2024-09-24 10:11

A look at the day ahead in U.S. and global markets from Mike Dolan Wall Street looks set to grind out another record on Tuesday as world markets were enlivened by long-awaited monetary easing in China - rate cuts aimed at underpinning a wobbling economy that's sowing weakness across the world, not least in Europe. Chinese stock indexes (.CSI300) , opens new tab, (.HSI) , opens new tab surged more than 4% on Tuesday and the offshore yuan hit its strongest level against the dollar in 16 months after a series of moves by the People's Bank of China to loosen lending conditions. Less than a week after the Federal Reserve's outsize half point rate cut, PBOC boss Pan Gongsheng said banks' reserve requirement ratio would be cut by 50 basis points, freeing up about 1 trillion yuan ($142.21 billion) for new lending. Aimed at shoring up the ongoing property bust and dousing fears of wider deflation, the RRR cut came in tandem with a 20bps cut in the one-week reverse repo rate to 1.5% as well as a series of other key lending and mortgage rate cuts. The sweeping, if long delayed, measures included cutting minimum down-payment rates on new homes and capital market props and swaps making it easier for funds and brokers to buy stocks. Whether the moves hit home remains to be seen. Geopolitical headwinds, for one, continue to stiffen as the U.S. Commerce Department on Monday proposed prohibiting key Chinese software and hardware in connected vehicles on American roads due to national security concerns. China's slowdown - which this month seen many banks and investment funds slash growth outlooks to well below Beijing's 5% target- has infected the industrial world at large. Nowhere is that clearer than in Europe's alarming business contraction in September, according to flash business surveys published on Monday. And at the heart of that is waning German confidence, where Ifo's September survey of German firms on Tuesday missed forecasts yet again. German business morale fell more than expected for a fourth consecutive month, the survey of around 9,000 managers found. China's latest stimulus, however, proved a shot in the arm for European stocks (.STOXXE) , opens new tab - which gained almost 1%, led by surges in basic resource (.SXPP) , opens new tab and luxury goods (.STXLUXP) , opens new tab sectors. The euro recouped a large chunk of Monday's retreat. Although the chance of a European Central Bank cut as soon as October crept higher on Monday, it remains less than 50%. Back on Wall Street, Monday's September business surveys also showed ongoing struggles in the factory sector - but, unlike in Europe, brisk service sector activity continued to show a healthy overall expansion of the private sector. That has retained faith in the soft landing theme, with the S&P500 (.SPX) , opens new tab eking out another record high on Monday and futures are up smartly again ahead of the bell. With some 75bps of additional Fed easing this year now priced into rate futures and Fed officials sounding dovish, two-year Treasury yields hovered about 3.60% on Tuesday ahead of a $69 billion auction later in the day. The two-to-10 year yield curve continued to steepen to a new two-year high of 18bps. Chicago Fed President Austan Goolsbee said on Monday that he expects "many more rate cuts over the next year". September U.S. consumer confidence readings are next up for examination later in the day. Elsewhere, Japanese markets returned from Monday's holiday in fine fettle, with the Nikkei (.N225) , opens new tab up 0.6% and the yen slipping to its lowest in almost three weeks. Bank of Japan Governor Kazuo Ueda told business leaders the central bank will raise interest rates if trend inflation accelerates as projected - but appeared unrushed and claimed the BOJ can "afford to spend time" scrutinising services prices, financial markets and overseas developments. The Reserve Bank of Australia, meantime, continued to toe a relatively hard line and held its policy rate steady on Tuesday - though at least governor Michele Bullock said further tightening was not up for discussion. The Australian dollar hit a nine-month high of $0.6869 on the decision but later retreated on Bullock's comment. Key developments that should provide more direction to U.S. markets later on Tuesday: * U.S. September consumer confidence, Richmond Fed September business survey, July house prices, * Federal Reserve Governor Michelle Bowman speaks; Bank of Canada Governor Tiff Macklem speaks; Dutch central bank chief and European Central Bank policymaker Klaas Knot speaks * US corporate earnings: Micron Technology, Autozone * US Treasury sells $69 billion of 2-year notes * United Nations General Assembly in New York Sign up here. https://www.reuters.com/markets/us/global-markets-view-usa-2024-09-24/

2024-09-24 10:10

Caroline Ellison pleaded guilty to fraud and conspiracy She testified for the prosecution against Bankman-Fried Ellison's lawyers recommended she get no prison time NEW YORK, Sept 24 (Reuters) - Former cryptocurrency executive Caroline Ellison was sentenced on Tuesday to two years in prison for her role in her former boyfriend Sam Bankman-Fried's theft of $8 billion in customer funds from the now-bankrupt FTX exchange he founded, even as the judge recognized her extensive cooperation with prosecutors. U.S. District Judge Lewis Kaplan said at a sentencing hearing in Manhattan federal court that he was not comfortable with remorse and cooperation being a "get out of jail free card" in a case so serious. Prosecutors have called Bankman-Fried's actions one of the biggest financial frauds in U.S. history. Ellison, 29, pleaded guilty to seven felony counts of fraud and conspiracy and testified as a prosecution witness in the trial of Bankman-Fried, who was convicted of fraud and other charges last year and is serving a 25-year prison sentence arising from FTX's 2022 collapse. The crimes to which she pleaded guilty carried a maximum sentence of 110 years in prison. Her lawyers had argued for no prison time due to her cooperation. Prosecutors sought leniency as well. Kaplan told Ellison she was "gravely culpable in this fraud," though he said her "remarkable cooperation" represented a "fundamental distinction" between her and Bankman-Fried. "There's no way you're ever going to do something like this again, I am persuaded," the judge told Ellison. "But here's the thing: this was, if not the very greatest financial fraud ever perpetrated in this country or anywhere else, close to it." Ellison crossed her hands on her lap and looked down at the defense table after the sentence was read. She earlier addressed Kaplan, speaking at a rapid pace and reading from a prepared statement. "Not a day goes by when I don't think about all the people I hurt," said Ellison, a Stanford University graduate whose parents and two sisters were present in court. "My brain can't even truly comprehend the scale of the harms I've caused. That doesn't mean I don't try." Ellison from 2021-2022 ran Alameda Research, a cryptocurrency-focused hedge fund Bankman-Fried founded. Ellison said she thought about leaving Alameda many times. "Every time I thought about it, I heard Sam's voice in my head," Ellison told the judge. "Ignoring that voice in my head and speaking out would have been brave," Ellison said, beginning to choke up and sniffle. "I'm sorry I wasn't brave." Without recommending a specific sentence, the U.S. Attorney's office in Manhattan, which brought the charges, urged Kaplan to go easy on Ellison. "I cannot overstate the importance of Ms. Ellison's testimony in convicting Sam Bankman-Fried," prosecutor Danielle Sassoon told the hearing. Prosecutors said Ellison met with them about 20 times to help them piece together FTX's unraveling and make their case against Bankman-Fried. "Unlike Bankman-Fried, she is not cunning. There is no evidence she was driven by greed, or that an appetite for risk or power was part of her nature," Sassoon said. 'A POWERFUL MESSAGE' Anjan Sahni, Ellison's lawyer, told the judge that sparing Ellison from prison time "would send a powerful message about the value of timely, honest and full cooperation with the government in cases of financial crime." "She didn't shy away from the details, however embarrassing they were," Sahni said, adding that Ellison's "honesty and openness" proved critical to the prosecution case. Kaplan said he would recommend that Ellison be incarcerated in a minimum-security prison and begin serving her sentence in November. Ellison may be eligible for release a few months shy of two years if given credit for good behavior in prison. Nishad Singh and Gary Wang, two other former FTX executives who cooperated with prosecutors, are scheduled to be sentenced on Oct. 30 and Nov. 20, respectively. Bankman-Fried, 32, rode a boom in cryptocurrency prices during the COVID pandemic to a net worth of, according to Forbes magazine, $26 billion by October 2021. He gained prominence as a generous donor to philanthropic causes and Democratic politicians. His wealth evaporated when FTX collapsed in November 2022 amid a flurry of customer withdrawals. Bankman-Fried was charged a month later with stealing FTX customer funds to plug losses at Alameda. Ellison pleaded guilty in December 2022. Ellison testified over three days at Bankman-Fried's trial, saying he directed her and others to take money from FTX's customers without their knowledge. Bankman-Fried is appealing his conviction and sentence. Sign up here. https://www.reuters.com/world/us/bankman-frieds-ex-girlfriend-ellison-be-sentenced-over-crypto-fraud-2024-09-24/

2024-09-24 10:03

LONDON, Sept 24 (Reuters) - British finance minister Rachel Reeves has suggested she will give the country's new government more leeway to borrow as part of her attempts to get the economy growing more quickly. Here some options which could give more wiggle room for borrowing and spending to Reeves, who is mindful of the chaos that engulfed Britain's bond markets in 2022 when former prime minister Liz Truss promised huge, unfunded tax cuts. WHAT IS THE MAIN RULE? The main fiscal rule set by the former Conservative government required debt to be falling as a share of gross domestic product between the fourth and fifth year of projections produced by Britain's official budget forecasters. In their most recent projections in March, the forecasters estimated that the then Conservative government was on track to meet this by a narrow margin of 9 billion pounds ($12 billion). Economists said the forecasts implied spending cuts to areas outside health, schools and defence. Since then Reeves, whose Labour Party took power in July, has said there is a further 22 billion-pound hole in the public finances for this financial year alone. Reeves said before the election that she would change another of the government's fiscal rules by removing public investment from annual budget deficit calculations. WHAT KIND OF DEBT? One possibility for Reeves would be to change the measure of debt used in the fiscal rule. The rule excludes a temporary BoE lending scheme to banks and takes a different accounting approach to the older public sector net debt measure for the years in which losses from quantitative easing are booked. The Institute for Fiscal Studies think tank estimated last month that switching back to the older debt measure would create around 16 billion pounds in extra headroom. EXCLUDE THE LOSSES Another option would be exclude the losses incurred by the Treasury from the BoE's past asset purchases. The central bank is selling gilts at prices lower than those it paid for them and now pays banks a higher interest rate for cash than it receives in coupons from the bonds it bought. Unlike other central banks, the BoE sends the bill for these losses to the government. Last month the BoE estimated the cost , opens new tab of this would be 20-30 billion pounds a year over the coming years, although this depends heavily on the path for interest rates and gilt sales. OFF THE BOOKS Media reports said Reeves was considering a change to move the government's new National Wealth Fund, which seeks to leverage private investment with initial public funding, and GB Energy, a holding firm overseeing the push for green power, off the government's books. Andy King, a former senior official at the Office for Budget Responsibility, has said that could give Reeves another 15 billion pounds more headroom for borrowing, the Guardian newspaper reported. VALUE THE ASSETS A more fundamental change would be to switch the fiscal rules away from looking only at debt levels to a broader measure which also takes into account the value of public assets. Public sector net worth (PSNW) could encourage governments to focus on investing in high-quality projects, the IFS said in a report last year. But the IFS also warned of potential problems with switching exclusively to the PSNW measure including the difficulty of valuing assets such as road networks which cannot be sold easily and therefore could not justify higher borrowing. Traditional measures of debt would remain important for fiscal policy, it said. ($1 = 0.7479 pounds) Sign up here. https://www.reuters.com/world/uk/how-could-uk-tweak-its-budget-rules-borrow-more-2024-09-24/

2024-09-24 07:45

Sept 24 (Reuters) - European shares opened higher on Tuesday, as China's sweeping stimulus measures boosted stocks of luxury companies and miners. The pan-European STOXX 600 index (.STOXX) , opens new tab gained 0.8% to 520.40 points by 0711 GMT, and France's CAC 40 (.FCHI) , opens new tab rose 1.4%, outperforming its peers. China's top financial regulators unveiled their biggest stimulus since the pandemic, saying they would cut bank reserves by 50 basis points while reducing mortgage rates. Luxury companies (.STXLUXP) , opens new tab, which rely heavily on Chinese consumer spending, were the biggest boost on the index. LVMH (LVMH.PA) , opens new tab, Hermes (HRMS.PA) , opens new tab, Kering (PRTP.PA) , opens new tab, and Dior (DIOR.PA) , opens new tab gained between 3.8% and 4%. Basic resources (.SXPP) , opens new tab led sectoral gains, jumping 4.4% as copper prices hit a two-month high supported by China's measures and improving demand in the region. Britain's FTSE (.FTSE) , opens new tab gained 0.4%, as stocks of metal miners rose on China's stimulus plans. The markets will also keep an eye out for comments from the European Central Bank's board member, Elizabeth McCaul, set to speak later in the day. Data on German business morale is set to be released at 0800 GMT. Among individual stock moves, UK engineering firm Smiths Group (SMIN.L) , opens new tab lost 6.7% after its annual profit missed estimates. Sign up here. https://www.reuters.com/markets/europe/european-shares-jump-china-stimulus-luxury-stocks-shine-2024-09-24/

2024-09-24 07:33

MILAN, Sept 24 (Reuters) - China's Leapmotor (9863.HK) , opens new tab is set to start taking orders in Europe for a city car and an SUV, the automaker and its partner Stellantis (STLAM.MI) , opens new tab said on Tuesday as they expand their budget electric vehicle (EV) offering in the region. Stellantis holds a 51% stake in their Leapmotor International joint venture and has exclusive rights to build, export and sell Leapmotor products outside China in the first such arrangement for a legacy Western automaker. The T03 compact car will be available from the end of September with prices starting from 18,900 euros ($20,990) while the C10 SUV will be in dealerships in October starting from 36,400 euros, the JV said in a statement. The two models were showcased for the first time in Europe near Milan on Tuesday. Initially imported from China, the T03 will also be assembled in Europe, at Stellantis' Tychy plant in Poland, potentially helping the brand avoid European Union tariffs on imported Chinese EVs. Stellantis CEO Carlos Tavares has hinted the C10 model could be manufactured in Europe, but has not provided details. Leapmotor, which will serve as Stellantis' 15th brand, will help the world's fourth-largest automaker widen its range of affordable EVs, as it presses ahead with electrification and seeks to comply with EU emission rules at a time of soft global demand for EVs. Tavares is opposed to a call by European auto lobby ACEA for relief from intermediate CO2 targets for cars and vans coming into effect in the EU in 2025. He said last week it was key for the industry to sell EVs at the same price as petrol models. ($1 = 0.9003 euros) Sign up here. https://www.reuters.com/business/autos-transportation/chinas-leapmotor-stellantis-open-orders-europe-budget-evs-2024-09-24/

2024-09-24 07:31

Sept 24 (Reuters) - Dulux paint maker Akzo Nobel (AKZO.AS) , opens new tab plans to cut about 2,000 jobs globally as part of efforts to reduce costs, targeting positions in its head offices, the Dutch company said on Tuesday. "We will be simplifying our structure, our processes, reducing cost of administrative functions," Akzo Nobel's senior spokesperson told Reuters, saying positions in finance or global business services at the head offices would be affected. The Amsterdam-listed group had announced a cost saving "industrial transformation" plan late last year, aiming for a 250 million euros ($278 million) benefit by 2027, following a post-COVID slowdown marked by rising raw material costs and customer destocking in its decorative do-it-yourself segment in Europe. Related to this, it announced plant closures in May in Ireland, the Netherlands and Zambia. Shares in Akzo Nobel were up 1.2% in the Amsterdam stock exchange by 0724 GMT. Akzo did not have any specific estimate on how much costs would be saved with the job reductions, the spokesperson said, and added that part-time positions could also be affected. The "structural adjustments" are set to be finalised by the end of 2025, the company said. ($1 = 0.8994 euros) Sign up here. https://www.reuters.com/markets/commodities/dulux-maker-akzo-nobel-plans-cut-about-2000-jobs-globally-2024-09-24/