2025-12-04 10:57

Upward revision of UK business activity supports pound Concerns recede after budget BoE likely to cut rates this month LONDON, Dec 4 (Reuters) - The pound steadied against the dollar on Thursday after rising over 1% the day before, its biggest daily jump since April, as an upward revision of business activity data painted a brighter picture of the economy. The pound was last down less than 0.1% at $1.3348 after earlier touching its highest level in over five weeks at $1.33585. Sign up here. November's S&P Global UK Composite Purchasing Managers' Index, which incorporates both services and manufacturing activity, was revised upwards on Wednesday, supporting the pound. "The growth outlook doesn't look as muted as it was initially assumed," said Kirstine Kundby-Nielsen, analyst at Danske Bank. BUDGET WORRIES RECEDE The pound has jumped in the last week after British finance minister Rachel Reeves's long-awaited budget passed the bond market's test without too much fuss. Investors had been concerned that Reeves's announcements, which included tax rises and large-scale spending, could have spooked bond investors, pushing yields higher. But British borrowing costs have fallen since last week's announcement. "The Labour government didn't really stir markets that significantly," said Danske Bank's Kundby-Nielsen. "What we've been seeing over the past week is some of that budget risk being priced out." Analysts also said the budget measures were unlikely to cause a rise in inflation, allowing the Bank of England to lower interest rates in the near term. Markets are pricing in a 90% chance of a rate cut when the central bank meets later this month. Against the euro, the pound was little changed at 87.44 pence. https://www.reuters.com/world/uk/sterling-steady-after-biggest-daily-jump-since-april-2025-12-04/

2025-12-04 10:22

Review for new products stopped until clarification issued SEC had sent warning letters to nine ETF providers The letters flagged outsized risks and sought more clarity Dec 4 (Reuters) - ETF provider ProShares has withdrawn its registration request for some highly leveraged exchange-traded funds after receiving a warning letter from the U.S. securities regulator that flagged risk exposures and paused the review of such plans. Such letters were sent on Tuesday to nine ETF providers, including ProShares, Direxion and GraniteShares, asking them to provide more clarity on the risks tied to funds that sought to track up to fives times the performance of the underlying stock. Sign up here. ProShares had sought approval from the Securities and Exchange Commission for ETFs, including products targeting to replicate three times the returns of Wall Street tech giants, including Meta Platforms (META.O) , opens new tab and Broadcom (AVGO.O) , opens new tab. "We understand and appreciate the recently published view of the SEC staff regarding certain novel leveraged ETFs filed by several issuers, indicating that such funds do not comply with relevant legal requirements," ProShares said on Wednesday. The fund manager's suite of registrations also included funds tracking specific sectors, countries and cryptocurrencies. Tidal Financial and Volatility Shares, two of the nine recipients of the SEC's letter, declined to comment. Leveraged ETFs, often favored by retail investors, have exploded in popularity due to sustained bullish market sentiment, the rise of speculative trading and a surge in product innovation, especially around single stocks and cryptocurrencies. GROWING POPULARITY BRINGS SCRUTINY In its letters, the regulator said its concerns stem from Rule 18f-4 under the Investment Company Act of 1940, which requires a fund's value-at-risk to remain below 200% of the value of an appropriate reference portfolio. The SEC questioned how the fund managers determine the reference portfolio used to measure leverage risks and suggested the issuers to revise their strategies to comply or withdraw filings. "I wouldn't characterize it as a broad clampdown, but it does signal a firmer boundary around product complexity," said Dave Mazza, CEO of Roundhill Investments. The latest scrutiny adds pressure to the growing leveraged ETF market, which continues to attract retail investors despite regulatory concerns over their complexity and risks. The ProShares UltraPro QQQ ETF (TQQQ.O) , opens new tab - the world's biggest leveraged ETF in terms of assets under management - targets three times the daily performance of the Nasdaq 100 index (.NDX) , opens new tab and has gained more than 40% so far this year. However, the outsized returns come with higher risks. Among the hardest hit this year is one tied to Strategy shares (MSTR.O) , opens new tab, according to VettaFi's ETF database. Earlier this year, GraniteShares' 3x Short AMD exchange-traded product was terminated after chipmaker AMD's (AMD.O) , opens new tab shares surged as much as 38% in one day back in October, driving the fund's value to zero. https://www.reuters.com/legal/government/proshares-withdraws-some-highly-leveraged-etf-plans-after-sec-review-halt-2025-12-04/

2025-12-04 10:20

State banks have smoothed yuan's gains Shift in trading style stymies long yuan bets - sources Yuan dips on Reuters report Dec 4 (Reuters) - China's major state-owned banks bought dollars in the onshore spot market this week and held on to them in an unusually strong effort to rein in yuan strength, according to people with knowledge of the matter. The dollar buying came as the yuan leapt to a 14-month high on Wednesday and extended a trend of state banks leaning against yuan gains in order to smooth its rise. Sign up here. But unlike their usual trading strategy, the lenders did not appear to recycle the dollars into the swap market, market sources said, noting the move was likely aimed at tightening dollar liquidity and so raising the cost of long yuan bets. Back-end dollar/yuan swap points have since dropped, reflecting a deeper negative carry of owning yuan with the one-year tenor down from a one-month high hit last week. The state bank actions were meant to moderate the pace of yuan rallies rather than reverse an upward trend, said one of the sources. All requested anonymity because they are not allowed to discuss the matter publicly. The yuan weakened a little to 7.072 per dollar after Reuters reported on the state banks' trading. It had already fallen in morning trade, following a surprisingly soft fixing of its trading band, which knocked it from a 14-month high. Slowing the yuan's rise makes it harder to hold long positions because profits don't make up for the difference in interest income between dollars and the lower-yielding yuan. State banks sometimes trade on behalf of the central bank, but they could trade on their own behalf or execute orders for their clients. China's central bank, the People's Bank of China did not immediately respond to a request for comment. YUAN POSTS BIGGEST ANNUAL GAIN SINCE 2020 The Chinese currency has gained about 3.3% on the dollar year-to-date and on Thursday looked set for the biggest annual rise since the pandemic year of 2020. The appreciation of the tightly managed currency has been helped by authorities' signalling their tacit approval, with the middle of the yuan's daily trading band repeatedly set firmer than market expectations. But it has been smoothed by the state banks, prompting speculation the aim is a gradual rise that would avoid sudden yuan purchases by exporters and project the sort of stability that can encourage global use of the currency. https://www.reuters.com/business/finance/china-state-owned-banks-soak-up-dollars-slow-yuan-gains-sources-say-2025-12-04/

2025-12-04 09:07

Plan aims to encourage EU citizens to invest locally EU stock exchanges' capitalisation lags US in terms of GDP Commission aims to give broader powers to European regulator EU countries split over crypto supervision BRUSSELS, Dec 4 (Reuters) - The European Commission proposed measures on Thursday to make the European Union's capital markets more competitive by easing cross-border operations and giving broader oversight to the European Securities and Markets Authority. The 27-nation EU is struggling to compete economically with the United States, China and other rivals, but could boost its competitiveness by bolstering its single market, which functions well for the exchange of goods but less well for services. Sign up here. Former Italian Prime Minister Enrico Letta, who wrote a report on improving the single market last year, said the biggest overall impact could come from steering the 33 trillion euros ($38.53 trillion) of private savings to the real economy. About a third of it is now held in current accounts. Letta said the 300 billion euros of family savings heading overseas, principally to the U.S., highlighted the deficiencies of the EU's fragmented markets, as did the 2024 market capitalisation of respective stock exchanges; in the EU it is 73% of GDP compared with 270% of GDP in the U.S. The proposals by the European Commission, the EU's executive body, require the approval of EU governments and the European Parliament. They are intended to ease operations across EU borders with enhanced passporting for regulated markets, as well as central securities depositories. They would allow pan-European trading venues to streamline corporate structures and licences into a single entity and relax limits on digital ledger technology, which typically refers to blockchain, the technology behind crypto assets. PLANS TO CENTRALISE CRYPTO SUPERVISION Oversight of major infrastructure such as trading venues, central counterparties, CSDs and crypto-asset providers would be transferred to the European Securities and Markets Authority (ESMA), which would also have a greater coordinating role for asset management. France, home to ESMA, has long pushed for it to be given greater power. ESMA head Verena Ross told Reuters in June she would welcome the move, but it faces resistance from some EU member states. ESMA said it welcomed the proposals. In a statement on its website, it said the package "represents a major step towards deeper and more efficient EU capital markets." The plan to transfer supervision of all crypto companies to ESMA follows the rollout of the EU's new crypto regulations this year which prompted concerns about differences in how national regulators were applying the rules. Financial regulators in France, Italy and Austria called in September for ESMA to take over supervision of major crypto firms, and France threatened to challenge the "passporting" of licences granted by a different member state, saying it was concerned crypto companies were seeking out jurisdictions with more lenient licensing standards. Malta's financial regulator, which came under scrutiny for its process for granting crypto licences this year, has said it opposes giving more crypto supervision power to ESMA. ($1 = 0.8565 euros) https://www.reuters.com/sustainability/boards-policy-regulation/eu-presents-plans-overcome-investment-hurdles-hampering-competitiveness-2025-12-04/

2025-12-04 08:45

TOKYO, Dec 4 (Reuters) - The European Central Bank will stick to the G7 communique's language on exchange rates, Piero Cipollone, a member of its executive board, told the Nikkei newspaper when asked whether it would accept any decision by Japan to conduct currency intervention. "The G7 communique on exchange rates uses very clear language. It says, among other things, that we are committed to 'market-determined exchange rates,' to 'consult closely in regard to actions in foreign exchange markets' and that 'we will not target exchange rates for competitive purposes. We will stick to that," Cipollone said in the interview published on Thursday. Sign up here. He made the remark when asked whether the ECB would accept Tokyo's intervention in the currency market to prop up the weak yen. Asked about the euro zone's economy, Cipollone said it had been resilient and the ECB's "central scenario" for inflation, under which it will dip in 2026 and head back to its 2% target by the end of 2027, seemed "more and more credible". Still, he cautioned the ECB might still need to cut interest rates if its expectations for a boost from German fiscal spending and greater consumption by households fail to come true. "We are assuming that the savings rate will go down, but this assumption has yet to be tested," Cipollone said. "If it doesn’t materialise, we will need to act." https://www.reuters.com/business/ecb-will-stick-g7-stance-fx-cipollone-says-chance-japan-intervention-2025-12-04/

2025-12-04 07:45

Dec 4 (Reuters) - British energy regulator Ofgem said on Thursday it has approved a 28 billion-pound ($37.33 billion) investment to upgrade the country's grid capacity, a move that would push up network charges on household bills by about 108 pounds by 2031. Ofgem's final approval on the day came in above the 24 billion pounds it had provisionally cleared in July. Sign up here. At the time, the regulator had estimated the upgrades would raise the average household bill by 104 pounds by 2031, before accounting for savings from the projects. However, the regulator said it was targeting around 80 pounds in savings annually from expanding the grid, bringing the net increase in bills by 2031 to about 30 pounds or less than 3 pounds per month. Costs are expected to  fall  further over time, it added. ($1 = 0.7500 pounds) https://www.reuters.com/business/energy/ofgem-approves-37-billion-boost-uks-energy-grid-2025-12-04/