2024-11-29 19:08
BoE sees higher global risks Trade fragmentation, high public debt levels in focus Bailey says finance rules are not hurting growth Finance minister Reeves has said rules need reform LONDON, Nov 29 (Reuters) - The Bank of England warned on Friday 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. Without specifically referring to the victory of Donald Trump in the U.S. presidential election, the BoE said the financial system could also be impacted by disruption to cross-border capital flows and a reduced ability to diversify risk. "A reduction in the degree of international policy cooperation could hinder progress by authorities in improving the resilience of the financial system and its ability to absorb future shocks," the BoE said in a half-yearly report on the financial system. Asked at a press conference about the likely impact of a second Trump presidency, Bailey repeated his stance that he wanted to see the policies the Trump administration will pursue. "We are seeing increased risk of global fragmentation. But I would say this, that there are quite a lot of causes of that and I don't think it's right to pin it on one particular event." While UK households, businesses and banks appeared to be in good shape, the BoE report said, Britain's financial sector faced risks that were "particularly relevant" given the openness of the UK economy. Other threats included high levels of public debt in many economies around the world. "Uncertainty around, and risks to, the outlook have increased," the report said. Bailey pushed back against a complaint from new finance minister Rachel Reeves that British regulators had inadvertently damaged the economy by taking too tough a stance on risk-taking in the financial sector. "Put simply, there is not a trade-off between financial stability and growth. This is a fundamental point," he said. But he said there were choices about how to apply rules and he said the BoE's announcement on Friday that it would conduct full tests on the health of UK banks once every two years, and no longer annually, was an example of how to help competitiveness in the sector. Bailey also stressed the importance of minimum international financial standards in the wake of the Nov. 5 U.S. election. The BoE said it continued to judge that valuations and risk premia in financial markets were "vulnerable to a sharp correction" due to the risks to growth and inflation and uncertainty about interest rates. "Such a correction could be amplified by long-standing vulnerabilities in market-based finance" and could push up borrowing costs for UK households and businesses, it warned. The BoE said its latest tests of the resilience of UK banks showed they were well capitalised with high levels of liquidity. But it said non-bank financial institutions such as hedge funds remained vulnerable to a sudden financial shock and might have to undertake a fire sale of assets such as British corporate bonds in this scenario. Going forward, the central bank plans to carry out full stress tests once every two years starting in 2025, reducing the administrative strain on lenders and allowing the BoE to focus on other potential financial risks. Less detailed desk-based stress tests would be conducted by the BoE, when needed, in the intervening years. The BoE held its countercyclical capital buffer (CCyB), or "rainy day" capital requirement for banks that can be drawn on in stressed times, at its neutral setting of 2%. Sign up here. https://www.reuters.com/world/uk/bank-england-warns-risks-rise-global-trade-barriers-2024-11-29/
2024-11-29 19:05
BOGOTA, Nov 29 (Reuters) - Colombian inflation in November is forecast to have hit 0.20% versus the same month a year ago, mostly due to changing food prices, according to a Reuters poll published on Friday, which also saw year-end expectations decline. Estimates from 20 analysts for inflation in November ranged from 0.14% to 0.29%. If the median estimate is met, consumer price increases in November would come in below the 0.47% acceleration seen in the same month of 2023. However, it would be higher than in October, when inflation surprised by contracting by 0.13%. "We expect a rebound in food inflation, after the deflation that the sector showed in previous months," Colombian bank Bancolombia said in a note. "Indexation would keep service inflation high, while the celebration of seasonal events (such as Black Friday and the Auto Show in Bogota) will allow another low record of inflation in goods and the evolution of electricity rates will continue to lead to low registration for those regulated," the note added. If the median of the survey is met, Colombia's 12-month inflation through Nov. 30 would be 5.13%, lower than the 5.41% at the end of October, but still above the central bank's 3% target. The government's DANE statistics agency will publish November inflation on Dec. 6. Meanwhile, inflation expectations for 2025 fell to 5.10%, down from 5.51% in last month's survey and below the 5.3% forecast by the central bank's technical team. For 2025, inflation forecasts fell marginally to 3.80%, versus 3.81% previously. The outlook for 2026 now expects inflation to close at 3.20%, down from 3.30% previously. Sign up here. https://www.reuters.com/markets/colombia-12-month-inflation-through-november-seen-513-2024-11-29/
2024-11-29 18:55
NEW YORK, Nov 29 (Reuters) - U.S. crude oil output fell by 157,000 barrels per day (bpd) month-over-month to 13.20 million bpd in September, the largest decline since January, data from the U.S. Energy Information Administration (EIA) showed on Friday. The decline comes as a number of oil and gas production facilities in the U.S. Gulf of Mexico faced prolonged closures in September as Hurricane Francine and Hurricane Helene churned through the region before making landfall. Output from the U.S. offshore Gulf of Mexico fell 12% month-over-month in September to 1.58 million bpd, the lowest in three years, EIA data showed on Friday. In Texas, the country's top oil-producing state, output rose slightly to 5.81 million bpd, surpassing the previous month's record high of 5.80 million bpd. New Mexico oil output fell 0.2% to 2.09 million bpd in September. Gross natural gas production in the U.S. Lower 48 states fell for the second consecutive month to 114.9 billion cubic feet per day (bcfd), the EIA data showed. In top gas-producing states, monthly output in Texas eased 0.5% to 35.83 bcfd and production in Pennsylvania fell by 1.6% to 19.71 bcfd, according to the data. Sign up here. https://www.reuters.com/business/energy/us-oil-output-fell-sept-by-most-since-jan-eia-says-2024-11-29/
2024-11-29 18:48
Brazil's currency rebounds after hitting record lows on income tax worries Congress leaders say income tax is not a near-term focus Finance Minister says government could present new fiscal measures SAO PAULO/BRASILIA, Nov 29 (Reuters) - Brazil's currency rebounded on Friday from record intraday lows after congressional leaders said they would put the brakes on government income tax reform, and the finance minister stressed that fiscal commitment goes beyond a new spending cuts package. "We won’t be able to do everything that needs to be done with a silver bullet. This set of measures is not the grand finale of what we need to do," said Minister Fernando Haddad at an event hosted by banking lobby group Febraban. Later, in an interview to Record TV, he said the government could resume discussions for new fiscal measures in two or three months if needed. Investors have been doubtful about the scope and effectiveness of the measures presented by President Luiz Inacio Lula da Silva's administration this week to slow down expenses to sustain a fiscal framework passed last year. Brazil's gross public sector debt rose to 78.6% of gross domestic product in October from 78.2% in September and economists say it is on a path to hit 91% by 2030, fueling market skepticism about the framework's ability to stabilize it. Haddad said on Friday at the event that no one in the government was trying to sell fantasies or magic, emphasizing a firm commitment to slashing the primary budget deficit. Before his remarks, Lower House Speaker Arthur Lira and Senate head Rodrigo Pacheco said that broader income tax exemptions proposed by the Lula administration were a topic for the future, and the near-term focus would be on passing spending cuts. The Brazilian real, which in early morning weakened to a record low of 6.11 per dollar following a two-session sell-off, pared losses and ended the session to trade slightly down, but still marking a fresh closing record ever at 6 per greenback. Lira said on social media that fiscal responsibility was a "non-negotiable" for the lower house, while Pacheco in a statement said a potential income tax reform would only go through if there was fiscal room. "The remarks by the heads of both houses of Congress are extremely relevant and indicate that there is an effort to regain some of the trust that was lost in the process," analysts at brokerage XP said. FX JITTERS The government on Thursday detailed a package announced a day earlier aimed at achieving more than 70 billion reais ($11.8 billion) in savings over the next two years. But the measures failed to ease market fiscal concerns amid rising mandatory expenditures growth, leading to a sharp decline in Brazilian assets. Following an over 20% decline of the real year-to-date, incoming central bank governor Gabriel Galipolo said on Friday that the monetary authority does not target or defend any specific exchange rate level, intervening only in cases of "market dysfunction." Speaking at the same event as the finance minister, Galipolo, the current central bank monetary policy director, added that the exchange rate is floating, which is important for absorbing shocks. The market had expected the fiscal package to focus exclusively on spending cuts, consistent with previous statements by Haddad, who had indicated that changes to income tax rules would only be presented next year. But the government unexpectedly announced an income tax reform, raising the exemption threshold to 5,000 reais ($842) per month from 2,824 reais, while compensating for the revenue loss with higher taxes on those earning over 50,000 reais. "What weighed heavily was the indication of including the income tax reform alongside the package," said Daniel Leal, strategist at BGC and former coordinator of public debt operations at the Treasury. "The market fixated on the signal of more fiscal stimulus," he added. Haddad said at the event on Friday that the Lula administration was "aligned" with Lira and Pacheco on the fiscal issue, and reiterated that any income tax reform would only be voted on by lawmakers if it proved to be fiscally neutral. The government stressed that spending control measures would ensure 327 billion reais in savings from 2025 to 2030, with Congress expected to approve them later this year. Sign up here. https://www.reuters.com/markets/brazils-finance-minister-congress-leaders-seek-calm-markets-tax-change-concerns-2024-11-29/
2024-11-29 18:47
ABUJA, Nov 29 (Reuters) - At least 27 people died when a boat capsized on the Niger River in central Nigeria, the local emergency management agency said on Friday. The final death toll from the accident late on Thursday would be known once a search and rescue operation ended, said Sandra Musa, spokesperson for Kogi State Emergency Management Agency. "So far, 27 bodies have been recovered, but (the) rescue operation is still ongoing," Musa told Reuters. The boat was carrying mostly traders from Missa community in central Kogi state heading to a weekly market in neighbouring Niger state, a National Inland Waterways Authority spokesperson said. None of the passengers were wearing life jackets, which significantly increased the risk of fatalities, the spokesperson said. Sign up here. https://www.reuters.com/world/africa/dozens-feared-dead-nigeria-boat-accident-2024-11-29/
2024-11-29 18:43
Nvidia leads tech stocks, retail stocks edge up Applied Therapeutics plummets after FDA declines drug approval Retail stocks up on Black Friday Indexes up; Dow 0.42%, S&P 500 0.56%, Nasdaq 0.83% Nov 29 (Reuters) - The S&P 500 and Dow Jones Industrial Average notched record closing highs in a shortened Black Friday session, lifted by technology stocks such as Nvidia (NVDA.O) , opens new tab, while retail was in focus as the holiday shopping season kicked off. Information technology stocks (.SPLRCT) , opens new tab helped boost the benchmark S&P 500 and blue-chip Dow, which was also aided by industrial stocks. Nvidia gained 2%, while Tesla (TSLA.O) , opens new tab rose 3.7%. Investors monitored shoppers' response to deep Black Friday discounts. Adobe Analytics estimated consumers would spend a record $10.8 billion in online purchases, up 9.9% from Black Friday last year. Shares of Target (TGT.N) , opens new tab rose 1.7% and Macy's (M.N) , opens new tab climbed 1.8%. The S&P 500 rose 0.56% to 6,032.44 points after breaching its intraday record high of 6,025.42 set on Nov. 26. The Dow Jones Industrial Average climbed 0.42% to 44,910.65 points. The Nasdaq gained 0.83% at 19,218.17 points. "Retailers do a lot of importing. Inventory levels are very important to their profitability and ability to kind of control margins, so they will be one of the industries in the (tariffs) crossfire," said Ross Mayfield, investment strategist at Baird. "But so far ... (things are) looking pretty solid for the Black Friday, Cyber Monday sale." Chip stocks rebounded from Wednesday's declines, sending the Philadelphia SE Semiconductor index (.SOX) , opens new tab 1.5% higher. The small-cap Russell 2000 index (.RUT) , opens new tab also rose 0.4% as Treasury bond yields retreated further from multi-month highs. Wall Street's main indexes had closed lower on Wednesday, with the Nasdaq leading declines, as technology stocks slumped on Thanksgiving eve on worries the Federal Reserve may be cautious about rate cuts following stubbornly strong U.S. inflation data. Donald Trump's victory in the U.S. presidential election earlier this month, along with his Republican Party winning the majority in both houses of Congress, provided the latest boost to equities. Investors were pricing in expectations that Trump's pro-business policies could spur economic growth and corporate profits. However, concerns prevailed that they could also stoke inflation, slow the pace of the Fed's rate cuts and weigh on global growth. Traders expect the U.S. central bank to lower borrowing costs by 25 basis points at its December meeting, but see it pausing rate cuts in January, the CME Group's FedWatch showed. Crypto stocks rose on the back of gains in bitcoin , boosting MARA Holdings (MARA.O) , opens new tab by 1.9%. Applied Therapeutics (APLT.O) , opens new tab plunged 76% after the U.S. Food and Drug Administration declined to approve its drug for the treatment of a rare genetic metabolic disease. Advancing issues outnumbered decliners by a 2.46-to-1 ratio on the NYSE. There were 386 new highs and 63 new lows on the NYSE. The S&P 500 posted 31 new 52-week highs and no new lows while the Nasdaq Composite recorded 116 new highs and 31 new lows. Volume on U.S. exchanges was 8.15 billion shares during a shortened trading week, compared with the roughly 15 billion full-session average over the last 20 trading days. For the week, the S&P 500 gained 1.06%, the Nasdaq rose 1.13%, and the Dow climbed 1.39%. The Russell 2000 Small Cap index rose 1.48%, after hitting a record high earlier in the week. Sign up here. https://www.reuters.com/markets/us/futures-inch-up-ahead-shortened-black-friday-session-2024-11-29/
