2025-01-30 05:33

A look at the day ahead in European and global markets from Kevin Buckland Monetary policy has come sharply back into focus, now that tech shares have regained their composure following the DeepSeek shock at the start of the week. The U.S. Fed, which held rates steady as expected, headlined a series of rate decisions overnight. Dovish comments by Chair Jerome Powell afterwards balanced the Fed's hawkish statement - and left traders uncertain on the likely timing of the next cut. That contrasts with the outcomes from Sweden's Riksbank and the Bank of Canada, which both cut rates. However, the Riksbank signalled that its current easing cycle might be over, while the Canadian central bank cast uncertainty over the odds of yet another reduction in March by flagging potential inflationary risks from U.S. tariffs. Cue the ECB, which like the Bank of Canada is viewed by traders as gearing up for rapid-fire cuts today, in March and in July, with high odds of another in December. But again, like the Canadians, the threat of tariffs from President Donald Trump looms large. The White House says Trump still plans to make good on his promise of 25% levies on Canada and Mexico come Saturday, and a 10% duty on China is also "very much" in consideration, despite the friendly phone call Trump had with Xi Jinping this month. Trump has also called out Europe in the opening days of his presidency, threatening punitive action if the bloc doesn't buy more American oil and gas. He has previously singled out cars, as well. For markets today, European traders won't get very clear trading clues from Asia, with many of the region's markets shut for lunar New Year. Still, Tokyo (.N225) , opens new tab recovered from early losses to trade in the green, Sydney's (.AXJO) , opens new tab bourse closed at a record high, and U.S. stock futures are gaining following Wall Street's weak close overnight. Megacap "Mag 7" earnings kicked off on Wednesday with a mixed bag of results: Microsoft (MSFT.O) , opens new tab beat quarterly revenue estimates, while Tesla's (TSLA.O) , opens new tab fourth-quarter profit margin missed expectations. Meta (META.O) , opens new tab forecast first-quarter revenue below market estimates. Apple (AAPL.O) , opens new tab reports after the closing bell today. European stocks start from a position of strength, after climbing to a record peak on Wednesday on strong results from Dutch chip equipment maker ASML (ASML.AS) , opens new tab. Europe has plenty of earnings today, as well, from a diverse group of companies that includes ABB, Deutsche Bank, Hennes & Mauritz, Shell and STMicroelectronics. Key developments that could influence markets on Thursday: -ECB policy decision -European earnings including ABB, Deutsche Bank, H&M, Roche, Shell, STMicro -Apple earnings Sign up here. https://www.reuters.com/markets/europe/global-markets-view-europe-2025-01-30/

2025-01-30 04:31

Investors await Trump's move on Mexico, Canada tariffs US crude oil stockpiles up last week OPEC+ ministerial meeting on Feb. 3 in focus HOUSTON, Jan 30 (Reuters) - Oil prices edged up on Thursday, held in check by threatened U.S. tariffs on Canadian and Mexican crude imports that could take effect this weekend. Brent crude futures settled 29 cents, or 0.4%, higher at $76.87 a barrel. U.S. crude futures finished at $72.73 a barrel, up 11 cents, or 0.2% higher than Wednesday, when they settled at their lowest level this year so far. "We're getting close to the deadline and people are getting nervous," said Phil Flynn, senior analyst with Price Futures Group. U.S. President Donald Trump has threatened to impose a 25% tariff as early as Saturday on Canadian and Mexican exports to the United States if those two countries do not end shipments of fentanyl across U.S. borders. The White House on Tuesday reaffirmed Trump's plan to impose the tariffs, while on Wednesday, the president's nominee to run the Commerce Department said the two countries can avoid this if they act swiftly to close their borders to fentanyl. IG market analyst Tony Sycamore, however, said traders had already priced in Trump's tariffs: "(this is) a major reason why crude oil is trading where it is." Winter storms hit U.S. demand last week, with crude oil stockpiles in the U.S. rising by 3.5 million barrels as refiners cut production. Analysts had expected a 3.2 million-barrel build, according to a Reuters poll. On the supply side, the latest U.S. sanctions on Moscow are squeezing crude oil exports from Russia's western ports, which are set to fall 8% in February from the January plan as Moscow boosts refining, according to traders and Reuters calculations. Investors are also looking ahead to a meeting by the Organization of the Petroleum Exporting Countries and its allies including Russia, together called OPEC+, scheduled for Feb. 3. The group is set to discuss Trump's efforts to raise U.S. oil production and take a joint stance on the matter, Kazakhstan said on Wednesday. Trump has called on OPEC and its leading member, Saudi Arabia, to lower oil prices, saying doing so would end the conflict in Ukraine. He has also set up an agenda of maximizing oil and gas output in the U.S., already the world's largest producer and at record highs. However, analysts believe a price war between the U.S. and OPEC+ is unlikely as it may hurt both. "A price war with the U.S. would involve OPEC+ producers maximising their output to undercut prices and drive shale production into decline," analysts at BMI, a Fitch Group division, said in a note. Sign up here. https://www.reuters.com/markets/commodities/oil-steady-markets-await-clarity-tariffs-by-trump-canada-mexico-2025-01-30/

2025-01-30 04:04

Disappearance of doves tips BOJ board neutral to hawkish Newcomer Koeda likely to reinforce shift towards higher rates Koeda has warned of demerits of negative rates, big stimulus Appointment may deepen BOJ debate on balance sheet woes TOKYO, Jan 30 (Reuters) - The fading shadow of reflationists in the Bank of Japan, and the latest addition to the board of an academic favouring an end to ultra-low interest rates, will likely bring the central bank's thinking closer to global peers taking a more conventional approach on monetary policy. Newcomer Junko Koeda, a 49-year-old academic known as a fiscal and monetary hawk, is likely to reinforce the shift towards higher interest rates and bring fresh thinking into a central bank long focused on reflating growth via huge stimulus. As the BOJ eyes further rate hikes, academic-turned Governor Kazuo Ueda will see a like-minded ally in Koeda, an economics professor with a Ph.D. from UCLA and a knack for quantitative analysis on the effects of monetary policy. She would replace one of the "reflationists," or advocates of aggressive monetary easing, who dominated the nine-member board during Governor Haruhiko Kuroda's decade-long experiment that began in 2013 to fire up inflation to its 2% target. The departure of Seiji Adachi in March will leave just one reflationist, Asahi Noguchi, in the board. With inflation above the BOJ's target for nearly three years, both have already shed their dovish streak and voted for raising rates in January. The disappearing reflationists, and the scheduled departure of another dovish member Toyoaki Nakamura in June, will tip the board increasingly in favour of steady rate hikes, analysts say. It would also symbolise how the BOJ is shifting further away from unconventional policy, and reverting to the conventional central banking style of moving short-term rates in accordance to developments in the economy and inflation. "While Koeda may be balanced on monetary policy, the departure of reflationist-minded members will steer the BOJ further toward policy normalisation," said former BOJ board member Takahide Kiuchi. "The appointment of someone like Koeda meshes with Ueda's goal of reverting to the conventional style of using short-term rates as the sole tool in guiding monetary policy," said Kiuchi, currently an economist at Nomura Research Institute. BALANCE SHEET WOES The BOJ ended negative interest rates and other remnants of Kuroda's radical stimulus last year. While it has moved up short-term rates to 0.5%, it is still saddled with huge asset holdings and is tapering bond purchases at a snail's pace. With her expertise on monetary policy analysis, Koeda may help deepen the board's debate on how far the BOJ can eventually raise short-term rates, and at what pace it can shrink its huge balance sheet, analysts say. Having served as a visiting scholar at a BOJ think tank from 2017 to 2018, she is a familiar face at the central bank who has warned of the demerits of prolonged monetary easing, such as eroding fiscal discipline and keeping unprofitable firms alive. In a model-based analysis in a paper released in 2018, she argued that ending negative interest rates could stimulate - rather than hurt - the economy, and that raising rates before inflation hits 2% won't necessarily cool growth. A member of a panel advising the finance ministry on debt management, Koeda has called for using more sophisticated means to analyse how big the risk is for Japan to see a spike in bond yields that would boost the cost of funding its huge debt. "The board reshuffle highlights how the BOJ is shifting its focus away from beating deflation towards tackling problems caused by its decade-long stimulus, such as how to shrink its enormous balance sheet," said former BOJ official Nobuyasu Atago. "That's a problem that many other central banks are struggling with. The BOJ needs to engage with them and align with global standards," he said. "From this standpoint, Koeda's appointment makes perfect sense." Sign up here. https://www.reuters.com/markets/asia/bank-japan-board-reshuffle-bring-it-closer-normal-central-banking-2025-01-30/

2025-01-30 03:09

HONG KONG, March 20 (Reuters) - The Hong Kong Monetary Authority (HKMA) left its base rate unchanged at 4.75% on Thursday, in line with the U.S. Federal Reserve's decision to keep rates steady. Major banks followed, with HSBC maintaining its best lending rate in Hong Kong at 5.25%, and Standard Chartered Bank keeping its Hong Kong dollar best lending rate unchanged at 5.5%. Bank of China (Hong Kong) kept its Hong Kong dollar prime rate steady at 5.25%. Sign up here. Hong Kong's monetary policy moves in lock-step with the United States as the city's currency is pegged to the greenback in a tight range of 7.75-7.85 per dollar. The Fed kept its benchmark overnight interest rate unchanged in the 4.25%-4.50% range, and maintained its projection for two quarter-point interest-rate cuts by year-end. The Fed also forecast slower economic growth and higher inflation. "Interest rates in Hong Kong might still remain at relatively high levels for some time, and the extent and pace of future U.S. interest rate cuts are subject to considerable uncertainty," HKMA said , opens new tab in a statement on Thursday. The public should manage the interest rate risk when making property purchase, mortgage or other borrowing decisions, it added. Hong Kong financial and monetary markets have continued to operate in a smooth and orderly manner, market liquidity condition remains stable, and the Hong Kong dollar exchange rate remains steady, HKMA said. https://www.reuters.com/markets/rates-bonds/hong-kong-central-bank-keeps-base-rate-unchanged-fed-holds-steady-2025-03-20/

2025-01-30 02:59

Fong among 17 watchdogs fired, Trump defends dismissals USDA inspector general's office investigates bird flu, animal abuse, food safety USDA inspector general's office is investigating Elon Musk's Neuralink WASHINGTON, Jan 29 (Reuters) - Security agents escorted the inspector general of the U.S. Department of Agriculture out of her office on Monday after she refused to comply with her firing by the Trump administration, sources familiar with the matter told Reuters. Phyllis Fong, a 22-year veteran of the department, had earlier told colleagues that she intended to stay after the White House terminated her Friday, saying that she didn’t believe the administration had followed proper protocols, the sources said. In an email to colleagues on Saturday, reviewed by Reuters, she said the independent Council of the Inspectors General on Integrity and Efficiency “has taken the position that these termination notices do not comply with the requirements set out in law and therefore are not effective at this time.” Fong declined to comment and the Office of the Inspector General did not respond to multiple requests for comment. After this article was published, a USDA spokesperson said Fong left the office Monday on her own accord. "She was accompanied by two friends who she paused to take selfies with on her way out. Security officials did not play any role in her departure,” the spokesperson said. The White House defended the firing of Fong and the other inspectors general, saying "these rogue, partisan bureaucrats... have been relieved of their duties in order to make room for qualified individuals who will uphold the rule of law and protect Democracy." The USDA inspector general has a broad mandate, pursuing consumer food safety, audits and investigations of the Agriculture Department as well as violations of animal welfare laws. The USDA has been at the heart of concerns about bird flu, which has spread among cattle and chickens and killed a person in Louisiana. In 2022, the inspector general’s office launched an investigation of Elon Musk’s brain implant startup Neuralink, which remains ongoing, sources said. In recent years, the office has also taken on animal abuse at dog breeders for research labs and the listeria outbreak at Boar’s Head, among other issues. Musk spent more than a quarter of a billion dollars to help President Donald Trump get elected in November and has emerged as a key player in the president’s orbit. Fong was among the 17 federal watchdogs fired by Trump on Friday in what critics described as a Friday-night purge. Speaking to reporters afterwards aboard Air Force One, Trump defended the move saying "it’s a very common thing to do." He did not say who would be installed in the vacant posts. The dismissals, handed out less than a week after Trump took office for his second term, appeared to violate federal law, the Council of the Inspectors General on Integrity and Efficiency said in a letter to the White House on Friday. Fong served as the first chairperson of CIGIE from 2008 through 2014, according to her biography on USDA’s website. In response to the Reuters story, Senator Mazie Hirono criticized Trump's firing of the watchdogs. "Egg prices are soaring. Bird flu is out of control. USDA should be fixing this problem. Instead, Trump is stacking the federal government with yes-men. He doesn’t care about your grocery prices," she wrote on X. Sign up here. https://www.reuters.com/world/us/usda-inspector-general-escorted-out-her-office-after-defying-white-house-2025-01-29/

2025-01-30 02:57

Recommitment to delivering new models in first half seen as positive Tesla's vehicle sales profit margin misses estimates at 13.6% in fourth quarter Shares rise 4% after hours Planning fully autonomous car test in Texas soon Jan 29 (Reuters) - Tesla (TSLA.O) , opens new tab said it was on track to roll out new, cheaper electric vehicle models in the first half of 2025 and would start testing a paid autonomous car service in June, enthusing investors and overshadowing quarterly results that fell short of Wall Street expectations on Wednesday. Tesla's market value has soared with the election of U.S. President Donald Trump, who is a close ally of CEO Elon Musk. But the electric car company posted a dip in deliveries last year, raising pressure for it to roll out lower-priced models as well as the autonomous vehicles and software that Musk says underpin its financial future. Shares rose 4% as Tesla said it was cutting costs and working on the new vehicles. "Teslas will be in the wild, with no one in them, in June, in Austin," Musk said on a call with analysts and investors, adding that it would proceed cautiously to ensure the safety of passengers and the general public. He did not provide details on how the paid service would work. Tesla's driver assistance software, known as full self-driving, or FSD, will see unsupervised tests in other states, including California, this year as well, he said. Musk also did not give new details on his affordable vehicle plans, including their pricing, size and specifications. Tesla is trying to make cars for less, and it said the average cost of materials and labor for building its cars had hit its lowest level ever in the fourth quarter, driven by lower raw material costs. Reuters calculations showed the cost of making Teslas had fallen to about $33,000 from nearly $39,000 two years earlier. Tesla has a history of delivering products late and the company's recommitment to delivering the new vehicles in the first half of the year was positive, said Thomas Martin, senior portfolio manager at Tesla shareholder Globalt Investments, who was also encouraged by its reduced costs. "They've been able to execute on the cost side and get that down. Their ability to do that in the fourth quarter definitely cushioned the blow," he added. Tesla last year abandoned plans to build a cheaper vehicle platform for the mass market, often called the Model 2, Reuters exclusively reported in April. Instead, Musk said the company will use its current electric vehicle platform and production lines to produce more affordable models this year. Commercial-scale production of a robotaxi was planned for 2026 at its Texas factory, Tesla said. "People are reading into the results that FSD and robotaxi are potentially on the cards in the next couple of years," said Will Rhind, CEO of global ETF issuer GraniteShares. Musk, however, said that computers in some older Teslas would have to be upgraded for full self-driving. Tesla has used cheap financing to pump up EV demand, a strategy analysts had predicted would erode automotive profit margins in future quarters as the company absorbs the impact of high interest rates. Tesla's fourth-quarter profit margin from vehicle sales, excluding regulatory credits, fell to 13.59% from 17.05% in the prior three-month period, according to Reuters calculations. Wall Street had expected the figure to be 16.2%, according to 23 analysts polled by Visible Alpha. Revenue was $25.71 billion for the October-December quarter, compared with estimates of $27.27 billion, according to estimates compiled by LSEG. Adjusted earnings per share stood at 73 cents, below the 76 cents analysts had estimated. The EV pioneer's annual deliveries dropped for the first time last year, due to higher borrowing costs and intense competition. Rivals such as China's BYD (002594.SZ) , opens new tab, as well as European manufacturers BMW (BMWG.DE) , opens new tab and Volkswagen (VOWG_p.DE) , opens new tab have launched new cheaper models to capture market share. Tesla said it expected the vehicle business to return to growth this year, after a small drop in 2024. Musk had said late last year he expected vehicle sales to grow 20% to 30% in 2025, a forecast the company did not repeat in its results announcement. Trump has vowed to impose this year a range of tariffs on imports from Mexico, Canada, Europe and other U.S. trading partners - a move that could disrupt supply chains and raise costs for automakers such as Tesla. Tesla CFO Vaibhav Taneja said tariffs, if imposed, would affect Tesla's business and profitability as it still relies on overseas suppliers. Garrett Nelson, an analyst at CFRA Research, said prospects of self-driving were encouraging investors. A forecast for a 50% jump in deployments at the energy storage unit, which builds systems to make the electricity grid more resilient, was positive, too, he said. Sign up here. https://www.reuters.com/business/autos-transportation/teslas-fourth-quarter-profit-margin-misses-estimates-2025-01-29/