2024-09-11 08:37

MUMBAI, Sept 11 (Reuters) - Indian importers are exploring options strategies to hedge against currency risks amid muted volatility in the rupee, moving away from outright forwards that have become expensive, traders said. Premiums, which reflect the interest rate differential between the United States and India, have surged as the Federal Reserve is expected to embark on a rate-cutting cycle, starting next week. "With forward premiums up significantly, we are recommending to importers to consider option structures," Samir Lodha, managing director at forex advisory firm QuantArt Market Solutions, said. The dollar/rupee 1-year forward premium has jumped nearly 75 basis points in the last two months to a 16-month high, making it costlier to hedge future foreign currency payments. With premiums high and volatility low, using options structures such as capped forwards is recommended, according to QuantArt's Lodha. The cost of using a capped forwards is about 55%-65% lower than using forwards. Such structures would, for instance, allow importers to lock in an FX payment due in six months at the dollar/rupee spot rate of 83.96 but the protection would be valid only until 85, Lodha said. This is where the relative stability of the rupee helps, as the probability of a large depreciation in a short span of time is low. India's central bank, which is active on both sides of the forex market - buying and selling dollars, has quashed volatility, making the rupee among the least volatile currencies in Asia. "Both implied and realised volatility for USD/INR remain extremely low, leading importers to use option structures such as seagulls, knockouts, and range forwards for better payoff in the current market environment," Ashhish Vaidya, managing director and treasurer, global financial markets at DBS Bank India, said. A knockout allows the importer to buy dollars at a better rate than in the forward market, but this benefit ceases if the rupee depreciates past a predetermined level. "There is no denying that higher premiums are deterring importers from hedging in the forward market", leading to enquiries for option structures which are low-cost, an FX salesperson at a bank said. Sign up here. https://www.reuters.com/world/india/indian-importers-favour-fx-options-rupee-holds-steady-premiums-soar-2024-09-11/

2024-09-11 07:58

Reuters poll graphic on U.S. economy and Fed monetary policy: BENGALURU, Sept 10 (Reuters) - (This Sept. 10 story has been corrected to show the number of respondents who said "likely" and "very likely", in paragraph 8) The Federal Reserve will lower interest rates by 25 basis points at each of the U.S. central bank's three remaining policy meetings in 2024, according to a majority of economists in a Reuters poll that found only nine of 101 expected a half-percentage-point cut next week. With inflation approaching the Fed's 2% target and some signs of an economic slowdown, policymakers have made it clear "the time has come" to start reducing the federal funds rate, which has been held in the 5.25%-5.50% range since July 2023. After the release on Friday of a mixed jobs report for August, interest rate futures contracts briefly priced in more than a 50% chance of a half-percentage-point cut next week, but the chances have narrowed to about one in four. Rate markets are still pricing in more than 100 basis points of cuts this year. Remarks from New York Fed President John Williams and Fed Governor Christopher Waller late last week also did not signal any support among policymakers for an outsized rate cut this month. A strong majority of economists in the Sept. 6-10 poll, 92 of 101, expect a 25-basis-point cut when the U.S. central bank's Federal Open Market Committee (FOMC) concludes its two-day meeting next week. "The employment report was soft but not disastrous. On Friday, both Williams and Waller failed to offer explicit guidance on the pressing question of 25 basis points vs. 50 on Sept. 18, but both offered a relatively benign assessment of the economy, which points strongly, in my view, to a 25-basis-point cut," said Stephen Stanley, chief U.S. economist at Santander. Among primary dealers surveyed, Santander has provided the most consistent end-year rate forecast throughout 2024, predicting 50 basis points of cuts in total in each Reuters poll up until July, when it switched to 75 basis points. Fifty-four of 71 economists polled said a 50-basis-point cut at any of the Fed's remaining meetings this year was unlikely, including five who said it was very unlikely. The other 13 said such a move was very likely, with four saying very likely. "If the Fed were to cut by 50 bp in September, we think markets would take that as an admission it is behind the curve and needs to move to an accommodative stance, not just get back to neutral," said Aditya Bhave, senior U.S. economist at Bank of America. A majority of economists polled by Reuters since May have been calling for two Fed rate cuts this year, but the number increased to three last month. Some economists have argued the reductions in borrowing costs will be aimed not at responding to an ailing economy, but instead to reduce the amount of policy restriction as inflation falls toward the Fed's target. ECONOMIC EXPANSION The median probability of a recession in the latest poll was just 30%, a figure little changed all year, despite recent concerns in financial markets about a possible economic contraction. After its meeting next week, the Fed will deliver two more 25-basis-point rate cuts this year - in November and December - according to 65 of 95 economists. That was up from 55 of 101 last month. Among 19 primary dealers polled, 11 expected the Fed to deliver a total of 75 basis points of rate cuts this year. The U.S. economy, which grew at an annualized pace of 3.0% in the second quarter, is expected to expand at or faster than what Fed officials currently see as the non-inflationary growth rate of 1.8% over the coming years, according to median forecasts in the poll. The unemployment rate was forecast to remain at around the current 4.2% through the end of 2026. Personal consumption expenditures (PCE) price index inflation - the Fed's preferred gauge - was expected to hit the 2% target in the first quarter of 2025. Sign up here. https://www.reuters.com/markets/us/fed-cut-rates-by-25-basis-points-sept-18-twice-more-2024-2024-09-10/

2024-09-11 07:36

FTSE 100 up 0.1%, FTSE 250 adds 0.2% Mining stocks lead gains Rentokil falls on plans to slash jobs UK economy shows no growth in July Sept 11 (Reuters) - London stocks edged higher on Wednesday, supported by precious and base metal miners, while investors maintained a cautious stance ahead of a crucial U.S. inflation print later in the day. The blue-chip FTSE 100 (.FTSE) , opens new tab was up 0.1%, as of 0712 GMT, while the mid-cap FTSE 250 (.FTMC) , opens new tab added 0.2%. Industrial (.FTNMX551020) , opens new tab and precious metal miners (.FTNMX551030) , opens new tab inched 1.8% and 1.4% higher, respectively, the biggest gainers in the index, as a softer dollar and rate-cut optimism lifted copper and gold prices. Heavyweight energy shares (.FTNMX601010) , opens new tab gained 1.2% after oil prices climbed, as concerns about Hurricane Francine disrupting output in the United States, the world's biggest producer, outweighed worries about weak global demand. On the flip side, industrial support services stocks (.FTNMX502050) , opens new tab led declines with a 2.4% loss. The sector was pulled down by Rentokil Initial (RTO.L) , opens new tab, which slipped 17.8% after the pest control company announced jobs cuts to address cost overruns. Data showed Britain's economic production grew by less than expected in month-on-month terms in July, showing no change after zero growth in June. "The figures are not bad enough to change the course the BoE is sailing on. An unexpected (cut) or a cut that's too large might be a signal to investors that the economic prognosis is significantly worse," said Nick Saunders, chief executive officer of trading platform Webull UK. Investors awaited the release of U.S. consumer prices index (CPI) numbers for more clues on the stance of the Federal Reserve on rate cuts this year after economic data last week did little to clear the uncertainty. Rightmove (RMV.L) , opens new tab fell 2% after the real estate portal rejected the 5.6 billion pound ($7.32 billion) cash-and-stock takeover proposal from Australia's REA Group (REA.AX) , opens new tab. Shares of WH SMith (SMWH.L) , opens new tab jumped 12% after the company reported a higher annual revenue and announced a buyback plan worth 50 million pounds. Sign up here. https://www.reuters.com/world/uk/ftse-100-inches-higher-commodity-strength-us-data-focus-2024-09-11/

2024-09-11 07:26

Sept 11 (Reuters) - European shares opened higher on Wednesday, boosted by the oil and gas, and the basic resources sectors, while investors awaited a key U.S. inflation reading for clues on the Federal Reserve's interest rate decision next week. The pan-European STOXX 600 index (.STOXX) , opens new tab was up 0.3%, as of 0710 GMT. All regional indexes were trading in the green. The oil and gas sector (.SXEP) , opens new tab boosted the index, with a 1.2% gain as concerns about Hurricane Francine disrupting output in the U.S., outweighed worries. Basic Resources (.SXPP) , opens new tab also provided support, gaining 1.6%, as copper prices rose on a softer U.S. dollar. With only a handful of economic data out of Europe, investors are laser focused on U.S. consumer price figures set to drop at 1230 GMT. Britain's benchmark FTSE 100 (.FTSE) , opens new tab ticked up 0.4% after estimates of GDP data showed the UK's economic output showed no change in month-on-month terms in July. Investors also have on their radar, comments from European Central Bank board member Elizabeth McCaul and the central bank's supervisor Claudia Buch due later in the day. Commerzbank (CBKG.DE) , opens new tab surged 15.7%, after Italy's UniCredit (CRDI.MI) , opens new tab bought a 9% stake in the German bank for 702 million euros ($775.29 million) from the German government. Rentokil (RTO.L) , opens new tab slumped more than 16%, after the British pest control firm said it would cut jobs and flagged a slowdown in its North American revenue. ($1 = 0.9055 euros) Sign up here. https://www.reuters.com/markets/europe/european-shares-gain-boost-oil-resources-sectors-2024-09-11/

2024-09-11 06:57

ZURICH, Sept 11 (Reuters) - Agrochemicals company Syngenta is cutting just over 10% of its workforce at its Swiss headquarters in Basel, newspaper Tages-Anzeiger reported on Wednesday, following a big downturn in its crop protection business this year. Up to 150 of the 1,100 positions in the city will be affected at the Chinese-owned company which employs 60,000 people globally. "The cuts are affecting all areas and levels of the heirarchy," Syngenta manager Alexandra Brand told the newspaper. The losses come after Syngenta, which produces seeds and crop protection sprays, reported a 17% drop in sales in the first six months of 2024. Core operating profit slumped by 36%. The company has been hit by continued destocking by farmers, who built up large inventories of seeds and insecticides after the pandemic. Lower agricultural commodity prices reduced the spending power of farmers, who also held back on using crop sprays during heavy rains, particularly in the United States. Syngenta was bought by ChemChina in 2017 for $43 billion and was folded into Sinochem Holdings Corp in 2021. Earlier this year it withdrew its bid for a multi-billion dollar listing on the Shanghai Stock Exchange due to unfavourable market conditions. Sign up here. https://www.reuters.com/markets/commodities/agrichemicals-company-syngenta-cuts-jobs-switzerland-2024-09-11/

2024-09-11 06:51

Sept 11 (Reuters) - Miner Anglo American (AAL.L) , opens new tab on Wednesday said one of its subsidiaries has raised 7.2 billion rand ($403.21 million) from the sale of about a 5.3% stake in Anglo American Platinum (Amplats) (AMSJ.J) , opens new tab as part of a share sale program that launched a day earlier. Anglo American South Africa Proprietary Limited sold 13.9 million Amplats shares for $28.84 per share, the miner said. An accelerated bookbuild offering of about 13 million shares of Amplats was launched on Tuesday, ahead of the South African unit's demerger expected next year. "The placing is intended to broaden the free float of Anglo American Platinum, reduce the number of shares distributed to Anglo American shareholders upon demerger and thereby reduce flowback following the demerger," Anglo American said. Amplats CEO Craig Miller had said in July that the company was planning a secondary listing in London. ($1 = 17.8824 rand) Sign up here. https://www.reuters.com/markets/commodities/anglo-american-launches-share-sale-platinum-unit-amid-demerger-plans-2024-09-10/