2024-08-26 03:08

MUMBAI, Aug 26 (Reuters) - The Indian rupee is expected to rise on Monday, after U.S. Federal Reserve Chair Jerome Powell comments nearly confirmed a September rate cut, spurring a further drop in the dollar. The 1-month non-deliverable forward indicated that the rupee will open at 83.80-83.82 to the U.S. dollar, compared with 83.89 in the previous session. The dollar index is near its lowest in more than a year after Powell said on Friday at the Fed's Jackson Hole symposium that "the time had come for policy to adjust", reinforcing expectations that the Fed will cut rates at the next month's meeting. The U.S. equities rallied on Friday, while U.S. Treasury yields dropped. Asian currencies rallied with the Indonesian rupiah leading the way. The September Fed rate cut was already fully priced in before Powell's speech and that is why "its surprising to see a reaction to what was already expected", a currency trader at a bank said. "It means that they were doubters that Powell would pivot, and now that he has confirmed, they have piled in," he said. For dollar/rupee, the "level to watch" on the downside is 83.75. 25 BPS or 50 BPS The debate is now on whether the Fed will cut rates by 25 basis points or 50 bps at the September meeting and whether it will deliver the 100 bps of rate cuts in 2024 that investors have currently priced in. The Sept. 6 U.S. jobs report will determine the quantum of the Fed's rate cut next month, ING Bank said in a note. The Fed does not want further weakness in the U.S. labour market and hence another rise in U.S. unemployment to 4.4% or 4.5% could trigger a 50 bps move, it said. Currently, futures are pricing in 60% odds of a 25 bps rate cut and 40% for a 50 bps. KEY INDICATORS: ** One-month non-deliverable rupee forward at 83.88; onshore one-month forward premium at 7 paisa ** Dollar index down at 100.62 ** Brent crude futures up 0.7% at $79.5 per barrel ** Ten-year U.S. note yield at 3.79% ** As per NSDL data, foreign investors bought a net $220.6 mln worth of Indian shares on Aug. 22 ** NSDL data shows foreign investors sold a net $222.3 mln worth of Indian bonds on Aug. 22 Sign up here. https://www.reuters.com/markets/currencies/rupee-rise-after-powell-reinforces-expectations-fed-rate-cut-sept-2024-08-26/

2024-08-26 00:22

S&P 500, Nasdaq indexes finish lower Nikkei slips as yen climbs Markets imply nearly 40% chance Fed cuts by 50 bps Oil gains as Libya shuts production, Israel-Hezbollah spar Investors await Nvidia earnings and key inflation data this week NEW YORK/LONDON, Aug 26 (Reuters) - World equity markets edged lower on Monday as investors digested the likelihood of U.S. interest rates being lowered soon, even as oil prices jumped amid increased tensions in the Middle East. The benchmark S&P 500 index (.SPX) , opens new tab and the Nasdaq (.IXIC) , opens new tab finished lower after giving up early gains, while the Dow (.DJI) , opens new tab climbed. European shares (.STOXX) , opens new tab ended slightly down, with trading subdued in the London market, which is closed for a public holiday. Japan's blue-chip Nikkei stock index also closed down almost 0.7% (.N225) , opens new tab as the yen firmed. The Dow Jones Industrial Average (.DJI) , opens new tab rose 0.16% to 41,240.52, the S&P 500 (.SPX) , opens new tab lost 0.32% to 5,616.84 and the Nasdaq Composite (.IXIC) , opens new tab lost 0.85% to 17,725.77. MSCI's World Index of stocks across the globe (.MIWD00000PUS) , opens new tab fell 0.20% to 829.64. The stock market "is digesting a lot of news: obviously there was a rally on Friday on (Federal Reserve Chair Jerome) Powell's comments and we thought durable goods orders come in good," said Ben McMillan, principal and chief investment officer at IDX Insights in Tampa, Florida. "Historically rate cuts have actually preceded equity market weakness because rates are being cut for a reason." AI chip maker Nvidia (NVDA.O) , opens new tab reports earnings on Wednesday, and market expectations are sky-high. Nvidia stock is up some 160% year-to-date, accounting for around a quarter of the S&P 500's 18% year-to-date gain. "The big thing this week is really Nvidia more than any of the macro stuff. I think folks are really focused on Nvidia because that's been kind of the bellwether for the risk-on trade this year," McMillan added. Israel and Hezbollah traded rocket salvos and airstrikes on Sunday, stirring worries about possible oil supply disruptions if the conflict escalated. Also supporting crude prices was Libya's eastern-based government announcement of the closure of all oil fields, which halted production and exports. Brent crude futures closed up 3.05% at $81.43 a barrel, while U.S. crude futures settled 3.5% higher at $77.42 a barrel. New orders for long-lasting U.S.-made goods (USDGN=ECI) , opens new tab, items ranging from toasters to aircraft, surged by 9.9% last month, a solid rebound from a decline in June that beat analyst expectations, Commerce Department data showed. In a highly-anticipated speech to the Jackson Hole symposium on Friday, Powell said the time had come to start easing policy and emphasised the central bank did not want to see further weakening in the labour market. European Central Bank chief economist Philip Lane struck a more cautious note in his Jackson Hole speech, saying the central bank was making "good progress" in cutting euro zone inflation back to its 2% target, but success was not yet assured. The yield on benchmark U.S. 10-year notes rose 1.3 basis points to 3.82%. The two-year note yield, which typically moves in step with interest rate expectations, rose 2.7 basis points to 3.94%. Fed fund futures are fully priced for a quarter-point cut at the Sept. 18 meeting, and imply a 39.5% chance of a 50 bps move. The market also has 103 bps of easing priced in for this year and another 122 bps in 2025. The ECB has already started cutting rates, with a 25 bps reduction in July, with a further two quarter point reductions priced in by year-end. "I think it's more likely than not that we're going to see 75 bps cut this year. And the market has some potential readjustment for less rate cuts than is being priced in," McMillan said. DOLLAR INDEX UP, GOLD FIRMS U.S personal consumption and core inflation data are due on Friday, along with a flash reading on European Union inflation. Most analysts expect the data will allow for rate cuts in September. The Japanese yen rose to a three-week high against the U.S. dollar, with the dollar dropping to 143.45 yen but pared losses and was last slightly up 0.14% at 144.56. The dollar index , which measures the greenback against a basket of currencies including the yen and the euro, gained 0.24% at 100.84, with the euro down 0.28% at $1.1159. Gold prices firmed, nearing the recent record high on safe-haven demand. Spot gold added 0.31% to $2,518.27 an ounce. U.S. gold futures gained 0.28% to $2,515.50 an ounce. Sign up here. https://www.reuters.com/markets/global-markets-wrapup-1-2024-08-26/

2024-08-25 23:30

HOUSTON, Aug 26 (Reuters) - Oil prices settled 3% higher on Monday as production cuts in Libya added to supply concerns stemming from reports of escalating conflict in the Middle East. Brent crude futures closed $2.41, or 3.05%, at $81.43 a barrel, while U.S. crude futures settled $2.59, or 3.5%, higher at $77.42 a barrel. Both benchmarks had gained more than 2% on Friday. "The near-term buying seems justified," said Dennis Kissler, senior vice president of trading at BOK Financial, citing Middle East tensions, Libyan production outages and weak oil inventories at Cushing, Oklahoma, the key U.S. storage hub. Libya's eastern-based government announced the closure of all oil fields on Monday, halting production and exports. National Oil Corp, which controls the country's oil resources, provided no confirmation. However, NOC subsidiary Waha Oil Company said it planned to gradually reduce output and warned of a complete halt to Libya's production, citing unspecified "protests and pressures". Libya's Sirte Oil Company, another NOC subsidiary, said it will start a partial reduction in production. Libya's oil production was about 1.18 million barrels per day in July, according to the Organization of the Petroleum Exporting Countries, citing secondary sources. "The biggest risk for the oil market is probably a further drop in Libyan oil production due to political tensions in the country, with a risk that production could fall from current levels of 1 million barrels per day to zero," said analyst Giovanni Staunovo of Swiss bank UBS. A long-expected missile attack by the Iranian-backed Hezbollah movement appeared to have been largely thwarted by pre-emptive Israeli strikes in southern Lebanon. However, the U.S. continues to assess that the threat of attack against Israel by Iran and its proxy groups still exists, the Pentagon said on Monday. There was no agreement on Sunday in Gaza ceasefire talks that took place in Cairo, with neither Hamas nor Israel agreeing to several compromises presented by mediators, two Egyptian security sources said An oil tanker has been on fire in the Red Sea since Aug. 23 after an attack by Yemen's Houthis, EU Red Sea naval mission Aspides said in a post on X. Meanwhile, crude oil inventories at Cushing, the pricing point for U.S. crude oil futures, have fallen to six-month lows. U.S. crude inventories were expected to have fallen by about 3 million barrels last week, according to a Reuters poll. Investors remain cautious over the actions of OPEC and its allies, or OPEC+, which has plans to raise output later this year, said Priyanka Sachdeva, senior market analyst at Phillip Nova. "Most oil forecasters expect 2025 oil demand growth to hover around 1 million b/d. Were Libya to go down in another bout of civil war, the balances of 2025 could look very similar to this year's despite more Saudi and Russian production," Viktor Katona, lead crude analyst at Kpler, added. On the demand side, increasing signs of lackluster growth and emerging risks to the job market overshadowed a gathering of global policymakers at the U.S. Federal Reserve's annual Jackson Hole conference, highlighting the changing trajectory of monetary policy as U.S. and European central banks eye cutting interest rates. However, San Francisco Fed President Mary Daly on Monday said it was hard to imagine anything could derail a September rate cut from the current range of 5.25%-5.50%. Sign up here. https://www.reuters.com/business/energy/oil-climbs-mideast-escalation-fears-us-rate-cut-expectations-2024-08-25/

2024-08-25 21:48

Aug 26 (Reuters) - A look at the day ahead in Asian markets by Noel Randewich. Asia investors will digest the near certainty of a September loosening of U.S. monetary policy on Monday after a speech by U.S. Federal Reserve Chair Jerome Powell on Friday confirmed that the United States is ready to begin cutting interest rates. At his keynote speech to the Kansas City Fed's annual economic conference in Jackson Hole, Wyoming, Powell said "the time has come for policy to adjust," given that upside risks to inflation have diminished and downside risks to employment have increased. Powell's comments lifted the yen and weakened the dollar index , with lower interest rates relative to Japanese rates making Japan's currency more attractive. Dollar/yen hit its lowest since August 6 in late Friday trading. Geopolitical risk ratcheted higher over the weekend as Hezbollah launched hundreds of rockets and drones at Israel early on Sunday while Israel's military said it struck Lebanon with around 100 jets to thwart a larger attack. It was one of the biggest clashes in more than 10 months of border warfare and raised the specter of Israel's war in Gaza turning into a wider conflict. Investors will also mull the outlook for Japanese interest rates after Bank of Japan Governor Kazuo Ueda on Friday reaffirmed his resolve to raise interest rates if inflation stays on course to sustainably hit the 2% target. Ueda's comments came as data showed Japan's core inflation accelerated for a third straight month in July, with a slowdown in demand-driven price growth potentially complicating the central bank's decision on further rate hikes. The Nikkei (.N225) , opens new tab share average ended up 0.4% on Friday following Ueda's parliamentary testimony. Having spent all year trying to put a floor under the tumbling yuan, China's central bank is suddenly faced with the opposite problem and is turning to subtle ways to stop the currency from appreciating sharply. The usually restrained yuan has strengthened 1.3% against the dollar in August, lifted by expectations of Fed rate cuts strengthening Japan's yen. On China's commercial banking front, Bank of China Vice Chairman and President Liu Jin resigned on Sunday. The state-owned lender said its board had approved Chairman Ge Haijiao to serve as acting president. The U.S. political landscape offered few new signs of certainty for global investors after Vice President Kamala Harris sealed the Democratic presidential nomination with a muscular speech on Thursday, laying down broad foreign policy principles and sharp contrasts with Republican rival and former President Donald Trump. With 11 weeks left in the contest for the White House, contracts for a Harris victory are trading at 55 cents, with a potential $1 payout, on the PredictIt politics betting platform. Contracts for a win by Trump, who has suggested he would impose tariffs of 60% or higher on all Chinese goods, are at 49 cents. Tariffs were in the spotlight last week after China's Commerce Ministry met with automakers and industry associations to discuss raising import tariffs on large-engined gasoline vehicles, sounding a warning as the European Union nears a tariff decision on Chinese electric cars. On Friday, the United States added 105 Russian and Chinese firms to a trade restriction list over their alleged support of the Russian military. Here are key developments that could provide more direction to Asian markets on Monday: - Singapore Manufacturing (July) - Japan Leading Indicator (Revised) (June) Sign up here. https://www.reuters.com/markets/asia/global-markets-view-asia-pix-2024-08-25/

2024-08-25 20:07

Union to mount legal challenge against decision Air Canada pilots concerned how ruling will affect their talks Both railways say they would have preferred a negotiated settlement CN and CP railways focusing on restoring service MONTREAL, Aug 25 (Reuters) - A decision obliging more than 9,000 Canadian rail workers to stay on the job is a win for the railways and could impact bargaining in other federally regulated sectors like aviation, the head of a Canadian rail workers' union told Reuters. Paul Boucher, president of the Teamsters Canada Rail Conference, also said the union would work with other labour groups as it mounts a legal challenge to a Saturday decision that halted work stoppages at the country's two largest railways and imposed arbitration. While the Teamsters will obey the order to return to work, the union has warned it could lead to the imposition of future contracts, eroding workers' bargaining power. The decision comes as Air Canada pilots (AC.TO) , opens new tab press for a new contract and can commence job action as early as mid-September if there is no agreement with the country's largest carrier. Air Canada said on Sunday its intent is to reach a negotiated settlement with the pilots over the coming weeks. "Any federally regulated company, it's a win for them at this point," Boucher told Reuters in his first interview since the Thursday lockout. "This is disastrous for labour, for workers." The Canada Industrial Relations Board made the decision after Labour Minister Steven MacKinnon asked it on Thursday to end an impasse in separate talks between the Teamsters, Canadian National Railway (CNR.TO) , opens new tab and Canadian Pacific Kansas City (CP.TO) , opens new tab. The dispute, which triggered a first-ever lockout of Teamsters workers on Thursday at both freight rail carriers, led to unprecedented disruptions that threatened to hammer Canada's export-driven economy, leading agricultural businesses to plead for relief. Tim Perry, president of the Air Line Pilots Association Canada, which represents Air Canada pilots, said the union is concerned. "The new Minister of Labour does not trust the Canadian laws governing collective bargaining, nor does the government he represents respect the constitutional rights of workers," Perry said in a statement. A spokesperson for Canada's labour minister declined to comment on whether the decision to impose binding arbitration on railways would serve as a precedent in other sectors, including aviation. CN has said the company would have preferred a negotiated agreement but was satisfied that the labour stoppage is over. Spokesperson Jonathan Abecassis said on Sunday that CN tried to get an agreement for nine months and made five offers that would have improved wages and working conditions but the union did not engage. A CP spokesperson said it regretted that the government had to intervene and fundamentally believes in and respects collective bargaining. Both railways have said they are focused on restoring service, with the Teamsters calling off a CN strike on Monday but planning to appeal the decision in federal court. Other unions could participate in court and support the Teamsters, Boucher said. "This historical moment is so extremely important that labour needs to get involved and they will," he said. The 58-year-old Boucher, who once worked as a CN locomotive engineer, has been bargaining with CN out of a second-floor conference room at a downtown Montreal hotel. The Teamsters union disagreed with CN and CP over scheduling, shift duration and availability. CN, for example, wants employees to work up to 12-hour shifts, compared with 10 hours in the current agreement, a move opposed by the union. Boucher said he has been in contact with the union representing more than 5,400 Air Canada pilots who approved a strike mandate last week. "We're going to be calling on all labour across Canada to join our fight and take this all the way," he said. Sign up here. https://www.reuters.com/world/americas/canadian-rail-decision-is-win-federally-regulated-companies-union-leader-says-2024-08-25/

2024-08-25 18:12

DHAKA, Aug 25 (Reuters) - At least 20 people have died and more than 5.2 million have been affected in Bangladesh by floods caused by relentless monsoon rains and overflowing rivers, officials said on Sunday. The floodwaters have left many people isolated and in urgent need of food, clean water, medicine, and dry clothes, particularly in remote areas where blocked roads have hampered rescue and relief efforts. Government Chief Adviser Mohammad Yunus said in a televised address that the administration has adopted all necessary measures to ensure a swift return to normality for flood victims. Yunus, a Nobel Peace Prize winner, is leading the interim government that was sworn in after former Prime Minister Sheikh Hasina fled the country following a student-led uprising this month. Abdul Halim, a 65-year-old farmer from a village in the Comilla district, said his mud hut was swept away by a 10-foot-high surge of floodwater in the middle of the night. "There are no goods and no water. Barely anyone has come with the relief (aid) deep inside the villages. You have to physically go close to the main road to collect it," he told Reuters television. Some people in Bangladesh have alleged that the floods were caused by the opening of dam sluice gates in neighbouring India, an assertion New Delhi has rejected. "We have begun discussions with neighbouring countries to prevent future flood situations," Yunus said. The Bangladesh Meteorological Department has warned that flood conditions could persist if the monsoon rains continue, as water levels are receding very slowly. More than 400,000 people have taken refuge in around 3,500 shelters in the 11 flood-hit districts, where nearly 750 medical teams are on the ground to provide treatment, with the army, air force, navy, and Border Guard Bangladesh assisting in rescue operations, authorities said. An analysis in 2015 by the World Bank Institute estimated that 3.5 million people in Bangladesh, one of the world's most climate-vulnerable countries, were at risk of annual river flooding. Scientists attribute the exacerbation of such catastrophic events to climate change. "The impact of this year’s monsoon rains has been widespread and devastating," said Kabita Bose, Country Director of Plan International Bangladesh. "Entire communities have been completely inundated, and there are now millions of people, including children, in need of safe shelter and lifesaving humanitarian assistance," she said. Sign up here. https://www.reuters.com/world/asia-pacific/twenty-dead-52-mln-affected-bangladesh-floods-2024-08-25/