2024-10-28 06:35

Gold projected to hit $2,900/oz within 12 months, says analyst China's Jan-Sept gold consumption slides 11% US 10-year Treasury yields hit three-month high Oct 28 (Reuters) - Gold prices eased on Monday, weighed down by a firmer dollar and higher Treasury yields while traders await a slew of U.S. economic data for guidance on the U.S. Federal Reserve's interest rate stance. Spot gold lost 0.5% to $2,732.98 an ounce by 1230 GMT. Bullion hit a record high of $2,758.37 last Wednesday, lifted by safe-haven demand in the face of market risks from continuing conflict in the Middle East and Ukraine. U.S. gold futures declined 0.3% to $2,745.10. The dollar index (.DXY) , opens new tab was on track for its best month since April 2022, with the currency's strength making gold less attractive for buyers holding other currencies. Yields on benchmark 10-year Treasuries , meanwhile, rose to a three-month high. "Prospects of lower U.S. interest rates have room to support further investment demand and lift gold prices. We look for gold to hit $2,900/oz in 12 months," said UBS analyst Giovanni Staunovo. Major data due this week includes ADP employment on Wednesday, U.S. Personal Consumption Expenditures (PCE) numbers on Thursday and Friday's payrolls report. Traders see a nearly 97% chance of an interest rate cut of 25 basis points by the Fed in November, which would provide further support for non-yielding gold. On the physical front, Chinese gold consumption dropped 11.2% year on year in first three quarters of 2024 as high prices dented demand for jewellery, the state-backed gold association said. "While physical demand in Asia, particularly in China, has been weak lately, I guess the focus when it comes to gold demand is shifting from East to West," Staunovo added. Spot silver was down 0.8% at $33.42 an ounce and platinum lost 0.3% to $1,019.30. Palladium eased 0.6% to $1,186.73, having hit a 10-month high in the previous session after the news that the United States asked Group of Seven allies to consider additional ways to restrict Russian revenue from the metals sector by exploring restrictions on palladium and titanium. Sign up here. https://www.reuters.com/markets/commodities/gold-slips-dollar-firms-market-eyes-crucial-us-data-2024-10-28/

2024-10-28 06:34

Political instability could force expansionary fiscal policy Smaller opposition parties call for lower taxes Weak yen could pressure BOJ to hike rates, analysts say TOKYO, Oct 28 (Reuters) - The loss of Japan's ruling bloc's parliamentary majority has heightened prospects that a new government will need to ramp up spending and of potential complications for further central bank interest rates hikes. Prime Minister Shigeru Ishiba's ruling Liberal Democratic Party (LDP) and its longtime partner Komeito failed to retain a majority in lower house elections on the weekend, casting doubts over how long the 67-year-old premier can keep his job. "Regardless of who will be in power, the new government will be forced to take expansionary fiscal and monetary policies to avoid inflicting burdens on voters," said Saisuke Sakai, senior economist at Mizuho Research and Technologies. To stay firmly in power, the LDP, which has governed Japan for almost all its post-war history, will likely need to court smaller opposition parties, such as the Democratic Party for the People (DPP) and Japan Innovation Party (JIP), as coalition partners or at least for policy-based alliances. Both smaller parties have ruled out forming a coalition with the LDP but said they are open to some policy cooperation. In their election campaigns, both the DPP and JIP pledged to lower consumption tax from 10%. DPP's proposals also included cutting power utility bills and tax for lower-income earners. While Ishiba has already proposed a supplementary budget that exceeds last year's 13 trillion yen ($85 billion), he could face pressure for a package that exceeds 20 trillion yen, Sakai said. 'POLITICAL NOISE' The heightened political turmoil could make it harder for the Bank of Japan in its bid to wean the economy off decades of monetary stimulus, analysts say. The central bank ended negative interest rates in March and raised short-term rates to 0.25% in July on the view Japan was making progress towards durably achieving its 2% inflation target. BOJ Governor Kazuo Ueda has vowed to continue lifting rates and economists don't see any major immediate change to the broader policy direction. However, a markedly new parliamentary makeup could deprive the BOJ of the political stability it needs to steer a smooth lift-off from near-zero interest rates, analysts say. "The bar is higher for the BOJ to raise interest rates again by the end of this year amid this political noise," said Masahiko Loo, senior fixed income strategist at State Street Global Advisors. DPP leader Yuichiro Tamaki has criticised the BOJ for raising rates prematurely. JIP proposes legislative changes that would mandate the central bank with objectives beyond just price stability, such as sustained nominal economic growth rate and maximization of employment. Conversely, the biggest opposition, Constitutional Democratic Party of Japan, has called for BOJ's inflation target to be lowered to one "exceeding zero" from 2% currently, which would reduce the threshold for more rate hikes. At the same time, a weak yen could become a headache for Japanese policymakers by boosting the cost of imported raw materials, pushing up inflation and hurting consumption. If the yen weakens toward 160 per dollar, the BOJ "would be pressured to raise rates again to stem the weakness of the Japanese currency," said Takeshi Minami, chief economist at Norinchukin Research Institute. The need for another rate hike could also grow if a yen downturn is accelerated by a Donald Trump victory in the U.S. presidential election on Nov. 5, he added. Trump's tariff and stricter immigration policies are seen as inflationary, which would diminish the need for U.S. rate cuts, in turn pushing the dollar up against the yen. "The visibility has gone down significantly for the BOJ," Minami said. ($1 = 153.5700 yen) Sign up here. https://www.reuters.com/markets/asia/japans-political-shakeup-complicates-boj-fiscal-policy-outlook-2024-10-28/

2024-10-28 06:12

MUMBAI, Oct 28 (Reuters) - The Indian rupee was little changed on Monday amid a buoyant U.S. dollar and a central bank that does not want the currency to slip, while exporters waited for better levels to hedge their future foreign currency receipts. The rupee was quoting at 84.0775 to the U.S. dollar at 11:14 a.m. IST, barely changed from 84.08 in the previous session. The currency's intraday range so far has been less than a paisa. The rupee's very muted price action to kick off the week is a repeat of the previous two weeks. Thanks to the Reserve Bank of India's (RBI) intervention to keep the rupee from dropping past the current level, the currency's near-term volatility has plunged. The 7-day daily realised volatility is just 0.1%, the lowest in at least 30 years. Amid this intervention to support the rupee, Indian exporters are waiting. Most exporters reckon that the risks that rupee will depreciate from here are much higher than it will appreciate, a forex salesperson at a mid-sized private sector bank said. "Exhaustion has set in to sell (dollars) at this level and they are now counting on higher levels (on dollar/rupee)." DOLLAR, US YIELDS KEEP RISING The dollar index inched past 104.50 in Asia, taking its rally this month to 3.8%. The 10-year U.S. Treasury yield is up nearly 50 basis points month-to-date. The dollar and yields have been pushing higher on the back of rising odds of Donald Trump winning the U.S. elections and data that has indicated the U.S. economy remains healthy. Sign up here. https://www.reuters.com/markets/currencies/rupee-flat-exporters-hold-back-selling-dollar-forwards-amid-cenbanks-chokehold-2024-10-28/

2024-10-28 05:42

Neither co-founding family holds majority of Korea Zinc Protracted takeover battle expected MBK proposes new board slate Shares rise again to all-time high close SEOUL, Oct 28 (Reuters) - Korea Zinc (010130.KS) , opens new tab said on Monday it has secured 9.85% of the company's shares in a $1.5 billion buyback that it launched to block shareholders from selling their stakes to its top investor Young Poong and private equity firm MBK. Bain Capital, which backs Korea Zinc's current leaders, separately secured a 1.41% stake in the company, the world's biggest zinc smelter said in a regulatory filing. Run by the Choi family, Korea Zinc has been in a bitter fight for control of the $18 billion zinc empire with the co-founding Chang family, whose conglomerate Young Poong (000670.KS) , opens new tab made an initial joint offer with MBK in September. The latest transactions suggest the overall backing Korea Zinc's management has won so far is smaller than the stake held by MBK and Young Poong. That raised investor expectations for a prolonged takeover battle, driving Korea Zinc shares to record highs on Monday. MBK and Young Poong together own about 38.5% of Korea Zinc. Before the buyback, Korea Zinc's Choi family had the backing of shareholders that owned up to 36% of the company, including strategic partners such as Hyundai Motor Group, according to analysts. Korea Zinc said on Monday it had spent 2.07 trillion won ($1.5 billion) on the buyback and would eventually cancel all of its newly acquired shares to raise shareholder value. Cancellation of the shares means the Chois' stake will not increase relative to its rival. Neither side has a majority stake in the case of a proxy fight. Shares in Korea Zinc jumped as much as 11.7% on Monday to 1.4 million won, 57% above its buyback price of 890,000 won, before ending the session up 3.8% at a record close as the number of shares available to trade have shrunk due to tender offers from both sides. Korea Exchange warned in a filing late on Monday that if such steep rises in its share price continue, and meet certain criteria, it may halt trading of Korea Zinc shares. Shares in Young Poong closed up 7.45%. MBK on Monday nominated 14 new directors for the firm, which currently has 13 board members, and called for Korea Zinc to hold an extraordinary shareholder meeting, as flagged to Reuters by a partner in the fund last week. The fund also said it would propose a new system to separate management from the board in a bid to improve governance, adding Korea Zinc's latest share buyback had caused a severe financial hit to the company. Various shareholders widely viewed as sympathetic to the Chois, such as Hyundai Motor (005380.KS) , opens new tab, Hanwha Group and LG Chem (051910.KS) , opens new tab, have yet to publicly declare their stance. South Korea's National Pension Service, the world's third-largest pension fund which held a 7.83% stake in Korea Zinc at end-June, is expected to be a key casting vote. It has yet to disclose its stance. ($1 = 1,384.1300 won) Sign up here. https://www.reuters.com/markets/commodities/korea-zinc-attempts-fend-off-takeover-with-stake-buyback-2024-10-28/

2024-10-28 05:41

A look at the day ahead in European and global markets from Vidya Ranganathan A weekend election in Japan that has knocked the yen down to three-month lows, a heavy U.S. corporate earnings calendar, Britain's budget and the fast-approaching U.S. election make for a week packed with excitement. The yen is down and Japanese shares (.N225) , opens new tab are up after Japan's ruling coalition lost its parliamentary majority in weekend elections, raising the spectre of drawn-out political wrangling and more fiscal stimulus. Markets are also betting politics will make the Bank of Japan's job more difficult, with policy normalisation already complicated by a fragile economy and unstable markets. It is expected to stand pat at its meeting ending on Thursday. Monday is thin on economic data releases but the week ahead brings eurozone third-quarter GDP and inflation that may validate the European Central Bank's dovishness. Britain's new Labour government unveils its first budget on Wednesday, and investors have sold UK stocks and gilts already in the run-up, unsure how finance minister Rachel Reeves can possibly balance high debt, public spending pledges and a promise not to hike the income tax. It's also peak earnings season on Wall Street. This week will be the busiest of the quarter with well over 150 S&P 500 companies set to post third-quarter results. Five of the "Magnificent Seven" U.S. titans report: Google parent Alphabet (GOOGL.O) , opens new tab on Oct. 29, Microsoft (MSFT.O) , opens new tab and Facebook parent Meta Platforms (META.O) , opens new tab on Oct. 30, and Apple (AAPL.O) , opens new tab and Amazon (AMZN.O) , opens new tab on Oct. 31. The run of market-sensitive events continues the following week, with U.S. election Day on Nov. 5 and the Fed's next monetary policy decision on Nov. 7, which could put investors increasingly on edge in the coming days. The U.S. jobs report on Nov. 1 is just as crucial to investors debating if a stronger-than-expected economy could lead to fewer interest rate cuts by the Federal Reserve than what is already priced in. Key developments that could influence markets on Monday: SPEAKERS: ECB Vice President Luis de Guindos speaks in Madrid EARNINGS: Koninklijke Philips NV (PHG.AS) , opens new tab Sign up here. https://www.reuters.com/markets/europe/global-markets-view-europe-2024-10-28/

2024-10-28 05:15

Oct 27 (Reuters) - Ukrainian drones targeted ethanol plants in Russia's southern region of Voronezh, Russian channels on the Telegram app said, while the regional governor said the attack injured two people, sparked a fire and damaged two industrial enterprises. Firefighters have doused the fire in the region's Anninsky district that injured two workers, Alexander Gusev, the regional governor, said on the Telegram messaging app. About 10 Ukrainian drones were destroyed or intercepted over the region late on Sunday, he added, with debris damaging several buildings in the district, as well as in the Novokhopersky district. The Russian defence ministry said only one Ukrainian drone was destroyed over the Voronezh region, however, from a total of 21 downed over its territory overnight. Explosions were heard near an ethanol spirit plant in the village of Krasnoye in the Novokhopersky district, said the Baza news channel on Telegram, which is close to Russia's security services, as well as several other news channels on the app. The SHOT breaking news channel said the fire broke out at a distillery in the village of Anna in Anninsky. Videos on social media showed large blaze at a building lighting up the dark. Reuters was able to confirm the location of the social media images as the Anninsky district of the Voronezh region. The date could not be verified. Reuters could not independently verify the reports of damage to two distilleries. There was no immediate comment from Ukraine. Kyiv has often said its drone attacks inside Russia target infrastructure key to the latter's war effort, in response to Moscow's continued strikes on Ukraine's territory. Sign up here. https://www.reuters.com/world/europe/ukraine-drones-target-ethanol-plants-russia-telegram-channels-say-2024-10-28/