The daily business briefing: December 27, 2016
Toshiba shares dive on news of nuclear construction losses, U.S. stock futures point to a flat post-holiday open, and more
Toshiba stock drops as nuclear construction losses loom
Toshiba shares plunged by 12 percent on Tuesday after the Japanese company said it might have to book several billion dollars in losses linked to a U.S. nuclear power acquisition. Toshiba said cost overruns at a nuclear construction business its subsidiary Westinghouse Electric bought from Chicago Bridge & Iron would be larger than initially expected. The news came as the conglomerate is still recovering from a $1.3 billion accounting scandal. "This indicates that corporate governance controls at one of Japan's largest and most consequential companies may have been extremely weak," said Tom O'Sullivan, a former investment banker and founder of energy consultancy Mathyos Japan.
Stock futures flat as U.S. markets prepare to open after long holiday weekend
U.S. stock futures pointed to a flat open for U.S. markets on Tuesday as trading resumes after the three-day Christmas weekend. The Dow Jones Industrial Average, the S&P 500, and the Nasdaq Composite benchmark indexes all inched lower shortly before the opening bell. The Dow has been flirting with the untouched 20,000 level after an extended post-election rally that has left it up by 14.6 percent on the year. Retailers such as Amazon and Walmart are expected to be in focus on Tuesday as investors look for signs of how they did in the crucial holiday shopping season. Asian and European stocks saw lackluster early trading. London markets remain closed in an extended holiday break.
Bailout of Italy's third largest lender gets more expensive
Troubled Italian bank Monte dei Paschi di Siena said late Monday that it will need a bigger government rescue than initially anticipated. The bank said in a statement that the European Central Bank's had revised its estimate of its capital shortfall to $9.2 billion, up from $5.2 billion. The Italian government could put up $6.8 billion to rescue Monte dei Paschi di Siena, the country's third largest lender, Reuters reported Tuesday, citing sources close to the matter. The bank asked for government support last week after it failed in an effort to raise the $5.2 billion from private investors.
U.S. led 2015 arms sales with $40 billion
The U.S. signed weapon-sale deals worth about $40 billion last year, ranking it first in the world, according to a new congressional study. France ranked as the No. 2 arms seller, far behind with $15 billion. Developing nations continued to rank as the top buyers, led by Qatar with more than $17 billion in weapons purchases, followed by Egypt with $12 billion, and Saudi Arabia with more than $8 billion. Despite ongoing terrorism threats, total sales in 2015 dropped to $80 billion from $89 billion the year before, "due, in part, to the weakened state of the global economy," wrote Catherine A. Theohary, a national security policy specialist at the bipartisan Congressional Research Service and author of the study.
Post-Christmas disturbances shut down several U.S. malls
Fights and false gunfire reports forced several malls across the U.S. to close on Monday. The day after Christmas typically is a busy shopping day, and many malls across the country were crowded with shoppers returning gifts, spending gift cards, or just looking for the season's last bargains. At one of the disturbances, as many as 10 people suffered minor injuries at The Mills at Jersey Gardens in Elizabeth, New Jersey, in a panic that started when someone shouted, "Gun!", after a chair toppled and made a loud noise as it hit the ground. It was not immediately clear whether the disturbances were related.