2024-10-23 10:17
OTTAWA, Oct 23 (Reuters) - The Bank of Canada is likely to cut its key policy rate by 50 basis points on Wednesday, as a slew of recent data on inflation, growth and unemployment calls for faster relief for consumers and businesses, economists said. This will be the central bank's first super-sized cut in over 15 years outside of the pandemic and its fourth rate reduction in a row, closely following the U.S. Federal Reserve, which slashed rates by a similar size last month. "Those three big components - real GDP, the labor market and inflation - are very much in line with a weaker outlook than the Bank of Canada had anticipated," said Randall Bartlett, senior director of Canadian economics at Desjardins. Consumer prices in Canada slowed to 1.6% last month, below the 2% mid-point of the BoC's 1% to 3% target range. GDP expanded at just a 0.2% rate in July, and an advance estimate indicated that growth likely stalled in August. Wage inflation, which has been a sore point in the BoC's fight against inflation, has also shown signs of consistent cooling. However, robust job numbers last month have some economists divided on the rate path ahead. The current benchmark rate is 4.25% after the central bank reduced borrowing costs by a cumulative 75 basis points from June. The BoC will announce its monetary policy decision at 9:45 a.m. ET (1345 GMT). It will also release its last quarterly Monetary Policy Report for the year, which will include fresh forecasts for economic growth and inflation for the year and next two years. Economists expect a broad set of revisions to inflation, growth and consumption numbers. They are also keen to watch the bank's commentary on population growth in the coming years. In a Reuters poll, two-thirds of economists, 19 of 29, forecast that the BoC would cut rates by one-half percentage point to 3.75% on Oct 23 and currency swap markets are pricing in an almost 95% chance of a cut of 50 basis points. "It's a bit of a balancing act," said Pedro Antunes, chief economist at Conference Board of Canada, an independent economic think tank. Most financial firms are expecting a cut of 50 basis point and that could sway the BoC's opinion, but just continuing the quarter-point trimming cycle is more prudent, he said. Sign up here. https://www.reuters.com/business/finance/bank-canada-likely-reduce-benchmark-borrowing-costs-by-50-bps-2024-10-23/
2024-10-23 09:39
Sterling dips ahead of central bank governor speech Bank of England's Andrew Bailey to speak at 1845 GMT Weaker-than-expected British inflation could lead to dovish tone LONDON, Oct 23 (Reuters) - The pound dipped a touch on the dollar and held steady on the euro on Wednesday, as traders awaited remarks by Bank of England Governor Andrew Bailey that could affect expectations of the central bank's rate cut path. Sterling was last down 0.14% at $1.2967, just above the previous day's intraday low of $1.2945, its lowest since Aug. 19. That weakness has largely been a result of a stronger dollar, as traders repositioned for a more moderate pace of rate cuts from the Federal Reserve than they had seen a few months ago, and took into account the potential for former President Donald Trump to win the U.S. election in November. Trump's policies, particularly his tariff proposals, are seen as likely to lead to higher U.S. yields, and a stronger dollar. As for the British leg of the sterling/dollar pair, the focus is on Bailey's remarks at the IMF due at 1845 GMT "We consider the main risk is that Governor Bailey is dovish because the September CPI report was weaker than expected," said Carol Kong, currency strategist at Commonwealth Bank of Australia, noting that such remarks would weigh on the pound. Annual consumer price inflation eased to 1.7% in September, the lowest reading since April 2021, data showed last week. At present markets are nearly fully pricing a BoE rate cut in November, and see a further rate cut in December as likely, but not certain. Versus the euro the pound was little changed, at 83.14 pence to the common currency. Investors focus is also on the British budget on Oct. 30, in which Finance Minister Rachel Reeves faces a tough task to raise the tax revenues she needs to invest more in public services and new infrastructure. Sign up here. https://www.reuters.com/markets/currencies/sterling-dips-dollar-eyes-governor-baileys-speech-2024-10-23/
2024-10-23 09:18
Oct 22 (Reuters) - CVS Health (CVS.N) , opens new tab last week named as CEO a tried-and-tested company veteran, the latest in a handful of firms this year that have turned to an experienced executive to take the helm, hoping to quell investor concerns amid economic uncertainty. Following pressure from an activist investor, CVS hired David Joyner to replace Karen Lynch. During her three-and-a-half year tenure, CVS' stock fell nearly 11%. The company has cut its 2024 profit forecast three times, blaming an increase in Medicare-related costs. A few weeks earlier, Nike (NKE.N) , opens new tab had hired former senior executive Elliott Hill to succeed John Donahoe as president and CEO, as it efforts to revive sales and battle competition. Boeing (BA.N) , opens new tab named aerospace industry veteran Kelly Ortberg as its CEO earlier this year to turn around the planemaker beset by legal and regulatory problems. "Investors tend to be comforted when someone with a track record comes in," said Brian Jacobsen, chief economist at Wisconsin-based Annex Wealth Management. "It's one thing if there is a new division or new opportunity, but when there are challenging times, investors often prefer someone who has been through a few economic cycles." A record number of CEOs have quit in the U.S. this year. CEO departures jumped 15% to 1,450 between January and August, from the same period a year earlier, according to a report from outplacement firm Challenger, Gray and Christmas. The report cited economic uncertainty as one of the main reasons for leadership changes. On Monday, Walt Disney (DIS.N) , opens new tab named Morgan Stanley MS.N veteran James Gorman as chair. Gorman had already been tasked with finding a replacement for Disney CEO Bob Iger, a Wall Street favorite who retired from the company in 2021, only to return the next year to deal with a pandemic-related slump. "The pandemic and subsequent economic challenges led some companies to prioritize stability, experience, and redundancies over innovation and disruption, bringing in experienced leaders to implement immediate turnaround strategies ... rather than for long-term transformation," said Michael Ashley Schulman, chief investment officer at Running Point Capital. The strategy has, however, met with mixed success. Famously, Apple (AAPL.O) , opens new tab founder Steve Jobs left the company in 1985 over differences with then-CEO John Sculley, returning a dozen years later to architect the iPhone. Howard Schultz has held the top job at Starbucks (SBUX.O) , opens new tab three different times, setting the coffee chain back on track each time its sales faltered. But things have not worked out the same way for several major American corporations who brought back former CEOs including Dell (DELL.N) , opens new tab, Twitter, and consumer goods giant Procter & Gamble (PG.N) , opens new tab. P&G, for instance, brought back former CEO Alan Lafley in 2013 to reinvigorate sales, but his second tenure was much less fruitful. He was replaced with another company veteran in roughly two years. Executives who come back to the fold, known as "boomerang CEOs", may either be unable or unwilling to make necessary strategic changes when they return, according to a research paper featured in the MIT Sloan Management Review in 2020. The annual stock performance of companies led by such CEOs was 10% lower on an average than their first-stint counterparts, the report showed. "Not everyone is Jobs ... Returning CEOs are usually overconfident, which, when combined with their difficulty of adopting to the constantly evolving business environment, may exacerbate the damage caused by their stubborn fixation on old strategies," said Xu Jiang, associate professor at Duke University's Fuqua School of Business. Sign up here. https://www.reuters.com/markets/us/more-us-firms-lean-retired-veteran-leaders-steady-ship-choppy-economy-2024-10-22/
2024-10-23 08:09
SEOUL, Oct 23 (Reuters) - South Korea's finance minister said the won's current level near 1,400 per dollar should be regarded as a "new normal", the Yonhap news agency reported on Wednesday, although the finance ministry later denied the minister made the remark. Choi Sang-mok, who is also the deputy prime minister for economic affairs, said "the current 1,400 level should be seen as different from the 1,400 in the past," according to the report. Choi added that South Korea's economic conditions did not make it possible to raise interest rates to defend the local currency, in a meeting with reporters accompanying him during a trip to New York, Yonhap reported. The won has weakened nearly 5% against the dollar this month and earlier on Wednesday hit its lowest level since late July at 1,385.1. It last touched the psychological threshold of 1,400 in mid-April. Soon after Yonhap's report, the finance ministry said in a text message: "Deputy Prime Minister Choi Sang-mok did not say that the FX rate of 1,400 won per dollar was the new normal at a meeting with correspondents in New York's Manhattan on the 22nd." About half a dozen outlets reported the comments, but some, including Yonhap, later removed their articles without explanation. Sign up here. https://www.reuters.com/markets/currencies/south-korean-finance-minister-views-dollar-won-near-1400-new-normal-yonhap-2024-10-23/
2024-10-23 08:02
Oct 23 (Reuters) - Poland's registered unemployment rate remained flat at 5.0% in September compared with 5.0% in August, statistics office data showed on Wednesday, in line with expectations of 5.0%. The statistics office also said that the number of registered unemployed was 769,600 last month. Sign up here. https://www.reuters.com/markets/europe/polands-unemployment-rate-50-september-2024-10-23/
2024-10-23 08:00
Gold has risen 33% so far this year Traders see 88% chance of a 25-bp US rate cut in November Silver's physical shortage provides strong support - analyst Oct 23 (Reuters) - Gold prices hit record highs on Wednesday, as investors grew anxious about a tight U.S. presidential race and loaded up on safe-haven investments, while silver traded close to its highest in 12 years. Spot gold gained 0.1% to $2,750.68 per ounce as of 1129 GMT after hitting a record high of $2,758.37 earlier in the session. U.S. gold futures edged 0.2% higher to $2,764.30. "It's the uncertainty related to the U.S. election and rising debt burden in the U.S. They have to issue billions of dollars of debt as well just ahead of the election into a relatively thin and nervous market," said Ole Hansen, head of commodity strategy at Saxo Bank. "The risk of additional spending raising the debt burden even more is what's driving this safe-haven demand into investment metals right now." Democratic U.S. Vice President Kamala Harris held a marginal 46% to 43% lead over Republican former President Donald Trump, a new Reuters/Ipsos poll found. Economic uncertainty and geopolitical tensions boost non-yielding bullion, which has hit multiple record highs and surged over 33% so far this year to become one of the best-performing assets of 2024. Gold got a boost after the U.S. Federal Reserve initiated its cycle of rate reductions last month with a significant 50-basis-point cut. The odds of a similar move by the Fed in November have faded entirely, but traders see an 88% chance of a quarter-basis-point cut, the CME FedWatch tool , opens new tab showed. Spot silver fell 0.8% to $34.57 per ounce after hitting its highest since late 2012 at $34.87 in the previous session. "The gold/silver ratio, currently standing at around 80, means silver tends to benefit as a natural consequence of gold's push into new territory on the upside," Kinesis Money said in a note. Silver's physical shortages also provide strong support for the metal, said Michael Langford, chief investment officer at Scorpion Minerals. Platinum rose 0.2% to $1,031.34 and palladium dropped 0.4% to $1,071.75. Sign up here. https://www.reuters.com/markets/commodities/safe-haven-gold-hits-record-high-global-uncertainties-2024-10-23/
