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By Wayne Cole and Hideyuki Sano SYDNEY/TOKYO (Reuters) - Asian stock markets followed Wall Street into the red on Wednesday, while the dollar was on edge following speculation the Federal Reserve could take a dovish turn in its post-meeting statement later in the session. Apple Inc provided some relief after the bell as record sales of its iPhone line helped it beat expectations, sending its stock up more than 5 percent, helping to lift U.S. stock futures by 0.3 percent. On Wall Street, the Dow ended with losses of 1.65 percent, while the S&P 500 fell 1.34 percent and the Nasdaq 1.89 percent. Soft business investment and corporate earnings stoked talk the Fed would have to acknowledge the more difficult environment in its policy statement at 1400 GMT.
"The results weren't that bad," said Scott Kessler, an analyst at Standard & Poor's Capital IQ. "What really struck people was that it wasn't just one thing and it wasn't just a handful of things that had obvious or easy fixes." The panoply of Microsoft's problems included an unexpectedly soggy PC market after a buying rush sparked by the end of Windows XP, an ongoing dip in companies' spending on Office software, problems in Japan and China and a strong U.S. dollar eating away at the value of its huge overseas revenues. Investors were aware of most of those issues before Monday, but the combination of concerns pushed Microsoft's stock down 9.25 percent to $42.66, its biggest one day fall since Chief Executive Satya Nadella took over last February. Until Tuesday, Nadella had enjoyed fanatical support from investors, who lapped up his plan to redesign Microsoft as a leader in cloud and mobile computing.
Yahoo Inc plans to spin off its 15 percent stake in China's Alibaba Group Holding Ltd , responding to pressure to hand over to shareholders its prized e-commerce investment valued at roughly $40 billion. Shares of Yahoo rose about 7 percent to $51.45 in after-hours trading on Tuesday, following the tax-free spinoff announcement and earnings which just beat analysts forecasts even as its revenues slightly lagged estimates. The move to spin off the Alibaba stake satisfies a persistent investor demand, but could also ratchet up pressure on Yahoo Chief Executive Marissa Mayer to make quicker progress in strengthening Yahoo's struggling media and advertising business. Shareholders feel that Yahoo and its stake in Alibaba would be worth more separately, as long as the Alibaba shares are not subject to the standard 35 percent tax rate that would be incurred from selling the shares.
Apple Inc quarterly results smashed Wall Street expectations with record sales of big-screen iPhones in the holiday shopping season and a 70 percent rise in China sales, powering the company to the largest profit in corporate history. Apple's cash pile is now $178 billion, enough to buy IBM or the equivalent to $556 for every American. Apple Chief Financial Officer Luca Maestri told Reuters in an interview that the company did not sell more iPhones in China than the United States, despite some earlier predictions by research analysts. The company's success in the competitive Chinese market can be attributed to its partnership with China Mobile Ltd , the largest global mobile carrier, and the appeal of the larger screen size of the iPhone 6 and 6 Plus.
The Federal Reserve is expected to signal it remains on track to begin raising interest rates later this year, as the central bank shows confidence that low inflation and rising risks from abroad have yet to derail the U.S. economic recovery. The Fed's first two-day policy meeting of the year concludes on Wednesday, and policymakers will likely restate their "patient" approach to raising rates, while also voicing faith that the economy will continue improving. Fed Chair Janet Yellen faces growing skepticism that the central bank can tighten monetary policy by mid-year, with a strengthening dollar and falling oil prices adding to worries that inflation readings remain too low for the Fed to begin hiking. "The Fed will follow through and normalize rates later this year...Our thinking is June.
By Malathi Nayak SAN FRANCISCO (Reuters) - AT&T Inc on Tuesday posted a quarterly net loss that was slightly slimmer than Wall Street expected, as its mobile device deals attracted more customers, but its users switched to other networks at a higher rate. AT&T shares rose about 2 percent in after-hours trading after closing at $32.81 on the New York Stock Exchange. Excluding items, AT&T earned 55 cents per share, beating analysts' forecasts by a penny. Faced with intense competition and promotional activity, wireless carriers have moved from two-year contract plans to equipment financing plans, which reduce service fees and eliminate subsidies for devices.
By Florence Tan SINGAPORE (Reuters) - Oil fell more than 1 percent on Wednesday as the dollar strengthened in early Asian trade, while an industry report showing a larger-than-expected rise in U.S. crude inventories also dragged on prices. "Oil eased a little bit in the Asian time zone, possibly reflecting the fact that the dollar is a little bit stronger." Brent crude hit a low of $48.79 a barrel and was down 60 cents at $49.00 by 0507 GMT. The American Petroleum Institute said late on Tuesday that U.S. crude inventories rose 12.7 million barrels last week, triple the volume expected.
Despite pressure on overseas sales from the strong dollar that has put a crimp in pharmaceutical company profits, Amgen reiterated the 2015 forecast it provided in October for adjusted earnings of $9.05 to $9.40 per share on revenue of $20.8 billion to $21.3 billion. Amgen is less exposed to foreign exchange fluctuations than other large drugmakers as only about 25 percent of its sales come from outside the United States. Excluding items, Amgen earned $2.16 per share, topping analysts' average expectations by 11 cents, according to Thomson Reuters I/B/E/S. The results were helped by a research and development tax credit that came through in the quarter, adding about 10 cents per share to earnings, the company said.
By Lucia Mutikani WASHINGTON (Reuters) - U.S. business investment spending fell for a fourth straight month in December, a sign that slowing global growth may be weighing on the economy, but consumers remained upbeat and new home sales in December hit their highest level since June 2008. "The drop in (capital spending) will weigh on growth, though stronger consumer spending should keep GDP from slowing too much," said Chris Low, chief economist at FTN Financial in New York. The Commerce Department said non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, dropped 0.6 percent last month after a similar decline in November. Orders for these so-called core capital goods started falling in September, the longest downward stretch since 2012.
(Reuters) - JPMorgan Chase & Co's currency traders made a profit of as much as $300 million when the Swiss central bank shocked markets by scrapping its cap on the franc this month, Bloomberg reported, citing two people with knowledge of the matter. JPMorgan netted $250 million to $300 million on the day the Swiss National Bank (SNB) removed the franc's ceiling of 1.20 against the euro, Bloomberg said, citing the people. Citigroup Inc , Deutsche Bank AG and Barclays Plc ran up cumulative losses of about $400 million as a result of the SNB's move, Bloomberg quoted the people as saying.