2024-10-15 10:25

BRUSSELS, Oct 15 (Reuters) - EU energy ministers met in Luxembourg on Tuesday to discuss the bloc's rising Russian LNG imports, Ukraine's energy shortages ahead of winter and how to balance energy prices across member states, officials said. The EU agreed a 14th package of sanctions in June including a ban on transhipments of Russian gas as of March next year but stopped short of an outright ban. Since then, Belgium and the Netherlands have seen a sharp increase in imports. In a letter on Monday, France and nine other countries asked the European Commission to propose stricter reporting obligations on Russian liquefied natural gas (LNG) for storage companies and suppliers. "Belgium will file and we will support an initiative to ban and track LNG imports from Russia more structurally," Kai Mykkanen, Finland's climate and environment minister, told reporters ahead of the meeting. Soon after Moscow began its invasion of Ukraine in February 2022, the EU announced an effort towards phasing out Russian fossil fuels "as soon as possible" without setting a date. "We have seen in Belgium a doubling of LNG volumes. These are probably destined for security of supply within Europe but we have difficulty implementing this (14th) package that's why we are calling for a tracking system," said Tinne van der Straeten, Belgium's energy minister. After the major Nord Stream pipeline was blown up in 2022, Russian LNG imports to the EU increased, while piped gas still flows via Ukraine and Turkey to central Europe. "Some countries have internal issues clouding their judgement preventing a fast switch but it's been two and a half years so it's time to find an alternative," Krzysztof Bolesta, Poland's state energy minister, said. The contract between Ukraine and Russia for gas flows via Ukraine is due to end in December. UKRAINE AHEAD OF WINTER The International Energy Agency said Ukraine's winter electricity shortfall could reach six gigawatts (GW), exacerbated by the end of the Russian pipeline deal. The Commission will update countries on Tuesday on efforts to extend the Russia-Ukraine pipeline deal. Ukraine said it does not want to continue while Russia said it is willing. The ministers will also look at practical ways to help Ukraine through the winter. Commission President Ursula von der Leyen said Russia had knocked the "power equivalent of the three Baltic states" and aims to restore about 15% of Ukraine's needs. Poland said it was in talks with Ukraine's transmission companies to raise exports while Lithuania has dismantled a power plant, which is being rebuilt in Ukraine. The ministers will discuss former ECB bank governor Mario Draghi's competitiveness report, on which the incoming Commission is expected to draft its new Clean Industrial Deal. Europe's gas and power prices are higher than in the United State and elsewhere, and they vary considerably across the bloc. In September, the Greek prime minister asked the EU to urgently respond to soaring power prices in central and eastern Europe. Draghi advocated a faster deployment of cheaper green energy solutions. However, aging power grids, red tape, and limited cross-border infrastructure have hampered efforts. "There is work to do on simplifying the authorisation of grid projects, mobilising funding and do more integrated planning," EU Energy Commissioner Kadri Simson told the meeting. ($1 = 0.9183 euros) Sign up here. https://www.reuters.com/business/energy/eu-energy-ministers-discuss-ukraine-energy-crisis-russian-lng-2024-10-15/

2024-10-15 10:11

MUMBAI, Oct 15 (Reuters) - The Indian rupee ended little changed on Tuesday as the slump in crude oil prices offset the impact of weakness in Asian peers and dollar demand from foreign banks. The rupee closed at 84.0375 to the U.S. dollar against its close at 84.06 in the previous session. The currency had slipped to an all-time low of 84.0750 on Monday. Mild dollar sales from state-run banks alongside limited speculative appetite kept losses for the rupee at bay, traders said. It is "quite likely that it (USD/INR) drifts up to 84.20 in the near-term but a rise above that could create some panic among importers so the Reserve Bank of India is unlikely to allow that", a trader at a state-run bank said. Asian currencies were down between 0.1% to 0.7% on the day while the dollar index was at 103.1, within touching distance of its two-month high hit on Monday. Brent crude oil futures fell 5% to $73.5 per barrel on the back of a weaker demand outlook and after a report said Israel is willing not to strike Iranian oil targets, easing concerns about supply disruptions. "Declining oil prices suggest the scope for further USD gains today is tight ... should we see more independent dollar outperformance, we could conclude that is due to some positioning ahead of the U.S. election in three weeks from now," ING Bank said in a note. While falling oil prices are a comfort for the rupee, portfolio investment flows are likely to be a more important driver for the currency in the near term. Foreign investors have pulled out about $8 billion from local stocks this month, a sharp reversal from inflows of about $11.1 billion in September. Benchmark Indian equity indices, the BSE Sensex (.BSESN) , opens new tab and Nifty 50 (.NSEI) , opens new tab, ended the day lower. They have slipped nearly 3% so far in October. Sign up here. https://www.reuters.com/markets/currencies/rupee-ends-little-changed-fall-oil-prices-counters-decline-asia-fx-2024-10-15/

2024-10-15 10:09

A look at the day ahead in U.S. and global markets from Mike Dolan The U.S. bond market returns from holiday to find Wall Street stocks soaring ever higher to new records, with Big Tech and Big Banks stirring earnings season excitement even as China's markets turn tail on demand worries and stimulus doubts. The S&P 500 (.SPX) , opens new tab and the Dow Jones (.DJI) , opens new tab posting fresh record finishes, with the former rapidly homing in on 6,000 after a 22% rise for the year so far and the Dow closing above 43,000 for the first time. With Taiwan's giant chipmaker TSMC (2330.TW) , opens new tab, the main producer of advanced chips used in artificial intelligence applications, expected to report a 40% leap in third-quarter earnings on Thursday and Europe's ASML (ASML.AS) , opens new tab reporting tomorrow, Tech stocks led the latest leg higher. The semiconductor index (.SOX) , opens new tab jumped 1.8% to a more than two-month high on Monday - aided by the 6.8% advance by Arm and a 2.4% surge in market heavyweight Nvidia (NVDA.O) , opens new tab to its best ever close. That lifted Nvidia's market value to $3.39 trillion - just shy of Apple's (AAPL.O) , opens new tab $3.52 trillion and above Microsoft's $3.12 trillion. The Nasdaq (.IXIC) , opens new tab is now back within 1% of the record high it set in July. But attention will flip back to financials on Tuesday, with Bank of America, Goldman Sachs, Citigroup and State Street reporting alongside pharma giant Johnson & Johnson. The first blush of bank results on Friday saw that sector's shares surge and estimates of annual profit growth for financials have doubled to 4% since the start of the month. Overall, forecasts for the annual S&P500 earnings expansion in Q3 are for dip this quarter to 5%, with the biggest drag from energy and materials. But the ebullience is all about an expected quick return to double-digit growth for the index in the next quarter and right through next year. And there's little in the robust economic news to make investors reconsider that idea. Bank of America's latest monthly fund manager survey showed global investor optimism and equity allocations recorded the biggest jumps this month since June 2020. Cash allocations dropped to 3.9% while equity exposure rose to a net 31% overweight - and bond allocations suffered a record drop to a net 15% underweight. With stock index futures , marginally off ahead of Tuesday's bell, the biggest drag remained energy stocks - with oil prices falling anew. U.S. crude slid as much as $4 to near two-week lows below $70 per barrel on the back of a weaker global demand outlook due to struggling China and after a media report said Israel is willing not to strike Iranian oil targets, easing fears of a major supply disruption. The world oil market is heading for a sizeable surplus in the new year, the International Energy Agency said on Tuesday. The annual decline in crude oil prices is running at more than 20% again - a balm for the returning Treasury market that's been so recently agitated by sticky U.S. inflation readouts. The dollar (.DXY) , opens new tab stepped back a touch as a result, although the euro remained on the back foot ahead of the widely expected European Central Bank interest rate cut on Thursday. But China's markets suffered again on Tuesday, reflecting concern about domestic demand in the world's second biggest economy - with persistent doubts that a recent burst of policy stimulus can get across a property-led slide in growth. A brewing trade war with Europe and geopolitical tensions surrounding China's war games around Taiwan this week and the upcoming U.S. election all dampen any optimism there. The Shanghai Composite (.SSEC) , opens new tab slumped 2.5% in heavy trading into Tuesday's close there, while the blue-chip CSI300 (.CSI300) , opens new tab lost 2.7%. Hong Kong's Hang Seng (.HSI) , opens new tab dropped 3.7% and the offshore yuan skidded to a one-month low. A report from Caixin Global that China may raise an additional 6 trillion yuan ($850 billion) over three years to fund ongoing stimulus seemed to have little effect and investors say they want to hear more detail soon. Elsewhere, sterling perked up even after news that British pay grew at its slowest pace in more than two years in the three months to August and with vacancies falling again. And in European earnings, Ericsson (ERICb.ST) , opens new tab shares jumped 8% after the Swedish company reported third-quarter sales above expectations as demand for 5G gear rebounded in North America. Key developments that should provide more direction to U.S. markets later on Tuesday: * US corporate earnings: Bank of America, Goldman Sachs, Citigroup, State Street, PNC, Progressive, Charles Schwab, Omnicom, Johnson & Johnson, Walgreens Boots Alliance, Unitedhealth, United Airlines, JB Hunt etc * New York Fed September manufacturing survey, NY Fed Oct survey of consumer inflation expectations; Canada Sept CPI inflation * Federal Reserve Board Governor Adriana Kugler, San Francisco Fed President Mary Daly and Atlanta Fed chief Raphael Bostic all speak. European Central Bank President Christine Lagarde speaks * US Treasury sells 3-, 6-month bills Sign up here. https://www.reuters.com/markets/us/global-markets-view-usa-pix-2024-10-15/

2024-10-15 09:40

Berlin to subsidise companies in exchange for emissions cuts Has awarded first 15 'climate protection contracts' Critics say plan protects uncompetitive sectors, is inefficient BERLIN, Oct 15 (Reuters) - The German government has earmarked up to 2.8 billion euros ($3.1 billion) to support 15 industrial companies in their bid to decarbonise under its first round of "climate protection contracts", the economy ministry said on Tuesday. As part of Germany's goal to become climate-neutral by 2045, Berlin will award 15-year subsidies to companies in sectors such as glass, paper and chemicals in return for them reducing carbon emissions in production. The 15 projects are expected to contribute to a reduction of 17 million metric tons of emissions over the contracts' 15-year term. Germany's total CO2 emissions in 2023 stood at 674 million tons, according to the Federal Environment Agency. Through the contracts, companies will be compensated for the extra costs of green production in industries where climate-friendly production processes cannot currently operate competitively. Critics say the subsidies are costly, will make only a small dent in Germany's emissions, and will support energy-intensive industries that are better suited to other countries where energy prices are lower. Berlin says they are a temporary lifeline to certain industries until the ramp-up in renewable energy lowers energy prices. Beneficiaries of the first round of the scheme, launched in March, include BASF (BASFn.DE) , opens new tab and Suedzucker (SZUG.DE) , opens new tab, as well as German subsidiaries of Kimberly-Clark (KMB.N) , opens new tab, Saint-Gobain and Wienerberger (WBSV.VI) , opens new tab. "Germany is the first EU member state to implement climate protection contracts, positioning us as a leader in industrial decarbonisation," Economy Minister Robert Habeck said in a statement. The contracts include flexible funding mechanisms that adjust based on energy and CO2 price changes, the economy ministry said, adding it expected to pay out significantly less in subsidies than the maximum earmarked sum. The government will run a second round of auctions later this year, earmarking a low double-digit billion euros amount for subsidies to be awarded in 2025, the ministry said. Berlin had originally planned to offer up to a mid-double-digit billion euro sum in subsidies, but the programme was put at risk by last year's constitutional court ruling that stopped the government from using 60 billion euros of debt for climate protection projects. ($1 = 0.9166 euros) Sign up here. https://www.reuters.com/markets/carbon/germany-earmarks-3-billion-decarbonisation-subsidies-2024-10-15/

2024-10-15 09:33

Oct 15 (Reuters) - The U.S. Federal Reserve will continue cutting interest rates in November, but policymakers are walking a thin line as inflation is no longer cooling at an accelerated pace, Morgan Stanley Wealth Management's chief investment officer said. The Fed is focused on a labor market that has shown evidence of being "mixed in pockets", Lisa Shalett told the Reuters Global Markets Forum , opens new tab (GMF). "They're not going for the 2% (inflation) target; they've abandoned it," she said. Most Fed policymakers last week gave the green light for more rate cuts in coming months, while Atlanta Fed President Raphael Bostic said skipping a move in November may be in order. "The equity market hasn't woken up to that yet, but the bond market looks like it's starting to back up on the long end as higher inflation expectations are being discounted," Shalett said. Data last week showed U.S. consumer prices rose slightly more than expected in September and producer prices were unchanged last month. Traders currently have 89% odds on a 25 basis-point rate cut at the Fed's Nov. 6-7 policy meeting, abandoning expectations for a half-point cut after a blowout September employment report and other rosy economic data. Meanwhile, Shalett said she does not expect a clear outcome on Nov. 5, the day of the U.S. presidential election, given how close the race is. Last week's polls had Democratic Vice President Kamala Harris and former Republican President Donald Trump neck-and-neck across seven battleground states. "We've encouraged clients to anchor position in what we call real assets ... including gold, commodities, real estate, energy infrastructure assets," Shalett said, to "hide out" from rising market volatility. "We also like market-neutral hedge fund strategies," she added. (Join GMF on LSEG Messenger for live interviews: https://lseg.group/3TN7SHH , opens new tab) Sign up here. https://www.reuters.com/markets/rates-bonds/labor-focused-fed-continue-rate-cuts-morgan-stanley-wealth-management-says-2024-10-15/

2024-10-15 09:26

BUCHAREST, Oct 15 (Reuters) - Romania's central bank saw a window of opportunity with falling inflation to cut interest rates twice and ease some policy restrictiveness, but the bank is now pausing as a pending fiscal correction is the main economic challenge, a bank board member said on Tuesday. Earlier this month, Romania's central bank held its benchmark interest rate at 6.50% after two consecutive cuts, saying inflation's downward path would be more erratic. With high spending ahead of presidential and parliamentary elections in November and December, analysts said the bank's scope to cut the benchmark rate further was limited by widening budget and current account deficits. The European Union state’s widening budget deficit has aggravated Romania's inflation, which will likely stay above target through 2027, S&P Global Ratings said in its latest ratings review. The bank expects inflation to return to its 1.5%-3.5% target band by end-2025. Speaking at a financial seminar on Tuesday, central bank board member Csaba Balint said it would be important to see what the budget deficit adjustment plan entailed. Asked about the interest rate outlook, he said "I believe the general trajectory is downwards. The budget correction would mean a lower fiscal impulse and demand aligned with production capacity, therefore inflation should come down, which would enable us to continue easing monetary policy." "However, it is very difficult to anticipate a timeline or the dosage." Romania has yet to unveil a 2025 budget, with the coalition government mulling a seven-year timeframe to bring the country's deficit below the bloc's 3% ceiling. The coalition government raised its 2024 consolidated fiscal deficit target to 6.94% of economic output in September, but the country's independent fiscal watchdog said the shortfall would likely rise to around 8% of economic output. Analysts and ratings agencies expect tax hikes from 2025. Sign up here. https://www.reuters.com/markets/europe/romanian-fiscal-adjustment-plans-challenge-timeline-interest-rate-cuts-2024-10-15/