2025-01-07 21:00

US service sector growth picks up in December Micron to provide memory for Nvidia gaming chips, shares up Tesla slips 4% after brokerage downgrade Indexes down: Dow 0.42%, S&P 500 1.11%, Nasdaq 1.89% Jan 7 (Reuters) - U.S. stocks tumbled on Tuesday after a batch of upbeat economic data raised concerns that an inflation rebound could slow down the Federal Reserve's pace of monetary policy easing. Stocks gave up early gains after a Labor Department report showed job openings unexpectedly increased in November, while a separate report said services sector activity accelerated in December with a measure tracking input prices surging to a near two-year high. "Markets are starting to recognize that they thought we were in the eighth inning of the inflation fight but now it's going to be higher for longer," said Joe Mazzola, head of trading and derivatives strategist at Charles Schwab. Benchmark 10-year Treasury yields hit 4.699% after the data pointed to a strong economy, the highest since April 26. "Both of those things potentially have inflationary impacts and, as a result, yields have increased," said Mike Dickson, head of research at Horizon Investments, referring to the economic data. "That's definitely weighing on stocks." Signs of continued resilience in the economy have pushed back expectations on when the central bank can deliver its first interest rate reduction this year. Traders now see the next cut more likely in June and the Fed staying on hold for the rest of 2025, according to the CME Group's FedWatch tool. Concerns over the impact of possible tariffs by the incoming Trump administration on consumer prices have also been on investors' minds. "A mix of solid growth and a new wave of inflationary pressure from tariffs means the Fed will likely switch from cutting interest rates at every decision ... to pausing in between rate cuts in 2025," Bill Adams, chief economist for Comerica Bank, said in a note. The Dow Jones Industrial Average (.DJI) , opens new tab fell 178.20 points, or 0.42%, to 42,528.36, the S&P 500 (.SPX) , opens new tab lost 66.35 points, or 1.11%, to 5,909.03 and the Nasdaq Composite (.IXIC) , opens new tab lost 375.30 points, or 1.89%, to 19,489.68. Higher yields pushed technology-sector stocks (.SPLRCT) , opens new tab lower by 2.39%. Shares of AI bellwether Nvidia (NVDA.O) , opens new tab fell 6.22%. Most of the 11 S&P 500 sectors declined, except for healthcare (.SPXHC) , opens new tab and energy stocks (.SPNY) , opens new tab. The main focus of the week is the key non-farm payrolls data, along with minutes from the Fed's December meeting. In the previous session, the S&P 500 (.SPX) , opens new tab and the Nasdaq (.IXIC) , opens new tab closed short of one-week highs on uncertainty after President-elect Donald Trump denied a report that his team was exploring less aggressive tariff policies. Tesla (TSLA.O) , opens new tab shares fell 4% after BofA Global Research downgraded the stock to "neutral" from "buy." Micron Technology (MU.O) , opens new tab rose 2.67% after Nvidia boss Jensen Huang said the chipmaker was providing memory for the AI bellwether's GeForce RTX 50 Blackwell family of gaming chips. Citigroup (C.N) , opens new tab rose 1.29% on bullish coverage from Truist Securities, while Bank of America (BAC.N) , opens new tab went up 1.5% after positive ratings from at least three brokerages. Some big banks are expected to report quarterly earnings in the next week. Declining issues outnumbered advancers by a 2.14-to-1 ratio on both the NYSE and the Nasdaq. The S&P 500 posted 9 new 52-week highs and 16 new lows while the Nasdaq Composite recorded 60 new highs and 58 new lows. Volume on U.S. exchanges was 20.45 billion shares, compared with the 12.52 billion average for the full session over the last 20 trading days. Markets will be closed on Thursday for a national day of mourning to mark the death of former President Jimmy Carter. Sign up here. https://www.reuters.com/markets/us/futures-subdued-ahead-economic-data-trumps-plans-eyed-2025-01-07/

2025-01-07 20:46

Jan 7 (Reuters) - Fitch Ratings on Tuesday upgraded its rating for El Salvador to B- from its prior CCC+ status, along with a stable outlook, citing a reduction in financing needs helped by a recently announced International Monetary Fund (IMF) program. The B- rating is, however, six notches into the credit rating agency's speculative grade, or junk, status. Last month, the IMF announced a staff-level agreement with El Salvador on a new loan program for about $1.4 billion to support government reforms. "Fitch expects the program to support implementation of fiscal consolidation measures which in conjunction with the reduction in outstanding short-term debt owed to domestic banks and buyback of external debt, due to last year's liability management operations, should reduce financing needs," according to a statement from the ratings agency. Fitch added that successful fiscal consolidation could boost investor confidence and potentially enable future debt issuances. "Hooah!" wrote President Nayib Bukele in a post on X celebrating the upgrade. Fitch expects Salvadoran economic growth to slow to 1.9% in 2024, from a 3.5% expansion in 2023, and then pick up to 2.3% growth this year despite the government's heavy debt burden. Sign up here. https://www.reuters.com/world/americas/fitch-upgrades-el-salvador-after-imf-deal-eases-financing-needs-2025-01-07/

2025-01-07 20:42

GENEVA, Jan 7 (Reuters) - The risk to the general population from H5N1 bird flu remains low, a World Health Organization spokesperson said on Tuesday, following the first death of a patient from the virus in the United States. The patient, who was over 65 and had underlying medical conditions, was hospitalised with the virus in December after exposure to a combination of backyard chickens and wild birds, Louisiana health officials said. "We are concerned, of course, but we look at the risk to the general population and ... it still remains low," WHO spokesperson Margaret Harris told reporters at a Geneva press briefing in response to questions about the risks of the virus. Asked whether U.S. monitoring of the virus was sufficient, she said: "They are doing a lot of surveillance. That's why we're hearing about it." Nearly 70 people in the U.S. have contracted bird flu since April, most of them farmworkers, as the virus has circulated among poultry flocks and dairy herds, according to the U.S. Centers for Disease Control and Prevention. Like the WHO, U.S. federal and state officials have said the risk to the general public remains low. Sign up here. https://www.reuters.com/world/us/bird-flu-risk-remains-low-after-first-us-death-who-says-2025-01-07/

2025-01-07 19:57

Canadian dollar falls 0.1% against the greenback Trades in a range of 1.4298 to 1.4365 Canada posts narrower-than-expected trade deficit Bond yields rise across a steeper curve TORONTO, Jan 7 (Reuters) - The Canadian dollar edged lower against its U.S. counterpart on Tuesday as American economic data supported bets for a slower pace of interest rate cuts by the Federal Reserve, but the currency kept hold of much of the previous day's gains. The loonie was trading 0.1% lower at 1.4350 per U.S. dollar, or 69.69 U.S. cents, after moving in a range of 1.4298 to 1.4365. On Monday, the currency touched nearly a three-week high at 1.4280 as a report cast doubt on the severity of expected U.S. trade tariffs and Canadian Prime Minister Justin Trudeau announced his plans to resign. A Canadian election is possible in the spring and must be held by Oct. 20, with polls showing voters will elect the opposition Conservatives. "A change in the leadership in Canada is not a long-term negative for the loonie," said Amo Sahota, executive director at Klarity FX in San Francisco. "People are looking at a new Conservative government which would probably be more pro-business, maybe less spending in there as well." The U.S. dollar gained on Tuesday against a basket of major currencies after economic data showed a generally stable jobs market and a robust services sector. The price of oil, one of Canada's major exports, was supported by concerns over tighter supply from Russia and Iran. U.S. crude oil futures settled 0.9% higher at $74.25 a barrel. Canada posted a narrower-than-expected trade deficit of C$323 million ($225.6 million) in November as exports rose faster than imports. Separate data showed that the seasonally adjusted Ivey Purchasing Managers Index (PMI) rose to 54.7 from 52.3 in November, reaching its highest level since July. Canadian bond yields moved higher across a steeper curve, tracking moves in U.S. Treasuries. The 10-year was up 7.3 basis points at 3.309%. Sign up here. https://www.reuters.com/markets/currencies/canadian-dollar-consolidates-prior-days-gains-election-looms-2025-01-07/

2025-01-07 18:58

BUENOS AIRES, Jan 7 (Reuters) - Argentina's country risk index, an important reflection of how investors view the country's public debt, closed on Tuesday slightly below the previous day's close, after a steep fall earlier in the day surprised officials and analysts. The closely watched J.P. Morgan risk benchmark, which shows the yield spread on Argentine sovereign government bonds versus comparable U.S. debt, closed at 561 points, after plummeting earlier to 444, its lowest level since 2018. While Argentina's government shoulders massive liabilities, markets have recently cheered cooling inflation and early signs of an economic rebound following years of a deep economic slump. According to traders, the index reading was adjusted due to technical issues that had caused the steep slide and were related to key bond payments expected later this week. Argentina is set on Thursday to pay off $4.3 billion in principal and interest on its "Bonares" and "Globales" bonds. Earlier on Tuesday, Felipe Nunez, an economist at Argentina's Treasury, wrote on social media that the index showed "a mismatch in the price due to coupon payments and amortization of the bonds." The country risk index has been falling due to rising optimism in Argentine financial markets, and broke the 600-point threshold on Monday. Argentina's falling country risk reflects optimism in the country's financial markets under President Javier Milei, who took office in late 2023 and has implemented a cost-cutting economic program targeting sky-high inflation and government spending. Nicolas Merino, from trading group ABC Mercados de Cambio, credited the country risk's reduction in part to Argentina's trade balance, which notched its 12th-consecutive monthly surplus in November. Merino also credited the country's recovering foreign reserves, expectations of a new debt agreement with the International Monetary Fund, and a recent $1-billion repurchase agreement loan with five foreign banks. Sign up here. https://www.reuters.com/world/americas/argentina-country-risk-plummets-lowest-level-since-may-2018-2025-01-07/

2025-01-07 18:25

Shein seeking London IPO Shein lawyer repeatedly avoids answering lawmakers' questions Committee chair says responses "bordered on contempt" LONDON, Jan 7 (Reuters) - A Shein representative declined to provide a direct answer when asked by a British parliamentary committee on Tuesday whether the online fast-fashion retailer uses cotton from China or from its Xinjiang province, a key issue for potential investors concerned about its supply chain. The repeated refusal by Shein's general counsel for Europe, Middle East and Africa (EMEA), Yinan Zhu, to answer lawmakers' questions "bordered on contempt" for the cross-party business and trade committee, said Liam Byrne, the committee chair. Singapore-headquartered Shein, which was founded in China in 2012, is awaiting regulatory approvals for an initial public offering (IPO) from both Britain's Financial Conduct Authority and China's securities regulator. Asked about Shein's supply chain, Zhu said: "The suppliers we work with, they are based in China, in Turkey and Brazil, and obviously many of them are in China." She asked the committee for permission to write to them about further questions, when pressed further on whether the company sources cotton from China and specifically from its Xinjiang province. When asked about the IPO, Zhu said she was not able to comment. "For a company that sells a billion pounds to UK consumers, and for a company which is seeking to float on the London Stock Exchange, the committee has been pretty horrified by the lack of evidence that you have provided today," said Byrne, who appeared visibly exasperated as the hearing progressed. "You've given us almost zero confidence in the integrity of your supply chains. You can't even tell us what your products are made from. You can't tell us much about the conditions which workers have to work in, and the reluctance to answer basic questions has frankly bordered on contempt of the committee." When asked whether the company was confident it was in compliance with the UK Modern Slavery Act, Zhu said: "Our position is we are compliant with relevant UK laws." CHINESE CONSUMER RISK Shein has faced allegations that its products contain cotton from China's Xinjiang province, where the U.S. and NGOs have accused the Chinese government of forced labour and human rights abuses. Beijing denies any abuses. Shein has previously said it requires contract manufacturers to only source cotton from approved regions, and that it has a zero-tolerance policy for forced labour. But publicly distancing itself from Xinjiang cotton is risky, as retailers that have done so in the past faced criticism and boycotts from Chinese consumers, and pushback from Chinese authorities. Most recently, Japan's Uniqlo was slammed on Chinese social media after a November BBC interview in which Chief Executive Tadashi Yanai said the retailer is not using cotton from the region. In a hearing after Shein's session on Tuesday, Independent Anti-Slavery Commissioner Eleanor Lyons told lawmakers: "I don't think they [Shein] are being transparent about what is going on in their supply chains, I would want to hear more from them and understand that they are truly looking into the potential human rights violations within them." Shein, which sells 2.99-pound ($3.75) dresses and jeans for as little as six pounds on its UK site, has grown rapidly and was valued at $66 billion in a fundraising in 2023. Shein has not disclosed any results at a group level, but its British business made 1.55 billion pounds ($2 billion) in revenue in 2023, filings showed last year. In contrast with Zhu, Temu's senior legal counsel Stephen Heary said the online retailer, part of Chinese ecommerce giant PDD Holdings (PDD.O) , opens new tab, does not permit sellers from the Xinjiang region to sell on its platform. Sign up here. https://www.reuters.com/business/retail-consumer/shein-representative-declines-say-if-company-uses-cotton-china-uk-hearing-2025-01-07/