2024-12-09 12:32

LONDON, Dec 9 (Reuters) - China still faces a very difficult economic situation and it is hard to be positive on the world's second-biggest economy just yet, Legal & General Investment Management's Chief Investment Officer Sonja Laud said on Monday. China will adopt an "appropriately loose" monetary policy next year, the first easing of its stance in some 14 years, alongside a more proactive fiscal policy to spur economic growth, the Politburo was quoted as saying on Monday. "You can't really stimulate away the excess in real estate that has been built over decades," Laud said at an LGIM outlook event with media. "The domestic consumer cannot compensate for the weakness that we are seeing in particular unfold in the real estate space," she said, adding that potential U.S. tariffs were another headwind. "We're not too positive on this." China's economy has struggled this year, prompting policymakers to act in September, with the central bank unveiling its most aggressive monetary easing since the pandemic, cutting interest rates and injecting 1 trillion yuan ($140 billion) into the financial system, among other steps. Donald Trump's U.S. election win in November also poses a challenge. Trump late last month outlined "an additional 10% tariff, above any additional tariffs" on imports from China. Laud added that, separately, UK gilts offered value, with the UK budget now digested by markets and the Bank of England likely to continue lowering interest rates. LGIM manages over a $1 trillion of assets. Britain's government bond market has underperformed its peers this year, with yields on 10-year gilts up roughly 75 basis points this year. In contrast, U.S. yields have risen 29 bps and German peers, just 7 bps , . On Europe, Laud said it was difficult to position given heightened political uncertainty in France and Germany - the euro zone's two biggest economies. Germany is expected to hold a snap election in February, while France is mired in its second political crisis in six months. Asked about the United States, Laud said she was focused on the inflationary impact of potential U.S. tariffs, noting that markets could dial back bets on Federal Reserve rate cut for next year. Sign up here. https://www.reuters.com/markets/global-markets-lgim-urgent-2024-12-09/

2024-12-09 12:03

General Matter to make high-assay low-enriched uranium HALEU is uranium enriched to between 5% and 20% Company's goal is to halve the cost of HALEU enrichment WASHINGTON, Dec 9 (Reuters) - Former SpaceX engineer Scott Nolan, CEO of startup General Matter, is on a mission to help end Russia's monopoly on a type of more-enriched nuclear fuel by producing it at commercial scale in the United States and slashing its costs. Nolan incorporated San Francisco-based General Matter this year in order to make high-assay low-enriched uranium, or HALEU, for a variety of planned atomic plants including small modular reactors, or SMRs, that backers hope will take off in the 2030s. HALEU is uranium enriched to between 5% and 20%, which backers say has the potential to make new high-tech reactors more efficient. Uranium fuel used in today's reactors is enriched to about 5%. Big Tech companies such as Amazon (AMZN.O) , opens new tab have plans to build new reactors to serve power-hungry data centers. "We believe HALEU is the most urgent need in the market today, and the most sensitive to enrichment cost," Nolan told Reuters in his first media interview since forming the company. "We are focused not only on bringing back domestic capacity, but on bringing the cost down significantly," Nolan said. The goal of General Matter is to halve the cost of HALEU enrichment, long term, Nolan said. HALEU is made primarily in Russia, and its price is elusive. Estimates range from $25,000 to $35,000 per kilogram of uranium. The U.S. Department of Energy in October awarded initial contracts to four companies including General Matter seeking to produce HALEU in the United States - part of an initiative to kick start domestic production. The United States plans to award $2.7 billion in contracts for HALEU, subject to Congress in coming years, the department said. General Matter, which currently has no infrastructure to make uranium fuel, will face stiff competition from other companies with experience and facilities in the uranium industry. The other companies with U.S. support are: Urenco USA, a European firm with operations in New Mexico; Orano USA, based in Maryland with global headquarters in France; and Centrus Energy's (LEU.A) , opens new tab subsidiary American Centrifuge Operating. Critics of the use of HALEU have said that the level of its enrichment means it is a weapons risk, and they recommend limiting its enrichment to 10% to 12%. Nolan said his company will look to regulators to determine the level. Nolan is also a partner in Founders Fund, a venture capital fund that was the first institutional investor in SpaceX and that Peter Thiel, a prominent supporter of President-elect Donald Trump, helped launch. Nolan said he expects that nuclear energy "should and will be" an important part of Trump's efforts to expand sources of baseload electricity. SPACEX EXPERIENCE Nolan worked at Elon Musk's private aerospace company SpaceX from 2003 to 2007. Nolan said his company's planned HALEU production will share SpaceX's focus on developing new technology and cutting costs. "SpaceX combined people from Silicon Valley in the software startup industry with the aerospace industry, and converged these two skill sets," Nolan said. "We're doing something similar, where we have deep experience on the team from the fuel cycle in the nuclear space, and are combining it with experience from the technology industry to rethink the problem and come at it from a new direction," Nolan said. A General Matter spokesperson said Nolan has not been in contact with Musk since "well before" the idea of the company was conceived in 2023. Nolan did not reveal what kind of technology General Matter plans to use to produce HALEU. Uranium production is dominated by centrifuges that spin at high speeds. Some new players are also trying to use lasers to produce uranium fuel. "Some are more commercially proven. Some are still to be proven from a technology standpoint that they can scale," Nolan said. Sign up here. https://www.reuters.com/technology/space/former-spacex-engineer-seeks-help-end-us-dearth-special-uranium-fuel-2024-12-09/

2024-12-09 11:50

JV to merge capacity of up to 13 gigawatts 50-50 JV to spend up to $5.8 bln by 2030 Major step in BP CEO's strategy to reduce renewables' focus LONDON, Dec 9 (Reuters) - BP (BP.L) , opens new tab and Japanese power generator JERA have agreed to join forces to form one of the world's largest offshore wind operators, a major step in CEO Murray Auchincloss' efforts to reduce BP's focus on renewables. BP's retreat from offshore wind reflects a similar trend at rivals Shell (SHEL.L) , opens new tab and Equinor (EQNR.OL) , opens new tab, which are trying to boost near-term profits by spending more on higher-return oil and gas operations. The 50-50 venture, called JERA Nex bp, will pool together almost all of their operating assets and development projects with a potential generation capacity of 13 gigawatts (GW), the two companies said in a statement. The partners have agreed to provide up to $5.8 billion in funding for projects approved by the joint venture by 2030, with BP contributing up to $3.25 billion and JERA paying up to $2.55 billion as BP's assets in the JV have yet to be developed. The JV will rank among the world's five largest offshore wind operators behind Orsted (ORSTED.CO) , opens new tab, Iberdrola (IBE.MC) , opens new tab and RWE (RWEG.DE) , opens new tab, JERA Chief Renewable Energy Officer Satoshi Yajima told reporters. BP's Auchincloss has been under pressure since taking over as CEO in January as the company's shares have underperformed rivals amid concerns over its energy transition strategy. BP shares closed 4.3% higher, outperforming the sector (.SXEP) , opens new tab on Monday. BP shares have declined 15.5% so far this year, compared with a 1.4% drop for rival Shell. Jefferies analyst Giacomo Romeo said the JV confirms his view that BP will be able to lower its annual capital spending below $16 billion and divest over $3 billion of assets. Offshore wind was a pillar of former CEO Bernard Looney's strategy to reduce BP's greenhouse emissions by rapidly building up renewables capacity and slowing investments in oil. Surging development costs, supply chain issues and higher inflation have nevertheless heavily weighed on the offshore wind sector in recent years. Auchincloss has said he will take a pragmatic approach by focusing on the most profitable operations. BP plans to sell its U.S. onshore wind business and a stake in its solar business Lightsource BP. "This will be a very strong vehicle to grow into an electrifying world, while maintaining a capital-light model for our shareholders," Auchincloss said in Monday's statement. Reuters reported in October that BP was considering selling a minority stake in its offshore wind business, citing sources with knowledge of the matter. In June Reuters reported, citing sources, that the company had paused investments in new offshore wind projects. Hours after the announcement, BP's head of offshore wind Matthias Bausenwein informed staff he was leaving the company, a spokesperson said. Last week, Shell signalled it was slowing down spending on new offshore wind projects. BP and JERA will contribute interests comprising around 1 GW of net generating capacity from operating wind farms and a pipeline of projects with around 7.5 GW of capacity, and further secured leases with around 4.5 GW of potential capacity. JERA, which is owned by Tokyo Electric Power Company (TEPCO) and Chubu Electric Power, first entered offshore wind in 2019. It later spun out its renewables assets into JERA Nex, which owns and operates wind farms in Europe, Asia and Australia. "We can't grow just by ourselves. We need scale, we need a more diversified portfolio, we need a fuller set of capabilities, and BP is the best choice for us," JERA CEO Yukio Kani told Reuters. BP entered the offshore wind market in 2019. It has a development pipeline with a generation capacity of 9.7 GW focused in the British North Sea, Germany and the U.S. East Coast. It currently does not have any offshore wind farms in operation. JERA Nex bp will be based in London. Its CEO will be nominated by JERA and the chief financial officer by BP. Kani said JERA will recommend current Jera Nex CEO Nathalie Oosterlinck to lead the JV. The deal is expected to be completed by the end of the third quarter of 2025. Bank of America is acting as financial adviser to BP and Rothschild for JERA. Sign up here. https://www.reuters.com/business/energy/bp-jera-form-jv-combining-offshore-wind-operations-2024-12-09/

2024-12-09 11:33

TSX ends down 0.3% at 25,625.42 Touches record intraday high of 25,843.20 Technology sector loses 0.8% Materials gains 2.1% as metal prices rise Dec 9 (Reuters) - Canada's main stock index ended lower on Monday as technology and industrial shares lost ground ahead of a key U.S. inflation report, but the decline was limited by gains for resource shares after China pledged to stimulate its economy. The Toronto Stock Exchange's S&P/TSX composite index (.GSPTSE) , opens new tab ended down 66.38 points, or 0.3%, at 25,625.42, after touching a record high of 25,843.20. "Considering the headwind from the U.S., we're holding in quite well," said Colin Cieszynski, chief market strategist at SIA Wealth Management. "We're getting a boost from commodities." The TSX's decline was less than for the major U.S. indices. Some investors worry that U.S. consumer price index data, due on Wednesday, could derail an expected Federal Reserve interest rate cut this month. The Bank of Canada is expected to continue its easing campaign at a policy decision on Wednesday, with the majority of economists polled by Reuters forecasting a half-percentage-point rate cut. The technology sector fell 0.8%, with e-commerce company Shopify Inc down 2.5%. Industrials lost 0.7%, while utilities ended 1.4% lower as bond yields climbed. The materials sector, which includes fertilizer companies and metal mining shares, advanced 2.1%. Gold and copper prices rose as top metals consumer China said it would take more action to boost its lethargic economy. Energy was up 0.4% as the price of oil rose 1.4% to $68.13 a barrel. Sign up here. https://www.reuters.com/markets/tsx-futures-rise-commodity-boost-boc-rate-decision-tap-2024-12-09/

2024-12-09 11:33

LONDON, Dec 9 (Reuters) - Sterling rose against the dollar and euro on Monday, as investors were on edge ahead of U.S. inflation data and the European Central Bank's meeting later in the week. The pound was last up 0.29% against the dollar to $1.2777, after easing 0.15% on Friday. Sterling has taken a 2% tumble against the greenback in the last three months. While the re-election of Donald Trump as president boosted the American currency in recent weeks, for the year to date, the pound is up 0.40%. Even though investors were still waiting for U.S. consumer price data on Wednesday, markets have priced in a quarter-point interest rate cut by the Federal Reserve next week as a near certainty. In Europe, investors were looking ahead to the ECB policy meeting this Thursday, where a quarter point cut is priced in. "There is little doubt that the ECB will deliver a widely anticipated 25bp rate cut, which will bring the deposit rate down to 3%," said UniCredit analysts. Sterling strengthened against the euro on Monday, up 0.12% at 0.8282 pence. The single currency has lost more than 4% against the pound since the start of the year. Michael Brown, senior research strategist at Pepperstone, saw little opportunity for sustained gains for the pound on its home turf. "The macroeconomic backdrop certainly doesn't support much by way of significant further gains for the pound". "We had reports out this morning that now job vacancies are at their lowest level in over four years in November. And of course, that comes as unemployment ticks higher and as inflation remains pretty stubbornly high here in the UK," Brown added. Demand for workers in Britain collapsed last month after the new Labour government's first budget, which raised employers' social security contributions, a survey published on Monday showed. The Recruitment and Employment Confederation trade body and accountants KPMG said their index of demand for staff slid to 43.9, the lowest reading since August 2020. The Bank of England is largely expected to hold interest rates steady at its next meeting on Dec. 19. Sign up here. https://www.reuters.com/markets/currencies/sterling-kicks-off-week-rise-against-dollar-euro-2024-12-09/

2024-12-09 11:09

A look at the day ahead in U.S. and global markets from Mike Dolan A seemingly robust U.S. employment report did little to dissuade markets that another Federal Reserve interest rate is coming this month, and China added to the easy money mix on Monday in a historic change of monetary stance. With the European Central Bank, Swiss National Bank and Bank of Canada among the major central banks expected to ease policy again this week, markets remain buoyant and Wall Street futures hover near their latest records. Just three weeks to the end of 2024, the S&P500 (.SPX) , opens new tab is up almost 28% for the year. The financial calm comes against more volatile geopolitics. A nervy weekend saw fresh tensions in South Korea and the spectacular collapse of Bashar al-Assad's regime in Syria, which throws another curve ball into an already fractious Middle East while undermining the credibility of Assad's foreign sponsors Russia and Iran. South Korea's won and stocks (.KS11) , opens new tab fell sharply on the refusal of the ruling party to back impeachment of the president following a botched attempt at martial law last week. Oil prices ticked up slightly on the Syrian drama. But Wall St is trying to keep eyes on its own slightly puzzling domestic script and the how the world's biggest economy is navigating next month's change of power in Washington. Headlines on November payrolls and average earnings data on Friday appeared to come in at or above forecast. But there were enough signs of weakness in the slightly higher unemployment rate and related household survey to prod futures markets into upping bets on a Fed cut next week. As it stands, those markets now see an almost 90% chance the Fed cuts by another quarter point on December 18. The big test of that confidence this week will come from Wednesday's consumer price inflation update. Fed Chair Jerome Powell may feel more secure in his job, meantime, after President-elect Donald Trump on Sunday said he would not try to remove him before his term ends in 2026. But central banks around the world are easing as fast, if not faster, than the Fed. After another alarming inflation miss and signs of persistent deflation pressures, China surprised on Monday with an historic change of its monetary policy orientation. Hong Kong stocks (.HIS) , opens new tab surged more than 2% late in the day after state media cited a Politburo meeting as saying China will adopt an "appropriately loose" monetary policy next year as part of steps to support economic growth. While that seems anodyne on the face of it, given the headwinds China's facing, it marked the first such shift towards loosening since 2010, and may show one of the ways Beijing is bracing for a threatened trade war with the United States under the incoming Trump administration. The central bank has outlined five policy stances - 'loose', 'appropriately loose', 'prudent', 'appropriately tight' and 'tight'. China last adopted an 'appropriately loose' monetary policy after the 2008 global financial crisis, before switching to 'prudent' in late 2010. The offshore yuan held steady after the reports, however. In Europe, the ECB, SNB and BOC are all expected to ease this week - the only live question for each one is whether it will be a jumbo 50bp or not. The euro and Canadian dollar were a touch firmer to start the week, while the Swiss franc was steady. But the slightly softer U.S. dollar (.DXY) , opens new tab owes as much to two weeks of ebbing U.S. Treasury yields -- confounding many post-election forecasts of restive sovereign bond markets. One of the reasons cited by some analysts is that economic weakness overseas and accelerated monetary easing around the world leaves U.S. Treasuries looking like high-yielding bonds among a basket of global 'safe assets' and drawing demand despite the relatively robust state of the U.S. economy. German and Chinese 10-year sovereign bonds are now yielding more than 200bp less that U.S. Treasury equivalents, Italy yields 100bp below them, France 150bps and Japan some 300bps. Elsewhere, euro group finance ministers meet in Brussels on their tricky annual budget drafts - not least the French impasse. But, curiously, British finance minister Rachel Reeves will also be in attendance. Britain's Labour government is pushing to reset ties with the European Union after coming to power in July and improve trading relations in a bid to raise growth. Sterling , was firmer against the dollar and the euro first thing Monday. Key developments that should provide more direction to U.S. markets later on Monday: * New York Federal Reserve's survey of consumer inflation expectations. US November employment trends report, October wholesale sales * US corporate earnings: Oracle * Euro group finance ministers meet in Brussels on draft budget plans, with European Central Bank board member Piero Cipollone and British finance minister Rachel Reeves in attendance * Bank of England Deputy Governor Dave Ramsden * G20 finance sherpas meeting in Johannesburg Sign up here. https://www.reuters.com/markets/us/global-markets-view-usa-2024-12-09/