2025-08-01 18:46

CALGARY, Aug 1 (Reuters) - Construction costs at Canada's Woodfibre LNG project have increased, driving up capital costs for all partners involved, Canadian pipeline company Enbridge (ENB.TO) , opens new tab reported on Friday. The Woodfibre LNG project is a 2.1-million tonne liquefied natural gas export facility under construction near Squamish, British Columbia. The project is one of several new LNG facilities planned for Canada's Pacific coast, and is expected to be complete in 2027. Sign up here. The project's capital cost was initially estimated at US$5.1 billion. But Enbridge, which owns a 30% stake in the project, said Friday on a conference call that costs have recently increased due to permit delays, building code changes, a second floating hotel to accommodate workers, and challenging on-site conditions. "Our share of the project costs have increased from US$1.5 billion to US$2.9 billion, and our partners' proportionate share has increased similarly," an Enbridge spokesperson said in an email. The 70% remaining stake in the Woodfibre project is owned by Pacific Energy Corp Ltd, which is part of the Singapore-based RGE Group of companies. Woodfibre LNG did not immediately respond to a request for comment Friday. Enbridge said Friday it is still expecting low double-digit returns from the project, relatively consistent with what it had initially expected. The company remains excited about the project and the LNG market, Enbridge's spokesperson said. https://www.reuters.com/business/energy/construction-costs-rise-canadas-woodfibre-lng-project-2025-08-01/

2025-08-01 16:42

Strong corporate earnings boost market confidence AI-driven companies lead market gains Short-term volatility expected, but long-term outlook positive NEW YORK, July 31 (Reuters) - With more than half of second quarter earnings reported and stocks near record highs, company results have reassured investors about the artificial intelligence trade that has energized Wall Street, even if tariff worries curtailed buying. With results in from 297 of the S&P 500 companies as of Thursday, year-on-year earnings growth for the second quarter is now estimated at 9.8%, up from 5.8% estimated growth on July 1, according to LSEG data. Sign up here. Next week investors will get a peek at earnings from Dow Jones Industrial Average (.DJI) , opens new tab constituents Disney (DIS.N) , opens new tab, McDonald's (MCD.N) , opens new tab and Caterpillar (CAT.N) , opens new tab, for a look at the broader economy. Strong profit reports for these companies could propel the Dow, trading just shy of its December record high, to a fresh peak. Some 81% of the companies have beaten analyst expectations on earnings, above the 76% average for the past four quarters. "The earnings season has been unambiguously better than expected," Art Hogan, chief market strategist at B. Riley Wealth in Boston, said. The strength of corporate earnings is particularly reassuring for investors after the pummeling sentiment took in the prior quarter due to the twin threats of tariffs and worries over flagging economic growth. "The first quarter was a bit more mixed and you had some questionable economic data ... which I think gave the market some pause," said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York. "But the second quarter seems to have just been a turnaround," Ghriskey said. The strength of results for names linked to the artificial intelligence trade - the investment thesis that AI will be a transformative force, driving a significant portion of future economic growth and company profits - is particularly heartening, investors and analysts said. "Overall it has been mega caps, growth/technology/AI that is driving a lot of the results," Ghriskey said. "This is where we want to be exposed in terms of companies ... we're at maximum equity exposures and we're comfortable there." Having boosted the market for several quarters, the trade ran into rough waters at the start of the year as the emergence of Chinese-founded artificial intelligence startup DeepSeek rattled investors, stoking concerns over heightened competition that could disrupt the dominance of established tech giants at the heart of the AI trade, including Nvidia. Strong results from Microsoft and Meta Platforms (META.O) , opens new tab reassured investors that massive bets on AI are paying off. Worries over AI demand appear overblown, Macro Hive research analyst Viresh Kanabar said. The trade related tumult earlier this year prompted many investors to pare equity exposure, particularly to higher-risk growth stocks. Even after the market rebound - the S&P 500 is up about 6% for the year and near a record high - institutional investors have been slow to return to equities. Overall, investors' equity positioning is still only modestly overweight, according to Deutsche Bank estimates. Strength in earnings from AI and technology names could draw more investors and lift markets further in coming weeks, analysts said. "If you are trying to beat your benchmark and you were underweight any of the AI names you have to chase them," B. Riley Wealth's Hogan said. After S&P 500's 2.2% gain in July, the seasonally volatile months of August and September, markets might face some short-term turbulence, Hogan said. Historically, August has marked a pick-up in stock market gyrations that peaks in October. August kicked off with stocks selling off sharply on Friday as new U.S. tariffs on dozens of trading partners and Amazon's unimpressive earnings weighed on sentiment, while a weaker payrolls report added to risk aversion. But any near-term market pullback should be seen as a buying opportunity, especially in some of the mega-cap, technology names, Hogan said. With big AI names, Alphabet, Microsoft, Nvidia, Meta Platforms and Amazon, commanding about a quarter of the weight in the S&P 500, the health of the AI trade bodes well for the market at an index level, analysts said. "We're not saying the weakness isn't there in other parts of the economy," Kanabar said. "We're just saying at the index level, the largest companies dominate to such an extent (that) it doesn't matter to some at the moment." https://www.reuters.com/business/wall-st-week-ahead-ai-gains-strong-earnings-support-wall-street-tariff-woes-2025-08-01/

2025-08-01 16:20

SARB surprises by aiming for lower inflation level Finance minister yet to approve formal target change Top finance officials rarely disagree in public Raises questions about policy cohesion JOHANNESBURG, Aug 1 (Reuters) - The South African central bank's decision to lower its inflation target on Thursday without the sign-off of the finance ministry has raised questions among investors about policymaking cohesion in Africa's largest economy. South African Reserve Bank Governor Lesetja Kganyago and Finance Minister Enoch Godongwana rarely disagree in public, but they have been at odds on this issue. Godongwana on Friday dismissed expectations that he would quickly endorse the bank's preference to aim for 3% inflation rather than the middle of the 3%-6% target range. Sign up here. Kim Silberman, portfolio manager at Matrix Fund Managers, said Thursday's SARB announcement raised "questions around where the mandate for inflation targeting sits". Markets nevertheless cheered the decision, with South African government bonds outperforming and yields at five-year lows. They are set for a 2.2% return this week, outstripping Turkey, Chile, Brazil and Mexico. Piotr Matys, senior FX analyst at InTouch Capital, said the SARB's commitment to anchor inflation would have long-term benefits. "But over the short term it could prove a risky move, being an additional burden on the economy that faces the prospect of tariffs to the U.S." Many investors' base case was that the target would eventually be lowered, but Kganyago going it alone gave investors a jolt. "The decision itself was no surprise to the market. It was the SARB's explicit preference to aim for the lower 3% band of its existing 3-6% CPI target, ahead of the National Treasury formally adjusting the target lower, that caught most by surprise," said Jeffrey Schultz, Head of CEEMEA Economics at BNP Paribas Markets 360. THE TARGET, OR THE PROCESS? Kganyago says the current target band is too wide and erodes competitiveness, while Godongwana says decisions on the target should not be taken without the necessary technical and political engagements. Inflation has moved below the current 4.5% target, and inflation expectations have dropped below that figure. Kganyago said on Thursday that the bank could lock in these gains and make sure that South Africans benefit from them. Godongwana, without openly disagreeing about inflation, said he wanted to stick to procedures for making any target changes. "Any adjustments to our inflation-targeting framework will follow the established consultation process," he said in a statement on Friday. "This means comprehensive consultation between National Treasury, the Reserve Bank, Cabinet, and relevant stakeholders – not unilateral announcements that pre-empt legitimate policy deliberation." Lowering the inflation target could cause some short-term pain. Some analysts, like those at Goldman Sachs, expect the central bank may front-load interest rate cuts. That's based on inflation forecasts more benign than those of the central bank. But equally, it may find itself constrained and need to keep them higher for longer to combat global risks and to force prices lower. Wages and prices also adjust slowly, likely resulting in lower spending, faltering investment, and job losses before benefits can be felt. Trade unions have previously voiced their objections. Governor Kganyago pointed to Section 224 of the constitution, which states the bank must protect the value of the currency, Silberman said. "According to the MPC (Monetary Policy Committee), this decision is procedurally equivalent to when the SARB announced in 2017 that it would explicitly target 4.5%," said Silberman at Matrix Fund Managers. "Despite any possible tensions between the two institutions, we do not expect that the latest change in the MPC’s reaction function with respect to targeting 3.0% will be retracted," she added. At Thursday's briefing, Kganyago said: "Changing policy is never easy." "What you can't do is to refuse to make a decision, because there are costs to a policy. There are costs in sticking to the existing target as well," he said. The finance ministry has previously voiced concerns about the impact on consumers, said Annabel Bishop, chief economist at Investec. "But the MPC has said it will be flexible in aiming to achieve 3% sustainably." https://www.reuters.com/world/africa/south-africas-finance-minister-central-bank-governor-odds-over-inflation-target-2025-08-01/

2025-08-01 13:58

BERLIN, Aug 1 (Reuters) - German Chancellor Friedrich Merz on Friday said the European Union will negotiate with the United States on steel, focusing on quotas that can be exported without too high tariffs, after the two sides struck a trade deal last month. The EU's trade deal with Trump in July was greeted with a mix of relief and anger, with tariffs set at 15% for most products but negotiations continuing for certain sectors, including steel and aluminium, which carries tariffs of 50%. Sign up here. The task now is to work out the "fine print," Merz said in the city of Saarbruecken. "This will particularly concern quotas that we can then export without being burdened with excessive tariffs." Merz described the agreement as "painful" for the entire European industry but said the EU was not in a position to trigger a full-blown trade dispute. "There would have been only losers, and the biggest losers would probably have been us, the Europeans." https://www.reuters.com/world/europe/germanys-merz-will-negotiate-steel-export-quotas-with-us-2025-08-01/

2025-08-01 13:53

BEIJING, Aug 1 (Reuters) - China's central bank has set up a macroprudential and financial stability committee to help defuse financial risks, it said on Friday, pledging to maintain accommodative policy. In its mid-year work summary, the People's Bank of China (PBOC) said it will focus on preventing and resolving key financial risks, supporting local government financing platforms in debt resolution, and managing risks in key regions and institutions in an orderly way. Sign up here. It will further strengthen risk monitoring, assessment, and macroprudential management, it said. The PBOC will continue to implement an "appropriately loose" monetary policy in the second half of this year, use various monetary policy tools to keep liquidity ample and guide financial institutions to sustain reasonable credit growth. The central bank will ensure the financing needs of Chinese trade-related firms, and maintain the flexibility of the yuan exchange rate, it said. The PBOC also pledged to push yuan internationalisation "in a steady and prudent" manner, expand the yuan's use in trade, strengthen its role as a financing currency, and optimise policies for currency pools and overseas listings of domestic firms. https://www.reuters.com/markets/currencies/chinas-central-bank-sets-up-new-financial-stability-committee-2025-08-01/

2025-08-01 13:20

NEW YORK, July 31 (Reuters) - U.S. job growth slower much more than expected in July, and the data from the prior month was revised sharply lower, indicating the labor market could be showing signs of stalling. Nonfarm payrolls increased by 73,000 jobs in July, after rising by a downwardly revised 14,000 in June, the Labor Department data showed on Thursday. Economists polled by Reuters had forecast 110,000 jobs added last month. Sign up here. The unemployment rate rose to 4.2% in July from 4.1% in the previous month. MARKET REACTION STOCKS: S&P E-minis briefly pared declines and were last down 1.05% BONDS: Treasury yields dropped, with the yield on the benchmark U.S. 10-year note down 9.9 basis points at 4.261% and the two-year note yield down 18.2 basis points to 3.77% FOREX: The dollar weakened sharply, with the dollar index down 1.16% to 99.31 COMMENTS: HELEN GIVEN, DIRECTOR OF TRADING, MONEX USA, WASHINGTON: “It's worse than anyone expected and the kicker is that downward revision for the prior month too…that figure going from 147,000 to just 14,000, it's frankly pretty shocking.” “This is what Powell was emphasizing in his press conference on Wednesday. He did say on Wednesday that we were looking at holding rates steadier for longer, but that we were going to get two sets of employment data before the next Fed meeting. So as this first set has been so decidedly negative… the labor market is clearly, clearly cooling, that's going to raise the importance of that September figure as well.” “I still don't think it's likely that the Fed will cut interest rates in September, I think they might keep holding off if we get an August jobs report that's not that bad. They might hold off further, but we'll definitely see a cut in October, and I would say definitely again in December as well. So, we're going to see likely 50 basis points of easing this year, which is a market change in overnight swaps from yesterday.” JEFF SCHULZE, HEAD OF ECONOMIC AND MARKET STRATEGY, CLEARBRIDGE INVESTMENTS, NEW YORK (emailed comment) "The July jobs report officially confirms that the labor market has kicked into a lower gear after today’s headline miss coupled with negative revisions of -258k to the prior two months. Investors will need to recalibrate their views on what is the 'normal' pace of employment growth going forward given the headwinds of lower immigration, an aging demographic and the arrival of DOGE related layoffs. "This payroll report kicks the door wide open for a September rate cut. Although the effects of tariff pass-through still lie ahead, the Fed will not want to wait too long to begin its cutting cycle with the nonfarm payrolls flatlining at 35k on average over the past 3 months and the unemployment rate ticking higher. "While investors have been viewing the commencement of the Fed cutting cycle as a positive catalyst for risk assets, today’s release is best characterized as 'bad news is bad news' in our view. With job creation at stall speed levels and the tariff headwind lying ahead, there’s a strong possibility of a negative payroll print in the coming months which may conjure up fears of a recession. This print should pressure risk assets and cause safe haven buying in US treasuries.” JAMIE COX, MANAGING PARTNER, HARRIS FINANCIAL GROUP, RICHMOND, VA (emailed comment) "Powell is going to regret holding rates steady this week. September is a lock for a rate cut and it might even be a 50-basis point move to make up the lost time." ART HOGAN, CHIEF MARKET STRATEGIST, B. RILEY WEALTH, BOSTON (emailed comment) "Today’s jobs report is unambiguously soft and a reflection of the trade and tariff impact on economic growth. Both the actual report and the big negative revisions are more evidence that the trade policy will slow growth. "What we know about our workforce population growth is that we need to create between 100 and 150 thousand jobs a month to keep the unemployment rate unchanged. That is down from a range of 150 to 200 thousand last year due to less immigration. The three-month average coming to today’s report was 150 thousand. The new three-month average of job creation is now 80 thousand. Not great news." SEEMA SHAH, CHIEF GLOBAL STRATEGIST, PRINCIPAL ASSET MANAGEMENT, LONDON (emailed comment) "Not only was this a much weaker than forecast payrolls number, the monster downward revisions to the past two months inflicts a major blow to the picture of labor market robustness. What’s more concerning is that with negative impact of tariffs only just starting to be felt, the coming months are likely to see even clearer evidence of a labor market slowdown. "Of course, with Powell emphasizing his focus on the unemployment rate which has only ticked up to 4.2%, perhaps it is too early to press the panic button. The shrinking of labor supply is somewhat offsetting the weakness in labor demand, keeping the labor market in an uneasy state of equilibrium. Even so, the sheer weakness of today’s payrolls number means that Powell will have to take notice. The odds of a September cut just took a big leap higher." CHRIS ZACCARELLI, CHIEF INVESTMENT OFFICER, NORTHLIGHT ASSET MANAGEMENT, CHARLOTTE, NC (emailed comment): "Just two days after the conclusion of this month’s Fed meeting, suddenly the dual mandate is back on the table. With this morning’s payroll miss – and the downward revisions that came with it – the Fed will again need to balance a slowing job market with inflation which isn’t slowing fast enough. "The knee jerk reaction from markets is for interest rates to drop and stock futures to give up ground. While normally it would make sense to focus more on the 3-month moving average and not the headline number, both are in play today because of the -258,000 revision to prior months’ jobs numbers. "The stock market will probably move past this particular report and keep climbing this month, but today could be an ugly day in the market given the confluence of new tariff announcements and more evidence that the job market is slowing." BRIAN JACOBSEN, CHIEF ECONOMIST, ANNEX WEALTH MANAGEMENT, MENOMONEE FALLS, WISCONSIN: "If Powell knew then what he knows now, maybe even he would have dissented from the decision to continue the rate cut pause. There’s no way to pretty-up this report. Previous months were revised significantly lower where the labor market has been on stall-speed. "History is repeating itself. Last year the Fed messed up by not cutting in July so they did a catch-up cut at their next meeting. They’ll likely have to do the same thing this year." https://www.reuters.com/business/view-us-job-growth-sharply-slows-july-unemployment-rate-ticks-higher-2025-08-01/