2024-11-05 19:18

BRUSSELS, Nov 5 (Reuters) - The European Union's likely new energy commissioner, Dan Jorgensen, wants to accelerate the end of the bloc's dependence on Russian fossil fuels, he told a parliamentary hearing on Tuesday. "In my first 100 days, I will present a plan on how to speed-up ending our reliance on Russian gas before 2027," he said. Commission President Ursula von der Leyen has tasked Jorgensen with lowering energy prices to try to restore Europe's industrial competitiveness, decarbonise the economy and end the bloc's remaining Russian energy imports. He is expected to be confirmed in his new post in the coming weeks. "We do have a challenge, our industry is suffering. They are paying two or three times as much for energy as in the U.S. and China...ordinary people are struggling to pay their bills," Jorgensen said, adding it was largely due to the war in Ukraine. He said the EU needed to deploy more renewable energy, which would require extending grids, boosting digitalisation and new storage technology, and faster permitting. To help decarbonise, Jorgensen also said nuclear energy was essential. Expanding nuclear energy has been a divisive issue in the bloc with two opposing camps - one in favour backed by France and the other led by Germany. The EU set itself a non-binding goal to end Russian gas imports by 2027 after Russia launched its full-scale invasion of Ukraine in 2022. However, some member states have done little to diversify and Russian gas imports rose last year. "We used to get 45% of our gas from Russia, now we are down to 18% but 18% is still too much we need to be 100% independent of Russian fuel," Jorgensen said. The EU banned imports of Russian oil with a few exceptions in 2022 but stopped short of placing any restrictions on gas. In June, countries took a first step and banned Russian liquefied natural gas (LNG) trans-shipments through European ports. While some member states seek tighter measures, Russia-friendly Hungary is negotiating with Russia's Gazprom to increase flows via the TurkStream pipeline in 2025. Sign up here. https://www.reuters.com/business/energy/prospective-eu-energy-boss-says-would-speed-up-end-russian-gas-imports-2024-11-05/

2024-11-05 18:44

Services sector PMI increases 1.1 points to 56.0 in October Employment index highest in just over a year Trade deficit rises 19.2% to $84.4 billion in September Imports jump 3.0%; exports decline 1.2% Imports of goods and services were highest on record WASHINGTON, Nov 5 (Reuters) - The U.S. services sector accelerated to a more than two-year high in October as employment rebounded strongly, suggesting that a near stall in job growth last month was an aberration. The surprise strength in the vast services sector reported by the Institute for Supply Management (ISM) on Tuesday indicated that the economy retained most of its momentum early in the fourth quarter and was in solid shape as Americans headed to the polls to pick the next president. Republican presidential candidate Donald Trump is locked in a tight race for the White House with Democratic Vice President Kamala Harris. Comments from respondents in the ISM were generally upbeat and included, "business is booming, nothing slowing down," and "commodity pricing is stabilizing as inflation concerns ease." "This sets the stage for another quarter of solid economic growth to round out 2024 to further push off concerns about the state of the economy," said Ben Ayers, senior economist at Nationwide. The ISM's nonmanufacturing purchasing managers (PMI) index jumped to 56.0 last month, the highest reading since July 2022, from 54.9 in September. Economists polled by Reuters had forecast the services PMI declining to 53.8. A PMI reading above 50 indicates growth in the services sector, which accounts for more than two-thirds of the economy. The ISM views PMI readings above 49 over time as generally indicating an expansion of the overall economy. Fourteen services industries reported growth, including retail trade, information, transportation and warehousing as well as construction, mining, and finance and insurance. Other services, and management of companies and support services, were the only two categories reporting a contraction. Construction companies used the words "good" and "building backlog" to describe business. Professional, scientific and technical services firms said "business is in a steady state, with everyone holding an even keel awaiting U.S. election results." But some healthcare and social assistance companies reported that Hurricane Helene, which devastated large parts of the Southeast, had "seriously damaged an IV production plant in North Carolina" and they were "now starting to experience shortages." Wholesale traders said "the economy is still causing issues within our business and that of our suppliers." The survey's measure of employment rebounded to 53.0 in October, the highest reading since September 2023, from 48.1 the prior month. It reinforced economists' views that October's paltry 12,000 gain in nonfarm payrolls was the result of temporary factors like Hurricanes Helene and Milton as well as strikes by aerospace workers, including at Boeing (BA.N) , opens new tab. The strikers accepted a new contract offer from Boeing on Monday, ending a bitter seven-week work-stoppage that halted most jet production and worsened a financial crisis at the troubled planemaker. "While businesses may not be hiring as many workers as they were coming out of the pandemic, there is still little evidence that businesses are rapidly shedding workers either," said Shannon Grein, an economist at Wells Fargo. The ISM's new orders measure eased to a still-high 57.4 last month from 59.4 in September. Its prices paid gauge for services inputs ticked down to 58.1 from 59.4 in September, indicating that inflation pressures continued to abate. The Federal Reserve is on Thursday expected to cut interest rates again, this time by a quarter of a percentage point to the 4.50%-4.75% range. The U.S. central bank launched its policy easing cycle with an unusually large half-percentage-point rate cut in September, the first reduction in borrowing costs since 2020. The Fed hiked rates by 525 basis points in 2022 and 2023. Stocks on Wall Street were higher. The dollar slipped against a basket of currencies. U.S. Treasury yield rose. TRADE DEFICIT WIDENS Strong domestic demand, which is underpinning the economy, is drawing in imports. The threat of higher tariffs on goods if Trump is returned to the White has also prompted businesses to front load on imports, driving the trade deficit to a nearly 2-1/2-year high in September. Trump has promised to impose a 60% tariff on Chinese goods and at least a 10% levy on all other imports if he wins Tuesday's election. The trade gap increased 19.2% to $84.4 billion, the highest level since April 2022, the Commerce Department's Bureau of Economic Analysis said in a separate report. Economists had forecast the trade deficit would swell to $84.1 billion. Imports jumped 3.0% to a record $352.3 billion. Goods imports advanced 4.0% to $285.0 billion, the highest level since March 2022. They were driven by a $4.0 billion rise in imports of consumer goods, mostly pharmaceutical preparations. Capital goods imports increased $2.8 billion to an all-time high, lifted by computers and semiconductors. Imports of industrial supplies and materials, which include crude oil, rose $2.2 billion. Imports of automotive vehicles, parts and engines gained $1.2 billion. Food imports at $18.8 billion were the highest on record. But imports of services fell $0.6 billion to $67.3 billion, amid a $0.8 billion decline in charges for the use of intellectual property. Travel services imports fell $0.2 billion, but those of transport services rose $0.3 billion. Exports dropped 1.2% to $267.9 billion. Goods exports fell 1.8% to $176.0 billion, weighed down by a decline of $1.9 billion in capital goods, mostly civilian aircraft. Consumer goods exports fell $1.4 billion amid a drop in pharmaceutical preparations. Exports of industrial supplies and materials decreased $1.4 billion, with crude oil easing $1.3 billion. Exports of services slipped $0.1 billion to $91.9 billion, reflecting a $0.2 billion dip in maintenance and repair services. Government goods and services increased $0.1 billion while transport services edged up $0.1 billion. The goods trade deficit widened 14.9% to $109.0 billion, also the highest since March 2022. It increased 13.1% to $100.1 billion when adjusted for inflation. The goods trade deficit with China widened to $26.9 billion from $24.7 billion in August. Trade subtracted 0.56 percentage point from gross domestic product in the third quarter. It has been a drag on economic growth for three straight quarters. The economy grew at a 2.8% annualized rate in the July-September quarter. "We expect imports to outpace exports in the short term, as investment in data centers and semiconductors supports capital goods imports and a strong consumer pushes retailers to build out inventories," said Matthew Martin, a senior U.S. economist at Oxford Economics. Sign up here. https://www.reuters.com/markets/us/us-trade-deficit-widens-sharply-september-2024-11-05/

2024-11-05 18:40

LONDON, Nov 5 (Reuters) - British government bond yields hit their highest in a year on Tuesday as global investors braced for a U.S. election outcome that could return Donald Trump to the White House with plans that might push up inflation and debt issuance. The yields on British five- , 10- and 20-year government bonds all touched their highest since Nov. 1, 2023 as gilt prices fell faster than those of U.S. Treasuries and German Bunds. British government bond prices had already fallen sharply last week, pushing up yields, after finance minister Rachel Reeves delivered her first budget on Oct. 30. Her plan included higher-than-expected spending and a jump in borrowing that is bigger than the 40 billion pounds ($52 billion) in tax increases. The five-year gilt yield rose the most on Tuesday, up 11 basis points on the day to a peak of 4.449%. The yield premium over German Bunds widened by 7 bps to 214 bps, the highest since September 2023. The two-year gilt yield was up 8 bps on the day at 4.51% while the 10-year yield rose around 7 bps to 4.52%. The gilt-Bund spread for 30-year debt hit its widest point since October 2022. Gilts often move more sharply than Treasuries or Bunds, and Michiel Tukker, senior European rates strategist at ING, said Tuesday's move was largely U.S.-driven. "The Trump trade led to some steepening of the U.S. Treasury curve, whilst strong ISM services data also pushed up yields. Together these easily account for the higher gilt yields," he said. Demand at a sale of 3.75 billion pounds of benchmark 10-year gilts on Tuesday was the weakest for any auction since December. Last week's rise in yields was attributed by many analysts to the risk that the Bank of England will cut interest rates less than previous estimates in response to the budget stimulus. The BoE is widely expected to cut its benchmark rate by a quarter of a percentage point to 4.75% on Thursday. But markets price in only gradual rate cuts thereafter to 4.25% or 4% by the end of next year. Less loosening is expected from the U.S. Federal Reserve or European Central Bank. ($1 = 0.7705 pounds) Sign up here. https://www.reuters.com/markets/europe/uk-bond-yields-hit-one-year-high-us-election-nerves-2024-11-05/

2024-11-05 18:31

OTTAWA, Nov 5 (Reuters) - The Bank of Canada's governing council felt its key borrowing cost was not needed to be as restrictive ahead of its Oct. 23 decision to cut rates as it was confident that upside pressures on inflation would continue to decline, minutes showed on Tuesday. The BoC slashed its key policy rate by 50 basis points to 3.75% last month, its fourth cut in a row and the first larger-than-usual move in more than four years, after declaring an almost victory over inflation. The members of the rate-setting committee, however, discussed the merits of a 25 basis point cut but saw a strong consensus among them for the larger step, the summary of deliberations said. "Governing Council members wanted to convey that a larger step was appropriate given the economic data seen since July," it said. There was concern among the members that many would construe the bigger rate cut as a sign of economic trouble, leading to expectations of further moves of this size or to assumptions that the policy interest rate would need to become very accommodative in the future. "Members felt that a larger step was appropriate given the ongoing softness in the labor market and the need for stronger economic growth to absorb excess supply," it said. Inflation in Canada eased to 1.6% in September, falling below the bank's mid-point of the 1% to 3% control range as over a 23-year high interest rate shrunk consumer prices. But it has also throttled growth with the GDP stalling in August and expectations are that it would miss the BoC's revised 1.5% target in the third quarter. The central bank and economists feel the latest government's efforts to curtail population growth would soften the GDP and consumption in the coming quarters. "The slowing rate of population growth would act as a brake on total consumption growth," the minutes said, adding it could slow in the near term even though reductions in interest rates would ultimately support stronger growth in consumption. Prime Minister Justin Trudeau's government announced measures last month which could lead to a population decline of 0.2% in both 2025 and 2026 before returning to a marginal growth in 2027. The six-member committee also discussed the risk that lower interest rates, pent-up demand, and new rules for mortgage qualification could increase demand for housing and boost housing prices more than expected. By Promit Mukherjee, editing by Dale Smith ([email protected] , opens new tab) Keywords: CANADA CENBANK/ Sign up here. https://www.reuters.com/world/americas/bank-canada-members-do-not-see-need-interest-rate-be-restrictive-minutes-show-2024-11-05/

2024-11-05 17:43

LONDON, Nov 5 (Reuters) - Hedge fund performance, on average, is better when the U.S. president is a Democrat, data from research firm HFR showed on Tuesday, as U.S. voters headed to the polls. Under Democratic Party presidents, hedge funds averaged a 10.2% annualized return, whereas under a Republican president hedge funds returned 8.7% on average, showed the data from Hedge Fund Research's main index which tracks the returns of global hedge funds. This data from HFR's HFRI Fund Weighted Composite Index tracked hedge funds' performance averaged over presidential terms from 1990 to 2024. Hedge funds performed roughly twice as well when the House and Senate majority were in one party than they did with a split legislative body, the HFR data showed. Performance when Democrats had a majority in the U.S. Congress came in higher than with Republicans, the data also showed. By strategy, stock hedge funds fared the best under Democrats -- averaging a 12.7% return compared to 9.6% under the Republicans, over the last 34 years, said HFR data. Hedge funds trading M&A deals and the relative value between different financial assets also had higher returns during years when the president was a Democrat, the data showed. Funds speculating on macroeconomics or so-called macro hedge funds were the only strategy listed with higher returns during Republican presidents, according to HFR. The dispersion between hedge fund performance, or the difference between the best and worst performing funds differed the most during years when the president was a Democrat, it added. Hedge funds' annualized performance averaged the highest during the first year of a president's term and came in lowest during two term presidencies in the second, sixth and last year. With 2008 and the financial crisis removed, the result skewed marginally towards Republicans. Hedge funds returned 10.7% with Republicans during these years, compared to a 10.2% result with presidents from the Democratic Party, HFR said. (This story has been refiled to fix a typo in 'tracked,' in paragraph 3) Sign up here. https://www.reuters.com/markets/us/hedge-funds-perform-better-with-democrats-white-house-hfr-data-shows-2024-11-05/

2024-11-05 16:18

Canadian dollar gains 0.4% against the greenback Touches its strongest since Oct. 25 at 1.3846 Canada's services economy expands in October Bond yields rise across the curve TORONTO, Nov 5 (Reuters) - The heavily shorted Canadian dollar strengthened to an 11-day high against its U.S. counterpart on Tuesday, with investors managing their currency risk as Americans headed to the polls and after data showed a pick-up in Canada's services sector. The loonie was trading 0.4% higher at 1.3850 to the U.S. dollar, or 72.20 U.S. cents, after touching its strongest intraday level since Oct. 25 at 1.3846. "We could just be seeing some position squaring. The Canadian dollar has been a heavily shorted currency," said Adam Button, chief currency analyst at ForexLive. Speculators have raised their bearish bets on the Canadian dollar to the highest level since mid-August. "The Canadian dollar is one of the clear election night trades along with the Mexican peso in the foreign exchange market," Button said. "Both are highly leveraged to U.S. trade and global growth." Republican former President Donald Trump, who is in a neck-and-neck race with Democratic Vice President Kamala Harris for the presidency, has proposed sweeping tariffs on imported goods. Canada sends about 75% of its exports to the United States, including oil. The nation posted a higher-than-expected trade deficit of C$1.26 billion ($908 million) in September mainly on account of lower prices which pulled down the value of exports but overall volumes of outbound shipments rose. Separate data showed that Canada's services economy expanded for the first time in five months in October. The headline business activity index rose to 50.4 from 46.4 in September. The price of oil was up 1.3% at $72.37 a barrel, adding to its gains in the prior day when OPEC+ delayed plans to hike production. Canadian bond yields moved higher across the curve, tracking moves in U.S. Treasuries. The 10-year was up 5.8 basis points at 3.293%. Sign up here. https://www.reuters.com/markets/currencies/canadian-dollar-climbs-11-day-ahead-us-election-night-2024-11-05/