2025-01-29 10:10

Peru to hold three bond issues this year - minister Will wait for calmer, more predictable global panorama GDP growth 3.3% in 2024, likely over 3% this year Minister says Peru needs to open 'more copper mines' LIMA, Jan 29 (Reuters) - Peru, the world's no. 2 copper exporter, plans to issue up to three sovereign bonds this year to finance its ballooning fiscal deficit after economic growth edged above forecasts last year, Economy Minister José Arista told Reuters. Peru is one of South America's most economically stable countries despite regular political upheaval, but a deficit that widened to 3.6% of gross domestic product (GDP) last year - its highest since 1992 excluding pandemic years - threatens its credit rating and could push up financing costs. "We plan to do it in two or three interventions in the external market," Arista told Reuters in an interview late on Tuesday, adding that the government would wait for international political turbulence to calm first. "Obviously, fiscal spending cannot be cut suddenly this year, it has to be a progressive cut," he said. The official projection is for a 2.2% deficit in 2025. Arista said that Peru's economy, which has been bouncing back since a recession in 2023, was likely to have grown 3.3% last year, slightly above forecasts for 3.2%, with a 5% expansion in December. Official growth numbers for 2024 have not been published. "Peru must, can and needs to grow much more," he said, giving a "conservative" projection for growth above 3% in 2025. "To solve all our social problems quickly and provide well-being to the population, we must grow at rates above 5%." The minister, who met with mining firms including Glencore (GLEN.L) , opens new tab, Anglo American (AAL.L) , opens new tab and Newmont (NEM.N) , opens new tab in Davos last week, said the sector was buoyed by Peru's economic stability but had concerns about over-regulation. He said that Newmont had committed to getting local community backing for its $2 billion Yanacocha Sulfuros copper-gold project in northern Peru. "They have committed to building a dam for the city of Cajamarca. They are aware that they cannot go into mining without first solving the water problem," he said. Newmont, which operates the largest gold mine in Peru, reported in mid-2023 that it had postponed for "at least two years" its decision on Yanacocha Sulfuros. Arista said Peru needed to make use of its strong current growth momentum to boost investment in new mines, key to maintaining Peru's global position in the copper market with rising rivals such as the Democratic Republic of Congo. "Peru has entered a cycle of sustained growth," Arista said. "We have to take advantage of this situation. We have to open more mines, more copper mines." Sign up here. https://www.reuters.com/world/americas/peru-plans-bond-sales-finance-ballooning-fiscal-deficit-minister-says-2025-01-29/

2025-01-29 08:01

Communications, power cables damaged in series of incidents Sensors, protective walls among costly counter-measures being considered Possible sabotage linked to Russia's shadow fleet, minister says TOKYO, Jan 29 (Reuters) - Shipping firms may need to pay a fee to use the Baltic Sea, one of the world's busiest shipping routes, in order to cover the high costs of protecting undersea cables, Estonia's defence minister said on Wednesday following a spate of breaches. NATO said last week it would deploy frigates, patrol aircraft and drones in the Baltic Sea after a series of incidents where ships have damaged power and communications cables with their anchors in acts of suspected sabotage. In addition to the patrols, Defence Minister Hanno Pevkur said countries are weighing other measures to protect cables, including installing sensors to detect anchors dragged across the sea floor or constructing casings or walls around the cables. But this will come at a cost, and whether countries or cable operators end up paying for it, consumers may be left ultimately footing the bill through higher taxes or utility costs. Another option, Pevkur said, is levying a tax on vessels that sail through the Baltic Sea, that is bordered by eight NATO countries and Russia. "Let's say that when you go to the airport you have the landing fee, you have the airport fee and this is paid in the ticket," he told Reuters in an interview in Tokyo. "So in one moment maybe we will see that when you are passing through the Danish straits there will be a cost for the companies to pay this because this is basically an insurance fee to damaging the cables." Pevkur added that there were different options on the table and that countries would have to find a common solution. Globally, around 150 undersea cables are damaged each year, according to the UK-based International Cable Protection Committee. The telecoms cables, power lines and gas pipes in the shallow Baltic are seen as particularly vulnerable due to its very intense traffic, with as many as 4000 ships crossing its surface every day, according to some estimates. Swedish authorities seized a Maltese-flagged ship on Monday in connection with damage caused to a cable running between Latvia and Sweden, one of four similar incidents in just over a year that have also affected power and telecoms lines running between Estonia and Finland. Pevkur said while official investigations are ongoing, the series of incidents point to coordinated action by ships that are part of Russia's "shadow fleet". "When we see that all those ships are part of the shadow fleet of Russia although having different flags on their tail...then of course you know we have to connect the dots," he said. Moscow has accused Western countries of making "evidence-free" assertions about its involvement in the incidents. Sign up here. https://www.reuters.com/world/europe/baltic-sea-shipping-tax-could-pay-undersea-cable-protection-says-estonian-2025-01-29/

2025-01-29 07:34

NEW DELHI, Jan 29 (Reuters) - Indian Prime Minister Narendra Modi may seek to shore up faltering economic growth, placate a middle class squeezed by high prices and low wage growth, and prepare for an uncertain year of global trade in the nation's budget this week. Finance Minister Nirmala Sitharaman will present the budget for the next fiscal year on Feb. 1 at 0530 GMT. The budget may provide a policy boost for the world's fifth-largest economy, which is expected to post its slowest pace of growth in four years, amid frail urban demand and inflation risks fuelled by a weak currency. Economists expect measures to raise disposable incomes and tariff cuts to encourage local manufacturing. "We could see a nod from the government, to signal to the middle class that we aware of your challenges and we would like to raise disposable incomes, which increases spending power," Priyanka Kishore, director and principal economist at research firm Asia Decoded said. Reuters reported last month that India is considering cutting tax on personal incomes to provide some relief. The budget could also introduce tax cuts on fuel prices or cooking gas, Dhiraj Nim, an economist at ANZ said. Despite world-beating growth, India's job market offers insufficient opportunities for its large youthful population to earn regular wages. In the last budget, India earmarked nearly $24 billion to be spent over five years in various schemes to create jobs but those programmes have not yet been implemented as discussions on details drag on. "They will focus more on direct measures for employment generation and skilling," Kishore said. India will also have to cope with possible global disruptions from U.S. President Donald Trump's trade policies. To support local production, the government could offer concessional tax rates to companies that use the country as a manufacturing hub, lower custom duties on intermediate inputs and raise tariffs to counter goods dumped from China, Nomura economists said in a note. India will also see an opportunity to clinch a larger share from further global supply chain shifts spurred by Trump's new tariffs, Nomura economists said. To that effect, India has drawn up a list of products that act as inputs for various local production units and is considering cutting import taxes on them, a senior government sources aware of the matter said. The list likely includes components for mobile phone assembly such as printed circuit board assembly, parts of camera modules, and USB cables, two industry sources said. The government source and the two industry sources, who joined the finance ministry's budget consultations, refused to be identified as such discussions were private. Moreover, India may also boost its textile and garment industry with financial support, tariff cuts on key inputs and incentives to produce locally, as a political crisis has hit neighbouring Bangladesh's exports. The budget is also likely to continue to prioritise spending on infrastructure, ICRA economists said in a note. Government infrastructure spending has been key to India's strong growth in recent years, though it is likely to undershoot a record spending allocation of 11.1 trillion rupees($128.22 billion) in the current fiscal year. India also plans to raise its spending for the agriculture sector by about 15%, marking the biggest increase in six years, and moderately increase key subsidy payouts to sustain a recovery in its rural economy. FISCAL BALANCE, GROWTH HOPES In the budget, India plans to project higher economic growth for the next fiscal year, Reuters has reported, an upbeat outlook that could help dispel worries over an economic slowdown which have bothered investors and equity markets since October. Indian stocks are set for their longest monthly losing streak in over 23 years, tumbling from record highs in September. However, the government will be walking a fine line on support measures given its relative lack of fiscal space, ANZ's Nim said. "The fiscal debt-to-GDP ratio is still over 80%, which is very high for emerging markets ... It needs to be brought down," Nim said. India is likely to continue fiscal consolidation and pursue its targeted fiscal deficit of 4.5% of gross domestic product for the next financial year that starts April 1, a Reuters poll of economists found. That will put the onus of reviving the economy on the central bank. Economists polled by Reuters forecast New Delhi's gross borrowing at 14.28 trillion Indian rupees ($164.95 billion) in the next fiscal year, up from this year's 14.01 trillion rupees borrowing. ($1 = 86.5725 Indian rupees) Sign up here. https://www.reuters.com/world/india/indias-modi-may-tackle-economic-slowdown-impending-trade-turmoil-annual-budget-2025-01-29/

2025-01-29 07:30

JOHANNESBURG, Jan 29 (Reuters) - South Africa's rand edged higher early on Wednesday ahead of an interest rate decision by the U.S. Federal Reserve. At 0706 GMT, the rand traded at 18.66 against the U.S. dollar , about 0.1% firmer than its previous close. The dollar last traded about 0.1% weaker against a basket of currencies. The Fed will conclude its two-day meeting today, where it is widely expected to keep rates steady. U.S. President Donald Trump has demanded lower interest rates, arguing that he understands monetary policy better than those charged with setting it. Investor focus is also on tariff threats after White House spokesperson Karoline Leavitt told reporters on Tuesday that Trump still plans to impose tariffs on Canada and Mexico this week. On Thursday, domestic investors will turn their attention towards the South African Reserve Bank's (SARB) first interest rate decision for 2025. Economists polled by Reuters forecast a 25 basis point cut to 7.50%. On the stock market, the Top-40 (.JTOPI) , opens new tab was up about 0.4%. South Africa's benchmark 2030 government bond was stronger in early deals, with the yield down 4.5 basis points to 8.99%. Sign up here. https://www.reuters.com/markets/currencies/south-african-rand-edges-higher-ahead-us-rate-decision-2025-01-29/

2025-01-29 07:03

Operating result 487 mln crowns vs 2.40 bln crowns last year Analysts' consensus had expected 419.1 mln crowns Proposes dividend of 2.60 crowns for 2024, down 48% Jan 29 (Reuters) - Sweden's SSAB (SSABa.ST) , opens new tab posted fourth-quarter operating profit well above analysts' estimates on Wednesday, helped by resilient demand for its high-strength steel and other premium products despite generally weak markets in Europe and North America. Shares of the Swedish steelmaker lost some of their early gains and were trading 1% higher by 1028 GMT. Kicking off the earnings season for European steelmakers, SSAB's operating result slumped to 487 million Swedish crowns ($44.36 million) in the December quarter from 2.40 billion crowns a year earlier. This, however, beat the 419 million crowns expected by analysts on average, according to a consensus , opens new tab provided by the company. "A >100% EBITDA beat in SSAB Europe against bearish expectations sets a positive tone and raises the bar for forthcoming European steel producers for Q4 reporting," J.P.Morgan said in a note to clients. ArcelorMittal (MT.LU) , opens new tab and ThyssenKrupp (TKAG.DE) , opens new tab, among SSAB's main rivals in Europe, will report their earnings in the first weeks of February. SSAB said it expected demand to remain weak in its home markets, Europe and North America, during the first quarter, but flagged a seasonal improvement in shipments. The group expects first-quarter shipments by its Special Steels and Europe units to be significantly higher than in the prior quarter, while those for the Americas arm were expected to be "somewhat higher". Prices will be "somewhat lower" for Special Steels and Americas and lower for Europe in the first quarter. Raw material costs should be stable for Special Steels and Europe and "somewhat higher" for Americas, SSAB said. "If the interest rates come down further, and construction segment comes down further, then we're quite optimistic that we will see an improvement in the year 2025," CEO Johnny Sjostrom said during a conference call. Sjostrom said SSAB had seen some signs that the market was starting to inflect, but added he could not really say it was a trend yet. Jefferies analysts said they expected "modestly better" earnings before interest, tax, depreciation and amortization in the first quarter compared with the previous three months, with lower prices offset by higher volumes and less maintenance. SSAB proposed a dividend of 2.60 crowns per share for last year, 48% lower than the 5.00 crowns paid for 2023. ($1 = 10.9779 Swedish crowns) Sign up here. https://www.reuters.com/markets/commodities/swedens-ssab-q4-profit-beats-analysts-estimates-2025-01-29/

2025-01-29 07:01

LONDON, Jan 29 (Reuters) - The Federal Reserve will probably keep its distance from the DeepSeek saga during its policy meeting this week, but the U.S. central bank has good reason to keep very close tabs on any artificial intelligence wobble on Wall Street. One of the curious things about the Nvidia-led plunge in U.S. megacap stocks on Monday, triggered by the emergence of the relatively cheap Chinese generative DeepSeek AI model, was how much the stock shakeout hit U.S. interest rate markets. As stock benchmarks and tech-led subsets recoiled sharply, so too did U.S. Treasury yields as Fed easing bets increased. Two-year yields lost up to 10 basis points - dipping below 4.2% for the first time this year - and Fed futures markets moved to fully price in two rate cuts this year, having been hesitant about the second until Monday. On one level, this may have been just a knee-jerk flight to "safety" at the first hint of a stock market swoon. Or maybe rates traders were just nervy ahead of the Fed's upcoming policy decision. What's almost certain is that the Fed will give the entire incident a bodyswerve when it issues its policy statement on Wednesday. Likely to stand pat on rates this week, the central bank already has its plate full processing the uncertain implications of the proposed policies of President Donald Trump's new administration. What's more, the Fed will not want to appear to be operating a "policy put" for any one company, sector or market. And yet the sensitivity of the wider U.S. economy to the fortunes of the equity market - and the related wealth effects from a 50% increase in the S&P 500 (.SPX) , opens new tab, the most popular U.S. equities index, in just two years - suggests rates markets probably had reason to be jumpy. 'WEALTH EFFECTS' Much like the stock market itself, net U.S. household wealth numbers are off the charts - or at least in uncharted territory. Quarterly Fed data , opens new tab shows the impact of the massive market moves in recent years. Last month's update shows net household wealth rose by almost $5 trillion in the third quarter of 2024 to a record high of nearly $169 trillion - more than $50 trillion higher than just before the COVID-19 pandemic and almost twice what it was 10 years ago. Some $3.8 trillion of the increase during the third quarter was down to rising corporate equity values, according to the Fed data. And given that U.S. stocks added another 10% in the final quarter of last year, at least another $4 trillion can probably be added to that total late last year too. Just how that affects behaviour in the real economy is the question. The "wealth effect" - a belief that rising asset values boost household confidence and consumption - has long been studied and debated. Even if the scale of the effect is hard to measure - as households' equity exposure varies from savings accounts to pension pots or even to annual remuneration - one pre-pandemic study , opens new tab suggested that for every $1 rise in stock values, consumer spending rose 28 cents. So just do the maths. The Fed data shows household equity holdings rose some $12.5 trillion in the year through September last year - and probably about that for the full calendar year. Based on the above rule of thumb, the wealth effect would have boosted spending by about $3 trillion last year - or around 5%. Obvious caveats to all this include the unequal distribution of equity holdings across the population, with richer households obviously controlling the bulk of the assets. But Fed data also shows almost 60% of U.S. households have some stock exposure, and the 60% of richest households are responsible for almost 80% of total annual expenditures in the economy. It's little surprise then that the speed of the stock market rebound after the interest rate squeeze of 2022 was often cited as a major reason retail sales and the wider economy proved so resilient in the face of such a steep rise in borrowing costs. Indeed, the Chicago Fed's measure of overall financial conditions in the economy, which includes equity, interest rate and credit metrics, has tumbled relentlessly since the start of 2023 and is now at its loosest reading in more than three years. And one key reason for the quick market bounceback was the quantum leap in generative AI represented by the launch of ChatGPT in late 2022. The AI frenzy since has catapulted the stocks of a narrow group of chipmaker and AI-related megacaps into the stratosphere, dragging wider indexes with them. The extent of that narrow leadership is best captured by the fact that the gains in the S&P 500 over the past two years were more than twice that of an equal-weighted index (.EWGSPC) , opens new tab that removes the distortions of the giant leaders. Even if DeepSeek does not end up being a gamechanger, the market reaction to it still throws a curve ball into the mix and suggests valuations may need to be reevaluated at the very least. But will a wobble in a narrow section of the equities universe threaten the entire edifice enough to warrant a macro policy reaction from the U.S. central bank? For now, almost certainly no. But if what was heard on Monday was the sound of a bubble popping, then there are very real economic implications the Fed may need to consider quickly. The opinions expressed here are those of the author, a columnist for Reuters. Sign up here. https://www.reuters.com/markets/maybe-fed-should-fret-bit-about-an-ai-wobble-mike-dolan-2025-01-29/