2025-08-07 18:39

European shares supported by Ukraine ceasefire expectations Sterling rises after "hawkish" BoE rate cut NEW YORK/LONDON, Aug 7 (Reuters) - European stocks closed at a one-week high on strong financial stocks and hopes of a Ukraine ceasefire, while global equities and major Wall Street indexes turned lower on Thursday. Oil price turned lower after the Kremlin said Russian President Vladimir Putin would meet with U.S. President Donald Trump. Sign up here. Prices of gold, seen as a safe haven in volatile times, extended gains to a two-week high. Wall Street was down following a report that Federal Reserve Governor Christopher Waller was Trump's top candidate to become the central bank chair, raising concerns over the Federal Reserve's independence. MSCI's gauge of stocks across the globe (.MIWD00000PUS) , opens new tab fell 0.19 point, or 0.02%, to 933.04. The Dow Jones Industrial Average (.DJI) , opens new tab fell 0.77% to 43,851.17, the S&P 500 (.SPX) , opens new tab retreated 0.47% to 6,315.33, and the Nasdaq Composite (.IXIC) , opens new tab gave up 0.30% to 21,104.91. "[There] are persistent risks to the downside. Downside surprises in official data are increasing," Capital.com analyst Kyle Rodda wrote in a note. "Valuations are also stretched, with forward price to earnings hovering around the highest in four years. And trade uncertainty persists." Higher U.S. tariffs on imports from dozens of countries kicked in on Thursday, raising the average U.S. import duty to the highest in a century. European shares logged their biggest daily rise in over two weeks on Thursday, boosted by financial stocks as investors weighed mixed corporate earnings and U.S. tariffs. The pan-European STOXX 600 index (.STOXX) , opens new tab closed at a one-week high. Europe's FTSEurofirst 300 index (.FTEU3) , opens new tab rose 0.93%. Plans for a meeting between Trump and Putin over the war in Ukraine also helped sentiment in European equities and underpinned the euro. A ceasefire "would be an extra positive," said Emmanuel Cau, Barclays head of European equity strategy. The Bank of England cut interest rates, but four of its nine policymakers, worried about inflation, voted to keep rates unchanged. The split vote suggested the BoE's run of rate cuts might be nearing an end. Sterling strengthened 0.47% to $1.3416. "The vote split is clearly a lot more hawkish than I was expecting," said Dominic Bunning, head of G10 FX strategy at Nomura. Japanese shares earlier hit a record high. MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) , opens new tab closed up 1.03%, as Japan's Nikkei (.N225) , opens new tab gained 0.65%. Taiwan's stock benchmark (.TWII) , opens new tab jumped as much as 2.6% to a more than one-year peak. Shares in chipmaker TSMC (2330.TW) , opens new tab, which this year announced additional investment in its U.S. production facilities and so is expected to be relatively unscathed by the U.S. tariff on imported chips, soared to a record high. The U.S. dollar gained 0.12% against other currencies , with the euro down 0.21% at $1.1634. The yield on benchmark U.S. 10-year notes rose 1.4 basis points to 4.246%. In commodities, spot gold rose 0.68% to $3,391.39 an ounce. Global oil prices wiped out earlier gains, with Brent crude futures down 0.45% at $66.59 per barrel and U.S. crude 0.51% lower at $64.02. https://www.reuters.com/world/china/global-markets-wrapup-7-graphic-2025-08-07/

2025-08-07 18:34

Too soon to commit to rate cut despite weak jobs data Inflation is expected to rise Can't rule out persistent tariff impact on prices WASHINGTON, Aug 7 (Reuters) - Risks to the job market have increased, but it remains too soon to commit to interest rate cuts before the next meeting of the U.S. Federal Reserve with key data still to come and inflation still expected to rise in coming months, Atlanta Fed President Raphael Bostic said on Thursday. Bostic, in comments to a Florida business group, said he still felt a single quarter percentage point rate cut was likely all that will be appropriate this year, but "we're actually going to get a lot of data around inflation, around what's happening in terms of employment, that will allow me to think about...the relative balance of risks between inflation and employment. The employment number did say that the risk on the employment side is much higher than it had been...I will definitely be looking carefully." Sign up here. The Fed next meets on September 16-17 and is widely expected to reduce the benchmark policy rate by a quarter of a point after holding it steady in the current 4.25% to 4.5% range for the last five meetings. President Donald Trump has insisted on deep and immediate rate reductions. Employment growth slowed and the unemployment rate rose in July, and new data from the Bureau of Labor Statistics showed a large downgrade to prior months' job gains, a development that led Trump to fire the head of the agency. Bostic said the size of the revisions had led him to rethink his view of the risks facing the economy, but that his concerns about inflation - and the uncertainty about coming tariff impacts - left his policy view unchanged for now. He said it may take until mid-2026 before businesses have fully responded to changes in tariffs, leaving risks to inflation unresolved. "My outlook for the economy is for it to continue to slow," Bostic said, but the issue of whether tariffs will cause only a one-time round of price hikes, or lead to more persistent price pressures, "is perhaps the most important question we have today." Some on the Fed, and most notably Governor Christopher Waller, a contender to replace current Fed Chair Jerome Powell, have said they don't see tariffs leading to steady price increases and argue that rates could begin to fall. Waller dissented at the last meeting in favor of a rate cut. Bostic said he was still concerned the tariff debate could reset public expectations in a way that boosts prices, and also noted that if tariffs do begin to reshape global supply chains away from low-cost producers like China, as the administration says it hopes, it could lead to structurally higher inflation. "Does the textbook model fit today's environment?" Bostic said, referring to economic models that show tariffs acting like a tax to change prices once, but not persistently. "I think there are reasons that are pretty compelling that suggest we should be somewhat skeptical about that." Still, he said, upcoming data will shape the near-term policy outlook. The Fed will receive new data on consumer prices next week, updates on other inflation measures later in the month, and a jobs report for August before the next policy meeting. https://www.reuters.com/business/bostic-labor-market-risks-rising-lot-data-come-before-september-meeting-2025-08-07/

2025-08-07 17:34

SAO PAULO, Aug 7 (Reuters) - Brazil's auto exports are set to grow much more than previously expected in 2025, automakers' association Anfavea said on Thursday, crediting strong demand from neighboring Argentina for the upward revision to its forecast. The higher exports should help the industry offset the weaker than previously expected local sales, as high interest rates and uncertainties linked to U.S. tariffs weigh on the Brazilian market. Sign up here. Anfavea now sees auto shipments from Latin America's largest economy jumping 38.4% year-on-year to 552,000 units, up from a previous estimate of a 7.5% increase to 428,000 vehicles. The change was "mainly driven by the Argentine market," Anfavea head Igor Calvet told reporters, as data showed that shipments to Brazil's top auto export destination more than doubled so far this year. Between January and July, according to the association, exports to Argentina increased 156.5% year-on-year to 183,905 units, lifting the nation's share of Brazil's auto exports to 58.9%, from 35.1% in 2024. Argentina and Brazil are part of South America's Mercosur trade bloc. Argentine President Javier Milei has implemented austerity measures in the country amid a crisis marked by steep inflation. Other key destinations for Brazilian auto exports include Colombia, Chile, Uruguay and Mexico, although the latter two have seen a decline in shipments in the first seven months of the year. Anfavea also revised its estimate for Brazil's auto sales in 2025. It now forecasts a 5% year-on-year increase to 2.765 million units, down from a previous forecast of 6.3% growth. It blamed the revision on high local interest rates. Brazil's benchmark rate currently stands at 15%, the highest in nearly two decades. Anfavea also cited economic uncertainties related to the trade war triggered by U.S. President Donald Trump. "There is significant uncertainty regarding what will happen to the truck market in light of the U.S. import tariffs," Calvet said. "Around 60% to 70% of Brazil's products are transported by road, and these tariffs have an indirect impact on vehicle registrations in that segment," he noted, as demand for transportation would drop if fewer products are shipped. Anfavea kept its forecast for Brazil's 2025 auto production unchanged at a 7.8% increase to 2.749 million units. https://www.reuters.com/business/autos-transportation/brazil-auto-exports-jump-driven-by-argentina-tariffs-affect-local-sales-2025-08-07/

2025-08-07 16:24

Waller met with Trump team, has not met with president: Bloomberg News Trump has demanded lower rates to reduce government borrowing costs Waller supports lower rates to help labor market Aug 7 (Reuters) - Federal Reserve Governor Christopher Waller is emerging as a top candidate to be the central bank's next chair, Bloomberg News reported on Thursday, citing people familiar with the matter. Waller has met with members of President Donald Trump's team, who are impressed with him, though he has not met with the president, Bloomberg News reported. A Fed spokesperson had no comment. Sign up here. "President Trump will continue to nominate the most competent and experienced individuals to deliver on his pledge to Make America Wealthy Again," White House spokesperson Kush Desai said. "Unless it comes from President Trump himself, however, any discussion about personnel decisions should be regarded as pure speculation." Trump has repeatedly criticized Fed Chair Jerome Powell for not cutting interest rates, and while he has backed off threats to try to oust Powell before his term ends on May 15, has accelerated the search for a replacement. Trump's pick will be closely scrutinized for a perceived ability to carry out monetary policy without ceding to political pressure, a quality that economists say is the bedrock of any central bank's inflation-fighting capabilities and what underpins the financial stability of the U.S. economy. Powell has not said if he would break with tradition and stay on as Fed governor after his chair term ends, though analysts speculate that if he felt the Fed's independence was under threat he would do so to deny Trump the chance to fill another open Fed seat. Waller, a PhD economist whose first speech after becoming Fed governor was about Fed independence, could allay those concerns. Waller wanted an interest-rate cut at the Fed's July meeting, and dissented along with fellow Trump appointee Fed Vice Chair Michelle Bowman when the majority decided to leave short-term borrowing costs unchanged. While Trump has called for lower rates in order to reduce the cost of government borrowing, Waller has built his case for lower rates on the argument that tariffs won't boost inflation and that a slowing labor market needs the support of easier policy. He has rejected the idea that rate-setting should have anything to do with making financing cheaper for the U.S. Treasury. White House economic advisor Kevin Hassett and former Fed Governor Kevin Warsh, both of whom have also expressed support for cutting interest rates, remain under consideration for the Fed chair job as well, Bloomberg News said. Trump on Wednesday said both men and an unnamed third person are candidates to fill a soon-to-be-open seat on the Fed board vacated by Governor Adriana Kugler, whose unexpired term runs through January. https://www.reuters.com/world/us/waller-is-favorite-fed-chair-among-trump-team-bloomberg-news-reports-2025-08-07/

2025-08-07 15:38

BoE says QT has probably raised 10-year gilt yields by 15-25 bps Last year BoE estimated 10-20 bp impact from QT BoE cutting bond holdings at annual pace of 100 billion pounds Bond market analysts expect BoE to slow QT next month LONDON, Aug 7 (Reuters) - The Bank of England said on Thursday it estimates that its programme to cut its bond holdings may have added as much as a quarter of a percentage point to the cost of 10-year British government borrowing, slightly more than it thought a year ago. Britain's central bank bought 875 billion pounds ($1.17 trillion) of gilts between 2009 and 2021 to support the economy through successive crises. It has reduced that debt pile by more than 300 billion pounds since 2022, through a mix of bond sales and allowing existing bonds to mature. Sign up here. Each August, the BoE assesses the impact of the programme over the past year, before its Monetary Policy Committee in September sets the pace at which bond holdings should fall over the following 12 months. Since October 2024 the BoE has reduced its holdings by 100 billion pounds - largely due to 87 billion pounds of gilts which matured. Market participants polled by the BoE earlier this year expected the stockpile to drop by 75 billion pounds in the 12 months from October 2025. In a report published after its August MPC meeting, the BoE revised up its estimate of the total impact of its quantitative tightening programme on 10-year gilt yields to 0.15-0.25 percentage points from 0.1-0.2 percentage points a year ago. This reflected the extra QT over the past year, it said. 'GRADUAL' SALES BoE Deputy Governor Dave Ramsden said at a press conference that the central bank intended to stick with its existing approach to QT, which included conducting gilt sales in a "relatively gradual and predictable manner". But he said it was too soon to give more detailed guidance on the future pace of QT. Market analysts at U.S. bank Citi said the report and Ramsden's comments made them more sure in their view that the BoE would cut the annual pace of QT to 75 billion pounds next month, and had led to modest price gains for longer-dated gilts on expectations of fewer sales. "Prudence alone suggests a slower pace, with either a subtle shift shorter by adjusting the longer maturity buckets to 7-15 years and 15 years-plus or just ending long sales completely," they said. Ten-year gilt yields have risen by about 3.25 percentage points since the start of QT in February 2022 and by 0.55 percentage points over the past year. Thirty-year gilt yields have risen more sharply, however, up by nearly a full percentage point over the last 12 months, and some economists think the BoE could skew its sales away from these gilts, or even stop them entirely. "We are very cognisant of developments in gilt markets, particularly at the long end. We have seen that spread between 30-year and 10-year widen," Ramsden said, but added that other bond markets had seen similar moves. The BoE's assessment noted that sales of long-dated gilts could have a bigger impact on liquidity due to reduced demand in the market from pension funds. "These same shifts in the gilt market could pose a risk that QT has a greater impact on market functioning than previously," it said. ($1 = 0.7454 pounds) https://www.reuters.com/world/uk/bank-england-sees-bigger-qt-impact-gilt-yields-2025-08-07/

2025-08-07 15:15

Stock pickers up 7.8% in 2025 Quants recover from record monthly loss Crowded trades drain gains LONDON/NEW YORK, Aug 8 (Reuters) - Hedge fund returns climbed in July as many were lifted by rising stock markets that hit record highs, though others were caught in turbulence sparked by U.S. trade uncertainty, according to a Goldman Sachs report and sources familiar with the funds. Hedge fund stockpickers returned almost 1.5% in July and are up roughly 7.8% for the year so far, said Goldman Sachs in a note to clients on Monday seen by Reuters. Sign up here. Systematic hedge funds trading stocks were on track to deliver their worst monthly performance on record before rebounding after July 25 to claw back half of their losses, finishing with a negative 2% return, said Goldman. These funds were up 10% for the year so far, however, added the bank. While stockpickers benefited by piling into already crowded trades, hedge funds using algorithms to create systematic trading strategies were hurt by busy trades, said Goldman. The S&P 500 (.SPX) , opens new tab hit record highs during July, but only returned 1.38%. The biggest multi-strategy funds posted muted returns, including Schonfeld Strategic Advisors' flagship fund Strategic Partners, which was down 0.3% in July and is now up 5.8% for 2025, according to a source familiar with the matter. Schonfeld's Fundamental Equity fund gained 1.4% last month and was up 7.1% in the year, the source added. The $76.9 billion British hedge fund Marshall Wace returned a negative 0.2% in its Market Neutral TOPS fund, bringing its half-year performance to roughly 11%. Its Eureka fund returned 1.6% in July and is up 6.1% for 2025 so far, said another source familiar with the fund's results. *result as of Aug 4 https://www.reuters.com/markets/wealth/how-hedge-funds-performed-turbulent-july-2025-06-03/