2025-02-06 07:46

Feb 6 (Reuters) - Sterling fell against the dollar on Thursday, on track for its biggest daily drop in about a month, as investors awaited the outcome of the Bank of England's meeting, at which the central bank is widely expected to cut interest rates. Markets are pricing in a 94% chance the BoE will cut rates by 25 basis points to 4.5% on Thursday, after which investors do not see a second easing until June. The Bank will also publish its latest projections for the economy. The pound was trading 0.74% lower against the greenback at $1.2414, breaking a three-day rising streak, after having touched a four-week high at $1.255 the day before. It looked set for its biggest one-day drop against the dollar since January 10. Sterling edged down 0.3% against the euro ahead of the BoE's decision, with one euro at 83.45 pence. The single currency was on track for its biggest rise against the pound since January 14. Investors worry about a stagnating British economy, but domestic price pressures remain hot, limiting the central bank's scope to act. "While the Monetary Policy Committee may wish to ease more rapidly, sticky inflation doesn't permit them to do so yet, and will likely also prevent any kind of dovish pivot at this stage," said Michael Brown, senior research strategist at Pepperstone. While sterling has edged up from the 14-month low of $1.21 it hit on January 13, the pound is still down 0.77% so far this year, as markets have priced in more BoE cuts due to slowing growth. Markets expect the BoE to cut rates three times in 2025, and price in a total 85 bps of easing this year. Sign up here. https://www.reuters.com/markets/currencies/sterling-edges-down-ahead-bank-england-rate-decision-2025-02-06/

2025-02-06 07:42

SEOUL, Feb 6 (Reuters) - South Korea's hopes for a major oil and gas project off its east coast may not be economically feasible, according to initial drilling results, the Yonhap news agency reported on Thursday citing, the energy ministry. Recent drilling showed some signs of gas prospects but the amount was not believed to be meaningful, Yonhap quoted a vice energy minister as saying. President Yoon Suk Yeol announced the project in June last year and approved exploratory drilling, saying the area could hold as much as 14 billion barrels of oil and gas. Energy ministry officials could not be immediately reached for comment on the Yonhap report. Sign up here. https://www.reuters.com/business/energy/south-korea-offshore-gas-find-may-not-be-economically-feasible-yonhap-reports-2025-02-06/

2025-02-06 07:37

Companies say consumer demand still weak in China Carlsberg sees Chinese beer market 4-5% smaller in 2024 Pernod says Chinese New Year demand disappointing China weakness, trade war worries cloud outlook PARIS/LONDON, Feb 6 (Reuters) - Pernod Ricard and Carlsberg warned on Thursday they see few signs of a pick-up in consumer demand in China, the world's second-biggest economy, adding to a gloomy outlook for 2025 as executives try to navigate growing global trade tensions. Weak consumer spending in China, which is grappling with youth unemployment and a real-estate crisis, has been a major concern for industries including luxury goods, consumer products and clothes manufacturers over the past year. In the second half of 2024, Beijing rolled out multiple rounds of stimulus to lift the property sector from a prolonged slump, but executives see no significant recovery. Carlsberg (CARLb.CO) , opens new tab CEO Jacob Aarup-Andersen said demand in its largest market remained subdued last year, driving down volumes, and that challenges were expected to continue. "We don't expect a marked change in the (Chinese) economy. That's too early to say," he told analysts on a call. The Danish brewer estimated the Chinese beer market shrank between 4-5% in 2024, with sales very weak in restaurants, bars and other venues there and in other Asian markets. The prolonged downturn in China adds to the challenges facing companies around the world as they assess the potential impact of U.S. President Donald Trump's trade measures. He has imposed tariffs of 10% on imports of Chinese goods, threatened import tariffs on Mexican and Canadian goods of 25% from March 1 and put Europe on notice, stirring worries that a trade conflict will fuel inflation and harm the global economy. Carlsberg's Aarup-Andersen said wholesalers and retailers had stocked up ahead of the Chinese Lunar New Year holiday, which was encouraging. The eight-day holiday ended on Tuesday. "Let's see how sell-out goes," he said referring to consumer sales. But Pernod Ricard (PERP.PA) , opens new tab said early signs pointed to a very soft Chinese New Year and a significant drop in gifting. The second-largest western spirits maker pulled forward its half-year results to report steep sales declines of 25% in China and 7% in the United States, warning of a low single-digit sales decline this year when it had previously expected modest growth. Pernod's deteriorating outlook was largely attributed to Chinese duties on cognac, which Beijing imposed in response to European Union tariffs on electric vehicle imports. Weakness in Asian travel and retail exacerbated by the political situation in South Korea was also cited as a factor. The company now also faces the threat of U.S. tariffs on Mexico, Canada and the EU, which would affect products ranging from Irish and Canadian whiskies like Jameson to tequila and agave brands like Codigo 1530. Pernod said such intense geopolitical uncertainties had forced it to revisit its guidance. CHOPPY CHINA Cosmetics giant L'Oreal (OREP.PA) , opens new tab is due to report results later on Thursday. Canada Goose Holdings (GOOS.TO) , opens new tab, also blamed choppy sales in key luxury goods market China for weaker-than-expected quarterly revenue. Its U.S.-listed shares were down 3% in early trade. Executives at companies making everything from chocolate to toothpaste have given a downbeat assessment of the business outlook for China on conference calls to discuss fourth-quarter earnings over the past week. John Idol, CEO of Michael Kors-owner Capri Holdings (CPRI.N) , opens new tab, warned of a "significant" decline in China in its financial year. The company also owns luxury brands Versace and Jimmy Choo. "And I don't think we see the recovery yet on the horizon," he said on a call on Wednesday. Toothpaste maker Colgate-Palmolive (CL.N) , opens new tab expects China to be "difficult" in the short to medium term, its CEO Noel Wallace told a call on Friday after missing quarterly sales estimates. Companies are more optimistic about long-term growth in China given its burgeoning middle class. But for now the prolonged downturn means Carlsberg will direct resources elsewhere. "We cannot have significant sales and marketing resources going into restaurants, bar chains, karaoke chains in Asia where there are no customers," Aarup-Andersen said. Sign up here. https://www.reuters.com/business/retail-consumer/drinks-group-pernod-cuts-2025-sales-outlook-challenges-us-china-2025-02-06/

2025-02-06 07:33

NAIROBI, Feb 6 (Reuters) - Kenya's shilling strengthened slightly on Thursday, and traders said they expected it to gain further ground in the days ahead, helped by dollar inflows from investors buying government bonds. At 0705 GMT, commercial banks quoted the shilling at 128.80/129.80 per dollar, compared with Wednesday's closing rate of 129.00/130.00. Sign up here. https://www.reuters.com/markets/currencies/kenyan-shilling-firms-slightly-traders-see-more-gains-ahead-2025-02-06/

2025-02-06 07:17

JOHANNESBURG, Feb 6 (Reuters) - The South African rand was little changed on Thursday as investors turned their attention to President Cyril Ramaphosa's national address for insights on future economic and political policies. At 1515 GMT, the rand traded at 18.5475 against the dollar , not far from its previous close. Ramaphosa will deliver the annual State of the Nation Address at 1700 GMT, the first under his coalition government, which will provide investors some clarity on economic reforms and the approach to structural challenges. Although the address has traditionally not been a market-moving event, this one could be different, analysts said. A highlight may be the economic reforms underway, which are key to removing the country from the Financial Action Task Force's greylist and stabilising government finances. ETM Analytics said in a research note that Ramaphosa will want to use the opportunity of the address to paint the country's future efforts in a better light. "This SONA will, therefore, be the main event of the day and capture the bulk of the market's attention through the afternoon and evening as it receives more and more coverage," the note added. On the stock market, the Top-40 (.JTOPI) , opens new tab index closed 0.9% higher. South Africa's benchmark 2030 government bond was marginally weaker, with the yield up 0.5 basis point at 9.05%. Sign up here. https://www.reuters.com/markets/currencies/south-african-rand-weakens-traders-focus-presidents-address-2025-02-06/

2025-02-06 07:17

Feb 6 (Reuters) - Foreign investors pulled heavily out of Asian stocks in January, deterred by higher U.S. Treasury yields and rising concerns that regional exports could suffer under additional tariffs from President Donald Trump's administration. Foreigners divested stocks worth $12.5 billion, on a net basis, in India, Taiwan, South Korea, Thailand, Indonesia, Vietnam and the Philippines in January, their third monthly net sales in four months. Prerna Garg, an equity strategist at HSBC Global Research, attributed the outflows to elevated U.S. bond yields and a stronger dollar, noting that looming geopolitical worries have also made investors more risk-averse. She said this trend is particularly noticeable in India, where softer domestic growth, coupled with global macro factors, has deterred foreign investors. Foreigners sold a net $9.04 billion worth of Indian stocks in January, their second-largest monthly net sales on record. The U.S. dollar index hit a 26-month high of 110.17 last month, driven by a robust labor market and fuelled concerns about the Federal Reserve's reluctance to cut rates this year. The U.S. Treasury 10-year yields also touched a 14-month high of 4.809% in January. The U.S. implemented additional 10% tariffs on all Chinese imports this week, with Beijing retaliating by announcing levies on U.S. imports including oil, coal, gas, cars, and farm equipment, set to kick in on February 10. Meanwhile, foreigners sold Taiwan and South Korean stocks worth a net $1.52 billion and $1 billion, respectively, last month. "The outflows in Taiwan and Korea equities are mainly due to the popularity of DeepSeek as investors are re-assessing the growth trajectory of AI capex in light of low-cost open-sourced AI models," said Jason Lui, head of APAC equity and derivatives strategy at BNP Paribas. Foreigners also offloaded $335 million of Thai stocks, $266 million of Vietnamese stocks, Indonesian shares worth $229 million and $114 million in Philippine equities last month. Yeap Jun Rong, a market strategist at trading platform IG, said market volatility and global trade uncertainty continue to persist in February, while the risks of further tit-for-tat retaliation between the U.S. and China remain high. "This may continue to warrant a cautious outlook on Asian equities, which could still limit foreign inflows into the region for the time being." Sign up here. https://www.reuters.com/markets/asia/asian-equities-see-sharp-foreign-outflows-january-2025-02-06/