2024-09-13 08:47
BUDAPEST/FRANKFURT, Sept 13 (Reuters) - The European Central Bank's two biggest shareholders expressed confidence on Friday about the prospect for lower inflation and interest rates in the euro zone. French central bank governor Francois Villeroy de Galhau and Bundesbank president Joachim Nagel backed Thursday's rate cut and struck a more confident tone than at any point over the last two years that the ECB's fight against high inflation was being won. "The inflation picture looks very good," Nagel told German radio Deutschlandfunk. "We are now assuming, and the data has shown, that we will reach our inflation target of 2% by the end of the next year." Villeroy went further, saying the "direction of the journey" was clearly for lower interest rates, albeit at a gentle pace that relied on incoming data. "We should continue to reduce gradually and as appropriate the degree of restriction of our monetary policy," he told the Eurofi financial forum in Budapest. "But the pace has to be highly pragmatic: we are not pre-committing to any particular rate path, and we keep our full optionality for our next meetings." Inflation in the 20 countries sharing the euro currency fell to 2.2% in August, the slowest pace since July 2021, and the ECB expects it to fall to 2% by the last quarter of next year after a slight rebound in the coming year. Growth is also flagging, particularly in industrial powerhouse Germany, strengthening the case for lower borrowing costs. Villeroy said the inflation projections and disappointing activity data made Thursday's rate cut an "obvious" move and the ECB should now also pay attention to the risk of inflation coming in too low. His Finnish colleague Olli Rehn said the reduction in borrowing costs would support growth but Europe should get on the road to better productivity. The Bundesbank and the Banque de France have the biggest shares in the ECB's capital in light of the size of their country's economy and population. Sign up here. https://www.reuters.com/markets/europe/top-ecb-governors-voice-confidence-inflation-rates-2024-09-13/
2024-09-13 07:58
LONDON, Sept 16 (Reuters) - Don't go anywhere: an event-packed week is coming up with central banks from the United States to Brazil and from Europe to Japan meeting. The Federal Reserve should deliver its first interest rate cut in four years, Brazil could hike for the first time since 2022 and Japan will be mindful of volatile markets as it mulls when to lift rates again. But it is not all about central banks, with UniCredit's move on Commerzbank reviving M&A talk among European banks. Here's your week ahead primer in world markets from Lewis Krauskopf in New York, Rae Wee in Singapore, Marcela Ayres in Brasilia, and Naomi Rovnick, Karin Strohecker, and Tommy Wilkes in London. 1/ TIME AT LAST The Fed is tipped to conclude a two-day meeting on Wednesday with its first rate cut of this cycle. The key question now is how much and how fast easing comes. A quarter point hike is fully priced, while markets now price in a roughly 60% chance of a bigger, half-point move. Latest data showed consumer prices rose slightly in August, but core inflation was a bit stickier. Fed Chair Jerome Powell's news conference will be scrutinised for hints of the potential pace of rate cuts. August employment data was weaker-than-expected , opens new tab for a second straight month, raising some concern the Fed may be too late with easing. Traders still price over 100 bps of Fed cuts by year-end, creating a potential disconnect between markets and the Fed's dot-plot projections. 2/ UP, NOT DOWN Also on Wednesday, Brazil's central bank is expected to diverge from the Fed by kicking off a tightening cycle given above-target inflation at 4.25% and stronger-than-expected growth in Latin America's largest economy. Since keeping rates at 10.50% in July, the bank has hinted it could raise borrowing costs to meet its 3% inflation target. The hawkish stance, reinforced by incoming governor Gabriel Galipolo, has fuelled bets on a forthcoming 25 bps hike that could bolster the real. . But Brazil is an outlier among emerging economies. In South Africa, where inflation is nearing its target, policymakers are expected to trim rates for the first time in four years on Thursday. Turkey is expected to hold rates at 50% the same day, but potentially cut in November. Indonesia's central bank, meeting on Wednesday, has flagged a possible fourth-quarter rate cut. 3/ ANOTHER ODD ONE OUT The only way for Japanese rates is up. At least, that is what Bank of Japan policymakers suggest, though doing so this month would come as a huge surprise. The BOJ is not expected to change rates at its policy meeting, which ends on Friday, with focus on the tightening path ahead following two hikes already this year. Going against the tide of global easing, BOJ policymakers have expressed their resolve to raise rates further, so long as markets behave and economic conditions remain favourable. That has helped the yen , which is up more than 10% from July's 38-year low, though investors remain nervous about any further unwinding of yen-funded carry trades that could spark renewed volatility. 4/ UNPREDICTABLE The Bank of England and Norges Bank are expected to keep rates unchanged when they meet on Thursday. The BoE is tipped to ease twice more by year-end and Norway could start easing by then. It is hard for anyone, including possibly the world's top central bankers themselves, to have much confidence in such forecasts. Any surprises from the Fed could potentially upend the global monetary policy outlook. An unexpectedly dovish Fed could weaken the dollar, alter inflation projections for nations, such as Britain that import dollar-priced commodities and prompt Norges Bank to support the oil-linked crown. Fed commentary that casts doubt over steady easing from here could boost the dollar and tighten financial conditions worldwide. Investors rely on market forecasts for central bank policy. It might be best to ignore them for now. 5/ IT'S BACK, OR IS IT? UniCredit's (CRDI.MI) , opens new tab swoop on Commerzbank (CBKG.DE) , opens new tab has sparked speculation that long-awaited European banking M&A is back. The Italian bank unveiled a 9% stake in the German lender - half of it bought directly from the German state. UniCredit CEO Andrea Orcel is keen to buy more or even take Commerzbank over should it want a tie-up. Investors are now watching whether Orcel can overcome the many hurdles that have stymied previous deals among European banks, including political opposition, and if more banks begin angling for other deals. Possibilities are numerous. In the meantime, investors are buying banking shares. Commerzbank shares rallied nearly 20% in two days, the European bank index (.SX7P) , opens new tab gained almost 2%. Sign up here. https://www.reuters.com/business/take-five/global-markets-themes-graphic-2024-09-13/
2024-09-13 07:54
FTSE 100 up 0.2%, FTSE 250 adds 0.4% Sept 13 (Reuters) - Mining stocks lifted London's blue-chip index on Friday as investors raised their bets of a hefty U.S. interest rate cut next week, but gains were limited as a strong pound weighed on export-oriented companies. The FTSE 100 (.FTSE) , opens new tab edged up 0.2%, while the mid-cap FTSE 250 (.FTMC) , opens new tab firmed 0.4%, aiming for its first weekly gain in three. Precious metal miners Fresnillo (FRES.L) , opens new tab, Endeavour (EDV.L) , opens new tab and Centamin (CEY.L) , opens new tab firmed about 2% each as gold scaled a record high against a weaker greenback. Industrial metal miners (.FTNMX551020) , opens new tab rose 0.9% as copper prices rose to a two-week high on expectations of fiscal support from in top consumer China. The sterling touched a one-week high against the U.S. dollar after the Wall Street Journal and the Financial Times reported it might be a close call on whether the U.S. Federal Reserve cuts rates by 25 basis points or by 50 bps at its meeting next Wednesday. That prompted traders to boost their expectations of a steeper 50 bps rate cut to 43% from just 14% a day earlier, according to CME's FedWatch tool. An influential former New York Fed President, Bill Dudley, later said, "there's a strong case for 50". Investors are also gearing up for the Bank of England's policy meeting next week, at which it is expected to stand pay, according to all 65 economists in a Reuters poll. The BoE meeting, however, will be parsed for clues about future moves as well as a decision over the pace of its bond sales -- a hot political topic. The central bank last month eased interest rates by 25 bps to 5% from a 16-year high. Among other stocks, Vodafone's (VOD.L) , opens new tab $19 billion merger with Three UK could push up bills for millions of mobile customers, Britain's competition regulator said. Vodafone shares rose 0.2%. Flutter Entertainment (FLTRF.L) , opens new tab edged lower after the Irish betting giant said it will buy a 56% stake in NSX Group, the operator of Brazilian gaming group Betnacional, for about $350 million. (This story has been refiled to correct syntax in the headline) Sign up here. https://www.reuters.com/world/uk/mining-stocks-pushes-export-heavy-ftse-100-higher-strong-pound-keeps-gains-check-2024-09-13/
2024-09-13 07:54
NAPERVILLE, Illinois, Sept 12 (Reuters) - The grain market moved one step closer to settling the size of the U.S. corn and soybean crops on Thursday with fresh projections from the U.S. Department of Agriculture. But the question now is whether the final harvest volumes could be bigger or smaller in a way that could materially change the current fundamental landscape, where supplies are very ample. USDA on Thursday pegged 2024-25 U.S. corn production at 15.186 billion bushels, the second largest crop on record and up slightly from August. Yield rose to 183.6 bushels per acre (bpa) versus 183.1 forecast in August, against trade expectations that yield would decline. Despite corn yield and production landing above the range of analyst estimates, traders were not overly disappointed with the numbers as CBOT December corn futures ended Thursday’s session fractionally higher. U.S. soybean production was as expected on Thursday with a yield of 53.2 bpa, matching both the analyst predictions and USDA’s August forecast. That maintained the record crop target, though traders may have been bracing for even bigger numbers as November soybeans jumped 1% during the session. But are the bigger numbers yet to come? Final corn and soy harvested areas tend to be lower than those predicted at this time of year, but the yield direction is not as straightforward. YIELD TRENDS Final U.S. corn yield has been higher than USDA’s September projection in 12 of the last 20 years. But only five of those 12 years featured stronger corn yields in September than what USDA had slated in July. In other words, it is more likely for final yield to be larger than in September when the September number is already somewhat light, and that is definitely not the situation this year. USDA’s 183.6-bpa corn peg is above the July trendline yield of 181 bpa, and this month’s estimate is some 3.6% above last year’s record yield. The last times USDA’s September estimate towered similarly above the prior highs were in 2004 and 2014. All those same ideas hold for soybeans. Final soy yield was higher than in September in 13 of the last 20 years, but only four of those 13 times occurred when the September yield was higher than in July. The 53.2-bpa soybean yield is above the July trendline of 52 bpa and 2.5% above the prior record set in 2016. Within the last two decades, only 2014 and 2016 featured September soy yield forecasts that represented even bigger records. BALANCE SHEET DAMAGE? If recent trends lend to the whittling of corn and soybean yields, and thus production, what could the implications be for overall supply? In recent years when final corn and soybean yields were lower than in September, the average reduction was about 2% for both crops. If final corn yield was 2% lower than in September, that would still result in a record 179.9 bpa but take about 300 million bushels off production. That would keep 2024-25 ending stocks about a third larger than observed between 2020-21 and 2022-23, and that is before making any reductions to demand, which would be necessary if the crop was smaller. If soybean yield ends up decreasing by 2%, production falls by 92 million bushels. Before demand adjustments, ending stocks would be around 75% heavier than the tighter levels observed between 2020-21 and 2022-23. While it is certainly not impossible for USDA to throw the market corn and soy yield curve balls in the months ahead, they would have to be extraordinary deviations to significantly alter the current market climate given how large carryout estimates already are for 2024-25. Karen Braun is a market analyst for Reuters. Views expressed above are her own. Sign up here. https://www.reuters.com/markets/commodities/huge-us-corn-soy-yields-could-stave-off-further-increases-2024-09-13/
2024-09-13 07:45
DHAKA, Sept 13 (Reuters) - At least six people, including three Rohingya refugees, died and several others were injured on Friday after heavy rains triggered landslides in southeastern Bangladesh, officials said. The landslides took place in two separate places in the border district of Cox's Bazar, including the Rohingya camps, after three days of intense late monsoon rains, said Mohammad Shamsud Douza, a senior government official overseeing refugee affairs. More than 1 million Rohingya live in squalid camps in Cox's Bazar, the world's largest refugee settlement, many having fled from a military crackdown in neighbouring Myanmar in 2017. The refugees mostly live in flimsy shelters made of bamboo and plastic sheets, often situated on unstable, steep hillsides. Three other people were killed in Cox’s Bazar town, where heavy rainfall has caused widespread waterlogging, another official said. The Cox's Bazar weather office recorded 378mm of rainfall from 6 a.m. Thursday to 6 a.m. Friday, marking the highest rainfall of the monsoon season so far, meteorologist Abdul Hannan said. The South Asian country is still recovering from a deadly flood after torrential rains and upstream water from India left more than 70 dead and displaced millions. Sign up here. https://www.reuters.com/world/asia-pacific/six-people-including-three-rohingya-killed-bangladesh-landslides-2024-09-13/
2024-09-13 07:27
Sept 13 (Reuters) - European stocks advanced on Friday and were poised for weekly gains, supported by miners, while investors shifted their focus to the U.S. Federal Reserve ahead of a long-awaited monetary easing cycle at its meeting next week. The pan-European STOXX 600 index (.STOXX) , opens new tab was up 0.5% at 514.5 points, as of 0710 GMT, with France's CAC 40 (.FCHI) , opens new tab rising 0.3% after consumer prices in the region's second-largest economy rose 2.2% year-on-year in August, in line with its preliminary reading. Miners (.SXPP) , opens new tab boosted the markets, rising 0.6%, as copper prices hit a two-week high on buying ahead of a Chinese holiday and amid stimulus hopes after President Xi Jinping pushed for measures to boost economic growth. After the European Central Bank (ECB) lowered its deposit rate to 3.5% on Thursday, investors are now wagering on the size and extent of the rate cut by the U.S. central bank next week, with money markets seeing a 43% chance for a 50 bps reduction on Sept. 18. "I think there's a strong case for 50," said Bill Dudley, the former chief of the New York Fed. Astrazeneca (AZN.L) , opens new tab was the top loser with a 1.1% fall after Deutsche Bank cut the stock rating to "sell" and lowered its price target on Friday. Shares of Denmark's DSV (DSV.CO) , opens new tab climbed 2.4% after the transportation and logistics services operator announced plans to invest around one billion euros ($1.1 billion) in Germany over the next three to five years as the new owner of Deutsche Bahn's [RIC:RIC:DBN.UL] logistics unit Schenker. Sign up here. https://www.reuters.com/markets/europe/european-shares-climb-with-focus-us-cenbank-policy-decision-2024-09-13/
