2024-11-01 11:10

JAKARTA, Nov 1 (Reuters) - Indonesia's Supreme Court has rejected an appeal by an Indigenous community that sought to cancel a permit for a palm oil concession on thousands of hectares of rainforest it claimed as ancestral land, legal documents showed on Friday. Upholding the appeal could have set an important precedent in a country that has pledged to both protect a $30 billion export industry, and improve governance amid allegations of deforestation and human rights violations. Indonesia is the world's largest palm oil exporter. The concession at the centre of the case brought by the Awyu people's Woro clan was granted to PT Indo Asiana Lestari (IAL) on 36,000 hectares (88,960 acres) of land. "I feel heartbroken because I am left with no other legal avenue to protect the land and the people of my ancestral homeland. I am shattered because throughout this struggle, there has been no support from the government," said Hendrikus "Franky" Woro, a community member leading the legal fight. The Supreme Court is Indonesia's final court for appeals. Two out of three Supreme Court judges argued that appeal exceeded the time limits and should be rejected, while one gave a dissenting opinion, arguing IAL's permit violated Indonesia's environmental rules, a court document issued on Friday showed. Indo Asiana Lestari did not immediately respond to a request for comment. It has said previously it obtained all the permits legally required and had reached agreements with 12 Indigenous clans in the area. Besides the IAL case, other Awyu members are also seeking to revoke the permits of PT Kartika Cipta Pratama and PT Megakarya Jaya Raya, two other palm oil companies granted concessions within in same area. The total size of the area for all cases is nearly 115,000 hectares (284,170 acres). Non-governmental groups advocating for the Awyu, which included Greenpeace, said on Friday the Supreme Court's rejection may have an impact on the results of the other cases. Sign up here. https://www.reuters.com/world/asia-pacific/indonesias-top-court-rejects-indigenous-communitys-appeal-palm-oil-case-2024-11-01/

2024-11-01 11:07

7% increase in oil and gas volumes offset weaker prices Up to $3 billion in cost cuts planned through 2026 Asset sales poised to generate $8 billion in proceeds HOUSTON, Nov 1 (Reuters) - Chevron Corp (CVX.N) , opens new tab beat Wall Street estimates for third-quarter profit on Friday, helped by higher oil and gas output, but its earnings fell from a year ago. The U.S. company, whose proposed $53-billion takeover of Hess (HES.N) , opens new tab has been delayed due to a challenge by rivals Exxon Mobil (XOM.N) , opens new tab and CNOOC Ltd (600938.SS) , opens new tab, reported an adjusted profit of $4.53 billion, compared to $5.72 billion a year ago. Shares rose 2% before normal trading hours. Oil industry profits have sagged this year due to softer crude prices and weaker fuel demand growth. Oil futures in the quarter ended Sept. 30 averaged 17% below the prior quarter, and global fuel margins have suffered from slowing demand growth and excess supplies. European oil majors BP (BP.L) , opens new tab and TotalEnergies (TTEF.PA) , opens new tab this week also posted weaker results on sharp year-over-year declines in refining margins and lower oil prices. Exxon Mobil posted higher-than-expected profit on raised oil production, but profit fell 5% from a year ago. Chevron said it earned $2.51 per share for the quarter on an adjusted basis, compared to analysts' estimates of $2.42 according to LSEG data, helped by a 7% year-over-year increase in oil and gas volumes and operating cost cuts. Year-ago adjusted profit was $3.05 per share. "We also are taking steps to optimize our portfolio and reduce operating costs to deliver superior long-term value to shareholders," CEO Michael Wirth said in a statement. Up to $3 billion in cost savings are planned through 2026 from leveraging technology, asset sales and changing how and where work is performed, the company said. Chevron has said it will move its headquarters to Texas from California, and open a new, nearly $1-billion engineering center in India Savings are needed to boost returns. This year, share buybacks and dividends have outstripped earnings. The third quarter's $4.5-billion profit was less than the $7.7 billion spent on shareholder returns. Pending sales of oil properties in Canada, Alaska and Congo will generate about $8 billion in pre-tax proceeds. All three sales are expected to close this quarter, the company said. Operating profits were down compared to a year ago in both its major units. Earnings from pumping oil and gas fell 20% to $4.59 billion while profit from refining oil into gasoline and diesel tumbled 65%, to $595 million. Well maintenance and asset sales will reduce fourth-quarter oil and gas output by about 90,000 barrels per day, but the company remains on track for a roughly 7% year-over-year increase. A closely watched oil-expansion project in Kazakhstan is on track for initial startup in the first quarter, the company said. Sign up here. https://www.reuters.com/business/energy/chevron-beats-quarterly-profit-expectations-2024-11-01/

2024-11-01 11:05

Measure would ax Washington's carbon market on 100 emitters Market has raised $2 billion for green programs since 2023 Vote could shape carbon markets in other states and Quebec BP, tribes, and labor and green groups work to defeat initiative Nov 1 (Reuters) - A ballot initiative to ax Washington state's carbon market would, if passed next week, send an ominous signal to other U.S. states and Canadian regions looking to build markets aimed at cutting emissions that scientists blame for climate change. The carbon market, formed by the state's Climate Commitment Act (CCA), has raised more than $2 billion for programs including transit, wildfire protection, and salmon protection since its 2023 launch. It is supported by Native American tribes and environmental groups, as well as BP (BP.L) , opens new tab, a global energy company preparing for the potential wider adoption of such markets. Hedge fund manager Brian Heywood is leading the initiative in the Nov. 5 elections to repeal it. He blames CCA, which puts emissions limits on about 100 of the state's largest polluters, for spiking Washington's gasoline prices to the highest in the U.S. in mid-2023. Heywood, the millionaire Republican and CEO of Taiyo Pacific Partners, holds rallies for the initiative at gas stations, where he gives drivers money to reduce the cost of fill-ups. "The guys that have to drive 45 minutes a day in their 2002 Honda sedans, they're the ones that get crushed, and no one's standing up for them, so I am," Heywood told Reuters. Backers of cap-and-trade carbon markets say they can efficiently tackle carbon emissions by harnessing the power of capitalism. In such markets, the government sets gradually falling limits on carbon pollution. Industry can meet the limits by reducing their emissions through investments in clean energy. If they reduce emissions they can sell allowances to other emitters who choose not to make the efficiency investments. Washington's market may eventually link to similar mechanisms in California and Quebec, which backers say would give industries a broader choice of credits. Luke Sherman, a carbon markets analyst at the consultancy Energy Aspects, said which way Washington votes could influence decisions in states like New York, which has proposed a carbon market to meet its 2050 carbon emissions goals, and in New Jersey and Maryland where some lawmakers support carbon markets. It could also help persuade California and northeastern states in the Regional Greenhouse Gas Initiative to either broaden existing carbon markets to more industries or narrow them. "How ambitious they want to be could certainly be influenced by their perception of voter support or rejection of carbon pricing in Washington," Sherman said. 'NEEDS SOME FIXES' Washington state auctions of the allowances also earn revenues that it invests in projects from clean transit to salmon fisheries. Kelsey Nyland, a spokesperson for No On 2117, named after the ballot number, said if the measure passes it would cut billions of dollars in funding hurting "every corner of our state, putting major road and bridge projects addressing congestion, safety and freight mobility at risk of being delayed or even canceled." Community Transit, which serves Puget Sound, said it would lose about $200 million through 2038. Programs that could be hit include bus rapid transit, an efficient service featuring dedicated lanes. "The last thing we'd like to cut is service to our customers, but that certainly could happen," said spokesperson Martin Munguia. A poll conducted in October sponsored by The Seattle Times and others showed 48% of respondents oppose the initiative, 30% said "yes" and 22% were undecided. Big fossil fuel companies could help overcome the measure. BP is working to defeat the initiative "because it moves the state backwards on climate action and endangers funding for key transportation infrastructure and other low-carbon projects," a spokesperson said. BP owns Cherry Point, the largest oil refinery in the Pacific Northwest. When asked whether it might oppose the measure because it would make any pollution allowances it owns worthless, BP referred to Washington state rules forbidding the disclosure of details on market positions. Energy Aspects' Sherman said if the measure succeeds, energy companies may have to face new state emissions regulations blunter in nature than carbon pricing. "These regulations could be costlier for some emitters than their obligations under the cap-and-invest program," Sherman said. The Western States Petroleum Association has not opposed CCA, but wants changes to avoid fuel price spikes. "Regardless of the election results, the program needs some fixes for it to be affordable for consumers and sustainable for the long run," said Jessica Spiegel, vice president, northwest region of WPSA. Sign up here. https://www.reuters.com/markets/carbon/washington-state-vote-harbinger-wider-carbon-markets-2024-11-01/

2024-11-01 10:17

A look at the day ahead in U.S. and global markets from Mike Dolan With next week's U.S. election now dominating thinking, the last two megacap earnings reports of the week appear to have calmed the stock market somewhat and a potentially noisy October payrolls report is up next. Amazon (AMZN.O) , opens new tab and Apple (AAPL.O) , opens new tab got different market receptions to their updates overnight - the remaining two of five "Magnificent Seven" firms reporting this week. Amazon stock jumped 6% on forecast-beating profit and sales, with the company indicating healthy results in the holiday quarter thanks to its faster shipping times and a move to stock lower-cost items. It was a relief to markets that saw fresh doubts this week about the speed with which the hefty spend on artificial intelligence was translating into returns for Big Tech giants. Apple underwhelmed with its beat and the stock is off about 1% before Friday's bell. Its AI-enhanced iPhone made a strong start, pushing quarterly sales ahead of expectations. But a modest revenue forecast raised questions about the holiday season and a decline in China sales bothered some analysts. Ailing chipmaker Intel (INTC.O) , opens new tab perked up, however, with a 7% rally overnight on optimism about a turnaround in its PC and server businesses. The market-wide upshot today is that index futures , look set to regain some of Thursday's heavy losses. And more than 60% through the current earnings season, the blended annual profit growth estimate for the S&P500 has actually picked up pace to as much as 7.5% - well up on pre-season forecasts of just over 5%. With sovereign bonds markets focusing more attention agitated by post-budget British gilts , U.S. Treasuries remained relatively calm as the October employment report is due later on Friday, the dead heat election race enters its final weekend, and a second Federal Reserve interest rate cut of the year is expected next week. Although a month of storms may distort the numbers, a Reuters survey showed nonfarm payrolls probably increased by 113,000 jobs last month after rising by 254,000 in September and jobless rate is forecast to remain unchanged at 4.1%. This week's private sector payrolls update for October and weekly jobless data came in hotter than many had bet on, but inflation readings were calm enough to keep futures confident the Fed will deliver a quarter-point post-election rate cut next Thursday. The personal consumption expenditures (PCE) price index rose 0.2% in September, driven mainly by services but with goods prices actually falling outright for a second consecutive month. An annual 2.1% gain in the headline PCE price index was the smallest since February 2021 and close to the Fed's target. ISM and S&P Global release October U.S. manufacturing surveys later on Friday too. In Europe, British gilts and the pound calmed down somewhat on Friday after a torrid week that saw 10-year yields hit their highest in a year following heavy tax and borrowing plans in the new Labour government's first budget. Worrying on Thursday was a slide in the pound , even as yield premiums on gilts over other major government bonds increased and money markets removed at least one Bank of England rate cut from next year's horizon. Markets still see an 80% chance the BoE will deliver its second rate cut of the year next Thursday although its 5% policy rate is now expected to remain above 4% through 2025 - almost half a point higher than the expected Fed rate at the end of next year. Helping calm the piece on Friday, credit ratings agency S&P said Britain's public finances were "constrained" after the budget but added it had not revised its forecasts for borrowing. "We have not changed our headline budget deficit forecasts as a result of the budget announcement, partly because our existing projections already contain wider deficits that reflect lingering public spending pressures," it added. Elsewhere, oil prices edged higher and world stocks were mixed - with European indexes advancing but Japan's Nikkei (.N225) , opens new tab underperforming with losses of more than 2% on a slightly stronger yen and the previous day's Wall Street slide. Big U.S. oil firms top the earnings diary later. Market bets on a U.S. election win for Republican Donald Trump - Bitcoin, Trump Media and gold - were pared back. The dollar index (.DXY) , opens new tab was firmer. Key developments that should provide more direction to U.S. markets later on Friday: * US October employment report, October manufacturing surveys from ISM and S&P Global * US corporate earnings: Exxon, Chevron, PPL, Dominion Energy, T Rowe Price, Cboe Global Markets, Church & Dwight, Cardinal Health, Waters, LyondellBasell Industries, Charter Communications Sign up here. https://www.reuters.com/markets/us/global-markets-view-usa-2024-11-01/

2024-11-01 10:11

Investors seek asymmetric trades with limited downside Bitcoin and yuan trades seen as potential winners Some say Trump trade overdone as race stays tight NEW YORK, Nov 1 (Reuters) - Hedge funds and other investors are searching for trades that profit from a win by Republican presidential candidate Donald Trump, but also offer limited downside in the event of a victory by Vice President Kamala Harris. As the nearly deadlocked race nears, some are looking for so-called "asymmetric trades" involving bitcoin or the yuan, assets which could yield big profits if Trump wins but would not cause big losses if the wagers are wrong. "Trading the election is difficult given how tight it is," said Edoardo Rulli, head of UBS Hedge Fund Solutions. Some betting websites have favored Trump, which has created momentum behind the so-called Trump trades. Others are now forecasting those trades, which involve bets that could benefit from a Trump victory, could lose momentum or reverse in the case of a Harris win. Trades that could yield higher gains than losses in whichever scenario plays out include a long position in bitcoin, said David Kalk, founder at hedge fund Reflexive Capital. He said the potential bitcoin upside would be two to three times the money which is put at risk if Trump wins, as he expects a more friendly regulatory approach to crypto under the former president. "The negative price response we expect (in case of a Harris' victory) just seems much smaller than the upside of a Trump win," Kalk said. Macro hedge fund MKP Capital Management's founder Patrick McMahon said he sees shorting the yuan versus the dollar as an asymmetric trade, given the losses the Chinese currency may face if tariffs were imposed. Some have placed neutral bets, such as pairing a short position on a stock with a long one, reducing directional exposure, said Robert Christian, chief investment officer at K2 Advisors. This way gains in one trade could offset losses in another. Mario Unali, head of investment advisory at Kairos Partners, which manages a fund of hedge funds, said trades were pivoting to a Trump win because a victory for Harris is more about the status quo, so losses would be limited. The hedge fund industry has so far posted gains of 8.3% in the first nine months of the year, according to research firm PivotalPath. The industry average is underperforming the S&P 500's 20% gain, putting some hedge funds under more pressure to adopt a more cautious stance on the race that will deliver some upside. Jon Caplis, CEO of PivotalPath, expects some selling ahead of the election. "They could bank those returns, and then they could wait for weeks or months, depending on how long it takes before things become clear again." TRUMP TRADE Large wagers on betting markets have raised questions by social media users about whether they were swaying the markets or whether prediction markets were simply a better leading indicator of the race. The Trump trades included a selloff in Treasuries, the yuan, and a rise in shares of Trump Media & Technology Group (DJT.O) , opens new tab. Because the two candidates are still neck and neck a few days from the election, some investors question whether some of the trades placed on expectations of a Trump victory may be overdone. An average of national polls according to opinion poll aggregator 538 on Thursday had Democratic presidential candidate Kamala Harris at 48.1% versus Trump at 46.7%, a gap which is 1.3 percentage point smaller than on Oct. 1. "At the end of the day I think this short term move in Treasuries is probably overdone," said John Luke Tyner, head of fixed income and portfolio manager at Aptus Capital Advisors. "If Harris wins you would probably see a snap back lower in long-term yields, but I think we’re going to see it either way," he added. Strategists at Citi said they have recently exited some of their Trump trades, including one that profited from rising five-year inflation expectations. "We have been taking profits on the view that the risk-reward is no longer compelling for some of these trades, with prices and positioning having moved and, in our view, perhaps more than polls alone would have justified," they said in a note on Tuesday. A Republican sweep could exacerbate the bond selloff due to higher deficit spending expectations in that scenario, but there is also a "meaningful risk of a sharp reversal in a Harris victory," they added. Sign up here. https://www.reuters.com/markets/us/hedge-funds-search-trades-dead-heat-us-election-2024-11-01/

2024-11-01 09:55

LONDON, Nov 1 (Reuters) - The pound stabilised on Friday after a volatile few sessions, but still headed for its longest stretch of weekly losses in nearly six years, as political and monetary uncertainty has prompted investors to favour the dollar lately. UK finance minister Rachel Reeves this week delivered her first budget since the Labour party came to power in July - a high-tax, high-spend and high-borrowing set of proposals that unnerved the British bond market and dented sterling. While the budget created nothing like the havoc of that in September 2022 of former Prime Minister Liz Truss, gilts have sold off, pushing up yields, while traders are betting on fewer UK rate cuts in the coming year as a result too. Both should in theory support the pound, but the prospect of even tighter British finances and the biggest tax burden in decades created concern about inflation and growth. "The market sees the heavy spending in the budget as possibly stagflationary, judging from the sharp rise in UK rates," Saxo Bank analysts said. Sterling was last up 0.1% at $1.2915, bringing the loss for the week to around 0.4%, set for a fifth consecutive weekly decline, the longest such stretch since December 2018. Against the euro the pound was up 0.3% at 84.14 pence. The Office for Budget Responsibility (OBR), the projections of which underpin government budgets, said the economy was set to expand by 2.0% in 2025, up only slightly from a forecast of 1.9% made in March at the time of the previous Conservative government's last budget, and it trimmed its growth forecasts further out. The OBR also projected UK inflation will average 2.6% in 2025, up from a previous forecast of 1.5% back in March. Employers have warned they will struggle to cope with the increase in social security contributions that form the lion's share of the extra 40 billion pounds that Reeves plans to raise in tax, the biggest increase in a budget since 1993. Sign up here. https://www.reuters.com/markets/currencies/pound-set-worst-weekly-losses-since-2018-after-budget-jolt-2024-11-01/