2025-01-06 05:35

US new orders for manufactured goods fell in November German annual inflation rose more than forecast in December US winter storm boosts energy prices, demand for heating Saudi Aramco raises crude prices for Asian buyers in February NEW YORK, Jan 6 (Reuters) - Oil prices eased in volatile trade on Monday as some bearish economic news from the United States and Germany offset bullish support from a weaker U.S. dollar and forecasts for increased heating demand for energy from a winter storm. After rising for five days in a row, Brent futures fell 21 cents, or 0.3%, to settle at $76.30 a barrel, while U.S. West Texas Intermediate (WTI) crude fell 40 cents, or 0.5%, to settle at $73.56. Despite those declines, both crude benchmarks remained in technically overbought territory for a third day in a row. On Friday, Brent settled at its highest level since Oct. 14 and WTI closed at its highest since Oct. 11 due in part on expectations of more fiscal stimulus to revitalise China's faltering economy. With interest in energy trade growing in recent weeks, open interest in WTI futures on the New York Mercantile Exchange soared to 1.933 million contracts on Friday, the most since June 2023. "Oil markets have entered 2025 with balanced supply-and-demand fundamentals, but with prices being propped up by enduring geopolitical tensions," analysts at Eurasia Group, a consultancy, said in a report. "As the year progresses, oil markets will probably continue to experience low demand growth that may be outpaced by new supply, especially from the U.S. and likely OPEC as well," Eurasia Group said. In the United States, the world's biggest economy, new orders for manufactured goods fell in November amid weakness in demand for commercial aircraft while business spending on equipment appeared to have slowed in the fourth quarter, according to data from the Commerce Department's Census Bureau. In Germany, Europe's biggest economy, annual inflation rose more than forecast in December due to higher food prices and a smaller drop in energy prices than in previous months. To combat higher inflation, central banks often boost interest rates, which can slow economic growth and demand for energy. CRUDE PRICES WERE UP Earlier in the day, crude prices were up as a winter storm marches across the United States, causing prices for natural gas , a heating fuel, to spike 10% on Monday, while diesel futures closed at their highest level since Oct. 7. Crude prices also gained ground earlier in the session on a 1.1% slump in the U.S. dollar (.DXY) , opens new tab against a basket of other currencies following a newspaper report that President-elect Donald Trump was mulling tariffs that would only be applied to critical imports, potentially a relief for countries that were expecting broader levies. The dollar, however, pared much of that decline after Trump denied the newspaper report. A weaker U.S. currency makes dollar-priced commodities like oil cheaper for buyers using other currencies. In China, the world's second-biggest economy, the yuan ended the domestic session at its weakest level in 16 months against the U.S. dollar, weighed down by trade concerns. In a sign of firmer demand expectations, Saudi Aramco, the world's top oil exporter, raised crude prices for Asian buyers in February for the first time in three months. Sudan, meanwhile, lifted a nearly year-long force majeure on the transport of crude oil from its neighbour South Sudan to a port on the Red Sea after security conditions improved. Sign up here. https://www.reuters.com/business/energy/oil-hovers-highest-since-oct-cold-weather-china-stimulus-2025-01-06/

2025-01-06 05:33

Jan 6 (Reuters) - A look at the day ahead in European and global markets from Wayne Cole. Markets have mostly been on a random walk in Asia, punctuated by reports embattled Canadian Prime Minister Justin Trudeau might announce his resignation as early as today. The muted market reaction suggested the news was priced in and investors could welcome the chance of an early election to clarify the outlook, nudging the U.S. dollar down 0.3% to 1.4404 Canadian . The dollar was also off a shade on the other majors, but underpinned by Treasury yields as the 10-year got within a whisker of its recent eight-month high of 4.641%. A break of that would target the 2024 peak at 4.739% and further challenge equity market valuations. While the S&P 500 returned 25% last year, it was built on a very narrow base with almost half of that from just five stocks. Japanese bond yields were also on the rise, reaching levels not seen since 2011 at 1.121%, as markets assume the Bank of Japan will hike sometime soon, even if not this month. Unfortunately for the yen, Treasury yields have been rising faster to keep the spread at a chunky 351 basis points in favour of the dollar. Meanwhile, Chinese yields keep hitting all-time lows and the yuan touched a 16-month trough on Monday at 7.3286 per dollar. Dollar bulls are now counting on a host of Federal Reserve speakers this week to sound cautious about cutting rates much further, with a focus on influential Fed Governor Waller on Wednesday. Service PMIs due later on Monday should echo the U.S. economic outperformance, though there's a chance the German CPI could surprise on the upside and offer the euro some aid. All this is just a taster for the payrolls main course on Friday. Wall Street needs the jobs report to be firm enough to augur well for economic growth and earnings, but not so strong that it makes it even harder for the Fed to keep cutting rates. Median forecasts are for jobs growth of 150,000 and an unemployment rate of 4.2%, but analysts caution quirks in the seasonal factors could depress jobs by around 50,000. There's also a chance the jobless rate could round up to 4.3%, given it was 4.246% in November. One added twist is the annual revisions of seasonal factors for the household survey, which could see the unemployment rate revised down for recent months. So much for a "clean" reading. Key developments that could influence markets on Monday: - German CPI for Dec, service PMIs for Europe and U.S., Nov U.S. factory orders - Fed Governor Lisa Cook speaks on the economic outlook Sign up here. https://www.reuters.com/markets/europe/global-markets-view-europe-2025-01-06/

2025-01-06 05:25

China's yuan hits 16-month low as concerns mount about economy, US tariffs China benchmark stock index fell 5% last week, biggest drop in more than two years PBOC may issue more yuan bills to curb speculation, local media reports Stock exchanges ask fund managers to restrict stock selling, sources say SHANGHAI/HONG KONG, Jan 6 (Reuters) - China's stock exchanges and central bank rushed to defend a tumbling yuan and falling stock markets on Monday, trying to soothe investors concerned about Donald Trump's return to the White House and Beijing's ability to revive the economy. With two weeks before Trump begins a second U.S. presidency, his threats of big tariffs on Chinese imports have rattled the yuan, driven mainland bond yields down and got stocks off to a rough start to 2025. On Monday, China's tightly controlled yuan weakened to its lowest in 16 months while the blue-chip stock index (.CSI300) , opens new tab touched its weakest since the end of September, slipping as much as 0.9% on the day before closing down 0.2%. The index fell 5% last week to clock its biggest weekly loss in more than two years. China's stock exchanges asked large mutual funds to restrict their selling of stocks at the beginning of the year, three sources familiar with the matter told Reuters, underscoring the jittery mood in the market. At least four large mutual funds received calls from the Shanghai and Shenzhen stock exchanges on Dec. 31 and Jan. 2 and 3, asking them to ensure they bought more stocks than they sold each day, the sources said. The Shanghai and Shenzhen stock exchanges recently met with foreign institutions, both bourses said on Sunday, assuring investors they would continue to open up China's capital markets. The People's Bank of China could issue more yuan bills in Hong Kong in January, state-owned news outlet Yicai reported on Monday, in a sign authorities want to absorb currency to dampen speculation. Financial News, a central bank publication, said the PBOC has the tools and the experience to react to yuan depreciation. "Preventing a sharp decline of the yuan will be crucial for China's recovery," said Charu Chanana, chief investment strategist at Saxo. "Any tactical recovery this year will need more than just stimulus measures, particularly whether China can negotiate a deal with President-elect Trump." The world's second-biggest economy has struggled over the past few years as a property downturn and slowing income sapped consumer demand and hurt businesses. Exports were one of the few bright spots, but could face hefty U.S. tariffs under a second Trump administration. The S&P 500 (.SPX) , opens new tab has risen 4% while China's CSI300 index has dropped 4.3% since the U.S. election in early November, highlighting the worries around tariffs. European stocks are flat in the same period. YUAN PRESSURE Chinese authorities have introduced various support measures since September, including swap and relending schemes totalling 800 billion yuan ($109 billion), to shore up investor confidence and put a floor under stocks. The yuan has routinely hit multi-month lows since Trump won the U.S. election as the threat of tariffs along with worries about China's sluggish economic recovery triggered capital outflows. The spot yuan hit 7.3301 per U.S. dollar on Monday, its weakest since September 2023, after breaching the key threshold of 7.3 per dollar for the first time since 2023 on Friday. The yuan declined 2.8% against the dollar in 2024, its third annual decline, reflecting most currencies' struggle against a strong dollar. Despite China's efforts to stall the yuan's decline via the daily benchmarks it sets, falling domestic yields and broad dollar strength have undercut their efforts. China's FX reserves at $3.3 trillion may have some buffer for capital outflows, although deprecation and outflow would be negative for China's equity market sentiment, BofA strategists said in a note. "Geopolitical tensions and potential US policies ... could lead to higher cost of capital and multiple de-rating again in 2025. That said, we believe the worst of flow/position-selling for the China market should have been over," they said. The central bank on Friday warned fund managers against pushing bond yields even lower, amid worries that a bubble in bonds might stymie Beijing's efforts to revive growth and manage the yuan. In a sign of bearishness on the economy and deeply entrenched deflationary pressures, the yields on short-term bonds, with maturities of 7 years or less, are trading below the policy rate, the 7-day reverse repo rate. Long-term yields are at record lows. "While Chinese officials have promised further stimulus, signalling greater monetary and fiscal easing, investors are waiting for concrete signs that demand is responding," HSBC's chief Asia economist Fred Neumann said. "After many fits and starts over the past year, greater evidence is needed that China’s economy is responding to stabilisation measures," Neumann said. A key test for consumer confidence will be the impending Lunar New Year celebrations, which start on Jan. 29, he said. ($1 = 7.3281 Chinese yuan renminbi) Sign up here. https://www.reuters.com/markets/asia/china-scrambles-shore-up-sliding-yuan-stock-markets-2025-01-06/

2025-01-06 05:22

Analyst expects $3,050/oz price target for gold by end of year US non-farm payrolls report due on Friday US 10-year Treasury yields at over eight-month high Jan 6 (Reuters) - Gold prices fell on Monday as U.S. Treasury yields rose, while the Federal Reserve's recent hint at a slower pace of rate cuts in 2025 kept investors keenly awaiting a slew of economic data due this week to shed more light on that view. Spot gold fell 0.2% to $2,634.52 per ounce by 2:27 a.m. ET (1927 GMT). U.S. gold futures settled 0.3% lower at $2,647.40. "Bond yields are back up again, placing pressure on gold," said Nitesh Shah, commodity strategist at WisdomTree. Yield on the 10-year U.S. Treasury Note rose to an over eight-month high, making non-yielding gold less attractive. "We expect a $3,050/oz by the end of the year based on a 'consensus' economic view of dollar depreciation and falling bond yields. Further escalation in tension in the Middle East could drive upside risk to our forecast," Shah said. The Fed's latest projections in December implied a shift to a more cautious pace of rate cuts this year, with the majority of the policymakers expressing concern that inflation could reignite. The central bank may need to keep rates higher for longer to address persistent inflation, which remains above its 2% target. U.S. President-elect Donald Trump takes office on Jan. 20, and his proposed tariffs and protectionist policies are expected to stoke further inflation. "There's speculation that Trump is going to pull back on tariffs ... If (the prices of) commodities go up, inflation's going to remain higher for longer," Phillip Streible, chief market strategist at Blue Line Futures, said. Gold slid despite the dollar index (.DXY) , opens new tab slumping 1%, down from a more-than-two-year high on Thursday. Market participants now look ahead to the U.S. jobs report on Friday, which could help illuminate the Fed's policy path going forward. Investors are also awaiting job openings data on Tuesday, ADP employment numbers, and the minutes from the Fed's most recent policy meeting on Wednesday. Spot silver gained 1.1% to $29.93 per ounce, platinum fell 0.8% to $930.41, and palladium lost 0.4% to $918.25. Sign up here. https://www.reuters.com/markets/commodities/gold-gains-focus-shifts-us-economic-data-2025-01-06/

2025-01-06 04:54

MUMBAI, Jan 6 (Reuters) - The Indian rupee slipped to an all-time low in early trade on Monday, pressured by broad-based dollar bids while likely intervention by the Reserve Bank of India (RBI) helped limit losses, traders said. The rupee declined to 85.82 against the U.S. dollar, inching past its previous all-time low of 85.8075 hit in the last week of December. The currency was quoted at 85.81 as of 10:15 a.m. IST. State-run banks were spotted offering dollars, most likely on behalf of the RBI, traders said. On multiple occasions over the last 10 days, the RBI has stepped in to curb the rupee's losses around the 85.80 level after the currency's pace of depreciation quickened in December. "USD/INR has always had episodic sharp depreciation bunched across a few days followed by months of stable movement," analysts at HDFC Bank said in a note. "Considering change of guard at RBI, we may see creativity in terms of managing stabilisation at the cost of temporary bouts of volatility in the rupee." The appointment of Sanjay Malhotra as the RBI's governor last month spurred speculation that the central bank may adopt a less aggressive approach to defending the rupee, especially as it is overvalued against currencies of major trading partners. Asian currencies were trading mixed on Monday while the dollar index was steady at 108.9, hovering close to its highest in two years. Investors will keep a close eye on the minutes of the Federal Reserve's December policy meeting due to be released on Wednesday followed by the U.S. non-farm payrolls report on Friday. Both the releases are expected to shape investor expectations on the future path of Fed policy rates. The dollar will also be influenced by anticipation of policy changes under incoming U.S. President Donald Trump. Sign up here. https://www.reuters.com/markets/currencies/rupee-slips-record-low-likely-rbi-intervention-caps-losses-2025-01-06/

2025-01-06 04:47

TOKYO, Jan 6 (Reuters) - Mazda Motor (7261.T) , opens new tab said on Monday that it will build a new module pack plant for automotive cylindrical lithium-ion battery cells in Iwakuni City in southwest Japan. The new plant, to be built in Yamaguchi Prefecture, will produce modules and packs of automotive cylindrical lithium-ion battery cells procured from Panasonic Energy, the automaker said in a statement. Sign up here. https://www.reuters.com/technology/mazda-build-module-pack-plant-southwest-japan-2025-01-06/