2024-10-25 10:42

KAMPALA, Oct 25 (Reuters) - The Ugandan shilling was slightly weaker on Friday on the back of hard-currency demand from energy importers, traders said. At 1029 GMT commercial banks quoted the shilling at 3,663/3,673 to the dollar, compared to Thursday's close of 3,660/3,670. Sign up here. https://www.reuters.com/markets/currencies/ugandan-shilling-falls-slightly-energy-sector-fx-demand-2024-10-25/

2024-10-25 10:15

LONDON, Oct 25 (Reuters) - The pound stayed on track for its biggest four-week decline in over a year on Friday, albeit it steady on the day, as investors cling to the dollar in choppy political and macroeconomic waters. Sterling traders are also preparing for the new Labour government's first budget on Oct. 30. Finance minister Rachel Reeves on Thursday confirmed she will change the measure of public debt that the government targets in next week's budget to allow for billions of pounds more in borrowing for investment, she said on Thursday. The news pushed up gilt yields on Thursday , but did little to support the pound. Sterling was last flat on the day at $1.2982, having traded at two-month lows on Wednesday. So far this week, it has fallen 0.5%, bringing its losses over the last four weeks to 3%, the most since September 2023. The statement is the latest in a series of indications from Reeves about how she wants more flexibility to borrow to finance investment within the government's budget rules, but with appropriate guard rails to avoid unsettling investors. "From a financial market perspective, this is a high-stakes budget, and one that could have big ramifications for financial markets," XTB research director Kathleen Brooks said. Reeves needs to convince markets that the change she has introduced to the debt rule will deliver growth benefits, or the UK bond market could get spooked, Brooks said. "The backdrop to this budget is one of a weakening pound and rising bond yields," she said, noting the 3% drop in the value of sterling in the last month, while 10-year gilt yields have risen around 30 basis points to their highest since early July. More room to borrow means the government could increase gilt issuance, which has weighed on that market. The premium investors demand to hold 10-year UK debt rather than German - viewed as some of the safest bets in the world - has widened to almost 200 basis points , around the widest in 14 months. "From an FX market perspective, what matters is whether any gilt underperformance turns into uncontrolled volatility. Given the pound is pricing in no risk premium, the downside risks for the currency would be very large," ING strategist Francesco Pesole said in a note. Adding to the slightly downbeat sentiment in the pound were surveys on Thursday that showed UK business activity was weaker than expected in the early part of this month. Sign up here. https://www.reuters.com/markets/currencies/sterling-set-biggest-four-week-drop-year-before-uk-budget-2024-10-25/

2024-10-25 10:04

A look at the day ahead in U.S. and global markets from Mike Dolan Tesla's 20%-plus stock surge whets investor appetites for next week's earnings from most of the rest of the "Magnificent 7" of U.S. megacaps - with overseas markets keeping close tabs on weekend elections in Japan and next week's UK budget. A relatively quiet end to a busy week sees market attention drift to numerous big events coming down the pike, not least the U.S. election in 11 days time. But the related edginess in the Treasury market earlier this week seems to have settled for now and the White House race remains far too close to call. Relatively upbeat economic numbers on business activity, jobless claims and housing did little to disturb the slightly calmer bond waters - especially as business price pressures appear to have eased further and oil prices retreated again. Ten-year yields hovered on 4.2% early on Friday, with the Federal Reserve's cyclical rate trough now seen as high 3.5% - close to Fed policymakers' highest estimates of the so-called 'neutral' long-term policy rate. The dollar index (.DXY) , opens new tab also held the line with Treasuries. For stocks, all the action was in earnings - with Tesla (TSLA.O) , opens new tab shares clocking their biggest single-day gain in over a decade as CEO Elon Musk's forecast of surging sales reassured investors he was still focussed on a core electric car business. The stock spike puts Tesla shares back in the black for the year to date and now tilts the market to updates from the other six megacaps next week - starting with Alphabet's quarterlies on Tuesday, Microsoft and Meta on Wednesday and Amazon and Apple on Thursday. Overall, the S&P500 (.SPX) , opens new tab ended three days of losses and closed marginally higher on Thursday, with futures up further ahead of Friday open. Japan's yen nudged lower through 152 per dollar as Sunday's election results and Wednesday's Bank of Japan policy decision were awaited, with data showing Tokyo inflation ebbing this month against a backdrop of fresh government warnings about excessive currency moves. For some investors, the risk of Japan ending up with a minority coalition government after the weekend poll raises some concerns that the BOJ could face complications in its quest to gradually normalise its super-easy interest rates. Several recent polls have increased speculation the ruling coalition could lose its majority in parliament, which could cost new premier Shigeru Ishiba his job or force his Liberal Democratic Party to look for another coalition partner to stay in power. And such a prospect may deprive the BOJ of the consensus support needed to push ahead with raising rates, some reckon. Britain provided the other big focus of the weekahead, with reports of significantly higher borrowing to fund a public investment push unnerving UK government bonds on Thursday. Finance minister Rachel Reeves said that next Wednesday she will announce a change to the measure of public debt that the government targets over a five year period in order to allow billions of pounds of more borrowing for investment. Economists estimate that had this measure been in place in March, it would have created scope for more than 50 billion pounds ($65 billion) of extra borrowing, equivalent to about 1.5% of Britain's annual economic output. In stark contrast to the retreat in U.S. yields on Thursday, the British bond market juddered at the prospect of higher borrowing tallies - with 10-year gilt yields hitting their highest in almost four months and the five-year yield premium over Germany reaching its highest this year. The pound , has held steady to firmer, however, showing no wider disturbance to investor confidence. Elsewhere, most stock markets in Europe and Asia were higher on Friday - with Japan's Nikkei (.N225) , opens new tab the underperformer. Above-forecast German business confidence readings from Ifo eased some of the gloom about Europe's biggest economy - but there are persistent concerns about the country's mammoth auto sector as trade tensions with China build. German automaker Mercedes-Benz (MBGn.DE) , opens new tab fell 3.7% after third-quarter earnings in its core car division massively missed estimates, while France's Valeo (VLOF.PA) , opens new tab shed 7.5% as the automotive supplier cut its annual sales guidance for the second time this year. Key developments that should provide more direction to U.S. markets later on Friday: * US September durable goods orders, University of Michigan October consumer survey; Canada Sept house prices, August retail sales and government budget balance * US corporate earnings: Aon, Colgate-Palmolive, Centene, HCA Healthcare * International Monetary Fund and World Bank Annual Meetings in Washington, speakers include German Finance Minister Christian Lindner, Budesbank President Joachim Nagel and Bank of Canada Governor Tiff Macklem * Boston Federal Reserve Bank of President Susan Collins speaks Sign up here. https://www.reuters.com/markets/us/global-markets-view-usa-2024-10-25/

2024-10-25 09:52

WARSAW, Oct 25 (Reuters) - Poland will amend its budget bill for 2024, a government website showed on Friday, after Finance Minister Andrzej Domanski said last month that September's devastating floods in southern Poland were likely to lead to changes in this year's budget. The agenda on the government website on Friday said the amendment was due to "the need to update the state budget revenue forecast and, consequently, change the level of the maximum deficit specified in the Budget Act for 2024". No details of the planned changes were given, however. Poland had originally forecast a 2024 budget deficit of 184 billion zlotys ($46 billion). ($1 = 4.0189 zlotys) Sign up here. https://www.reuters.com/world/europe/poland-amend-budget-bill-2024-wake-floods-2024-10-25/

2024-10-25 09:41

Oct 25 (Reuters) - UBS Global Wealth Management has raised its stance on global equities to "attractive" from "neutral", citing resilient U.S. economic growth, monetary policy easing by major central banks and an artificial intelligence (AI) boom. "Economic growth is remarkably resilient and central banks have been proactive, giving us confidence the supportive backdrop has more room to run," UBS analysts said in a note dated Thursday. Interest rate cuts across major central banks including the U.S. Federal Reserve have primarily boosted the MSCI's broad world equity index (.MIWD00000PUS) , opens new tab, a benchmark for gauging the performance of global stocks, by 16.3% so far this year. "While the impact of monetary policy easing usually comes with some lag, the start of a rate-cutting cycle has historically been a positive catalyst for equity markets over the subsequent 6-12 months," UBS said. More stimulus measures from China will further aid global stocks, the brokerage said, adding that growth across other regions appears to have "bottomed out". Corporate earnings will benefit from the resilient U.S. economic backdrop that would be further supported by AI, robust labour markets and gradual easing of inflation, UBS said. Among broader sectors, technology should remain the main engine of earnings growth, even as contributions from others pour in, it said. U.S. elections are a short-term risk, UBS said, especially if former President Donald Trump is elected, as markets could quickly price in potential tariff risks. Sign up here. https://www.reuters.com/markets/ubs-global-wealth-management-lifts-global-equities-stance-attractive-2024-10-25/

2024-10-25 09:39

HONG KONG, Oct 25 (Reuters) - HSBC's (HSBA.L) , opens new tab Hong Kong unit has joined China's worldwide interbank renminbi payment system (CIPS) as a direct offshore participant, according to a company statement. Beijing is pushing to internationalise the yuan, which ranks fourth in global payments according to the global bank messaging network SWIFT, and challenge the U.S. dollar, by far the world's most widely used currency. "By any measure, the usage of renminbi is not remotely proportionate to China’s economic heft," HSBC Asia Pacific Co-Chief Executive David Liao said during a banking event after announcing access to CIPS. Standard Chartered's Hong Kong unit in 2022 became the first offshore unit of a sizable global bank to directly access CIPS. Launched in 2015, CIPS replaced a patchwork of networks and allows hassle-free renminbi transactions. The system had 153 such members as of end-September, according to its official website, and has been more widely adopted in Russia since lenders there were banned from SWIFT over Moscow's invasion of Ukraine in 2022. HSBC's and StanChart's China onshore operations are already in the system. Hong Kong was the largest offshore renminbi clearing centre as of July, sharing about 83% of the world's payments in the currency, according to SWIFT data. Sign up here. https://www.reuters.com/business/finance/hsbc-joins-chinas-payment-system-boost-yuan-usage-2024-10-25/