2024-11-01 09:29

KARACHI, Nov 1 (Reuters) - Pakistan's central bank is expected to cut its key interest rate further at its policy meeting on Monday, with policymakers continuing their efforts to revive a fragile economy as inflation eases off recent record highs. The central bank, the State Bank of Pakistan, has slashed the benchmark policy rate to 17.5% from an all time-high of 22% in three consecutive policy meetings since June, having last reduced it by 200 basis points in September. All 15 investors and analysts surveyed by Reuters expect the central bank to cut rates next week. Two expect a 150 bps cut, twelve predict a 200 bps reduction, and one forecasts a 250 bps cut. Economic activity has stabilised since last summer when the country came close to a default before an eleventh hour bailout by the International Monetary Fund (IMF). The IMF, which in September gave a boost to Pakistan's struggling economy by approving a long-awaited $7 billion facility, said that the South Asian nation had taken key steps to restore economic stability with consistent policy implementation under the 2023-24 standby arrangement. While the economy has started to gradually recover, and inflation has moved sharply down from a multi-decade high of nearly 40% in May 2023, analysts say further rate cuts are needed to bolster growth. Mustafa Pasha, Chief Investment Officer at Lakson Investments, said rates must drop under 15% and hold below that for six months to have a material impact. The IMF in its latest October report forecast Pakistan's gross domestic product growth at 3.2% for the fiscal year ending June 2025, up from 2.4% in fiscal 2024. Inflation for October clocked in at 7.2%, slightly above the government's expectation of 6-7%. The finance ministry expects inflation to slow further to 5.5-6.5% in November. However, inflation could pick up again in 2025, driven by electricity and gas tariff hikes under the new $7 billion IMF bailout, and the potential impact of taxes on the retail and wholesale sector proposed in the June budget. Ahmad Mobeen, senior economist at S&P Global Market Intelligence, said that while lower rates will offer some relief to the manufacturing sector, the benefits may be limited due to "elevated input costs, driven by high electricity and gas tariffs, combined with global supply and shipping constraints." The survey responses on Monday's policy rate decision are listed below: Sign up here. https://www.reuters.com/markets/rates-bonds/pakistan-central-bank-set-deliver-fourth-consecutive-rate-cut-revive-economy-2024-11-01/

2024-11-01 09:22

ZURICH, Nov 1 (Reuters) - Swiss inflation fell to its lowest level in more than three years in October, government data showed on Friday, pointing towards more interest rate cuts by the Swiss National Bank this year and into 2025. Swiss consumer prices rose by 0.6% in October compared with the same month a year earlier, data from the Federal Statistics Office showed, lower than the 0.8% forecast in a Reuters poll. The increase in prices was the lowest level since July 2021, and reflected cheaper food, clothing and household goods. Month-on-month prices fell by 0.1%, the FSO said. The Swiss franc fell to a five-week low following the data, in anticipation the SNB will cut borrowing costs to prevent inflation undershooting its 0-2% target range. The SNB declined to comment. Markets currently give a 72% probability the central bank will cut rates from 1% at its next meeting on Dec. 12 to 0.75%, and a 68% probability it will cut them again next March to 0.5%. "The situation with falling inflation is becoming uncomfortable for the SNB, which will certainly cut rates by 25 basis points in December, although I wouldn't be surprised if they cut by 50 basis points," said Karsten Junius, an economist at J.Safra Sarasin. "But I think it will prefer to keep something in reserve and cut rates again by 25 basis points in March and another 25 basis points in June to get to 25 basis points," added Junius, who anticipated the SNB would also step up currency interventions in early 2025. GianLuigi Mandruzzato, an economist at EFG Bank, said October's inflation was much lower than the latest SNB forecast for inflation of 1% in the fourth quarter. "The data also raises the chances that the SNB will consider a larger rate cut of 0.5% instead of the standard 0.25% cuts implemented since March as the risk of negative inflation in 2025, if only temporarily, has clearly risen," he said. Sign up here. https://www.reuters.com/markets/europe/swiss-inflation-falls-lowest-level-three-years-2024-11-01/

2024-11-01 08:47

JOHANNESBURG, Nov 1 (Reuters) - South Africa's rand edged higher on Friday after the release of a purchasing managers' index (PMI) for the domestic manufacturing sector, and U.S. jobs data. At 1512 GMT, the rand traded at 17.5675 against the U.S. dollar , about 0.2% stronger than its previous close. South African manufacturing activity grew in October, a local PMI survey showed, the first time since early 2023 that the highly volatile sector has recorded two consecutive months of growth. Meanwhile, U.S. job growth slowed sharply last month amid disruptions from hurricanes and strikes by aerospace factory workers, data showed earlier. "Looking ahead, we anticipate a week of significant volatility, particularly with the U.S. elections poised to influence market dynamics," said Wichard Cilliers, director and head of market risk at TreasuryONE. On the stock market, the blue-chip Top-40 (.JTOPI) , opens new tab index closed 0.95% higher. South Africa's benchmark 2030 government bond was slightly weaker, with the yield up 0.5 basis point at 9.32%. Sign up here. https://www.reuters.com/markets/currencies/south-african-rand-softer-before-manufacturing-pmi-us-jobs-data-2024-11-01/

2024-11-01 07:53

Nov 1 (Reuters) - Voters in the United States are heading to the polls on Tuesday to pick their next president in a too-close-to-call election pitching Republican Donald Trump against Democrat Kamala Harris. Who will be at the helm of the world's biggest economy will have wide-ranging consequences for financial markets, global trade, with China and Europe in focus, and monetary policy, with interest-rate setting meetings at the Fed, as well as in Britain, Australia and Brazil scheduled for the coming week. Here's all you need to know about the week ahead from Lewis Krauskopf, Ira Iosebashvili and Rodrigo Campos in New York, Rae Wee in Singapore and Amanda Cooper in London. 1/TO THE BALLOT BOXES The U.S. election cycle that has already rattled asset prices finally comes to a head. Recent gains in Treasury yields and the dollar are seen by some traders as the market anticipating a win for Trump. But polls suggest a very close race with Harris, meaning that a victory by the Democrat could spark a rash of trading unwinds. Investors may just be rooting for a clear result, fearing a potentially contested election and lengthy period of uncertainty about the government makeup as a significant risk to markets. Meanwhile, bitcoin - the ultimate Trump trade - is nearing an all-time high again. 2/THE DAY AFTER The day after the U.S. election, the Fed kicks off its meeting on interest rates. The elephant in the monetary policy room is how the decisions by the next U.S. president will impact growth and inflation dynamics. For now, recent data shows a stronger-than-expected U.S. economy has led some investors to question whether the Fed miscalculated when it kicked off the current easing cycle with a jumbo-sized 50-basis point rate cut in September. A more modest 25-basis point reduction is expected on Thursday. Investors hope the Fed's statement and Chairman Jerome Powell’s news conference will show whether policy makers believe economic resilience will continue - and if they might cut rates less than expected as a consequence. Futures linked to the Fed’s policy rate showed investors pricing in about 120 basis points of cuts by year-end. 3/US BULL IN A CHINA SHOP? China announces October trade figures on Thursday - some fear this might be one of the last times investors can expect upbeat export numbers, depending on who takes the White House. Trump's threat of 60% tariffs on China has rattled the country's industrial complex, which sells goods worth more than $400 billion annually to the United States. With export momentum having been the lone bright spot for China's struggling economy, a Trump victory is likely to have huge ramifications. October inflation data due on Nov. 9 - the first full-month reading since Chinese authorities unveiled the September raft of stimulus measures to pull the economy out of its deflationary funk. That could provide an early read of how domestic consumers have taken to Beijing's urgent push to support growth. 4/ FOLLOW THE LEADER, OR NOT Where the Fed goes, other central banks often follow. But the outcome of the U.S. election could skew this dynamic. A Trump victory - and potential tit-for-tat trade war - would weigh on export-reliant economies. The resulting rise in U.S. inflation and a stronger dollar might force the Fed to cut rates more slowly, while other central banks are left to grapple with a hit to growth from those extra duties. For now, it's business as usual. The Bank of England is expected to cut rates by 25 bps on Thursday. Possible inflationary effects of the Labour government's new budget might mean fewer cuts in 2025, no matter what happens in the U.S. Down under, sticky inflation means there is virtually no chance of a cut from the Reserve Bank of Australia on Tuesday until next year. 5/ WOBBLY EMERGING GIANTS Mexico, jointly with China, is a weather vane for U.S.-emerging market relations and has seen the peso touch a two-year low, with concerns over the election amplifying domestic woes. Emerging market outflows have, by some measures, scaled two-year highs, fuelled by a mix of a strong dollar, high U.S. yields and a general de-risking desire. That will raise pressure on emerging market central banks near and far. Brazil's central bank, which has been front-running the Fed, has already returned to a hiking cycle. Policy makers are expected to lift interest rates by 50 bps on Wednesday, following a 25 bps increase in September to 10.75%. Economists now see inflation ending the year slightly above the 4.5% upper end of the official target range. Policy makers in emerging Europe might be in line for more pressure as well. Poland's central bank, which has held rates for a just over a year now, releases its decision on Wednesday and the Czech Republic is expected to deliver another rate cut on Thursday. Sign up here. https://www.reuters.com/business/take-five/global-markets-themes-graphic-2024-11-01/

2024-11-01 07:27

MOSCOW, Nov 1 (Reuters) - A drone fell on an oil depot in Russia's southern Stavropol region, local governor Vladimir Vladimirov said on Friday. It was the second suspected Ukrainian attack in consecutive days on Russian fuel and energy targets, following a lull of about seven weeks since a fuel facility in Tula was attacked on Sept. 10. There were no casualties in the incident at the Svetlograd oil depot, Vladimirov said on Telegram. Baza Telegram channel, which is close to Russia's security services, posted a CCTV video purportedly showing the attack on the oil depot. The video showed that at least one of several fuel tanks was swiftly engulfed by a fireball. On Thursday, several fuel and energy facilities were targeted in a Ukrainian drone attack on the central Russian region of Bashkortostan, home to Bashneft (BANE.MM) , opens new tab, a major oil company controlled by Russia's leading oil producer, Rosneft (ROSN.MM) , opens new tab. Bashneft operates several refineries in the region, playing a significant role in Russia's energy infrastructure. The attacks come days after the Financial Times reported early-stage talks between Ukraine and Russia about potentially halting airstrikes on each other's energy facilities. The Kremlin dismissed the report. Russia has called such attacks terrorism, while Ukraine, which stepped up the drone strikes on Russian energy facilities since the start of the year, has said it is striking back in retaliation for attacks on its energy infrastructure. Andrei Kartapolov, chairman of Russia's lower house of parliament's defence committee, said in comments to Life media channel earlier this week, that there were no talks on halting the attacks. "We are not going to spare anyone," he said. European Commission President Ursula von der Leyen said in September that Russia had knocked out the gigawatt equivalent of over half of Ukraine's energy infrastructure. The European Union aims to restore 2.5 GW of capacity, about 15% of the country's needs, she said, referring to proposed EU-funded repairs. Sign up here. https://www.reuters.com/world/europe/drone-crashes-oil-depot-russias-stavropol-region-2024-11-01/

2024-11-01 07:21

LONDON, Nov 1 (Reuters) - British house prices rose by a marginal 0.1% in October, slowing sharply from a 0.6% monthly increase in September but the market remained resilient and was likely to gain momentum as borrowing costs fall, mortgage lender Nationwide said on Friday. Economists polled by Reuters had forecast prices would rise by 0.3% on a monthly basis. Compared with October last year prices were 2.4% higher, a weaker annual increase than September's 3.2% rise and below the median forecast for a 2.8% gain in the Reuters poll. Robert Gardner, Nationwide's chief economist, said the housing market remained resilient and activity was likely to strengthen as interest rates fall. The Bank of England is expected to cut borrowing costs on Thursday next week followed by further reductions in 2025. The expiry at the end of March next year of a temporary tax incentive for home-buyers - which was confirmed in finance minister Rachel Reeves' first budget this week - was also likely to increase demand in the first three months of 2025. "However, the swings in activity are likely to be somewhat less pronounced, in this instance, given that the stamp duty reduction has been in place for some time and its planned expiry was well known," Gardner said. An increase in the higher rate of stamp duty for second homes could dampen demand for buy-to-let properties, he said. Sign up here. https://www.reuters.com/world/uk/uk-house-prices-barely-edge-up-october-nationwide-says-2024-11-01/