2024-09-04 11:07

Sept 4 (Reuters) - Sterling held steady on Wednesday after a survey showed Britain's services activity grew last month at the fastest pace since April, adding to signs of momentum in the economy. The pound was flat at $1.3115, hovering near a two-week low touched in the prior session. The currency has eased somewhat after a stunning rally in August that pushed it to its strongest level in more than two years. The S&P Global UK Services Purchasing Managers Index rose in August to 53.7 from 52.5 in July, above a preliminary estimate of 53.3. The survey, which also pointed to easing price pressures, followed a poor reading on U.S. manufacturing activity which knocked global stocks lower ahead of monthly U.S. payrolls data on Friday. Traders are pricing in just over 100 basis points of interest rate cuts from the Federal Reserve by the end of the year, and about 39 bps, or at least one more cut, from the Bank of England this year. Britain's central bank cut borrowing costs last month for the first time since March 2020, to 5.0% from a 16-year high of 5.25%. "We think sterling can grind higher but with greater unwind risk because of how stretched positioning is," said Alex Jekov, head of G10 FX strategy at BNP Paribas. The euro edged up against the pound at 84.275 pence, rising for a fourth consecutive day after having hit a one-month low late last week. HCOB's composite PMI for the euro zone, compiled by S&P Global and seen as a good gauge of overall economic health, jumped to 51.0 in August from July's 50.2. Sign up here. https://www.reuters.com/markets/currencies/sterling-steady-after-upbeat-uk-services-sector-data-2024-09-04/

2024-09-04 10:50

SINGAPORE, Sept 4 (Reuters) - The outcome of November's presidential election will loom large over talks in Beijing this week between U.S. climate envoy John Podesta and his Chinese counterpart Liu Zhenmin, experts said on Wednesday. Co-operation between the world's two biggest greenhouse gas emitters has helped pave the way for major climate deals, such as the 2015 Paris Agreement, but the risk of former President Donald Trump's re-election could make fresh pledges difficult. "The election will make it very hard - in fact, impossible - for the two sides to reach any substantive agreement during Podesta's trip," said Li Shuo, an expert in climate diplomacy at the Asia Society Policy Institute. "There's just no reason why the China side will show its cards ahead of the election." With Podesta set to arrive in Beijing on Wednesday, the United States also hopes to press China to contribute to a new global climate finance package and set more ambitious 2035 goals before a U.N. deadline early next year. China's foreign ministry declined to comment on the visit. During Trump's first term in office, starting in 2017, the United States shut down climate talks with China and withdrew from the Paris Agreement. Though it rejoined in 2021, Trump is expected to pull out again if he wins in November. However, the entry of Kamala Harris to the fray means Beijing's calculations will be different from a few months ago, when most polls showed Trump leading over President Joe Biden, said Tom Evans, senior policy adviser with the E3G climate think tank. "China is going to have to entertain the possibility of two very different U.S. scenarios and hedge their bets," he said, after the vice president took Biden's place on the Democratic ticket. Washington is said to be pushing Beijing to pledge an emissions cut of 30% by 2035 to align with the Paris Agreement, and regardless of November's result, Evans said, it was still key for the United States to spur China to raise its ambitions. Even a Trump win could afford China an opportunity to show more ambition and "distinguish itself positively from a backsliding United States", he added. Yet a victory for Trump would doom two-way climate diplomacy, said Li, who is also the director of the China Climate Hub at the Asia Society Policy Institute. "It will be very clear-cut: climate is just not an issue and there won't be any U.S.-China climate engagement from day one." Sign up here. https://www.reuters.com/world/china-us-climate-envoys-meet-presidential-election-casts-shadow-2024-09-04/

2024-09-04 10:46

MUMBAI, Sept 4 (Reuters) - The Indian rupee dropped to a record low near the close of trading on Wednesday after yet another rangebound trading session as it stayed wedged between negative global cues and support from the central bank. The rupee hit a lifetime low of 83.98 to the U.S. dollar in the last minute of trade. It closed at 83.9650, versus its previous close of 83.9675, having stayed in a narrow three-paisa range throughout the session. "It is quite clear that the RBI (central bank) is defending the rupee," said a trader with a private bank. "If it allows the rupee to go below 84, dollar bulls will be active and a move towards 84.25 will be quick." Over the last month, there were several instances when the Reserve Bank of India intervened on both sides of the forex market to support the currency. This has led to the rupee holding a narrow range for extended periods. It has stayed in a 20-paisa range over the last month. Meanwhile, the overnight weakness in U.S. equities, after data that indicated manufacturing activity remained weak, percolated to Asian and European equities. The data has raised the odds of a 50-basis-point rate cut at the Federal Reserve's Sept. 17-18 meeting to 42% from 30%, per the CME FedWatch Tool. "With the Fed's monetary policy meeting just a fortnight away, the market has already priced in a 25-basis point rate cut," said Amit Pabari, managing director of CR Forex. "However, any further deterioration in the data could reignite concerns, possibly prompting the Fed to consider a larger 50-basis point cut." More clues on the direction of the Fed's monetary policy pivot will be gauged after Friday's U.S. payroll numbers, which will likely set the tone for global rates going forward. (This story has been refiled to add the dropped words 'hit a,' in paragraph 2) Sign up here. https://www.reuters.com/markets/currencies/rupee-hits-record-low-amid-negative-global-cues-rbi-support-aids-2024-09-04/

2024-09-04 10:21

Sept 4 (Reuters) - The International Longshoremen's Association union, representing 45,000 workers at major container ports from Texas to Maine, began two days of meetings on Wednesday to review wage demands and prepare for a potential strike on Oct. 1. Formal talks have reached an impasse as the union and the United States Maritime Alliance (USMX) employer group wrangle over pay, terminal automation, healthcare coverage and retirement benefits. A source familiar with the negotiations said the ILA has asked for a 77% pay bump over the life of the new contract. Three experts told Reuters the final increase would likely improve on the 32% rise the West Coast longshore union negotiated last year. ILA International President Harold Daggett has warned that workers will strike if a new labor agreement is not reached before the current six-year contract expires on Sept. 30. "The ILA most definitely will hit the streets on October 1 if we don't get the kind of contract we deserve," Daggett, the union's chief negotiator, said in a video message posted on Wednesday. The USMX said in previous statements it has been trying to set a meeting with the ILA to resume talks. Any work slowdown or stoppage would affect key ports including New York/New Jersey, Houston and Charleston, South Carolina, backing up goods ahead of the holiday season and U.S. presidential elections. Such disruptions would have "serious ripple effects" on global supply chains already under pressure from Red Sea diversions, said Vincent Clerc, CEO of A.P. Moller-Maersk (MAERSKb.CO) , opens new tab, last week at an event in Los Angeles. Maersk is a USMX member company. When asked about the status of the talks, Clerc said negotiators previously had been able to "take it from the brink" and reach an agreement. Shippers that depend on affected ports are not taking chances, and many have brought in goods early to mitigate risk. Still, each day without a deal fuels worries about a strike. The National Retail Federation (NRF) on Tuesday urged the two sides to return to the bargaining table, following similar calls by the Retail Industry Leaders Association and the American Apparel & Footwear Association. "A strike or other disruption would significantly impact retailers, consumers and the economy. The administration needs to offer any and all support to get the parties back to the table to negotiate a new contract," NRF CEO Matthew Shay said in a statement. Sign up here. https://www.reuters.com/business/autos-transportation/us-east-coast-ports-union-meets-over-wage-demand-preps-possible-strike-2024-09-04/

2024-09-04 10:14

A look at the day ahead in U.S. and global markets from Mike Dolan Wall Street seems to be making a habit of these early month stock plunges, with Tuesday's tremor a mild aftershock from the brief August quake one month ago. Given that September historically tends to be the worst month of the year for stock market returns - with August a close second - then seasonal flurries like this probably should be treated as such. This too will likely pass. And yet there's inevitably some anxiety that the sharp retreat from near record highs is rooted in something more fundamental. And on that score, this week's critical U.S. employment report and another dour reading on global manufacturing for August cranked up the tension again. While factories in the U.S. and around the world have been spluttering for the best part of two years, there had been some sign of a manufacturing upturn earlier this year. But the sector seems to be suffering a relapse, not least as China's economy continues to struggle with its property bust and growth there wanes. U.S. output contracted again in August, according to Tuesday's release of the Institute for Supply Management's latest factory survey, even if some modest improvement in employment readings may ease fears for this week's big labor market readouts. The first of those starts today with a report on July job openings. But survey signs of a further decline in new orders and rising inventories suggested a deepening slowdown in manufacturing is taking hold. What's more, JPMorgan's global manufacturing index slipped to its weakest reading of the year and registered its second month in a row in contractionary territory. "More concerning are signs that business equipment spending is losing steam - potentially pointing to a weakening in the pace of hiring as well," the bank said in a report. While manufacturing only accounts for about 10% of the U.S. economy, it's 15% of euro zone GDP, 20% of Germany's output and 26% of China's. More dominant service sector readings are offsetting the gloom - with euro zone surveys on Wednesday showing the overall business activity signal still expanding last month and only marginally below forecast as the Paris Olympics seemed to lift the mood. Still, the factory wobble seems to have been enough to knock back the stocks again as the S&P500's 2% loss on Tuesday (.SPX) , opens new tab clocked its worst day in a month and the VIX volatility gauge (.VIX) , opens new tab jumped back above its long-term averages. Adding to the angst was a near 10% drop in artificial intelligence bellwether Nvidia (NVDA.O) , opens new tab, its worst day since April and marking its biggest ever one-day loss in market value with a $279 billion wipeout. The stock lost another 1% out of hours overnight after Bloomberg reported the U.S. Department of Justice has sent a subpoena to Nvidia as it deepens its probe into the AI heavyweight's antitrust practices. Stocks around the world were caught in the slipstream on Wednesday, with Japanese (.N225) , opens new tab, Taiwanese (.TWII) , opens new tab and Korean (.KS11) , opens new tab markets all suffering 3-4% swoons. European stocks (.STOXXE) , opens new tab lost another 1% and Wall St stock futures , remained slightly in the red. With growth clouds nudging up Federal Reserve easing expectations, there was some relief for global investors from the rally in Treasuries - sustaining the newly negative correlation between stocks and bonds that re-emerged last month. The chances of a Fed rate cut of as much as 50 basis points rose to about 40%, with 104bps now priced for the year. Two-year Treasury yields plunged to 3.83% - their lowest since May last year - and 10-year yields ebbed too. The bond rally was encouraged by a sharp drop in oil prices - which were hit by worries about global manufacturing, a likely resumption of Libyan supply after the recent outage and expectations of an increase in overall OPEC output next month. U.S. crude prices fell below $70 per barrel for the first time since Jan. 2 and year-on-year price drops are now running at close to 20%. The dollar index (.DXY) , opens new tab, which hit a two-week high on Tuesday, slipped back again. And there was little sign of a renewed "safety bid" in the likes of gold or Bitcoin , which both fell today. Japan's yen was slightly firmer after this week's latest reiteration from the Bank of Japan that it plans to continue tightening. And the Canadian dollar found a foothold as it awaits another Bank of Canada interest rate cut later today - the third of the year so far even before the Fed gets going. Key developments that should provide more direction to U.S. markets later on Wednesday: * Bank of Canada policy decision, news conference from BOC governor Tiff Macklem * US July job openings, July international trade balance, July factory goods orders; Canada July trade balance, * Federal Reserve publishes 'Beige Book' on economic conditions; European Central Bank board member Frank Elderson speaks * US corporate earnings: Hewlett Packard Enterprise, Dollar Tree, Hormel Foods, Copart Sign up here. https://www.reuters.com/markets/us/global-markets-view-usa-pix-2024-09-04/

2024-09-04 10:04

Vista is Argentina's No. 2 shale producer behind YPF Oil output seen hitting 150,000 barrels daily by 2030 Company sees lower lifting costs near technical limit Vaca Muerta output gains dependent on more fracking BUENOS AIRES, Sept 4 (Reuters) - In a push to unlock more of the oil riches buried in a massive shale deposit in Argentina, Vista Energy will invest about $1.1 billion this year as it also aims to cut costs there by double digits, the firm's chief executive told Reuters. Miguel Galuccio, Vista Energy's founder and CEO, offered the near-term development plan for the Vaca Muerta shale formation in a Zoom interview from New York , where he was celebrating the company's five-year anniversary on the New York Stock Exchange. Shares have surged more than 460% since the company's initial public offering. The company also trades on the main stock index in Mexico (VISTAA.MX) , opens new tab, where it operates an onshore field. But Vaca Muerta, the world's largest shale project in development outside the United States, is by far the company's top project. It is also the Argentine government's main hope for reversing a longstanding energy deficit that has forced it to finance costly imports over decades. Galuccio noted how the project has taken off in just over a decade. "In 2012, Vaca Muerta was for believers. Today Vaca Muerta is for engineers," he said, touting expected production gains. Since last year, output from the deposit has more than doubled to reach 65,000 barrels of oil equivalent per day (boepd) in this year's second quarter. The breakneck growth will likely continue as output in the fourth quarter is seen hitting 85,000 boepd, on its way to reaching 100,000 boepd in 2026 and 150,000 boepd by the end of the decade, said Galuccio. To prime the expansion, Vista will invest in more wells and related transport infrastructure in the area, located in Argentina's western Neuquen province, where it already has 1,150 new well locations identified across more than 200,000 acres, according to company data. The former chief executive of state-owned oil producer YPF, Galuccio said Vista added its third drilling rig to its Vaca Muerta operations earlier this year and will bring on a second fracking crew in the fourth quarter. Fracking, short for hydraulic fracturing, is a common industry practice that allows oil and gas to flow out from dense shale rock. The technique requires blasting sand, toxic chemicals and large quantities of water into wells, which environmentalists criticize as harmful to aquifers and likely linked to a rise in earthquakes. While Vaca Muerta's lifting costs settled at $4.50 per barrel in the second quarter, the executive sees the extraction costs dipping around 11% to $4 by 2026. He described the expected cost at near the technical limit, from about $18 per barrel when production began. Galuccio flagged that insufficient pipeline capacity was the local industry's biggest bottleneck last year, but pointed to plans to address that by doubling capacity on midstream operator Oldelval's pipeline network, as well as separate expansions on the Vaca Muerta Sur and Norte pipelines. He also stressed that Argentina could use more help developing the massive shale formation, which is about the size of Belgium. "Vaca Muerta needs more Vistas and more investment," he said. Sign up here. https://www.reuters.com/markets/commodities/vista-energy-pump-more-than-1-bln-into-growing-argentina-shale-2024-09-04/