2025-07-11 10:31
July 11 (Reuters) - Sterling slipped on Friday and was trading close to a more than two-week low after data showed the UK economy contracted for the second month, boosting expectations that the Bank of England could lower borrowing costs next month. Gross domestic product shrank by 0.1% after a 0.3% drop in April, the Office for National Statistics said, primarily dragged by weakness in industrial and construction output. Sign up here. "Though it would be wrong to conclude from the GDP data alone that the economy is coming under greater pressure, there are genuine questions emanating from the jobs market and whether it is beginning to fall apart more quickly," said James Smith, an economist at ING. "For the (BoE), it would likely force a rethink on the pace of rate cuts. Until now, officials have appeared highly reluctant to move beyond their recent, gradual once-per-quarter cutting pace." The pound weakened 0.26% to $1.354, while against the euro it slipped 0.2% to 86.35 pence. Yields on short-term gilts , , often a reflection of interest rate expectations, were steady after easing about two basis points earlier in the day. Traders are now pricing in a 78.3% chance the BoE could deliver a 25-basis-point interest rate cut in August, versus the 64% probability they were pricing in two weeks ago, data compiled by LSEG showed. Friday's data adds to worries for finance minister Rachel Reeves, with economists saying it looks likely she will need to raise taxes again in the upcoming Autumn budget as the government strives to balance its public accounts. UK markets took a beating last week after the Labour government was forced to pass a highly contested welfare bill that did little to make good on the spending cuts initially hoped for and heightened the uncertainty regarding the sustainability of government finances. Globally, investors were rattled by U.S. President Donald Trump's latest tariff escalation as he said he would impose a 35% rate on Canadian imports next month, while other trading partners are likely to face blanket levies of 15% or 20%. The pound firmed 0.5% against the Canadian dollar and last fetched C$1.855. Analysts have said that Britain's deal with the U.S. has made it less exposed to uncertainty on the trade front, which was also reflected in the pound's 8% rise against the U.S. dollar so far this year. https://www.reuters.com/world/uk/sterling-slips-weak-growth-data-fuels-rate-cut-expectations-2025-07-11/
2025-07-11 10:10
MUMBAI, July 11 (Reuters) - The Indian rupee stayed on the defensive for much of the week and nursed modest losses on Friday as likely foreign portfolio outflows added to pressure from rolling tariff threats from the White House. The rupee ended at 85.80 on Friday against its close at 85.6350 in the previous session, down nearly 0.5% on the week. Sign up here. U.S. President Donald Trump sent out letters to trading partners including Japan, South Korea, Canada, Brazil, and the Philippines, among many others this week, declaring levies that would go into effect starting August 1. While the tariff announcements kept traders on their toes, the market reaction was relatively subdued compared to April when Trump had unveiled a broad set of reciprocal levies and later delayed their implementation. India is among the few countries that are still negotiating a trade deal with Washington with a delegation expected to visit the United States soon for talks. An extended deadline to implement tariffs has stoked hopes about negotiations with trading partners but "there is little risk priced for this not panning out so well," MUFG said in a note. With the U.S. economy showing resilience and the risk of tariffs spurring inflation on the horizon, the dollar may again start to benefit from yield differentials, the note added. The dollar index rose 0.2% on the day and was on course for its first weekly advance in three while Asian currencies traded mixed. On the day, India's benchmark equity indices ended in the red, troubled by disappointing earnings from bellwether IT firm Tata Consultancy Services, while the benchmark 10-year bond reversed early losses to last quote a tad higher on the day. Dollar sales from a large state-run bank helped the rupee weather the pressure on Friday and hold above the 86 mark, similar to the previous session, a trader at a large private bank said. https://www.reuters.com/world/india/rupee-endures-weekly-decline-tariff-jitters-holds-ground-short-86usd-2025-07-11/
2025-07-11 10:02
US stock investors shrug off Trump's latest tariff plans Analysts pared forecasts for profits in June quarter Earnings coming up from big US banks, Netflix, 3M, J&J US consumer price data due Tuesday, retail sales Thursday NEW YORK, July 11 (Reuters) - A rally that has taken U.S. stocks to record highs will be tested in the coming week by the kick-off of corporate earnings season and a key inflation report as investors hope to learn more about the economic fallout from tariffs. The S&P 500 (.SPX) , opens new tab is little changed so far this week, but the benchmark stock index has surged 26% since April to all-time high levels. Sign up here. Stocks this week largely shrugged off President Donald Trump's threats of more aggressive tariffs on over 20 countries set to take effect August 1. Trump also announced plans for higher levies on copper, pharmaceuticals and semiconductors. "Investors are looking toward the end of the year into next year where fundamentals are better, and they are willing to look through some short-term uncertainty as they get there," said Chris Fasciano, chief market strategist at Commonwealth Financial Network. After a strong first-quarter reporting season helped lift stocks, analyst estimates for second-quarter results have weakened. S&P 500 companies are expected to have increased profits by 5.8% from the year-earlier period, down from an expectation of a 10.2% gain on April 1, according to LSEG IBES. The percentage of S&P 500 companies beating consensus estimates rose to 78% in the first quarter after the rate had declined the prior three quarters, Ned Davis Research analysts said. "Another reading in the upper 70s would suggest that companies have a grasp not only on tariffs, but also on the broader macro environment," the Ned Davis analysts said in a note. Reports from banks will dominate the week, including results from JPMorgan Chase (JPM.N) , opens new tab, Bank of America (BAC.N) , opens new tab and Goldman Sachs (GS.N) , opens new tab. Among the other major companies reporting next week are Netflix (NFLX.O) , opens new tab, Johnson & Johnson (JNJ.N) , opens new tab and 3M (MMM.N) , opens new tab. In focus will be whether executives indicate if they are able to forecast and make decisions in areas such as capital investment and hiring despite the still-shifting trade backdrop, Fasciano said. "The uncertainty hasn't gone away, but I'm curious to see how much of the uncertainty they feel they have a better understanding of in terms of longer-term plans," Fasciano said. The impact of tariffs will also be at issue with the consumer price index for June, due on Tuesday, which will shed light on inflation trends. CPI is expected to increase 0.3% on a monthly basis, an acceleration from the prior month, according to economists polled by Reuters. A busy week of economic data will also be highlighted by monthly retail sales on Thursday. Investors are eager for the Federal Reserve to resume interest rate cuts, but central bank officials have cited worries that tariffs will drive inflation higher as reasons for holding off on changing monetary policy. The S&P 500 is up nearly 7% in 2025, just over halfway through the year. In the latest sign of positive stock momentum, Nvidia Corp (NVDA.O) , opens new tab this week became the first publicly traded company to hit $4 trillion in market value, fueled by a massive run for AI chipmaker's stock price. Stocks have rebounded after plunging in April following Trump's "Liberation Day" announcement of sweeping global tariffs. This past Wednesday was expected to be a key deadline, marking the end of Trump's pause on many of the harsh "reciprocal" tariffs he unveiled in April. This week, he launched an array of levies, many scheduled to take effect on August 1. Still, most investors appear to be banking on the U.S. avoiding higher tariff rates as Washington strikes deals in coming weeks with trading partners such as Japan and South Korea, said Anthony Saglimbene, chief market strategist at Ameriprise Financial. "That's what the market has built in," Saglimbene said. "If we don't get that, then I think there is probably some risk that we would see some higher near-term volatility if the White House actually implements some of these aggressive tariff measures." text_section_type="notes">Wall St Week Ahead runs every Friday. For the daily stock market report, please click https://www.reuters.com/business/wall-st-week-ahead-earnings-inflation-data-confront-resilient-us-stocks-rally-2025-07-11/
2025-07-11 09:19
MILAN, July 11 (Reuters) - The European Central Bank should continue to loosen its monetary policy if threats to economic growth from international trade tensions and geopolitical instability strengthen the current disinflationary trends, a policymaker said on Friday. ECB governing council member Fabio Panetta told an annual meeting of Italy's banking association that the current outlook, which projects euro zone inflation at 1.4% in early 2026 with a return to 2% the following year, was highly uncertain. Sign up here. "The key issue now is whether the current level of interest rates is adequate to keep inflation close to target, avoiding persistent deviations in either direction," he said. As inflation has diminished, the ECB has cut interest rates eight times in its current easing cycle, bringing the key deposit rate to 2%. "If downward risks to growth were to strengthen disinflationary trends, it will be appropriate to continue with the policy easing," Panetta said. He added that the experience of the past decade, which has seen an extended phase of low inflation followed by violent inflationary shocks, has shown it is important to react decisively when the inflation rate deviates from the ECB's target either upwards or downwards. "In coming months, the monetary policy approach must remain flexible and pragmatic," Panetta said. "It will be vital to continue to assess (from one ECB meeting to the next) the outlook and risks for price stability," he added. https://www.reuters.com/markets/europe/ecb-should-ease-monetary-policy-if-disinflationary-trends-intensify-panetta-says-2025-07-11/
2025-07-11 07:49
BERLIN, July 11 (Reuters) - Volkswagen (VOWG.DE) , opens new tab and Chinese partner SAIC (600104.SS) , opens new tab will close their joint plant in the Chinese city of Nanjing, German daily Handelsblatt reported on Friday, as the German carmaker loses market share in the world's largest car market. Production has already been halted, and the closure will take place gradually in the second half of the year, the report said, citing several people familiar with the process. Sign up here. "We can confirm that SVW Nanjing Plant has ended production," a Volkswagen spokesperson said in a statement, adding "many SAIC VOLKSWAGEN sites are currently being converted or have already been converted for electric vehicle production". Reuters reported in September that the German carmaker was planning to stop production at its Nanjing plant, citing a person with direct knowledge of the matter. The carmaker would gradually shift production of its Passat family cars from the Nanjing plant to a nearby factory in the same eastern province of Jiangsu, the person said at the time. Volkswagen, long the top-selling automaker in China, is suffering from a decline in its market share in the country and is working with SAIC and other partners such as Xpeng to bring new models on the market that it hopes will be more competitive. https://www.reuters.com/business/retail-consumer/volkswagen-close-joint-plant-with-saic-chinas-nanjing-reports-handelsblatt-2025-07-11/
2025-07-11 07:46
FRANKFURT, July 11 (Reuters) - The hurdle for another interest rate cut by the European Central Bank is "very high" as the euro zone economy is holding up better than expected and inflation is moored at 2%, ECB board member Isabel Schnabel said in an interview published on Friday. "Inflation is projected to be at 2% and inflation expectations are well anchored," Schnabel told financial newswire Econonostream. "In view of this, our interest rates are also in a good place, and the bar for another rate cut is very high." Sign up here. https://www.reuters.com/business/finance/ecbs-schnabel-sets-bar-very-high-rate-cut-economy-holds-up-2025-07-11/
