2024-12-06 11:42

EU, Mercosur trade bloc strike free trade agreement Deal now faces long process to finalise, approve Trade agreement over two decades in the making Deal faces pushback from France, EU farmers MONTEVIDEO/BRUSSELS, Dec 6 (Reuters) - The European Union and South America's Mercosur bloc dragged a long-delayed free trade deal over the line on Friday, announcing an agreement - at least in principle - on the pact that has deeply divided nations in Europe. In a press conference in Montevideo, European Commission President Ursula von der Leyen and her Mercosur counterparts heralded the deal after 25 years of talks, citing the need for free trade in the face of rising protectionism globally. "This agreement is not just an economic opportunity, it is a political necessity," von der Leyen said. "I know that strong winds are coming in the opposite direction, towards isolation and fragmentation, but this agreement is our near response." European officials and proponents of the deal say that it offers a way to reduce reliance on trade with China as well as insulating EU nations from the impact of likely trade tariffs being threatened by U.S. President-elect Donald Trump. The trade agreement is however just the start of what could be a lengthy endgame to turn it into a reality. It needs to be legalized, translated and then approved by member nations, and could even be blocked, with France the fiercest opponent. A short press conference in Montevideo itself underscored some of challenges. Only von der Leyen and Uruguayan President Luis Lacalle Pou spoke, with no questions taken after. The presidents of Brazil, Argentina and Paraguay sat in silence. "Only two of the five spoke and no questions were taken. That in itself, speaks volumes," said an EU source closely involved in the talks. "This came out but it came out, but by the skin of its teeth... At least we have the association agreement, the rest will keep playing out in the coming days." With negotiators racing against time and pushback against the deal at home, von der Leyen had made a late call to fly in for the summit of Mercosur, which includes farming powerhouses Brazil and Argentina as well as Uruguay and Paraguay. The agreement saw amendments made to public procurement, auto trading, and critical minerals exports versus a version agreed in 2019. It also saw an annex about environmental measures to defuse South American fears about EU protectionism. "After more than two decades, we have concluded negotiations on the agreement between Mercosur and the European Union," Brazilian President Luiz Inácio Lula da Silva wrote on X. Paraguayan President Santiago Peña acknowledged the deal was an important step but cautioned much work remained to be done. "We have to be very realistic, we have a long way to go," he told Mercosur leaders later on Friday. EU FARMERS IN OPPOSITION France, the most vociferous critic of the deal in the EU, has branded it as "unacceptable". Underscoring the obstacles it now faces, French Trade Minister Sophie Primas pledged to resist its next stages, citing environmental and farming concerns. European farmers have repeatedly protested against an EU-Mercosur deal that they say would lead to cheap imports of South American commodities, notably beef, that do not meet the EU's green and food safety standards. European farm lobby Copa-Coge reiterated its opposition to the deal on Friday and called for protests in Brussels. Italy said on Thursday there were no conditions for signing off on a deal. Poland said last week it opposed the free trade deal in its current form. European green groups also broadly oppose the accord. Friends of the Earth calls it a "climate-wrecking" deal. Conversely, a group of EU members including Germany and Spain say the deal is vital for the bloc as it looks to diversify its trade after the near-closure of the Russian market and discomfort about reliance on China. "Spain will work to ensure that this agreement is approved by the majority of the (European) Council because trade openness with our Latin American sister countries will make us all more prosperous and stronger," Spanish Prime Minister Pedro Sanchez said on X. EU proponents of the deal see Mercosur as a market for European cars, machinery and chemicals and a potentially reliable source of critical minerals, such as battery metal lithium, required for Europe's green transition. They also point to agricultural benefits, given the deal offers greater access and lower tariffs for EU cheeses, ham and wine. The trade agreement would require approval from 15 of the 27 EU members representing 65% of the EU population along with a simple majority in the European Parliament. South American negotiators remain optimistic that the EU will eventually give its approval and that France will not be able to rally a blocking minority. Sign up here. https://www.reuters.com/world/eu-mercosur-set-finalise-contentious-trade-deal-2024-12-06/

2024-12-06 11:33

TSX ends up 0.05% at 25,691.8 Eclipses Thursday's record closing high Technology adds 1.78% Energy falls 2% Dec 6 (Reuters) - Canada's main stock index rose to a new record high on Friday, led by technology shares, as bond yields fell in anticipation of another outsized interest rate cut from the Bank of Canada. The Toronto Stock Exchange's S&P/TSX composite index (.GSPTSE) , opens new tab ended up 11.76 points, or 0.05%, at 25,691.8, moving past the record closing high it posted on Thursday. For the week, the index was up 0.22%, its fifth straight weekly advance. Investors assessed U.S. and Canadian employment data for November. Canada's unemployment rate rose to 6.8%, a near-eight-year high outside of the pandemic era, while U.S. job growth surged after being severely hindered by hurricanes and strikes. "Even though we're getting some vibes of recession in Canada, the U.S. jobs number was very robust and the Canadian number is a worry for another day," said Barry Schwartz, chief investment officer at Baskin Wealth Management. "Rate cuts at least make stocks look that more attractive." Investors raised bets on a half-percentage-point interest rate cut from the BoC on Dec. 11 after the bank cut by that magnitude in October, while the Canadian 10-year yield touched its lowest level in two months at 2.978%. Lower long-term rates increase the value to investors of the future cash flows that companies in high-growth sectors such as technology are expected to produce. The technology index (.SPTTTK) , opens new tab rose 1.78%, with shares of e-commerce company Shopify Inc (SHOP.TO) , opens new tab up 4.67%. Shares of Bank of Montreal (BMO.TO) , opens new tab were up 4.72% after Scotiabank raised its target price on the stock. Heavily weighted financials (.SPTTFS) , opens new tab ended up 0.39%. BRP Inc (DOO.TO) , opens new tab was a standout. Its shares rose 6.9% after the power sports products company reported third-quarter earnings that beat estimates. Declines for energy, however, helped limit the TSX's advance. The sector (.SPTTEN) , opens new tab fell 2% as fear of a supply glut weighed on oil prices. Sign up here. https://www.reuters.com/markets/tsx-futures-steady-ahead-key-domestic-us-jobs-data-2024-12-06/

2024-12-06 11:19

Dec 6 (Reuters) - Morgan Stanley bumped up its Brent price view for the second half of 2025 and said it now expects a smaller oil market surplus for the year following a decision by OPEC+ oil producers to delay and slow plans for higher output. The bank raised its Brent price forecast for the second half of 2025 to $70 from $66-68 per barrel in a note dated Dec 5. On Thursday, OPEC+, which groups the Organisation of the Petroleum Exporting Countries and allies including Russia, postponed the start of oil output increases by three months until April. It also said the cuts would take place until September 2026, nine months later than previously planned. The bank lowered its estimate for OPEC-9 (OPEC members minus Iran, Libya and Venezuela who are exempted from output curbs) production by 400,000 barrels per day (bpd) for 2025, and by 700,000 bpd by the fourth quarter of next year. It also cut its estimate for Iran's production by about 100,000 bpd through 2025. "In aggregate, this reduces our estimated surplus in 2025 from 1.3 to 0.8 million bpd in our total liquids balance, and from 0.7 to 0.3 million bpd in our crude-only balance." Brent crude futures were trading near $71.88 per barrel on Friday, while U.S. West Texas Intermediate crude futures were near $68.15. Sign up here. https://www.reuters.com/markets/commodities/morgan-stanley-ups-h2-2025-brent-view-70-after-opec-decision-2024-12-06/

2024-12-06 11:07

LONDON, Dec 6 (Reuters) - European energy firm Varo Energy is in talks to acquire Preem's two Swedish refineries in a bet on growing demand for low-carbon biofuels, four industry sources told Reuters. Varo has been expanding fast in Europe's refining and fuel trading in recent years. The company is backed by private equity giant Carlyle Group (CG.O) , opens new tab and the world's biggest trading house Vitol, which has enjoyed record profits in recent years. Varo could buy the Gothenburg and Lysekil plants from Corral Petroleum Holdings, which owns Preem, the sources said. A Varo spokesperson declined to comment. Preem declined to comment. The sources said the value of the possible deal wasn't clear as the downturn in Europe's refining margins has made transactions more complicated, one of the sources said. Preem's , opens new tab adjusted earnings fell 15% to $1 billion in the first nine months of 2024, but plunged 94% to $28 million in the third quarter alone. Varo already has stakes in refineries in Germany and Switzerland and is expanding in sustainable fuel and trading. It plans to invest around $3.5 billion between 2022 and 2026, with two-thirds committed to sustainable energies. Preem aims to increase production of renewable fuels to 5 million cubic metres by 2035, the company has said. It also has a network of over 500 petrol stations in Sweden. ($1 = 10.8499 Swedish crowns) Sign up here. https://www.reuters.com/markets/deals/varo-energy-talks-buy-preems-swedish-refineries-sources-say-2024-12-06/

2024-12-06 11:05

A look at the day ahead in U.S. and global markets from Mike Dolan Somewhat counter to post-election narratives and many new year outlooks, long-dated U.S. Treasury yields continue to sink as the November payrolls report holds all the attention on Friday. The 30-year 'long bond' yield fell to 6-week lows of 4.31%, flattening the 2-30 year U.S. yield curve gap to just 16 basis points - its lowest since August. With the 2-10 year curve flat as a pancake near zero, bond market volatility gauges (.MOVE) , opens new tab subsided to their lowest since September. Perhaps year-end effects are at play, with another steep rise in cash-like money market fund holdings to a record $6.77 trillion in the latest week also catching eyes even as stock indexes (.SPX) , opens new tab hold near record highs. But with economic and trade uncertainty high before Donald Trump's new administration takes office next month, and many Federal Reserve officials hesitant about another interest rate cut this year, the calming of the Treasury market is notable. More immediately, markets need to negotiate November's jobs report. Forecasters reckon the report will show payrolls increased by 200,000 jobs in November. But there remain nagging doubts about the labor market after October's surprisingly small 12,000 gain - the weakest since 2020 - and the unemployment rate is expected to tick up a tenth to 4.2%. While October's low jobs reading was distorted by storms and strikes, this week's U.S. economic updates have nodded to some emerging softness - most obviously in the ISM survey of the dominant service sector but also in creeping jobless claims, ebbing hiring rates and sub-forecast private payrolls. The U.S. economic surprise index compiled by Citi remains firmly in positive territory but at its lowest since October. Ahead of the jobs report, Fed futures remain uncertain about another rate cut this month and price just a 65% chance of a move. Fed Chair Jerome Powell on Wednesday appeared to signal a slower pace of rate cuts ahead when he said the economy was stronger at this point than the Fed had expected in September. The dollar (.DXY) , opens new tab perked up a bit on Friday after the prior day's slide. FRENCH RALLY Thursday's currency shift owed as much to a rallying euro and French bonds and stocks (.FCHI) , opens new tab as political tensions in Paris appeared to ease. French debt risk premiums versus benchmark German bunds fell after French President Emmanuel Macron said he would appoint a new prime minister in the coming days and his top priority would be getting a 2025 budget adopted by parliament. Despite Prime Minister Michel Barnier resigning on Thursday after losing a confidence vote on the budget, Macron insisted he would remain as president until his term ends in 2027. Far-right National Rally leader Marine Le Pen, who voted to oust Barnier, said on Thursday she had no plans to seek the removal of Macron and a budget could be passed within weeks. French 10-year yields fell to 2-month lows, with the French-German spread compressing to two-week lows around 74bps. The CAC40 stock benchmark was up more than 1%. The European Central Bank meets next week amid widespread expectations of another quarter-point rate cut - the fourth of the year. In Asia, tensions remained in South Korea. The ruling party leader there said President Yoon Suk Yeol needed to be removed from power for trying to impose martial law and the government denied reports it was preparing to issue another such declaration. The won and the main KOSPI stock index (.KS11) , opens new tab both fell again. Chinese stocks (.CSI300) , opens new tab outperformed, however, pushing aside U.S. trade-related anxieties amid expectations for fresh domestic policy support at next week's meeting of the Central Economic Work Conference - which will set the agenda and targets for China's economy for 2025. China's ministry of finance also published draft rules that would provide incentives for government agencies to buy China-made products, fuelling bets on home-grown technologies. Elsewhere, bitcoin recoiled below the $100,000 level it breached for the first time this week. President-elect Donald Trump said he was appointing former PayPal (PYPL.O) , opens new tab Chief Operating Officer David Sacks as his "White House A.I. & Crypto Czar", another step towards overhauling U.S. policy toward the sector. In company news, UnitedHealth's (UNH.N) , opens new tab stock dropped 5.2% on Thursday after the shocking murder of its chief executive in Manhattan on Wednesday and was the biggest weight on the Dow and S&P 500. The S&P 500 healthcare index (.SPXHC) , opens new tab fell 1.1% as health insurance companies reassessed the risks for their top executives. In deals news, Direct Line (DLGD.L) , opens new tab rose 8.5% after the British insurer said it was set to recommend a sweetened 3.61 billion pound ($4.60 billion) cash-and-stock takeover by Aviva (AV.L) , opens new tab if the bigger rival makes a formal offer. Key developments that should provide more direction to U.S. markets later on Friday: * US November employment report, University of Michigan December consumer sentiment survey, October consumer credit; Canada Nov employment report * Federal Reserve Board Governor Michelle Bowman, Chicago Fed President Austan Goolsbee, Cleveland Fed President Beth Hammack and San Francisco Fed chief Mary Daly all speak Sign up here. https://www.reuters.com/markets/us/global-markets-view-usa-2024-12-06/

2024-12-06 10:50

TIRUNELVELI, India, Dec 6 (Reuters) - Tata Power's (TTPW.NS) , opens new tab newly built 4.3 gigawatt (GW) solar module and cell manufacturing facility in southern India will largely cater to domestic markets, its chief executive said, even as exports from the country have grown exponentially. Tata Power, one of India's leading integrated power companies, has built a new solar module and cell manufacturing facility in Tamil Nadu state, with an investment of 43 billion rupees ($508 million), overlooking several wind turbines in the region. "We are setting up this plant to cater to the Indian market ... This country offers huge opportunity. Whatever we are producing over here for the next 12 to 16 months is already tied up (with projects)," Praveer Sinha told reporters on Friday at the new plant spread across 317 acres. Although Sinha said Tata Power's new manufacturing facility would cater to India's domestic market, solar module and cell making companies are increasingly trying to tap the market in the United States, the world's second-largest solar consumer after China. The export of Indian modules has surged more than 23 times during the last two years, with the United States accounting for more than 97% of India's exports, according to a report by the Institute for Energy Economics and Financial Analysis. Currently, India has a solar module-making capacity of 80 GW, while its cell-making capacity stands at slightly over 7 GW, with Indian companies relying on Chinese cells for the modules. In comparison, China accounts for about 80% of the world's solar shipments, with its export hubs in other parts of Asia making up much of the rest, according to SPV Market Research. Tata Power can add an additional 4 GW of cell and module production capacity at its new Tamil Nadu plant, but the company would decide on scaling up capacity later, Sinha said. The company aims to cross 1 trillion rupees in annual revenue by 2030, up from around 615 billion rupees achieved in the fiscal year to March 2024, Sinha said. Tata Power also aims to more than double its annual profit to 100 billion rupees by 2030, he said. Tata Power plans a capital expenditure of nearly 1.46 trillion rupees between 2024-25 and 2029-30 fiscal years, with nearly 60% to be spent in the renewable sector. Sign up here. https://www.reuters.com/business/energy/indias-tata-power-prefers-domestic-market-over-lucrative-solar-exports-ceo-says-2024-12-06/