2025-01-08 05:27

Dec Fed minutes show uncertainty about Trump policies to cloud economic outlook US nonfarm payrolls report due on Friday Fed's Waller: More cuts likely though timing depends on inflation progress Jan 8 (Reuters) - Gold prices hit a near four-week high on Wednesday after a weaker-than-expected private employment report for December provided reassurance for some in the market the U.S. Federal Reserve may be less cautious about easing rates this year. Spot gold rose 0.3% to $2,657.38 per ounce, as of 02:15 p.m. ET (1915 GMT) and hit its highest since Dec. 13. U.S. gold futures settled 0.3% higher at $2,672.40. Weaker private payrolls "is contributing to gold's move, because ultimately, weaker employment numbers imply that the economy has been weaker than many had expected," said Bart Melek, head of commodity strategies at TD Securities. The ADP National Employment report showed the U.S. economy added 122,000 jobs in the private sector last month, compared with economists' estimate of a rise of 140,000. A separate Labor Department report showed jobless claims stood at 201,000 in the previous week, lower than estimates of 218,000. "The bigger factor will be U.S. nonfarm payrolls on Friday, the market is expecting a change of 163 (thousand); anything significantly above that will be negative for gold," Melek said. Traders are on edge ahead of Friday's key U.S. labor data, due at 08:30 a.m. ET, and Donald Trump's Jan. 20 inauguration, with expectations of a flurry of policy moves marking the start of his second presidency. Minutes from the Federal Reserve's Dec. 17-18 meeting revealed officials expect inflation to ease this year but acknowledged the risk of stubborn price pressures, particularly as they assess the potential impact of Trump's policies. Trump's proposed tariffs could stoke U.S. inflation, complicating the Fed's ability to cut rates and potentially weighing on gold prices. However, Fed governor Christopher Waller said inflation should continue to fall in 2025 and allow the central bank to further reduce interest rates, though at an uncertain pace. Bullion is considered an inflationary hedge, but high rates reduce the non-yielding asset's allure. Spot silver added 0.1% to $30.03 per ounce, platinum gained 0.2% to $952.76, palladium lost 0.1% to $925.05. Sign up here. https://www.reuters.com/markets/commodities/gold-inches-lower-us-yields-dollar-rise-strong-data-2025-01-08/

2025-01-08 05:22

India's 2024 power output growth tapers on economic slowdown Coal-fired power growth slows, share in power mix dips Renewables dependence at record despite fall in wind output SINGAPORE, Jan 8 (Reuters) - India's electricity generation grew at its slowest pace in 2024 since the COVID-19 pandemic, an analysis of federal grid regulator data showed, hit by a slowdown in the world's fastest growing major economy. Power output rose 5.8% annually to 1,824.13 billion kilowatt-hours (kWh), an analysis of daily load despatch data from federal grid regulator Grid-India showed. Growth in power generation averaged 2.3% in the year's second half, nearly a quarter of the first half's rise of 9.6%, the data showed. The slackening electricity generation was in line with a softening economy, which grew at the slowest pace in nearly two years during the quarter that ended on Sept. 30. The slowdown has not shown signs of easing significantly, with India's manufacturing activity growing in December at its weakest pace , opens new tab for the year, amid weaker demand. However, analysts expect a pickup in industrial activity and residential power use stemming from adverse weather to drive growth of 6% to 7% in electricity use in 2025. "Demand has already picked up in December, with mercury levels dropping and increased usage of heating systems," said Sooraj Narayan, head of Asia-Pacific power modelling at consultancy Wood Mackenzie. "Combined with increased industrial production activities, we expect the demand growth rate to be higher in 2025." Slowing electricity demand growth and a rise in the share of renewables to a record 12.1% of power generation helped the world's third-largest emitter of greenhouse gas snap a three-year streak of gains in the share of coal. The polluting fuel's share in India's power mix fell to 74.4% in 2024, from 75% in 2023. But the year also saw tepid growth in the renewables sector, with growth of 18.4% in total solar output its slowest since India made international commitments to fight climate change in 2015. Annual wind power output fell for the first time since 2020, the data showed. Output from hydropower, India's second-largest electricity source after coal, rose 4% in 2024, recovering from a plunge of 13.7% in 2023, but its share in total output fell further to 8.6%. In 2025, analysts expect both the share of coal and renewables to rise at the expense of natural gas-fired power, which rose 17.3% last year. "We see a declining share of gas in the generation mix this year due to our forecast of higher year-over-year gas prices," said Kesher Sumeet, senior LNG analyst at Energy Aspects. Sign up here. https://www.reuters.com/business/energy/indias-2024-power-output-growth-is-slowest-since-pandemic-data-shows-2025-01-08/

2025-01-08 05:18

JAKARTA, Jan 8 (Reuters) - Indonesia is encouraging domestic cattle ranchers to import breeding cows, targeting 400,000 head in 2025, to supply meat and milk for the government's free school meals programme, the agriculture ministry said on Wednesday. Indonesia's programme to give free meals to children and pregnant women began this week with 570,000 meals distributed to schools around the country. This will be scaled up, the government has said, with the target of feeding more than 80 million children and expectant mothers, with an estimated total cost of $28 billion. Deputy Agriculture Minister Sudaryono said in a statement that out of the 400,000 cows he hoped ranchers would import this year, half should be dairy cows. In the next five years, Jakarta is targeting to import 2 million breeding cows, so that over time, demand for beef and milk for the school meals programme could be met with local supply, Sudaryono, who goes by one name, said. The ministry did not say what incentive the government would offer ranchers for the imports. Indonesia typically imports cattle from Australia and its top source of milk is New Zealand. Authorities have said it was looking into allowing cattle imports from Brazil. Sign up here. https://www.reuters.com/world/asia-pacific/indonesian-government-tells-ranchers-import-cattle-school-meals-programme-2025-01-08/

2025-01-08 05:03

LONDON, Jan 8 (Reuters) - From China to Europe, Canada to Mexico, world markets are already reeling from Donald Trump's promise to jack up tariffs when he becomes U.S. president in less than two weeks. Trump has pledged tariffs of as much as 10% on global imports and 60% on Chinese goods, plus a 25% import surcharge on Canadian and Mexican products, duties that trade experts say would upend trade flows, raise costs and draw retaliation. The scale and scope remains to be seen, but the road ahead is bumpy. Here's a look at some markets in focus right now. 1/ FRAGILE: CHINA "China is likely to be the primary target of the Trump trade wars 2.0," say Goldman Sachs. Investors are already getting ahead, forcing the country's stock exchanges and central bank to defend a tumbling yuan and stocks. China's tightly controlled currency is at its weakest in 16 months, with the dollar trading decisively above the symbolic 7.3 yuan milestone which authorities had defended. Barclays sees the yuan at 7.5 per dollar by end-2025, and sliding to 8.4 in a scenario in which the U.S. imposes 60% tariffs. Even without tariffs, the currency has been hurt by a weak economy pushing down Chinese government bond yields -- widening the gap with elevated U.S. Treasury yields. Analysts expect China to let the yuan weaken further to help exporters manage the impact of tariffs, but gradually. A sudden plunge would bring lurking fears of capital outflows to the fore, and jolt confidence, already bruised after stocks just saw their biggest weekly fall in two years. Investors in other major Asian exporters such as Vietnam and Malaysia are also nervous. 2/ EURO'S TOXIC MIX The euro has slid over 5% since the U.S. election, the most among major currencies, to two-year lows around $1.03. JPMorgan and Rabobank reckon the single currency could fall to the key $1 mark this year, as tariff uncertainty weighs. The U.S. is the European Union's most important trading partner, with $1.7 trillion in two-way goods and services trade. Markets anticipate 100 basis points of European Central Bank rate cuts this year to bolster a lackluster economy. But traders, speculating that tariffs could boost U.S. inflation, anticipate just 40 bps of Fed rate cuts, enhancing the dollar's appeal over the euro. A weakening Chinese economy also hurts Europe. Tariffs hitting China and the EU at the same time could be a "very toxic mix for the euro", said ING currency strategist Francesco Pesole. 3/ CAR TROUBLE In Europe, auto stocks are also particularly sensitive to tariff-headlines. On Monday, a basket of auto names (.SXAP) , opens new tab briefly shot up almost 5% on a Washington Post report that Trump aides are exploring import duties only for critical imports but then fell as Trump denied the article. The swings highlight investors' touchiness on an already-depressed sector that has seen its shares shed a quarter of their value since an April 2024 peak and their relative valuations plunge. Barclays' head of European equity strategy Emmanuel Cau said autos are among the trade-exposed, consumer sectors he is watching. Others include staples, luxury goods and industrials. A Barclays basket of the most tariff-exposed European stocks is down about 20%-25% relative to the main market in the past six months. Euro zone economic weakness could also prolong European equities' underperformance. The STOXX 600 (.STOXX) , opens new tab rose 6% in 2024, while the S&P 500 index surged 23%. (.SPX) , opens new tab 4/ GOING LOONIE Canada's dollar is near its weakest in over four years, having fallen sharply after Trump in November threatened a 25% tariff on Canada and Mexico until they clamped down on drugs and migrants. It has potential to fall further. Goldman analysts reckon markets may only be pricing about a 5% chance of such a tariff, and while they think this is unlikely to materialise, prolonged trade talks could keep risks alive. A full-fledged trade war necessitating additional Canadian rate cuts could push the loonie to the 1.50 mark against the U.S. dollar, said ING's Pesole. That would imply a further weakening of almost 5% from almost 1.44 now. Canadian Prime Minister Justin Trudeau's resignation further complicates the outlook. 5/ VOLATILE PESO The Mexican peso was already down 16% against the dollar in 2024 when Trump was elected, so a lot of news - both good for the dollar and bad for the peso - was priced in. The peso's 2024 performance, a 18.6% drop, was its weakest yearly showing since 2008. Besides the threat of tariffs from the U.S. - the destination of 80% of Mexico's exports - a controversial judicial reform also affected the currency. Monday's tariff news, later denied by Trump, sent the peso up as much as 2% before it pared gains, highlighting that volatility may continue as trade along the U.S. southern border remains a target for the President-elect. Sign up here. https://www.reuters.com/markets/global-markets-trump-tariffs-graphic-2025-01-08/

2025-01-08 04:33

WTI, Brent gains limited by US dollar strength API shows US crude stocks fall 4.02 million barrels, sources say OPEC production falls in December, Reuters survey shows Jan 8 (Reuters) - Oil prices trimmed earlier gains on Wednesday as the dollar strengthened but continued to find support from a tightening of supplies from Russia and other OPEC members and a drop in U.S. crude stocks. Brent crude was up 32 cents, or 0.42%, at $77.37 a barrel at 1217 GMT. U.S. West Texas Intermediate crude climbed 47 cents, or 0.63%, to $74.72. Both benchmarks had risen more than 1% earlier in the session. "The dollar's safe haven status is appreciated as fears of renewed U.S. inflationary pressure grow," said Tamas Varga, an analyst with oil broker PVM. A stronger dollar makes oil more expensive for holders of other currencies. "The drop (in oil prices) seems to be driven by a general shift in risk sentiment with European equity markets falling and the USD getting stronger," said UBS analyst Giovanni Staunovo. Oil output from the Organization of the Petroleum Exporting Countries fell in December after two months of increases, a Reuters survey showed. Field maintenance in the United Arab Emirates offset a Nigerian output hike and gains elsewhere in the group. In Russia, oil output averaged 8.971 million barrels a day in December, below the country's target, Bloomberg reported citing the energy ministry. U.S. crude oil stocks fell last week while fuel inventories rose, market sources said, citing American Petroleum Institute figures on Tuesday. Despite the unexpected draw in crude stocks, the significant rise in product inventories was putting those prices under pressure, Varga added. Analysts expect oil prices to be on average down this year from 2024 due in part to production increases from non-OPEC countries. "We are holding to our forecast for Brent crude to average $76/bbl in 2025, down from an average of $80/bbl in 2024," BMI, a division of Fitch Group, said in a client note. Sign up here. https://www.reuters.com/business/energy/oil-prices-up-tighter-opec-supply-us-jobs-data-2025-01-08/

2025-01-08 02:55

MUMBAI, Jan 8 (Reuters) - The Indian rupee is likely to open weaker on Wednesday after upbeat U.S. economic data lifted U.S. bond yields, prompting the dollar to resume its uptrend. The one-month non-deliverable forward indicated that the rupee will open at 85.80-85.81 to the U.S. dollar, compared with 85.7125 in the previous session. The dollar index dipped during Asia trade to 108.5 after rising 0.3% on Tuesday as data showed that job openings in the U.S. grew to 8.098 million, exceeding forecasts for a 7.7 million rise, while services sector activity also accelerated. The greenback had dipped to is lowest level in a week on Monday as traders assessed whether U.S. President-elect Donald Trump's tariff policies would match his aggressive rhetoric. The data, alongside a supply of $39 billion worth of 10-year U.S. bonds, prompted the 10-year Treasury yield to rise about 8 basis points to 4.69%, its highest level since April last year. Persistent strength in the U.S. dollar, concerns over India's slowing economic growth and tepid capital flows have pressured the rupee in recent weeks. Foreign investors have net sold nearly $2 billion worth of Indian stocks and bonds over January so far, while India has pegged its forecast for annual growth in the year ending in March at 6.4%, the slowest pace in four years, per data released on Tuesday. "Juxtaposing less favourable global catalysts (slippery yuan included) and domestic drivers, we expect the rupee to lose ground this quarter," DBS Bank said in a note. "Rupee traders have been keen to assess the new RBI (Reserve Bank of India) Governor’s view on the currency since he assumed office last month. Recent INR price action points to a higher tolerance for a weaker exchange rate," it said. Asian currencies were mostly weaker on Wednesday, with the offshore Chinese yuan trading lower at 7.34. KEY INDICATORS: ** One-month non-deliverable rupee forward at 86.05; onshore one-month forward premium at 24.5 paise ** Dollar index down 0.1% at 108.58 ** Brent crude futures up 0.3% at $77.3 per barrel ** Ten-year U.S. note yield at 4.68% ** As per NSDL data, foreign investors sold a net $356 million worth of Indian shares on Jan. 6 ** NSDL data shows foreign investors sold a net $56.6 million worth of Indian bonds on Jan. 6 Sign up here. https://www.reuters.com/markets/currencies/rupee-face-pressure-upbeat-us-data-reignites-dollar-uptrend-2025-01-08/