2025-01-16 20:19

STOXX 600 up 0.6%, FTSE, DAX at records Dollar hits one-month low to yen on Fed comments, hawkish BOJ Investors wary ahead of Trump's inauguration on Monday LONDON, Jan 17 (Reuters) - European shares rose on Friday and were heading for their biggest one-week jump since September as falling bond yields, stronger-than-forecast China growth figures and upbeat earnings supported riskier assets. The Chinese data also supported most Asia-Pacific shares, but Japanese markets underperformed after the yen popped to a one-month high due to rising bets that the Bank of Japan will hikes interest rates next week. The dollar clawed back some of Thursday's steep declines against major peers, the result of resurgent wagers on a Federal Reserve rate cut by June. Treasury yields also halted their decline, but remained close to the previous session's lows. China's economy grew 5% last year, matching the government's target, but growth was unbalanced, led by industry and exports and the 2025 outlook remains uncertain as U.S. President-elect Donald Trump returns to the White House. "If China is starting to do a little better, that's positive (for European equities)," said Lars Skovgaard, senior investment strategist at Danske Bank. The pan-European STOXX 600 (.STOXX) , opens new tab is up 0.6% on Friday, taking the weekly gain to 2.3%, its biggest one-week jump since September. Britain's FTSE 100 (.FTSE) , opens new tab and Germany's DAX (.GDAXI) , opens new tab both hit intraday record highs on Friday, up 1% and 0.9% respectively. In Asia, mainland Chinese blue chips (.CSI300) , opens new tab and Hong Kong's Hang Seng (.HSI) , opens new tab both rose 0.3%. Japan's Nikkei (.N225) , opens new tab sagged 0.3%, paring earlier losses of more than 1%. The yen had earlier climbed to the highest since Dec. 19 at 154.98 per dollar then reversed course to last trade about 0.4% lower at 155.75. MSCI's world index (.MIWD00000PUS) , opens new tab rose 0.05%. U.S. S&P 500 futures gained 0.3%, after the cash index closed down 0.2% on Thursday. Those small declines came after a 1.8% jump on Wednesday - the biggest daily percentage gain since the post-election rally on Nov. 6 - fuelled by strong bank earnings at the start of the new reporting season. "Investors are enjoying the re-anchoring of the market narrative to company fundamentals and away from the macro, with earnings season so far proving robust," said Kyle Rodda, senior financial market analyst at Capital.com. BOND YIELDS DROP Ten-year U.S. Treasury yields stood at 4.6047% in the latest session, after sliding to the lowest since Jan. 6 at 4.5880% on Thursday, when Fed Governor Christopher Waller said three or four interest cuts this year are still possible if U.S. economic data weakens. Ten-year Japanese government bond yields eased along with overnight moves in Treasuries, even as comments from BOJ Governor Kazuo Ueda and one of his deputies, Ryozo Himino, this week spurred a rise in bets for a quarter-point hike on Jan. 24 to 78%. They indicated wage growth would likely remain strong this year and Japan was progressing towards durably hitting its inflation target. Sources told Reuters that following a likely policy tightening, the central bank is set to maintain a pledge to keep pushing up borrowing costs if the economy continues to recover. The dollar index - which measures the greenback against a basket of six major currencies, including the yen - edged up 0.1% to 109.09, but remained 0.5% lower for the week, threatening to snap six straight weeks of gains. The euro was little changed at $1.0297, while the beleaguered sterling lost 0.3% to $1.2197 after worse-than-forecast British retail sales in December. Declines in bond yields supported alternative assets. Bitcoin edged as high as $102,242, its highest since Jan. 7. Gold stood at $2,704, hovering close to Thursday's high of $2,724.55, its strongest in more than a month. Meanwhile, crude oil headed for a fourth consecutive weekly advance as the latest U.S. sanctions on Russian energy trade hit supply and pushed up spot prices and shipping rates. Brent crude futures rose 0.2%, to $81.45 per barrel, on course for a 1.9% rise this week. U.S. West Texas Intermediate crude futures were up 0.4% to $79.02 a barrel, headed for a 2.76% weekly advance of 2.8%. Sign up here. https://www.reuters.com/markets/global-markets-wrapup-1-2025-01-16/

2025-01-16 20:03

Farmers fear reduced crop selling options and prices Approval conditions include selling grain elevators and oilseed plants Concerns over merger's impact on Prairie and Quebec competition WINNIPEG, Manitoba, Jan 16 (Reuters) - Farmers warn Canada's approval of U.S. grain trader Bunge's (BG.N) , opens new tab $34-billion takeover of Glencore-backed (GLEN.L) , opens new tab Viterra will reduce their options to sell crops at competitive prices, and say the government did not require enough concessions. Canada's approval with conditions on Tuesday was one of the final steps needed to close the largest-ever global agriculture merger by dollar value. Experts had expected asset sales would be required in a country where the companies' businesses overlap. Farmers in Canada, the world's top canola producer and No. 3 wheat grower, are struggling with years of drought and low commodity prices. Consolidation among grain traders may reduce farmers' leverage to receive reasonable prices. "Farmers will be the ones suffering," said Agricultural Producers Association of Saskatchewan president Bill Prybylski. Farmers have worried combining Bunge's oilseed-crushing plants with Viterra's grain storage, shipping and processing plants, plus Bunge's minority stake in grain company G3, would limit competition in some areas. Conditions for approval from Transport Minister Anita Anand included Bunge selling six Western Canada grain elevators, which are storage and transportation facilities, and two oilseed-crushing plants. Canada also required Bunge officials on G3's board of directors to be replaced with independent directors. G3 is partly owned by Saudi Arabia's SALIC. "Minister Anand's decision to approve the acquisition, even with conditions, doesn't go nearly far enough," said Kyle Larkin, executive director of the Grain Growers of Canada farmer group, in a statement. "These conditions do little to offset the $770 million annual cost this merger will impose on farmers." Larkin said the merger will reduce competition across the Prairies and in Quebec. The transport ministry said in a statement that "extensive terms and conditions" were put in place to ensure competition between G3 and Bunge/Viterra continues. Conditions regarding independent directors nominated by Bunge for G3's board are designed to ensure there is no influence from Bunge on G3's willingness to compete for grain, the ministry said. "In other words, G3 will operate independently from Bunge," said the statement. CRUSH PLANT SALE ORDER WELCOMED Jill Verwey, president of Keystone Agricultural Producers, said the ordered sale of an oilseed crushing plant south of Winnipeg and just north of the U.S. border addressed one of the chief concerns of Manitoba's main farmers organization. Bunge announced the proposed merger in 2023. The company said in a Tuesday statement that it expects to close the merger early this year. It separately said approval from Chinese authorities is the final major step. Viterra declined to comment. A 2024 study by agricultural economists commissioned by farmer organizations found the deal would give the merged company and G3 45% of Vancouver port grain terminal capacity. Canada's Competition Bureau dismissed those concerns, saying its analysis suggested port terminals mostly serve their owners' needs and do not compete for other companies' export business. Sign up here. https://www.reuters.com/markets/commodities/canadian-farmers-warn-bunges-viterra-takeover-will-reduce-competition-2025-01-16/

2025-01-16 20:03

Wildfires burn 59 sq miles - an area larger than Paris LA withstands red flag conditions without the fires growing Toxic waste removal delays return of wildfire evacuees Search teams still processing human remains; death toll at 27 LOS ANGELES, Jan 16 (Reuters) - Los Angeles officials told most evacuees from the wildfires on Thursday to stay away from their homes at least another week as emergency responders remove toxic waste from incinerated neighborhoods and cut off electricity and gas lines posing a hazard amid the ruins. Landslides further endangered the devastated hillsides, where leveled structures no longer hold earth in place and water from fire hoses and broken pipes has saturated the ground, adding more stress and heartache to people suffering the worst natural disaster in Los Angeles history. With wildfires burning for a 10th day, firefighters expressed relief over withstanding recent red flag conditions of high desert winds and low humidity without either of the two monster fires growing. But the National Weather Service warned that the respite of ocean breezes and cloud cover will be short, as hazardous fire weather was forecast to return on Sunday. Frustrated evacuees are eager to return home to assess the damage and salvage any keepsakes or medicine, but officials said it was too dangerous or too taxing on first responders who were still dealing with the immediate disaster, which has killed at least 27 people. Frank McGrath, 46, was at a disaster center in Pasadena on Thursday. He, his wife, Bridget, and their 9-year-old daughter lost their home in the Eaton fire and are now living with Bridget's mother nearby. McGrath, a film and television editor, said he is eager to get back in and search the rubble for any family heirlooms that survived. But he knows he likely lost the quilts from his grandmother and his late mother's paintings. "Is my wedding ring somewhere buried?" he said. "There are clearly some hazardous materials in there. We want to get in, but we understand why it's limited." Even for people whose homes survived the fires, like Melanie Alonso, 28, a behavioral therapist who lives in Altadena, the toxic ash created by the blazes and insurance company instructions not to begin a clean up until the company examines the house means she cannot return home. "It's like there is an ashtray up your nose," Alonso, who was back on her street on Thursday, said of the inside of her home covered in ash. "Insurance is like don't start cleaning your house," she added. "We were supposed to be back after a day, then a week ..." Los Angeles Mayor Karen Bass said that "you can see the emotional toll that this disaster has taken on people, as I spoke to people who had lost their homes or who were not sure the status of their homes or missing pets. The toll you can see mounting on them." The Palisades fire on the west side of Los Angeles has consumed 23,713 acres (96 sq km) and was 27% contained, meaning firefighters had control of that percentage of the perimeter. The Eaton fire, which has burned 14,117 acres (57 sq km) in the foothills east of town, was 55% contained, Cal Fire said. Together the two fires have charred 59 sq miles (152 sq km) - an area larger than Paris or nearly three times the size of Manhattan. A series of smaller wildfires in southern California have been brought completely or mostly under control. At least 12,000 structures - many of them homes - have been leveled or damaged, leaving 82,400 people still under evacuation orders and another 90,400 under evacuation warnings. Some people defied evacuation orders and died. Others found it impossible to abandon distressed neighbors and fought the flames with buckets. John Carr said he stayed in his home in Pacific Palisades to protect it because rebuilding would be too expensive. As the fire began to encroach on his backyard, Carr said he sprang into action, jumping fences to tackle spot fires from all directions using his hose, not only on the flames but also himself. "I was awake all night, all day. I got a little bit of sleep after things calmed down a little bit, after all the houses all burned down. I did probably hurt a rib jumping a fence over there," Carr said. "Some things in life are worth fighting for, you know." Los Angeles County officials said some people in evacuation zones would be let home sooner than a week but for others it may take even longer, as officials attempted to recover and identify charred human remains. Damaged or destroyed homes are loaded with hazardous materials, which must be removed by the U.S. Environmental Protection Agency before local agencies can haul away debris and restore severed utilities. The massive amounts of debris and toxic material will have damaged or clogged the region's flood control system, which will need to be clear before badly needed rains return after what so far has been nine months of dry weather, said Mark Pestrella, director of Los Angeles County Public Works. Police had experimented with escorting people to their homes for brief visits but found it obstructed streets needed for firetrucks and consumed the time of too many officers, Los Angeles Police Chief Jim McDonnell said. Beyond the immediate cleanup, state and local officials are preparing for a massive reconstruction effort by suspending regulations that might cause delay. Private forecaster AccuWeather projects damage and losses at more than $250 billion, which would make the Los Angeles fires the costliest natural disaster in U.S. history. The devastation has also complicated the city's preparation to host major sporting events such as part of the 2026 World Cup, the 2027 Super Bowl and the 2028 Olympic Games. Experts say a relocation of the Olympics would be unlikely. Sign up here. https://www.reuters.com/world/us/weather-conditions-los-angeles-improve-giving-firefighters-respite-2025-01-16/

2025-01-16 18:14

Jan 16 (Reuters) - Scott Bessent, U.S. President-elect Donald Trump's choice to head the Treasury Department, on Thursday said that extending Trump's 2017 tax cuts that are set to expire at the end of this year is "the single most important economic issue of the day." "If we do not renew and extend, then we will be facing an economic calamity," Bessent told the U.S. Senate Finance Committee. "We will see a gigantic middle class tax increase." Sign up here. https://www.reuters.com/world/us/trumps-us-treasury-pick-bessent-says-extending-tax-cuts-top-priority-2025-01-16/

2025-01-16 17:47

Recently launched New York Fed measure held steady as of Jan. 7 Fed officials still see no imminent need to stop balance sheet drawdown Wall Street pushing back end of balance sheet drawdown NEW YORK, Jan 16 (Reuters) - The U.S. central bank faces no imminent pressure to stop the contraction of its holdings of Treasury bonds and mortgage-backed securities, data released by the New York Federal Reserve suggested on Thursday. The regional Fed bank reported that its recently launched Reserve Demand Elasticity measure essentially held steady as of Jan. 7 at -0.04 relative to recent readings and said "the estimate suggests that reserves remain abundant." For the Fed, an abundant reserve level means that liquidity in the financial system remains strong enough that it can continue to shrink its balance sheet by allowing some of the Treasury and mortgage bonds it owns to mature and not be replaced. This process, which began in 2022, is called quantitative tightening, or QT, and it has allowed Fed holdings to go from a peak of about $9 trillion in the summer of 2022 to the current level of just under $7 trillion. Fed officials have been uncertain how much further they'll be able to cut the holdings. But seeking to avoid a replay of the events of the fall of 2019, when the last chapter of QT unexpectedly withdrew too much liquidity and forced central bank interventions, they have taken lessons from that episode. The Reserve Demand Elasticity measure helps measure liquidity conditions and appears to front-run shortages with robust lead times. The Fed has also slowed the pace of the QT drawdown and also put in place a facility called the Standing Repo Facility, which provides fast cash to eligible banks, in a bid to quickly address any market kinks. Fed officials allow that the outlook for QT is uncertain but they appear for now to see no need to change gears. 'ENDLESSLY DEBATABLE' Transitioning through the end of 2024 into 2025 "went very smoothly," New York Fed President John Williams told reporters on Wednesday, referring to what can be a turbulent period for markets. He said he's "not seen any particular signs" reserve levels have contracted to a point where the Fed would have more difficulty managing the setting of the federal funds rate, its main tool for affecting the path of the economy. "I don't have a prediction" of when QT will conclude, Williams added, while noting the central bank has taken steps to reduce the chance it will have to happen abruptly. Wall Street has been pushing back its expected end for QT. New York Fed market surveys note the big banks envision a stopping point in June, a slightly longer horizon relative to recent expectations. Barclays analysts, however, see an even longer runway. "Timing the end of QT is as endlessly debatable - and about as fruitless - as calculating the number of angels that can dance on the head of a pin," they said in a report. "With no mention of QT in the December (Fed meeting) minutes, we are (humbly) pushing our forecast for its end to September." Ending QT likely rests on lowering the Fed's reverse repo facility down further from its already dwindling size. At that point, what have been fairly steady bank reserve levels will likely fall. Versus the current level of $3.3 trillion, banks surveyed by the New York Fed ahead of the Dec. 17-18 policy meeting projected QT would end with Fed reserves at $3.125 trillion and total Fed holdings of $6.375 trillion. Sign up here. https://www.reuters.com/markets/rates-bonds/new-york-fed-says-january-reserve-levels-still-abundant-2025-01-16/

2025-01-16 17:44

LONDON, Jan 16 (Reuters) - Staff at central bank umbrella group, the Bank for International Settlements, have warned of a global bout of stagflation if trade tariffs promised by soon-to-be-U.S. President Donald Trump continue to drive up the dollar. Stagflation - the combination of strong inflation and weak economic growth is viewed as Kryptonite by economists as consumers and firms are hit from both sides. Just days before Trump takes office, the BIS-published report said the world economy was on track for a "soft landing" but it stressed growing uncertainty due to what it described as the new looming challenges. It highlighted surveys showing a rise in the perceived probability of "no landing" - strong U.S. economic growth and sticky inflation, which could limit the degree to which the U.S. and other countries can cut interest rates. At the same time, global trade is likely to face increased "frictions and fragmentation" with the broad-based trade war between Washington and other countries now "a tangible risk scenario," it warned. If the U.S. ends up barely cutting, or even raising its interest rates as a result, but other nations have to slash theirs, it could cause significant capital flow and exchange rate adjustments. "The value of the U.S. dollar could continue its recent rise on the back of higher U.S. interest rates, a stronger U.S. economy and high political uncertainty," the BIS report said. "This could have stagflationary effects on the global economy due to the dollar’s dominant role in trade invoicing and international finance." A stronger dollar tends to boost inflation outside the U.S. by increasing import prices and inflation expectations, especially in developing world countries. Dollar strength also tends to tighten financial conditions by pushing up global borrowing costs. That then dampens real economic activity, particularly in countries with weak fundamentals and vulnerable fiscal positions, the BIS said. Sign up here. https://www.reuters.com/markets/tariff-fuelled-dollar-gains-pose-global-stagflation-risks-bis-warns-2025-01-16/