2024-09-04 13:45

TORONTO, Sept 4 (Reuters) - Canada posted a lower-than-expected trade surplus of C$684 million ($505 million) in July as imports fell faster than exports, while the June balance was revised to a deficit from a surplus, Statistics Canada data showed on Wednesday. Exports were down by 0.4%, after rising 4.7% in June, on declines for motor vehicles and parts as well as wheat and canola. In volume terms, exports decreased 1.5%. "Export volumes were pretty weak across the board," said Stuart Bergman, chief economist at Export Development Canada. "That continues the volatile yo-yo trend that we've seen this year ... This bouncing around makes it really hard for businesses to plan. It is somewhat reflective of the stop-start nature of what we're seeing in the economy south of the border." Canada sends about 75% of its exports to the United States. Analysts polled by Reuters had forecast a surplus of C$0.8 billion. June's trade balance was revised to show a deficit of C$179 million from a preliminary surplus of C$638 million. Imports fell by 1.7%, from a record C$66.1 billion in June, on lower motor vehicles and parts as well as aircraft. Import volumes were down 2%. "Higher interest rates and prices continue to hamper consumers," Bergman said. The Bank of Canada has begun lowering interest rates to support the economy. It is due to make a policy decision at 9:45 a.m. ET (1345 GMT). The Canadian dollar was trading nearly unchanged at 1.3552 per U.S. dollar, or 73.79 U.S. cents. ($1=$1.3552 Canadian) Sign up here. https://www.reuters.com/markets/canada-trade-balance-swings-surplus-july-2024-09-04/

2024-09-04 12:47

Renewed recession risks batter stocks Volatility gauges on the rise Aggressive Fed rate cut forecasts no longer seen as good news LONDON, Sept 4 (Reuters) - Mounting unease over the U.S. economic outlook and a seasonally weak month for stocks have created another perfect storm of global market volatility, leaving investors scrambling for protection and fearing another round of currency chaos. Following a rapid recovery for risky assets such as stocks and high yield bonds from a chaotic early August selloff, traders have lost their short-lived optimism that U.S. interest rate cuts would support growth. Instead, they appear to be already getting ahead of U.S. jobs data on Friday that may repeat last month's weak report, with Tuesday's weak U.S. manufacturing data triggering fresh selling. Wall Street's S&P 500 share index (.SPX) , opens new tab fell over 2% on Tuesday, while Japan's broad Topix share gauge plunged 3.7% on Wednesday in its biggest daily drop since the Aug. 5 market rout and European stocks tumbled (.STOXX) , opens new tab. Meanwhile, the VIX (.VIX) , opens new tab index of expected U.S. equity volatility has hit a one-month high, as choppy currency trading threatened the dollar and other haven currencies. "Markets were dealing with uncertain inflation but growth was resilient," said Florian Ielpo, head of macro at Lombard Odier. "That situation seems to be changing, the new uncertainty is how deep will the slowdown be." SHAKEOUT The shaky start to September follows an early August global rout as a Japanese rate increase and the U.S. jobs data wrecked popular carry trades betting against the yen. Echoing August's pain, highly valued tech stocks that investors have crowded into are taking a beating. AI heavyweight Nvidia (NVDA.O) , opens new tab slid 9.5% on Tuesday, the deepest ever single-day market value decline for a U.S. company. Dutch semiconductor equipment supplier group ASML Holdings (ASML.AS) , opens new tab slumped around 5% on Wednesday. "One of the big risks is that you have this market concentration, and all it takes is one of those (big tech) names to be volatile, for it to feed through to the entire market," said Justin Onuekwusi, CIO at investment firm St. James' Place. The shakeout followed investor unease that stocks and bonds had started September with different stories - equity markets had priced robust company earnings while government debt rallied in anticipation of deep U.S. rate cuts and recession risk. "You need to decide now whether you like credit and bonds or equities," said Lombard Odier's Ielpo, who added he had bought government bonds over the last four weeks. U.S. 10-year bond yields, at around 3.8%, have fallen for the past four months. German Bund yields pulled further away on Wednesday from one-month peaks touched on Monday. BCA Research recommended selling equities and buying bonds. "We assign high odds to a recession tipping point," it said in a client note. The Federal Reserve is expected to cut rates for the first time since 2020 on Sept. 18, with money markets now pricing a 43% probability of a 50-basis-point reduction in its funds rate to 4.5%-4.75%. A broad index of high-yield corporate bond performance (.MERH0A0) , opens new tab has also risen 2.5% since dropping briefly in early August. Ninety One credit fund manager Darpan Haran said he was cautious about U.S. high yield bonds, sold by borrowers whose weaker financial profiles make them sensitive to economic shocks. "U.S. high yield is more prone to a repricing because of valuations and U.S. recession fears," he said. DOLLAR JITTERS Traditional currency havens might not shine in this global selloff, analysts said, because of uncertainty about whether the dollar would retain its usual appeal when risky assets fall or suffer instead because traders believe a U.S. recession is on the horizon. Short-term speculators have a roughly $9 billion bet on the dollar falling against other major currencies, a position that could spark more foreign exchange swings if proven wrong, or further weaken U.S. stocks if it is accurate. Trend following CTA funds, key players in August's market selloff, have built large bets the dollar will weaken, BNP Paribas head of G10 FX Strategy Alex Jekov said. If U.S. jobs data this week come out strong, the dollar may strengthen, causing brisk exits from those short positions and hitting currencies speculators currently prefer, like the British pound. An index of foreign exchange volatility (.DBCVIX) , opens new tab is heading back towards peaks hit in early August. Societe Generale chief FX strategist Kit Juckes said over the longer term, the dollar and U.S. stocks could drag each other lower because of the vast magnitude of funds that had now flowed into Wall Street stocks from overseas, without currency hedging. "The risk for the dollar is that people actually don't just go off the dollar, but they also come out of U.S. stocks as well," he said. Sign up here. https://www.reuters.com/markets/us/recession-fears-trounce-rate-cut-cheer-latest-market-selloff-2024-09-04/

2024-09-04 12:43

SAO PAULO, Sept 4 (Reuters) - Brazil's industrial production fell more than expected in July, losing steam after a stellar performance in the previous month, government statistics agency IBGE said on Wednesday. Industrial production in Latin America's largest economy fell 1.4% in July from June . Economists polled by Reuters projected a decline of 0.9%. "Negative industry performance in July comes after intense growth in the previous month," IBGE survey manager Andre Macedo said. In June, output had increased 4.3% from May, revised data from IBGE showed on Wednesday, breaking a two-month negative streak. According to Macedo, some important industrial plants also halted their production process in July. The main negative influence came from food products, with production down 3.8% on a monthly basis. "There was a drop in sugar production, impacted by the effects of a drought in the country's center-south region, as well as in beef and soy products. These items were the ones that contributed most negatively this month," Macedo said. Still, industrial production jumped 6.1% in July from a year earlier , IBGE said, citing "spread positive results" and a low 2023 comparison base. Economists polled by Reuters were expecting an annual increase of 6.3%. With July's figures, Brazil's industrial sector is now 1.4% above pre-pandemic levels but 15.5% below its record high reached in 2011. Sign up here. https://www.reuters.com/markets/brazils-industrial-output-falls-more-than-expected-july-2024-09-04/

2024-09-04 12:32

Sept 4 (Reuters) - Russian President Vladimir Putin said that he intended to discuss a gas supply contract with Serbia that expires in March 2025 with Serbian Deputy Prime Minister Aleksandar Vulin. Putin met Vulin at the Eastern Economic Forum in Russia's far eastern port of Vladivostok. Serbia, which was bombed by NATO during the 1999 war in Kosovo, has historically close ties to Russia but also aspires to join the EU. Since Russia's full-scale invasion of Ukraine in 2022, Serbia's President Aleksandar Vucic has walked a fine line, condemning the Russian military action but refusing to join European sanctions against Moscow. Serbia largely depends on gas supplies from Russia and its NIS oil monopoly is majority owned by Russia's Gazpromneft, although it is seeking to diversify its energy supplies. In a statement, Vulin's office made no mention of gas supply talks but said Vulin had reassured Putin about Serbia's relationship with Russia. "Serbia led by Aleksandar Vucic ... will never become a member of NATO, will never impose sanctions on the Russian Federation, and will never allow anti-Russian actions to be carried out from its territory," it said. Vulin, the former head of Serbia's BIA state security agency, is under sanctions by the United States for helping Moscow in its "malign" activities, and for having links to an arms dealer and a drug trafficking ring. He resigned from the BIA when sanctions were imposed, and has denied wrongdoing. His visit to Russia comes only days after Belgrade and France's Dassault Aviation agreed about the purchase of 12 new Rafale fighter jets for 2.7 billion euros ($2.98 billion), a move seen as a major shift away from Russia, Serbia's major weapons supplier. ($1 = 0.9053 euros) Sign up here. https://www.reuters.com/world/europe/putin-discuss-gas-supply-contract-with-serbian-deputy-pm-2024-09-04/

2024-09-04 12:26

BRUSSELS, Sept 4 (Reuters) - The European Union has coordinated a record number of emergency responses to extreme weather this year, as climate change fuels wildfires and other disasters in Europe, the world's fastest-warming continent. Europe's fire season typically peaks in June to September, but climate change increases hot and dry conditions that have contributed to the fire season starting earlier and burning more land. To help EU members and other countries that request emergency help, the bloc oversees and funds the deployment of firefighting airplanes and medical teams pooled by member countries - a system known as the EU civil protection mechanism. It has been activated 31 times this year so far in response to extreme weather - more weather-related deployments than in any other year to date, European Commission data shared with Reuters showed. The scheme was deployed 23 times in response to extreme weather in the whole of 2023. Most of this year's activations were to tackle wildfires. The 19 wildfire responses the EU coordinated this year already exceed the total in any other year in records going back to 2007. The EU civil protection scheme was formed in 2001. The EU sent firefighting planes to Albania, Greece and the Portuguese island of Madeira last month, in response to requests for emergency help from those governments. It also sent firefighting aircraft to Bulgaria and North Macedonia in July. The EU's reserve fleet of 28 firefighting planes and four helicopters from its member countries has more than doubled since 2022, when devastating fires in southern Europe exhausted its previous 13-craft capacity. "Heatwaves are becoming hotter and longer lasting, which dries out vegetation, particularly in periods of low rainfall, creating tinderbox conditions," Ben Clarke, a climate researcher at Imperial College London's Grantham Institute, said. "Hot and dry fire-prone conditions are increasing, notably in southern Europe." By the time Greece's worst wildfire this year broke out in mid-August near Athens, the country had already faced over 3,500 fires since May, a nearly 50% increase from the same period in 2023. Ahead of this summer, the EU stationed 556 firefighters across countries including Greece and Spain. Brussels has also placed orders for the first directly EU-owned firefighting planes, due for delivery from 2027. Sign up here. https://www.reuters.com/business/environment/eu-manages-record-number-responses-extreme-weather-2024-09-04/

2024-09-04 12:25

BRASILIA, Sept 4 (Reuters) - Brazil's Finance Minister Fernando Haddad said on Wednesday that he trusts central bank officials when asked about the prospect of an interest rate hike at the upcoming monetary policy meeting this month. In an interview with GloboNews, Haddad noted that it would not be "elegant" for him to comment on what the central bank should do. Policymakers will meet on September 17-18, and bets on an interest rate hike have increased after second-quarter data showed stronger-than-expected economic growth. The central bank has kept the benchmark rate steady at 10.5% since June, but warned in July that it would not hesitate to raise borrowing costs if needed amid a more challenging outlook for consumer prices. Annual inflation hit 4.35% in mid-August compared to a 3% official target. Amid rising social security spending, Haddad said that the government is not discussing a potential new pension reform but acknowledged there is "some discussion" about categories that were excluded from the previous reform and may eventually make their contribution. When asked about adjustments to other mandatory expenses that could provide fiscal relief, such as unlinking certain expenditures from the minimum wage growth, Haddad said the government is open to discussing any topic. "But politics has its own timing, and that requires due caution," he said. Sign up here. https://www.reuters.com/business/finance/brazil-finance-minister-says-he-trusts-central-bank-officials-ahead-rate-2024-09-04/