2024-10-09 10:12

Milton loss could reach $100 billion, matching Katrina Possible loss of $60 billion would be similar to Ian Reinsurance rates could increase and boost shares LONDON, Oct 9 (Reuters) - Hurricane Milton could result in losses of up to $100 billion for the global insurance industry, creating a surge in 2025 reinsurance prices that could boost some insurance companies' shares, analysts said on Wednesday. The Category 4 hurricane is expected to make landfall on the Gulf Coast of Florida late on Wednesday or early Thursday. It is potentially one of the most destructive to hit the region, which is recovering from Hurricane Helene less than two weeks ago. Insured losses from Milton could range from $60 billion to $100 billion if the hurricane makes direct landfall in the densely populated area of Tampa, analysts at Morningstar DBRS said. A loss of $100 billion would put Milton on par with Katrina in 2005, they added, saying that insured losses would likely be "substantial but not catastrophic". Katrina caused the largest insured loss from a hurricane. The second-largest loss came from Ian, which hit Florida in 2022 and led to losses of around $60 billion. RBC analysts estimated Milton would cause similar losses to Ian that should be "very manageable" for the insurance sector. Analysts at Jefferies estimated a mid-double-digit billion-dollar insured loss would follow a major hurricane impact in one of Florida's most heavily populated regions. "A 1-in-100-year event is estimated by some to result in $175 billion in losses for landfall in the Tampa region, and $70 billion in losses in the Fort Myers region," they wrote in a note, outlining an extreme scenario. S&P analysts noted on Wednesday the scope of damages "remains highly uncertain" but that it could match the $60 billion caused by Ian in 2022. Hurricane Milton could "fully exhaust" many primary insurers' 2024 catastrophe budgets, the S&P analysts wrote in a note. INDUSTRY RESPONSE Insurers and reinsurers - who insure the insurers - have responded to rising losses from natural catastrophes, which scientists say are being exacerbated by climate change, by raising rates and excluding higher-risk business. "Better reinsurance contract terms, broader earnings diversification and bigger reserve buffers should put the sector in better stead than before," the RBC analysts said in a note. Shares in global reinsurers Swiss Re (SRENH.S) , opens new tab and Munich Re (MUVGn.DE) , opens new tab and in Lloyd's of London (SOLYD.UL) players Beazley (BEZG.L) , opens new tab, Hiscox (HSX.L) , opens new tab and Lancashire (LRE.L) , opens new tab have fallen this week. Swiss Re, Munich Re and Beazley have been trading at record highs in recent weeks following strong profits. "It's only a matter of time before shares regain lost ground as prospects of harder pricing at the subsequent (policy) renewals set in," RBC added. Reinsurers fix prices for many insurance contracts on Jan. 1. Analysts at Peel Hunt said on Wednesday that a major hurricane making landfall across Tampa Bay and travelling west across the Florida Peninsula would be similar to a realistic disaster scenario set out by Lloyd's earlier this year, which projected a $134-billion loss for the insurance sector. Lloyd’s maintains a set of mandatory realistic disaster scenarios to stress-test both individual syndicates and the market as a whole. The event scenarios are regularly reviewed to ensure they represent material catastrophe risks. Sign up here. https://www.reuters.com/business/finance/hurricane-milton-could-cost-insurers-60-bln-raise-reinsurance-rates-rbc-says-2024-10-09/

2024-10-09 10:03

Minutes may reveal division among Fed policymakers over rate cut Investors expect further rate cuts in November and December Upcoming inflation data crucial for future rate cut decisions Oct 9 (Reuters) - Minutes of the U.S. Federal Reserve's half-a-percentage-point rate cut last month, to be released on Wednesday, may provide a final word on just how divided policymakers were over a decision that took many economists by surprise and sparked the first dissent from a member of the Board of Governors in 19 years. Fed chair Jerome Powell in his post-meeting press conference said there was "broad support" for the half-point cut, with even dissenting Governor Michelle Bowman agreeing it was time to ease monetary policy but preferring to start with a smaller quarter-point reduction as a hedge against inflation risks she is not convinced have been fully tamed. Yet Powell also acknowledged a "good diversity of excellent discussion" about the decision, while projections issued by Fed policymakers about what would happen over just the next three months were unusually dispersed. In anonymized rate cut projections issued at the September meeting policymakers saw rates falling anywhere from 0 to 0.75 basis points further by the end of the year. This is a spread matched in the Fed's September 2022 projections, when officials were still in the midst of hiking rates and debating how much farther they would need to go to tame inflation, but before that not seen since September 2016. The three-month time horizon provided in the Fed's September outlook to the end of the current year is the shortest in the central bank's Quarterly Summary of Economic Projections. The minutes, to be released at 2 pm EDT (1800 GMT), provide a detailed account of the back and forth among policymakers and staff over the course of each two-day meeting. They contain sections on the economic and financial outlook as well as an account of officials' views about appropriate monetary policy and the risks they feel the economy is facing. While it is a backward-looking document, typically issued three weeks after each Fed meeting, it can also better frame for the public and investors the spread of opinion around each policy vote. In doing so it also can provide clues about how the Fed might react to incoming economic data. The minutes "may shed some light on the bar for officials to move policy rates lower at a faster rate," economists from Citi wrote on Monday. Investors currently expect the Fed to lower the benchmark rate another quarter of a point at the Nov. 6-7 meeting and then again in December. The document may also give a better sense of whether the half-point cut was a hard sell for its proponents or not. Though there was only one dissent, that does not speak to how the 7 non-voting participants in the meeting, the presidents of some of the regional reserve banks who rotate in and out of voting positions year by year, felt about the move, or about how the voters viewed their options. In an interview last week, Richmond Fed president Thomas Barkin, who does have a vote this year and supported the half-point, said he was open to a smaller reduction as well and did not see much macroeconomic difference between the two. He noted that starting with the larger reduction was consistent with the policy paths outlined by almost all 19 Fed officials. Nine officials, for example, expected four quarter point cuts for all of 2024 would be appropriate, while seven others projected three only. "It was a big tent," Barkin said. "If you were going to end up somewhere in that range...it was reasonable to do 50. It also would have been reasonable to do 25. I was perfectly comfortable voting for 50." From here, Powell and other officials have noted, the Fed can tailor the pace and extent of cuts depending on how the economy and inflation evolve. A Friday jobs report cemented views among investors that the Fed would scale back to a quarter point cut at its November 6-7 meeting after payroll employment surged more than expected, the unemployment rate fell, and wage growth at 4% remained above what policymakers see as consistent with their 2% inflation target. New inflation data to be released on Thursday will be the latest key data point in the debate, with policymakers generally open to continued rate cuts as long as there is evidence price pressures are continuing to ease. Sign up here. https://www.reuters.com/markets/rates-bonds/fed-september-minutes-may-show-whether-50-bps-rate-cut-was-slam-dunk-or-hard-2024-10-09/

2024-10-09 09:37

ZURICH, Oct 9 (Reuters) - Cash is still the most accepted payment method for Swiss businesses, the Swiss National Bank said on Wednesday, despite plans by some companies to reduce their acceptance of notes and coins in future. Physical money is still accepted by 98% of the 770 companies in the survey of retailers, public transport companies, service providers like hairdressers as well as cultural and entertainment facilities. The respondents said customers still wanted the option of paying in cash, while the payment means was also crisis resistant and offered a cost-effective alternative to cashless payment methods. "The surveyed companies continue to view cash as important," the survey said. The findings of the SNB survey contrast with the experience of countries such as Sweden which have become increasingly cashless. Switzerland has long had an affinity for physical money and still has a 1,000 Swiss franc ($1,166) note - one of the world's highest-value notes. Still cashless systems are encroaching, with many public transport companies planning to reduce their cash acceptance in future, citing the cost and effort of returning excess money. Companies said that the services of banks and cash-in-transport companies are too expensive, while there are too few cash machines and counters. The number of Swiss branches has fallen 21% in the last 10 years, with the trend set to continue with UBS (UBSG.S) , opens new tab closing 85 branches by 2025 following its consolidation of its fallen rival Credit Suisse. ($1 = 0.8575 Swiss francs) Sign up here. https://www.reuters.com/markets/europe/cash-still-king-swiss-businesses-central-bank-survey-shows-2024-10-09/

2024-10-09 08:14

JOHANNESBURG, Oct 9 (Reuters) - South Africa's rand softened on Wednesday, ahead of the closely watched minutes from the Federal Reserve's September meeting. At 1554 GMT, the rand traded at 17.6425 against the dollar , about 0.3% weaker than its previous close. The dollar index last traded up about 0.3% against a basket of currencies. "Dollar strength of late can be attributed to stronger economic data out of the region which is dimming the outlook of further outsized rate cuts this year in the world's largest economy," said Shaun Murison, senior market analyst at IG. "The rand looks to be eyeing out a move towards the R18/$ mark as it has now firmly cleared the R17.50/$ level." Fed minutes due later in the day were expected to provide an explanation for the U.S. central bank's big interest rate cut last month, and could potentially offer more clues on its interest rate trajectory. The risk-sensitive rand is susceptible to global movers like the direction of U.S. monetary policy. On Thursday, September U.S. consumer inflation figures will be released, while domestic investors also turn their focus towards monthly mining and manufacturing data. On the stock market, the Top-40 (.JTOPI) , opens new tab index closed about 0.2% down. South Africa's benchmark 2030 government bond was stronger, with the yield down 6.5 basis points to 9.17%. Sign up here. https://www.reuters.com/markets/currencies/south-african-rand-edges-lower-ahead-fed-minutes-2024-10-09/

2024-10-09 07:15

Nine out of 10 analysts expect MAS to hold policy Inflation cooled to 2.7% in August from 5.5% peak Singapore's GDP growth forecast adjusted to 2.0%-3.0% for 2024 SINGAPORE, Oct 9 (Reuters) - Singapore's central bank is widely expected to keep monetary policy unchanged next week and hold off easing settings amid inflation and growth uncertainties caused by geopolitical tensions. Of the 10 analysts polled by Reuters, nine expect the Monetary Authority of Singapore (MAS) to hold off making changes to its policy at the scheduled review next Monday. "Oil prices have climbed from recent geopolitical tensions in the Middle East, while extreme weather conditions are still holding sway over food prices, which remain above pre-pandemic levels," said Moody’s Analytics economist Denise Cheok. "We see a reduction of slope of the S$NEER policy band in the first half of the year, while a more drastic move of bringing down the mid-point of the band might be on the cards in the second half of 2025, should imported inflation continue to step down discernibly." Cheok thinks MAS is likely to ease only next year. Inflation in the Asian financial hub remains sticky. While it cooled from a peak of 5.5% in early 2023, it remained at 2.7% year-on-year in August. The central bank expects core inflation to ease more significantly in the final quarter to 2.5% to 3.5% for the year . Singapore is often seen as a bellwether for global growth as its international trade dwarfs its domestic economy. Growth slowed to 1.1% in 2023 from 3.8% in 2022. Its GDP rose 2.9% on a year-on-year basis in the second quarter of 2024, stronger than expected and leading economists to upgrade their forecasts. The trade ministry in August adjusted its GDP growth forecast range for 2024 to 2.0% to 3.0%, from 1.0% to 3.0% previously. Lee Yen Nee, a risk analyst at Fitch Solutions unit BMI, said: "The economy has been performing at close to its potential, which suggests that there is no hurry for the MAS to adjust its policy." Central banks globally have started to cut rates. The Federal Reserve last month delivered a larger-than-usual half-percentage-point reduction, while the European Central Bank is tipped to cut rates next week for the third time this year. Maybank economists said the falling SORA (Singapore Overnight Rate Average) interest rate alongside the U.S. rate cuts can be seen as a de-facto easing. Instead of using interest rates, Singapore manages monetary policy by letting the local dollar rise or fall against currencies of its main trading partners within an undisclosed band, known as the Singapore dollar nominal effective exchange rate, or S$NEER. It adjusts policy via three levers: the slope, mid-point and width of the policy band. The outlier expecting a loosening of monetary policy next week was UOB bank, which cited major central banks in advanced economies' easing and the world was in a "last mile of disinflation". UOB analysts expect a slight reduction to the S$NEER slope, but said "the prospect of a delay to policy normalisation to January or April 2025 remains." The MAS has not changed policy since a tightening in October 2022, which was the fifth in a row, as broader concerns about growth kept authorities sidelined. Core inflation peaked at 5.4% in the first quarter of 2023 and headline inflation at 7.3% in the third quarter of 2022. MAS this year began making policy announcements every quarter instead of semiannually. Sign up here. https://www.reuters.com/world/asia-pacific/singapore-seen-keeping-monetary-policy-unchanged-inflation-risks-linger-2024-10-09/

2024-10-09 07:07

US crude oil stocks rose by nearly 11 million barrels last week EIA cuts US and global oil demand forecasts for 2025 Biden expected to discuss Iran with Israeli PM Netanyahu Israel could yet attack Iranian oil infrastructure Iran warns Gulf states against use of airspace for attacks LONDON, Oct 9 (Reuters) - Oil prices erased early gains on Wednesday as weak demand fundamentals and rising supply countered elevated risk of supply disruption from conflict in the Middle East and Hurricane Milton in the United States. Brent crude futures were down 36 cents, or 0.47%, at $76.82 a barrel by 1103 GMT while U.S. West Texas Intermediate (WTI) futures lost 43 cents, or 0.58%, to $73.14. Brent and WTI both gained more than 1% earlier in the session after prices had plunged on Tuesday by more than 4% on a possible Hezbollah-Israel ceasefire, though markets remain wary of a potential Israeli attack on Iranian oil infrastructure. "Despite the current heightened tensions in the Middle East, it is easy to forget that the oil market is very much vulnerable to corrections due to the ongoing bearish macro narrative centred on China," said Harry Tchilinguirian, head of research at Onyx Capital Group. China said on Tuesday it was "fully confident" of achieving its full-year growth target but refrained from introducing stronger fiscal steps, disappointing investors who had banked on more support for the economy. Investors have been concerned about slow growth dampening fuel demand in China, the world's largest crude importer. Weak demand continues to underpin the fundamental outlook. The U.S. Energy Information Administration's (EIA) on Tuesday downgraded its demand forecast for 2025 on weakening economic activity in China and North America. U.S. crude oil stocks rose by nearly 11 million barrels last week, much more than analysts polled by Reuters had expected, according to market sources citing American Petroleum Institute figures on Tuesday. "Such a backdrop belies the war premium in oil prices at present, but it would be a brave soul indeed to dismiss what will happen to oil prices if Israel does the unthinkable and targets Iran's oil sector," said John Evans at oil broker PVM. Investors are awaiting developments from expected talks between U.S. President Joe Biden and Israeli Prime Minister Benjamin Netanyahu over intensifying conflict in the Middle East. The oil-producing region has been on high alert for any Israeli response to an Iranian missile attack last week in retaliation for Israel's military escalation in Lebanon. Tehran told Gulf Arab states it would be "unacceptable" if they allowed use of their airspace or military bases against Iran and warned that any such move would draw a response, a senior Iranian official said. The official added that there had been no discussion as yet on any potential action by Gulf states to balance oil markets if Iranian energy facilities are attacked by Israel. Sign up here. https://www.reuters.com/business/energy/oil-prices-steady-after-sliding-potential-israel-hezbollah-ceasefire-2024-10-09/