2025-01-24 13:30
BRASILIA, Jan 24 (Reuters) - Brazil closed 2024 with a current account deficit equivalent to 2.55% of gross domestic product (GDP), the central bank said on Friday, more than double the level seen in the previous year after reporting a shortfall in December. The deterioration was primarily attributed to a shrinking trade surplus, as import growth contrasted with decreases in exports amid a stronger-than-anticipated performance of Latin America's largest economy, which consistently exceeded expectations throughout the year. According to the central bank, Brazil's trade surplus fell by 28.2% to $66.2 billion, reflecting a 1.2% decline in exports alongside a 8.8% rise in imports. Also driven by strong economic activity, the services account deficit grew by 24.7% in the year, reaching $49.7 billion, further contributing to the current account deterioration. In contrast, the factor payments deficit narrowed by 5.1%, the central bank said, influenced by reduced profit and dividend outflows. The December current account deficit reached $9 billion, while foreign direct investment (FDI) for the month totaled $2.8 billion. For the year, FDI reached $71.1 billion, equivalent to 3.24% of GDP, marking a 13.8% increase from the previous year. The central bank also reported that portfolio investments in the domestic market posted net outflows of $4.3 billion in 2024, driven by net outflows of $17.1 billion in equities and investment funds, partially offset by net inflows of $12.8 billion in debt securities. In December alone, portfolio investment net outflows reached $12.6 billion amid a sharp rise in the risk premium on Brazilian assets after the government unveiled a fiscal package that disappointed investors concerned about the rising trajectory of public debt. This was the second-worst monthly result in the central bank's series, which began in 1995, surpassed only by the $22.1 billion outflow in March 2020, when the COVID-19 pandemic was declared. Sign up here. https://www.reuters.com/world/americas/brazils-current-account-deficit-widens-december-deteriorates-2024-2025-01-24/
2025-01-24 12:50
FRANKFURT, Jan 24 (Reuters) - Euro zone banks need a digital euro to respond to U.S. President Donald Trump's push to promote stablecoins, a type of cryptocurrency typically pegged to the U.S. dollar, European Central Bank board member Piero Cipollone said on Friday. Trump said he would "promote the development and growth of lawful and legitimate dollar-backed stablecoins worldwide" as part of a broader crypto strategy that he sketched out in an executive order issued on Thursday. Cipollone said this would help lure even more customers away from banks and strengthen the case for the ECB to launch its own digital currency in response. "I guess the key word here (in Trump's executive order) is worldwide," Cipollone told a conference in Frankfurt. "This solution, you all know, further disintermediates banks as they lose fees, they lose clients...That's why we need a digital euro." Stablecoins work similarly to money market funds in that they offer exposure to short-term interest rates in an official currency - nearly always the U.S. dollar. A digital euro, by contrast, would essentially be an online wallet guaranteed by the ECB but operated by companies such as banks. It would allow people, even those who don't have a bank account, to make payments. Holdings would likely be capped at a few thousand euros and not remunerated. Banks have expressed concerns that a digital euro would empty their coffers as customers transfer some of their cash to the safety of an ECB-guaranteed wallet. The euro zone's central bank is currently experimenting with how a digital euro would work in practice. But it will only make a final decision on whether to launch it once European lawmakers approve legislation on the matter. Trump's executive order also prohibited the Federal Reserve from issuing its own central bank digital currency (CBDC). Nigeria, Jamaica and the Bahamas have already launched digital currencies and a further 44 countries, including Russia, China, Australia and Brazil are running pilots, according to the Atlantic Council think tank. Sign up here. https://www.reuters.com/technology/ecb-pitches-digital-euro-response-trumps-crypto-push-2025-01-24/
2025-01-24 12:48
Turkey local gov't bonds see big foreign inflows this month Turkey's December inflation eased faster than expected Syria, Gaza reconstruction could benefit Turkey LONDON, Jan 24 (Reuters) - Foreign investors are flocking to Turkey's local debt markets, saying they are impressed by interest rate cuts and easing inflation and are hoping that a regional transformation could further boost their bets on the economy. Turkey's central bank cut rates by another 250 basis points on Thursday to 45%, continuing an easing cycle it began just last month after an aggressive drive to end years of soaring prices and a tumbling currency. More than a year and a half after President Tayyip Erdogan's re-election and pivot back to more orthodox economic and monetary policies, Turkey is back to being a mainstay of emerging market investors. "Turkey is one of the bigger success stories, one of the positive dynamics in our space that we like," said Nick Eisinger, co-head of Emerging Markets with Vanguard. "The reform story and the macro story is very positive and still has runway to go." Local bonds sucked in $1.24 billion of foreign investor cash in the week to Jan 17, the biggest such inflows in two months, bringing the 2025 tally so far to as high as $1.9 billion, central bank data show. Foreigners hold more than 10% of government debt, levels last seen in 2019. While that is a sharp increase from around 1% in 2022, it is still less than half of the 25% prior to August 2018, when the lira crisis started. Emerging from that crisis has been painful. Turkey for years opted for unorthodox fiscal and monetary policies that fuelled red-hot growth. It claimed the top spot for economic growth among larger emerging markets since the onset of the COVID-19 crisis, according to Oxford Economics. But those exposed to local bonds paid a hefty price: with inflation topping 85% in 2022 and touching 75% last year, and a lira tumbling to a series of record lows, a big chunk of investments were wiped out. DISINFLATION The more favourable recent backdrop has also seen Amundi, Europe's largest asset manager, venture into domestic bonds. "We like Turkey from a local currency perspective," said Yerlan Syzdykov, global head of emerging markets & co-head of emerging markets fixed income at Amundi. Easing inflation - which was lower than expected at 44.38% annually in December - coinciding with a fragile balance of payments situation that gave Turkey little wiggle room to allow the lira to slide further, was favourable to investors for now, said Syzdykov. "The pace of the disinflation should continue being higher than the pace of devaluation - so that's the bet that we have as well." A Reuters poll shows the central bank is expected to forge ahead with cuts that leave its key rate at 30% at year-end, when the bank itself expects inflation to slow to about 21%. While the government may be less inclined to push for high growth for now, recent regional developments - including the ousting of Syrian leader Bashar al-Assad and the Israel-Hamas ceasefire in Gaza - could add to Turkey's growth momentum, analysts said. "Everything that's happened in the Middle East is probably quite positive for Turkey," said Magda Branet, head of emerging markets and Asian fixed income with AXA Investment Managers. "Turkey will probably be an actor in the reconstruction of the region and in the reconstruction of Ukraine... So on the growth outlook and the fiscal outlook there's definitely some positive news." Turkey still has to prove its orthodox pivot will last before it lures back so-called crossover investors: the major developed-market investors who also dabble in emerging markets. Often managing big pots of money, they have in recent months sought exposure to emerging economies, especially investment-grade rated sovereigns in the Gulf or Latin America. "From their perspective, it's too risky to go into Turkey because of these factors... on the geopolitical side, but also because of the fragility of the institutional space," said Amundi's Syzdykov. (This story has been refiled to include the company's full name 'AXA Investment Managers' in paragraph 17) Sign up here. https://www.reuters.com/world/middle-east/foreign-investors-bet-turkey-drawn-by-rate-cuts-easing-inflation-2025-01-24/
2025-01-24 12:46
Jan 24 (Reuters) - NextEra Energy's (NEE.N) , opens new tab fourth-quarter profit fell over the year earlier on Friday, hurt by weakness in its renewables segment. Shares of the Juno Beach, Florida-based renewable energy company were down 1.6% in premarket trading. The company posted earnings of $1.20 billion, or 58 cents per share, for the quarter ended Dec. 31, compared with $1.21 billion, or 59 cents per share, a year ago. Its renewables business, NextEra Energy Resources, recorded a loss of $442 million compared with a net income of $885 million a year earlier, in part due to higher costs. The company reported revenue of $5.39 billion, missing analysts' average estimate of $7.07 billion, according to data compiled by LSEG. Sign up here. https://www.reuters.com/business/energy/nextera-energy-posts-lower-fourth-quarter-profit-2025-01-24/
2025-01-24 12:37
DAVOS, Switzerland, Jan 24 (Reuters) - Saudi Economy Minister Faisal Alibrahim said on Friday that the $600 billion of expanded investment and trade with the United States mentioned by Saudi Crown Prince Mohammed bin Salman includes investments as well as procurement from the public and private sectors. The state news agency said on Thursday that the crown prince had affirmed the kingdom's intention to broaden its investments and trade with the United States over the next four years, in the amount of $600 billion, and potentially beyond that. "This number represents investments, procurement, public and private sector, and it's just a mirror reflection of the strong relationship," Alibrahim said on a panel at the World Economic Forum in Davos when asked if the kingdom would increase the figure to $1 trillion, as U.S. President Donald Trump suggested to the forum on Thursday. "What we'll spend in the economy from the start of Vision 2030 to 2030 is 12 times that number," Alibrahim said. Asked if Saudi Arabia would reduce the price of oil - after Trump told Davos he would tell the kingdom and OPEC to do so - he said Riyadh was focused on long-term oil market stability. Oil prices fell following Trump's remarks on Thursday. Vision 2030 is an ambitious agenda launched in 2016 aimed at overhauling the Saudi economy to cut reliance on hydrocarbons, create jobs and build new industries. "The kingdom's position, OPEC's position, is all about long-term market stability to make sure that there's enough supply for the growing demand," including from the U.S. and for artificial intelligence, he said. Alibrahim also said a World Economic Forum gathering will regularly be held in Saudi Arabia starting in the spring of 2026, after it hosted a meeting last year. Sign up here. https://www.reuters.com/world/middle-east/saudi-economy-minister-says-600-bln-package-with-us-includes-investments-2025-01-24/
2025-01-24 12:34
Sterling jumps as tariff doubts weigh on dollar Burberry says more likely to make annual profit FTSE 100 down 0.3%, FTSE 250 up 0.3% Jan 24 (Reuters) - The UK's FTSE 100 slipped on Friday, as a jump in sterling hurt export-oriented firms, while Burberry soared after a strong U.S. holiday season helped the luxury firm beat quarterly sales expectations. The blue-chip FTSE 100 (.FTSE) , opens new tab dipped 0.3% by 1214 GMT, but still looked on course for its fifth straight week of gains. The benchmark hit a record high this week, as global stocks surged on signs that U.S. President Donald Trump was taking a softer stance towards tariffs against China and looking to boost the U.S. economy by lowering taxes and making big AI investments. Sterling climbed 0.5% against the dollar on Friday as a lack of concrete tariff policies during Trump's first week in office hurt the dollar, and in turn weighed on shares of global companies such as Shell (SHEL.L) , opens new tab and HSBC (HSBA.L) , opens new tab. UK-listed global miners such as Antofagasta (ANTO.L) , opens new tab, Glencore (GLEN.L) , opens new tab and Rio Tinto (RIO.L) , opens new tab climbed as copper prices jumped to their highest in more than two months on hopes of a U.S. trade deal with China. The FTSE 250 midcap index (.FTMC) , opens new tab gained 0.3%, boosted by a 13% surge in Burberry (BRBY.L) , opens new tab shares after it reported a smaller-than-expected 4% drop in quarterly comparable store sales and said it was now more likely to record a profit over its financial year. The results boosted shares of other European luxury firms including Kering (PRTP.PA) , opens new tab and LVMH (LVMH.PA) , opens new tab. Harry Potter publisher Bloomsbury Publishing (BLPU.L) , opens new tab rose 3.8% after renewing its supply agreement with Amazon (AMZN.O) , opens new tab. Meanwhile, a survey showed tepid growth across British businesses picked up only slightly at the start of 2025, with employment and optimism contracting again while price pressures rose, underscoring the challenge facing the Bank of England (BoE). The survey was the latest sign of lacklustre growth and a weakening jobs market since finance minister Rachel Reeves raised payroll taxes for businesses in her budget on Oct. 30. Traders expect an 81% chance of a 25-basis-point rate cut on Feb. 6, when the BoE policymakers meet next. Sign up here. https://www.reuters.com/world/uk/ftse-100-dips-stronger-sterling-hits-export-focused-firms-burberry-soars-2025-01-24/
