2024-12-02 11:02

MUMBAI, Dec 2 (Reuters) - Indian mills have produced 2.79 million metric tons of sugar since the current season began on Oct. 1, down 35.4% year on year, as mills in two key states started operations later than usual, a leading industry body said on Monday. Lower sugar production could lead the world's second-largest producer to refrain from allocating export quotas and support global prices , . The start of sugar cane crushing in the western state of Maharashtra and neighbouring Karnataka was delayed, but soon crushing will pick up momentum, said Prakash Naiknavare, managing director of the National Federation of Cooperative Sugar Factories Ltd (NFCSF). Maharashtra's production in the first two months of the new season fell 66% from a year ago to 460,000 tons, while Karnataka's output dropped 36% to 700,000 tons, the industry body said. Mills in the northern state of Uttar Pradesh have produced 1.29 million tons, down 1 % from a year ago. By the end of November, 381 sugar mills in the country had started crushing operations, compared to 433 during the same period a year ago, Naiknavare said. India could produce 28 million tons of sugar in 2024/25, down from 31.9 million tons produced a year ago, estimates NFCSF. Sign up here. https://www.reuters.com/world/india/indias-sugar-industry-off-slow-start-oct-nov-output-falls-2024-12-02/

2024-12-02 10:44

Dec 2 (Reuters) - Sterling dropped versus the dollar and rose against the euro on Monday, with political troubles in France and the so-called Trump trade back in focus. The euro fell on Monday on growing concerns about a possible government collapse in France, which would stall plans to curb a burgeoning budget deficit. Meanwhile, the greenback rose as President-elect Donald Trump marked a shift from his prior advocacy of a weaker dollar by demanding that BRICS member countries not create or support another currency that could replace the dollar. "High rates and relatively low exposure to the risk of Trump tariffs mean that the pound's path of least resistance is probably up from here," said Enrique Diaz-Alvarez, chief financial risk officer at Ebury. Sterling was down 0.22% to $1.2708 after increasing 1.64% last week in its biggest weekly rise since mid-August. Ebury's Diaz-Alvarez flagged that last week's rebound restored sterling to the top of the 2024 rankings, reclaiming the title from the dollar, although just barely. On Friday, the Bank of England warned that higher trade barriers could hit global growth and feed uncertainty about inflation, potentially causing volatility in financial markets and pushing up borrowing costs for businesses and consumers. However, money markets kept pricing just 75 bps of BoE rate cuts by the end of 2025, while discounting an ECB depo rate below 1.7% from the current 3.25% The pound rose 0.35% versus the euro to 82.75 pence not far from its 2-1/2-year high. It hit 82.58 pence per euro around mid-November, its highest level since April 2022. Markets also await the Bank of England Decision Maker Panel on Dec. 5, which could provide some clues about the inflation outlook and the Bank of England monetary easing path. Citi forecast some modest upside risks to price expectations and wage growth to be steady at 4.1% before moderating further in the months ahead. "We see the risks as broadly balanced here (in terms of wage growth)," Citi said in a research note. "The crystallization of a higher national living wage could put some upside pressure here." Sign up here. https://www.reuters.com/markets/currencies/sterling-rises-versus-euro-towards-its-2-12-year-high-2024-12-02/

2024-12-02 10:42

FTSE 100 up 0.3%, FTSE 250 flat Persimmon, Vistry drop as brokerage cuts rating S&P Global Manufacturing PMI falls Dec 2 (Reuters) - The UK's FTSE 100 touched a six-week closing high on Monday, extending November's modest gains, as a slide in sterling supported shares of international firms. The blue-chip FTSE 100 (.FTSE) , opens new tab rose 0.3% to its strongest close since Oct. 21. The index clocked a 2.2% gain in November. The pound slid 0.8% against the dollar, helping big firms such as Unilever (ULVR.L) , opens new tab, HSBC (HSBA.L) , opens new tab and Anglo American (AAL.L) , opens new tab which draw a large part of their revenue in dollars. The midcap FTSE 250 (.FTMC) , opens new tab closed flat as investors watched political developments in France. French stocks found support, having fallen sharply earlier in the session, as Prime Minister Michel Barnier made a major concession to Marine Le Pen's far-right National Rally party, dropping planned cuts to medication reimbursements in a last-minute bid to get his 2025 budget bill over the line. "It has been a day of diverging fortunes for European markets – the FTSE 100's flat session sits between an ebullient Dax, which hit a new record high and a CAC40 that is being pulled first one way and then another by the growing political crisis in France," said Chris Beauchamp, chief market analyst at online trading platform IG. Meanwhile, a gauge of British manufacturing activity pointed to the sharpest contraction in nine months, as orders from domestic and foreign customers fell and ongoing supply chain disruption pushed up costs. All eyes will be on Bank of England Governor Andrew Bailey's speech on Wednesday for more clues on the central bank's monetary policy path. British homebuilders Vistry Group (VTYV.L) , opens new tab and Persimmon (PSN.L) , opens new tab fell 3.9% and 1.3% after brokerage RBC cut the rating on their stocks to "underperform" from "perform". Sign up here. https://www.reuters.com/markets/currencies/london-stocks-slip-homebuilders-precious-metal-miners-drag-2024-12-02/

2024-12-02 10:36

BEIJING, Dec 2 (Reuters) - A new round of U.S. solar panel import tariffs on Southeast Asian producers is expected to raise consumer prices and cut into producer profit margins, but was largely anticipated by industry, analysts said. The new duties announced on Friday by the Commerce Department extend the United States' anti-dumping regime in Southeast Asia to solar cells, from just finished modules previously. The tariff rise was largely in line with expectations, Citi analyst Pierre Lau said in a note, adding that in the longer term, the duties would encourage more production in the United States, replacing imports. "PRC module makers generally think the impact limited near term, assuming much of the incremental cost would be passed through to U.S. customers without alternatives," he added, however. The determination is the second in a trade case brought by a group of companies, including South Korea's Hanwha Qcells (000880.KS) , opens new tab and First Solar (FSLR.O) , opens new tab, accusing Chinese companies of unfairly selling below-cost solar components into the U.S. Affected producers may source cells from Laos and Indonesia instead, or take the cut out of their profit margins, said Yana Hryshko, head of global solar supply chain research at consultancy WoodMackenzie. "They want to stay competitive for the U.S. market," said Hryshko. "The actual manufacturing cost in Southeast Asia is not that high compared to the prices that they are selling to the United States." Chinese-owned solar plants have already popped up in Indonesia and Laos, the key Southeast Asia manufacturing bases not yet covered by tariffs, although industry experts say they may be added once export volumes increase. In the case of tariffs on Indonesia, the new capacity could be redirected into the burgeoning domestic market, however, Hryshko added, supported by local content requirements. Some 80% of America's solar imports, which hit a record $15 billion last year, came from Cambodia, Malaysia, Thailand and Vietnam in 2023. The Commerce Department calculated anti-dumping rates of 271.28% for imports from Vietnam, 125.37% for Cambodia, 77.85% for Thailand and 21.31% for Malaysia, while major manufacturers have their own company-specific rates. The United States makes up just 4% to 10% of major Chinese module makers' sales volumes, but a higher share of their earnings, according to Citi. The commerce department's final order will be released on April 18, when the proposed duties could be revised. Sign up here. https://www.reuters.com/business/energy/new-us-solar-tariffs-southeast-asia-raise-prices-cut-profit-margins-2024-12-02/

2024-12-02 10:12

MUMBAI, Dec 2 (Reuters) - The Indian rupee declined to its weakest level on record on Monday, hurt by concerns about economic growth slowing to its lowest in seven quarters alongside strong dollar bids in the non-deliverable forwards market. The rupee hit a low of 84.7050 during the session before ending at 84.6950. The currency weakened 0.2% on the day, its worst single day fall since June 4 when a narrower-than-expected win for Prime Minister Narendra Modi's alliance in the country's federal elections had weighed on the local unit. The rupee has hit a string of record lows over the past two months as a disappointing corporate earnings for the June-September quarter spurred outflows from local equities and Donald Trump's victory in U.S. elections sparked a wave of dollar strength. Data released after Friday's trading session had showed that India's economy grew by 5.4% year-on-year in the July-September quarter, markedly lower than expectations, which is likely to add pressure on the Reserve Bank of India (RBI) for interest rate cuts, which could further weigh on the rupee. "If the INR is broadly well-behaved and growth is weak, the RBI should be on track to cut rates once the supply shocks fade," Rahul Bajoria, head of India and ASEAN economic research at BofA Securities, said in a note. The brokerage expects the central bank to keep rates unchanged at its upcoming policy meeting this week, kicking off rate cuts with a 25-basis-point cut in February. Likely intervention by the RBI helped the rupee avert deeper losses on Monday but bankers reckon that the surge in the central bank's position in the non-deliverable forward market (NDF) reflects the extent of pressure on the rupee and suggests that the currency will fall further. Elevated dollar demand in the NDF market alongside weakness in its regional peers also weighed on the rupee on Monday. The dollar index was up 0.3% at 106.3 while Asian currencies decline between 0.1% to 0.6%. Sign up here. https://www.reuters.com/markets/currencies/economic-growth-concerns-strong-ndf-dollar-bids-push-rupee-record-low-2024-12-02/

2024-12-02 09:56

MUMBAI, Dec 2 (Reuters) - The drop in India's benchmark bond yields and swap rates signals the central bank may address weaker-than-expected economic growth by easing monetary policy, which, traders say, will likely be via a lower cash reserve ratio than by interest rate cuts. WHY IT'S IMPORTANT The Reserve Bank of India's monetary policy decision is due on Friday but elevated inflation may prevent an immediate cut in policy rates, treasury officials said. In that light, easier liquidity conditions will bring down market interest rates even without a direct policy rate cut. Therefore, market participants expect the RBI to start easing liquidity via lowering the CRR, setting the stage for rate cuts from early 2025. They are also not ruling out liquidity infusion through long-term repurchase auctions, dollar/rupee swaps and debt purchases. CONTEXT India's economy grew a weaker-than-expected 5.4% in July-September due to weaker expansions in manufacturing and consumption, data showed on Friday. And while the growth rate hit a seven-quarter low, inflation was above the central bank's comfort range at 6.2% in October. MARKET REACTION Overnight index swap rates -- the closest gauge of interest rate expectations -- have slumped in response to the GDP data. The one-year OIS rate was at 6.30%, down 21 basis points from Nov. 28, while the five-year rate was at 5.99%, down 18 bps. Bond yields also eased, with the 10-year benchmark bond yield down 8 basis points to 6.72%. KEY QUOTE "There has been a build-up in momentum related to pricing in of a rate cut in the upcoming policy due to a lower-than-expected GDP growth," said Alok Sharma, head of treasury at ICBC. "We expect RBI to cut the CRR by 50 bps. That would address the tight liquidity and prep up the market for a 25 bps cut in February 2025." GRAPHIC ($1 = 84.6850 Indian rupees) Sign up here. https://www.reuters.com/world/india/india-rates-market-signals-easing-likely-via-liquidity-after-weak-growth-data-2024-12-02/