2025-05-08 10:30

MUMBAI, May 8 (Reuters) - The Indian rupee weakened sharply to log its steepest fall in more than two years on Thursday as the ongoing India-Pakistan conflict hurt the currency alongside the country's bonds and equities. The rupee rose at the start of the session but weakened sharply after India said it had "neutralised" attempts by Pakistan to "engage" several military targets in its northern and western regions on Wednesday and early Thursday. Sign up here. Pakistan said it had shot down 25 Indian drones. India hit "terrorist infrastructure" in Pakistan in the early hours of Wednesday, two weeks after it accused the nation of involvement in an attack in Indian Kashmir in which 26 people were killed. Islamabad had denied the accusation and vowed to retaliate to India's missile strikes. Indian markets dropped following the latest statements from the two nuclear-armed neighbours. The rupee closed down 1% at 85.71 against the U.S. dollar, its worst day since February 2023, after hitting a low of 85.7625 during the session. Benchmark Indian equity indexes, the BSE Sensex (.BSESN) , opens new tab and Nifty 50 (.NSEI) , opens new tab, ended down 0.5% and 0.6%, respectively while the yield on India's benchmark bond rose nearly 7 basis points to 6.3983%. The rupee could continue to face pressure in the near-term and may fall towards 86.50, said Abhilash Koikkara, head of forex and rates at Nuvama Professional Clients Group. Panic dollar buying from importers could pick up, which would add to the headwinds, Koikkara said. Dollar-rupee forward premiums also jumped with the 1-year implied yield rising 16 basis points to a near one-month high of 2.34%. The rupee's 1-month implied volatility, a gauge of future expectations, rose to an over two-year high of 6.3%. "International investors undoubtedly evaluate geopolitical risk into their assessment of India, contributing to the rupee’s underperformance," said Samsara Wang, Asian sovereign analyst in New York-headquartered PineBridge Investments' global emerging markets fixed income team. "That said, conflicts between India and Pakistan have not had a lasting effect on Indian financial assets, and the impact is likely to be limited and temporary.” https://www.reuters.com/world/india/india-pakistan-conflict-pushes-rupee-worst-day-over-two-years-2025-05-08/

2025-05-08 09:37

MUMBAI, May 8 (Reuters) - The Indian rupee, equities and bonds dropped on Thursday, pressured by risk aversion after India said it pushed back Pakistani retaliation overnight. The rupee dropped 1% to 85.71, the Nifty 50 benchmark share index (.NSEI) , opens new tab declined 0.6%, while the yield on India's benchmark 10-year bond rose 6 basis points. Sign up here. The markets came under pressure in late afternoon trading after the Indian government said it had "neutralised" attempts by Pakistan to "engage" several military targets. Pakistan, meanwhile, said it had shot down 25 drones from India in its airspace. "This is a knee-jerk reaction from the markets just as we had expected due to the escalation of border tensions," said Sandeep Bagla, CEO of Trust Mutual Fund. On Wednesday, India said it hit "terrorist infrastructure" in Pakistan two weeks after it accused the Islamic nation of involvement in an attack in Indian Kashmir in which 26 people, mostly Hindu tourists, were killed. The United States, Russia and China have urged the South Asian countries to exercise restraint. Volatility gauges for the rupee and Indian equities have spiked, reflecting the nervousness among market participants. The Nifty volatility index (.NIFVIX) , opens new tab rose to a peak of 21.9 in intra-day trade, the highest since April 9, while the rupee's volatility has also spiked to an over two-year high. India's overnight index swap (OIS) rates also jumped, with the most-liquid five-year rate rising 12 basis points to 5.68% on the likely unwinding of speculative positions In Pakistan, trading in the benchmark share index (.KSE) , opens new tab was halted after the index slumped 6.3% on news of the drone attacks. The country's international bonds also extended recent losses. Cross-border developments are expected to stay in focus going forward, with market participants likely to remain risk-averse in the near term, traders said. "If the conflict were to escalate, worries might rise regarding important industrial / infra facilities located close to the India-Pakistan border," Jefferies said in a report dated May 7. "Based on precedents, we believe that any potential market correction on the back of escalation would be short-lived." In the medium term, traders expect the focus to return to fundamentals and the U.S.-India talks on a trade deal, following the UK-India trade deal. https://www.reuters.com/world/india/india-rupee-shares-bonds-weaken-after-india-says-it-neutralised-attempts-engage-2025-05-08/

2025-05-08 08:00

Starmer says 'historic' deal to expand US-UK trade Deal opens 'a tremendous market' for the US - Trump Deal is first since Trump launched global tariff war Baseline 10% tariff on UK goods to remain, Trump says WASHINGTON/LONDON, May 8 (Reuters) - U.S. President Donald Trump and British Prime Minister Keir Starmer on Thursday announced a limited bilateral trade agreement that leaves in place Trump's 10% tariffs on British exports, modestly expands agricultural access for both countries and lowers prohibitive U.S. duties on British car exports. The "general terms" agreement , opens new tab is the first of dozens of tariff-lowering deals that Trump expects to land in coming weeks after upending the global trading system with steep new import taxes aimed at shrinking a $1.2 trillion U.S. goods trade deficit. Sign up here. Trump hailed the deal in the Oval Office with Starmer patched in on a speaker phone, as U.S. Treasury Secretary Scott Bessent and top trade negotiator Jamieson Greer head to Switzerland to launch negotiations with Chinese negotiators. He pushed back against seeing the UK deal as a template for other negotiations, saying that Britain "made a good deal" and that many other trading partners may end up with much higher final tariffs because of their large U.S. trade surpluses. In April, Trump imposed reciprocal duties of up to 50% on goods from 57 trading partners including the European Union, pausing them days later to allow time for negotiations until July 9. He has also heaped new 25% tariffs on auto imports, ended all exemptions on steel and aluminum duties, and announced new tariff probes on pharmaceuticals, copper, lumber and semiconductors. This week he added movies to the list. "It opens up a tremendous market for us," Trump told reporters, noting that he had not fully understood the restrictions facing American firms doing business in Britain. "This is a really fantastic, historic day," Starmer said, noting that the announcement came nearly at the same hour 80 years ago when World War Two ended in Europe. "This is going to boost trade between and across our countries, it's going to not only protect jobs, but create jobs, opening market access." The two leaders heralded the plan as a "breakthrough deal" that lowers average British tariffs on U.S. goods to 1.8% from 5.1% but keeps in place a 10% tariff on British goods. A UK official told reporters that the United States and the United Kingdom have more serious work to do, and noted the deal did not include Washington's demand for restructuring of Britain's digital services tax, levied at 2% of UK revenue for online marketplaces. Washington could revisit the issue, but there was no agreed process for doing so, the official said. "This is not a finished, classic 'bells and whistles' free trade agreement. It started off as a tactical response to President Trump's tariffs, but actually morphed into a more substantive trade deal," the official said. "And it will be built on. ... We've done the Oval Office, now we've got more serious work to do." Trump's first trade deal fueled a rally on Wall Street, sending major U.S. indexes briefly up over 1%. The S&P 500 passenger airlines index (.SPLRCALI) , opens new tab closed up 5.4%, led by a 7.2% surge in Delta Air Lines (DAL.N) as U.S. Commerce Secretary Howard Lutnick said British-made Rolls-Royce (RR.L) , opens new tab engines would enter the U.S. duty-free. Trump's administration has been under pressure from investors to strike deals and de-escalate its tariff war after the U.S. president's often chaotic policymaking upended global trade with friends and foe alike, threatening to stoke inflation and tip the global and U.S. economies into recession. Lutnick told CNBC on Thursday that Washington will roll out dozens of trade deals over the next month. Trump's biggest challenge, however, is resolving a virtual trade embargo between the U.S. and China, with tariffs of 145% and 125%, respectively on each side. Greer and Bessent will lead talks with Chinese officials in Switzerland, on Saturday and Sunday. Trump said the talks would be substantive -- more than an ice-breaker -- and predicted the tariffs would come down. WARM RELATIONSHIP, SOME DISAPPOINTMENT The British-American Business group expressed disappointment that the deal leaves in place Trump's 10% tariffs for many products, including cars, raising costs for UK exporters. It said it hoped that the deal would be a start of deeper U.S.-UK trade integration including the digital economy. The deal will provide potential new export opportunities for American producers worth $5 billion a year, Lutnick said, while the higher tariffs would generate $6 billion in annual U.S. revenue. It will reduce U.S. tariffs on British auto imports to 10% from the current 27.5%, according to a UK statement. The lower rate will apply to a quota of 100,000 British vehicles, almost the total exported to the U.S. last year. U.S. tariffs on imports from the struggling UK steel industry will fall to zero from 25%, while Britain's 19% tariffs on U.S. ethanol will fall to zero through a 1.4 billion-liter (370 million gallon) quota that far exceeds U.S. exports last to the UK last year. Both sides have agreed to new reciprocal market access on beef, with UK farmers given a first-ever tariff-free quota for 13,000 metric tonnes. There will be no weakening of UK food standards on imports, despite repeated entreaties by the U.S. side. Crucially there will be no weakening of UK food standards on U.S. beef imports, which was an election manifesto pledge for the Labour government. That means U.S. beef bred with growth hormones still won't be allowed in. U.S. Agriculture Secretary Brooke Rollins said the deal would "exponentially increase" U.S. beef exports to Britain. But much depends on whether American beef could compete with the British beef on price and find favor with British consumers. Currently 100% of the fresh beef sold by Britain's two biggest supermarket chains Tesco (TSCO.L) , opens new tab and Sainsbury's (SBRY.L) , opens new tab is British and Irish. Details were scant on tariffs on UK pharmaceuticals imports, which could damage AstraZeneca (AZN.L) , opens new tab and GSK (GSK.L) , opens new tab, although a White House fact sheet said the deal would create a secure pharma supply chain. The U.S. agreed to give Britain preferential treatment in any further tariffs imposed under Section 232 national security investigations, which include ongoing probes of pharmaceutical and semiconductor imports. GSK and AstraZeneca declined comment. In addition to assurances "future-proofing" Britain from additional sectoral tariffs, the UK official also welcomed Trump's assurance during the Oval Office event on finding ways to avoid his new push to tariff foreign-made movies. Starmer's government has been seeking to build new trading relationships post-Brexit with the U.S., China and the EU without moving so far towards one bloc that it angers the others. With the British economy struggling to grow, the tariffs had added to the pressure on his government. Jaguar Land Rover (TAMO.NS) , opens new tab paused its shipments to the U.S. for a month and the government was forced to seize control of British Steel to keep it operating. Economists and one FTSE 100 chief executive said the immediate economic impact of a tariff deal was likely to be limited, but that trade agreements in general would help long-term growth. Britain struck a free trade agreement with India this week. https://www.reuters.com/world/europe/us-britain-expected-announce-tariff-deal-thursday-2025-05-08/

2025-05-08 07:59

LONDON, May 8 (Reuters) - The pound received a lift on Thursday from a surprising split in votes on interest rates at the Bank of England while shares in UK companies rallied after U.S. President Donald Trump said he had struck a "full and comprehensive" trade deal with Britain. The BoE cut its main rate by a quarter of a point to 4.25%, as widely expected, but there was a surprising three-way split among policymakers, emphasising how Trump's tariffs continue to plague the economic outlook. Sign up here. Sterling rose nearly 0.4% on the day to $1.333, from a session low of $1.3242 immediately before the decision. Two policymakers voted to leave rates unchanged, prompting traders to trim their bets on the chances of the BoE delivering another three rate cuts this year. "Two members, including chief economist Huw Pill, preferred to leave rates unchanged. That may reduce speculation as to a possible back-to-back reduction at next month’s meeting," said Investec's chief UK economist, Philip Shaw. UK government bonds came under pressure, pushing up the yield on rate-sensitive two-year gilts by seven basis points on the day to 3.874%, from 3.791% ahead of the BoE decision. The pound had received a boost from an overnight report by the New York Times that flagged the possible trade deal between Britain and the United States. On his Truth Social platform on Thursday, Trump said he would hold a press conference later and that the agreement would "cement the relationship between the United States and the United Kingdom for many years to come". British Prime Minister Keir Starmer will also provide an update later on Thursday, a spokesperson for his office said. A deal would be Britain's second within a week after it clinched a free trade pact with India. London's FTSE 250 index (.FTMC) , opens new tab of midcap companies, which are more sensitive to the domestic economy, rose 1.1% to outperform the large-cap FTSE 100 index (.FTSE) , opens new tab, which rose by only 0.3%. The globally focused FTSE 100 on Tuesday racked up 16 straight days of gains for its longest winning streak on record, powered by a solid first-quarter earnings season and optimism over a thawing in global trade tensions. "The UK has struggled to make deals with different countries following the exit from the EU and has been waiting on a deal with the U.S. for a long time. It definitely matters, but lets see what the deal is going to be," said Kirstine Kundby-Nielsen, FX analyst at Danske Bank. "I'm cautiously optimistic. On balance I would think it's positive for the pound." The pound was last up 0.3% against the euro at 84.78 pence per euro. Unlike many of its major trading partners, the United States has a small trading surplus with Britain, to the tune of some $12 billion. Britain's main U.S. goods exports are in the form of cars, steel and pharmaceuticals. Shares in energy companies were the prime gainers on the mid-cap index while the FTSE 100 held in positive territory thanks to a rally in the aerospace and defence sector while drugmakers Astrazeneca (AZN.L) , opens new tab and GSK (GSK.L) , opens new tab proved the biggest drags. https://www.reuters.com/business/pound-little-changed-us-trade-deal-touted-boe-rate-cut-eyed-2025-05-08/

2025-05-08 07:44

May 8 (Reuters) - LG Electronics India has begun construction on its third plant in the country, the company and India's Andhra Pradesh state government, where the facility is located, said on Thursday. The IPO-bound electronics manufacturer will invest $600 million in the plant located in Sri City, close to the South Indian city of Chennai. Sign up here. The plant will generate direct employment opportunities for 1,495 individuals and indirectly employ 10,000 people. The company's other plants are located in Greater Noida, Uttar Pradesh state, and in Pune, Maharashtra. Reuters reported last month that the company's South Korean parent delayed the public float in India due to market volatility. LG Electronics (066570.KS) , opens new tab is now targeting launching the IPO of its Indian unit in the second or third quarter of fiscal year 2026, instead of May. ($1 = 85.0400 Indian rupees) https://www.reuters.com/world/india/ipo-bound-lg-electronics-india-begins-work-new-600-million-plant-2025-05-08/

2025-05-08 07:40

May 8 (Reuters) - Citi Research lowered its three-month price forecast for Brent crude to $55 per barrel on Thursday, from a previous estimate of $60 per barrel, as U.S.-Iran nuclear deal talks resume, raising prospects for an eventual agreement. An agreement between the U.S. and Iran, which could ease sanctions, may drive Brent prices down towards $50 per barrel, Citi said, on increased supply in the market. Sign up here. But no deal, and potentially escalatory actions like curbing Iran's nuclear programme, could push prices back to $70 per barrel or more, the bank said. "We see probabilities at an indicative 60%:40% skew toward an eventual deal," Citi said in the note. U.S. Vice President JD Vance on Wednesday described the talks with Iran as "so far, so good." Analysts at Citi acknowledged downside risks that could push prices to $55 occasionally throughout the middle of the year. The bank maintained its long-term forecast of $60 a barrel Brent in 2025 despite the recent downward trend in oil prices. "The recent sell-off has come with tariffs and OPEC+ adding supply back to market at an expedited rate, which could yet pause/reverse," Citi said. On Saturday, OPEC+ agreed to increase oil production for a second straight month, boosting output in June by 411,000 barrels per day despite falling prices and weakened demand expectations. Meanwhile, ANZ maintained its price target over the next three months of $55 per barrel for oil, but warned that risks were "firmly skewed to the downside." Brent crude futures were trading at $61.61 a barrel as of 0554 GMT. https://www.reuters.com/business/energy/citi-cuts-short-term-brent-crude-price-forecast-55-potential-us-iran-nuclear-2025-05-08/