2025-07-30 14:29
Bank of Canada keeps its policy rate unchanged at 2.75% Anticipates economy contracting by 1.5% in the second quarter Refrains from giving central economic forecast Shares three scenarios of outcome of the tariff war OTTAWA, July 30 (Reuters) - The Bank of Canada held its key policy rate at 2.75% for the third time in a row on Wednesday, as expected, and said the risk of a severe and escalating global trade war had diminished. But for the second consecutive quarter, the central bank declined to give detailed forecasts for the Canadian economy, citing the uncertainty around U.S. trade policy. Sign up here. The bank also said that if the economy weakened further it could cut rates, provided upward pressures on inflation were kept in check. Although Canada faces tariffs on three sectors, the overall effects have been contained. The economy has weakened only slightly, job growth is robust and closely-tracked metrics of core inflation are firm. "Canada's economy is showing some resilience so far... inflation is close to our 2% target, but we see evidence of underlying inflation pressures," said Governor Tiff Macklem. The situation could change on August 1, the deadline for the United States and Canada to reach a trade deal and the date when U.S. President Donald Trump has threatened to impose 35% tariffs on some Canadian goods. The BoC aggressively eased rates by 225 basis points starting in June last year, but since March has paused as it waits to assess the impact of tariffs on the economy and prices. "Since April, the risk of a severe and escalating global trade conflict has diminished," the bank said in its quarterly monetary policy report. "Nevertheless, how U.S. trade policy will unfold remains highly uncertain." Rather than issuing forecasts, the bank presented three different scenarios. The first scenario assumes existing tariffs on steel, aluminum, automobiles and on goods not compliant with a continental free trade pact will be maintained, GDP contracts by 1.5% in the second quarter of 2025 and rises by 1% in the second half before reaching 1.8% in 2027, while total inflation stays close to 2% over the next two years. The other scenarios look at the impact should tariffs around the world decrease or increase. In the de-escalation scenario, lower tariffs improve the growth outlook and reduce the direct cost pressures on inflation while in the opposite scenario, higher tariffs weaken the economy and increase direct cost pressures, Macklem said. "We will be following tariff developments closely and assessing indicators of underlying inflation," he said, adding that the central bank would continue to support economic growth while ensuring inflation was controlled. "If a weakening economy puts further downward pressure on inflation and the upward price pressures from the trade disruptions are contained, there may be a need for a reduction in the policy interest rate," he said. Money markets assume a more than 81% chance of another hold in interest rates in September and do not expect any more cuts this year. "The Bank appears to be getting a little more comfortable with the notion that the Canadian economy will need the support from further interest rate cuts in the future," Andrew Grantham, senior economist at CIBC Capital Markets wrote in a note. "It is clearly not there yet and upcoming data will remain more important," he added. The Canadian dollar weakened after the monetary policy report and traded down 0.30% to 1.3811 to the U.S. dollar, or 72.41 U.S. cents. https://www.reuters.com/world/americas/bank-canada-holds-rates-steady-says-global-trade-war-risk-has-eased-2025-07-30/
2025-07-30 14:24
July 30 (Reuters) - Wells Fargo Investment Institute on Wednesday became the latest Wall Street research house to lift its year-end target for the S&P 500 index, citing tariff delays and strong corporate earnings. The Wells Fargo bank (WFC.N) , opens new tab subsidiary sees the benchmark index (.SPX) , opens new tab ending 2025 between 6,300 and 6,500, up from a prior range of 5,900 to 6,100. Sign up here. The target raise follows U.S. President Donald Trump delaying his reciprocal tariffs and signing deals with trade partners including EU and Japan. Earlier this month, Trump also signed into law tax and spending cuts that would benefit corporate earnings. "The dilution of tariff implementations and the new business tax provisions should improve earnings growth and investor sentiment," Wells Fargo said in a note. Earlier this month, research firms Goldman Sachs, Bank of America, Oppenheimer and RBC Capital Markets also raised their S&P 500 targets. For the year, Wells Fargo increased its U.S. GDP growth forecast to 1.3% from 1.0% earlier. The U.S. economy expanded at a brisk 3% annualized pace in the second quarter, buoyed primarily by a sharp retreat in imports and a tempered rise in consumer outlays. Wells Fargo also lifted its earnings-per-share forecast for the S&P 500 index to $265 from $260. It raised its index target for 2026 to a range of 6900-7100 from 6400-6600. The institute maintained its preference for U.S. large- and mid-cap equities over small caps and emerging markets, and reiterated its view that the U.S. dollar will remain resilient amid diverging global growth trajectories. https://www.reuters.com/business/wells-fargo-joins-wall-street-chorus-lifting-sp-500s-annual-target-2025-07-30/
2025-07-30 13:49
OTTAWA, July 30 (Reuters) - The risk of a severe and escalating global trade conflict has diminished since April and there is some clarity about what U.S. tariffs will look like, the Bank of Canada said on Wednesday. But for the second quarter in a row, the bank did not issue regular economic forecasts, citing the uncertainty over the direction of U.S. trade policy. Instead it issued three scenarios as to what might happen. Sign up here. In the current tariff scenario, based on conditions on July 27, GDP grows by about 1% in the second half of 2025 and then picks up, hitting 1.8% in 2027. Inflation stays at around 2%. In the de-escalation scenario, where the U.S. and others cut tariffs, growth hits about 2% in the second half of 2025 and then averages 1.7% through the end of 2027. Inflation falls in the first quarter of 2026 before rising close to 2% in 2027. In the escalation scenario, where the U.S. and others raise tariffs, growth falls in 2025 before picking up in the first half of 2026 and rising to an average of 2%. Inflation rises to just above 2.5% in the third quarter of 2026 and then falls to around 2% in 2027. ((Reuters Ottawa bureau, +1 647 480 7921; [email protected] , opens new tab)) Keywords: CANADA CENBANK/FORECASTS https://www.reuters.com/world/americas/bank-canada-says-risk-severe-global-trade-conflict-has-diminished-2025-07-30/
2025-07-30 13:33
LONDON, July 30 (Reuters) - Hedge fund Man Group (EMG.L) , opens new tab posted a more than 40% fall in first-half core profit on Wednesday as fee income dropped, even as its assets under management rose 14% to a record $193.3 billion. The company's shares fell by as much as 5.75% at the market open, before reversing track to stand more or less steady on the day. Sign up here. Hedge fund returns so far this year show a stark divide between those that have been able to navigate U.S. President Donald Trump's erratic decision-making and switch tactics quickly and those hemmed in by algorithmic strategies. "During a particularly volatile first half of 2025, we delivered positive investment performance overall and achieved net inflows of $17.6 billion," said Robyn Grew, CEO of Man Group, which runs funds spanning a range of strategies. Net inflows surged 1,855% in the twelve months to June 30, driven by the hedge fund's long-only products betting on rising asset values, it said in a statement. The bulk of the new client money came from one customer who invested $13 billion in the hedge fund's systematic strategy, Numeric, chief financial officer Antoine Forterre confirmed to Reuters in a phone call. The company also saw inflows into its credit strategies, where it runs roughly $43 billion, he added. Man reported a six-month core profit before tax collected from management and performance fees of $146 million, down 43% from $257 million in June last year. Systematic hedge funds, where algorithms ride market trends until they peter out, are down roughly 10% so far this year to the end of June, according to Societe Generale. "It proved to be one of the most challenging periods for trend-following strategies in 25 years," CEO Grew said in the statement. Man Group confirmed recently two high-profile executives would be leaving while promoting others, in order to streamline operations, part of a programme launched by Grew when she became the company's first female CEO in 2023. Grew told Reuters the restructuring at Man Group would "reduce friction" in the organisation and confirmed that its two flagship systematic divisions, Numeric and AHL, though still separate, would be managed under one roof. (This story has been corrected to say that the two senior executives will be leaving the firm, and were not let go, in paragraph 11) https://www.reuters.com/business/finance/man-groups-half-year-profit-slumps-even-assets-under-management-hit-record-193-2025-07-30/
2025-07-30 13:04
MEXICO CITY, July 30 (Reuters) - Mexico's economy grew 0.7% in the second quarter from the previous three-month period, a preliminary estimate from national statistics agency INEGI showed on Wednesday, beating market expectations. Latin America's second-largest economy notched its second consecutive quarter of growth and exceeded the 0.4% expansion forecast by economists in a Reuters poll. Sign up here. Secondary and tertiary activities, respectively covering manufacturing and services, grew 0.8% and 0.7% on a sequential basis, offsetting a 1.3% contraction in primary activities, which includes farming, fishing and mining. Gabriela Siller, head of analysis at Banco Base, noted that the figures "clearly show" that Mexico is not in recession, but that "does not mean the economy is doing well." "There is still a risk of recession for Mexico, especially if the United States begins to strictly enforce tariffs or adds more sectors to the sectoral tariffs," she said. Year-on-year growth in the second quarter hit 0.1%, while economists expected a 0.2% expansion. https://www.reuters.com/world/americas/mexicos-economy-grows-more-than-expected-q2-previous-quarter-2025-07-30/
2025-07-30 12:55
WASHINGTON, July 30 (Reuters) - President Donald Trump said on Wednesday the United States will impose a 25% tariff on goods imported from India starting on Aug. 1. He said India, which has the world's fifth largest economy, will also face an unspecified penalty on Aug. 1, but did not elaborate on the amount or what it was for. Sign up here. "While India is our friend, we have, over the years, done relatively little business with them because their Tariffs are far too high, among the highest in the World, and they have the most strenuous and obnoxious non-monetary Trade Barriers of any Country," Trump wrote in a Truth Social post. "They have always bought a vast majority of their military equipment from Russia, and are Russia’s largest buyer of ENERGY, along with China, at a time when everyone wants Russia to STOP THE KILLING IN UKRAINE — ALL THINGS NOT GOOD!" India's commerce ministry, which is leading the trade negotiations with the United States, did not immediately respond to a request for comment. Trump's decision dashes hopes of a limited trade agreement between the two countries, which had been under negotiation for several months. U.S. and Indian trade negotiators had held multiple rounds of discussions to resolve contentious issues, particularly over market access for American agricultural and dairy products. Despite progress in some areas, Indian officials resisted opening the domestic market to imports of wheat, corn, rice and genetically modified soybeans, citing risks to the livelihood of millions of Indian farmers. The new tariffs are expected to impact India’s goods exports to the U.S., estimated at around $87 billion in 2024, including labour-intensive products such as garments, pharmaceuticals, gems and jeweler, and petrochemicals. The United States currently has a $45.7 billion trade deficit with India. India now joins a growing list of countries facing higher tariffs under Trump’s "Liberation Day" trade policy, aimed at reshaping U.S. trade relations by demanding greater reciprocity. The White House had previously warned India about its high average applied tariffs — nearly 39% on agricultural products, with rates climbing to 45% on vegetable oils and around 50% on apples and corn. The setback comes despite earlier commitments by Prime Minister Narendra Modi and Trump to conclude the first phase of a trade deal by autumn 2025 and expand bilateral trade to $500 billion by 2030, up from $191 billion in 2024. U.S. manufacturing exports to India, valued at around $42 billion in 2024, as well as energy exports such as liquefied natural gas, crude oil, and coal, could also face retaliatory action if India chooses to respond in kind. Indian officials have previously indicated that they view the U.S. as a key strategic partner, particularly in counterbalancing China. But they have emphasized the need to preserve policy space on agriculture, data governance, and state subsidies. https://www.reuters.com/world/india/trump-says-us-impose-25-tariff-india-aug-1-2025-07-30/
