in the absence of MAX 10 to pursue its growth plans, Chief Financial Officer Mike Leskinen said on Tuesday.

A mid-air emergency last month on an Alaska Airlines 737 MAX 9 has raised new doubts over certification of the already delayed MAX 10. United has ordered 277 MAX 10 jets with options for another 200.

While United has not cancelled the order, the airline has removed them from its internal plans. That has raised questions about the carrier’s ability to grow domestic capacity by almost 30% by 2026 under its “United Next” plan.

At Citi’s industrial conference, Leskinen said the airline would not be able to grow as fast without MAX 10.

“What you’re going to see now is much more MAX 9 and 321 aircraft,” he said. “The mix of which I don’t know yet. It depends on the prices.”

Reuters last month reported that United had approached rival Airbus about buying more A321neo jets as possible alternatives to its MAX 10 order.

Leskinen said United is “deeply disappointed” with Boeing due to aircraft delivery delays. The Chicago-based airline has options to mix some additional Airbus product into its “Boeing heavy fleet” and extend the life of some planes that are ready to retire, he said.

(Reporting by Rajesh Kumar Singh; Editing by Nick Macfie)

(Reuters) – A scorching rally in Nvidia’s shares this year came to a halt on Tuesday as investors worried if the high-flying chip designer’s quarterly results would justify its towering valuation.

The stock fell 5.3% to $687.91. If losses hold, it could be the biggest percentage drop in more than eight months.

Nvidia has been at the heart of the frenzy around artificial intelligence (AI). A more than 40% surge in its stock this year helped it replace Alphabet as the third most valuable U.S. company, behind Microsoft and Apple.

The market capitalization of Nvidia was $1.79 trillion on Friday.

“The market is maybe a little bit hesitant whether they (Nvidia) can deliver a strong enough guidance to reinvigorate the market even higher,” said Frank Lee, head of technology research at HSBC.

The company will report quarterly results on Feb. 21. Analysts expect earnings of $4.56 a share and revenue to rise to $20.378 billion from $6.05 billion a year earlier, according to LSEG estimates.

Still, Nvidia’s eye-popping run this year that pushed it to new peaks and powered gains in U.S. stock markets could make the stock vulnerable if earnings are less than stunning.

“You can’t come out and simply meet or slightly beat for the stock to go higher, Nvidia’s going to need to blow it away,” said Dennis Dick, a trader at Triple D Trading.

Nvidia options are pricing a swing of about 11% in either direction following results, according to data from options analytics service ORATS.

Other AI-focused stocks such as Super Micro Computer fell 11.6% and Arm Holdings dropped 7.3%.

Advanced Micro Devices was down nearly 6%, having recorded double-digit gains on a year-to-date basis.

Nvidia’s shares are trading at 32 times its forward earnings estimates compared with the industry median of 25.4.

(Reporting by Sruthi Shankar in Bengaluru, additional reporting by Arsheeya Singh Bajwa and Bansari Mayur Kamdar; Editing by Shinjini Ganguli)

By Deborah Mary Sophia and Granth Vanaik

(Reuters) -Home Depot forecast full-year results below analysts’ estimates on Tuesday, signaling that lackluster demand would continue to pressure the company this year as people tighten spending on home remodeling amid sticky inflation.

With food prices and borrowing costs still elevated, customers are limiting home-related spend to just essential repair and maintenance rather than undertaking larger renovations.

Foot traffic at the No. 1 U.S. home improvement chain fell in the fourth quarter, with declines worsening toward January due to harsh winter weather, Placer.ai data showed.

“The home improvement market still faces headwinds … we are planning for a year of continued moderation but with slightly less pressure to (sales) than what we faced in fiscal 2023,” Home Depot CFO Richard McPhail said.

The back half of 2024 would be “marginally stronger,” CEO Ted Decker said.

Home Depot expects 2024 comparable sales to decline about 1%, while analysts estimate a 0.06% rise, LSEG data showed. The company’s shares fell about 1%.

“I’m not overly alarmed by the guidance … the timing of (recovery) is the big question mark,” said Sarah Henry, managing director and portfolio manager at Logan Capital Management.

Still, the consumer backdrop appeared strong, Henry added. Retail bellwether Walmart issued an upbeat annual sales forecast.

Fourth-quarter transactions at Home Depot fell 1.7%, logging their eleventh straight quarterly decline, while comparable sales dropped a bigger-than-expected 3.5%.

“There was an expectation … that the company could return to growth sooner than they’re guiding to,” said Jonathan Reid, a director at Fitch Ratings.

Home Depot forecast 2024 per-share earnings to grow about 1%, below expectations of a 3.62% rise.

Shares of Lowe’s, which reports results next week, also dropped 1.5%.

“I wouldn’t say it (the forecast) is a big red flag … it’s a little yellow flag,” D.A. Davidson analyst Michael Baker said.

(Reporting by Granth Vanaik and Deborah Sophia in Bengaluru; Editing by Shounak Dasgupta)