Business

OSLO (Reuters) – Norway’s Equinor posted record pretax profits for the first quarter on Wednesday as the war in Ukraine triggered an energy supply crunch that sent the price of natural gas soaring to all-time highs.

Adjusted earnings before tax rose to $18 billion in the January-March quarter, up from $5.5 billion a year earlier, beating the $17.1 billion predicted in a poll of 25 analysts compiled by Equinor.

“Continued capital discipline and cost focus enabled us to deliver very strong financial results and cash flow, strengthening the balance sheet,” Chief Executive Anders Opedal said in a statement.

The sale of natural gas is now Equinor’s most profitable business, exceeding traditionally dominant crude oil revenues as Europe scrambles to fill depleted gas storages amid fears the war in Ukraine will lead to cut-off of Russian supplies.

(Reporting by Nerijus Adomaitis, editing by Terje Solsvik)

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By Ann Saphir

WASHINGTON (Reuters) – The Federal Reserve on Wednesday is expected to raise interest rates by half of a percentage point and announce the start of reductions to its $9 trillion balance sheet as U.S. central bankers intensify efforts to bring down high inflation.

Fed policymakers have widely telegraphed a double-barreled decision that would lift the Fed’s short-term target policy rate to a range between 0.75% and 1%, and set in motion a plan to trim its portfolio of Treasuries and mortgage-backed securities (MBS) by as much $95 billion a month.

The policy statement is due to be released at 2 p.m. EDT (1800 GMT) following the end of the Fed’s latest two-day meeting.

Markets have priced in further rate increases through this year and into next, including at least a couple more half-percentage-point hikes, as traders bet the central bank moves much more quickly than it had anticipated it would in March to get borrowing costs up to where they will start actively curbing inflation.

With no fresh Fed economic or policy rate projections due until the central bank’s June meeting, most clues on how far and how fast it is prepared to go will come from Fed Chair Jerome Powell’s news conference, which starts at 2:30 p.m. EDT.

‘SOUND HAWKISH’

The Fed began its current round of policy tightening in mid-March with a quarter-percentage-point rate hike, smaller than many policymakers had wanted given inflation had hit a 40-year high, but calibrated so as not to inject more uncertainty into global markets roiled by Russia’s Feb. 24 invasion of Ukraine.

In the weeks since that decision, inflation has gained new steam as the war pushed up oil and food prices and China’s strict lockdowns to combat the spread of COVID-19 further disrupted supply chains.

Data on the U.S. labor market also suggests increasing labor market tightness, with employment costs surging as businesses struggle to hold onto workers. A record number of job openings may also translate to higher wages that could also feed through to inflation.

All that is ratcheting up the pressure on the Fed to act more decisively to rein things in.

“Powell will continue to have a strong incentive to sound hawkish,” Piper Sandler economist Roberto Perli said this week. “The Fed’s focus these days is 100% on bringing inflation down, and hawkish expectations help that cause.”

In the run-up to this week’s meeting, Powell has said he wants to get rates “expeditiously” to what Fed policymakers regard as a “neutral” range of 2.25%-2.5%, and then higher if needed.

Most of his colleagues appear to be on board with at least the first part of that plan.

The aim would be to lift borrowing costs high enough and fast enough that households slow spending and businesses pare hiring in response, reducing inflation that is now about three times the Fed’s 2% target.

But the central bank wants to avoid raising rates so high or so fast that it short-circuits the labor market and trips up the economy. The U.S. unemployment rate has only just dropped to 3.6%, near the pre-pandemic level, and any large reversal could be a prelude to a recession.

The Fed has managed “soft landings” infrequently in the past, analysts say, and at this point has allowed inflation to rise so much faster than interest rates that it may have already missed its chance to do so.

A fast trip to neutral https://graphics.reuters.com/USA-ECONOMY/POWELL/zdvxogolapx/chart.png

Fed policy trails inflation by historic margin https://graphics.reuters.com/USA-FED/gdpzynrmnvw/chart.png

And while it is expected to raise rates rather quickly now to compensate, the inflation path will also depend on a number of factors beyond the Fed’s control, including the evolution of the pandemic, the war in Ukraine, and ongoing supply and labor shortages connected to both.

The Fed’s plan to reduce its balance sheet will also be a focus on Wednesday. While the broad outlines were disclosed about three weeks ago in minutes of the Fed’s March meeting, investors expect to learn details of the speed and extent of the plan, including possible MBS sales at some point in the future.

(Reporting by Ann Saphir; Editing by Paul Simao)

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By Gwladys Fouche

OSLO (Reuters) – Norway’s $1.2 trillion sovereign wealth fund is prepared for a rocky ride as it confronts the biggest geopolitical changes in three decades, its chief executive said on Tuesday.

“We probably face the greatest changes for 30 years,” Nicolai Tangen told a Norwegian parliamentary hearing, adding the world’s largest sovereign wealth fund expects “growing frictions between superpowers and a reversal of globalisation”.

Tangen said that the Norwegian fund, which invests all of its assets in foreign stocks, bonds, property and renewable energy projects, has “nowhere to hide” and must manage the risk that comes with exposure to global markets.

“We have a rocky ride ahead,” he said, adding that inflation, already on the rise before the Ukraine conflict, has continued to increase, while interest rates are still very low and share prices remain high.

Of all the risk factors, stagflation was “the worst”, Tangen said, adding it could potentially lead to a 40% fall in the fund and that it was a more likely scenario than six months ago.

“We have a combination of high price rises and lower-than-before economic growth, inflation is going up and growth is on its way down,” Tangen later told Reuters.

“It looks like we are potentially nearer a scenario of (stagflation) than we were earlier.”

Founded in 1996, the fund invests revenue from Norway’s oil and gas sector and holds stakes in 9,300 companies globally, owning 1.3% of all listed stocks.

Assets now correspond to $230,000 for every Norwegian, and the purpose of the fund is to share the proceeds of the country’s oil and gas revenues with future generations.

RUSSIA AND RENEWABLES

Norway ordered the fund to first freeze and then divest its Russian assets, worth some 27 billion crowns ($2.85 billion) and equivalent to 0.2% of its total value at the end of 2021, after Moscow began its “special military operation” in Ukraine.

However, the fund has not yet begun selling, Tangen said, adding that he did not know when this would be possible as the Moscow market was not functioning well with traded volumes not large enough for its needs.

It could not be sure who counterparties were, making it hard to avoid selling to individuals under international sanctions.

Elsewhere, the fund took its first ever direct stake in a renewable energy project, a Dutch wind farm, in April last year, but has not done so since.

Tangen said even though the fund has a mandate from parliament to invest up to 2% of its total value in renewables, it would take some time as competition was fierce and “good prospects (are) hard to find”.

($1 = 9.4587 Norwegian crowns)

(Reporting by Gwladys Fouche; Editing by Terje Solsvik, Louise Heavens and Alexander Smith)

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(Reuters) -Pfizer Inc maintained sales forecasts for its COVID-19 products for the first time since launching its coronavirus vaccine, in a sign that the dizzying growth of the past few quarters has slowed.

The company said it expects $22 billion in sales of its COVID pill Paxlovid this year, compared with analysts’ average expectation of $26.1 billion.

Pfizer had previously said that its forecast for $22 billion in Paxlovid sales only represents a fraction of the 120 million courses the company is able to manufacture this year.

The company’s reluctance to lift the forecast could suggest that it did not sign significant new sales contracts for the pill during the first quarter.

In prepared remarks for the company’s conference call with investors, Chief Executive Albert Bourla said the company had seen a significant pickup in the drug’s use in the United States recently and said that some countries that have experienced recent outbreaks have asked for more treatment courses.

The drugmaker also reiterated its forecast of $32 billion in sales from the vaccine it developed with BioNTech. It has raised the forecast for the vaccine’s sales every quarter in 2021.

“Sales (of the vaccine) are expected to eventually slow as an increasing percentage of the global population receive a complete vaccination course,” said Millie Gray, analyst at Informa Pharma Intelligence.

At the request of the U.S. Securities and Exchange Commission, several drug companies have adjusted their forecasts to include expenses from milestone payments and acquisitions.

The company said it now expects full-year adjusted profit of $6.25 to $6.45 per share, below its prior forecast of $6.35 to $6.55, mostly due to the impact of those expenses.

Pfizer’s shares fell nearly 1% to $47.94 in choppy premarket trading.

(Reporting by Manas Mishra in Bengaluru and Michael Erman in New Jersey; Editing by Saumyadeb Chakrabarty)

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NEW YORK (AP) — In a court appeal, a lawyer for Donald Trump said Monday it is “unconscionable and indefensible” for the ex-president to be held in contempt and fined $10,000 a day for failing to turn over documents he doesn’t possess.

Attorney Alina Habba made the argument in a submission to a New York state appeals court requesting that the contempt order and fine be suspended until the challenge can be heard by appeals judges.

The arguments were submitted a week after State Supreme Court Judge Arthur Engoron in Manhattan said Trump and his lawyers had failed to show they conducted a proper search for records sought by New York Attorney General Letitia James, a Democrat, in a civil probe of his business dealings.

James had asked the court to hold Trump in contempt after he failed to produce any documents to satisfy a March 31 deadline to meet the terms of the subpoena. She has said her investigation has found evidence that Trump may have misstated the value of assets like skyscrapers and golf courses on financial statements for over a decade.

Trump, a Republican, has been fighting James in court over her investigation, which he has called a politically motivated “witch hunt.”

Habba told Engoron a week ago that she met with Trump to ensure he had no records and there were none to be found. On Friday, she submitted additional documents explaining the document search, including an affidavit in which Trump claimed he has no documents. Engoron criticized the affidavit as lacking in detail.

In Monday’s written arguments submitted to the appellate division of the state’s trial court, Habba wrote that the daily fine “is not only unwarranted, it is also patently improper and impermissible by law.”

She said Trump and his representatives had performed a “diligent, thorough and comprehensive search” for everything sought in the subpoena and provided complete and accurate responses to the attorney general. She said the additional submissions last week amounted to “extraordinary efforts to comply.”

“Given these circumstances, it is unconscionable and indefensible for Appellant to be held in contempt in any manner, must less at the inordinate expense of $10,000 per day,” she said.

The written submission Monday came after Habba notified the appeals court last week that she was appealing. Trump is also appealing Engoron’s Feb. 17 ruling requiring him to answer questions under oath. Oral arguments in that appeal are scheduled for May 11.

A message seeking comment from the attorney general’s office was not immediately returned.

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Associated Press Writer Michael R. Sisak contributed to this story.

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By Maria Ponnezhath

(Reuters) – Netflix Inc said on Sunday it has decided to drop works on Meghan Markle’s animated family series “Pearl” as the streaming platform hew its animated content.

Netflix decided to stop developing several projects, including Meghan’s series as part of its strategic decisions on creating animated series, the company said in a statement, without providing further details on its decisions.

Archewell Productions, the company formed by Meghan and her husband Prince Harry, formally known as the Duke and Duchess of Sussex, had announced last year that Meghan would be an executive producer of “Pearl”. The series was planned to be centered on the adventures of a 12-year-old girl, who is inspired by a variety of influential women from history.

Archewell Productions did not immediately respond to a request for comment.

Netflix also decided not to move forward with two animated kids’ series “Dino Daycare” and “Boons and Curses.”

The decision to cancel these shows came after Netflix reported a loss of 200,000 subscribers in the first quarter, falling well short of its forecast of adding 2.5 million subscribers.

However, Netflix confirmed that the company would continue to work on a number of projects with Archewell Productions, including previously announced documentary series “Heart of Invictus”. The series will focus on athletes competing in the Invictus Games for injured veterans in The Hague in 2022.

Netflix did not respond to a query on whether it will cut down more animated shows.

(Reporting by Maria Ponnezhath in Bengaluru; editing by Diane Craft)

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(Reuters) – Saudi Arabia’s economy grew by 9.6% in the first quarter of 2022, compared to a year earlier, according to flash government estimates on Sunday, as a recovery in the oil sector drove the strongest growth in more than a decade.

During the first quarter, oil activity in Saudi Arabia increased by 20.4% and non-oil activity by 3.7%, the estimates showed.

If the estimates are confirmed, they would mark the highest growth rate since 2011, the Saudi General Authority for Statistics said.

(Reporting by Moataz Mohamed,; Editing by Barbara Lewis)

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By Dawn Chmielewski and Lisa Richwine

LOS ANGELES (Reuters) – Walt Disney Co’s head of corporate affairs, Geoff Morrell, is leaving the company three months after joining from oil and energy company BP Plc, according to an email on Friday from Chief Executive Officer Bob Chapek.

Morrell’s brief tenure has been marked by controversy over the company’s response to Florida’s law barring classroom instruction of sexual orientation and gender identity for some younger students.

“It has become clear to me that for a number of reasons it is not the right fit,” Morrell wrote in a separate email to his staff. “I have decided to leave the company to pursue other opportunities.”

Both emails were seen by Reuters.

Kristina Schake will lead the company’s communications efforts, Chapek said in the email. Her 30-plus years of experience include heading up President Joe Biden’s vaccine education program, as well as communications for Instagram and work in the Obama administration.

Government relations and global public policy will be led by Disney’s general counsel, Horacio Gutierrez.

Disney became the focus of criticism for initially failing to speak out publicly against the Florida legislation, which critics call the “Don’t Say Gay” bill. The company said it worked behind the scenes to influence the legislation, an approach Chapek admitted had failed. He later voiced disappointment with the measure and apologized to the company’s LGBTQ employees for failing to be a “stronger ally in the fight for equal rights.”

When Florida Governor Ron DeSantis signed the Parental Rights in Education bill into law on March 28, Disney issued a statement saying it “should never have passed” and said that it should be repealed.

Disney’s public condemnation opened a new front in the nation’s culture wars, with DeSantis signing a bill on April 22 that would strip the company of its self-governing authority at its Orlando-area parks in apparent retaliation.

The company has yet to issue a statement on the new law, which would take effect on June 1, 2023.

(Reporting by Dawn Chmielewski and Lisa Richwine in Los Angeles; Editing by Chris Reese and Matthew Lewis)

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By Natalie Grover and Pushkala Aripaka

(Reuters) -AstraZeneca’s COVID-19 vaccine still has a role to play in the fight against the pandemic, even as sales slow and the company charges more in some places, CEO Pascal Soriot said on Friday, the latest drugmaker to warn about a global supply glut.

The comments come after the company reported better-than-expected first-quarter profit and sales driven by the vaccine, its second bestseller last year raking in $3.9 billion. It also confirmed its forecast that 2022 sales of the shot would fall.

The vaccine, branded as Vaxzevria and Covishield, has struggled to compete with rivals made by Pfizer and Moderna using mRNA technology, and has hit setbacks with production, rare side-effects and relatively limited shelf life. Approval in the United States has been delayed.

Soriot said the shot, which was seen early in the pandemic as the inoculation of choice for low-income countries, should remain relevant because it’s easy to administer and distribute.

Volume will ease, though, because people will probably only need one booster.

“We are no longer in a period of scarcity of vaccine supply – we have oversupply everywhere around the world. So what is out there needs to be used and then of course we’ll be able to get a better sense for reordering,” he said on a media call.

Rival Johnson & Johnson this month pulled its sales forecast for its COVID-19 vaccine, blaming oversupply on hesitancy in developing countries.

So far, 2.9 billion shots of the AstraZeneca vaccine have been delivered globally.

In the first quarter, the company recorded $1.15 billion in sales for the product, the majority of which came from initial contracts, but that number eclipsed analysts’ consensus forecast of $739 million, cited by Credit Suisse.

AstraZeneca’s shares were down 0.6% in early afternoon trading, underperfoming London’s blue-chip index.

The company has started earning a modest profit on the vaccine, which was initially sold at-cost, but it will continue selling in low-income countries on a non-profit basis.

Apart from the vaccine, AstraZeneca also has a COVID-19 treatment, Evusheld, which has been authorised in many regions including the United States, United Kingdom and European Union for preventing infections in people whose immune system is too weak to respond to vaccines.

The drug generated $469 million in first-quarter revenue, below the consensus forecast of $480 million, cited by Credit Suisse.

Access to the drug in the United States has been limited by logistical bottlenecks that are being addressed, Soriot said, adding Britain was one of the few developed countries that has not ordered Evusheld.

“It’s a sad situation, quite frankly, because people who are immunocompromised are really suffering from the COVID crisis.”

CANCER

AstraZeneca – which unveiled plans to open an R&D centre in Cambridge, Massachusetts designed to serve as the new headquarters for rare disease unit Alexion, which it bought last summer – relies on cancer drugs for about a third of its total product sales.

Even though COVID-19 levels are beginning to wane, access to cancer diagnoses and treatment has still not rebounded to pre-pandemic levels. Things should normalise over the next few months, Soriot predicted.

Meanwhile, the company pared back its expectations for China, which accounted for about 16% of total revenue last year.

The Anglo-Swedish drugmaker said it expected sales there to decline by a mid-single-digit percentage in 2022, largely due to the impact of a programme designed to bring down the prices of off-patent drugs in the country.

“The future for China, we believe is still very strong and we expect to return to growth in the next couple of years,” Soriot said, cautioning that lockdowns in China this year could hurt the uptake of cancer and other drugs.

(Reporting by Pushkala Aripaka in Bengaluru and Natalie Grover in LondonEditing by Jason Neely and Mark Potter)

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BEIJING (Reuters) -China signalled an easing of its crackdown on the once-freewheeling tech sector on Friday as President Xi Jinping seeks to bolster the economy in the face of growth-sapping COVID-19 lockdowns, sending shares in online heavyweights surging.

China’s powerful Politburo, in a meeting chaired by Xi, said it will step up policy support for the world’s second-largest economy, including its so-called “platform economy”, fueling investor hopes that the worst may be over for an unprecedented, multi-pronged crackdown that began in late 2020.

The optimism was also powered by reports that China’s top leaders will hold a symposium early next month with a number of internet companies, expected to be chaired by Xi, according to two people familiar with the matter. Food delivery giant Meituan was among those invited, one source said.

The sources declined to be named cited confidentiality constraints.

The South China Morning Post, which first reported on the upcoming meeting, said that tech giants Alibaba Group Holding, Tencent Holdings and TikTok owner ByteDance were also invited, citing two sources.

Authorities are seeking to reassure the corporate executives about the current regulatory environment and encourage them to continue to develop their business, one source told Reuters.

Separately, sources said Chinese and U.S. regulators were discussing operational details of an audit deal that Beijing hopes to sign this year, the latest move to try to keep Chinese companies from being kicked off U.S. exchanges.

“The Chinese regulators have been trying to strike a balance between growth and regulation over the years,” said Ming Liao, founding partner of Beijing-based Prospect Avenue Capital, which manages $300 million in assets.

“For now, we might see the regulatory crackdown wrapping up as earlier policies take effect while the economy looks for growth,” he said, adding that investors are anxiously awaiting regulatory actions to reassure the investment outlook for China, particularly a clarified set of overseas listing rules.

Earlier on Friday, the Politburo, a top decision-making body of China’s ruling Communist Party, vowed to “complete the special rectification of the platform economy”, without giving a timeline, and roll out measures to support its development.

TOUGH TARGET

Beijing has set a growth target of 5.5% this year, which private economists have said will be difficult to reach without significant support, as COVID-19 lockdowns and other heavy curbs to battle the pandemic create havoc for businesses and supply chains.

During Friday’s meeting, the Politburo said it will support COVID-hit industries and small firms, accelerate infrastructure construction, and stabilize transport, logistics, and supply chains, according to the state-run Xinhua news agency.

Gary Ng, senior economist at Natixis in Hong Kong, said the Politburo meeting “is a positive sign that the government seeks to prioritise growth versus a lot of other goals such as deleveraging or other regulatory change in the short term.”

Ng said that anti-trust measures that have squeezed the platform economy as well as a clampdown on the property sector could ultimately return.

“But in the short run because of the pressure on growth and the zero covid policy, there will need to be a trade off between deleveraging and crackdowns versus growth, and that’s why the market is a bit more optimistic in the short term,” he said.

The Hang Seng Tech index rose 10% for its best day since Vice Premier Liu He promised policy support six weeks ago. E-commerce giants Alibaba and JD.com rose 16%, as did Meituan, while Tencent rose 11%.

China’s benchmark share index jumped more than 2%.

Markets had been hit hard over the past two weeks by fears that lockdowns would cause severe damage to China’s economy and derail a global recovery just as many countries are rebounding from pandemic-led slumps.

(Reporting by Julie Zhu, Kevin Yao, Alun John, Xie Yu and the Beijing newsroomWriting by Tony Munroe; Editing by Carmel Crimmins)

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