2024-11-06 06:13

Dollar climbs to four-month high Commodities from oil and gas to metals and grains drop after Trump win Market expects Fed to cut rates by 25 bps on Thursday Silver, platinum and palladium hits three-week low Nov 6 (Reuters) - Gold prices slid to a three-week low on Wednesday, as investors piled into the U.S. dollar after Republican Donald Trump was elected U.S. president. Market participants were also looking ahead to the Federal Reserve's interest-rate decision on Thursday for further clues on the bank's easing cycle that had helped gold's stunning rally to successive record highs this year. Spot gold was down 2.8% at $2,667.19 per ounce, as of 2:07 p.m. ET (1907 GMT), after hitting a three-week low of $2,652.19. The metal was on track to post its biggest daily loss in five months. U.S. gold futures settled 2.7% lower at $2,676.30. "A clear presidential victory when the market has been pricing in a contested result, removal of an element of risk, Trump trades include the dollar's strengthening this morning and the combination of the two has brought gold lower," said StoneX analyst Rhona O'Connell. Trump recaptured the White House by securing more than the 270 Electoral College votes needed to win the presidency, Edison Research projected. Investors said Trump's presidency will bolster the dollar, causing the Federal Reserve to pause its easing cycle if inflation takes off after expected new tariffs. The dollar index (.DXY) , opens new tab hit a four-month high, making bullion more expensive for overseas buyers. The risk of rising inflation could slow the pace of U.S. rate cuts as tariffs roll out, said Ole Hansen, head of commodity strategy at Saxo Bank. "The (Federal Open Market Committee) will likely still cut on Thursday but the subsequent language will be studied closely for signs of a pause." Investors widely expect the Fed to announce a quarter-point rate cut after 50-bps reduction in September. Commodities from oil and gas to metals and grains dropped as the dollar rallied. Spot silver fell 4.4% to $31.24 per ounce. Platinum shed 0.8% to $991.60 and palladium was down 3.4% at $1,039.43. All three metals hit their lowest levels in three weeks. Sign up here. https://www.reuters.com/markets/commodities/gold-holds-steady-market-awaits-us-election-outcome-2024-11-06/

2024-11-06 06:06

Major stock indexes on Wall St hit record highs; Tesla jumps Dollar climbs, euro down 2% Treasury yields surge as 30-year yield rises as much as 20 bps Mexican peso hits two-year low NEW YORK/LONDON, Nov 6 (Reuters) - Wall Street tore to record highs on Wednesday and major stock markets around the world surged, while bitcoin hit an all-time-high and the dollar was set for its biggest one-day jump in four years after Donald Trump was elected U.S. president. Trump's decisive victory pummelled long-dated Treasuries and revived the "Trump trade," as yields rose in anticipation that Trump will hike tariffs as he has promised, increasing the U.S. deficit and inflation and causing the Federal Reserve to cut interest rates by less than it otherwise would have. Trump, 78, recaptured the White House in Tuesday's election with resolute support, despite news reports and polls that said it was a closely contested election. “The fact that he won so handily, and it was called so quickly, I think that was a bit of a shock to the market," said Paula Comings, head of foreign exchange sales at U.S. Bank. "We have seen now massive rallies in risk assets.” The VIX, a measure of stocks' volatility also perceived as "Wall Street's fear gauge," dived 21% as investors celebrated in part the clarity of the election outcome. The S&P 500 Index (.SPX) , opens new tab jumped 2.5%, the Dow Jones Industrial Average surged 3.6%, and the Nasdaq Composite leapt 3%. All three indexes hit record highs on Wednesday. The MSCI index for world stocks (.MIWD00000PUS) , opens new tab rose 1.3%. Shares in electric car maker Tesla (TSLA.O) , opens new tab leapt 15% after Elon Musk, its billionaire CEO, emerged as one of Trump's key supporters in the final leg of his 2024 campaign. Investors appeared to bet on Tesla's benefiting from Musk's ties with Trump, who has said he would create a government efficiency commission headed by Musk to cut federal spending. Shares in Trump's social media company, Trump Media & Technology Group (DJT.O) , opens new tab, gained 5.9% to $35.96 after surging as much as 42% overnight. The stock has approximately halved in value since hitting a record high in March. The dollar index rallied 1.7% and was set for its best day since March 2020. Outside the United States, investors were decidedly less euphoric, weighed by concerns that higher tariffs under Trump would hurt global trade and economic growth. The euro extended losses by a touch late in the day after German Chancellor Olaf Scholz sacked his finance minister, and said he will hold a parliamentary confidence vote in the government in January, triggering political chaos in Europe's largest economy. European shares gave up earlier gains and fell 0.5% (.STOXX) , opens new tab. Mexico's peso sank to its weakest level in over two years. "The market is definitely moving in line with the Trump playbook; stocks and small caps, in particular, are higher on the idea that Trump will be good for U.S. companies," said Seema Shah, chief global strategist for Principal Asset Management in London. "Across emerging markets, you can see China and Europe are struggling with the idea that they could face higher tariffs, and U.S. bond yields higher with expectations for a higher fiscal deficit and inflation." BONDS DISCONNECT U.S. borrowing costs surged particularly for longer-dated bonds, suggesting concern from investors about the U.S. deficit path. The 10-year Treasury yield rallied 14 basis points to 4.4343%, its largest gain in a single day in nearly seven months. The 30-year Treasury yield shot up 16 bps to 4.6085%, its biggest one-day increase since March 2020's pandemic-induced volatility. While markets were still confident the Federal Reserve would cut interest rates by 25 basis points at the close of its two-day meeting on Thursday , they slightly reduced bets on further easing in December. "The big challenge for markets is that if you do see tariffs come through you need to balance the short-term nature of inflation risks with the medium-term aspect of lower growth," said Justin Onuekwusi, chief investment officer at investment firm St. James's Place. "The market appears to be thinking about inflation right now." In contrast, European government bonds rallied, and German two-year bond yields fell 11 basis points to 2.19% , while money markets priced in lower European Central Bank rates. "For European businesses, Trump’s return to the White House would mean considerable trade policy and geopolitical uncertainty, with negative implications for growth on the continent," said Berenberg chief economist Holger Schmieding. CURRENCY WINNERS AND LOSERS Bitcoin emerged as one of the clear winners of the day. The cryptocurrency climbed to a record high of $76,086 and was last up 9.6%. Trump is seen as more actively supportive of cryptocurrencies than the Democratic candidate, Vice President Kamala Harris. In traditional currencies, the euro was hurt by potential tariffs and the widening differential between U.S. and European rates. It was last down 1.8% at $1.0730 , set for its biggest daily fall since 2016's Brexit referendum and outpacing a 1.2% fall in sterling . The dollar jumped 2% to 154.59 Japanese yen, , and gained 1.4% on the offshore yuan to 7.1969 yuan amid reports Chinese banks were selling dollars to slow the yuan's decline. China is seen on the front line of tariff risk, and its currency in particular is trading on tenterhooks with implied volatility against the dollar around record highs. Chinese stock markets have surged to almost one-month highs as investors expect a meeting of top policymakers in Beijing this week to approve local government debt refinancing and spending. Chinese blue chips (.CSI300) , opens new tab lost early gains to turn flat, and Hong Kong stocks (.HSI) , opens new tab fell over 2%. Mexico's peso briefly dropped as low as 20.8038 per dollar for the first time since August 2022, more than 3% below its previous close - the biggest such tumble since Mexico's election in the summer roiled domestic assets. Ukraine's international sovereign bonds rallied nearly 2 cents, boosted by bets that a second Trump term could lead to a quicker end to Russia's war in Ukraine. The sharp rise in the dollar pressured oil prices, and other commodities, as it makes them more expensive when buying in other currencies. U.S. crude lost 0.2% to $71.83 per barrel, while Brent fell 0.6% to $75.11. Gold prices dropped 3.1% to $2,660.22 an ounce , off a recent record peak of $2,790.15 . (This story has been corrected to say yields rose, not sank, in paragraph 2) Sign up here. https://www.reuters.com/markets/global-markets-wrapup-1pix-2024-11-06/

2024-11-06 05:49

Nov 6 (Reuters) - German chemicals group Evonik Industries (EVKn.DE) , opens new tab reported third-quarter core profit above market expectations on Wednesday, and said its initiatives to cut costs and build a leaner organisation were paying off. Evonik posted a 19% rise in quarterly adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) to 577 million euros ($622 million), beating analysts' median forecast of 572.7 million euros in a poll compiled by Vara , opens new tab. "Our adjusted EBITDA and free cash flow trends are clearly pointing in the right direction - upward," Chief Financial Officer Maike Schuh said in the statement, adding that the success was based on Evonik's shift towards high-margin growth businesses and cost discipline. The company had in March said it would cut up to 2,000 jobs worldwide by 2026, with some 1,500 of them in Germany, to reduce annual costs by 400 million euros. In October, Evonik said it planned to scale back its adhesives and health care lines to focus on the core parts of those businesses, while shedding other non-core operations. Its free cash flow fell to 357 million euros in the quarter from 469 million a year ago. It said this was due to a more even distribution of cash inflows in the first nine months of the year. ($1 = 0.9276 euros) Sign up here. https://www.reuters.com/markets/commodities/evoniks-cost-cuts-help-it-beat-q3-core-profit-expectations-2024-11-06/

2024-11-06 05:35

Taliban outlawed narcotics cultivation in 2022 Opium production collapsed 95% the following year In 2024 the area cultivated has rebounded 19%, report says Centre of production shifts to northeast, prices surge VIENNA, Nov 6 (Reuters) - Opium poppy production in Afghanistan, long the world's dominant supplier of the raw material for heroin, has risen by a fifth in the second full year since the Taliban banned it but remains a fraction of pre-ban levels, a U.N. report said on Wednesday. The Taliban's supreme spiritual leader banned the cultivation of narcotics in April 2022. That prompted opium farming in the country to plummet an estimated 95% in 2023, according to an annual survey by the United Nations Office on Drugs and Crime (UNODC). This year, cultivation increased an estimated 19% to 12,800 hectares (32,000 acres) and the centre of production shifted from its traditional heartland, the country's southwest, to the northeast, the latest UNODC report published on Tuesday said. "Despite the increase in 2024, opium poppy cultivation remains far below 2022, when an estimated 232,000 hectares were cultivated," the UNODC said in a statement. Dry opium prices stabilized around $730 a kilogram in the first half of this year, far above the pre-ban average of $100, the report said. Last year's report said that in August 2023 those farm-gate prices had reached a "20-year peak" of $408. In Afghanistan's southwestern region, which borders Pakistan and accounted for almost half the country's production in 2023, cultivation collapsed 65% this year, the report said. Of that region's poppy-farming provinces, the only exception was Helmand, which saw a 434% increase but from a low base. In the northeastern region, which borders Turkmenistan, Uzbekistan and Tajikistan, cultivation surged 381% this year to 7,563 hectares, four times the area cultivated in the southwest, the second-biggest producer, the report said. Almost all the northeast's production was in one province, Badakhshan, a mountainous area that includes a stretch of the Hindu Kush and Afghanistan's relatively short border with China. "The high prices and dwindling opium stocks may encourage farmers to flout the ban, particularly in areas outside of traditional cultivation centers, including neighboring countries," the UNODC said. Sign up here. https://www.reuters.com/markets/commodities/afghan-opium-cultivation-bounces-shifts-two-years-after-ban-un-says-2024-11-06/

2024-11-06 05:33

A look at the day ahead in European and global markets from Wayne Cole. It's been a wild ride in markets with the dollar and Wall Street futures surging while Treasuries took a beating as early results in the presidential election favoured Republican Donald Trump. Several key battleground states were still to be called, but betting sites heavily favoured Trump and the NY Times real-time forecast projected a 91% chance of him winning. Analysts generally assume Trump's plans for restricted immigration, tax cuts and sweeping tariffs if enacted would put more upward pressure on inflation and bond yields than would Harris' centre-left policies. Trump's proposals would also tend to push up the dollar and potentially limit how far U.S. interest rates might ultimately be lowered. Thus while markets were still confident the Federal Reserve would cut interest rates by 25 basis points on Thursday, futures for next year eased into the red with December down 8 ticks. The risk of a higher terminal Fed funds rate combined with the prospect of ever-larger budget deficits to hammer Treasuries, sending 10-year yields to four-month highs and two-year yields to a three-month top. Ten-year yields were last up 17 basis points at 4.449%, the sharpest rise since April. The jump in yields fuelled bullish bets on the dollar, which boasted its biggest daily gain since early last year . The euro, yen and Swiss franc all sank more than 1%, while the trade-exposed Australian and New Zealand dollars dived to three-month lows. China's yuan also took a tumble on fears Trump would follow through on plans to impose punishing tariffs on Chinese goods. Wall Street looked forward to promised tax cuts and less corporate regulation, with S&P 500 futures up 1.2% and Nasdaq gaining 1.3%. European stock futures were less enthused as Trump's tariff policies, if enacted, could ignite a global trade war and threaten EU exports. There was also the risk Trump could pull out of NATO, forcing Europe to spend more on defence, while emboldening Russia in its territorial ambitions. Key developments that could influence markets on Wednesday: - EZ services PMIs for Oct, producer prices for Sept - German industrial orders for Sept - US services PMI for Oct Sign up here. https://www.reuters.com/markets/europe/global-markets-view-europe-2024-11-06/

2024-11-06 05:24

MEXICO CITY, Nov 5 (Reuters) - The Mexican peso sank against the U.S. dollar as results in the U.S. presidential election rolled in, extending a streak of volatility which has hit the currency in recent days. The peso dropped as low as 20.7710 per dollar for the first time since August 2022, about 3.2% weaker than its closing price from the previous session. The peso's weakness came as traders priced in the possibility that Republican Donald Trump could defeat Democratic candidate Kamala Harris. Trump has vowed to impose new tariffs on Mexican exports. Traders are bracing for more fluctuations as the vote counts from the hotly contested U.S. presidential election come in. After Trump's 2016 presidential victory, the peso plummeted around 8.5% on the dollar to a then-historic low. Reuters' vote count shows Trump so far winning 230 Electoral College votes against 169 for Harris. A candidate needs at least 270 electoral votes to win. "Since it's such a close election and results will be slow to come in, we'll likely see the reality (of the impact on the peso) during trading in London, tomorrow in the U.S. or even through the rest of the week," said Jorge Gonzalez, who heads the consultancy Asesores en Divisas y Riesgos. Earlier this year, the value of the local Mexican currency was battered after the ruling Morena party of leftist President Claudia Sheinbaum secured large majorities in Congress following June's general election in Latin America's second-biggest economy. The congressional majorities paved the way for lawmakers to pass a controversial judicial overhaul in September that has provoked market jitters, with some investors doubting the safety of their investments under a more politicized judiciary. Officials in the United States, by far Mexico's top trade partner, have criticized the overhaul. The peso has shed around 18% of its value so far this year against the U.S. dollar. Sign up here. https://www.reuters.com/markets/currencies/volatile-mexican-peso-slips-weakest-2-years-us-votes-roll-2024-11-06/