2024-12-11 06:35
US Steel, Nippon Steel blast Biden's block of deal Concerns about U.S.-Japanese relations Union says job risk unfounded Jan 4 (Reuters) - U.S. President Joe Biden blocked Nippon Steel's (5401.T) , opens new tab proposed $14.9 billion purchase of U.S. Steel (X.N) , opens new tab citing national security concerns, in a potentially fatal blow to the deal after a year-long review. Biden, President-elect Donald Trump and an influential labor union opposed the effort by Japan's top steelmaker to acquire the iconic American firm, which would have created the world's third-largest steelmaker, according to World Steel Association data. The path forward is unclear. The companies could sue the U.S. government, another buyer could swoop in for U.S. Steel, or Republicans who favor the deal could urge Trump to find a way to approve it. Here is what could come next: THE DEAL ITSELF The proposed deal has not yet been terminated by the companies even after Biden blocked the deal. In a joint statement, Nippon and U.S. Steel called Biden's decision "unlawful," and Nippon Steel may file a lawsuit against the U.S. government challenging the procedures behind the decision, Japan's Nikkei business daily reported on Saturday. David Burritt, U.S. Steel's chief executive, said on Friday "we intend to fight President Biden’s political corruption." Some lawyers, such as Nick Wall, M&A partner at Allen & Overy, have said a legal challenge would be tough. Nippon Steel argued it made numerous concessions, including offering to move its headquarters to Pittsburgh, to meet the demands of CFIUS, the Committee on Foreign Investment in the United States, the panel that decides on whether foreign purchases of U.S. companies should go forward. CFIUS was split over a decision and did not make a recommendation on the deal. "If they go to court most of the decisions by the various CFIUS agencies will be made public," said Brett Lambert, a former senior Pentagon official under Barack Obama, citing the rare move to forward a split decision to the president. If the deal does not go through, Nippon Steel would have to pay a $565-million break-up fee. U.S. STEEL'S FUTURE Pittsburgh-based U.S. Steel had warned that mills could close and thousands of jobs would be at risk without the deal. U.S. Steel's profits have dropped for nine straight quarters amid a global industry downturn, but it still sports a forward price-to-earnings ratio of 12.87, more expensive than U.S. peers, according to LSEG data. The United Steelworkers union, which opposed the deal, has called the company's warnings baseless, saying Friday that it is clear that U.S. Steel's recent financial performance shows it "can easily remain a strong and resilient company." Other suitors could emerge. U.S.-based Cleveland-Cliffs (CLF.N) , opens new tab, which previously bid for the company, could come back with a lower offer. However, its market value is now smaller than that of U.S. Steel. "One would suspect that Nucor (NUE.N) , opens new tab and Cleveland Cliffs will be in discussions with U.S. Steel, but based on presidential messages one would think the U.S. government may come to its aid and invest in its infrastructure," said Jay Woods, chief global strategist at Freedom Capital Markets. TRUMP'S POSITION Trump, who takes office on Jan. 20, has repeatedly vowed to block the sale, a view he shared with Biden. "I am totally against the once great and powerful U.S. Steel being bought by a foreign company, in this case Nippon Steel of Japan," he wrote on his Truth Social platform last month. "As president, I will block this deal from happening. Buyer Beware!!!" Trump's transition team did not comment on Friday. However, several current and former Republican officeholders on Friday criticized Biden’s decision, saying it would cost investment in the U.S. U.S.-JAPANESE RELATIONS Some analysts warned that blocking the deal could sour relations between the United States and Japan, which Biden had worked on improving to counter the threat of China's economic and military rise. Japan is the top U.S. investor in the U.S. and its biggest business lobby has raised concerns about political pressure on the deal, a view the White House rejected. "It would have helped us rebuild our competitiveness and counter China. To do this effectively, we need our friends, particularly Japan," Wendy Cutler, who served as a senior trade negotiator under former President Barack Obama, wrote on social media platform X. Trump's stance on trade could add to that unease when he returns to office, as he has already threatened heavy tariffs on key allies Canada, Mexico and Europe. Sign up here. https://www.reuters.com/markets/commodities/what-next-nippon-steel-us-steels-15-bln-mega-merger-2024-12-11/
2024-12-11 06:30
US CPI data due at 1330 GMT Goldman Sachs bullish on gold, but flags downside risk Gold showing signs of revival -analyst Dec 11 (Reuters) - Gold prices were flat on Wednesday as investors awaited a U.S. inflation print that could influence the likelihood of a Federal Reserve's interest rate cut next week and offer clues on the central bank's 2025 outlook. Spot gold was steady at $2,695.91 per ounce, as of 1216 GMT, having hit its highest since Nov. 25 earlier in the session. U.S. gold futures rose 0.4% to $2,727.80. Markets are focused on upcoming inflation numbers, with a 25-basis-point Fed rate cut next week already priced in, said StoneX analyst Rhona O'Connell, adding that attention will be on Chair Powell’s post-meeting commentary next week for further policy insights. The U.S. Consumer Price Index (CPI) data is due at 1330 GMT, with the core CPI projected to have risen 0.3% on a month-on-month basis and 3.3% annually. "An expected (CPI) number pretty much gives the Fed green light to cut (interest rates) next week and that might be the catalyst we need to see for gold," said Kyle Rodda, financial market analyst at Capital.com. According to the CME Group's FedWatch Tool , opens new tab, markets are pricing an 86% chance of a quarter-point rate cut next week. Goldman Sachs flagged fewer Fed rate cuts as the main downside risk to its 2025 year-end gold forecast of $3,000 per ounce, rather than a stronger dollar. "Gold would rise to just $2,890/toz if the Fed cuts only one more time." Bullion tends to benefit from lower interest rates and thrives during economic and geopolitical turmoil. Gold has been stagnant but is showing signs of revival, with a rally this week driven by Syria's regime change and reports of China resuming gold purchases, pushing prices to the upper end of their range without breaking higher, O'Connell added. Spot silver shed 0.5% to $31.74 per ounce, platinum dropped 1.1% to $932.35 and palladium fell 0.3% to $965.59. Sign up here. https://www.reuters.com/markets/commodities/gold-touches-two-week-peak-us-inflation-data-focus-2024-12-11/
2024-12-11 06:30
MELBOURNE, Dec 11 (Reuters) - Global mining giants BHP Group (BHP.AX) , opens new tab and Rio Tinto (RIO.AX) , opens new tab are facing class actions alleging widespread and systemic sexual harassment at Australian mine sites, law firm JGA Saddler said on Wednesday. JGA Saddler said women who spoke out about the harassment were allegedly discriminated against by the miners and that it expects "thousands of female workers" at the two companies to join the class actions. BHP issued a statement on Wednesday saying it apologised to anyone who has ever experienced any form of harassment at BHP. "Sexual harassment has no place in our workplaces or indeed anywhere. We are committed to providing a safe and respectful workplace for everyone," said BHP. A Rio Tinto spokesman said the miner was aware that a claim had been filed in the Federal Court on Wednesday. "We treat all such claims with the utmost seriousness. We do not tolerate any form of sexual harassment or sex-based harassment. We take all concerns about workplace safety, culture and breaches of our values, or our code of conduct extremely seriously," the spokesman said. In 2022, a Western Australia state government review into abuse at mining sites found unsafe working conditions for women in the industry, who had to frequently deal with sexual harassment and sexual assault. "BHP and Rio Tinto have sent female staff to these sites knowing there was a high risk of personal danger, and then punished them with demotion, dismissal or discrimination when they reported it," JGA Saddler lawyer Joshua Aylward said in a statement. The class actions are being funded by litigation financier Omni Bridgeway (OBL.AX) , opens new tab. The lead applicant in the class action against Rio Tinto, who JGA Saddler said has requested to remain anonymous for fear of reprisals, alleged she suffered sexual harassment on a weekly basis while working as a security guard on Rio Tinto’s Australian sites. "I was sent unsolicited sexually explicit messages, videos and pictures from a colleague including pictures and videos of him masturbating in his on-site room. Rio Tinto allowed him to resign but after my complaint I was overlooked for opportunities to upskill," she said in a statement detailing her allegations. The lead BHP applicant, who requested anonymity for the same reason, listed incidents of harassment in a statement and said she was often afraid to report the abuse. "There have been times I haven’t reported an incident for fear of what might happen to my career, my job and my personal safety," she said. The class actions were previously reported by the country's national broadcaster, the ABC. Sign up here. https://www.reuters.com/markets/commodities/bhp-rio-tinto-face-sexual-harassment-class-actions-australia-2024-12-11/
2024-12-11 06:14
US CPI in line with expectations Global equities rise Dollar hits two-week high NEW YORK/LONDON, Dec 11 (Reuters) - Global shares and Wall Street indexes rose on Wednesday after an in-line inflation reading kept intact bets on the Federal Reserve cutting interest rates later this month. The dollar hit a two-week high, and gold prices rose. Oil prices finished up more than $1 after the European Union agreed to another round of sanctions threatening Russian oil. European shares recouped earlier losses to finish higher. U.S. Treasury yields rose as the Treasury Department sold long-dated supply and data showed a widening U.S. budget deficit. The Dow Jones Industrial Average (.DJI) , opens new tab fell 99.27 points, or 0.22%, to 44,148.56, the S&P 500 (.SPX) , opens new tab rose 49.28 points, or 0.82%, to 6,084.19 and the Nasdaq Composite (.IXIC) , opens new tab rose 347.65 points, or 1.77%, to 20,034.89. MSCI's gauge of stocks across the globe (.MIWD00000PUS) , opens new tab rose 5.04 points, or 0.58%, to 871.45. A Labor Department report showed the Consumer Price Index (CPI) rose 0.3% on a monthly basis in November, matching the 0.3% increase forecast by economists polled by Reuters. Annually, it stood at 2.7%, in line with estimates. "Everything's exactly in line with estimates ... it's very likely that you will see the Fed probably go ahead with what they projected, cutting 25 basis points (later this month)," said David Miller, chief investment officer at Catalyst Funds. The European STOXX 600 (.STOXX) , opens new tab index rose 0.28%. The yield on benchmark U.S. 10-year notes rose 5.2 basis points to 4.273%, from 4.221% late on Tuesday. The dollar index , which measures the greenback against a basket of currencies including the yen and the euro, rose 0.31% to 106.68, with the euro down 0.31% at $1.0493. MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) , opens new tab closed lower 0.46% to 586.09. China's yuan fell and currencies across Asia lost ground on the dollar after Reuters reported that China was considering allowing a weaker currency next year to weather any higher tariffs. CUTS AHEAD The Canadian dollar rallied against the greenback and all other G10 currencies as the Bank of Canada cut interest rates by half a percentage point, as expected, but shifted to more hawkish guidance on prospects for additional easing. Canada has already reduced rates by 125 basis points (bps) this cycle but news last week that the jobless rate spiked to an eight-year high of 6.8% in November has driven bets on an extra 50 bps of cuts, which would bring the overnight rate to 3.25%. Markets have fully priced a European Central Bank rate cut on Thursday and a 61% chance of a 50 bps cut from the Swiss National Bank, which would help cool a rally in the franc. Spot gold rose 0.87% to $2,717.14 an ounce. U.S. gold futures settled 1.4% higher at $2,756.70. Elsewhere in commodities, arabica coffee prices fell off a record peak as dealers worried that a drought would hurt output for top producer Brazil. SOF Brent crude futures settled up $1.33, or 1.84%, to $73.52 a barrel. U.S. West Texas Intermediate crude futures rose $1.70, or 2.48%, to $70.29. [O/R] Sign up here. https://www.reuters.com/markets/global-markets-wrapup-1-2024-12-11/
2024-12-11 06:13
LITTLETON, Colorado, Dec 11 (Reuters) - U.S. power producers have raised total generation to new highs in 2024, fuelled mainly by record natural gas-fired output alongside a sharp jump in generation from renewable sources. Natural gas plants remain the key pillar of U.S. generation, accounting for a record 42% of total power production from January through November, according to LSEG. That gas share will likely hold steady in December. However, utilities have also deployed record volumes of clean power, with clean energy sources on track to generate over 40% of total annual power output for the first time this year. Moreover, cuts to coal-fired output have allowed power firms to reduce emissions per unit of electricity generation, making good on commitments to curb pollution while raising total energy output. In 2025, power firms will need to lift generation higher still due to expected increases in total energy consumption by data centres, other businesses and households. To meet that higher demand, new clean generation capacity is expected to be brought online which should lift overall clean power output to a fresh record next year. But the incoming administration of President Donald Trump is also expected to spur more fossil fuel production, which could result in fossil fuel-fired generation rising by even more. FOSSIL FLUX U.S. power generation from fossil fuels during January through November increased by around 1% from the same months in 2023, to the highest since 2019. Generation from clean energy sources increased by 6% to a record-high. The faster growth of clean power sources relative to fossil power has resulted in fossil fuel's share of the U.S. generation mix declining below 60% for the first time, which marks a significant milestone in U.S. energy transition progress. The complexion of U.S. fossil fuel generation has also undergone a significant change in recent years, thanks to a 30% drop in coal-fired generation and a 22% increase in gas-fired output since 2019. That switch-out of high-polluting coal for somewhat cleaner-burning gas has cemented natural gas as the backbone of the U.S. power system, and provided U.S. natural gas producers - the world's largest - with a growing market for their wares. The greater gas emphasis within fossil power generation has also resulted in a steady decline in overall power sector emissions per unit of generated electricity. Just over 381,000 metric tons of carbon dioxide (CO2) have been emitted by U.S. power producers so far in 2024 for every terawatt hour (TWh) of electricity they generated, according to data from think tank Ember. That emissions toll compares to an average of 390,144 tons of CO2 per TWh in 2023, 408,200 tons of CO2 per TWh in 2022, and 437,720 tons of CO2 per TWh in 2019. CLEAN GROWTH A 14% increase in clean power generation since 2019 has also played a key role in driving down U.S. power emissions per unit of electricity production. Generation from wind farms increased by 8% during January to November from the same months in 2023, while solar output increased by 37%. Since 2019, wind output has climbed 55% while solar output has jumped 218%. Output from nuclear plants and hydro dams - the two largest sources of clean power in the United States - held largely flat so far this year from 2023. Nuclear output this year is around 7% down from 2019's levels, while hydro generation is down 14%. Utilities and other power suppliers have prioritised the development of clean power over fossil fuel power in recent years, with clean generation capacity climbing by 34% since 2019, according to Ember. Solar power capacity has grown the fastest - by 126% from 2019 to 2023 - followed by wind capacity, which has grown by 43% over that period. Power firms have plans to add more renewable capacity in 2025 and beyond, which should sustain the recent growth path of clean power supplies through the U.S. power system. But with Trump returning to the White House in 2025, his more oil and gas-friendly administration is expected to approve more fossil fuel extraction and use going forward. That in turn could spur utilities to lift the proportion of fossil fuels within their generation mixes, especially if demand loads continue to rise at a faster pace than new clean capacity can be connected to the national grids. The opinions expressed here are those of the author, a market analyst for Reuters. Sign up here. https://www.reuters.com/markets/commodities/gassier-cleaner-us-power-system-hits-new-output-record-2024-maguire-2024-12-11/
2024-12-11 06:11
BoE expected to keep Bank Rate at 4.75% on Dec. 19 Policymakers have signalled they will cut only gradually Other central banks seen cutting rates in coming days BoE is worried about jobs market, budget impact LONDON, Dec 11 (Reuters) - The Bank of England looks set to keep interest rates on hold next week as it moves more slowly to cut borrowing costs than central banks in Europe and the United States. The BoE remains on alert about price pressures in Britain's jobs market that have subsided more clearly elsewhere. The new government's tax and spending plans have only added to the uncertain outlook for inflation. Investors see only a one-in-10 chance of the BoE cutting its Bank Rate from its current level of 4.75% on Dec. 19. By contrast, the European Central Bank, the U.S. Federal Reserve and the central banks of Canada, Switzerland and Sweden are all expected to lower borrowing costs in the coming days. The BoE has cut Bank Rate only twice from a 16-year peak, helping to make sterling the only currency from the Group of 10 leading economies that has not fallen against the U.S. dollar in 2024. Investors expect the stop-start pattern to continue. Governor Andrew Bailey last week welcomed the recent slowdown in price growth but said there was still "a distance to travel" with inflation likely to hover a bit above the BoE's 2% target until 2027. The British central bank last month raised its inflation forecasts after finance minister Rachel Reeves announced a big increase in government spending in her first budget, temporarily boosting demand in an economy with little spare capacity. The BoE is worried that tax increases on employers will lead to higher prices too - a survey published by the central bank showed more than half of employers planned to pass on some of the cost. But more than half of the respondents said they would cut jobs and a separate report from Britain's recruitment body also suggested a sharp downturn in hiring in the wake of the budget. "With risks remaining in both directions, gradual feels like the right approach for now," HSBC economists Elizabeth Martins and Simon Wells said in a note to clients this week. THREE BOE CUTS, SIX BY ECB Investors are currently betting on the BoE cutting interest rates only three times between now and the end of 2025, lowering Bank Rate by a total of 75 basis points. By comparison, the European Central Bank is forecast to lop its benchmark rate by 150 basis points - equivalent to six quarter-point cuts, including one expected on Thursday - as Germany, France and other euro zone nations struggle. Donald Trump's threat of trade tariffs poses a further risk. The state of Britain's labour market could yet cause the BoE to rethink its gradual approach if signs of nervousness among employers after the budget turn into a hiring slump. Britain's statistics office is still overhauling its main survey, complicating the task of assessing Britain's underlying inflationary heat. But separate data collected by tax authorities on employee numbers and wages, as well as figures on vacancies, will be watched closely on Tuesday. "Signalling from the BoE about gradual rate reductions has been very strong of late, suggesting very low odds of a cut next week," JP Morgan economist Allan Monks said. "But signs of a faster weakening in the labour market, if sustained, would pressure on the Monetary Policy Committee to deviate from that message." Sign up here. https://www.reuters.com/markets/rates-bonds/bank-england-set-stay-central-bank-slow-lane-keep-rates-hold-2024-12-11/
