2024-10-11 11:51
MUMBAI, Oct 11 (Reuters) - India's foreign exchange reserves (INFXR=ECI) , opens new tab fell for the first time in eight weeks and came off a record high to stand at $701.18 billion as of Oct. 4, data from the Reserve Bank of India (RBI) showed on Friday. The reserves fell by $3.71 billion in the reporting week, after having risen by a total of nearly $35 billion in the prior seven weeks. They had hit a record high of $704.89 billion and had risen by $12.6 billion in the week ending Sept. 27 in their biggest weekly increase since mid-July 2023. Changes in foreign currency assets are caused by the central bank's intervention in the foreign exchange market as well as the appreciation or depreciation of foreign assets held in the reserves. The RBI intervenes on both sides of the forex market to prevent undue volatility in the rupee. Forex reserves also include India's reserve tranche position in the International Monetary Fund. In the period for which the forex reserves data pertains, the rupee had logged its worst week since May and had slipped 0.3% week-on-week, as equity outflows surged and crude oil prices rose due to a worsening of the Middle East conflict. The RBI had intervened in both the non-deliverable forwards and local spot forex market to help the rupee stay above the psychologically important 84 mark, traders said. The currency settled at 84.06 on Friday, after hitting a record low of 84.07 in intraday trade. It was down 0.1% week-on-week. FOREIGN EXCHANGE RESERVES (in million U.S. dollars) --------------------------------------------------------- Oct 04 Sept 27 2024 2024 --------------------------------------------------------- Foreign currency assets 612,643 616,154 Gold 65,756 65,796 SDRs 18,425 18,547 Reserve Tranche Position 4,352 4,387 ---------------------------------------------------------- Total 701,176 704,885 ---------------------------------------------------------- Source text: (https://www.rbi.org.in/scripts/BS_PressReleaseDisplay.aspx , opens new tab) Sign up here. https://www.reuters.com/world/india/indias-fx-reserves-halt-7-week-rising-streak-come-off-record-high-2024-10-11/
2024-10-11 11:36
LONDON, Oct 11 (Reuters) - The U.S. presidential election, the most consequential vote for financial markets in an election-packed year, is weeks away. With Democratic Vice President Kamala Harris and Republican Donald Trump locked in a close race to win the Nov. 5 election, we look at what matters most for world markets. EUROPE IN THE BALANCE For European equity markets, a Trump victory could spell trouble for export-heavy sectors, particularly German automakers such as BMW (BMWG.DE) , opens new tab but also LVMH (LVMH.PA) , opens new tab and other luxury goods makers as concerns of renewed trade tensions loom. Barclays has warned of possible "high single-digit" percentage drops in European earnings should trade conflicts reignite. Trump has floated plans for blanket tariffs of 10-20% on virtually all imports to boost U.S. manufacturing. On the flip side, a Harris win would be a relatively better outcome for European equities. This could energize renewable energy, a possible tailwind for utilities with large U.S. projects like Orsted (ORSTED.CO) , opens new tab and Iberdrola (IBE.MC) , opens new tab. Over the longer term, however, her plans to raise corporate taxes from 21% to 28% could curb margins for American firms and European dollar earners alike. A further cut under Trump would likely be welcomed on both sides of the Atlantic. The election could have implications for the war in Ukraine. Trump and some Republicans in Congress have questioned the value of U.S. funding for Ukraine's two-year battle against Russia, while Democrats have pushed to bolster Ukraine. Aerospace and defense stocks (.SXAPRO) , opens new tab have gained over 80% since Russia invaded Ukraine in 2022. CURRENCY SWINGS Trade tariffs are key for traders in the world's most-actively traded currencies. The euro, trading below September's 14-month peaks at around $1.09 , is seen as being in the losing camp if a Trump win means higher universal tariffs. "A Trump win, in the eyes of the market, would take euro/dollar down to the $1.05 area, whereas a win for Harris would see the rate move in the opposite direction, above $1.15," said BlueBay Asset Management CIO Mark Dowding. Geopolitical risks, especially in the Middle East, that trigger a surge in oil prices and hurt economic growth, also make the euro vulnerable, analysts said. ING added that a Trump win could also hurt the Australian and New Zealand dollars -- currencies of economies dependent on trade from China, a main target of higher tariffs. Around 37% of Australia's and 29% of New Zealand’s exports land in China, ING noted. The Swedish and Norwegian currencies were also seen as vulnerable to global trade dynamics, while Canada's dollar could suffer if a Harris win is viewed negatively for the U.S. economy. CHINA ROULETTE One of the highest stakes gambles in global markets right now is whether to place bets on China, where government stimulus pledges have revived investor interest that could be canceled out by tariff hikes or trade wars under Trump. Investors expect Harris to pursue targeted tariffs and Trump to lean towards more aggressive, disruptive policies. "If Trump wins, the (political) rhetoric towards Chinese companies would be terrible," Edmond de Rothschild international equities manager Christophe Foliot said. That would likely increase China scepticism among U.S. investors and intensify a trend for multinationals to remove made-in-China components from their supply chains, he added. China faces further hits from a Trump administration potentially cutting Chinese companies' access to new technologies, which would limit productivity, Oxford Economics said. And risk consultancy Eurasia Group said a Trump victory would pressure EU nations to also decouple from China. Goldman Sachs strategists estimate that Chinese stocks could fall by 13% if Trump levies a 60% tariff on Chinese goods. But threats of an export slump may also motivate Beijing to follow up monetary stimulus with more significant state spending programmes. "Potential new U.S. tariffs on Chinese goods might increase the intensity and longevity (of stimulus)," Goldman said. EM ON THE LINE Emerging market (EM) equities are, on paper, ready to shine after underperforming their developed-world peers for the better part of a decade. The U.S. Federal Reserve has kicked off rate cuts and the dollar, food and fuel prices are falling – big boosts for importing countries. Investors say that a Harris win, signaling broad policy continuity from President Joe Biden, could give the assets a tailwind. But a Trump win, accompanied by global tariffs, could come down hard on any excessive optimism. Most investors say Mexico, with strong U.S. trade ties, has the most to lose; those betting on a Trump win often turn on Mexico's peso. JPMorgan warned investors to stay neutral until the U.S. election risk has passed, and UBS warned that the highest Trump tariffs threaten losses of up to 11% for EM equities in 2025. The Swiss bank also said that its EM Risk Appetite index is near 15-year highs, suggesting investors are not fully pricing in the downside risk of Trump tariffs to EM assets broadly. Sign up here. https://www.reuters.com/markets/what-matters-most-world-markets-tight-us-election-race-2024-10-11/
2024-10-11 11:30
NAPERVILLE, Illinois, Oct 10 (Reuters) - The bumper U.S. corn and soybean crops are up for revision again on Friday when the U.S. Department of Agriculture issues its next round of monthly supply and demand data. Unlike in past Octobers, adjustments to U.S. corn and soybean acres are not on the table this time around, meaning any production surprises would have to come from yield. The trade remains comfortable with the idea of record U.S. corn and soybean yields heading into this month’s report, which is typically headlined by the U.S. crops. But a slew of other weather-driven topics have grabbed attention in the market, such as soybean planting in Brazil and dryness for wheat in the Southern Hemisphere as well as in Russia. These items also warrant an eye on Friday. YIELD SURPRISE? On average, industry analysts peg U.S. corn yield at 183.4 bushels per acre, down slightly from 183.6 in September. Soybean yield is projected at 53.1 bpa, just below last month’s 53.2. Surprises can never be ruled out, but analysts have been good at anticipating U.S. corn yields in recent Octobers. USDA’s figure has come within 0.5% (less than 1 bpa) of the average trade guess in the past five years. Analysts have also had October soybean yield reasonably well-pegged, as the last time USDA’s yield landed 1 bpa or more away from the average trade guess was in 2011. Percentage-wise, the deviation since 2011 has exceeded 1% only twice (2012, 2022). The trade tends to overestimate soybean yield in October, as the average trade guess was equal to or larger than USDA’s print in eight of the last 10 years (not 2020 or 2021). The opposite trend is true for corn, but by a lesser degree. The average analyst estimate was higher than USDA’s yield in four of the last 10 Octobers. Some traders have wondered whether widespread dryness across the U.S. Corn Belt late in the season has clipped yields, but USDA’s month-ago estimates showed no evidence of that. It is still early in the corn harvest, though most Crop Watch soybean fields have done as expected or better thus far. Three more soy fields were harvested over the past couple of days, and two of them met yield expectations while the third exceeded them. INTERNATIONAL SPOTLIGHT Dryness in Brazil’s top producer Mato Grosso has held the state’s soybean planting to the slowest pace in nine years, but decent rains should be in store for the rest of the month. Although it often remains unchanged, USDA in recent Octobers has only raised – never lowered – Brazil’s soybean crop, usually driven by larger area outlooks from Brazil’s statistics agency, Conab. Last month, USDA had Brazil’s 2024-25 harvested soybean area at 47.3 million hectares (116.9 million acres), and Conab days later pegged planted area at 47.4 million hectares. If anything, this could be an upward force on USDA’s already hefty 169 million-tonne peg for Brazil’s upcoming soy harvest, possibly padding global soy stocks even further. But USDA’s assumptions already imply a greater year-on-year jump in Brazil’s soy area versus Conab’s figures. Relative to demand, wheat supplies in major exporting countries are set for 17-year lows in 2024-25, and that outlook could tighten further this month based on weather troubles in multiple regions. Industry production estimates for wheat in Argentina and Australia, the last to harvest 2024-25 crops, have recently been trimmed from prior expectations. Russia on Thursday also revised its 2024-25 wheat output downward. As of last month, USDA pegged 2024-25 global wheat production up 0.8% on the year to a new record, but output across major exporters was seen falling 1.1% to a five-year low. Extreme drought has recently hampered winter wheat planting across Russia, but this pertains to the 2025-26 crop, and USDA will not release those official outlooks until May. Decent rains are seen moving across Russian wheat regions next week, though if things do not permanently turn around for the top wheat exporter, the 2025-26 global balance sheet could be as thin or thinner than this year’s. Karen Braun is a market analyst for Reuters. Views expressed above are her own. Sign up here. https://www.reuters.com/markets/commodities/gearing-up-fridays-usda-supply-demand-data-2024-10-11/
2024-10-11 11:10
BERLIN, Oct 11 (Reuters) - An oil tanker caught fire off the Baltic Sea coast of northern Germany early on Friday, and all seven crew members on board at the time were taken ashore, maritime rescue services said in a statement. Three vessels have been deployed to the burning tanker Annika in the Mecklenburg Bay to extinguish the blaze, with several firefighting teams also en route to the site via helicopters, according to the statement. The Germany-flagged, 73-metre-long tanker is carrying around 640 tonnes of oil, it added. The vessel is at anchor and connected to a tugboat on site. Sign up here. https://www.reuters.com/world/europe/oil-tanker-catches-fire-off-northern-germany-2024-10-11/
2024-10-11 10:50
TSX ends up 0.7% at 24,471.17 For the week, the index climbs 1.3% Financials add 0.8%; tech rises 1.2% Nine of 10 major sectors notch gains Oct 11 (Reuters) - Canada's main stock index extended its record-setting run on Friday in a broad-based move that included gains for heavily weighted financial shares as investors cheered U.S. bank earnings and the move to lower borrowing costs globally. The Toronto Stock Exchange's S&P/TSX composite index (.GSPTSE) , opens new tab ended up 168.91 points, or 0.7%, at 24,471.17 ahead of a long weekend, with the market closed on Monday for the Thanksgiving Day holiday. For the week, the index was up 1.3%, its fifth straight weekly gain, while it was eclipsing the previous day's record closing high. "We're on a coordinated global easing cycle," said Mike Archibald, a portfolio manager at AGF Investments. "That is quite bullish for stocks. You are going to get a better flow of liquidity." The S&P 500 and the Dow also hit record highs, with the biggest boosts from financial stocks after banks reported strong quarterly results while the latest inflation data supported expectations for the Federal Reserve to cut interest rates for a second time in November. "Certainly the bank earnings out of the U.S. this morning were fairly positive ... and that's having a knock-on effect to the Canadian banks," Archibald said. Financials, which account for 30% of the TSX's weighting rose 0.8%. It included gains for major banks such as Royal Bank of Canada (RY.TO) , opens new tab and Bank of Montreal (BMO.TO) , opens new tab, but a decline of 4% for the shares of TD Bank (TD.TO) , opens new tab, adding to the previous day's losses. Industrials were up 1.1% and technology added 1.2%. Nine of the 10 major sectors ended higher. The Bank of Canada is also expected to continue its easing campaign after a downbeat business survey offset stronger-than-expected jobs data. Investors are betting the BoC will step up the size of its rate cuts to 50 basis points either at its next decision on Oct. 23 or in December. Sign up here. https://www.reuters.com/markets/tsx-futures-flat-ahead-key-domestic-jobs-data-2024-10-11/
2024-10-11 10:45
LONDON, Oct 11 (Reuters) - The pound was pinned around a one month low on the dollar on Friday, getting little support from data that showed Britain's economy returned to growth in August. Sterling was last flat on the day on the dollar at $1.3069, just off the $1.3011 hit Thursday, its lowest since mid Sept. It was also flat on the euro, at 83.70 pence to the common currency. Economic output rose by 0.2% in monthly terms in August, according to figures from the Office for National Statistics - in line with expectations in a Reuters poll of economists - and a return to growth after two consecutive months of stagnation. That provides some relief to finance minister Rachel Reeves ahead of the new Labour government's first budget later this month, though still shows a slowdown compared to the start of the year. But the pound was little moved. "The data didn't change the big picture a great deal, it provides confirmation that the UK economy is slowing in the second half of this year, but that's understandable, I don't think anyone thought that the strong pace of growth in the first half of the year was sustainable," said Lee Hardman, senior FX strategist at MUFG. "For the Bank of England, next week is much more important with the latest inflation and labour market reports due, which will be important in terms of determining the kind of messaging we get for the Bank of England ahead of their next meeting in November." The pound for much of this year had been supported by expectations that the Bank of England will cut rates more slowly than peers such as the Federal Reserve and European Central Bank. But this has been changing, and much of the currency's decline in the past month against the dollar has been down to shifts in those relative expectations. Markets have reduced the amount of Fed easing they expect while, in contrast, BoE governor Andrew Bailey said last week the central bank could become 'more aggressive' on rate cuts if inflation pressures continue to weaken. U.S. CPI and jobless claims data Thursday did little, in combination, to shift market pricing for the Fed, and they continue to see two 25 bp rate cuts at each of its remaining meetings. Markets see at least one 25 bp BoE cut across its two remaining meetings and around a 40% chance of a second. Sign up here. https://www.reuters.com/markets/currencies/sterling-pinned-near-one-month-low-after-british-gdp-data-2024-10-11/
