2024-09-26 05:59

S&P 500 posts record closing high European shares set record closing high Oil prices settle lower; silver, gold rise NEW YORK, Sept 26 (Reuters) - Global stock indexes reached record highs on Thursday after chipmaker Micron Technology's (MU.O) , opens new tab upbeat forecast, while oil dropped on a media report that Saudi Arabia plans to dump its unofficial crude price target of $100 a barrel. Silver rose to its highest level in nearly 12 years, with interest rate cuts by major central banks lifting investment interest in precious metals. The S&P 500 registered an all-time closing high, as did the pan-European STOXX 600 index (.STOXX) , opens new tab. MSCI's global stock index (.MIWD00000PUS) , opens new tab hit an intraday record. Micron's forecast late on Wednesday bolstered optimism about demand for chips used for artificial intelligence computing. Micron's shares rose 14.7% on Thursday, while an index of semiconductors (.SOX) , opens new tab was up 3.5%. U.S. Treasury yields edged higher after strong data, including an unexpected drop in weekly U.S. jobless claims, led traders to cut bets that the Federal Reserve will make another 50-basis point cut at its November meeting. Last week's rate cut by the U.S. central bank was its first reduction in borrowing costs since 2020. "There's a lot of focus on the labor market in terms of what the Fed is going to do next," said Zachary Griffiths, senior investment grade strategist at CreditSights. Other U.S. reports showed corporate profits increased at a more robust pace than initially thought in the second quarter, while gross domestic product grew at an unrevised 3%. Investors anxiously await Friday's release of the core personal consumption expenditures (PCE) price index - the Fed's preferred measure of inflation. The Dow Jones Industrial Average (.DJI) , opens new tab rose 260.36 points, or 0.62%, to 42,175.11, the S&P 500 (.SPX) , opens new tab increased 23.11 points, or 0.40%, to 5,745.37 and the Nasdaq Composite (.IXIC) , opens new tab was 108.09 points, or 0.60%, higher at 18,190.29. European shares followed China's market higher. The pan-European STOXX 600 index (.STOXX) , opens new tab closed 1.3% higher at 525.61 points, an all-time closing high. MSCI's gauge of stocks across the globe rose 7.08 points, or 0.84%, to 850.69 and hit a record during trading. In Europe, China-exposed stocks such as luxury goods companies and miners outperformed. An official readout from a meeting of China's politburo said Beijing would deploy "necessary fiscal spending" to meet this year's economic growth target of roughly 5%, acknowledging new problems and raising market expectations for fresh stimulus on top of measures announced this week. Reuters reported separately that China plans to issue special sovereign bonds worth about 2 trillion yuan ($284 billion) this year, primarily to stimulate consumption. In commodities, spot silver was up 0.6% at $32.03 per ounce as of Thursday afternoon, having hit its highest since December 2012 at $32.71. Spot gold was up 0.5% at $2,670.52 per ounce, having hit a record high of $2,685.42 earlier in the day. U.S. crude fell $2.02 to settle at $67.67 a barrel and Brent dropped $1.86 to settle at $71.60. Saudi Arabia is preparing to abandon its unofficial price target of $100 a barrel for crude as it gets ready to increase output, the Financial Times reported on Thursday, citing people familiar with the matter. In Treasuries, benchmark 10-year yields rose 0.8 basis points to 3.789% and earlier reached 3.821%, the highest since Sept. 4. Traders are now pricing in a 51% probability that the Fed will cut rates by 50 basis points at the conclusion of its Nov. 6-7 meeting, down from 63% before the most recent data, according to the CME Group's FedWatch Tool. The dollar eased after the U.S. data indicated a relatively healthy economy, while the Swiss franc rose after the country's central bank cut rates. The Swiss National Bank cut rates by 25 basis points on Thursday, choosing not to go for a larger 50-bp move that markets had seen as a possibility. It was the SNB's third such move this year. Against the Swiss franc , the dollar weakened 0.52% to 0.846. Elsewhere, policy doves at the European Central Bank are preparing to fight for an interest rate cut next month after a string of weaker-than-expected economic data, a move likely to meet resistance from their more conservative peers, seven sources told Reuters. The dollar index , which measures the greenback against a basket of currencies including the yen and the euro, fell 0.42% to 100.52, on track for its sixth drop in seven sessions, after rising as high as 100.95 earlier in the day. The euro was up 0.41% at $1.1178. Sign up here. https://www.reuters.com/markets/global-markets-wrapup-1-2024-09-26/

2024-09-26 05:35

LONDON, Sept 26 (Reuters) - Oil prices slipped on Thursday, reversing earlier gains, on a media report that Saudi Arabia, the world's top crude exporter, will give up its price target in preparation for raising output. Brent crude futures were down $1.62, or 2.2%, to $71.84 a barrel, while U.S. West Texas Intermediate crude fell $1.6, or 2.3%, to $68.09 per barrel as of 1240 GMT. Both contracts fell more than $2 a barrel earlier on Thursday. Saudi Arabia is preparing to abandon its unofficial price target of $100 a barrel for crude as it prepares to increase output, the Financial Times reported on Thursday, citing people familiar with the matter. The Saudi government's communications office did not immediately return a request for comment. The Organization of the Petroleum Exporting Countries - led de facto by Riyadh - along with the group's allies including Russia, together known as OPEC+, have been cutting oil output to support prices. However, prices are down nearly 6% so far this year, amid increasing supply from other producers, especially the United States, as well as weak demand growth in China. "The prospect of additional supply from Libya and Saudi Arabia has been the main driver behind the latest weakness," Saxo Bank analyst Ole Hansen said. A United Nations statement on Wednesday said delegates from divided Libya's east and west agreed on the process of appointing a central bank governor, a step which could help resolve the crisis over control of the country's oil revenue that has disrupted exports. Libya's crude exports have averaged about 400,000 barrels per day (bpd) in September, down from over 1 million bpd in August, shipping data show. News of a new Chinese stimulus package limited further losses, however. Top government officials in China, the world's largest crude oil importer, pledged on Thursday to deploy "necessary fiscal spending" to meet this year's economic growth target of roughly 5%, acknowledging new problems and raising market expectations for fresh stimulus in addition to measures announced this week. Sign up here. https://www.reuters.com/business/energy/oil-prices-little-changed-us-stockpile-drop-offsets-global-demand-woes-2024-09-26/

2024-09-26 05:20

MUMBAI, Sept 26 (Reuters) - The Indian rupee declined on Thursday due to increased dollar demand from importers related to month-end payments and likely unwinding of long positions after it failed to hold above a key resistance level at 83.50. The rupee was at 83.6850 against the U.S. dollar as of 10:45 a.m. IST, down 0.1% from its close at 83.5925 in the previous session. Importers, including local oil companies, were spotted buying dollars, traders said. A large foreign bank has also been consistently bidding for dollars, which is likely related to an unwinding of some long bets on the rupee, a trader at a foreign bank said. Asian currencies were mixed while the dollar index was down 0.1% at 100.8. While "inflows have been quite strong, especially in the debt market" over recent sessions, strong dollar demand between 83.45-83.50 has kept a lid on the currency's gains, a trader at a private bank said. The rupee rose to a near 3-month peak of 83.48 last week. Overseas investors have net bought about $10 billion of Indian equities and debt over September so far, the highest monthly inflow since December last year. "Over the week, the (dollar-rupee) pair has opened lower, only to rebound as importers rush to meet month-end dollar demand, causing USD/INR to close higher," Amit Pabari, managing director at FX advisory firm CR Forex said. The attention on Thursday lies squarely on remarks from Federal Reserve Chair Jerome Powell who is slated to speak later in the day, alongside a host of other policymakers, and may offers cues on the future trajectory of policy rates. Sign up here. https://www.reuters.com/markets/currencies/rupee-weakens-month-end-importer-dollar-bids-likely-position-unwinding-2024-09-26/

2024-09-26 05:14

LONDON, Sept 26(Reuters) - War and extreme weather are weighing on economic growth in countries covered by the European Bank for Reconstruction and Development (EBRD), the bank said in a semi-annual report released on Thursday. The downward revision to 2.8% GDP growth this year and 3.5% in 2025 is a small change, shaving off 0.2 and 0.1 percentage points respectively. But it is the second downward adjustment for the lender's region, which covers emerging Europe, central Asia, the Middle East and Africa. "Travelling through European cities, I see that the mood is very much down," EBRD Chief Economist Beata Javorcik told Reuters, adding that Europe was grappling with expanding conflicts and high energy costs. "There is a sense that Europe (is in) some crisis." While energy prices have moderated since their spike after Russia's 2022 invasion of Ukraine, Europe's gas prices are five times higher than those in the United States, the report showed. Stagnating mining output in Kazakhstan and Uzbekistan, the conflict in Gaza and Lebanon, and severe droughts in Morocco and Tunisia are also clipping growth, it said. Javorcik said Chinese stimulus measures could boost commodity-exporting EBRD countries, and that trade barriers had led Beijing to pour billions into Hungary, Serbia and Morocco - foreign direct investment that could rise further if global trade policy blocks more imports from China. CONFLICTS But Javorcik said the expanding crisis in the Middle East - with Israel bombing Hezbollah targets in Lebanon - would deepen Lebanon's political and economic crisis and hurt nearby countries such as Jordan and Egypt. "It is quite likely that countries that are in proximity to the conflict in the Middle East will see an increase in the risk premium, so their borrowing costs will be higher," she said. The EBRD also shaved 1.3 percentage points off Ukraine's expected growth in 2025, to 4.7% due to attacks on energy infrastructure, and said they could also cause inflation to accelerate. "Imported electricity is more expensive, so it increases the cost. Moreover, there are blackouts, rolling blackouts... That's going to be detrimental for energy-intensive industries." In Russia, though, the EBRD said growth of 4.7% outpaced expectations in the first half of 2024, driven in part by oil export prices that increased by more than 10% year-on-year. EBRD analysis showed that the discount that importers paid for Russian oil, which once stood at $20 per barrel, had disappeared, casting doubt on the effectiveness of Western price caps. "Sanctions are working but they are working slowly," Javorcik said. "It's an effect that is cumulative... and it is going to be slowing down Russia's productivity." Sign up here. https://www.reuters.com/markets/europe/war-weather-weigh-economic-growth-again-says-ebrd-2024-09-26/

2024-09-26 05:07

Swiss franc up after SNB cuts interest rates Drop in US jobless claims boosts dollar briefly Pound poised for biggest daily pct gain in a month NEW YORK, Sept 26 (Reuters) - The dollar weakened in choppy trading on Thursday after a boost from healthy U.S. economic data faded, while the Swiss franc rose after the country's central bank cut interest rates by 25 basis points. The greenback began paring losses after data showed U.S. weekly jobless claims fell by 4,000 to a four-month low of 218,000, below the 225,000 forecast by economists polled by Reuters. Other reports showed corporate profits increased at a more robust pace than initially thought in the second quarter while gross domestic product grew at an unrevised 3%. A gauge of new orders for key U.S.-manufactured capital goods unexpectedly rose in August, although business spending on equipment appears to have waned in the third quarter. "Once again we have this split between the Fed cutting rates and an economy that is essentially growing at 3% or more, so the market doesn't quite know what to make of this," said Joseph Trevisani, senior analyst at FXStreet in New York. "So why are we cutting rates? Well, what have we got to lose? It is not going to make the economy worse, it may make the economy better and the neutral rate is somewhere south of here so let's turn around and head in that direction." The dollar index , which measures the greenback against a basket of currencies including the yen and the euro, fell 0.42% to 100.52, on track for its sixth drop in seven sessions, after rising as high as 100.95 earlier in the day. The euro was up 0.41% at $1.1178. The Federal Reserve has recently signaled a shift in focus away from inflation and towards keeping the labor market healthy, but delivered a larger-than-usual 50 basis point interest rate cut last week. The market is completely pricing in a cut of at least 25 basis points at the Fed's Nov. 6-7 meeting, with a 51.3% chance for another outsized half-percentage-point cut, according to CME Group's FedWatch Tool , opens new tab. SWISS RATE CUT Against the Swiss franc , the dollar weakened 0.55% to 0.846 after the Swiss National Bank reduced interest rates by 25 basis points, echoing the moves by the Fed and European Central Bank (ECB), and left the door open for more rate cuts as inflation cools sharply. The move disappointed some who saw a chance for a larger cut after the Fed's decision last week. Analysts at Goldman Sachs said the SNB cut was motivated by lower inflationary pressure, driven by a stronger franc and other factors, and they expect a further 25-bp cut at the central bank's December meeting given its dovish guidance and new inflation projections. A slew of U.S. central bank officials were speaking on Thursday, although several, including Fed Chair Jerome Powell, declined to comment on monetary policy. U.S. Treasury Secretary Janet Yellen said labor market and inflation data suggest the U.S. economy is on a path to a "soft landing," but the "last mile" in the effort to tame inflation revolves around bringing down housing costs. The Japanese yen strengthened 0.1% against the greenback to 144.6 per dollar. Bank of Japan policymakers were divided on how quickly the central bank should raise interest rates further, minutes of the bank's July meeting showed, highlighting uncertainty on the timing of the next increase in borrowing costs. Sterling rose 0.71% to $1.3417, on track for its biggest daily percentage gain in a month. Sign up here. https://www.reuters.com/markets/currencies/dollar-firm-following-sharp-rebound-fed-speakers-eyed-2024-09-26/

2024-09-26 05:03

Markets see inflation falling much faster than ECB ECB risks falling behind curve on rate cuts, investors say Deteriorating economic outlook boosts Oct rate cut bets Sept 26 (Reuters) - If traders are right, the European Central Bank is now at risk of pushing inflation below its 2% target by cutting interest rates too slowly, hurting the bloc's fragile economy. The swaps market, where investors hedge inflation risk by exchanging payments tied to the rate of price growth, suggests inflation will fall durably below the ECB's target from January, according to data compiled by Danske Bank for Reuters on Wednesday. That's much earlier than the ECB, which expects inflation - currently at 2.2% and potentially dipping below target this month before rising back - to fall to 2% in late 2025. The ECB has been battling to rein in inflation, which was running in double digits less than two years ago. But price pressures have eased following aggressive rate hikes, prompting the bank to kick off an easing cycle in June. It last cut rates earlier this month. "The market is signalling to the ECB that they could be behind the curve," said Analissa Piazza, fixed income research analyst at MFS Investment Management, which manages $639 billion. If the bank continues quarterly moves through next year - slower than markets expect - it could push inflation below target for too long and then struggle to push it back up in the future, she added. Data this week showing euro zone business activity unexpectedly contracted in September vindicated markets, which have expected swifter disinflation than the ECB for a while. Traders now see more than a 50% chance of an October rate cut, which policymakers had reckoned was unlikely following this month's meeting. Reuters reported on Thursday that dovish policymakers are preparing to fight for an October rate cut, a move likely to meet resistance from their conservative peers. Investors reckon the risk of below-target inflation is rising globally. While they saw inflation between 2%-3% as the more likely outcome in the United States and the euro zone at end-2025, the share of investors who expect below target inflation rose in both regions this month, a BofA investor survey showed on Sept. 13, just before the Federal Reserve's 50 basis-point rate cut. In Sweden, inflation has been below target for three straight months, prompting the Riksbank to put faster cuts on the cards on Wednesday. GROWTH WORRIES A key part of the discrepancy is oil prices, which dropped to their lowest in nearly three years below $69 earlier in September . At around $72 on Thursday, they were still more than 9% lower than at the Aug. 16 cut-off date for the ECB's latest economic projections. For sure, markets aren't signalling the kind of ultra-low inflation that prevailed before the COVID-19 pandemic that the ECB struggled to reignite, prompting it to unleash vast bond purchases and a controversial experiment with negative interest rates. The swaps point to average inflation of 1.7% over the next year. And a key market gauge of longer-term inflation expectations , which dropped to a two-year low earlier in September, remains just a touch above 2%. But crucially, market inflation expectations signal disagreement with the ECB's outlook on growth. "The market is thinking the ECB is a little bit optimistic on growth," said Amundi Investment Institute's head of developed markets strategy Guy Stear, who expects euro zone growth to improve to 1% next year from 0.8% this year, less than half the rise to 1.3% the ECB expects. INCOME BOOST? While acknowledging domestic demand will be weaker than previously expected, the ECB reckons goods disinflation has run its course and expects rising real incomes to support consumption and drive growth. But euro zone households are saving more than they did before the pandemic and some economists reckon they are unlikely to run down those savings and boost consumption as consumer confidence remains weak. Nomura economists note that, rather than accumulating more cash, savers have upped their asset holdings, making them less likely to spend. And while volatile, wage growth - which ECB hawks in particular worry risks keeping services inflation high - has slowed more sharply than the bank expected. Monday's business activity data, showing German businesses shedding staff at the fastest pace in over 15 years outside of the pandemic, also warranted caution, economists said. A bleaker economic outlook than the ECB expects would support euro zone government bonds, which have underperformed U.S. Treasuries this year, investors said. Indeed, rate-sensitive German two-year bond yields registered their biggest daily fall in nearly two months on Monday. "The question simply remains given the weakness in overall growth... just how long can the ECB hold onto the idea that services inflation is sticky and we have to be patient?" said Barclays's head of euro rates strategy Rohan Khanna. "The longer they hold onto that argument, it worsens the economic situation and will hence force them into deeper cuts, or potentially even bigger cuts down the line." Sign up here. https://www.reuters.com/markets/europe/markets-fear-ecbs-cautious-path-risks-tipping-inflation-below-target-2024-09-26/