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Dollar rises before expected Fed rate rise, euro zone bond yields up


The dollar rose before the start on Tuesday of a Federal Reserve policy meeting expected to raise U.S. interest rates while euro zone government bond yields headed higher as investor nerves over an election in the Netherlands appeared to ease slightly. Sterling hit an eight-week low against the dollar after the British government won parliamentary approval to trigger talks on leaving the European Union, reversing Monday's gains when Scotland's leader demanded a referendum on independence. European shares dipped. Stocks in Asia had risen and Wall Street traded in tight ranges on Monday before the Fed meeting. Traders were also looking ahead to Wednesday's election in the Netherlands, seen as a test of populist sentiment in Europe. A poll on Monday showed Prime Minister Mark Rutte's conservatives taking 27 seats in the 150-seat parliament, three more than in the pollster's previous survey and slightly outpacing gains for nationalist Geert Wilders's Party for Freedom (PVV). Wilders has advocated a referendum on the country's euro membership. Yields on benchmark 10-year German government bonds DE10YT=TWEB, which are seen as among the world's safest assets, briefly hit 14-month highs above 0.5 percent. Higher U.S. Treasury yields due to the Fed outlook, signs of recovery in the euro zone economy, and an easing of concern that the French and Dutch votes could bring populist, anti-euro leaders to power have pushed yields higher in recent weeks."At the start of this year yields were trending higher, and then there were escalating nerves about upcoming political risks that pulled yields back down. Now investors have revised these political risks somewhat and now we are heading back towards those yield levels seen in January," DZ Bank strategist Daniel Lenz said.

The dollar index . DXY, which measures the greenback against six other major currencies, rose 0.3 percent. The euro fell EUR= 0.1 percent to $1.0640 while the yen JPY= fell 0.1 percent to 115.03. Sterling GBP=D4 fell 0.7 percent to $1.2129, having dropped as far as $1.2107, its weakest since Jan. 17. A Fed rate rise on Wednesday is seen as all but certain and investors will focus on new economic forecasts and any clues to how many rate hikes can be expected this year.

While higher rates would raise companies' costs, they are also seen as evidence of economic recovery."March’s Fed meeting, even if it does suggest that FOMC members want a faster pace of rate hikes, is looking unlikely to cause market panic, and instead we could see U.S. stocks actually rise on Wednesday night, and the dollar and U.S. yields retreat," City Index Research Director, Kathleen Brooks, said in a note. EUROPEAN SHARES DIP The pan-European STOXX 600 share index fell 0.3 percent, led lower by a 0.8 percent fall in banks . SX7P. Sterling weakness helped Britain's FTSE 100 . FTSE gain 0.1 percent. MSCI's broadest index of Asia-Pacific shares outside Japan . MIAPJ0000PUS was up 0.2 percent, while Japan's Nikkei . N225 closed down 0.1 percent.

Shares in Toshiba Corp.

Toshiba misses third quarter deadline; considers strategic options for Wes...


Japan's Toshiba Corp failed to submit audited third-quarter earnings for a second time on Tuesday, gaining a one month extension as its expands a probe into problems at its U.S. nuclear unit Westinghouse. With its financial woes only deepening, Toshiba said it would speed up looking at whether to sell a majority of Westinghouse even as it sought to reassure investors it could have a future without the unit or its prized memory chip business which has been put up for sale. It will "aggressively consider strategic options" for Westinghouse, it said in a statement, although it did not mention a potential Chapter 11 filing for the U.S. nuclear firm. Sources have said that bankruptcy lawyers have been hired as an exploratory step. The conglomerate said its auditing committee had confirmed that certain Westinghouse senior managers had exerted 'inappropriate pressure' in the accounting for an acquisition of a U.S. nuclear power plant construction company in its third-quarter earnings. It now needs to check if pressure was exerted in preceding quarters as it would also be filing nine-month results. Toshiba will also expand the probe's scope to see if there were 'other inappropriate pressures', it said in a statement without elaborating on what they could be. Chief Executive Satoshi Tsunakawa will hold a news conference at 4:00 p.m. Tokyo time (0700 GMT).

Japan's Toshiba Corp failed to submit audited third-quarter earnings for a second time on Tuesday, gaining a one month extension as its expands a probe into problems at its U.S. nuclear unit Westinghouse. With its financial woes only deepening, Toshiba said it would speed up looking at whether to sell a majority of Westinghouse even as it sought to reassure investors it could have a future without the unit or its prized memory chip business which has been put up for sale. It will "aggressively consider strategic options" for Westinghouse, it said in a statement, although it did not mention a potential Chapter 11 filing for the U.S. nuclear firm. Sources have said that bankruptcy lawyers have been hired as an exploratory step. The conglomerate said its auditing committee had confirmed that certain Westinghouse senior managers had exerted 'inappropriate pressure' in the accounting for an acquisition of a U.S. nuclear power plant construction company in its third-quarter earnings. It now needs to check if pressure was exerted in preceding quarters as it would also be filing nine-month results. Toshiba will also expand the probe's scope to see if there were 'other inappropriate pressures', it said in a statement without elaborating on what they could be. Chief Executive Satoshi Tsunakawa will hold a news conference at 4:00 p.m. Tokyo time (0700 GMT).

Westinghouse has become the epicenter of Toshiba's latest crisis, after buying a U.S. nuclear power plant construction company from Chicago Bridge & Iron in 2015. Two U.S. projects in Georgia and South Carolina handled by the acquired firm have been plagued by cost overruns and Toshiba has already flagged a $6.3 billion writedown. Liabilities attached to Westinghouse mean it is unlikely to be an easy asset to sell, despite attractive technology. South Korea's KEPCO is seen as the only potential buyer, as it expands in nuclear after a successful deal in the United Arab Emirates. KEPCO said on Tuesday it would consider an approach by Toshiba.

"We will review the overall project and weigh how beneficial this project would be to us," a spokesman said. Toshiba, for whom the latest scandal is its second in two years, said it would also introduce fresh measures to overhaul its governance, including improving board level oversight, internal controls, risk management and headquarters' grip on the activities of its affiliates. It estimated that it could post an operating profit of 70 billion yen ($610 million) in the next financial year excluding Westinghouse and its chips business, and also forecast an operating profit of 210 billion yen two years later.

Those forecasts helped its stock recover from sharp losses to end 0.5 percent higher on the day. The new extension to April 11 follows its first postponement of audited earnings a month ago. If it fails to meet that deadline and does not gain another extension it would have until April 21 to submit the earnings or be delisted. A source with direct knowledge of the matter said a one-month extension should be enough to work out differences with auditors. "I understand auditors' skittishness but at the same time I don't think they want to be the reason for Toshiba's failure by keeping refusing to sign off," said the person, who was not authorized to discuss the matter publicly. Toshiba is also due to submit this week a report to the Tokyo Stock Exchange on its internal controls in the wake of its latest financial woes as well the 2015 accounting scandal. That could eventually also lead to a delisting if the bourse finds Toshiba's efforts unsatisfactory.