Financial News

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Australia's Service Activity Shrinks to 26-Month Low in March

Australia's service sector in March slumped into contraction for the first time after 26 months as the oil price shock continued to weigh heavily on the domestic and international economy.The seasonally adjusted S&P Global Australia Services PMI Business Activity Index dipped to 46.3 from 52.8 in February, according to the think tank's Tuesday news release.The decline was attributed to the ongoing Iran war, which weakened new orders and new business, as well as business sentiment, which fell to its lowest in 28 months."The S&P Global Australia Services PMI data for March paint a picture of how the war in the Middle East has impacted companies, and the results are concerning," S&P Global Market Intelligence economics director Andrew Harker said. "Business activity was down solidly amid a renewed fall in new orders, with the rate of decline in output more pronounced than the earlier flash reading, suggesting that downwards momentum gathered pace over the course of the month."Among sectors, the finance and insurance sector recorded the sharpest reduction.In a March note, Fitch said that the ratings of Australia's big four --- Westpac (ASX:WBC, NZE:WBC), ANZ Group (ASX:ANZ, NZE:ANZ), Commonwealth Bank of Australia (ASX:CBA) and National Australia Bank (ASX:NAB) --- are well positioned to withstand macroeconomic headwinds for the next two years. However, the Middle East conflict may weaken their financial metrics if it is prolonged.Barrenjoey analyst Jon Mott warned investors to stay away from bank stocks as there is the possibility of the war in Tehran not being resolved in the near term. Moreover, analysts from Morgan Stanley and Macquarie lowered their outlook on the banking industry, according to a March 25 report in the Financial Review.Only the consumer services sector saw an increase in activity, S&P Global said.Despite the slowdown in demand and orders, service providers added more manpower, with employment rising for the fifteenth straight month. Data indicated that employers are working on expanding their work capacity on future projects.Meanwhile, the S&P Global Australia Composite Output Index declined to 46.6 in March from 52.4 in the prior month, showing that the private sector business activity contracted for the first time in a year and a half.

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US Markets3d ago

Japan Household Spending Lags in February

Spending by Japan's households declined in February from a year earlier, perhaps raising a challenge to the Bank of Japan's plans to tighten monetary policy.Expenditures for two-or-more-person households in Japan in February reached an average of 289,391 yen, down 1.8% in real terms from the same month in 2025, reported the Statistics Bureau.February marked the third month in succession that household outlays have declined in Japan, on year.The declining outlays came despite a recently improving picture for family income.The average monthly income per household with a worker logged at 589,038 yen in February, up 1.6% in real terms from the previous year, added officials.Japan average household outlays on food, which absorb about 30% of family budgets, declined 0.5% on year in February, dragged down by sluggish seafood and seasoning-products purchases.Spending on transportation and communication fell 5.9% on year, due in part to soft auto sales, reported the Statistics Bureau.In contrast, family outlays on housing rose 12.1% on year in February, while spending on culture and recreation gained 10.8%, according to official figures.For the Bank of Japan, the nation's soft household spending is a concern.The central bank has reiterated it wants the demand for labor to be strong enough that real wages rise, thus allowing consumers to spend more and boost the overall economy.However, the recent monthly spending surveys show households sitting on their wallets, conserving financial resources.The next Bank of Japan policy session falls on April 27-28. The central bank has held its key rate unchanged since December.According to Polymarket odds, there is a 62% chance the Bank of Japan will raise rates by 0.25% to 1%, at the pending meeting.

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US Markets3d ago

Equity Futures Fall as Trump's Latest Iran Deadline Looms

The benchmark US stock measures were trending lower before the opening bell Tuesday ahead of President Donald Trump's deadline for Iran to reopen the key Strait of Hormuz.The S&P 500 was down 0.4% and the Nasdaq lost 0.6% in premarket activity, while the Dow Jones Industrial Average lost 0.3%. The indexes finished the previous trading session higher, with the Nasdaq and the S&P 500 posting a fourth straight increase.Trump's latest deadline for Iran to reopen the Strait of Hormuz or face destructive attacks is set to expire at 8 pm ET, with no immediate signs of a diplomatic breakthrough to end the war."We're giving them till tomorrow, 8 o'clock Eastern time, and after that, they're going to have no bridges," Trump told reporters at the White House Monday, according to NBC News. "They're going to have no power plants."Iran has rejected a proposal conveyed by intermediaries for a temporary ceasefire, Reuters reported Tuesday, citing a senior Iranian source.On Monday, JPMorgan (JPM) Chief Executive Jamie Dimon said that supply disruptions caused by the Iran war could keep inflation and interest rates higher than expected.Separately, International Monetary Fund Managing Director Kristalina Georgieva reportedly said that "all roads now lead to higher prices and slower growth" as a consequence of the war.West Texas Intermediate crude oil was up 1.8% at $114.52 per barrel before the open Tuesday, while Brent rose 0.6% to $110.40.UnitedHealth Group (UNH) and CVS Health (CVS) rose more than 6.5% each before the open, while Humana (HUM) surged 11%, as the Centers for Medicare and Medicaid Services finalized a proposal to raise payments to Medicare insurers by 2.48% on average next year. Broadcom (AVGO) gained 3.6% after the company announced a long-term agreement to develop chips for Alphabet's (GOOG, GOOGL) Google.Tuesday's thin economic calendar has the durable goods orders report for February at 8:30 am. Chicago Fed President Austan Goolsbee is set to speak at 12:35 pm, while remarks from Fed Vice Chair Philip Jefferson are due at 5:50 pm.Levi Strauss (LEVI) is scheduled to release its latest financial results after the markets close.Gold slipped 0.6% to $4,657 per troy ounce, while bitcoin fell 1.9% to $68,296.

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US Markets3d ago

Pershing Square Seeks to Unlock Universal Music Group's Value in Proposed Cash-and-Stock Merger

Universal Music Group (UMG.AS) shares rose 11% in early Tuesday afternoon after Pershing Square Capital Management proposed a cash-and-stock acquisition, saying the former's stock underperformance since its Euronext Amsterdam listing 4.5 years ago is unrelated to the underlying music business and can be resolved through a merger.In a nonbinding proposal, the New York-based investment adviser offered 9.4 billion euros in cash, or 5.05 euros per share, to shareholders of the music company. The offer includes 0.77 new shares for each share of UMG, which brings the total cash-and-stock consideration package to 30.4 euros apiece, a 78% premium to UMG's stock price. Shareholders may elect to receive all cash, all stock, or a combination, subject to proration.Pershing Square said the cash component would reduce the UMG stock overhang and give shareholders, including the Bolloré Group (BOL.PA), "sufficient" liquidity. It also highlighted that UMG's 2.7 billion-euro Spotify stake has not been fully credited in the stock's valuation. Following the merger, Pershing Square plans to sell the Spotify stake in the market or via a block transaction, potentially distributing up to 750 million euros in proceeds to UMG artists.Regarding UMG's capital allocation plan, the acquirer proposed to scrap the current 50% of net income dividend policy at the "new UMG" and instead target a 2% increase annually, while using all free cash flow after required investments for share repurchases.New UMG expects to generate 2.3 billion euros of cash from operations in 2027, growing to more than 3.8 billion euros by 2031, with a total of 15 billion euros available for investments, acquisitions, or share buybacks over that period.If the transaction gets regulatory and shareholder approval, UMG will merge with Pershing Square SPARC to become a Nevada corporation. Closing is expected by the end of 2026, after which the combined entity will be listed on the New York Stock Exchange and be eligible for inclusion in the S&P 500 and other indices.In a letter to UMG's board, Pershing Square recalled its initial 10% investment in UMG before the 2019 Euronext listing, emphasizing that the company remains a "high-quality, capital-light royalty on the long-term growth of global music," supported by streaming penetration and price increases that could drive high-single-digit revenue growth for the next decade and likely beyond.

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