2025-11-21 11:30
LONDON, November 21 (REUTERS) - Everything Mike Dolan and the ROI team are excited to read, watch and listen to over the weekend.From the Editor That Nvidia bump was rather short-lived. U.S. equities tumbled on Thursday despite an early rally, with both the Nasdaq and the Dow recording +1,000 point moves from peak to trough. The tech-heavy Nasdaq’s 4.9 percentage point swing was its biggest intraday move since April’s tariff tantrum. Sign up here. Why didn’t Nvidia’s record-high $57 billion third quarter revenue and rosy forecasts calm market fears about an AI bubble? Because, as ROI markets columnist Jamie McGeever explains, the chip behemoth’s latest figures actually highlight many of the concerns that have been roiling markets recently, namely massive AI spending, extreme concentration and sky-high valuations. Indeed, investors are now clearly anxious about AI capex indigestion, particularly given the increasing use of debt to finance investments with very high thresholds for profitability, as ROI editor-at-large Mike Dolan wrote this week. That other big news yesterday was the delayed release of the September U.S. jobs report. While nonfarm payrolls rose by 119,000, jobs, more than twice the consensus forecast, August figures were revised down by 4,000. And, more importantly for the Federal Reserve, the unemployment rate rose to 4.4%, the highest level since October 2021. This release will likely do little to clear-up the labor market picture for the Fed, argues Mike Dolan, especially considering how messy economic data is likely to be in the wake of the longest-ever U.S. government shutdown. Over in Asia, the Japanese yen was hovering near a 10-month low around 157 per dollar on Friday, as Prime Minister Sanae Takaichi approved a 21.3 trillion yen ($135.5 billion) economic stimulus package, raising the spectre of FX intervention. Jamie McGeever argues that the yen’s long-standing position as a global safe haven may now be in question. Meanwhile, as the COP30 climate summit in Belem, Brazil continued this week, ROI energy columnist Ron Bousso did a deep-dive on the green transition, arguing that it will be a lot bumpier and more fractured than leaders expected when the Paris agreement was signed ten years ago. But Ron also cautions investors from being hoodwinked by the grim energy transition vibes. Staying in energy markets, the U.S. has risen to the top of global LNG exporter rankings, prompting the narrative that shipments of "freedom gas" will continue climbing for years. But, as ROI energy transition columnist Gavin Maguire argues, American LNG vendors are at risk of rapid volume downturns if European buyers curb gas use, especially if U.S. firms fail to increase market share in Asia. Speaking of commodity demand in Asia, ROI columnist Clyde Russell this week looked at China’s growing oil stockpiles, the slump in its steel output amid a rise in iron ore imports, and the spike in the country’s fossil fuel-powered electricity generation. Finally, over in the metals markets, the global competition for critical minerals has reached the least glamorous part of the metallic supply chain, Aluminium scrap. ROI metals columnist Andy Home explains why this humble material actually should be considered “a strategic commodity.” As we head into the weekend, check out the ROI team’s recommendations for what you should read, listen to, and watch to stay informed and ready for the week ahead. I’d love to hear from you, so please reach out to me at [email protected] , opens new tab . , opens new tabThis weekend, we're reading... MIKE DOLAN, ROI Financial Markets Editor-at-Large: This interesting column from VoxEU , opens new tab argues that Europe’s lack of defence capabilities leaves it highly vulnerable to economic and foreign policy pressure. CLYDE RUSSELL, ROI Asia Commodities and Energy Columnist: This Renew Economy article , opens new tab discusses Australia's first hybrid utility scale solar and battery plant about to come online. Surprisingly, this is the first such combination, so this may be a model for the future. GAVIN MAGUIRE, ROI Global Energy Transition Columnist: This fascinating report from The Examination , opens new tab explains how recycling lead for U.S. car batteries is poisoning people in Nigeria. It's a grim outcome for policies designed to protect American consumers from toxic emissions. ANDY HOME, ROI Metals Columnist: I recommend this analysis of why some rare earths are rarer than others by our Reuters colleague Eric Onstad. It also includes my quote of the week from Erik Eschen, CEO of Germany's Vacuumschmelze. "If you talk about critical resources, it's really the heavies, the heavies, the heavies - all the rest we will get." We're listening to... JAMIE MCGEEVER, ROI Markets Columnist: The latest Reuters ‘Econ World’ podcastwith chief emerging markets correspondent Karin Strohecker uses the recent turbulence financial turbulence in Argentina to explain all you need to know about exchange rate policies, currency banks and geopolitics.And we're watching... RON BOUSSO, ROI Energy Columnist: I highly recommend the Gulf Intelligence Daily Energy Markets podcast , opens new tabto anyone seeking a close look at what’s moving the oil market. This episode is of special interest due to the guest appearance of our own ROI Asia Commodities Columnist Clyde Russell who discusses China’s oil stockpiling and the impact of Trump’s policies. Want to receive the Morning Bid in your inbox every weekday morning? Sign up for the newsletter here. You can find ROI on the Reuters website , opens new tab, and you can follow us on LinkedIn , opens new tab and X. , opens new tab Opinions expressed are those of the authors. They do not reflect the views of Reuters News, which, under the Trust Principles , opens new tab, is committed to integrity, independence, and freedom from bias. https://www.reuters.com/business/finance/global-markets-view-usa-2025-11-21/
2025-11-21 11:22
BOJ will debate feasibility, timing of rate hike, Ueda says Ueda says he wants 'just a bit more data' on wage impulse Weak yen could affect underlying inflation, Ueda says Remarks come as government ramps up threat of yen intervention BOJ's next meeting on December 18-19 likely to be live TOKYO, Nov 21 (Reuters) - Bank of Japan Governor Kazuo Ueda said he wanted "just a bit more data" on next year's wage-growth direction and warned of the boost a weak yen could have on underlying inflation, issuing the strongest signal yet on the chance of a December rate hike. Ueda also told parliament on Friday the central bank will discuss at upcoming policy meetings the "feasibility and timing" of a rate hike, a change in tone from previous remarks that the bank had no preset idea on the timing of a policy shift. Sign up here. The comments came as the yen's slide to a 10-month low against the dollar raised pressure on Japanese policymakers to combat further declines in the currency that would inflate households' cost of living. Ueda said the BOJ must be mindful the weak yen could affect underlying inflation - a key gauge it looks at in deciding how soon to raise rates - by pushing up import costs and broader prices. "Compared with the past, the impact of currency moves on inflation may have become bigger because companies have become more active in raising prices and wages," Ueda said. "We must be mindful that price rises, through such channels, could affect inflation expectations and underlying inflation," he said, adding the BOJ will be vigilant about such currency-linked effects on domestic prices. CHANGE OF TONE The remarks contrast with those by BOJ officials previously describing the weak yen as having only a temporary impact on prices, rather than a long-lasting one that could affect public perceptions of future price moves. They also followed comments from BOJ board member Junko Koeda on Thursday that the central bank must keep raising real interest rates given "relatively strong" price rises. "The BOJ will likely raise rates in December," said Takeshi Minami, chief economist at Norinchukin Research Institute, pointing to hawkish comments, including from Koeda. "The government doesn't want a weak yen and would tolerate a rate hike to combat declines in the currency," he said. The BOJ next meets for a policy meeting on December 18 and 19. YEN FALL MAY EMBOLDEN HAWKS The yen has slumped since dovish Prime Minister Sanae Takaichi took office last month on market bets that political pressure could cause delays in future BOJ rate hikes. In a sign that the weak yen has become a pain point for Takaichi, her finance minister, Satsuki Katayama, on Friday signaled the chance of currency intervention to stem further yen falls. The administration's aversion to the weak yen could work in favour of BOJ hawks. Yen moves have historically been key triggers of BOJ policy changes including last year, when the central bank raised rates in July amid political calls for steps to combat the currency's sharp declines. Ueda reiterated there was no change to the BOJ's stance of continuing to hike rates if the economy moves in line with its forecasts, adding that he expects underlying inflation to reach 2% from the latter half of fiscal 2026 through fiscal 2027. When asked in parliament why the BOJ kept policy steady last month, Ueda said he wanted to take "just a bit more time" to scrutinise signs on whether firms will keep raising pay in next year's wage talks with unions. The central bank was still collecting relevant information, including from its branches nationwide, Ueda said. After exiting a decade-long, massive stimulus programme last year, the BOJ raised rates twice, including in January. It has kept rates steady at 0.5% since then, even as consumer inflation has remained above its 2% target for over three years. Many market players expect the BOJ to raise rates either next month or at a subsequent meeting in January. https://www.reuters.com/world/asia-pacific/boj-chief-ueda-says-weak-yen-could-affect-underlying-inflation-2025-11-21/
2025-11-21 11:20
MUMBAI, Nov 21 (Reuters) - The Indian rupee hit a lifetime low on Friday, as a bout of portfolio outflows, uncertainty over a U.S.-India trade deal and a pullback in the central bank's defense of a key level sparked a slide in the local currency. The rupee fell to 89.49 against the U.S. dollar, sliding past its previous all-time low of 88.80 hit in late September and earlier this month. It was down 0.9% on the day, its biggest single-day decline since May. Sign up here. The South Asian currency has struggled for three months since steep U.S. tariffs on Indian exports took effect in late August, even as India's economic fundamentals remain resilient while equity markets are hovering near record highs. The tariffs though have impacted trade and portfolio flows, and pushed India’s merchandise trade deficit to a record high last month, with exports to the United States down 9% year-on-year. Foreign investors, meanwhile, have withdrawn $16.5 billion from Indian equities so far this year, making India one of the worst-hit countries in terms of foreign portfolio outflows. Traders said the Reserve Bank of India, which had actively defended the 88.80 level in recent sessions, appeared to have scaled back its defense and instead likely stepped in near 89.50 on Friday. "There were large custodial outflows and stop-losses got breached. With the central bank not intervening (near 88.80) the depreciation became all the more pronounced," a trader at a large foreign bank said. The rupee is among the weakest performers in major Asian currencies this year, down 4.5% year-to-date. "An early trade deal is important for a recovery in export order momentum, which remains below Jan-Jul levels as per PMI data," economists at Citi said in a note. Citi expects India to post a balance of payments (BoP) deficit of $5 billion for fiscal 2026. "If correct, this would be the first time since at least 1991 that India has seen two consecutive years of BoP deficit," the note added. Over recent weeks, the rupee also had to contend with a rise in hedging interest from importers and muted activity from exporters. On USD/INR, 89.50 is the new resistance for now, said Dhiraj Nim, an FX and rates strategist at ANZ, adding that "the RBI seems to be relenting to a market that has been short INR for quite some time." "A lot now depends on the trade deal. A favourable one can bring USD/INR down materially," Nim said. The local currency also hit an all-time low of 12.60 against the offshore Chinese yuan on Friday, down 8% on the year. https://www.reuters.com/world/india/rupee-weakens-record-low-us-india-trade-limbo-fed-rate-outlook-2025-11-21/
2025-11-21 11:17
European Union set to adopt tougher stance towards China Chinese presence hindered Snam expansion in Germany Beijing's State Grid sees Italian investment as strategic ROME, Nov 21 (Reuters) - Italy is concerned that Chinese involvement in its energy infrastructure companies could hinder their expansion plans in Europe, two government sources said, as other countries balk at Beijing-linked deals for security reasons. Rome's worries came into focus last week when Italian gas grid operator Snam (SRG.MI) , opens new tab scrapped plans to acquire a stake in Germany's largest independent gas transmission firm in the face of opposition from Berlin, according to the officials, who asked not to be named due to the sensitivity of the issue. Sign up here. The German economy ministry opposed Snam's transaction due to the presence of the State Grid Corporation of China as an indirect investor in Snam, Reuters reported. Berlin has become a key backer of European Union efforts to come up with plans to counter China's increased industrial and political clout, including Beijing's dominance in the production of rare earths. CHINA SEES INVESTMENTS AS STRATEGIC A separate source close to the matter said Berlin was looking to set conditions blocking Snam's ability to become an industrial partner in Germany's Open Grid Europe, by making it a simple financial investor. Prime Minister Giorgia Meloni's office declined to comment. China's State-owned Assets Supervision and Administration Commission, which oversees state-owned companies, did not respond to an email seeking comment. Germany's economy ministry said the decision to abandon the transaction was taken by all involved parties. "Foreign trade law allows for the review of investments by non-EU entities. Accordingly, only the planned indirect investment by the Chinese state-owned group State Grid Corporation of China ... was reviewed in this case," the ministry added. Italian state lender Cassa Depositi e Prestiti (CDP) in 2014 sold the State Grid Corporation of China a 35% stake in CDP Reti, a holding company that owns 31.35% of Snam, 29.85% of power grid company Terna (TRN.MI) , opens new tab and about 26% of Italgas (IG.MI) , opens new tab, Italy's biggest gas distributor. Snam also holds 13.5% of Italgas. The same representative from the Chinese state-owned group sits on the boards of Snam, Terna, Italgas and CDP Reti, a position giving him visibility over Italian moves in the energy sector. China's State Grid has told Rome its investment in Italian energy infrastructure is strategic, the first two sources said. "The Chinese group has no plans to divest the stake," one of them added. Liquidating the Asian investor would require billions of euros that no state-backed company is in a position to spend, the sources said. At current market prices, the indirect stakes of China's State Grid in the three Italian companies are worth more than 5 billion euros ($5.76 billion) . CDP declined to comment. The pact between CDP and State Grid detailing CDP Reti's corporate governance is due to expire in November next year, but will renew automatically unless one or both parties tap an opt-out option six months before the expiry date. ($1 = 0.8682 euros) https://www.reuters.com/sustainability/boards-policy-regulation/italy-worried-over-chinese-stake-energy-grids-officials-say-2025-11-21/
2025-11-21 11:17
LONDON, Nov 21 (Reuters) - Sterling was little changed on Friday as investors awaited Britain's upcoming budget, with data showing the economy struggled before next week's major test for the currency and bond market. The pound was last down less than 0.1% against the dollar at $1.3063 . It was set to lose 0.8% for the week. Sign up here. The last major economic releases before the budget next Wednesday painted a sombre picture, with borrowing hitting the highest on record outside of the COVID-19 pandemic in the first seven months of the year. Business growth almost ground to a halt this month, retail sales tumbled in October, and a closely watched gauge of household sentiment fell. "The data highlights the challenging position that the government is currently in ahead of the budget," Lee Hardman, senior currency economist at MUFG, said. "The government borrowing figure is obviously worse than anticipated, but that won't feed into the government's budget proposals. It is too late for that." British finance minister Rachel Reeves is expected to need to raise tens of billions of pounds to stay on track to meet her self-imposed fiscal targets. Media reports last week that she would not raise income tax roiled British assets. Just days before she had appeared to prime the market that tax hikes were coming. MUFG's Hardman said the timing of the budget will dampen the growth outlook heading into next year, putting pressure on the Bank of England to keep lowering interest rates. "We think they'll cut rates in December and then deliver two more cuts by the summer," Hardman added. The BoE kept interest rates unchanged in November in a tight 5-4 vote, but markets expect the central bank will resume its rate-cutting cycle when it convenes next month. Money market traders are currently pricing in a more than 80% chance of a rate cut from the BoE in December. Elsewhere, the pound was flat at 88.21 pence per euro , but declined against a strengthening yen after the Japanese currency found some support as officials stepped up their verbal intervention to stem the currency's decline. Sterling was last down 0.5% at 204.71 yen, after rising to its highest since July last year on Thursday. https://www.reuters.com/world/uk/sterling-treads-water-data-paints-sombre-picture-before-budget-2025-11-21/
2025-11-21 11:12
US Treasury chief says Beijing will buy 12 million tons of soy Beijing must reduce its reserves to make room for US beans Trump's trade war had prompted Beijing to shun US supplies CHICAGO, Nov 21 (Reuters) - The largest U.S. soybean sales to China in more than two years this week could be just the beginning of an accelerated buying program by Beijing after the world's top importer shunned U.S. supplies for months due to a trade war with Washington. Even if purchases fall short of the 12 million metric tons that U.S. Treasury Secretary Scott Bessent announced, the uptick in sales has buoyed crop prices. Sign up here. That triggered a flurry of sales by farmers who were holding their crop hoping for such an uptick. Some Chinese traders also cashed in after booking long positions when prices slumped, but any American farmers who sold their crop before the Chinese purchase deal was announced did not benefit. It remained unclear how quickly China would reach the target that U.S. officials said Beijing has agreed to. The confirmed purchases of nearly 1.6 million metric tons in three days sent U.S. prices sharply higher to a steep premium over shipments from rival exporter Brazil. That has made U.S. soybeans uncompetitive for other importers like Turkey and Vietnam. It also creates a problem for Beijing, which does not now need more beans after major purchases of South American crops. China must empty some of its national reserves to make space for the U.S. shipments. Bessent and Agriculture Secretary Brooke Rollins said China had agreed to buy 12 million tons by the end of this year after President Donald Trump met in October with Chinese President Xi Jinping in South Korea. Last week, Trump said the purchases would take place before spring. Beijing has not officially confirmed the volume commitment, but Bessent said the deal could be inked by late next week. In past years China has accounted for 50% to 60% of all U.S. soybean exports, so timing of the purchases is likely to steer soybean prices at least until an official agreement is signed. "Do I believe China will take 12 million metric tons? I do," said Dan Basse, president of consultancy AgResource Co. "Do I think China will take 12 million tons by the end of the year? Not a chance." The U.S. Department of Agriculture has confirmed 1.584 million tons in sales to China over three days this week, the largest single-week tally since early November 2023, according to USDA data. Traders and analysts said total sales may be closer to 2 million to 3 million tons after a minimal volume was sold ahead of the Trump-Xi summit with other recent purchases below the USDA's daily reporting threshold. CBOT soybean futures rallied to their highest point since June 2024 on news of the sales, and the benchmark price was up nearly 12% from mid-October ahead of the meeting in South Korea. This U.S. price rally coincided with a drop in costs for Brazilian soybeans, widening the U.S. premium to Brazil to around 50 cents per bushel for January shipments, or more than $1.1 million per 60,000-ton cargo. The premium for U.S. shipments in February was as high as $1.10 per bushel, according to traders. A surge in futures open interest during the rally suggested that Chinese importers were among those taking long positions in the market, betting prices would rise. The positions locked in lower prices before they booked physical sales. Futures have retreated as Chinese traders liquidated those long positions, traders said. "They have actually bought the futures a long time ago, likely when January beans were around $10 a bushel and prior to Xi meeting with Trump and announcing the trade deal. So they have been long the futures this entire time and are now announcing cash purchases, which means they are actually selling their long futures, which in turn is putting pressure against the January soybean futures," said Brian Hoops, analyst with Midwest Market Solutions. Timely data from the Commodity Futures Trading Commission showing trader positions in the futures market was not available due to the recent U.S. government shutdown, with a backlog of data , opens new tab to be released piecemeal over the next several weeks. U.S. farmers, who struggled with low prices for most of the summer and into the fall harvest, accelerated sales of their 2025 soybean harvest during the rally. Growers are estimated to have sold about 30% to 40% of their harvest so far, based on interviews with six farmers and analysts. These levels would be at or below normal sales in mid-November. "In some places, the basis is still pretty wide and maybe the farmer is still hoping that the rally may continue," said Tanner Ehmke, analyst with farm lender CoBank. The basis is the difference between futures prices and the local cash market price, reflecting supply and demand at a particular location. "There may be some apprehension about selling if farmers are expecting still an ad hoc payment," Ehmke said, referring to proposed farmer aid payments that have yet to be finalized. The Trump administration was expected to announce up to $15 billion in aid payments to farmers hurt by low prices and trade disputes, but the government shutdown delayed that plan. Details about the bailout package would be announced "soon," Agriculture Secretary Rollins said on Wednesday. After avoiding sales for much of the season due to low prices, Illinois farmer and commodities analyst Sherman Newlin booked some soybean sales as prices began rising. Those sales, booked before the market peaked this week, were below his cost of production. "We hated to sell, but it's cash flow. We've got a lot of stuff to pay for this time of year," he said. Spot cash soybean bids at Archer-Daniels-Midland's massive processing plant in Decatur, Illinois, a benchmark for the top soy producing state, were $11.23 per bushel on Thursday afternoon. That was at or above the average estimated break-even price for highly productive farmland in central Illinois from $10.87 to $11.23 per bushel, according to University of Illinois economists, and up from $10.42 per bushel a month ago. https://www.reuters.com/world/china/chinas-largest-us-soybean-buy-2-years-buoys-prices-triggers-sales-by-struggling-2025-11-21/
