2024-09-27 14:12

July GDP growth at 0.2%, below forecast in Reuters poll Growth in July led by services-producing industries GDP to be well below BoC's Q3 estimate, economists say OTTAWA, Sept 27 (Reuters) - Canada's gross domestic product expanded at a faster-than-expected 0.2% rate in July, but an advance estimate indicated that growth likely stalled in August, data showed on Friday, bolstering hopes for a super-sized interest rate cut next month. Economists welcomed the July growth but looked at it mostly as a blip sandwiched between two months in which activity was flat and reiterated that GDP would fall well below the Bank of Canada's third-quarter estimate. "Growth appears to be tracking just over 1% for Q3, well below the Bank of Canada's 2.8% forecast," Royce Mendes, head of macro strategy at Desjardins Group, wrote in a note. He said he expected the Canadian central bank would deliver a 50-basis-point rate cut on Oct. 23. Analysts polled by Reuters had forecast GDP would rise 0.1% in July, after zero growth in June. The economy grew in July despite the negative impact of wildfires on several industries, with growth driven by services-producing industries, primarily retail trade, public sectors and finance and insurance, Statistics Canada said. The expected economic weakness in August likely is due to a contraction in manufacturing, transportation and warehousing which would essentially offset growth in oil and gas extraction and the public sector, Statscan said. The BoC forecast in July that the economy would grow 2.8% in the third quarter, but data released since then have led economists to predict growth of about half that figure. "The preliminary estimate of unchanged GDP in August suggests that the momentum was short-lived and puts third-quarter growth on track to surprise marginally to the downside of our already downbeat forecast of 1.2% annualized," said Olivia Cross, North America economist at Capital Economics. She expects a 50-basis-point rate cut next month. The BoC has cut interest rates three times since June, moving in quarter-percentage-point steps, but has said it could shift to larger cuts if the economy needs a boost. Money markets see just over a 50% chance of a half-percentage-point reduction in borrowing costs at the central bank's next announcement and are fully pricing in another 25-basis-point cut in December. The Canadian dollar was trading down 0.08% to 1.3475 to the U.S. dollar, or 74.21 U.S. cents, after the data. Yields on the two-year Canadian government bonds were down 3.4 basis points to 3.07%. On Tuesday, BoC Governor Tiff Macklem said it was reasonable to expect more rate cuts given the progress made in cooling inflation and reiterated that the central bank wanted to see growth pick up to absorb economic slack. Economic growth in July was driven by increases in both services, which grew by 0.2%, and goods industries, which rose by 0.1%, Statscan said. Sign up here. https://www.reuters.com/world/americas/canada-economy-tops-july-growth-forecast-seen-stalling-august-2024-09-27/

2024-09-27 14:10

JOHANNESBURG, Sept 27 (Reuters) - South Africa's rand extended gains against the dollar on Friday, hitting a fresh 20-month high amid improved risk appetite and positive sentiment at home. At 1400 GMT, the rand traded at 17.125 against the greenback , 0.35% firmer than its previous close. It earlier hit 17.075 per dollar, its strongest level since early February 2023. The dollar index was last down 0.31% against a basket of currencies after a reading of U.S. inflation indicated price pressures continue to cool. The rand has been on an upward trajectory since a big interest rate hike by the Federal Reserve last week, hitting repeated 20-month highs. "The rand has continued to strengthen due to a favourable risk-on trading environment and a generally weaker U.S. dollar," said Shaun Murison, senior market analyst at IG. Analysts say the improvement in South Africa's risk profile following the formation of a coalition government after an election in May has also contributed to the currency's strength. On the stock market, the Top-40 (.JTOPI) , opens new tab index was up about 0.5%. South Africa's benchmark 2030 government bond was stronger, with the yield down 2.5 basis points at 8.805%. Sign up here. https://www.reuters.com/markets/currencies/south-african-rand-holds-gains-against-dollar-2024-09-27/

2024-09-27 13:17

Sept 27 (Reuters) - The Federal Reserve is likelier than not to deliver a second 50-basis-point interest rate cut in November, traders bet on Friday, after a government report showed U.S. inflation has cooled to a pace nearer to the central bank's 2% goal. Inflation by the Fed's targeted measure, the year-over-year rise in the personal consumption expenditures price index, was 2.2% in August, the Commerce Department reported. That's in line with what Fed Chair Jerome Powell said he expected in a news conference after last week's half-point cut. The big start to what's expected to be further reductions in the policy rate ahead was aimed at bolstering what Fed policymakers see as a softening but still-solid labor market. "If the Fed wants to cut by another 50 basis points in November, the inflation data isn't going to stand in their way," wrote Inflation Insights Omair Sharif after the report. "In fact, the faster inflation cools, the more impetus there is for them to move faster to get to neutral." Interest rate futures contracts now reflect a 54% chance of a half-point cut in November, versus a still-hefty 46% chance of a quarter-point cut. Either way traders are betting the policy rate - now in the 4.75%-5.00% range - will be 75 bps lower by year end, and in the 3.00%-3.25% range by mid-2025. That's just above what most Fed policymakers see as the neutral rate where the level of borrowing costs is neither stimulating nor braking a healthy economy. Sign up here. https://www.reuters.com/markets/us/traders-bet-second-straight-50-bps-fed-rate-cut-november-2024-09-27/

2024-09-27 12:50

HOUSTON, Sept 27 (Reuters) - A U.S. court officer overseeing an auction of shares in a Citgo Petroleum (PDVSAC.UL) parent disclosed on Friday he has ended talks with holders of Venezuela 2020 bonds seeking to receive proceeds from the court auction, a filing showed. The court has not been able to reach an agreement with the bondholders and discussions are no longer active, Delaware District Court Special Master Robert Pincus said in a filing. The bonds were secured with a pledge of a controlling interest in another Citgo parent. U.S. District Court in Delaware is auctioning shares in PDV Holding to repay $21.3 billion in claims against Venezuela and state-oil firm PDVSA for expropriations and debt defaults. The bondholders have been pursuing their claims in separate court actions. Pincus, who had missed several deadlines to provide the court with the winner and sale terms of the auction, has blamed bondholders' legal filings for complicating talks with a bidder. Bidder Gold Reserve this month dropped out of the running over delays and uncertainty surrounding the auction. Pincus' filing said he reserves the right to re-engage with the bondholders in the future. Sign up here. https://www.reuters.com/business/energy/us-court-overseeing-citgo-share-auction-ends-talks-with-venezuela-bondholders-2024-09-27/

2024-09-27 12:46

MOSCOW, Sept 27 (Reuters) - Russia's winter crop sowing is in a very difficult situation due to severe drought, which is expected to seriously affect next year's harvest, analysts and farming company executives said on Friday. The Sovecon consultancy warned earlier this week that wheat sowing rates in Russia have fallen to an 11-year low, clouding the outlook for the 2025 grain harvest in the world's top wheat exporter. Chicago wheat prices climbed to their highest in almost two weeks on the warning before sliding again on demand worries. "We are closely monitoring the situation with the winter crops. It appears to be extremely difficult, potentially turning into some kind of dramatic scenario," IKAR consultancy head Dmitry Rylko told an agricultural investors conference. Rylko said the situation in Volgograd and Saratov regions, Russia's forth and sixth largest grain producing regions, was particularly difficult. Kirill Yershov, head of Aeon Agro, which cultivates over 240,000 hectares in Russia's Penza and Saratov regions, said that "there will be problems" with the wheat harvest next year. "I can say that the situation is very critical, everything is in dry soil. We planted even less than last year. I know that many have planted less," Yershov said. Alexander Pryanishnikov from plant protection products maker Shchelkovo Agrokhim said farmers in Penza, Saratov and Mordovia regions in the Volga area have seen unprecedented sowing rates. "In all the years I've worked with winter crops, I have never seen such a disheartening situation." he said. Weather extremes ranging from early spring frost to drought to heavy rains have hit Russia's main agricultural areas this year, dampening a boom in the sector that has in recent years become a success story despite Western sanctions. Just as southern and Volga river regions suffered from extreme drought in September which is not expected to abate for another two weeks, several grain producing regions in Siberia declared an emergency due to heavy rains. Russia had seen a record grain harvest of 158 million metric tons in 2022 but has since experienced a decline with 148 million tons harvested last year and 132 million tons officially expected to be harvested this year. IKAR has cut its forecast for Russia's wheat crop this year to 81.8 million metric tons from 82.2 million tons and for the grain crop to 124.5 million tons from 125 million tons. Sign up here. https://www.reuters.com/world/russian-drought-threatens-2025-grain-crops-2024-09-27/

2024-09-27 12:45

Sept 27 (Reuters) - French bank Credit Agricole (CAGR.PA) , opens new tab said on Friday that its Credit Agricole Transitions & Energies unit had bought stakes of up to 32% in 11 wind farms in France. WHY IT'S IMPORTANT: France hopes to have 45 gigawatts (GW) of offshore wind in operation by 2050 to achieve carbon neutrality. The country lags others in offshore wind due to complex permit procedures and multiple appeals lodged against projects. Furthermore, the European Union wants more wind power in the region, having struck a deal in July with Deutsche Bank (DBKGn.DE) , opens new tab to finance more investments in this sector. The EU wants banks to support increasing the roll-out of renewable energy to help meet climate policies and improve energy security in the wake of Russia's invasion of Ukraine. CONTEXT: A report earlier this month by the International Renewable Energy Agency (IRENA) showed that new renewable power capacity last year reached a record 473 gigawatts (GW). BY THE NUMBERS: European wind energy projects with a total of more than 500 GW of potential capacity are waiting for an answer to their requests for grid connections, across countries including France, Germany, Ireland, Poland and Spain, according to a July report from industry association WindEurope. Sign up here. https://www.reuters.com/business/energy/french-bank-credit-agricole-buys-stakes-11-wind-farms-2024-09-27/