2024-09-16 11:11

TSX ends up 0.6% at 23,702.07 Posts record closing high Energy adds 1%; oil settles 2.1% higher Bausch Health Companies jumps 10.6% Sept 16 (Reuters) - Canada's commodity-linked main stock index rose to an all-time high on Monday, led by gains for energy and technology shares, as expectations rose the Federal Reserve would cut U.S. interest rates by half a percentage point at a policy decision this week. The Toronto Stock Exchange's S&P/TSX composite index (.GSPTSE) , opens new tab ended up 133.42 points, or 0.6%, at 23,702.07, its fourth straight day of gains and eclipsing the record closing high it posted on Friday. Futures on the fed funds rate have priced in a nearly 60% chance of a 50 basis-point rate cut by the Fed on Wednesday, rather than a quarter-point move, up from 45% last Friday. "It's probably the first cut of many to come" and that gives a boost to the resource-heavy Canadian market for a number of reasons, said Allan Small, senior investment advisor at Allan Small Financial Group with iA Private Wealth. Zero-yielding gold and other dollar-denominated commodities tend to benefit from lower U.S. interest rates. Gold rose to a record high and oil settled 2.1% higher at $70.09 a barrel. The energy group advanced 1%, heavily-weighted financials added 0.7% and technology ended 1% higher. Bausch Health Companies (BHC.TO) , opens new tab shares jumped 10.6% after a report that its Bausch + Lomb unit was exploring sale options. Air Canada (AC.TO) , opens new tab shares gained 3.5% after the company said on Sunday it has reached a tentative, last-minute deal with its pilots' union over a new four-year collective agreement, averting a near-term strike or lockout. Sign up here. https://www.reuters.com/markets/tsx-futures-edge-up-fed-rate-cut-expectations-rise-2024-09-16/

2024-09-16 11:02

Central bank umbrella group urges prudence with rate cuts BIS taking deep look into yen carry trade dynamics after turmoil Private equity in insurance markets presents stability risks LONDON, Sept 16 (Reuters) - The Bank for International Settlements has urged top central banks not to squander the interest rate buffers they have rebuilt over the last couple of years by now cutting them again too rapidly. The recommendation from the central bankers' central bank, as the BIS is known, comes as markets wait to see whether the U.S. Federal Reserve starts its long-awaited rate cutting cycle this week with a quarter-point or larger half-point move. BIS Monetary and Economic Department head Claudio Borio stressed that its message was to all central banks that they needed to maintain some "safety margins" to be able to handle both expected downturns and unexpected future crises. "It would be a pity if this room for manoeuvre was squandered," Borio told reporters as the BIS published its latest quarterly report on Monday. "The expected is recessions that are bound to come. The unexpected are the types of COVID shocks that we saw. So that is one additional consideration to bear in mind when deciding the pace and how far to go". The Fed's widely expected cut this week will be its first in four years, but others, including the European Central Bank and those of Britain, Canada, Switzerland, New Zealand and plenty of emerging market central banks, have already started the process. Markets have been struggling to decipher where rates are likely settle this cycle though given the current uncertainty over the global economy. Borio said that neutral rate, or r* in economic textbook speak, was a "rather blurry concept". "You only find out where r* star is, when you get there somehow," he said. CARRY TRADE The BIS' report also unpicked August's steep falls in supersized U.S. tech and world stocks and the dramatic moves when the Bank of Japan's move towards higher interest rates saw a sudden unwinding of hugely popular yen carry trades. That trade, which involves borrowing yen at a low cost to invest in other currencies and assets offering higher yields, has underpinned markets for decades. As well as the yen spike, August's turmoil included the biggest single day drop for Japan's TOPIX banks index in its 40 year history as well as a major jump in the main global market fear gauge, the Chicago Board Options Exchange's Volatility Index, or 'VIX' (.VIX) , opens new tab. Hyun Song Shin, the BIS' head of research and top economic adviser, said the notional scale of outstanding FX swaps and forwards with the yen on one side - has soared by some 27% since the end of 2021 to $14.2 trillion (1,989 trillion yen). There wasn't enough information at the moment, however, on how destabilising an unwind of the carry trade could potentially be. "One thing that we will need to do is to have better data on the direction of the trade to get a sense of what the economic purpose of that transaction actually is," Shin added. "This is something that we're working on at the moment." VULNERABILITY The Switzerland-based BIS also flagged financial stability concerns over the use in the life insurance market of offshore reinsurance - insurance for insurers - provided by private equity firms. This type of reinsurance is making the market "increasingly interconnected" and exposing life insurers to riskier assets, the report said, estimating that PE firms' investment in life insurance has grown nearly sevenfold since 2010, particularly in the United States. The Bank of England has threatened to curb UK life insurers' use of PE-backed reinsurance, and global regulators are also worried about it. Private equity players "could prove more vulnerable than peers in difficult market conditions", the BIS warned. (1 Japanese yen = $0.0071) Sign up here. https://www.reuters.com/markets/rates-bonds/global-markets-bis-2024-09-16/

2024-09-16 10:54

MUMBAI, Sept 16 (Reuters) - The Indian rupee ended unchanged on Monday while dollar-rupee forward premiums rose on heightened chances of an outsized 50-basis-point rate cut by the U.S. Federal Reserve this week. The rupee ended at 83.8875 against the U.S. dollar, the same as its closing level on Friday. The currency was unable to benefit from weakness in the greenback in the face of dollar demand from importers, including local oil companies, traders said. The dollar index was down 0.3% at 100.7, while Asian currencies rose. The rupee is nearly flat over September so far even as most of its Asian peers have strengthened between 0.3% and 2.8%. The rupee is likely to move in the 83.85-83.98 trading range before the Fed's policy decision on Wednesday, a foreign exchange trader at a private bank said. Strong local dollar demand alongside likely absorption of inflows by the Reserve Bank of India have kept a lid on the appreciation of the rupee, traders said. The focus this week squarely lies on whether the Fed will cut rates by 25 or 50 basis points. Interest rate futures currently signal a near 60% chance of the latter, up from 30% last week, according to CME's FedWatch tool. Dollar-rupee forward premiums have benefited from the shift, with the 1-year implied yield rising 3 basis points to 2.30%, its highest since April 2023. "We had favoured a 50bp cut, but the latest job and inflation numbers suggest officials will more likely vote in favour of 25bp," ING Bank said in a note. "Nonetheless, they will leave the door open to potentially more aggressive action down the line," the note said. The Bank of England and the Bank of Japan will also deliver policy decisions later this week. Sign up here. https://www.reuters.com/markets/currencies/rupee-ends-flat-forward-premiums-climb-fed-rate-cut-hopes-2024-09-16/

2024-09-16 10:05

A look at the day ahead in U.S. and global markets from Mike Dolan After an extraordinary 30-month monetary squeeze designed to zap a post-pandemic inflation spike, the Federal Reserve is finally set to cut interest rates this week - and it's now only a matter of how much. With another set of weak industrial and retail readings from China on Saturday and the FBI on Sunday pursuing a second failed assassination attempt on Republican presidential candidate Donald Trump, the news backdrop to this long-awaited Fed easing week is agitated to say the least. But investors are staying focussed for now on growing speculation the first Fed cut on Wednesday will be 50 basis points rather than 25 bps - not least as some see last week's press reports as a possible steer even as Fed officials remain in their traditional pre-meeting quiet period. World markets were relatively calm first thing on Monday, largely because Japanese and mainland Chinese centres were closed for holidays. Yet the buoyancy seen at the end of last week - which took Wall Street stock benchmarks (.SPX) , opens new tab back to within 1% of record highs - looks to be sustained first thing on Monday. Stock futures were higher, with those on the small cap Russell 2000 (.RUT) , opens new tab leading the way. Fed futures now price in some 40 bps easing on Wednesday - more than a 60% chance that it will be 50 bps rather than 25 bps. Just as significantly, they pencil in 120 bps of cuts by year-end. And with short-dated Treasury yields returning to 2022 levels, the dollar (.DXY) , opens new tab is taking much of the heat first thing. Two-year Treasury yields fell below 3.55% for the first time in two years, sending the 2-to-10-year yield curve gap to its most positive since June 2022 at almost 9 bps. The dollar bore the brunt of Fed-focussed trading, with its DXY index (.DXY) , opens new tab down sharply and stalking the year's lows once again. MSCI's emerging market currency index (.MIEM00000CUS) , opens new tab gained almost 0.25% to hit a record high. Relative interest rate plays dominated among the majors. With the Bank of Japan still holding out the likelihood of higher rates ahead, Japan's yen strengthened through 140 per dollar for the first time since July 2022. And with markets assuming the Bank of England will hesitate on a second rate cut of the year when it meets on Thursday - in part awaiting next month's first budget from the new British Labour government - sterling pushed higher again too. CHINA WEAKNESS It was trickier to judge the reaction to China's latest sweep of sub-forecast economic readings at the weekend as mainland markets there were closed on Monday. China's industrial output growth slowed to a five-month low in August, according to the latest numbers, while retail sales and new home prices also missed and weakened further - inevitably bolstering the case for the sort of aggressive government stimulus that so far has been conspicuously absent. The weak numbers made Beijing's 5% growth target a more distant prospect and echoed soft bank lending figures seen on Friday. Perhaps most alarming of all is the ongoing property bust the authorities have failed to get across. And China's new home prices fell at the fastest pace in more than nine years in August - with only two of 70 surveyed cities reporting home prices gains both in monthly and annual terms in August. Hong Kong's Hang Seng index (.HSI) , opens new tab, however, edged higher on Monday and the offshore yuan firmed against a generally weaker dollar worldwide. In politics, the White House race took another twist after the U.S. Secret Service foiled what the FBI called an apparent assassination attempt on Trump while he was golfing on his course in West Palm Beach, Florida. Trump has trailed Democratic candidate Kamala Harris in betting markets since last week's TV debate between the two and she remains marginal favorite to win the presidency in November. In Europe, stock markets were little changed. But in deals news, France's Rexel (RXL.PA) , opens new tab jumped 12.6% after the Paris-listed group on Sunday rebuffed a $9.4 billion acquisition offer from billionaire Brad Jacobs-led QXO (QXO.O) , opens new tab. Key developments that should provide more direction to U.S. markets later on Monday: * New York Fed's September manufacturing survey * European Central Bank chief economist Philip Lane speaks * US Treasury sells 3-, 6-month bills Sign up here. https://www.reuters.com/markets/us/global-markets-view-usa-pix-2024-09-16/

2024-09-16 09:47

LONDON, Sept 16 (Reuters) - The British pound rose against the dollar on Monday, after closing slightly in negative territory last week, ahead of this week's UK inflation data and central bank meeting. Sterling rose by 0.5% on the day to $1.3190, above the $1.3125 it recorded at Friday's close. "Sterling is holding up quite well," said Niels Christensen, chief analyst at Nordea, with the general opinion being that the Bank of England would be "a little bit less aggressive" on rate cuts on account of an expected rise in core inflation. The BoE is widely expected to keep interest rates unchanged this week after a 25-basis-point cut last month, although futures markets on Monday implied a greater chance for a rate cut of a quarter of a point, at about 38% versus 20% on Friday. Inflation figures, released on Wednesday, will be a key set of data ahead of the BoE's policy announcement, after data from Britain's Office for National Statistics last week showed the economy stagnated unexpectedly in July. "The expected rise in the core rate is one of the reasons why we do not expect a change in the key rate," said Volkmar Baur, FX strategist at Commerzbank. "However, if this does not happen, the BoE's decision could become more difficult after the recent weaker economic data," Baur added. The European Central Bank lowered interest rates by 25 basis points last week and signalled a "declining path" for borrowing costs in the months ahead as inflation slows and economic growth in the euro zone dwindles. Against the euro , the pound was flat at 84.35 pence. Meanwhile, the dollar weakened and the yen hit its highest level in more than a year on Monday, as market participants increasingly expected an oversized rate cut by the Federal Reserve later this week. Sign up here. https://www.reuters.com/markets/currencies/sterling-gains-ahead-uk-inflation-data-boe-meeting-this-week-2024-09-16/

2024-09-16 09:21

LONDON, Sept 16 (Reuters) - Global commodity trading house Trafigura has announced it will appoint Jiri Zrust to the newly opened role of Global Head of Operational Assets. Zrust will join the company on Oct. 1, the company said in a statement on Monday, from private equity group CVC Capital Partners. "Jiri Zrust will join Trafigura to lead our Operational Assets division, creating a fourth pillar for our business alongside our Oil and Petroleum Products, Metals and Minerals, and Gas, Power and Renewables trading division," Trafigura chief executive Jeremy Weir said. The Operational Assets division will be responsible for the governance and management of Trafigura's controlled and minority-owned operational assets in infrastructure, downstream and midstream for the oil, mining, metals, power generation, logistics and renewables sectors. Zrust joined CVC in March 2022, according to his profile on social media professional networking site LinkedIn. Prior to that, he worked for Australian financial services company Macquarie for just over 10 years. Sign up here. https://www.reuters.com/markets/commodities/trafigura-appoints-jiri-zrust-global-head-operational-assets-2024-09-16/