2024-10-18 05:05

Small-cap stocks, bitcoin climb; Mexican peso, Treasuries slip Trump Media & Technology Group shares up 140% since Sept. 23 Investors debate if market moves are due to Trump or economic optimism NEW YORK, Oct 18 (Reuters) - Corners of financial markets that could feel the impact of a Donald Trump victory are stirring again, as the U.S. presidential race tightens with less than three weeks until Election Day. Assets ranging from small-cap stocks to bitcoin have climbed in recent weeks while the Mexican peso and Treasuries have slipped, as polls show a tight race between Republican candidate Trump and his Democratic opponent, Vice President Kamala Harris. The moves echo the so-called Trump trades from earlier this year when he pulled ahead of President Joe Biden, only to fade after Biden withdrew. Harris led Trump by a marginal 45% to 42% in a Reuters/Ipsos poll released on Tuesday, a tighter race than the same poll showed several weeks earlier. Trump has taken the lead in online prediction markets such as PredictIt and Polymarket. Polymarket last favored him 61% to 39% over Harris. Trump's gains on Polymarket might stem from a group of four Polymarket accounts that have collectively spent about $30 million worth of cryptocurrency on bets that he will win, the Wall Street Journal reported on Friday. Polymarket did not immediately respond to a request for comment. Investors caution, however, that linking the investment moves to Trump this time is more difficult, as many can also be tied to rising economic optimism following a blowout U.S. jobs report this month and a 50-basis-point interest-rate cut from the Federal Reserve last month. "Some of this certainly could be being driven by Trump's improved position in the predictive markets," said Steve Sosnick, chief strategist at Interactive Brokers. Due to strong economic data, however, “it’s really hard to separate cause from effect, much less separate different causes,” he said. Among the biggest gainers are shares of Trump Media & Technology Group (DJT.O) , opens new tab, the former president’s media company, which have broadly tracked Trump’s fortunes in polls and online prediction markets since its listing this year. Shares are up more than 140% since Sept. 23. “It’s the trade that is most levered to Trump’s election prospects,” Sosnick said. Other beneficiaries include private prison operators Geo Group (GEO.N) , opens new tab and CoreCivic (CXW.N) , opens new tab, whose shares have risen about 18% and 10%, respectively, this month. Trump has promised to crack down on illegal immigration, which could boost demand for detention centers. The small cap-focused Russell 2000 (.RUT) , opens new tab is up 4% since Oct. 10 and trades near its highest level since late 2021. Expectations that Trump will keep taxes low and reduce regulation have boosted shares of smaller companies, though analysts believe they are also benefiting from greater confidence in the economy. In foreign-exchange markets, Trump trades are visible in the dollar’s rebound against a range of currencies, particularly the Mexican peso, strategists said. The peso , seen as vulnerable to new tariffs Trump plans to impose, is down 4% from its September high. MSCI's gauge for Latin American currencies (.MILA00000CUS) , opens new tab has slipped over 3% during that period. "Implied volatility in the dollar-peso pair has been ratcheting up in line with Trump’s gains in betting markets," said Karl Schamotta, chief market strategist at payments company Corpay in Toronto. Trump said on Sunday he would slap tariffs as high as 200% on vehicles imported from Mexico. The former president’s economic policies are seen as growth-friendly and a catalyst for inflation, two factors that could translate to higher Treasury yields, which move inversely to bond prices, and a stronger dollar. The dollar index , which measures the greenback's strength against six major currencies, has risen more than 3% since late September, as investors price in a shallower trajectory for interest-rate cuts. Some of its gains, however, are likely related to greater confidence of a Trump win, wrote Thierry Wizman, global FX & rates strategist at Macquarie. Improved betting-market odds for Trump, who has positioned himself as pro-cryptocurrency, appear to be lifting bitcoin. The world's largest cryptocurrency is up 12% since Oct. 10, a rally that Sean Farrell, head of digital asset strategy at Fundstrat Global Advisors, attributed to rising confidence in a Trump victory. "If Trump secures a second term, the regulatory-risk-driven discount applied to crypto would likely shrink to near-zero, and investors would need to price in the possibility, however small, of the government adopting a strategic bitcoin reserve," he said. In government bond markets, some investors believe Trump’s improved standing has spurred a rise in the 10-year term premium - a measure of the compensation investors demand to hold long-term government debt securities - on concerns that the former president’s proposals for lower taxes could increase the budget deficit. A New York Fed gauge measuring term premium turned positive last week for the first time since July. The move has come amid a broader rise in Treasury yields. Part of the reason for those moves are expectations of a Trump win, said Matt Eagan, portfolio manager and head of the full discretion team at Loomis, Sayles & Company. Still, not everyone interprets these market moves as bets on a Trump victory. "I think the election mostly remains as a toss-up," said Sonu Varghese, global macro strategist at Carson Group. "The story is really one of stronger economic growth and a supportive Fed.” Sign up here. https://www.reuters.com/markets/us/bitcoin-mexican-peso-trump-trades-are-appearing-again-2024-10-18/

2024-10-18 04:56

Hezbollah says it will escalate war with Israel Investors flock to safe-haven gold on Mid-East war concerns Bullion has risen over 30% so far this year Oct 18 (Reuters) - Gold surged above the historic threshold of $2,700-per-ounce on Friday, powered by escalating tensions in the Middle East, uncertainties around the U.S. elections and relaxed monetary policy expectations that pushed the metal into uncharted territory. Spot gold was up 1% at $2,720.05 per ounce by 02:58 p.m. ET (1858 GMT) and has risen 2.4% so far this week. U.S. gold futures settled 0.8% higher to $2,730. "With the conflict intensifying – particularly following Hezbollah's announcement to escalate the war with Israel – investors are flocking to gold, a traditional safe-haven asset," said Alexander Zumpfe, a precious metals trader at Heraeus Metals Germany. Pledges from Israel and its enemies Hamas and Hezbollah to keep fighting in Gaza and Lebanon dashed hopes that the death of a Palestinian militant leader might hasten an end to escalating war in the Middle East. Rising geopolitical tensions prompt investors to seek safe-haven assets like gold, driven by risk aversion and concerns over global market instability. "Adding to the momentum, concerns around the U.S. presidential election and anticipation of looser monetary policies have further fuelled the rally," Zumpfe added. Gold shattered records multiple times this year as expectations of more rate cuts by central banks and geopolitical uncertainties boosted prices by more than 30% so far this year, its best annual growth since 1979, as per LSEG data. Lower rates enhance the appeal of bullion, which yields no interest on its own. Sources told Reuters the ECB was likely to cut again in December unless economic data suggests otherwise. Traders are also pricing in a 92% chance of a Federal Reserve rate cut in November, according to the CME Fedwatch tool. Max Layton, global head of commodities research at Citi, sees gold prices reaching $3,000/oz over the next 6-12 months, as a store of wealth in a time of high U.S. and European economic uncertainty, driving up ETF and investment demand. Silver is expected to perform strongly to $35/oz over the next three months, Layton added. Spot silver rose 6% to $33.58. Platinum added 2.4% to $1,016.25 and palladium gained about 4% to $1,083.25. Sign up here. https://www.reuters.com/markets/commodities/safe-haven-gold-breaks-2700oz-level-uncertainty-looms-2024-10-18/

2024-10-18 04:52

MUMBAI, Oct 18 (Reuters) - The Indian rupee was unable to benefit from a rise in its Asian peers on Friday as likely outflows from local equities and a buoyant dollar pressured the currency, but dollar sales from state-run banks helped limit losses. The rupee was at 84.07 against the U.S. dollar as of 10:15 a.m. IST, little changed from its previous close and just shy of its all-time low of 84.0750 hit on Monday. Dollar bids from foreign banks, likely related to custodial outflows, and local oil companies pressured the rupee on Friday, a trader at a state-run bank said. However, mild sales from state-run banks, likely on behalf of the Reserve Bank of India (RBI) helped the rupee hold above its all-time low, traders said. Benchmark Indian equity indices, the BSE Sensex (.BSESN) , opens new tab and Nifty 50 (.NSEI) , opens new tab, were down about 0.5% each on the day, adding to a three-session losing streak. Foreign investors have sold $8.4 billion worth of local stocks in October on a net basis so far, on course for the highest monthly outflows since at least 2002. Assets under custody of foreign portfolio investors had crossed $1 trillion as of end-September. Asian currencies were mostly stronger with the Philippine peso up 0.3% and leading gains. Data released on Thursday showed U.S. retail sales increased 0.4% last month, compared to a 0.3% rise expected by economists, while jobless claims dipped, reinforcing bets that the Federal Reserve will cut rates by 25 bps, and not 50 bps, in November. The data helped boost the dollar to an 11-week high of 103.87 on Thursday, also lifting U.S. bond yields. The dollar index's recovery "looks overstretched," DBS Bank said in a note. With the rise in U.S. bond yield stalling near 4% this month, the dollar index should be lower around 102, the note said. Sign up here. https://www.reuters.com/markets/currencies/rupee-pinned-near-record-low-equities-remain-under-pressure-2024-10-18/

2024-10-18 04:34

A look at the day ahead in European and global markets from Kevin Buckland China is very much the center of attention today, following a barrage of data and remarks from its central bank chief, financial regulator and stats bureau. Unfortunately, though, none of it served to paint a clearer picture of how exactly the world's second-largest economy is positioned and what actually policy makers are doing about it. The economy grew at the slowest pace since early 2023 in the third quarter, although forecast-topping retail sales potentially gave some cause for optimism. At the same time, new home prices tanked at the fastest pace since 2015. Of course, all this is arguably old news, mostly predating the announcement of the most aggressive stimulus since the pandemic at the end of last month - even if a lack of detail in subsequent press briefings has sapped the initial momentum. That said, the official launch today of a swap facility aimed at supporting the stock market seemed to have an immediate psychological impact, spurring a swing to gains in mainland equity markets. The effect was not transmitted more widely, with shares in economies tied closely to China, like Australia and South Korea, performing poorly. Robust earnings from Taiwanese chipmaker and Nvidia (NVDA.O) , opens new tab supplier TSMC (2330.TW) , opens new tab was probably responsible for the bulk of gains in Hong Kong stocks (.HSI) , opens new tab, as well as lifting Taiwan's equity benchmark (.TWII) , opens new tab by 2.5%. European shares look headed for a softer open, with FTSE and DAX futures both down, although both indexes are currently on course for weekly gains of more than 1%. UK retail sales are the biggest macro event regionally, coming just as sterling recovers from its mid-week inflation shock. The British currency is down 0.4% for the week, looking much more robust than the euro, which is on track for an almost 1% slide after Thursday's ECB rate cut and signals of more coming soon. Key developments that could influence markets on Friday: -UK retail sales (Sep) -US housing starts, building permits (both Sep) -Fed's Bostic, Kashkari and Waller speak Sign up here. https://www.reuters.com/markets/europe/global-markets-view-europe-2024-10-18/

2024-10-18 03:46

Sept coal output rises to 414.46 mln metric tons Sept thermal power generation jumps 8.9% on year earlier Coal output heads for record high in 2024 - Galaxy Futures BEIJING, Oct 18 (Reuters) - China's coal output rose 4.4% year-on-year in September, statistics bureau data showed on Friday, after safety inspections launched earlier in the year ended and more coal-to-chemicals capacity came back online. September's output climbed to 414.46 million metric tons, from 396.55 million tons in August. "Coal production in September continued to rise, benefiting mainly from an improvement in mine safety," analysts at Galaxy Futures said. Accidents and deaths in the coal mines of major producing province Shanxi fell by 42% and 40% respectively in the first half of the year because of increased safety inspections, according to the province's mine safety administration. That enabled mines to resume production to meet stronger demand. The province, which mined 29% of China's coal in 2023, told miners to curb excess output as a safety measure earlier this year. Output for the first nine months of the year was 3.48 billion tons, up 0.6% on the year, according to the revised government data. Driving up coal use, thermal power generation, which in China is mostly fuelled with coal, rose 8.9% in September from a year earlier to 545.1 billion kilowatt-hours (kWh), statistics bureau data showed on Friday. Demand also grew in the industrial sector. "Following the end of maintenance on some coal-based methanol, urea, PVC and other chemical capacity, the capacity utilisation rate has gradually increased," the Galaxy Futures analysts said. Galaxy Futures analysts forecast production increases through the rest of the year, leading to total 2024 output of 4.68 billion tons, which would be up by around 0.5% from last year's record 4.66 billion tons. Sign up here. https://www.reuters.com/world/china/chinas-sept-coal-output-rises-44-safety-improvements-chemical-industry-demand-2024-10-18/

2024-10-18 00:36

Brent, WTI post largest weekly declines since Sept. 2 China's economy grew at the slowest pace in Q3 since early 2023 Biden says there is potential to end Israel and Iran conflict in Middle East for a while US crude output at record high, while oil stocks fall, EIA says HOUSTON, Oct 18 (Reuters) - Oil futures fell on Friday, declining more than 7% on the week after data showed China's economic growth slowed and investors digested a mixed Middle East outlook. Brent crude futures fell $1.39, or 1.87%, to $73.06 a barrel. U.S. West Texas Intermediate crude settled at$69.22 a barrel, down $1.45 or 2.05%. Brent settled more than 7% lower this week, while WTI lost around 8%, marking their biggest weekly declines since Sept. 2, when OPEC and the International Energy Agency cut their forecasts for global oil demand in 2024 and 2025. In China, the world's top oil importer, the economy grew at the slowest pace since early 2023 in the third quarter, though September consumption and industrial output beat forecasts. "China is key to the demand side of the equation so that is very much weighing on prices here today," said John Kilduff, partner at Again Capital in New York. China's refinery output declined for the sixth straight month as thin refining margins and weak fuel consumption curbed processing. "We cannot ignore the impact of electric vehicles in China," said Neil Atkinson, Paris-based independent energy analyst and former head of the oil division at the IEA. "There are various factors at play here, economic weakness in China but also the move towards the electrification of transport." Electric vehicle sales in China jumped 42% in August and reached a record high of over one million vehicles. Meanwhile, China's central bank rolled out two funding schemes that will initially pump 800 billion yuan ($112.38 billion) into the stock market through newly created monetary policy tools. "Chinese data shows tentative signs of improvement, but recent briefings on additional economic stimulus left market participants underwhelmed," said Rishi Rajanala, associate at Aegis Hedging. U.S. President Joe Biden said on Friday there was an opportunity to deal with Israel and Iran in a way that potentially ends their conflict in the Middle East for a while. "We lost additional parts of the geopolitical risk premium in the price of oil on talks of this all reaching an end point," said Again Capital's Kilduff. Biden, on a visit to Berlin, also told reporters he has an understanding of how and when Israel will respond to the missile attacks by Iran, something investors continue to anxiously wait for, said Alex Hodes, analyst at energy brokerage StoneX, said in a note. After the killing of Hamas leader Yahya Sinwar, Lebanon's Hezbollah militant group said on Friday it was moving to a new and escalating phase as it battles Israeli troops. This dashed hopes earlier on Friday that Sinwar's death would speed up an end to escalating war in the Middle East. In the U.S., crude production smashed another record last week, according to the Energy Information Administration on Thursday, as output rose by 100,000 barrels per day (bpd) in the week to Oct. 11 to 13.5 million bpd, from its previous peak of 13.4 million bpd first hit two months ago. Helping to give prices a floor, the EIA also said U.S. crude oil, gasoline and distillate inventories fell last week. And U.S. retail sales increased slightly more than expected in September, with investors still pricing in a 92% chance of a Federal Reserve rate cut in November. "Positive U.S. economic data has helped alleviate some growth concerns, but market participants continue to monitor potential demand recovery in China following recent stimulus measures," said Hani Abuagla, senior market analyst at XTB MENA. Sign up here. https://www.reuters.com/business/energy/oil-edges-up-track-biggest-weekly-loss-over-month-2024-10-18/