Business Blog Posts

The snowiest January in six years played havoc with hopes of a strong ending to the holiday season, weighing down shopper traffic in malls and stores, especially in the Northeast, which saw multiple snowstorms.

Fewer discounted goods in a typically promotional month could also have kept bargain-hungry shoppers away, analysts pointed out.

Retailers ranging from Target Corp to Saks Inc report January sales on Thursday. January is the final month and the smallest contributor to sales in the retail sector's fourth quarter.

Sales at stores open at least a year, or same-store sales, are forecast to rise 2.7 percent, compared with a rise of 3.3 percent a year earlier, according to Thomson Reuters data.

"The market is obviously very aware of Mother Nature's negative impact this month, as well as limited clearance levels. As a result, we would not read too much into any January softness," Retail Metrics President Ken Perkins said.

Like others, Perkins sees February as a better indicator of how retailers are faring.

In an early batch of results on Wednesday, mall-based teen apparel chain Hot Topic Inc reported a 3.3 percent fall in January same-store sales, while analysts expected only a 2.8 percent decline. On the other hand, Zumiez beat estimates with a 15.3 percent rise in same-store sales.

U.S. shoppers cut back on shopping in January after opening their wallets during November and December, helping U.S. retailers post their best holiday sales in six years.

Claudia Carrmoma was one of them. After scooping up discounts on clothes in December, she hardly shopped in January. The 38-year old New Jersey resident, who works at a jewelry store in Manhattan, said her spring shopping "depends on the money I make."

"I feel like I should save now," Carrmoma said.

Analysts expect teen chains American Eagle Outfitters Inc, Abercrombie & Fitch Co and Aeropostale Inc -- all three of which face tough comparisons versus last year -- as well as apparel chains such as Gap Inc to report same-store sales declines in January.

Luxury chains, Victoria's Secret parent Limited Brands Inc and warehouse club operator Costco Wholesale Corp are among those expected to do well.

"Despite the headwinds that existed during this month, we believe that recent solid trends at the high end likely continued through January as well, as luxury sales continued to outpace the middle and lower end," Barclays analyst Robert Drbul said.

He sees same-store sales rises for both Nordstrom Inc and Saks Inc.

(Reporting by Dhanya Skariachan; editing by Andre Grenon)

North Sea Brent crude futures rose nearly a dollar to $103.27 per barrel, the highest in 28 months, after supporters of Egyptian President Hosni Mubarak opened fire on protesters, in what many saw as an official crackdown on anti-government demonstrations.

Fears that unrest in Egypt and Tunisia will spread to other countries in the Middle East and threaten the region's oil exports overshadowed the bearish effect of soaring gasoline inventories in the United States, prompting investors to move to safer assets, or the sidelines.

In currency markets, the euro paused below a 12-week peak, though tough talk on the inflation from the European Central Bank after its monthly meeting later in the day could give it fresh impetus to test resistance around $1.3950.

Higher energy prices along with copper, sugar and cocoa prices at or near record highs have put a sharp dent in appetite for riskier assets such as emerging market equities as investors fear price pressures will get out of control.

In fast growing countries such as Brazil, India and China, worries have grown that policymakers will need to tighten monetary policy aggressively to tame rising consumer prices, which could put a dampener on a key driver of the global economy.

"The current strong pace of activity is clearly not compatible with comfortable and stable levels of inflation, underscoring the urgency of continued monetary policy tightening," said Leif Eskesen, chief economist for India & ASEAN at HSBC, in a report on India's services sector.

The report showed business activity in the country's services sector grew at a faster pace in January than the month before, but the input price index hit a 30-month high.

Higher prices for raw materials are already squeezing corporate profit margins. While many firms appear able to pass those costs on for now, sharp spikes will eventually force consumers to cut back on spending.

U.S. candy maker Hershey Co (HSY.N) reported overnight that it was seeing "meaningfully higher" costs for ingredients such as cocoa and sugar, while Australia's Qantas (QAN.AX) announced a round of fuel surcharges on Thursday.

Japan's Nikkei .N225 fell 0.3 percent, easing slightly after posting its biggest jump in two months the day, as investors took a more cautious stance and awaited key earnings results and Friday's U.S. payrolls data.

Shares of Panasonic Corp (6752.T) fell 3.2 percent after it posted a worse-than-expected drop in quarterly profit as tough price competition and a stronger yen offset help from Japan's incentive scheme for eco-friendly appliances.

Overall, foreigners remained net buyers of Japanese stocks for a 13th straight week on optimism that the U.S. and global economies are gathering momentum.

Developed market shares are likely to outperform those in emerging markets over the next six months, until it is clear inflation is under control, said Shane Oliver, chief investment strategist at AMP Capital Investors.

U.S. private employers added more jobs than expected in January, the 12th consecutive month that companies took on staff, adding to hopes that the American labor market is slowly recovering and bolstering hopes for the more comprehensive U.S. jobs report on Friday.

The snowiest January in six years played havoc with hopes of a strong ending to the holiday season, weighing down shopper traffic in malls and stores, especially in the Northeast, which saw multiple snowstorms.

Fewer discounted goods in a typically promotional month could also have kept bargain-hungry shoppers away, analysts pointed out.

Retailers ranging from Target Corp to Saks Inc report January sales on Thursday. January is the final month and the smallest contributor to sales in the retail sector's fourth quarter.

Sales at stores open at least a year, or same-store sales, are forecast to rise 2.7 percent, compared with a rise of 3.3 percent a year earlier, according to Thomson Reuters data.

"The market is obviously very aware of Mother Nature's negative impact this month, as well as limited clearance levels. As a result, we would not read too much into any January softness," Retail Metrics President Ken Perkins said.

Like others, Perkins sees February as a better indicator of how retailers are faring.

In an early batch of results on Wednesday, mall-based teen apparel chain Hot Topic Inc reported a 3.3 percent fall in January same-store sales, while analysts expected only a 2.8 percent decline. On the other hand, Zumiez beat estimates with a 15.3 percent rise in same-store sales.

U.S. shoppers cut back on shopping in January after opening their wallets during November and December, helping U.S. retailers post their best holiday sales in six years.

Claudia Carrmoma was one of them. After scooping up discounts on clothes in December, she hardly shopped in January. The 38-year old New Jersey resident, who works at a jewelry store in Manhattan, said her spring shopping "depends on the money I make."

"I feel like I should save now," Carrmoma said.

Analysts expect teen chains American Eagle Outfitters Inc, Abercrombie & Fitch Co and Aeropostale Inc -- all three of which face tough comparisons versus last year -- as well as apparel chains such as Gap Inc to report same-store sales declines in January.

Luxury chains, Victoria's Secret parent Limited Brands Inc and warehouse club operator Costco Wholesale Corp are among those expected to do well.

"Despite the headwinds that existed during this month, we believe that recent solid trends at the high end likely continued through January as well, as luxury sales continued to outpace the middle and lower end," Barclays analyst Robert Drbul said.

He sees same-store sales rises for both Nordstrom Inc and Saks Inc.

(Reporting by Dhanya Skariachan; editing by Andre Grenon)

With the onset of long Lunar New Year holidays across much of Asia and a U.S. payrolls report looming Friday, investors took a step back as clashes between Egyptian President Hosni Mubarak's supporters and demonstrators became increasingly violent.

Brent crude oil futures approached $103 a barrel as Mubarak's supporters opened fire on protesters in Cairo in what many saw as an attempted government-backed crackdown on pro-democracy demonstrations.

Fears that unrest in Egypt and Tunisia will spread to other oil-rich countries in the Middle East overshadowed the bearish effect of soaring gasoline inventories in the United States.

Rising fuel and food prices have exacerbated worries that high inflation will force policymakers in Asia and other emerging markets to aggressively tighten policy, putting a dampener on a key driver of the global recovery.

Higher prices for raw materials are already squeezing corporate earnings. U.S. candy maker Hershey Co (HSY.N) reported overnight that it was seeing "meaningfully higher" costs for ingredients such as cocoa and sugar, though productivity gains and cost savings are helping to support its profit margins for now.

"While monetary tightening across Asia and EMs (emerging markets) generally is unlikely to get so aggressive that it crunches growth, it is still likely to worry investors," said Shane Oliver, chief investment strategist at AMP Capital Investors.

The short-term cautious stance on emerging markets is likely to see shares in developed markets such as the U.S. and Northern Europe outperform over the next six months, said Oliver.

Japan's Nikkei .N225 fell 0.2 percent, after posting its biggest jump in two months the day before.

Weighing on the index, shares of Panasonic Corp (6752.T) fell 3.4 percent yen after it posted a worse-than-expected 5.6 percent fall in quarterly profit as tough price competition and a stronger yen offset help from Japan's incentive scheme for eco-friendly appliances.

Overall, foreigners remained net buyers of Japanese stocks for a 13th straight week on optimism that the U.S. and global recoveries were still gathering strength.

"Foreign buying rose if we look at inflows, but it actually fell when we consider number of shares bought, indicating that foreigners have shifted into more expensive, major shares of exporters as hopes for a pickup in the U.S. economy are on the rise," Yamagishi said.

U.S. private employers added more jobs than expected in January, the 12th consecutive month that companies took on staff, adding to hopes that the American labor market is slowly recovering and bolstering hopes for the more comprehensive U.S. jobs report Friday.

In currency markets, the euro eased from a 2-1/2 month high of $1.3860 against the dollar, though traders believed the single currencies' uptrend was still intact given signs of inflation in the euro zone. <FRX/>

Elsewhere in Asia, Australia's main share benchmark .AXJO rose 0.4 percent as strong metals prices continued to support shares of resources firms. Mining giants BHP (BHP.AX) and Rio Tinto (RIO.AX) both rose more than 1 percent as copper prices stayed near $10,000 a ton, with supplies tight against strong demand.

The report cited court documents and people familiar with investigations by state attorneys general in California, Virginia, Florida and Tennessee that it said could reveal more about the $4 trillion-a-day international foreign-exchange market.

An entity called FX Analytics sued Bank of New York Mellon Corp in Fairfax County Circuit Court in Virginia, accusing the bank of overcharging a state pension fund in converting currencies for its securities trading.

The lawsuit seeking $150 million in damages, was filed in 2009 and taken over by Virginia state prosecutors last month, the Wall Street Journal reported.

A spokesman for the bank could not immediately be reached outside of business hours in New York.

The WSJ report quoted a statement by the bank as saying: "We believe the lawsuit is without merit and we intend to defend it vigorously."

Another lawsuit involves State Street Corp, which was sued in California by an entity called Associates Against FX Insider Trading. The state attorney general sued State Street in 2008 and 2009.

The lawsuit alleged that the Boston-based firm "raided" the custodial accounts of California's two largest public pension funds in excess of $56 million by fraudulently pricing foreign currency trades.

A spokeswoman for the bank could not immediately be reached outside of business hours in Boston. The WSJ quoted a State Street statement as saying the firm believed its "FX services are consistent with our contractual obligations with the California state entities, and we are defending ourselves against the charges made in the complaint."

The whistleblowers, who are using Delaware shell companies to remain anonymous, may have worked at State Street and Bank of New York Mellon, the report said. It identified one of the whistleblowers as Harry Markopolos, a Boston-based investor who for years warned regulators about epic swindler Bernard Madoff, but no action was taken against him until his firm collapsed in December 2008.

The Wall Street Journal said prosecutors were looking into whether banks charged state pension funds the most expensive foreign-exchange price during the day when a trade took place, rather than the rate the bank paid, and when currencies were sold, paid them the lowest price for the day.

(Editing by Lincoln Feast)