2024-11-12 11:01
A look at the day ahead in U.S. and global markets from Dhara Ranasinghe Almost a week on from the U.S. election and investors are wasting no time betting on who they believe will be the biggest winners (and losers of course) of a new Donald Trump administration. Say no more than the word bitcoin. The cryptocurrency, referred to by some as "digital gold" has surged more than 25% since Trump's win and stood on the verge of $90,000 on Tuesday . Its year-to-date gain stands at more than 100%. At the heart of the latest surge is the perception that a new Trump administration will usher in a more crypto-friendly environment, with investors seeing an end to increased scrutiny under U.S. Securities and Exchange Commission Chair Gary Gensler, whom Trump has said he will replace. Trump embraced digital assets during his campaign, promising to make the United States the "crypto capital of the planet" and to accumulate a national stockpile of bitcoin. Crypto miner Riot Platforms jumped nearly 17% on Wall Street overnight, pushing higher still in after-hours trade. Fellow miners MARA Holdings (MARA.O) , opens new tab and CleanSpark (CLSK.O) , opens new tab leapt nearly 30%. With the focus on the winners of Trump's election win last week, Tesla shares also stand out with the automaker up almost 40% in the past week (TSLA.O) , opens new tab. As markets assess what's to come under Trump 2.0, economic data could play second fiddle for now. Still, the Federal Reserve's Senior Loan Officer Opinion Survey on Bank Lending Practices, which provides a sense of how credit conditions are faring, should get some attention. The last survey, released in August, showed U.S. banks reported unchanged demand for commercial and industrial loans in the second quarter, the first time in two years that demand did not weaken. Any further signs that credit conditions are in relatively strong shape may add to the perception that U.S. interest rates may not need to fall as quickly as anticipated - especially if tax cuts and tariff hikes under a Trump administration fuel inflation. Markets price in roughly 80 basis points of U.S. rate cuts by end-2025, compared with just over 100 bps a week ago. No wonder then that the dollar is rising to near four-month peaks against other big currencies, and the euro is languishing at seven-month lows around $1.0617 . The single currency, down almost 3% in the past week, is decidedly in the losers' camp post the U.S. election. Capital Economics forecasts the euro to fall to parity against the greenback by the end of 2025, believing that tariffs will be imposed next year and the ECB will ease by more than investors expect. Key developments that should provide more direction to U.S. markets later on Tuesday: * German ZEW index * Federal Reserve's Senior Loan Officer Opinion Survey on Bank Lending Practices * Fed speakers Christopher Waller, Thomas Barkin, Neel Kashkari and Patrick Harker Sign up here. https://www.reuters.com/markets/us/global-markets-view-usa-pix-2024-11-12/
2024-11-12 10:48
Rand slumps as markets fret over Trump's policies Local data releases have little effect on currency JOHANNESBURG, Nov 12 (Reuters) - South Africa's rand hit a three-month low on Tuesday, hurt by a stronger dollar and weaker gold prices, as markets grappled with what another Donald Trump presidency will mean for U.S. policy and trade relations. At 1533 GMT, the rand traded at 18.1325 against the dollar , down more than 1% on its previous close, its weakest level since mid-August. The risk-sensitive rand has been highly volatile since Trump's U.S. election win last week and is on course for its third day of heavy losses. Investors have piled into trades seen as benefiting from the incoming U.S. administration, with markets anticipating Trump's policies could mean higher economic growth in the short term but also potentially inflationary pressures. Potential policy changes include tariffs and tax cuts. ETM Analytics said in a research note that the rand "remains on the defensive while investors try to understand what (Trump's win) means for the dollar and for currencies quoted against it". The rand reacted little to positive local job data on Tuesday showing the unemployment rate fell for the first time in a year in the third quarter. The unemployment rate fell to 32.1% from 33.5% in the second quarter (ZAUNR=ECI) , opens new tab. Another local factor that had little impact was manufacturing output for September (ZAMAN=ECI) , opens new tab, which fell 0.8% year-on-year. On the Johannesburg stock market, the Top-40 index (.JTOPI) , opens new tab closed 0.7% down. The benchmark 2030 government bond was little changed, the yield at 9.23%. Sign up here. https://www.reuters.com/markets/currencies/south-african-rand-hits-three-month-low-markets-ponder-trump-policies-2024-11-12/
2024-11-12 10:44
LONDON, Nov 12 (Reuters) - Bank of England Chief Economist Huw Pill said labour market data released earlier on Tuesday showed inflation pressures in Britain remained too high for the BoE's 2% inflation target. "As we saw in the labour market data that was released this morning, pay growth remains quite sticky at elevated levels and levels that - given the outlook for productivity growth in the UK - are hard to reconcile with the UK inflation target," Pill said at a conference organised by Swiss bank UBS. The BoE last week cut borrowing costs for only the second time since 2020 and said further reductions were likely to be gradual as it assessed the persistence of inflation pressures including from the first budget of Britain's new government. Pill said Britain might be behind other economies in working its way through the impact of the COVID pandemic and other shocks in recent years, which could help to explain why investors are pricing higher UK interest rates than elsewhere. While it was not the BoE's base case that Britain would need higher levels of rates to stabilise the economy, that possibility did need to be considered. "So (given) the fact that we are entertaining that story, it's not surprising that markets are entertaining some of that story," Pill said. Financial markets only price in 0.6 percentage points of interest rate cuts by the BoE by the end of next year, compared with 1.4 percentage points for the European Central Bank and 1.0 percentage points for the U.S. Federal Reserve. Pill voted last week with the majority of the BoE's monetary policymakers to cut Bank Rate to 4.75% from 5% but has voted against lowering borrowing costs in other, closer decisions by the Monetary Policy Committee in recent months. Sign up here. https://www.reuters.com/world/uk/bank-englands-pill-says-pay-growth-stuck-high-level-2024-11-12/
2024-11-12 10:28
MUMBAI, Nov 12 (Reuters) - The Indian rupee touched its all-time low on Tuesday, pressured by the dollar's rise to a more than four-month peak and on likely outflows from local equities. The rupee hit a low of 84.4125 before ending at 84.3925, unchanged from its closing level in the previous session. The currency has fallen to record lows for five straight sessions. Donald Trump's victory in the U.S. election has boosted the dollar index, which has risen 1.8% so far this month. On the day, the dollar index rose 0.3% to a peak of 105.87, its highest level since July, while most Asian currencies fell. Despite dollar strength and outflows from local stocks, the rupee has fared better than a majority of its regional peers in recent sessions. While the offshore Chinese yuan and the Thai baht have declined 1.2% and 1.6% in November, the rupee has weakened by 0.4%, supported by the central bank's routine interventions. State-run banks were spotted offering dollars on Tuesday, likely on behalf of the Reserve Bank of India, traders said. "As the dust settles after last week's U.S. election results, global markets are settling into core trades of a firmer dollar, higher U.S. equities and higher terminal rate from the Fed," ING Bank said in a note. Overseas investors have pulled out nearly $3 billion from local stocks in November, adding to last month's $11 billion outflow and keeping the rupee under pressure. Benchmark Indian equity indexes, the BSE Sensex (.BSESN) , opens new tab and Nifty 50 (.NSEI) , opens new tab, ended lower by 1% on the day, their fourth consecutive daily decline. Investors awaited India's consumer inflation data, due at 4:00 p.m. IST (10:30 a.m. GMT), and remarks from Federal Reserve policymakers later in the day. Sign up here. https://www.reuters.com/markets/currencies/rupee-falls-record-low-buoyant-dollar-persistent-outflows-2024-11-12/
2024-11-12 10:10
VIENNA/FRANKFURT, Nov 12 (Reuters) - Protectionist policies from the incoming U.S. administration will hamper global growth and Europe must be better prepared than in 2018, European Central Bank policymakers warned on Tuesday. U.S. President-elect Donald Trump has promised a big increase in trade barriers, including a 10% universal tariff on imports from all foreign countries and a 60% tariff on imports from China, with the aim of reducing the U.S. trade deficit. "What we do know is that the significant import duties spoken of could have detrimental ramifications for the world economy," Finnish central bank chief Olli Rehn said in London. "A new trade war is the last thing we need amid today’s geopolitical rivalries – especially among allies." Austrian central bank chief Robert Holzmann warned that these policies, if implemented, will keep U.S. interest rates and inflation higher, also putting upward pressure on prices elsewhere. "He means what he has said and he will probably implement it faster than we expect. If so, what do markets expect? ... That interest rates will stay higher and that inflation will also be higher," Holzmann said in Vienna, adding that would put upward pressure on the dollar and euro zone inflation. Holzmann argued that if the dollar firms and approaches parity against the euro, that would have a measurable impact on import costs, especially for energy, making it harder for the ECB to get to its 2% inflation target and potentially delaying the process. Trade tensions started to increase between the U.S. and Europe during Trump's first presidency and Europe struggled to find a joint response, a mistake it should not make this time, Rehn said. "If a trade war were to start, Europe must not be unprepared, as it was in 2018," Rehn added. "The (ECB) must, within its mandate, act as an anchor for economic and financial stability in this landscape of great challenges," Rehn said. "No one should doubt that we will shoulder this responsibility in full." Sign up here. https://www.reuters.com/markets/trumps-policies-will-put-upward-pressure-inflation-ecbs-holzmann-says-2024-11-12/
2024-11-12 08:20
JOHANNESBURG, Nov 12 (Reuters) - South Africa's rand extended its losses in early trade on Tuesday to hit a two-and-a-half month low, ahead of third quarter unemployment figures and September manufacturing data. At 0805 GMT, the rand traded at 18.0375 against the dollar , about 0.6% softer than its previous close, and its weakest level since mid-August. The currency has traded turbulently since Donald Trump's U.S. election win last week. The dollar firmed against a basket of currencies. Local investors will look to third quarter unemployment numbers (ZAUNR=ECI) , opens new tab at 0930 GMT and September manufacturing output data (ZAMAN=ECI) , opens new tab at 1100 GMT, which could give clues on the health of Africa's most industrialised economy. "The labour market remains a significant drag on growth," said Andre Cilliers, currency strategist at TreasuryONE. "While reforms under the government of national unity (GNU) may offer a glimmer of hope, businesses are likely to remain cautious on hiring until clearer signs of sustained economic momentum emerge," Cilliers added. On the Johannesburg stock market, the Top-40 (.JTOPI) , opens new tab index was down about 0.8%. South Africa's benchmark 2030 government bond was weaker in early deals, with the yield up 5.7 basis points to 9.282%. Sign up here. https://www.reuters.com/markets/currencies/south-african-rand-extends-losses-before-unemployment-manufacturing-data-2024-11-12/
