2024-10-25 04:37

A look at the day ahead in European and global markets from Kevin Buckland Yields are mercifully lower as the week draws to a close, removing some of the angst that has weighed on equities and allowing the beaten-down yen and euro to regain some composure against the dollar. But this relative calm feels like the eye of the storm as risk events swirl on the horizon next week: mega-cap earnings from five of the "Magnificent 7"; a highly consequential U.S. payrolls report on Friday; and the final lap going into a likely photo-finish U.S. presidential election on Nov. 5. The "Trump trade" has been gathering momentum with a sharp rise in the odds of a second Donald Trump presidency on some betting platforms, although polls have the race neck-and-neck. The upshot in markets thus far is a dollar on track for a fourth week of gains and Treasury yields set for a sixth weekly advance, on Trump's platform of more tariffs and taxes, seen as inflationary by many in the markets. Meanwhile, a spate of robust U.S. economic data has spurred a rapid paring back of bets on Fed easing, which is also buoying yields and the dollar. Stocks are getting a little respite to finish the week but it's far from a recovery. Optimism over Tesla's earnings was the driver for most of Wall Street's limited overnight gains, and the Dow actually fell. Investors are now looking ahead to earnings from Alphabet, Amazon, Apple, Meta and Microsoft over a three-day period from Tuesday. Stocks in Asia are mixed, with Japan's Nikkei sliding 1% amid a rebound in the yen and uncertainty over a general election on Sunday that could deprive the coalition government of its lower house majority. The MSCI world equity index (.MIWO00000PUS) , opens new tab is still limping towards a 1.2% loss for the week, set to snap a two-week winning streak. Pan-European STOXX 50 futures are pointing slightly lower, with the cash STOXX 600 (.STOXX) , opens new tab heading for a 1.1% weekly decline. For Europe, the docket of scheduled events is on the lighter side: Germany's Ifo surveys headline the macro calendar for Friday, while earnings are due from Sanofi, Natwest and Mercedes-Benz, among others. Later in Washington, the annual IMF-World Bank meetings - where policymakers of all stripes step up to air their views - enter the penultimate day. Japanese officials have used the venue to issue warnings to speculators against pushing down the yen. Bank of England Governor Andrew Bailey speaks on Saturday. Key developments that could influence markets on Friday: -German Ifo surveys (Oct) -Earnings from Sanofi, Natwest and Mercedes-Benz -IMF-World Bank meetings in Washington DC Sign up here. https://www.reuters.com/markets/europe/global-markets-view-europe-2024-10-25/

2024-10-25 03:51

BOJ meets Oct 30-31, decision expected 0330-0430GMT Thursday Board likely to keep short-term rates steady at 0.25% No big change expected to growth, inflation forecasts BOJ may modify view on risks, may signal progress on wage front Governor Ueda to brief media 0630GMT Thursday WASHINGTON, Oct 25 (Reuters) - The Bank of Japan is set to maintain ultra-low interest rates next week, and probably signal a less dovish policy outlook due to receding fears of U.S. recession - and the need to keep speculators from pushing down the yen too much. Since ending a decade-long, radical stimulus programme in March, the BOJ has signaled its intention to keep raising interest rates from rock-bottom levels. But it was forced to water down the hawkish message and pledge to move slowly, or even pause, in raising rates after a hike in July was blamed for triggering a rout in markets. While the BOJ appears in no rush to hike rates, any tilt back towards a less dovish stance would underscore its desire to leave itself wiggle room on the timing of the next move, analysts say. It may also help prevent the yen, which has renewed its decline recently, from testing further lows and hurting already weak consumption by pushing up fuel and food import costs. "As the yen is falling again, the BOJ will probably try to avoid sending a message that would appear too dovish," said Ryutaro Kono, chief Japan economist at BNP Paribas. At the two-day meeting ending on Oct. 31, the BOJ is widely expected to keep short-term interest rates steady at 0.25%. In a quarterly report to be released after the meeting, the board is also seen making no major changes to its projection that inflation will move around 2% through early 2027. Recent domestic data have mostly backed up the BOJ's view that rising pay and prospects of sustained wage gains are underpinning consumption, and prodding more firms to raise prices not just for goods but services. An intensifying labor shortage is also heightening expectations that companies will continue to hike pay next year, say three sources familiar with the BOJ's thinking. "Japan's economy is on track for a recovery," one of the sources said. "Prices will likely keep rising as many companies have yet to fully pass on rising costs," another source said. The BOJ may reflect such progress made on the wage and price front in the report, which would underscore its conviction that the prerequisite for more rate hikes is falling into place. STRIKING RIGHT BALANCE Markets, however, will be focusing more on the BOJ's view on risks as Ueda has highlighted unstable markets and U.S. recession fears as key reasons to go slow in its rate-hike path. After meeting his counterparts from major economies this week in Washington, Ueda offered a cautiously upbeat view on the outlook for the global economy. "Optimism over the U.S. economic outlook appears to be broadening somewhat," although more scrutiny was needed on whether it would be long-lasting, he said on Thursday. The BOJ may also drop hints by modifying the report's portion on future policy guidance. In the current report issued in July, the BOJ said it would continue to raise rates if economic and price conditions move in line with its forecast. The board will likely debate whether additional language on risks or triggers for policy shifts should be included in the guidance, the sources said. The BOJ ended negative rates in March and raised short-term rates to 0.25% in July on the view Japan was making progress towards sustainably achieving its 2% inflation target. Ueda has repeatedly said the BOJ will keep raising rates if the economy moves in line with its forecast. But he has also said the bank was in no rush as inflation remained moderate. A slim majority of economists polled by Reuters expect it to forgo a hike this year, though most expect one by March. The IMF on Thursday welcomed the BOJ's July rate hike and called on the central bank to raise rates at a gradual pace. But political uncertainty and the yen's renewed declines are complicating the BOJ's communication. While it wants to tread cautiously to avoid upending markets, sounding too dovish could give speculators an excuse to sell off the currency - a dilemma Ueda acknowledged in Washington. "When there's huge uncertainty, you usually want to proceed cautiously and gradually. "But the problem here is if you proceed very, very gradually and create expectations that rates are going to stay at low levels for a very long time, this could lead to a huge build-up of speculative positions which could become problematic," Ueda told an IMF panel on Wednesday. "We need to strike the right balance." Sign up here. https://www.reuters.com/markets/asia/boj-may-offer-less-dovish-signs-us-recession-fears-ease-rates-hold-2024-10-25/

2024-10-25 00:49

Scout to begin selling EVs in 2027 produced in South Carolina Scout to forgo traditional dealers, expects 65-70% of vehicles will be SUVs New vehicles will start below $60,000, compete with Tesla, Rivian, GM Oct 24 (Reuters) - Volkswagen's (VOWG_p.DE) , opens new tab Scout Motors unit on Thursday unveiled its concept electric SUV and truck and said it will offer extended-range versions that include a small gasoline engine. The German automaker announced the brand in May 2022 as an EV-only standalone company, but Scout said on Thursday that it had listened to the concerns of some U.S. drivers about recharging abilities. VW is building a $2 billion factory in South Carolina and expects to begin production of the new vehicles in 2027. The full EV versions will offer up to 350 miles (560 km) of range on a charge while the extended-range version will have 500 miles (800 km). "It makes the platform future proof," Scout CEO Scott Keogh said, adding that the company can divide production between the variants based on demand. The gas-powered engine will recharge the vehicle’s high-voltage battery, but will not have a direct connection to the wheels, the company said. Like Tesla (TSLA.O) , opens new tab, Scout will forgo a traditional independent dealer network in favor of directly selling and servicing vehicles, and it pledged full price transparency and transactions that can be completed in minutes. Keogh expects Scout will have around three dozen U.S. retail centers when sales start, eventually rising to 100. Scout will compete with growing EV SUV and truck segments that include Rivian (RIVN.O) , opens new tab, Tesla, General Motors (GM.N) , opens new tab and Ford (F.N) , opens new tab. Keogh said in a Reuters interview that Scout models are designed to feel like traditional vehicles with mechanical switches that are less futuristic than other EVs. "They want real switches, they want a door handle they can move," Keogh said of American buyers. "It has that love and nostalgia from the '60s and '70s with the high-tech stuff." The Scout Traveler SUV and Scout Terra pickup will start under $60,000. Scout, which will be able to produce 200,000 vehicles annually in South Carolina, is currently planning 65%-70% of production as SUVs versus pickups. Keogh says the SUV is "kind of a Defender meets a Land Cruiser meets a Bronco" -- referencing three popular SUVs of Land Rover, Toyota and Ford, respectively. VW last sold a pickup in the United States in the early 1980s. Scout and Travelall vehicles made by International Harvester were forerunners in both function and style of the popular SUVs from Detroit's Big Three automakers such as the Bronco and GM's Chevrolet Suburban. Sign up here. https://www.reuters.com/business/autos-transportation/vws-scout-motors-unit-will-offer-ev-suvs-trucks-with-gas-engine-option-2024-10-24/

2024-10-25 00:35

Q3 net profit of $2.41 bln beats analysts' estimates Core profit in line with market estimates New CEO Pimenta wants to speed up iron ore quality upgrade RIO DE JANEIRO/SAO PAULO, Oct 24 (Reuters) - Brazilian miner Vale, one of the world's largest iron ore producers, said on Thursday its third-quarter net profit fell 15% from a year earlier, hit by lower prices of the steel-making ingredient and provisions related to the Mariana dam collapse. Still, Vale (VALE3.SA) , opens new tab posted a $2.41 billion net profit for the quarter ended in September, well above analysts' estimates for a $1.65 billion profit as polled by LSEG. Vale reported a 10% decline in its net revenue year-on-year to $9.55 billion, almost in line with the $9.44 billion analysts had expected. It had already released earlier this month its third-quarter sales and output report, which showed the highest iron ore production for a quarter since 2018, but realized prices of iron ore fines dropping 14%, weighing on its profit. Its core profit as measured by adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) came in at $3.62 billion in the quarter, down 18% from a year earlier and also broadly meeting analysts' estimates of $3.61 billion. Vale said in the earnings report it booked an additional $956 million provision related to the deadly collapse of a dam at an iron ore mine owned by Samarco, a joint venture between Vale and BHP, near the Brazilian city of Mariana in 2015. The firm had already anticipated a similar impact last week as a final compensation deal approaches, with Vale saying on Thursday that it was set to sign the deal on Friday after years of talks with Brazilian authorities. The most recent discussions were for the three miners to pay up 170 billion reais ($30 billion), with 100 billion reais of that to be paid over 20 years directly to public authorities. Vale's new management is eyeing a better quality portfolio with more focus on the client, CEO Gustavo Pimenta said in the earnings report. Pimenta, Vale's former chief financial officer, joined as CEO earlier this month. Pimenta said Vale aims to speed up efforts to offer high-quality product in its main iron ore business, while adding it plans to grow its base metal unit, particularly in copper. In a separate filing on Thursday evening, Vale also raised its all-in cost guidance for copper for the year. ($1 = 5.6653 reais) Sign up here. https://www.reuters.com/markets/commodities/brazils-vale-posts-15-decline-q3-net-profit-2024-10-25/

2024-10-24 23:47

WASHINGTON, Oct 24 (Reuters) - Japanese Finance Minister Katsunobu Kato and U.S. Treasury Secretary Janet Yellen discussed recent exchange-rate moves, among other topics, in a bilateral meeting held on Thursday, a senior Japanese finance ministry official said. "The two sides discussed exchange-rate moves, and confirmed the need for the United States and Japan to communicate closely," Atsushi Mimura, Japan's vice finance minister for international affairs, told reporters. A weak yen has become a source of concern for Japanese policymakers as it hurts households and retailers by pushing up the cost of raw material imports. "We have recently seen one-sided, sharp moves in currency rates," said Mimura, who oversees Japan's currency policy. "It's desirable for exchange rates to move in a way that reflects fundamentals. We will be increasingly vigilant to currency moves, including those driven by speculation," he said in Washington on the sidelines of the G20 and IMF meetings. The dollar climbed above 153 yen for the first time in nearly three months on Wednesday as receding expectations of big interest rate cuts by the Federal Reserve drew renewed attention to the wide rate divergence between U.S. and Japan. The dollar stood at 151.83 yen on Thursday. Sign up here. https://www.reuters.com/world/japan-us-finance-chiefs-discussed-fx-moves-bilateral-meeting-2024-10-24/

2024-10-24 23:42

Korea Zinc, Young Poong want their representatives to account for more than half the board Korea Zinc board currently has 13 members led by Chairman Yun B. Choi MBK says it wants to separate management from board to tackle corporate governance issues at Korea Zinc SEOUL, Oct 25 (Reuters) - Korea Zinc's top shareholder Young Poong and private equity fund MBK Partners plan to call for an extraordinary shareholder meeting this year seeking approval to appoint their board nominees, a top executive at the fund said, escalating a takeover battle. Run by the Choi family, Korea Zinc (010130.KS) , opens new tab has been in a bitter fight for control of the $17 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. MBK and Young Poong want their representatives to account for more than half the board of the world's biggest zinc refiner, Kim Kwang-il, a partner at MBK, told Reuters in an interview, adding they have yet to decide on the number of new directors. Currently, Chang Hyung-jin, a Young Poong adviser, is the only member representing Young Poong in the 13-member board. MBK will also propose the introduction of an "executive officer" system, to separate management from the board, a measure that would require Korea Zinc Chairman Yun B. Choi to give up his management role, Kim said. "Korea Zinc is a typical example of board of directors not taking into account shareholders' interests in South Korea," Kim said. "To them, the company is synonymous with Choi. That is the corporate governance problem that we want to resolve." MBK and Young Poong acquired a more than 5% stake in the South Korean firm through a tender offer that closed last week, bringing their combined stake in the firm to nearly 39%. To counter the proposal, Korea Zinc launched a share buyback programme that closed on Wednesday. It has yet to disclose how many shares were tendered. Korea Zinc's Choi family can potentially secure the backing of up to 36.5% of shareholders, including Bain Capital and strategic partners such as Hyundai Motor Group, according to analysts. CORPORATE GOVERNANCE Korea Zinc has been criticised by some governance experts for its $400 million investment in private equity funds run by a longtime friend of Choi who has been detained and released on bail over his company's alleged involvement in a stock manipulation scheme involving K-pop agency SM Entertainment (041510.KQ) , opens new tab. "This is a conflict of interest," Kim said, adding the investments did not get board approval and Korea Zinc's shares had been undervalued partly because of its inefficient capital management. At a press conference this month, Choi said Korea Zinc took all necessary steps required by the law and internal rules to make a "reasonable and normal" management decision to use surplus money to boost investment returns. Korea Zinc CEO Park Ki-deok, also told reporters on Tuesday that its board composition and governance structure is "exemplary", with independent directors making up the majority. MBK and Young Poong have far more than the 3% stake needed to call for a special shareholder meeting. If the request is rejected by Korea Zinc's board, MBK plans to seek a court approval to press ahead and the proposed meeting could be delayed to January or February, Kim said. Adding new directors would require approval by a majority of voting shareholders. The change of the board structure to separate management roles requires approval from two-thirds of the votes present, meaning that MBK and Young Poong would need to get support from other shareholders such as the National Pension Service, which has a 7.83% stake. Shares in Korea Zinc skyrocketed 30% on Thursday to a record high, as investors are bracing for a lengthy takeover battle for the company that could involve on-market purchases by the rival parties. ($1 = 1,380.5500 won) Sign up here. https://www.reuters.com/markets/commodities/mbk-young-poong-call-korea-zinc-shareholder-meeting-push-revamp-board-2024-10-24/