2024-08-15 22:38

WELLINGTON, Aug 16 (Reuters) - Manufacturing activity in New Zealand rose in July but while there was some improvement the numbers still tell a story of a sector continuing to struggle. The Bank of New Zealand-Business NZ's seasonally adjusted Performance of Manufacturing Index (PMI) rose to 44 in July from 41.2 in the previous month. A reading above 50 indicates an expansion in activity, while anything below that threshold indicates a contraction. BNZ’s senior economist Doug Steel said in a note that perhaps the best thing to be said about July’s Performance of Manufacturing Index is that it was less bad than June’s result. The data “speak to a manufacturing sector firmly in reverse and under significant duress,” he said. Sign up here. https://www.reuters.com/markets/new-zealands-manufacturing-sector-continues-struggle-survey-2024-08-15/

2024-08-15 22:27

Kishida's departure will deprive BOJ of counterpart to work with Most candidates to succeed Kishida favour policy normalisation Political uncertainty diminishes chance of Sept or Oct rate hike Reversal of weak-yen trend may raise questions on further hikes TOKYO, Aug 16 (Reuters) - The political uncertainty left by Prime Minister Fumio Kishida's decision to step down will likely lead to a pause, rather than a full stop, to the Bank of Japan's plan to raise interest rates steadily from near-zero levels. How long that pause could be will depend not just on how the ruling party leadership race plays out, but how market moves affect the political debate on the preferred pace of rate hikes, analysts say. Kishida, who hand-picked Kazuo Ueda as BOJ governor last year, said on Wednesday he will not stand in his ruling Liberal Democratic Party's (LDP) leadership race in September. The BOJ worked closely with Kishida's administration in preaching the benefits of higher wages. Days before the BOJ's rate hike in July, Kishida said the central bank's policy normalisation would support Japan's transition to a growth-driven economy in a sign of his backing towards exiting ultra-low interest rates. Kishida's departure leaves a political vacuum that heightens uncertainty on economic policy, and complicates the BOJ's efforts to steer a smooth exit from easy monetary conditions in coordination with the government. Those seen as leading candidates have mostly endorsed gradual increases in Japan's current ultra-low interest rates, partly as a means to keep sharp yen falls at bay. Shigeru Ishiba, seen as a frontrunner to succeed Kishida as next LDP leader and thus premier, told Reuters that the BOJ was "on the right policy track" in hiking rates gradually. Other leading candidates, such as party heavyweights Toshimitsu Motegi and Taro Kono, have also called on the need for higher interest rates and hawkish communication by the BOJ. The only advocate of aggressive easing is dark horse candidate Sanae Takaichi, who belongs to a party group that supported former premier Shinzo Abe's stimulus policies. "Takaichi might be an exception, but most candidates don't seem to be against the BOJ's policy normalisation. If so, there won't be much disruption to the bank's long-term rate hike path," said veteran BOJ watcher Mari Iwashita. POLITICS-BOJ TENSION The BOJ by law is granted independence from government interference in setting monetary policy. But it has historically come under political pressure to use its monetary easing tools to reflate the economy. That policy tension is in part driven by the government's power to appoint BOJ board members including the governor, which then needs parliament approval to take effect. With the weak yen intensifying the strain on households through rising living costs, many politicians will likely nod to gradual rate hikes for now, analysts say. That means the BOJ will likely stay the course and keep raising rates - albeit at a slower pace than initially thought. A survey taken by think tank Japan Center for Economic Research on July 30-Aug. 6 showed many economists projecting another rate hike by year-end. "The weak yen has been enemy No. 1 for many lawmakers, which means there is less political pushback against rate hikes than in the past," said a source familiar with the BOJ's thinking. MOMENT FOR PAUSE Data showing the economy rebounded in the second quarter on robust consumption helps justify further rate hikes, analysts say. The BOJ has too much to lose by ditching a carefully crafted plan to roll back a decade-long radical stimulus programme, which put an end to negative rates in March and led to an increase in short-term rates to 0.25% from 0-0.1% in July. The BOJ remains a global outlier on monetary policy. The central bank kept rates ultra-low even as its U.S. and European counterparts hiked aggressively since 2022 to combat red-hot inflation. Now, the BOJ is raising rates while its peers have begun easing and yet it's some way off from normalising policy. Governor Ueda has said further rate hikes are necessary adjustments of excessive monetary support, rather than a full-fledged tightening - a stance he is likely to maintain. But the BOJ also has good reason to ride out the storm by standing pat at the next policy meeting on Sept. 19-20, which will likely be close to the date of the LDP leadership race. The U.S. presidential election may also heighten market volatility and keep the BOJ from acting at a subsequent rate review on Oct. 30-31, analysts say. "The BOJ will hold off on rate hikes at least until December, when Japanese and U.S. political events run their course," said Toru Suehiro, chief economist at Daiwa Securities. The BOJ would also need time to build trust with the new prime minister, who may have to wait until November to be approved by parliament. An academic turned governor, Ueda has few associates in political circles, which heightens challenges in communicating smoothly with the new administration, some analysts say. There is no guarantee politicians will keep favouring rate hikes, if the yen's downtrend reverses course. A spike in the yen, caused in part by the BOJ's July rate hike, led to a plunge in stock prices that forced the central bank to back-track on its hawkish communication. "If the weak-yen tide reverses, some politicians may begin to question whether the BOJ needs to hike rates further," said Naomi Muguruma, chief bond strategist at Mitsubishi UFJ Morgan Stanley Securities. Sign up here. https://www.reuters.com/markets/asia/political-uncertainty-may-prod-boj-pause-not-end-rate-hike-path-2024-08-15/

2024-08-15 22:06

Aug 15 (Reuters) - California Governor Gavin Newsom proposed a plan on Thursday requiring oil refiners to maintain minimum reserves of gasoline in an effort to prevent price spikes. The California Energy Commission said that on 63 days last year California refiners maintained less than 15 days of supply of gasoline, a situation that it said spiked prices and cost drivers $650 million. “Price spikes at the pump are profit spikes for Big Oil. Refiners should be required to plan ahead and backfill supplies to keep prices stable, instead of playing games to earn even more profits," Newsom, a Democrat, said in a release. It was unclear when the plan could take effect and Newsom's office did not immediately respond to a request for comment. Under the plan, which industry has criticized as attacking producers, California’s oil refiners would be required to demonstrate resupply plans that are adequate to address losses in production when their plants are undergoing maintenance work. California found that in 2023 gasoline prices spiked largely due to refineries going offline without adequately planning to backfill supplies. The plan comes three months after the U.S. Department of Energy sold its 1 million barrel Northeast gasoline reserve, which Washington created after 2014's Superstorm Sandy left motorists scrambling for fuel supplies. The U.S. Congress mandated the sale after the reserve was criticized as expensive to maintain and for not increasing energy security. California, the most populous U.S. state, is home to some of the country's highest average gasoline prices and has had a fraught relationship with oil companies. The state has ambitious targets for electric car adoption and is the only one with a waiver from the federal environmental regulator to set its own vehicle emissions regulations. This month, U.S. oil company Chevron (CVX.N) , opens new tab said it was moving its headquarters to Houston from San Ramon, California. Catherine Reheis-Boyd, president and CEO of the Western States Petroleum Association said Newsom's plan was "nothing more than a political attack on consumers and our industry." "To impose new operational mandates on energy producers based on such falsehoods is regulatory malpractice, and ignores the logistical challenges and costs associated with such a plan," she said. Sign up here. https://www.reuters.com/business/energy/california-aims-tackle-pump-spikes-by-requiring-gas-reserves-2024-08-15/

2024-08-15 21:50

Aug 15 (Reuters) - Chevron Corp (CVX.N) , opens new tab is to pay Richmond City Council $550 million over 10 years, the city said in a statement, in a settlement that saw it drop a proposed ballot on a new tax on the oil major's Richmond refinery. Richmond planned to seek voters' approval for a tax on the refinery, which processes about 250,000 barrels of crude oil per day, saying Chevron should pay its fair share to the community it has been in for over a century. As a result of the settlement the council approved on Wednesday, the city agreed to withdraw the measure, it said in the statement posted on its website. The company will pay the money in annual installments starting from July 1, 2025 to June 30, 2035, it said. "Chevron Richmond and the City of Richmond have reached an agreement that settles litigation and removes the Refining Business License Tax measure from the ballot," the company said in an emailed response to Reuters. "This agreement ensures Chevron Richmond can continue to provide Northern California with the affordable, reliable and ever-cleaner energy the region’s economy needs." Sign up here. https://www.reuters.com/business/energy/chevron-pay-550-million-settlement-richmond-california-2024-08-15/

2024-08-15 21:38

Aug 15 (Reuters) - Hurricane Ernesto on Thursday strengthened into a Category 2 hurricane as it barreled toward Bermuda threatening major damage over the weekend from powerful winds and heavy rain, after leaving hundreds of thousands of Puerto Ricans without power. Ernesto is forecast to strengthen further before it reaches Bermuda late on Friday, a British island territory far out in the Atlantic, the National Hurricane Center (NHC) said. At 11 p.m. ET on Thursday (0300 GMT Friday) it was 410 miles (660 km) south-southwest of Bermuda as it headed north, packing winds of 100 mph (155 kph). "Additional strengthening is forecast during the next day or so, and Ernesto could be near major hurricane strength on Friday. Ernesto is forecast to be a large hurricane near Bermuda on Saturday," the hurricane center said. A major hurricane is a Category 3, 4 or 5 on the five-step Saffir-Simpson Hurricane Wind Scale and is capable of causing devastating or even catastrophic damage. The storm could produce up to 15 inches (38 cm) of rain that could result in life-threatening flash flooding, the hurricane center said. Only 11 storms have made direct landfall on Bermuda, an archipelago of 181 islands with a population of 64,000, since records began in 1851. Hurricanes Gonzalo in 2014 and Fabian in 2003 were the most destructive storms to hit Bermuda in recent memory, causing hundreds of millions of dollars in damage and leaving most of the islands without electricity. Fabian killed 4 people, the first storm to cause deaths on the islands since 1926. Ernesto became a hurricane on Wednesday after leaving Puerto Rico as a tropical storm, where it battered the island with heavy rainfall. Images and video from the island showed flood waters covering roadways, downed power lines and destroyed homes and vehicles. As of Thursday afternoon, some 407,000 homes and businesses - about a quarter of all customers on the U.S. territory - remained without electricity, according to LUMA Energy, the Caribbean island's main power supplier. LUMA said it had restored power to 300,000 customers. Vanessa Toro, a San Juan resident who lost electricity early on Wednesday morning, said she was frustrated that she was still without power even though the storm itself had little impact on her area. "If the event had been of a large magnitude, one understands the situation a little more, but this storm was not catastrophic," she said. "Then LUMA says it is prepared to deal with these situations, but we are without power 29 hours after the storm." LUMA Chief Executive Juan Saca said in a radio interview on Thursday morning he expected power to be restored to many customers later on Thursday. Puerto Rico's power grid is notoriously fragile. In 2022, Hurricane Fiona knocked out power for about 80% of the island's homes and businesses for as long as a month. Five years earlier, Hurricanes Irma and Maria destroyed the island's power grid and caused outages in some areas that lasted nearly a year. Ernesto was expected to stay well west of the U.S. East Coast as it traveled north over the ocean. However, the storm was forecast to produce life-threatening surf and rip currents across the region, the center said. Ernesto is the fifth named Atlantic storm of what is expected to be an intense hurricane season. Slow-moving Debby hit Florida's Gulf Coast as a Category 1 hurricane just last week before soaking some parts of the Carolinas with up to 2 feet (60 cm) of rain. Sign up here. https://www.reuters.com/world/americas/ernesto-leaves-third-puerto-rico-without-power-it-heads-toward-bermuda-2024-08-15/

2024-08-15 21:30

SANTIAGO, Aug 15 (Reuters) - A strike at mining giant BHP's (BHP.AX) , opens new tab huge Escondida mine in Chile entered its third day on Thursday, bolstering global copper prices as an ongoing standoff between the company and workers starts to spread worries about supply of the red metal. BHP and the worker union held an initial meeting on Wednesday in a bid to defuse the strike but failed to make a breakthrough that would allow the restart of formal talks, with miners digging in as they seek a larger share of profits. Benchmark three-month copper on the London Metal Exchange was up over 2.2% to $9,169 per metric ton on Thursday, and various mining shares like Rio Tinto (RIO.AX) , opens new tab, Southern Copper (SCCO.N) , opens new tab and Freeport-McMoRan (FCX.N) , opens new tab rose as well. Escondida is the world's largest copper mine, accounting for nearly 5% of global supply in 2023, and the union on strike has in past years forced the firm to halt operations and declare force majeure, meaning it can't fulfill its contracts. On Wednesday, BHP said operations were continuing under a contingency plan while the union said the strike was keeping the Los Colorados concentration and electrowinning plants offline. The two sides have both signaled a willingness to returning to formal talks but remain at loggerheads over the conditions. BHP had asked the union to pause its strike to resume negotiations, a demand the union refused. Hundreds of workers have also set up camp at Puerto Coloso, BHP's exclusive port, which also houses its desalination plants. Sign up here. https://www.reuters.com/markets/commodities/bhp-strike-chile-enters-third-day-buoying-global-copper-price-2024-08-15/