2024-11-28 11:51

November trade driven by Trump election win Bitcoin, Tesla clear winners U.S., European bonds, bank stocks go in different directions LONDON, Nov 29 (Reuters) - November was a month of clear winners and losers from Donald Trump's Nov. 5 U.S. election victory. Trump trades, essentially punishing tariff-sensitive assets from European exporters to Mexico's peso and driving investment towards U.S. stocks and the dollar, proved successful. Wall Street has rallied, the dollar gained 2% against rival major currencies and bitcoin surged. But December could be bumpy, with the Trump trade vulnerable to a potential bond market backlash against fiscal largesse, while tariffs might boost inflation and snarl up supply chains. "Elevated (U.S.) equity valuations reflect complacency as the more challenging environment we expect is not priced in," BCA Research said. Here's a look at some assets in the spotlight. 1/ CURRENCY WOES The euro has suffered its worst monthly drop since early 2022, losing almost 3% to around $1.05 , on U.S. tariff risks, political upheaval in Germany and France and a sharp regional economic downturn. Analysts expect more volatility in the $7.5 trillion-a-day currency markets as debate rages about how low the euro can go and whether Trump really will boost the U.S. economy while most others suffer. Mexico's peso dropped 2% against the dollar in November and sterling by just over 1%. China's offshore yuan has fallen by around 1.5%. The key question in FX markets, Monex Europe senior market analyst Nick Rees said, is: "does Trump's election victory presage a fundamental structural shift in the global economy, or are markets just engaged in a knee-jerk panic?" 2/ BITCOIN, BOOM OR BUST? If there's one asset that smashed it out of the park in November, it's bitcoin. The crypto currency has surged 37%, briefly eying the $100,000 milestone, on hopes of a more crypto-friendly regulatory environment under Trump. The last time bitcoin surged as much was in February, when money flooded into new bitcoin exchange-traded products. So what's next? For some in the industry, a rise to $100,000 would mark the niche asset finally going mainstream. "If bitcoin smashes through the $100,000 level... then even more people could find crypto on their radar," said AJ Bell investment analyst Dan Coatsworth. Others reckon there is a risk of speculative excess, meaning bitcoin's surge could just as easily be followed by a sharp fall that catches some investors out. 3/ TECH UNDER TARIFFS Wall Street's tech-heavy Nasdaq 100 (.NDX) , opens new tab has scored its best monthly gain since June as Trump ally Elon Musk's Tesla (TSLA.O) , opens new tab surged 33% and AI fervour boosted Nvidia (NVDA.O) , opens new tab even as the chipmaker forecast slower sales growth. Risks are growing for tech, as Trump's tariff plans threaten supply chains and an AI spending splurge by so-called hyperscalers such as Microsoft (MSFT.O) , opens new tab, Meta (META.O) , opens new tab and Amazon (AMZN.O) , opens new tab sparks investor anxiety. "There's an intense arms race between the main hyperscalers, which could be over-investment," said Mikhail Zherev, manager of Amati Global Investors' innovation fund. "We have reduced our exposure (to AI)." The European Central Bank warned last week of "adverse global spillovers" if an AI "bubble" bursts and the tech stocks that dominate global equity markets slump. 4/ BANK RUN Investors loved big U.S. banks but loathed European ones. An index of U.S. banking stocks (.SPXBK) , opens new tab soared 13% in November, the best month in a year, driven by deregulation hopes under Trump. But European bank shares have slumped 5% as a weakening economy boosted rate-cut bets (.SX7E) , opens new tab. Still, they have rallied 16% so far this year, benefiting from relatively higher lending rates. Europe's banks remain net sold by hedge funds "despite good performance" said a JPMorgan prime brokerage note to clients seen by Reuters on Wednesday. The sector must respond and rev up fee-making activities from asset and wealth management as well as deal-making and investment banking, a Deutsche Bank report said. 5/ BOND BUDDIES NO MORE November may well mark the month that major bond markets (which usually move together) parted company. Although U.S. 10-year Treasury yields end November little changed on the month, the direction matters and that's pointed higher. U.S. borrowing costs have surged 60 basis points since mid-September on strong data and expectations for higher inflation and fiscal deficits under Trump's policies. Capital Economics sees Treasury yields rising to 4.5% by year-end, from around 4.24% now . In contrast, Germany's 10-year yields are down almost 30 bps at around 2.11% , set for their biggest monthly fall of 2024, on weakening economic activity, Trump tariff threats and Russia-Ukraine escalation. In Japan it's a different story again, with yields set for the biggest monthly jump since May , partly as a post Trump-win yen slide boosts speculation about a rate hike next month. Sign up here. https://www.reuters.com/markets/global-markets-graphic-update-1-graphic-2024-11-29/

2024-11-28 11:38

Nov 28 (Reuters) - Sterling edged lower against a firm dollar on Thursday and gained slightly versus the euro in a quiet trading session due to a U.S. holiday. The pound retreated 0.1% at $1.26625 but was still headed for its best week in 11 as the greenback slid this week. Trading volume was thin across markets as U.S. stocks and bonds markets were shut due to the Thanksgiving holiday. Investors were also preparing to close the books on a volatile month that pushed up the dollar to over four-month highs and weighed on most major currencies. The pound's losses this month, however, have been shallower than the euro's helped by bets on a more hawkish Bank of England policy stance and the looming U.S. tariff threat on the euro zone under incoming U.S. President Donald Trump. "No news is seemingly good news for sterling at present," said Nick Rees, currency analyst at Monex Europe. "We are biased to think that another day of sterling outperformance is likely, absent any surprises." The relative changes in rate expectations has played in the British currency's favour lately. The Bank of England move is expected to deliver 70 basis points (bps) of rate cuts by the end of 2025 compared to 145 bps by the European Central Bank and 75 bps by the Federal Reserve. The pound was a fraction stronger on the euro with one euro at 83.26 pence . The common currency is set for its biggest monthly decline against the pound since January. Against the yen, the biggest mover in currency markets on Thursday, the pound was up 0.4%, at 192.33 yen, its first rise in six sessions . Markets were little changed after the latest survey data from the Confederation of British Industry (CBI) said business sentiment in Britain's services sector is falling at the fastest rate in two years, partly as a result of tax rises in finance minister Rachel Reeves' first budget on Oct. 30. The gloom in the CBI survey has also been reflected in other surveys. Last week the S&P Global purchasing managers' index pointed to economic contraction for the first time in 13 months. Sign up here. https://www.reuters.com/markets/currencies/sterling-ticks-lower-versus-dollar-quiet-session-2024-11-28/

2024-11-28 11:35

Nov 28 (Reuters) - China's imports of scrap copper are set to slump as some traders have suspended buying from the United States, the top supplier, due to worries about rising trade tensions under a Donald Trump presidency, analysts said. Trump, who takes office in January and has threatened tariffs of 60% on Chinese imports, on Monday pledged to impose "an additional 10% tariff" on imports from China, raising the prospect of retaliatory measures from Beijing. "According to our survey, most domestic import traders have already stopped directly buying scrap copper from U.S. ... And this is especially true among the leading traders who have relied on imports from the U.S.," analysts at information provider Shanghai Metals Market (SMM) said in a note on its WeChat account on Thursday. Zhao Yongcheng, principal analyst at consultancy Benchmark Mineral Intelligence (BMI), said Chinese scrap importers were buying cautiously on concerns that growing uncertainties over U.S.-China trade could increase their procurement costs. China imported 361,099 metric tons of scrap copper from the U.S. in the first ten months of the year, accounting for nearly a fifth of total such imports, Chinese customs data showed. Less buying from the U.S. will crimp China's scrap copper imports and spur consumption of refined copper at a time when supply of scrap copper is already tight, SMM analysts said. BMI's Zhao said the impact would likely be reflected in import data from next year. "It takes time to find alternatives to completely offset the reduced supply from the U.S., so tightening scrap supply will likely aggravate the copper price volatility in the short term." "But higher scrap prices will spur domestic supply increase," he said. Beijing announced in late October that it would allow imports of more recycled copper, or scrap copper, from Nov. 15 as part of efforts to develop its recycling industry and reduce dependence on primary raw materials. Scrap copper can be remelted into refined copper and processed into copper products. Sign up here. https://www.reuters.com/markets/commodities/chinas-scrap-copper-imports-set-slump-over-us-trade-worries-analysts-say-2024-11-28/

2024-11-28 11:32

MOSCOW, Nov 28 (Reuters) - President Vladimir Putin said on Thursday that a massive Russian overnight attack on Ukrainian infrastructure was a response to Kyiv's attacks on Russian regions using longer-range Western missiles. Ukrainian officials said that Russia had unleashed its second big attack on Ukraine's energy infrastructure this month on Thursday, cutting power to more than 1 million people in the west, south, and centre of the country. Speaking in Astana, Kazakhstan, Putin told members of a security alliance made up of ex-Soviet states: "Tonight we conducted a comprehensive strike using 90 missiles of similar classes and 100 drones. Seventeen targets were hit. "These are military facilities, defence industry facilities and their support systems. Let me repeat once again: these strikes on our part also took place in response to the ongoing strikes (by Ukraine) on Russian territory with American ATACMS missiles. As I have already said many times, there will always be a response from our side." Sign up here. https://www.reuters.com/world/europe/putin-says-ukrainian-infrastructure-attack-was-revenge-kyivs-strikes-russia-2024-11-28/

2024-11-28 10:10

MUMBAI, Nov 28 (Reuters) - The Indian rupee weakened on Thursday to close just shy of its all-time low, pressured by foreign portfolio outflows and month-end importer demand for dollars, while intervention by the central bank helped limit losses. The rupee closed at 84.4850 against the U.S. dollar, down from its close of 84.4525 in the previous session. The currency had weakened to its all-time low of 84.5075 last week. Benchmark Indian equity indexes, the BSE Sensex (.BSESN) , opens new tab and Nifty 50 (.NSEI) , opens new tab, closed down by about 1.5% each, dragged down by losses in stocks of heavyweight IT firms. Foreign banks were spotted bidding for dollars while state-run banks were present on offer "pretty much through the session", most likely on behalf of the Reserve Bank of India, a trader at a foreign bank said. The central bank has frequently intervened in recent sessions to support the rupee near the psychologically important support level of 84.50. The dollar index rose about to 106.3 after slumping 0.7% on Wednesday, its largest single-day fall since late-August. A stronger euro following hawkish comments from a European Central Bank policymaker and month-end rebalancing flows likely weighed on the dollar, ING Bank said in a note. Elevated US interest rates, European political developments and "the threat of more tariff social media posts coming through should keep the dollar bid on dips," the note said. Meanwhile, investors have added to short positions on most emerging Asian currencies, including the rupee, amid concerns about the incoming U.S. administration's policies, according to a Reuters poll. Focus now turns to the India gross domestic product (GDP)data for the July-September quarter due on Friday, which will help investors gauge the extent of the economic slowdown that contributed to foreign outflows from local equities. Sign up here. https://www.reuters.com/markets/currencies/rupee-declines-avoids-record-low-cenbank-intervention-2024-11-28/

2024-11-28 10:02

TOKYO, Nov 28 (Reuters) - Tokyo Gas (9531.T) , opens new tab aims to enhance capital efficiency by selling underperforming assets, including real estate, its president said on Thursday, following a filing disclosure of a 5% stake investment by U.S. activist investor Elliott Management. Elliott has taken a 5.03% stake in Tokyo Gas, a regulatory filing showed earlier this month, as it seeks to push Japan's biggest city-gas provider to boost shareholder value. Tokyo Gas President Shinichi Sasayama, in a news conference to provide a business update, declined to comment on Elliott's actions or whether his company had engaged in discussions with the investor. But he said the utility is looking to improve capital efficiency through various ways including reviewing and offloading assets that are low in efficiency. "We will review and better utilize... not only real estate, but also any assets that are not efficient, to improve our capital efficiency," he said. Elliott, one of the world's most influential activist investors, views that Tokyo Gas could improve capital efficiency, free up capital to enhance shareholder returns, and boost investments in decarbonisation and other growth areas by divesting some assets from its extensive real estate portfolio that are non-core to main energy business, according to a person familiar with the matter. "Some real estate assets are making a good profit contribution, but we may review and sell some underperforming real estate," Sasayama said, without providing any further details. Reuters reported in October that Tokyo Gas is in talks with Woodside Energy (WDS.AX) , opens new tab over taking a stake in a multi-billion-dollar Louisiana liquefied natural gas (LNG) export project, quoting two people familiar with the discussions. Sasayama declined to comment on the deal, but said the company may invest in U.S. gas assets if they contribute to profits, though its current focus in the U.S. is to expand the gas value chain, including trading and marketing. Asked about new U.S. sanctions on Russia's Gazprombank, Tokyo Gas, a major LNG buyer, sees no impact on its procurement of the fuel from Russia's Sakhalin-2 project, as the project is exempted from the sanctions, Sasayama said. The U.S. imposed new sanctions on Gazprombank last week as part of a wider push to punish Moscow for its invasion of Ukraine, barring it from any new energy-related transactions that touch the U.S. financial system, among other restrictions. (This story has been corrected to say that the Tokyo Gas president declined to comment on Elliott's actions, not on the company's dialogue with Elliott, in paragraph 3) Sign up here. https://www.reuters.com/business/energy/tokyo-gas-boost-capital-efficiency-with-asset-sales-president-says-2024-11-28/