2025-08-26 07:10
Aug 26 (Reuters) - Morgan Stanley has joined a growing bloc of global brokerages forecasting a September interest rate cut by the U.S. Federal Reserve, citing Chair Jerome Powell's shift in tone toward labor market risks at the Jackson Hole symposium. In a note dated Monday, the brokerage said Powell's tone marked a departure from his earlier emphasis on inflation persistence and low unemployment, suggesting the Fed may move preemptively to manage downside risks to the labor market. Sign up here. Morgan Stanley now forecasts two 25-basis-point rate cuts this year, one in September and another in December, followed by quarterly 25bp reductions through 2026, bringing the benchmark interest rate to 2.75%-3.0%. That's a shift from its previous view that the central bank would stay on hold until March 2026 and cut more aggressively thereafter. Powell's remarks on Friday triggered a wave of revised forecasts across brokerages, with Barclays, BNP Paribas and Deutsche Bank expecting a 25-basis-point cut next month. Traders are now pricing in an 81.9% chance of a September move, according to LSEG data. The change in forecasts reflect what the economists called a shift in the Fed's "reaction function," with Powell now appearing more sensitive to labor market deterioration than before. "A large up-front cut would come only with sizeable payroll declines," Morgan Stanley noted, referring to cuts bigger than 25 bps. "The Fed may also see dissents against rate cuts in September." The Trump administration's effort to steer the Fed towards more aggressive rate cuts intensified on Monday night, with the president announcing plans to remove Governor Lisa Cook over alleged mortgage fraud. JPM analysts, in a separate note, warned the move could open vacancies on the Board of Governors and potentially shift the balance of power within the FOMC. BofA Global Research remains the only major brokerage still forecasting no rate cuts this year. The rate-setting Federal Open Market Committee (FOMC) is scheduled to meet on September 16 and 17. https://www.reuters.com/business/morgan-stanley-joins-global-peers-with-september-fed-rate-cut-outlook-powell-2025-08-26/
2025-08-26 07:00
Aug 26 (Reuters) - Work is underway at three new wells in the Zohr gas field in the Mediterranean in the current financial year, Egypt's petroleum ministry said on Tuesday. Another well, the Zohr-6 well, has added about 65 million cubic feet per day of gas to Egypt’s output, the ministry added. Sign up here. Italian energy group Eni (ENI.MI) , opens new tab, Zohr's operator, resumed drilling at the Zohr field in February after production was curbed because of arrears owed to foreign oil companies. Output in the largest gas field found in the Mediterranean dropped to 1.9 billion cubic feet per day in early 2024, well below the peak reached in 2019. Zohr was discovered in 2015 by Eni and began producing gas in late 2017. It holds an estimated 30 trillion cubic feet of gas. The field in is operated by Petrobel, a joint venture of Eni and state-owned Egyptian General Petroleum Corp (EGPC). https://www.reuters.com/business/energy/egypt-petroleum-ministry-says-work-underway-three-new-wells-zohr-gas-field-2025-08-26/
2025-08-26 06:56
MUMBAI, Aug 26 (Reuters) - The Reserve Bank of India is reportedly selling dollars via state-run banks to stabilize the rupee, which has come under pressure on worries about the fallout from potential steep U.S. tariffs, three traders said. The rupee was trading at 87.7350 to the dollar, down 0.18% on the day and off an intraday low of 87.80. Sign up here. "It looks like the RBI is defending 87.80 for now," said a currency trader at a mid-sized private bank. "How long they can or will hold is anyone's guess." https://www.reuters.com/world/india/indian-central-bank-likely-intervening-cushion-rupee-against-us-tariff-risks-2025-08-26/
2025-08-26 06:35
SEOUL, Aug 26 (Reuters) - South Korea touted a broad range of U.S. investment plans by its companies at Monday's summit between U.S. President Donald Trump and South Korean President Lee Jae Myung, spanning shipbuilding, nuclear energy, aerospace, energy and critical minerals. While South Korean companies pledged at the summit $150 billion in U.S. investments, the countries also agreed to establish a non-binding agreement to steer $350 billion of investment funds proposed by Seoul in July as part of a trade deal to cut threatened U.S. tariffs on Korean goods. Sign up here. Here are some of the investment plans announced as part of the summit. $150 BILLION IN INVESTMENTS South Korea's business lobby group said companies would invest $150 billion in areas such as artificial intelligence, chips, biotechnology, shipbuilding and nuclear power. The group did not give a breakdown or timeframe for the investments. The investments by South Korean companies, already among the leading investors in the United States, would be equivalent to about six times their U.S. foreign direct investment in 2024 if pushed through. Presidential adviser Kim Yong-beom previously said the investments would include some previously announced projects such as Samsung Electronics' (005930.KS) , opens new tab new chip factory in Texas and Hyundai Motor's (005380.KS) , opens new tab car factory in Georgia, as well as Hanwha's plan to expand its U.S. shipyard. AEROSPACE Korean Air (003490.KS) , opens new tab, South Korea's biggest carrier, announced the purchase of 103 Boeing (BA.N) , opens new tab aircraft worth $36.2 billion, alongside a $13.7 billion agreement with GE Aerospace for engines and maintenance services. The deal is the largest single contract in the airline's history, and separate from an order it signalled in March for up to 50 Boeing jets and GE (GE.N) , opens new tab engines. HYUNDAI MOTOR GROUP Hyundai Motor Group announced it will boost its U.S. investment to $26 billion from a previously announced $21 billion between 2025 and 2028. The plan includes building a new steel mill in Louisiana, expanding Hyundai Motor (005380.KS) , opens new tab and Kia Corp’s (000270.KS) , opens new tab U.S. auto production capacity, and establishing a robotics hub with an annual output of 30,000 units. SHIPBUILDING Trump said during the summit the U.S. would work with South Korea to revive the struggling U.S. shipbuilding industry, saying the U.S. would buy ships from South Korea but also get support to make ships in the country. South Korea's HD Hyundai (267250.KS) , opens new tab, together with Korea Development Bank, signed a memorandum of understanding with U.S. investment firm Cerberus Capital to create a multibillion-dollar joint fund aimed at strengthening U.S. maritime capacity, including shipbuilding. Samsung Heavy Industries (010140.KS) , opens new tab and Vigor Marine Group also inked a preliminary deal covering maintenance and overhaul of U.S. Navy support ships, shipyard modernization and joint vessel construction. LNG State-run Korea Gas Corp (036460.KS) , opens new tab reached long-term agreements with commodity trader Trafigura among others to import 3.3 million tonnes of liquefied natural gas annually for about 10 years starting in 2028, mainly sourced from the United States. The long-term contracted LNG volumes are set to be supplied by Cheniere, the largest U.S. LNG exporter, among others. NUCLEAR ENERGY Korea Hydro & Nuclear Power and Doosan Enerbility (034020.KS) , opens new tab joined with U.S. partners X-energy and Amazon Web Services to cooperate on small modular reactor design, construction and supply chains. Doosan Enerbility also struck an agreement with Fermi America to supply nuclear and SMR equipment for a Texas-based AI project, while KHNP and Samsung C&T (028260.KS) , opens new tab signed a separate MOU with Fermi on the project’s construction. In addition, KHNP agreed with Centrus a joint investment in a U.S. uranium enrichment facility. CRITICAL MINERALS Korea Zinc (010130.KS) , opens new tab agreed with Lockheed Martin (LMT.N) , opens new tab to supply germanium from 2028 under a long-term deal and to deepen supply chain cooperation in rare metals. NON-BINDING DEAL ON $350 BILLION FUND South Korea last month agreed on a trade deal to cut tariffs in exchange for pledging to make separate $350 billion investments, with the two sides deferring over details about the fund. Kim said on Monday that South Korea plans to pursue a "non-binding" deal on the structure and operation of the fund. The "financial package" would be used to support strategic industries such as key minerals, batteries, chips, pharmaceutical products, AI and quantum computing, he said. https://www.reuters.com/business/aerospace-defense/south-korean-firms-pledge-150-billion-us-investments-summit-2025-08-26/
2025-08-26 06:16
Dollar stumbles after Trump's announcement Markets recalibrate, rate cuts seen more likely Cook's removal intensifies worries over Fed independence SINGAPORE, Aug 26 (Reuters) - The dollar skidded in a volatile session on Tuesday after U.S. President Donald Trump said he was removing Federal Reserve Governor Lisa Cook from her position, seen by markets as a fresh jab at the central bank's independence. The dollar index fell as much as 0.4% before recovering after Trump made the announcement in a letter to Cook that he posted on social media. Sign up here. An index measuring the greenback's strength against a basket of six currencies was last 0.1% lower at 98.368. The pullback came after the U.S. currency had registered its biggest daily gain of the month on Monday. "Markets aren't panicking, but they are recalibrating, earlier rate cuts look more likely after Cook’s removal," said Charu Chanana, chief investment strategist at Saxo in Singapore. "But this isn’t just about rate cuts, it’s about Fed independence and the growing institutional risks in the U.S." Trump said in the letter to Cook he was firing the governor over alleged improprieties in obtaining mortgage loans. In response, Cook said Trump has no authority to fire her from the central bank, and she will not resign. The unprecedented move marks a sharp escalation of Trump's battle against the Fed, which he blames for not lowering interest rates quickly, and intensifies investor worries about the U.S. central bank's independence. "Trump's move to fire Lisa Cook will cast a pall on Fed independence and could weigh on the dollar and U.S. Treasuries," said Vasu Menon, managing director of investment strategy at OCBC. "However, don't expect major market moves as Trump's action is somewhat unprecedented and may be challenged in U.S. courts," he added. The yield on the two-year U.S. Treasury bond was last down 1.3 basis points to 3.717% after the move, while the yield on long-dated 30-year bonds rose 4.7 basis points to 4.936%. The interest rate differential between two- and 10-year Treasury bonds hit a one-month high of positive 58.7 basis points. Traders are pricing in an 83.3% probability of a cut at the Fed's September meeting, little changed from a week ago, according to the CME Group's FedWatch tool. Against the yen, the dollar traded at 147.845 yen , in line with late U.S. levels. The euro tacked on 0.1% in Asia, last fetching $1.1629 , reversing some losses after France's main opposition parties said they would not back a confidence vote, over Prime Minister Francois Bayrou's planned budget cuts, increasing the prospect of political instability. The offshore yuan changed hands at 7.1547 yuan per dollar , appreciating just shy of 0.1% and trading near the strongest level in a month, as a Chinese stock rally gathered steam. The Australian dollar slipped 0.1%, fetching $0.6479 , after the Reserve Bank of Australia's minutes for its August meeting said the central bank judged further policy easing would likely be needed over the coming year. The kiwi slipped 0.2% to $0.5839 . Sterling traded at $1.3453 in volatile trade, giving up early gains made after news of Trumps's move against the Fed broke. Cryptocurrencies fluctuated between gains and losses after several days of choppy trading, with bitcoin last up 0.5% and attempting to break a three-day losing streak, while ether climbed 1.9%. https://www.reuters.com/world/middle-east/dollar-jolted-lower-after-trump-fires-feds-cook-2025-08-26/
2025-08-26 06:14
Small businesses offer steep discounts, shed staff amid slowdown Some big diamond traders consider moving operations to Botswana Exporters slash rough diamond purchases, run on minimal stocks SURAT, India, Aug 26 (Reuters) - The Surat Diamond Bourse, billed as the world's largest office complex - surpassing even the Pentagon in size and symbolising India's growing trade ambitions, stands eerily quiet, with only a few traders at work. The reason: business is sluggish and the outlook is grim. Sign up here. Exports by India's diamond industry have already hit a two-decade low on weak Chinese demand, and now higher tariffs under U.S. President Donald Trump threaten to sever access to its largest market, which accounts for nearly a third of its $28.5 billion annual shipments of gem and jewellery. In Surat, where more than 80% of the world's rough diamonds are cut and polished, orders have started drying up with looming U.S. tariffs shaking buyer confidence. While smaller exporters have fewer options to cushion the blow, some bigger players plan to shift part of their operations to countries like Botswana, which faces a lower 15% U.S. tariff. India's current 25% tariff is set to double on Aug. 27. "We are in a wait-and-watch mode until the end of August but may increase production in Botswana if this continues," said Hitesh Patel, managing director of Dharmanandan Diamonds, which expects U.S. tariffs to slash its annual revenue by 20–25%. Shaunak Parikh, vice chairman of the Gem and Jewellery Export Promotion Council (GJEPC), said the industry was also responding to slower demand by cutting working days and hours. At the Surat Diamond Bourse, more than 4,700 offices have been sold, but less than 250 are in use with several companies rethinking their plans to move in, a bourse official said on condition of anonymity. The owner of a Mumbai-based diamond firm, who bought space at the bourse last year, said he had shelved relocation plans. "U.S. tariffs have already shaken our business, and we don't want the added hassle of moving from Mumbai to Surat," he said, requesting anonymity to avoid naming his company. In December 2023, while inaugurating the Surat Diamond Bourse - built over 6.7 million square feet, surpassing the Pentagon's 6.5 million - Prime Minister Narendra Modi had hailed it as a symbol of "new India's strength and new resolve". Comprising nine interconnected towers, each with 15 floors and gleaming glass facades, the sprawling bourse houses banks, customs offices, secure vaults, and a jewellery mall, designed as a one-stop hub for the global diamond industry. LITTLE SPARKLE DESPITE PEAK SEASON At this time of year, workers in Surat typically ramp up production to meet a surge in orders from the United States ahead of Christmas and New Year. This year, however, many artisans are uncertain whether they will even have work. "Demand has slumped so badly that the diamond packets I sold for 25,000 rupees ($285.84) last year now barely fetch 18,000," said Shailesh Mangukiya, who runs a cutting and polishing unit in Surat, the second-largest city in Modi's home state of Gujarat in India's west. Mangukiya said he had halved his staff strength to 125. GJEPC's Parikh said that in the absence of a trade deal between India and the U.S. to lower tariffs, 150,000 to 200,000 workers could lose their jobs. Stung by tariffs, U.S. buyers are likely to source diamonds from countries such as Israel, Belgium and Botswana, industry officials said. India's diamond exporters are trying to boost sales to Asia, Europe and the Middle East to offset U.S. losses, but finding new diamond buyers is not easy, exporters said. The industry is cutting rough diamond purchases and operating with minimal inventories to preserve cash flow, while cash-strapped smaller units have begun offering deep discounts to stay afloat, exporters said. The only silver lining is India's domestic demand. Demand for diamonds in India, which recently overtook China as the world's second-largest market, continues to show growth, said Hitesh Shah, a partner at Venus Jewel, which supplies global luxury brands such as Tiffany & Co. and Harry Winston. "Our sale for the last 10-15 days has slowed down a little but not that much because the loss of American demand is being compensated by some good demand in the Indian market," Shah said. ($1 = 87.46 rupees) https://www.reuters.com/world/india/empty-offices-lost-orders-indias-diamond-hub-stands-idle-steep-us-tariffs-loom-2025-08-26/
