2024-09-19 21:48

Sept 19 (Reuters) - Canadian producer of forestry products West Fraser (WFG.TO) , opens new tab announced on Thursday that it would indefinitely curtail its sawmill in Lake Butler, Florida, by the end of this month. The curtailment would impact nearly 130 employees, and the company expects to mitigate this by providing work opportunities at other company operations. High fiber costs and soft lumber markets led to the decision, the company said, where the current low-price environment has impaired the ability to operate the mill profitably. This also reduces West Fraser's U.S. lumber capacity by approximately 110 million board feet, and the company said it would take an impairment charge in the third quarter of 2024. The Vancouver, Canada-based company missed profit estimates in the second quarter of the year. Morningstar analyst Spencer Liberman in July had said that the stagnant housing markets as well as tepid repair and remodel demand were weighing on lumber demand end markets. Sign up here. https://www.reuters.com/business/canadas-west-fraser-curtail-lake-butler-operations-amid-weak-market-environment-2024-09-19/

2024-09-19 21:42

Fed delivers big rate cut, BoE holds But soft landing vs. recession debate remains - investors Divergence among central banks also opening up LONDON, Sept 19 (Reuters) - Big global investors are on alert for wild market swings after a jumbo U.S. rate cut sparked confusion over whether the world's dominant economy is set to boom or face recession, muddling prospects for stocks, bonds and currencies worldwide. Global stocks (.MIWD00000PUS) , opens new tab hit records on Thursday, a day after the Federal Reserve lowered borrowing costs by 50 basis points from a 23-year high while the euro, sterling and currencies from Norway to Australia firmed against the dollar. U.S. stocks surged after an initial muted reaction to the Fed cut. But in one sign the Fed's cut is making policymakers outside the U.S. edgy, the Bank of England held interest rates steady on Thursday, citing uncertainty about inflation and global demand. Traders dialed back their UK rate cut forecasts and some money managers warned the Fed might be adding too much support to an already robust U.S. economy, lifting global growth but potentially also prices of commodities and consumer goods. "I think it's more likely the Fed cuts too much and the economy accelerates," Royal London head of multi-asset Trevor Greetham said. "It might be that there are then not loads of (global) rate cuts," he said, adding he expected higher market volatility from here. "I see more turbulence, there are just too many risks," Legal & General Investment Management head of economics Tim Drayson said, citing prospects that the U.S. was slowing. LGIM, Britain's biggest asset manager, was not taking strong positions on global stocks and bonds for now, he said. DIVERGENCE? Traders see the Fed's funds rate dropping 72 bps this year and by 195 bps by October 2025. They have reduced near-unanimous bets for a quarter-point UK rate cut in November to around 80% and see the European Central Bank as unlikely to cut rates next month, but investors viewed such predictions as unstable. These European rate-setters are grappling with slower growth than the U.S, but stickier inflation. Their policy paths and markets depend on a scattergram of unpredictable scenarios for the U.S. economy. Fidelity International portfolio manager Shamil Gohil said that faltering U.S. and UK growth could persuade the BoE to cut rates more rapidly and boost British government bonds, known as gilts. But such positions were vulnerable to current expectations for further U.S. rate cuts proving wrong, he said. "That could be a scenario where all markets sell off," he said, adding that on balance he expected global market volatility to rise. Gohil said his portfolio was defensive, with a preference for investment-grade corporate bonds. Neil Mehta, portfolio manager at BlueBay Asset Management, warned the Fed was cutting into a "very hot" economy with GDP growth at 3% and inflation still above target. Euro-zone core inflation is just under 3% and its policymakers are divided over future rate cuts after it lowered borrowing costs in June and September. But if the Fed keeps going, further strength in the euro against the dollar would pile pressure on the ECB by making exports less competitive, Greetham said. Marcus Jennings, fixed-income strategist at Schroders, said a dovish Fed, along with a weak euro-zone economy, made German Bunds more attractive. But investors warned any global central bank outlook was likely to shift if U.S. data changed views on what the Fed may do next. "If you start to see (U.S.) employment contract they (Fed) would be much more aggressive," said TS Lombard head of macro Dario Perkins. "Then they would start to panic a little bit about what’s happening. If employment started to rebound, then that would suggest policy isn’t as massively tight as they thought". The VIX (.VIX) , opens new tab gauge of implied stock-market volatility dipped to 16.6 on Thursday, far below its spike to almost 66 during early August's market turmoil on a surprisingly weak U.S. jobs report and follow-on currency market gyrations. MSCI's world share index (.MIWD00000PUS) , opens new tab has also gained more than 10% since that Aug. 5 shakeout. Marlborough chief investment officer Sheldon MacDonald said market volatility could rise because stock-market valuations suggested the U.S. economy would be boosted by rate cuts but government bond pricing hinted at a recession. Ben Gutteridge, multi-asset manager at Invesco, said if the Fed prevents a recession this would boost trades centered on central-bank divergence, such as bets that a more restrictive BoE would keep the pound strengthening against the dollar. But a U.S. downturn would weaken stocks and support bonds worldwide, narrowing regional market divergence, he said. "If you don't want to lose money, you've got to get the Fed right." Sign up here. https://www.reuters.com/markets/us/global-markets-cenbanks-investors-analysis-pix-2024-09-19/

2024-09-19 21:24

HOUSTON, Sept 19 (Reuters) - Chevron (CVX.N) , opens new tab does not want to invest in the construction of U.S. LNG plants, as it is not the best use of the company's capital and it can easily sell its U.S. gas, said a top official on Thursday. The head of Chevron's midstream, Colin Parfitt, also ruled out taking an equity stake in Woodside Energy's (WDS.AX) , opens new tab impending purchase of Louisiana-based Driftwood LNG. "We chose not to do the owning and operating but we do deals that allow us to have production of gas in the U.S. and translate it into LNG for our customers," Parfitt said in an interview. Woodside has said it is prepared to sell up to 50% stake in the proposed 27.6 million tons per annum Driftwood liquefied natural gas project. The U.S. is unique in that Chevron can monetize its gas production without having to convert it to LNG since the country had a large midstream market. One of the ways that Chevron plans to benefit from LNG output in the U.S is through sales and purchase agreements with LNG developers. It has separate agreements with Cheniere Energy (LNG.N) , opens new tab and Venture Global LNG, the latter of which has been in contract disputes with big customers. "I have sat with Venture Global in the past and I am very well aware of the noise that's out there. Our view is if we have an issue with a supplier then we talk to them and we do talk to Venture Global very directly," Parfitt said. Large projects are prone to delays and the Biden pause on export reviews that held up LNG export approvals to non FTA countries will also slow down the next phase of projects, Parfitt said. Sign up here. https://www.reuters.com/business/energy/chevron-not-looking-invest-building-us-lng-plants-official-says-2024-09-19/

2024-09-19 21:19

Sept 19 (Reuters) - German energy company Uniper (UN0k.DE) , opens new tab and U.S. oil and gas producer ConocoPhillips (COP.N) , opens new tab said they have agreed on a supply deal for up to 10 billion cubic metres (bcm) of natural gas over the next 10 years. Under the agreement, ConocoPhillips will supply natural gas to Uniper in north-west Europe. Financial details were not disclosed. The agreement is for natural gas pipeline supply, not liquefied natural gas (LNG), a ConocoPhillips spokesperson told Reuters, which is gas cooled and turned into liquid for transportation in tankers. ConocoPhillips has stakes in Norwegian gas fields from where gas is piped to continental Europe and Britain. A Uniper spokesperson said that a partnership between the two companies has existed for more than four decades. "The agreement also supports ConocoPhillips' increasing gas flows into Europe, where significant long-term regasification capacity commitments have been made including the German LNG, Gate and Zeebrugge terminals," the ConocoPhillips spokesperson added. Sign up here. https://www.reuters.com/business/energy/uniper-conocophillips-agree-10-year-natural-gas-supply-deal-2024-09-19/

2024-09-19 21:06

BOJ keeps short-term rate steady at 0.25% as expected BOJ upgrades view on consumption Gov Ueda says domestic economy on track, warns of U.S. risk Remarks weaken yen, heighten uncertainty on rate hike timing TOKYO, Sept 20 (Reuters) - The Bank of Japan kept interest rates steady on Friday and its governor said it could afford to spend time eyeing the fallout from global economic uncertainties, signalling it was in no rush to raise borrowing costs further. The dovish comments pushed down the yen, heightening uncertainty over whether the BOJ could hike interest rates again this year, as many market players had predicted. BOJ Governor Kazuo Ueda said Japan's economy was moving in line with forecasts, with rising wages lifting consumption, and keeping inflation on track to durably hit the bank's 2% target. But volatile financial markets and uncertainty over whether the U.S. economy can manage a soft landing required the BOJ to spend more time determining whether more rate hikes were needed, he said. "The outlook for overseas economic development is highly uncertain. Markets remain unstable. We need to scrutinise such developments carefully for the time being," Ueda told a news conference after the BOJ's widely expected decision to keep short-term rates steady at 0.25%. The yen's recent rebound has also moderated upward pressure on import costs, and diminished the risk of an overshoot in domestic inflation, he said. "As such, we can afford to spend some time in making a policy decision." The dollar jumped above 143 yen after Ueda's remarks on relief he did not give strong clues on the chance of a near-term rate hike. "The governor stressed risks surrounding the U.S. economy and re-confirmed the view the BOJ won't hike rates when markets are unstable. That may have led to receding market expectations of a year-end rate hike," said Atsushi Takeda, chief economist at Itochu Research Institute. "But such risks may clear up. I believe there's still a chance the BOJ could hike rates in December," he said. The BOJ ended negative interest rates in March and hiked short-term rates to 0.25% in July, in a landmark shift away from a decade-long stimulus programme aimed at firing up inflation and economic growth. U.S. SLOWDOWN LOOMS A majority of economists polled by Reuters earlier this month expected the BOJ to raise rates again this year, with most betting on a December hike. The BOJ maintained its view the economy was on track for a recovery. It also upgraded its view on consumption to say it was on a "moderate increasing trend," compared with the assessment in July that it was "resilient." Ueda said the BOJ was ready to raise rates if its economic and price forecasts are achieved, as Japan's real borrowing costs remained extremely low. But he said the central bank's rate hike time will depend partly on whether the U.S. economy will achieve a soft landing, or suffer a bigger-than-expected downturn. "Looking at consumption and other data, Japan's economy is on track and moving in line with our forecasts," he said. "But uncertainty on the U.S. economic outlook has heightened. That is offsetting some of our optimism on inflation expectations." The remarks underscore how a recent slew of weak U.S. data, which led the U.S. Federal Reserve's decision on Wednesday to deliver an oversized reduction in borrowing costs, were casting a cloud over the BOJ's rate-hike path. Ueda gave few clues on how much the BOJ could eventually raise rates, saying it was hard to pin down Japan's neutral rate, or the level that neither cools nor overheats growth. Japan's economy expanded an annualised 2.9% in April-June and real wages rose for two straight months in July, easing fears that rising living costs will dent consumption. But soft demand in China, slowing U.S. growth and the yen's recent rebound cloud the outlook for the export-reliant country. Market volatility remains a key concern for BOJ policymakers after the July rate hike and hawkish remarks from Ueda triggered a spike in the yen and sharp falls in equity prices. Sign up here. https://www.reuters.com/markets/asia/boj-keep-policy-steady-signal-more-rate-hikes-come-2024-09-19/

2024-09-19 20:56

Dow closes above 42,000 for the first time BofA expects Fed to go for 75-bp cut in Q4 US big banks rise after Fed's rate cut S&P 500 +1.70%, Nasdaq +2.51%, Dow +1.26% Sept 19 (Reuters) - The S&P 500 surged to a record high close on Thursday, the day after the Federal Reserve cut interest rates by 50 basis points and indicated more rate cuts were on the horizon. The blue chip Dow Jones Industrial Average also registered a record closing high, ending the session above 42,000 for the first time. Heavyweight stocks that have enjoyed much of this year's stock market rally made fresh gains, with Tesla (TSLA.O) , opens new tab surging over 7%, and Apple (AAPL.O) , opens new tab and Meta Platforms (META.O) , opens new tab each up almost 4%. AI powerhouse Nvidia (NVDA.O) , opens new tab jumped 4%, helping lift the PHLX semiconductor index (.SOX) , opens new tab surge 4.3%. Better-than-expected jobless claims data further stoked global risk appetite. On Wednesday, the Federal Reserve announced a rate cut at the high end of expectations, and said it had greater confidence inflation was under control. Fed Chair Jerome Powell said the U.S. economy remained strong and the central bank would decide on the appropriate pace of future rate cuts. "The Fed has sanctioned a pretty strong economic picture here, and so we're just seeing the money flow back into some of the sectors that have perhaps underperformed so far this quarter," said James Ragan, Director of Wealth Management Research at D.A. Davidson. The small-cap Russell 2000 index (.RUT) , opens new tab rose 2.1% as lower interest rates boosted prospects of reduced operating costs and greater profits. The S&P 500 <.SPX> climbed 1.70% to end the session at 5,713.64 points, its highest close ever. The Nasdaq <.IXIC> gained 2.51% to 18,013.98 points, while the Dow Jones Industrial Average (DOW.N) , opens new tab rose 1.26% to 42,025.19 points. Of the 11 S&P 500 sector indexes, eight rose, led by information technology (.SPLRCT) , opens new tab, up 3.08%, followed by a 2.2% gain in consumer discretionary (.SPLRCD) , opens new tab. In extended trade, Fedex (FDX.N) , opens new tab dropped 10% after the company cut its revenue target for its fiscal year 2025. BofA Global Research said it now expects a total of 75 basis points in rate cuts by the end of this year, steeper than its previous forecast of 50 bps. Evercore ISI data going back to 1970 showed the S&P 500 has posted an average 14% gain in the six months following the first reduction of a rate-cutting cycle. September has generally been a disappointing month for U.S. equities with the S&P 500 notching an average loss of 1.2% since 1928. The S&P 500 banks index (.SPXBK) , opens new tab rose 2.5%, with gains in Citigroup (C.N) , opens new tab and Bank of America (BAC.N) , opens new tab after they lowered their respective prime rates. Fertility benefits management firm Progyny (PGNY.O) , opens new tab plunged 33% after a significant client notified the company it had elected to exercise a 90-day option to terminate its services agreement. Advancing issues outnumbered falling ones within the S&P 500 (.AD.SPX) , opens new tab by a 2.4-to-one ratio. Across the U.S. stock market (.AD.US) , opens new tab, advancing stocks outnumbered falling ones by a 3.8-to-one ratio. Volume on U.S. exchanges was relatively heavy, with 12.3 billion shares traded, exceeding the average of 10.8 billion shares over the previous 20 sessions. Sign up here. https://www.reuters.com/markets/us/fed-rate-cut-boosts-futures-growth-stocks-lead-gains-2024-09-19/