2024-12-20 05:41
A look at the day ahead in European and global markets from Stella Qiu 2024 is almost over. Several central banks have concluded their final policy meetings of the year - some held steady and others cut, but all of them were noting a more uncertain 2025 when the global economy and trade could look sharply different with Donald Trump back in the White House. That leaves the U.S. Core Personal Consumption Expenditures - the Fed's preferred gauge of inflation - as the one last hurdle before the usually quiet Christmas time. With upside risks to inflation back on the Fed's radar, the outcome could have an outsized impact on markets. Hence the caution in Asia. MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) , opens new tab hit a fresh three-month low on Friday. Nasdaq futures fell 0.7%, while EUROSTOXX 50 futures were 1% lower. Investors are also alarmed a little that even Republicans are not a fan of Trump's big spending plans, with the U.S. government facing a potential shutdown on Saturday if no action is taken. For the core PCE, forecasts are centred on a monthly rise of 0.2% in November. It will probably take a flat number to calm things a bit while an increase of 0.3% or more could cast doubt on any policy easing from the Fed next year. Futures imply just 37 basis points of U.S. rate cuts in 2025, equivalent to less than two cuts, to a terminal rate of 3.9%, much higher than just a few months ago. That outlook took a heavy toll on the Treasury market, which is headed for the fourth straight year of losses. The benchmark 10-year yields jumped 40 bps over the past two weeks to cross a key level of 4.5% for the first time since May. Looking back, it has been a good year for equities, bitcoin, and the U.S. dollar, but nothing much else. Japan's Nikkei (.N225) , opens new tab jumped 16% to test record highs, finally being able to shake off the spectre of decades of deflation. Even the flailing Chinese blue chips (.CSI300) , opens new tab rose 15% on hopes of more stimulus from Beijing to steady the local economy. The U.S. dollar is up 7% for the year against its major peers to stand at a two-year peak. The relentless surge has pushed every other currency to fight for survival, especially those in emerging markets where authorities have had to intervene to keep their currencies afloat. The Japanese yen is another major loser, down a staggering 12% this year. Bitcoin made a stunning comeback, up 130% this year to hit all-time highs, thanks to Trump's friendly policies. Key developments that could influence markets on Friday: - UK retail sales for Nov - U.S. PCE data for Nov - Irish central bank Governor Gabriel Makhlouf gives remarks - Speech by Norway Central Bank Deputy Governor Pal Longva Sign up here. https://www.reuters.com/markets/europe/global-markets-view-europe-2024-12-20/
2024-12-20 05:06
TOKYO, Dec 20 (Reuters) - The broad shift towards renewable energy in the U.S. will continue even under the incoming administration of Donald Trump, said the head of the Americas arm of Japan's largest banking group, Mitsubishi UFJ Financial Group (8306.T) , opens new tab. President-elect Trump's anti-renewables rhetoric has not prompted a change in strategy, MUFG Americas chief executive officer Kevin Cronin told Reuters in an interview. "The new administration will be more constructive on fossil fuels, but that doesn't mean renewables go away," Cronin said. Projects take several years and often multiple election cycles to plan, finance and build, Cronin noted, adding "we try not to time our strategy around things beyond our control." While the bank had received a fillip from the infrastructure and renewables projects coming from President Joe Biden's Inflation Reduction Act, soaring energy demand from the data centres that power artificial intelligence is where growth lies, Cronin said. "We're at the peak of the hype cycle of AI, but it's real and it's big," Cronin said. Data centre capacity will double by 2030 and securing reliable power is an increasingly strategic part of data centre location, Cronin said. Masatoshi Komoriya, chairman of the board at MUFG's Americas subsidiary who was interviewed at the same time, said the bank had adopted a flexible approach incorporating renewables and fossil fuels to meet data centre demand. That was particularly important as different states set different rules around the financing of renewable and non-renewable energy projects. Financing of renewable energy projects has been central to MUFG reaching pole position in project finance loan volume in America over 14 consecutive years. MUFG sold its U.S. retail banking arm in 2022 and now focusses exclusively on wholesale banking and markets, but nevertheless the U.S. business accounted for almost 30% of the group's total profits in the year to March 2024. The U.S. operation has been strengthening its mid-market offerings in areas of competitive advantage, such as technology, and is actively increasing personnel, having already hired around 30 people from Silicon Valley Bank, which collapsed in 2023, Komoriya said. "I think we have a more balanced platform than we did 10 years ago," Cronin said. Sign up here. https://www.reuters.com/sustainability/climate-energy/ai-data-centres-bolster-renewable-energy-demand-even-under-trump-says-mufg-2024-12-20/
2024-12-20 04:48
TOKYO, Dec 20 (Reuters) - Top Japanese finance officials said on Friday the government is "alarmed" by recent foreign exchange moves and is ready to intervene if speculative moves were deemed excessive, as the yen resumed its rapid downturn. Against the Japanese yen , the dollar rose to a top of 157.93 on Friday, its highest since July, after the Bank of Japan kept interest rates unchanged on Thursday and its governor offered few clues on how soon it could push up borrowing costs. "We have been recently seeing one-sided and sharp moves," Finance Minister Katsunobu Kato told a regular news conference on Friday. "As we are alarmed by recent currency market developments including those driven by speculators, we'll take appropriate action against excessive moves," he said. It is rare for Japanese policymakers to explicitly describe the currency market situation as alarming, signaling the government's heightened concerns over the sliding yen. Speaking to reporters later in the day, Japan's top currency diplomat Atsushi Mimura also reiterated the government's stance, saying that he has been alarmed by currency moves and flagging a readiness to take appropriate action. The BOJ's rate-setting meeting on Thursday concluded hours after the U.S. Federal Reserve cut interest rates but signalled a more cautious path of easing next year, suggesting that the U.S.-Japan interest rate differentials may not narrow as fast as previously expected. Asked about U.S.-Japan rate differentials and the BOJ's communications style, Mimura, vice finance minister for international affairs, declined to comment. Japan last conducted a yen-buying intervention in July to support its currency after it tumbled to a 38-year low below 161 per dollar. Kato, in the news conference, also said finance leaders of the Group of Seven (G7) nations held an online meeting last night under Italy's presidency to discuss support for Ukraine and the impact of artificial intelligence on the global economy. Kato said he and BOJ Governor Kazuo Ueda joined the call. Sign up here. https://www.reuters.com/markets/currencies/japans-government-alarmed-by-recent-forex-moves-top-officials-say-2024-12-20/
2024-12-20 04:45
Dec 19(Reuters) - California's utilities regulator on Thursday set a clear path toward potentially closing SoCalGas's Aliso Canyon gas storage facility, prioritizing energy reliability and affordability as the state shifts to cleaner energy. The California Public Utilities Commission (CPUC) has set a natural gas peak demand target of 4,121 million cubic feet per day, marking the threshold at which Southern California can meet demand without Aliso Canyon, it said in a statement. Aliso Canyon, which serves more than 11 million customers and provides fuel to 17 natural gas-fired power plants, will be reviewed for permanent closure when the "forecasted peak day demand for two years out decreases to the target level," the CPUC said. Natural gas demand in Southern California is currently on a downward trajectory as a result of the state's policies and climate goals, the regulator said. The CPUC added that this includes the procurement of historic amounts of renewable electricity, which reduces dependency on natural gas-fired power plants. "Aliso Canyon must be closed for good, but without harming working families with skyrocketing utility bills," Governor Gavin Newsom said in a statement. U.S. natural gas futures jumped about 6% to a 23-month high on Thursday due to lower output in recent days, an increase in the amount of gas flowing to liquefied natural gas (LNG) export plants to an 11-month high, and early forecasts for colder weather in January. Sign up here. https://www.reuters.com/sustainability/climate-energy/california-sets-clear-path-close-aliso-canyon-gas-storage-facility-2024-12-20/
2024-12-20 04:35
BEIJING, Dec 20 (Reuters) - (This December 19 story has been corrected to remove the reference to China's imports peaking as soon as 2025 in paragraph 3) Oil prices fell in early trading on Friday on worries about demand growth in 2025, especially in top crude importer China, putting global oil benchmarks on track to end the week down more than 2%. Brent crude futures fell by 31 cents, or 0.43%, to $72.57 a barrel by 0139 GMT. U.S. West Texas Intermediate crude futures fell 26 cents, or 0.26%, to $69.12 per barrel. Chinese state-owned refiner Sinopec said in its annual energy outlook, released on Thursday, that the country's oil consumption would peak by 2027 as diesel and gasoline demand weaken. The dollar's climb to a two-year high also weighed on oil prices, after the Federal Reserve flagged it would be cautious about cutting interest rates in 2025. A stronger dollar makes oil more expensive for holders of other currencies, while a slower pace of rate cuts could dampen economic growth and trim oil demand. J.P. Morgan sees the oil market moving from balance in 2024 to a surplus of 1.2 million barrels per day (bpd) in 2025, as the bank forecasts non-OPEC+ growth increasing by 1.8 million bpd in 2025 and OPEC output remaining at current levels. In a move that could pare supply, G7 countries are considering ways to tighten the price cap on Russian oil, such as with an outright ban or by lowering the price threshold, Bloomberg reported on Thursday. Russia has evaded the $60 per barrel cap imposed in 2022 using its "shadow fleet" of ships, which the EU and Britain have targeted with further sanctions in recent days. Sign up here. https://www.reuters.com/markets/commodities/oil-prices-fall-demand-concerns-strong-dollar-2024-12-20/
2024-12-20 04:33
MUMBAI, Dec 20 (Reuters) - The Indian rupee weakened to its record low on Friday, hurt by persistent dollar strength after strong U.S. economic data reinforced the Federal Reserve's hawkish tilt while likely intervention by the Reserve Bank of India capped the currency's losses. The rupee declined to 85.10 against the U.S. dollar in early trading, inching past its previous record low of 85.0850 hit on Thursday. The local unit was last quoted at 85.0975 as of 10:00 a.m. IST. State-run banks were spotted offering dollars, most likely on behalf of the RBI, traders said. The rupee has stayed under pressure amid multiple headwinds, including India's economic growth slowing to a seven-quarter low, a widened merchandise trade deficit and a hawkish turn in the Fed's policy rate forecasts. "Higher trade deficit along with slow growth figures puts rupee on test with outflows from domestic equity markets. For USD/INR, positionally 84.70 now acts as a good base while the door remains open for 85.50 levels," said Kunal Sodhani, vice president at Shinhan Bank India. The dollar index was at 108.4, hovering close to an over two-year peak after data showed the U.S. economy grew more than expected in the July-October quarter while weekly jobless claims fell more than anticipated. The data came a day after the Fed signalled fewer rate cuts in 2025 amid sticky inflation. Meanwhile, foreign investors net sold nearly $500 million of local stocks on Thursday. Despite the multiple pressure points, routine interventions by the RBI have kept the rupee's volatility low relative to its Asian peers. Investors now await U.S. core personal consumption expenditure (PCE) inflation data, the Fed's preferred inflation gauge, due later on Friday. Economists polled by Reuters expected the core PCE inflation to have ticked up 0.3% month-on-month in November, up from 0.2% in the previous month. Sign up here. https://www.reuters.com/markets/currencies/rupee-weakens-record-low-dollar-extends-gains-strong-us-data-2024-12-20/
