Tag Archives: PREMTL

World

Asian stocks shaken by blast in Poland; dollar gains

Leave a comment

HONG KONG, Nov 16 (Reuters) – Asian stocks dropped and the dollar gained on Wednesday after a blast in Poland that Ukraine and Polish authorities said was caused by a Russian-made missile.

Worries over a potential ratcheting up of geopolitical tensions spurred a drop of 1% in MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS).

Australian shares (.AXJO) fell 0.4%, while Japan’s Nikkei stock index (.N225) dropped 0.1%.

Hong Kong’s Hang Seng Index (.HSI) shed 1.1% and China’s CSI 300 (.CSI300) fell 0.4% by the midday break. The struggling property sector weighed on the markets, with China’s new home prices falling at their fastest pace in more than seven years in October, weighed down by COVID 19-related curbs and industry-wide problems.

U.S. stock futures, the S&P 500 e-minis , fell 0.2%.

In early European trade, the pan-region Euro Stoxx 50 futures lost 0.9%, German DAX futures dipped 1%, and FTSE futures fell 0.5%.

NATO member Poland said on Wednesday that a Russian-made rocket killed two people in eastern Poland near Ukraine, and it summoned Russia’s ambassador to Warsaw for an explanation after Moscow denied it was responsible.

“(It) interrupted what is a far more constructive tone in markets over the last three, four days,” said Dwyfor Evans, head of Asia Pacific macro strategy at State Street Global Markets in Hong Kong, who noted optimism in the financial markets that U.S. inflation was cooling.

U.S. President Joe Biden said the United States and its NATO allies were investigating the blast but early information suggested it may not have been caused by a missile fired from Russia.

“I do think President Biden’s comment was clear in representing the U.S. government,” said Quincy Krosby, chief global strategist at LPL Financial in Charlotte, North Carolina.

“Unless there’s evidence to the contrary, (market concerns) should dissipate.”

The safe-haven U.S. dollar pared gains against its major peers but was still mostly higher, led by a 0.63% advance versus the yen .

Sterling lost 0.32%, while the risk-sensitive Aussie dollar weakened 0.34%. The euro was flat.

“A lot of headlines are going on around today but there’s a feeling that this is not going to, at this stage… result in an escalation in tensions, or at least there is no appetite to go in that direction,” said Rodrigo Catril, senior currency analyst at National Australia Bank in Sydney.

The fact that the risk-sensitive, pro-growth Australia and New Zealand dollars retained most of their big gains from Tuesday, following soft U.S. PPI readings, is an indication that “there is a lot of appetite to push the U.S. dollar lower,” Catril said.

The yield on benchmark 10-year Treasury notes rose to 3.8068% in Tokyo, compared with 3.799% at the close of U.S. trading on Tuesday. It earlier fell as low as 3.757%, matching the previous session’s intraday trough, which was the lowest since Oct. 6.

U.S. crude dipped 0.74% to $86.29 a barrel. Oil prices rose on Tuesday after news that oil supply to Hungary via the Druzhba oil pipeline had been temporarily suspended due to a fall in pressure.

Gold was slightly lower, with spot gold trading at $1,778.17 per ounce.

Reporting by Xie Yu; Additional reporting by Ankur Banerjee; Editing by Edwina Gibbs and Edmund Klamann

Our Standards: The Thomson Reuters Trust Principles.

Read original article here

Business

Shares sobered by Fed warning, China acts on property

Leave a comment

  • Fed’s Waller plays down CPI as just one number
  • Beijing lays out property support, COVID steps
  • Biden to meet Xi at G20 meeting

SYDNEY/LONDON, Nov 14 (Reuters) – Share markets continued last week’s rally in more modest fashion on Monday after a top U.S. central banker warned investors against getting carried away over one inflation number, while Chinese stocks gained on aid for the country’s property sector.

A modest miss on U.S. inflation was enough to see two-year Treasury yields dive 33 basis points for the week and the dollar lose almost 4% – the fourth biggest weekly decline since the era of free-floating exchange rates began over 50 years ago.

However, the resulting easing in U.S. financial conditions was not entirely welcomed by the Federal Reserve, with Governor Christopher Waller saying on Sunday it would take a string of soft reports for the bank to take its foot off the brakes.

Waller added the markets were well ahead of themselves on just one inflation print, though he did concede the Fed could now start thinking about hiking at a slower pace.

Futures are wagering heavily on a half-point rate rise to 4.25-4.5% in December, and then a couple of quarter-point moves to a peak in the 4.75-5.0% range.

Two-year yields edged down to 4.39%, after diving as deep as 4.29% on Friday.

“The CPI downside surprise aligns with a broad range of indicators pointing to a downshift in global inflation that should encourage a moderation in the pace of monetary policy tightening at the Fed and elsewhere,” said Bruce Kasman, head of economic research at JPMorgan.

“This positive message needs be tempered by the recognition that downshift in inflation will be too little for central banks to declare mission-accomplished, and more tightening is likely on the way.”

The benchmark European STOXX index rose 0.37% (.STOXX), and MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) added 0.73%, after jumping 7.7% last week.

U.S. markets looked set to open lower, with S&P E-mini futures down 0.26% .

EYES ON CHINA

Dealers were also waiting to see if Chinese stocks could extend their big rally amid reports regulators have asked financial institutions to extend more support to stressed property developers. read more

China’s real estate index (.CSI000952) jumped 3.5% in response. Blue chips (.CSI300) rose 1%, helped by a slew of changes to China’s COVID curbs, even as the country reported more cases over the weekend. read more

“It’s hard to see how the case news is anything but negative from an economic standpoint, but it’s the symbolism of the movement, however small, in the zero COVID strategy that markets are happily latching onto,” said Ray Attrill, head of FX strategy at NAB.

The support for China’s property sector, which consumes a vast amount of metals, boosted copper towards a five-month high. Three-month copper on the London Metal Exchange (LME) rose 0.3% at $8,519 a tonne by 0725 GMT.

U.S. President Joe Biden will meet Chinese leader Xi Jinping in person on Monday for the first time since taking office, with U.S. concerns over Taiwan, Russia’s war in Ukraine and North Korea’s nuclear ambitions on top of his agenda.

The news on COVID rules had stoked a short-covering bounce in the yuan, which added to broad pressure on the dollar as yields dived. The yuan was set 1.4% firmer on Monday – the largest such move since 2005.

The dollar index moved down a fraction on Monday at 106.69 , still well short of last week’s 111.280 top.

The euro eased a touch to $1.0308 , after climbing 3.9% last week, while the dollar firmed to 139.56 yen following last week’s 5.4% drubbing.

The dollar lost almost as much to the Swiss franc , steered in part by warnings from the Swiss National Bank that it would use rates and currency purchases to tame inflation.

Sterling eased back to $1.1755 ahead of the British Chancellor’s Autumn Statement on Thursday, where he is expected to set out tax rises and spending cuts.

Crypto currencies remained under pressure as at least $1 billion of customer funds were reported to have vanished from collapsed crypto exchange FTX.

Bitcoin recovered 2.9% at $16,785 , having shed almost 22% last week.

Oil prices pared earlier gains and fell on Monday, after hopes of a boost in China demand were offset by the firmer U.S. dollar. Brent crude futures were down 32 cents, or 0.3%, to $95.67 a barrel by 0725 GMT after settling up 1.1% on Friday

Reporting by Wayne Cole and Lawrence White; Editing by Shri Navaratnam, Kenneth Maxwell, William Maclean

Our Standards: The Thomson Reuters Trust Principles.

Read original article here

Business

Asian shares fall ahead of U.S. CPI, crypto worries mount

Leave a comment

  • https://tmsnrt.rs/2zpUAr4
  • Dollar stays firm, crypto stokes spillover fears
  • European markets set to open lower
  • China mainland, Hong Kong shares battered by COVID case surge
  • Focus on U.S. inflation for signs of slowdown in Fed rate hike

SYDNEY, Nov 10 (Reuters) – Asian share markets pulled back on Thursday and the dollar held its overnight gains before the big test of a U.S. consumer inflation report, while market sentiment took a dive as the likely collapse of a major crypto exchange spooked investors.

With no final results available from the U.S. mid-term elections, investors were turning to upcoming inflation data later in the day, which is likely to show a slowing in both the monthly and yearly core numbers for October to 0.5% and 6.5%, respectively, according to a Reuters poll.

European markets are set to extend the cautious mood, with the pan-region Euro Stoxx 50 futures down 0.7%. However, U.S. S&P 500 futures edged up 0.2% while the Nasdaq futures rose 0.3%.

MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) fell 1.2%, dragged lower by a 1.0% drop in China’s bluechips (.CSI300) and a 1.8% retreat in Hong Kong’s Hang Seng index (.HSI).

Japan’s Nikkei (.N225) lost 1.0%.

China is again grappling with a COVID surge, with the southern metropolis of Guangzhou reporting thousands of cases. Apple Inc (AAPL.O) supplier Foxconn (2317.TW) plans to update its fourth-quarter outlook on Thursday, after strict COVID curbs remained in place at its major plant in China despite the lifting of a lockdown.

Elsewhere, focus remained squarely on inflation.

“The high probability is we see a number that is fairly in line with expectations – that is obviously harder to call, and we may need to wait for the guidance from Fed speakers in the session ahead to see how they interpret it,” said Chris Weston, head of research at brokerage Pepperstone.

Minneapolis Federal Reserve Bank President Neel Kashkari on Wednesday said it’s “entirely premature” to discuss any pivot away from the Fed’s current policy tightening.

A slew of Fed officials including Board Governor Christopher Waller, Bank of Philadelphia President Patrick Harker, Bank of Dallas President Lorie Logan will be speaking tonight.

The futures market currently showed investors believe the Fed could step down to a 50 basis point hike next month, while the target U.S. federal funds rate could peak around 5.1% by next June.

Overnight on Wall Street, shares ended lower as Republican gains in midterm elections appeared more modest than some had expected. Republicans were still favoured to win control of the House of Representatives but key races were too close to call.

In the crypto world, bitcoin rose 3.6% to $16,443 on Thursday, after tumbling for two straight sessions to its lowest level since late 2020.

Binance, the world’s biggest crypto exchange, said late on Wednesday that it had decided not to acquire smaller rival FTX, which has grappled with a severe liquidity crunch and faced bankruptcy without more capital.

“You can’t deny the growing correlation between bitcoin and risk assets. The FTX news is having an outsized effect on asset prices,” said Stephen Innes, managing partner at SPI Asset Management.

“Bitcoin spillovers are not negligible, and given how widely crypto coins are held, it could mean more forced liquidation of other assets to cover margin calls as long position investors were massively wrong-footed.”

The U.S. dollar on Thursday held onto most of its overnight gains against a basket of currencies.

The sterling gained 0.4% against the greenback to $1.1409, after tumbling 1.6% in the previous session.

U.S. Treasury yields were lower on Thursday.

The yield on benchmark 10-year notes eased 8 basis points to 4.0751% while the yield on two-year notes edged 3 basis points lower to 4.5963%.

In commodities, oil prices trimmed earlier losses on Thursday, after tumbling around 3% in the previous session on fears of demand from China and rising U.S. crude stocks.

U.S. crude oil futures was flat at 0.3% to $85.83 per barrel, while Brent crude futures stabilised at $92.71.

Gold was higher, with the spot price at $1,709.08 per ounce.

Reporting by Stella Qiu; Editing by Bradley Perrett and Sam Holmes

Our Standards: The Thomson Reuters Trust Principles.

Read original article here

Business

European stocks up as investors see signs Fed could slow rate rises

Leave a comment

LONDON, Oct 25 (Reuters) – European stocks rose in early trading on Tuesday, as investors took confidence from signs that the U.S. Federal Reserve could slow down its rate increases, although concern about China’s economy still weighed on Asian markets.

Asian equities struggled to make gains due to uncertainty over whether Xi Jinping’s new leadership team would prioritise economic growth. China’s onshore yuan finished the domestic session with its weakest close since late 2007 .

European stock indexes opened higher, with the STOXX 600 up 0.4% at 0809 GMT (.STOXX).

Register now for FREE unlimited access to Reuters.com

The MSCI world equity index, which tracks shares in 47 countries, was up 0.1% on the day (.MIWD00000PUS) and MSCI’s main European Index (.MSER) hit a five-week high, up 0.8% on the day (.MSER).

“The proximate cause appears to be some hope that the pace of central bank tightening may start to slow later this year and that’s giving some investors cause to be relieved,” said Hani Redha, a portfolio manager at Pinebridge Investments.

U.S. business activity contracted for a fourth straight month, data on Monday showed, suggesting that the Fed’s rate increases have softened the economy, which in turn raised hopes that the central bank could begin slowing the pace of the hikes.

The expected peak for Fed rates has edged down to around 4.93%, from above 5% early last week .

Economists polled by Reuters said that the central bank should not pause until inflation falls to around half its current level.

Some better-than-expected earnings results also supported European stock market sentiment, with Swiss bank UBS (UBSG.S) among those beating market expectations. But Europe’s largest bank, HSBC, reported a 42% slump in third quarter profit, prompting a 4% fall in its shares (.HSBA.L).

Tech giants Alphabet and Microsoft report earnings later in the session.

Pinebridge’s Redha said that earnings estimates have been edging lower in recent months but that the pace of this has been “fairly modest”.

“The potential relief that investors feel in terms of coming towards the end of the hiking cycle, that seems to dominate over the grinding lower of earnings estimates.”

The U.S. dollar index was a touch higher on the day, up 0.1% at 112.01 .

The euro slipped, down 0.1% at $0.98675 . The European Central Bank meets on Thursday and is set to raise rates by 75 basis points.

The British pound was up 0.2% at $1.1309 . It recovered from session lows and gilt yields fell sharply on Monday in a sign of investor relief when it was announced that former finance minister Rishi Sunak would be the next prime minister.

Euro zone government bond yields were down, with the benchmark German 10-year yield down 7 bps at 2.272% .

German business morale fell slightly in October but the data still beat analyst estimates.

The data “suggests that at least business sentiment is forming a trough”, said ING global head of macro Carsten Brzeski in a client note. “This, however, does not mean that any improvement in the economy is near.”

Oil prices were up, although gains were limited by fears about slowing growth in the United States and China.

Register now for FREE unlimited access to Reuters.com

Reporting by Elizabeth Howcroft

Our Standards: The Thomson Reuters Trust Principles.

Elizabeth Howcroft

Thomson Reuters

Reports on the intersection of finance and technology, including cryptocurrencies, NFTs, virtual worlds and the money driving “Web3”.

Read original article here

Business

Dollar shrugs off suspected yen intervention, Europe clings to Fed hopes

Leave a comment

  • Dollar buffeted vs yen by suspected BOJ intervention
  • European shares rise ahead of earnings-packed week
  • China GDP beats forecasts but retail sales disappoint
  • Pound gains as Sunak emerges as front-runner for PM

LONDON/SYDNEY, Oct 24 (Reuters) – The dollar weathered another suspected blast of Japanese intervention to rise against the yen on Monday, while European markets got a lift from hopes that U.S. interest rates could rise more slowly than previously thought.

The dollar roared to 149.70 yen in early trade before hastily retreating to 145.28 in a matter of minutes in what traders and analysts said appeared to be at the hands of the Bank of Japan. It was last down almost 1% at 149.24.

The Financial Times reported the BOJ may have sold at least $30 billion on Friday to try to protect the yen from yet more weakness, which has sharply lifted the cost of Japan’s imports, particularly for resources.

Register now for FREE unlimited access to Reuters.com

Japanese authorities again declined to confirm whether they had intervened, but the price action suggested they had.

Any action to support the yen runs counter to the BOJ’s commitment to controlling Japanese government borrowing costs and could increase the pressure on it to step back on yield curve control at its policy meeting this week.

Sterling, meanwhile, see-sawed in volatile trade on news Boris Johnson had dropped out of the running for British prime minister.

Former finance minister Rishi Sunak, who is the market’s preferred candidate, has emerged as the front-runner for the job, which could reduce some of the political uncertainty hanging over the pound.

The news initially saw sterling jump almost a cent to $1.1402, but it could not hold and was last trading at $1.1328 as investors waited for more clarity on the contest. The leadership could potentially be settled later on Monday if Sunak becomes the only candidate to secure the minimum number of MPs’ votes required to progress.

“The day-to-day is tricky. My favourite expression on all of it this morning is this is a time to be a poker player, not a chess player. It’s all about positioning and sentiment and understanding who you’re playing against,” Societe Generale strategist Kit Juckes said.

Equities mostly extended the bounce that began late in New York on Friday on talk the Federal Reserve was debating when to slow the pace of hikes and might signal a step back at its November meeting.

Markets are still priced for a rise of 75 basis points next month, but have scaled back bets on a matching move in December. The peak for rates has also edged down to around 4.87%, from above 5% early last week.

ECB, BoC SET TO HIKE

Stocks in Europe opened on an upbeat note, with the STOXX 600 up 0.7% on the day, ahead of a week of packed earnings, as 118 companies, including big guns like HSBC (HSBA.L), Unilever (ULVR.L) and TotalEnergies (TTEF.PA) are set to report.

Chinese blue chips (.CSI300) slid almost 3%, while the offshore yuan hit another record low against the dollar after Xi Jinping secured a precedent-breaking third leadership term, picking a top governing body stacked with loyalists. Xi is likely to stick to his zero-COVID policy that is damaging growth, analysts say.

Delayed data on gross domestic product(GDP) showed the Chinese economy grew 3.9% in the third quarter, above forecasts for 3.5%, but retail sales disappointed, with a rise of 2.5%.

Markets now await figures on U.S. GDP due on Thursday and core inflation measures the day after. The economy is forecast to have grown an annualised 2.1% in the third quarter, while the Atlanta Fed GDP Now indicator rose to 2.9% in the latest week, from 2.8%.

Sentiment will also be tested by some major earnings with Apple (AAPL.O), Microsoft (MSFT.O), Google-parent Alphabet (GOOGL.O) and Amazon (AMZN.O) all reporting.

The European Central Bank meets this week and is widely expected to raise its rates by 75 basis points, though it is less clear whether it will signal a further such move in December.

“Although we do not expect any ‘dovish’ policy signal, we maintain a bias towards a lower rate path than currently priced by markets,” said analysts at NatWest Markets in a note.

“We forecast +50bp in December and +25bp in early 2023 to a 2.25% peak,” they added. “There is more uncertainty around QT (quantitative tightening), where beginning sales in Q1 2023 could well be announced.”

The euro was off a fraction at $0.9835 , having briefly been as high as $0.9899 early in the session.

The Bank of Canada is also expected to tighten by 75 basis pointsat its meeting this week.

The possibility of a slowdown in U.S. rate increases helped bonds pare some of their recent heavy losses, with U.S. 10-year Treasury yields easing to 4.16% compared to a 15-year peak of 4.337% on Friday.

In commodity markets, gold was sidelined at $1,654 an ounce .

Oil prices surrendered early gains following soft data on Chinese demand. Brent retreated 42 cents to $93.08 a barrel, while U.S. crude fell 41 cents to $84.64.

Register now for FREE unlimited access to Reuters.com

Reporting by Wayne Cole; Editing by Jacqueline Wong, Christopher Cushing and Susan Fenton

Our Standards: The Thomson Reuters Trust Principles.

Read original article here

Business

Asia shares ease, major test looms for UK bonds

Leave a comment

  • https://tmsnrt.rs/2zpUAr4
  • Nikkei down 1.4%, S&P 500 edges up after slide
  • Focus on gilts as BoE buying ends, Truss future in doubt
  • Dollar near 149 yen, market wary of intervention

SYDNEY, Oct 17 (Reuters) – Asian share markets slipped on Monday following another drubbing for Wall Street as investors braced for a further drastic tightening in global financial conditions, with all the risks of recession that brings.

Concerns about financial stability added to the corrosive mix with all eyes on UK bonds, now that the Bank of England’s (BoE’s) emergency buying spree is over.

Prime Minister Liz Truss’ decision to fire her finance minister might help reassure investors, but her own fate is unclear with media reporting Tory lawmakers will try and replace her this week.

Register now for FREE unlimited access to Reuters.com

BoE Governor Andrew Bailey warned over the weekend that interest rates might now have to rise by more than thought just a couple of months ago.

“The BoE was doing emergency bond-buying that’s technically identical to QE with one hand, while furiously raising the policy rate with the other,” said analysts at ANZ in a note.

“Monday’s market action will provide a test, not only for the survival of Truss’ low-tax vision, but also her political future.”

Sterling was quoted up 0.4% at $1.1219 , but off the early high with trading sparse in Asia. FTSE futures fell 0.5%, and EUROSTOXX 50 futures 0.6%.

MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) eased 1.2% and back toward last week’s 2-1/2 year low.

Japan’s Nikkei (.N225) shed 1.4% and South Korea (.KS11) 0.1%. Chinese blue chips (.CSI300) dipped 0.4% ahead of GDP data due on Tuesday.

S&P 500 futures edged up 0.4% after Friday’s sharp retreat, while Nasdaq futures added 0.3%.

While the S&P is an eye-watering 25% off its peak, BofA economist Jared Woodard warned the slide was not over given the world was transitioning from two decades of 2% inflation to a time of something more like 5% inflation.

“$70 trillion of ‘new’ tech, growth, and government bond assets priced for a 2% world are vulnerable to these secular shifts as ‘old’ industries like energy and materials surge, reversing decades of under-investment,” he wrote in a note.

“Rotating out of 60/40 proxies and buying what is scarce – power, food, energy – is the best way for investors to diversify.”

INTERVENTION WATCH

A red-hot U.S. consumer price report and rising inflation expectations have markets fully expecting the Federal Reserve to hike rates by 75 basis points next month, and likely by the same again in December.

A host of Fed policymakers are speaking this week, so there will be plenty of opportunity for hawkish headlines. The earnings season also continues with Tesla Inc (TSLA.O), Netflix (NFLX.O) and Johnson & Johnson (JNJ.N) reporting, among others.

Goldman Sachs Group Inc (GS.N) also reports this week and the WSJ reported the investment bank plans to restructure its biggest businesses into three divisions.

In China, the Communist Party Congress is expected to grant a third term to President Xi Jinping, while there could be a reshuffle of top economic roles as incumbents are near retirement age or term-limits.

In currency markets, the dollar remains king as investors price in U.S. rates peaking around 5%.

The yen has been particularly hard hit as the Bank of Japan sticks to its super-easy policy, while authorities refrained from intervention last week even as the dollar sped past the 148.00 level to 32-year peaks.

Early Monday, the dollar was up at 148.73 yen and heading for the next target at 150.00.

The euro was holding at $0.9733 , having put in a steadier performance last week, while the U.S. dollar index eased a fraction to 113.20 .

The rise of the dollar and global bond yields has been a drag for gold, which was stuck at $1,648 an ounce .

Oil prices were trying to bounce, after sinking more than 6% last week as fears of a demand slowdown outweighed OPEC’s plans to cut output.

Brent firmed 64 cents to $92.27 a barrel, while U.S. crude rose 55 cents to $86.16 per barrel.

Register now for FREE unlimited access to Reuters.com

Reporting by Wayne Cole; Editing by Himani Sarkar, Ana Nicolaci da Costa and Muralikumar Anantharaman

Our Standards: The Thomson Reuters Trust Principles.

Read original article here

Business

Stocks ease as Ukraine attacks and rate outlook spark flight to havens

Leave a comment

  • MSCI global index drops for a fourth day
  • Russian bombings across Ukraine fuel nervousness
  • Markets braced for high core U.S. CPI, earnings season

LONDON, Oct 10 (Reuters) – Global shares dropped on Monday after Russian missiles pounded cities across Ukraine and as renewed concern about the economic outlook sent investors into safe-haven assets such as the dollar and bonds.

Any belief that the Federal Reserve will shift to a softer stance towards monetary policy was extinguished on Friday by data that showed US unemployment fell in September, pointing to a persistently tight labour market.

The dollar held steady against a basket of currencies, while a number of market-based measures of investor risk nervousness showed another increase.

Register now for FREE unlimited access to Reuters.com

The Russian missiles killed civilians and knocked out power and heat in cites across Ukraine in apparent revenge strikes after President Vladimir Putin declared a blast on Russia’s bridge to Crimea to be a terrorist attack. read more read more

“I had wondered if markets were looking at the situation in Ukraine and thinking this was moving us toward an end – which was what the first reaction was to the progress that the Ukrainian army had made in the summer. That reaction is no longer happening and this is clearly seen as just an increase in tension, rather than the end of anything,” Societe Generale’s head of currency strategy, Kit Juckes, said.

“We’ve got geopolitical tensions and we’re still on track towards tighter monetary policy in the States and the concern is still by the time they finished tightening, will they have tightened too much and leave the economy looking pretty vulnerable?,” Juckes added.

The MSCI All-World index (.MIWD00000PUS) was last 0.4% lower, down for a fourth day in a row. The pan-European STOXX 600 (.STOXX) fell 0.2%, having skimmed one-week lows, while the FTSE 100 (.FTSE) fell 0.4%.

S&P 500 futures fell 0.3%, while those on the Nasdaq lost 0.4%.

Wall Street sank on Friday after the upbeat payrolls report cemented expectations for another large rate hike. read more

Futures imply a more than 80% chance of rates rising by 75 basis points next month, while the European Central Bank (ECB) is expected to match that and the Bank of England to hike by at least 100 basis points. ,

CORE MEASURE

U.S. consumer inflation is expected to have moderated to an annual 8.1%, but the core measure is forecast to have accelerated to 6.5% from 6.3%. The U.S. CPI data is due on Thursday.

“Whether one number should be the basis for huge swings in markets, it seems inevitable that a notable miss on core on either side could bring about big moves in trading over the coming weeks, so stand by,” Deutsche Bank strategist Jim Reid said.

Minutes of the Fed’s last policy meeting will also be published this week and could offer a steer on rate-setters’ thinking about the likely path of monetary policy.

BONDS GAIN

Although U.S. inflation and the Fed’s response to it remain front and centre of investors’ minds, euro zone government bonds got a boost from the pickup in investor risk aversion.

German 10-year Bund yields , which serve as the region’s benchmark, were steady around 2.195%, while the more sensitive 2-year Schatz fell 7 bps to 1.795%.

Adding another note of caution was a 2% drop in Chinese blue-chip stocks (.CSI300) following a survey that showed the first contraction in services activity in four months. read more

Corporate earnings also kick off on Friday, with JPMorgan, Citi, Wells Fargo and Morgan Stanley reporting results.

The dollar index rose 0.2% to 113.06 , leaving the euro down 0.3% at $0.9707 and the yen flat at 145.465, a whisker away from the recent 24-year high of 145.90 that prompted Japanese intervention.

Sterling fell 0.2% to $1.1066 , after the Bank of England announced a surprise decision to shore up the gilt market ahead of the end of an emergency bond-buying programme on Friday and the government brought forward the publication of independent budget forecasts. [nL8N31B0VI] read more

Oil fell for the first time in a week, as investors took profit on last week’s 11% rally after a deal on supply reductions by OPEC+.

Brent fell 0.6% to $97.30 a barrel, while U.S. crude dropped 0.5% to $92.14 a barrel.

Register now for FREE unlimited access to Reuters.com

Additional reporting by Wayne Cole; Editing by Diane Craft, Ana Nicolaci da Costa, Ed Osmond and Andrew Heavens

Our Standards: The Thomson Reuters Trust Principles.

Read original article here

Business

Britain’s tax backdown bounces stocks and sterling

Leave a comment

  • Britain scraps small part of tax plan; markets relieved
  • Reserve Bank of Australia surprises with a small hike
  • High VIX; Credit Suisse stock slide point to nerves beneath

SYDNEY, Oct 4 (Reuters) – Asian stocks bounced on Tuesday after Britain scrapped bits of a controversial tax cut plan, tentatively improving global market sentiment and rallying bonds and the pound.

Australia’s central bank added to that sense of relief in markets, surprising investors by lifting interest rates by a smaller-than-expected 25 basis points, saying they had already risen substantially. .

That pushed the Aussie dollar down, lifted the S&P/ASX 200 index (.AXJO) by 3.6% and spurred benchmark 3-year bonds for their best day in 13 years.

Register now for FREE unlimited access to Reuters.com

In trade thinned by holidays in China and Hong Kong, MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) rose 1.7%, led by gains in Australia.

UK stocks seemed set for a bounce, with FTSE futures up 0.8%.

“It feels short term it’s a little bit oversold,” said Geoff Wilson, chief investment officer at Wilson Asset Management in Sydney.

“Is this the bottom? It’s nearly impossible to pick the bottom, but I don’t think so,” he said, referring broadly to markets.

Japan’s Nikkei (.N225) rose 2.8%. Sterling drifted up to an almost two-week high of $1.1343, making for a bounce now of almost 10% from a record low hit last week after plans for unfunded tax cuts unleashed chaos on British assets.

“The about-face … will not have a huge impact on the overall UK fiscal situation in our view,” said NatWest Markets’ head of economics and markets strategy John Briggs.

“(But) investors took it as a signal that the UK government could and is at least partially willing to walk back from its intentions that so disrupted markets over the past week.”

Investors also took heart from stability at the long end of the gilt market, even though emergency purchases from the Bank of England were only relatively modest.

S&P 500 futures rose 1%, following a 2.6% bounce for the index (.SPX) overnight.

British Finance Minister Kwasi Kwarteng released a statement reversing planned tax cuts for top earners. It makes up only 2 billion out of a planned 45 billion pounds of unfunded tax cuts that had sent the gilt market into a tailspin last week.

South Korea’s Kospi (.KS11) bounced 2.5%, lifting away from last week’s two-year low, despite North Korea’s firing a missile over Japan for the first time in five years.

STERLING BOUNCE

The recovery for sterling has settled some nerves in the currency market, though the persistent strength of the dollar still holds a lot of major currencies near milestone lows and has authorities throughout Asia on edge.

Japan’s yen hit 145 to the dollar on Monday – a level that prompted official intervention last week – and was last at 144.71. The euro was at $0.9838, about three cents stronger than last week’s 20-year trough.

Chinese authorities have rolled out manoeuvres to support the yuan ranging from unusually strong signals to the market to administrative measures that raise the cost of shorting it.

“More volatility is almost certainly assured as FX markets re-focus on U.S. recession risks, which continue to build,” said ANZ senior economist Miles Workman, with U.S. jobs data on Friday the next major data point on the horizon.

The Australian dollar fell to $0.6451 after the central bank meeting. The Reserve Bank of New Zealand meets on Wednesday and the kiwi held just above $0.57.

Treasuries rallied in sympathy with gilts overnight and the benchmark 10-year yield dropped 15 basis points. It was steady in Asia at 3.62%, having briefly poked above 4% last week.

Other indicators of market stress abound. The CBOE Volatility Index (.VIX) remains elevated and above 30. Shares (CSGN.S) and bonds of Credit Suisse hit record lows on Monday as worry about the bank’s restructuring plans swept markets.

Oil held overnight gains on news of possible production cuts, and Brent futures were last up 43 cents to $89.29 a barrel.

Register now for FREE unlimited access to Reuters.com

Editing by Sam Holmes

Our Standards: The Thomson Reuters Trust Principles.

Read original article here

Business

Q4 off to shaky start as stocks stumble, but oil jumps

Leave a comment

LONDON, Oct 3 (Reuters) – The final quarter of the year got off to a shaky start on Monday, with world stocks languishing at their lowest levels since late 2020 – when the global economy was still reeling from the COVID-19 pandemic.

Oil prices jumped more than 4% as the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, said it would consider reducing output, while sterling rallied after the British government said it would reverse a controversial tax cut that had rocked UK markets.

But sentiment across markets remained frail given worries that aggressive interest rate hikes from the U.S. Federal Reserve and others raise global recession risks.

Register now for FREE unlimited access to Reuters.com

European equity markets were a sea of red, with the STOXX 600 index down 0.4%, pulling back from earlier losses of 1.4% (.STOXX). Shares in beleaguered Swiss bank Credit Suisse (CSGN.S) fell around 10% in early trading, reflecting market concern about the group as it finalises a restructuring programme due to be announced on Oct. 27.

Asian stocks mostly fell in holiday-thinned trade although Japanese markets found support on strong energy and semiconductor shares (.N225).

U.S. stock futures were mixed and MSCI’s world equity index (.MIWD00000PUS) fell to its lowest level since late 2020.

News of the British government’s tax U-turn didn’t appear to lift broader sentiment but probably helps to calm market worries about fiscal excess, said Kallum Pickering, senior economist at Berenberg Bank in London.

“Markets seem to have lowered their expectations for the BoE bank rate while gilt yields have fallen further from their recent highs. Less tight financial conditions may ease the near-term shock on economic performance,” said Pickering.

MSCI’s 47-country world stocks index rallied 10% between July and mid-August. But aggressive Fed rate hikes soon came swinging back in, and that index has plunged 15% since, leaving it down 25% and $18 trillion so far this year.

Central banks in Australia and New Zealand meet this week and are expected to deliver further rate increases.

Oil prices rallied on reports what OPEC+ will this week consider cutting output by more than 1 million barrels a day, for its biggest reduction since the pandemic, in a bid to support the market. Brent crude futures rose more than 4% to almost $89 a barrel and U.S. West Texas Intermediate crude was up 4.5%, at $83 a barrel.

UK RESPITE

Britain’s battered pound was up around 0.4% at $1.12085 and its government bond yields fell, pushing their price up, following the UK policy reversal , .

“From a market perspective, it is a good step in the right direction. It will take time for markets to buy the message but it should ease the pressure,” said Jan Von Gerich, chief analyst at Nordea. “Questions still remain and sterling will likely remain under pressure.”

London’s FTSE-100 stock index was down 0.5% (.FTSE), falling in line with other markets.

Japan’s yen meanwhile briefly fell as low as 145.4 to the dollar even as Japan’s finance minister, Shunichi Suzuki, said that the government would take “decisive steps” to prevent sharp currency moves.

It was the first time the yen has fallen through the 145 barrier since Sept. 22, when Japan intervened to prop up its currency for the first time since 1998.

Trade across Asia was generally subdued. South Korea had a national holiday and China entered its “Golden Week” break on Monday. Hong Kong is closed for a public holiday on Tuesday.

Gold was just 0.4% firmer to $1,665.79 an ounce .

Register now for FREE unlimited access to Reuters.com

Reporting by Dhara Ranasinghe, additional reporting by Sam Byford in TOKYO; Editing by Hugh Lawson and David Evans

Our Standards: The Thomson Reuters Trust Principles.

Read original article here

Business

World stocks edge above Nov 2020 lows, sterling recovers some ground

Leave a comment

Register now for FREE unlimited access to Reuters.com

  • Dollar eases from 20-year highs reached Monday
  • German 10-year bond yields hit near 11-year highs
  • Oil rallies from Monday’s nine-month lows

LONDON/HONG KONG, Sept 27 (Reuters) – World stocks picked up from 21-month lows on Tuesday and sterling rallied after hitting record lows versus the dollar a day earlier on UK plans for tax cuts, as market slides ran out of steam.

U.S. S&P futures bounced 0.94% after Wall Street fell deeper into a bear market on Monday, benchmark 10-year Treasury yields dipped from the previous session’s 12-year high and the dollar eased from 20-year highs on a basket of currencies.

Markets remain nervous, however, after U.S. Federal Reserve officials on Monday said their priority remained controlling domestic inflation. read more

Register now for FREE unlimited access to Reuters.com

“U.S. rate expectations have increased fairly significantly,” said Andrew Hardy, investment manager at Momentum Global Investment Management, though he added that “there’s a huge amount of bearishness already priced into markets”.

Markets are pricing in a 76% probability of a further 75 basis point move at the next Federal Reserve meeting in November.

Central bank speakers on Tuesday include Fed chair Jerome Powell and ECB president Christine Lagarde.

The MSCI world equity index (.MIWD00000PUS) rose 0.29% after hitting its lowest since Nov 2020 on Monday. European stocks gained more than 1% and Britain’s FTSE (.FTSE) rose 0.6%.

Sterling collapsed to a record low $1.0327 on Monday as the government tax cut plans announced on Friday came on top of huge energy subsidies.

The British currency recovered 4.6% from that low to $1.0801 on Tuesday.

After the pound’s plunge, the Bank of England said it would not hesitate to change interest rates and was monitoring markets “very closely”. read more

Bank of England Chief Economist Huw Pill will speak on a panel at 1100 GMT.

A lack of confidence in the government’s strategy and its funding also hammered gilts on Friday and again on Monday.

The yield on five-year gilts rose as much as 100 basis points in two trading days, though it slipped off the highs on Tuesday.

“(It) is definitely something that’s unfolding…probably we’re only at a certain initial stage of seeing how the market digests that kind of information,” said Yuting Shao, macro strategist at State Street Global Markets.

“Of course the tax cut plan itself was really aimed to stimulate growth, reduce household burdens, but it does raise the question of what the implications are in terms of the monetary policies.”

Spillover from Britain kept other assets on edge.

Bond selling in Japan pushed yields up to the Bank of Japan’s ceiling and prompted more unscheduled buying from the central bank in response.

The German 10-year bond yield briefly hit a new nearly 11-year high of 2.142%.

Ten-year U.S. bond yields dropped 3.2 bps after reaching a high on Monday of 3.933%.

MSCI’s broadest index of Asia shares outside Japan (.MIAPJ0000PUS) hit a fresh two-year low before bouncing 0.5%. Japan’s Nikkei (.N225) was up 0.5%.

The dollar index eased 0.13% to 113.72, after touching 114.58 on Monday, its strongest since May 2002.

The European single currency was up 0.24% on the day at $0.9629 after hitting a 20-year low a day ago.

Oil rose more than 1% after plunging to nine-month lows a day earlier, amid indications that producer alliance OPEC+ may enact output cuts to avoid a further collapse in prices.

U.S. crude gained 1.4% to $77.70 a barrel. Brent crude rose 1.27% to $85.20 per barrel.

Gold , which hit a 2-1/2 year low on Monday, rose 0.8% to $1,634 an ounce.

Bitcoin broke above $20,000 for the first time in about a week, as cryptocurrencies bounced, along with other risk-sensitive assets. read more

Register now for FREE unlimited access to Reuters.com

Reporting by Xie Yu; Editing by Edmund Klamann, Muralikumar Anantharaman and Raissa Kasolowsky

Our Standards: The Thomson Reuters Trust Principles.

Read original article here