2025-11-12 07:11

LONDON, Nov 12 (Reuters) - Momentum has been the stock market story of 2025, as trades that have worked just keep on working. It would be brave to bet against momentum at this point, but there might be ways to ride the wave while avoiding a wipeout. Momentum has outperformed as a strategy for much of the past 50 years. But this year it has been especially hot, whether it’s the seemingly unstoppable rise of anything related to artificial intelligence or even the spike in the price of gold, long considered a safe haven. Sign up here. Flows into many momentum-based exchange-traded products have hit all-time highs. For example, a BlackRock AI-themed active ETF raised $7 billion in its first year, and global gold ETPs (exchange-traded products) recorded their largest monthly inflows ever in September. On the flip side, quality-related exchange-traded products have seen outflows, and defensive areas of the market, such as consumer staples, have hit multi-decade lows versus broader markets. What’s driving this? Firstly, and at the risk of stating the obvious, the themes behind these trades are powerful. AI will almost certainly change the world, and big tech companies are set to spend nearly half a trillion dollars this year on their AI capabilities. That’s understandably boosting chip providers like Nvidia, which recently saw its market cap eclipse $5 trillion. Gold is also supported by potent trends. The poor state of many government balance sheets calls into question the perceived safety of government bonds and raises fears of lingering inflation. STRUCTURAL CHANGES Yet there are also structural changes to the market contributing here. One is the rise of retail investors. Retail investors account for about 20% of global equity market participation, up from around 15% in 2019 and 10% in 2010, according to SIFMA data. , opens new tab Greater retail participation is typically associated with more sentiment-driven markets. Another change is the rise of exchange-traded funds. There are now more ETFs than stocks listed in the United States, with 469 new ETFs coming to market in the first half of this year alone. As money pours into ETFs that track major indices or dominant themes, the biggest stocks just keep getting bigger. And many ETFs explicitly attempt to capture the momentum in stock markets by giving investors exposure to a basket of the winners. Given these thematic and structural forces, it’s hard to bet against momentum. But if history is any guide, there should be a reversal at some point. And that reversal might be sharp. For one, retail investors can be “flighty.” They typically hold stocks for only a few months on average versus a few years for institutional investors, according to data from CIBC. , opens new tab And in the event of a correction, ETFs that track momentum would have to rapidly rotate out of the current momentum “winners”. FOCUS ON QUALITY This leaves investors in a challenging position. The higher equities and other momentum darlings rise, the more investors will want to shelter their portfolios from a swift market change. Yet investors will also likely want to participate in the upside for as long as the momentum continues – because it could continue for a while. There is no strategy that can guarantee success here, but a focus on fundamentals is likely to help. Global “quality” companies – those that score well on measures such as profitability and earnings stability – have been on a losing streak versus the MSCI World Index since the start of 2024. That’s especially true in Europe, where valuations of quality companies are currently below the 40-year average, based on LSEG data. This could be an opportunity for skilled stock-pickers to scoop up strong companies at reasonable prices. While some quality companies are in industries that benefit from the AI theme, many can also be found in sectors with less direct AI exposure, including financials, healthcare and consumer discretionary. In the U.S., the earnings gap between the “Magnificent 7” – Amazon, Apple, Alphabet, Meta, Microsoft, Nvidia and Tesla – and the rest of the S&P 500 index is forecast to narrow to just three percentage points next year, based on consensus estimates. And there are already signs in Europe that the region’s large, quality companies, including some in the luxury space, are making a comeback after reporting promising third-quarter earnings numbers. GOLD HAVEN What about the gold boom? Where’s the haven if the price of the ultimate hedge comes down? Perhaps surprisingly, gold mining companies, despite rallying over 100% this year, actually still look cheap relative to their historical averages given their rapid rise in earnings. And mining companies are priced for a much lower gold price than we have today, as there is a large discount between consensus price estimates and both the spot price and futures curve. If gold prices remain elevated, the miners stand to generate enormous amounts of cash. If prices fall further from record highs, the miners may see their share price dip – as we’ve seen recently – but we expect their earnings to remain robust. MOMENTUM CRASH Ultimately, momentum could crash, rather than stall, due to some unforeseen event that upends financial markets, especially if that “something” results in global interest rates moving higher again. In that case, there may be few places for equity investors to hide, at least in the short term. But even in this scenario, a focus on fundamentals is likely to cushion the fall. (The opinions expressed here are those of the author, Helen Jewell, International CIO, Fundamental Equities, at BlackRock. This column is for educational purposes only and should not be construed as investment advice.) Enjoying this column? Check out Reuters Open Interest (ROI), , opens new tab your essential new source for global financial commentary. ROI delivers thought-provoking, data-driven analysis of everything from swap rates to soybeans. Markets are moving faster than ever. ROI , opens new tab can help you keep up. Follow ROI on LinkedIn , opens new tab and X. , opens new tab https://www.reuters.com/markets/europe/how-ride-stocks-momentum-wave-while-avoiding-wipe-out-2025-11-12/

2025-11-12 07:02

Gold prices stabilizing before further gains, analyst says US House due to vote on Wednesday on government shutdown JP Morgan sees gold breaching $5,000/oz by 4Q 2026 Nov 12 (Reuters) - Gold prices were steady on Wednesday as investors awaited a U.S. House of Representatives vote on a deal to reopen the federal government, which could pave the way for clarity on economic data and the potential path for Federal Reserve rate cuts. Spot gold was steady at $4,125.22 per ounce, as of 1158 GMT. U.S. gold futures for December delivery rose 0.4% to $4,130.90 per ounce. Sign up here. "Everyone is awaiting more clarity on the government shutdown and when the data is coming out of the U.S. again," said UBS analyst Giovanni Staunovo. "It's probably some stability before prices keep going up... we are still in an uptrend when it comes to the gold prices. Nothing from the structural side has completely changed," Staunovo added. Gold prices have surged more than 57% year-to-date, reaching a record high of $4,381.21 on October 20, driven by geopolitical tensions, economic concerns, easing Fed monetary policy, de-dollarization, and strong gold-backed ETF inflows. The U.S. Senate approved a deal on Monday to restore federal funding after a record-breaking government shutdown. House lawmakers returned to Washington on Tuesday to vote on the measure that could formally resolve the standoff. Economic data remains a focus, with payroll processor ADP reporting on Tuesday that U.S. companies were cutting more than 11,000 jobs per week through late October. Meanwhile, market expectations for monetary policy have shifted, with CME Group's FedWatch tool showing a 67% probability of a 25-basis-point rate cut at the Fed's next meeting on December 10, up from 62% a day earlier. "Gold's prices have broken above $4,050 resistance level after a consolidation. This confirms a continuation of the prevailing bullish momentum. Yet, the next resistance zone is $4,160-$4,170/oz, breach of this range will push prices towards the record high of $4,380/oz," ANZ said in a note. JP Morgan, in a note on Wednesday, said it expects central banks and consumers to emerge as reliable buyers during price dips and forecast gold prices to exceed $5,000 by the fourth quarter of 2026. Elsewhere, spot silver gained 0.6% to $51.51 per ounce, platinum fell 0.5% to $1,579.85 and palladium lost 1.5% to $1,422.25. https://www.reuters.com/world/india/gold-extends-rise-softer-dollar-fed-rate-cut-hopes-2025-11-12/

2025-11-12 07:01

TOKYO, Nov 12 (Reuters) - Japan's government will pledge to increase spending "without hesitation" to support an economy on the cusp of emerging from stagnation, according to a draft of premier Sanae Takaichi's stimulus package seen by Reuters on Wednesday. While the draft does not mention the size of spending, it calls for "bold and strategic" investment in crisis management and growth areas in a sign the package would likely include sizeable spending. Sign up here. Describing Japan's economy as in a transition period from one "prone to deflation and cost cuts," the government will vow to spend "boldly without hesitation on necessary policies," the draft showed. The package will include subsidies to lower utility and gasoline bills, aid to businesses hit by higher U.S. tariffs and an expected increase in defence spending, the draft showed. The government will also promote investment in key growth areas such as artificial intelligence (AI), semiconductors and shipbuilding, according to the draft. Takaichi's administration is expected to finalise the package later this month, and compile a supplementary budget for the current fiscal year to finance part of the spending. "The size of the package will be quite large," as Japan's economy still needs fiscal support and the long list of areas the administration promises to invest in, analysts at Daiwa Securities said in a research note. "We won't be surprised if spending financed by the extra budget reaches 20 trillion yen ($133 billion)," they said. ($1 = 150.7800 yen) https://www.reuters.com/world/asia-pacific/japan-pledge-bold-spending-increase-stimulus-package-draft-shows-2025-11-12/

2025-11-12 06:59

PM Takaichi says current type of inflation 'not good' Govt will work with BOJ to achieve wage-driven inflation Finance minister says demerits of weak yen becoming pronounced Katayama says vigilant to 'one-sided, rapid' yen moves TOKYO, Nov 12 (Reuters) - Japanese Prime Minister Sanae Takaichi said she "strongly hopes" the central bank achieves inflation driven by wages rather than primarily through rising food costs, signaling her administration's preference for interest rates to stay low. Speaking in parliament on Wednesday, Takaichi said Japan still faced the risk of returning to deflation, which would prompt households to hold off spending, hurt corporate profits and discourage firms from raising wages. Sign up here. She also voiced displeasure over recent inflation because it was driven mostly by rising food costs and potentially hurting the economy. "I'd like to see Japan experience moderate inflation accompanied by wage increases. The type of inflation we're seeing now is not good," Takaichi said. The government plans to compile a package of measures to cushion the blow from rising living costs and lift investment in growth areas, which in turn will boost corporate profits and brighten consumer sentiment, she said. "We will create a strong economy. This is a matter that affects monetary policy in a big way, so we hope to coordinate closely with the Bank of Japan," Takaichi said. "I strongly hope the BOJ conducts policy appropriately so it sustainably and stably achieves its 2% inflation target not through cost-push factors, but by wage gains," she said. The remarks by Takaichi, known as an advocate of expansionary fiscal and monetary policy, reinforce the challenge facing the BOJ. Even before Wednesday's comments, the Takaichi administration's preference for low rates and fiscal largesse had raised complications for the BOJ's decision on how soon to resume interest rate hikes. While the BOJ kept interest rates steady at 0.5% last month, governor Kazuo Ueda has signaled the central bank's readiness to hike rates as soon as December if it is sufficiently convinced that companies will keep hiking pay next year. A delay in the next rate hike, which most market players expect to happen in December or January next year, could trigger renewed yen declines that push up import costs and broader inflation, analysts say. Finance Minister Satsuki Katayama acknowledged that the negative aspects of the weak yen have become more pronounced than the positives factors, adding the currency's weakness was among factors pushing up raw material costs. "Recently, we have been seeing one-sided and rapid movements in the foreign exchange market," Katayama told the same parliament session on Wednesday, warning that authorities were monitoring developments with a "strong sense of vigilance." Katayama's remarks briefly pushed down the dollar to around 154.55 yen from 154.75. While a weak yen gives exports a boost, it has become a political headache for policymakers as it pushes up the cost of importing fuel, food and raw materials. Core consumer inflation hit 2.9% in September, staying above the BOJ's 2% target on stubbornly high food prices and keeping pressure on the bank to push up still-low borrowing costs. Pessimists in the BOJ, however, fret about the fragile state of Japan's economy. A Reuters poll showed analysts expect Japan's economy to have shrunk an annualised 2.5% in the third quarter due partly to the hit from higher U.S. tariffs. https://www.reuters.com/sustainability/sustainable-finance-reporting/japan-pm-says-strongly-hopes-boj-achieves-wage-driven-inflation-2025-11-12/

2025-11-12 06:59

Traders uncertain about long-term impact on US dollar trust Fed policymakers cautious on further rate cuts amid inflation concerns Euro rises against dollar, yen weakens amid BOJ rate hike speculation NEW YORK, Nov 13 (Reuters) - The U.S. dollar dipped on Thursday as the U.S. government reopened, leaving traders grappling with the long-term impact the shutdown will have on trust in the U.S. currency and ahead of a deluge of data on the health of the economy. The shutdown was the U.S. government's longest, snarling air traffic, cutting food assistance to low-income Americans and forcing more than 1 million workers to go unpaid for more than a month. Sign up here. "The shutdown is over, but how soon are we going to go back to normal? How soon are we going to have numbers? How soon am I going to be able to do real, accurate analysis based on trusted American statistics from September and October? That's in doubt," said Juan Perez, director of trading at Monex USA in Washington. White House economic adviser Kevin Hassett said on Thursday the government would release the closely watched employment report for October, but without the jobless rate because the household survey wasn't conducted during the month. The data could influence Federal Reserve policy, though the trajectory of interest rates for now remains murky. Citing worries about inflation and signs of relative stability in the labor market after two U.S. interest rate cuts this year, a growing number of Federal Reserve policymakers are signaling reticence on further easing, helping push financial market-based odds of a reduction in borrowing costs in December to below 50%. The falling odds of a December rate cut failed to boost the greenback on Thursday. The U.S. currency was boosted after Fed Chair Jerome Powell said last month that an interest rate cut at the U.S. central bank’s December meeting is not certain, but momentum behind that trade has faded, said Sarah Ying, head of FX strategy at CIBC Capital Markets in Toronto. Federal Reserve officials on Thursday gave diverging views on the path of monetary policy. San Francisco Fed President Mary Daly said on Thursday that risks to the Federal Reserve's goals of price stability and full employment are now balanced. Minneapolis Fed President Neel Kashkari on Thursday said he sees mixed signals, with inflation, running around 3%, "too high," but also noted that "Some sectors of the labor market look like they're under pressure." Cleveland Fed President Beth Hammack said that interest rate policy should remain restrictive so it can put downward pressure on still concerning levels of inflation. St. Louis Fed President Alberto Musalem also reiterated his view that policy is now closer to neutral than to modestly restrictive, leaving limited room to ease further without becoming overly accommodative. The dollar index , which measures the greenback against a basket of currencies including the yen and the euro, fell 0.35% to 99.14, with the euro up 0.4% at $1.1638, the highest since October 29. The euro has now broken above a downtrend channel that began against the greenback on September 17. Meanwhile European financial stability officials are debating whether to create an alternative to Federal Reserve funding backstops by pooling dollars held by non-U.S. central banks in a bid to reduce their reliance on the U.S. under the Trump administration. Against the Japanese yen , the dollar weakened 0.22% to 154.43. The U.S. currency reached a nine-month high against the Japanese currency on Wednesday after Japanese Prime Minister Sanae Takaichi expressed her administration's preference for interest rates to stay low and asked for close coordination with the Bank of Japan. Japanese Finance Minister Satsuki Katayama also gave a new warning on yen weakness as it approached 155 per dollar, noting "one-sided and rapid movements in the foreign exchange market". The yen on Thursday reached its lowest against the euro since 1999, when the European Union introduced the single currency. A weak yen could force the BOJ's hand, leading to a rate hike next month, though traders only see a 24% chance of a quarter-point increase to the key rate in December. In Europe, the pound gained despite data showing Britain's economy barely grew in the third quarter of the year, in part due to the drag from a cyberattack in September. Sterling was last up 0.47% at $1.3192. The Australian dollar hit a two-week high thanks to official data that showed a steeper drop in the unemployment rate from a recent four-year high, reducing the possibility of further rate cuts. It later reversed those gains and was last down 0.12% versus the greenback at $0.653. In cryptocurrencies, bitcoin fell 3.07% to $98,752. https://www.reuters.com/world/africa/dollar-eases-traders-eye-december-fed-cut-weakening-us-jobs-market-2025-11-12/

2025-11-12 06:50

IEA's current policies scenario shows no oil demand peak before 2050 LNG supply to grow 50% by 2030 US has criticized the IEA for clean energy focus IEA says target to limit temperature rise at 1.5C out of reach LONDON, Nov 12 (Reuters) - Global oil and gas demand could grow until 2050, the International Energy Agency said on Wednesday, departing from its previous expectations of a speedy transition to cleaner fuels and predicting that the world will likely fail to achieve climate goals. The IEA, the West's energy security watchdog, has been under pressure from the U.S. for a shift in recent years toward a focus on clean energy policies as President Donald Trump called on American companies to further expand oil and gas production. Sign up here. Under the Joe Biden administration, the IEA predicted that global oil demand would peak this decade and said no more investment in oil and gas was needed if the world wanted to achieve its climate target. Trump's Energy Secretary Chris Wright has called the IEA’s demand peak projections “nonsensical”. The IEA is funded by member countries, with the U.S. being the largest contributor. Its analysis and data underpin energy policies of governments and companies around the world. EXISTING POLICIES, NOT CLIMATE GOAL ASPIRATIONS In its annual World Energy Outlook published on Wednesday, the IEA predicted under a current policies scenario that oil demand will hit 113 million barrels per day by mid-century, up around 13% from 2024 consumption. It predicted that global energy demand will climb by 90 exajoules by 2035 - a 15% increase from present levels. The current policies scenario takes into account existing government policies and not aspirations to achieve climate goals. The IEA last used the "current policies scenario" for its predictions in 2019 and switched to predictions more in line with a clean energy transition and pledges of reaching net zero emissions by mid-century from 2020. This year's outlook ditched the pledges scenario. The IEA said it had planned to assess new country climate targets covering 2031-2035 but not enough countries had submitted these plans to produce a meaningful picture. In the IEA's stated policies scenario, which considers policies that have been put forward but not necessarily adopted, oil demand peaks around 2030. The IEA says its scenarios explore a range of possible outcomes under various sets of assumptions and are not forecasts. LNG CAPACITY TO SOAR Final investment decisions for new liquefied natural gas projects have surged in 2025, the report noted. Operations for about 300 billion cubic metres of new annual LNG export capacity will start by 2030, marking a 50% increase in available supply. Under the current policies scenario, the global LNG market increases from around 560 bcm in 2024 to 880 bcm in 2035 and to 1,020 bcm in 2050, driven by rising power sector demand fuelled by data centre and AI growth. Global investment in data centres is expected to reach $580 billion in 2025, the report said, noting that if achieved this would surpass the $540 billion a year spent globally on oil supply. GLOBAL TEMPERATURES RISE TO EXCEED 1.5 DEGREES CELSIUS The report also includes a net zero scenario describing a pathway to reduce global energy emissions to net zero by 2050. More than 190 countries pledged at the Paris climate talks in 2015 to try to keep the world from warming more than 1.5 degrees Celsius (2.7 degrees Fahrenheit). But the report shows the world surpassing 1.5 C of warming in all scenarios, only declining again under the net zero scenario if technology to remove carbon dioxide from the atmosphere is deployed. https://www.reuters.com/sustainability/boards-policy-regulation/world-oil-gas-demand-could-grow-until-2050-iea-says-2025-11-12/