2024-10-08 10:26

MUMBAI, Oct 8 (Reuters) - The Indian rupee ended nearly unchanged on Tuesday as the central bank's steps to support the currency helped offset a host of negative cues such as a rise in U.S. bond yields, elevated oil prices and outflows from local equities. The rupee closed at 83.9625 against the U.S. dollar, nearly unchanged from its close at 83.9775 in the previous session. The currency is hovering close to its all-time low of 83.9850 but has avoided weakening below it on account of the Reserve Bank of India's market interventions. The interventions were complemented by informal instructions to banks on Monday to refrain from betting heavily against the rupee, which prompted some traders to reduce the size of their bets against the rupee and tweak their trading approach. Bids on the dollar-rupee pair "were significantly fewer," on Tuesday while a dip in oil prices is also a positive cue for the local currency, a foreign exchange trader at a state-run bank said. Brent crude oil futures declined to $79.4 per barrel on Tuesday after rising for five consecutive trading sessions on concerns that escalating conflict could disrupt oil supplies from the Middle East. The dollar index was tad lower on the day at 102.5 but has risen about 1.5% over October so far while crude oil prices are up about 10% in the same period. A rise in oil prices coinciding with dollar strength "have increased inflation risks in India and put pressure on the rupee, such that the RBI has had to undertake significant FX intervention in recent days," J.P. Morgan analysts said in note on Tuesday. Investor focus is now on the Indian central bank's monetary policy decision due on Wednesday. J.P. Morgan expects the central bank to keep policy rates and its stance unchanged "along with a cautious tone until the current global storm passes." Sign up here. https://www.reuters.com/markets/currencies/rupee-ends-flat-cenbank-support-helps-counter-global-pressures-2024-10-08/

2024-10-08 10:15

A look at the day ahead in U.S. and global markets from Mike Dolan World markets painted a messy picture on Tuesday, with recently pumped-up crude oil prices retreating sharply and disappointment surrounding China's economic stimulus already setting in - knocking Hong Kong shares (.HSI) , opens new tab back almost 10%. The return of mainland Chinese markets after a week's holiday there did see the CSI300 (.CSI300) , opens new tab index play catch-up with another jump of about 6%. But the Hang Seng, which had remained open for much of the week and rallied significantly during that time, turned tail. Chinese officials said they were fully confident of achieving this year's 5% GDP growth target. But there were no stronger fiscal measures announced yet to accompany the wave of monetary easing from two weeks ago - disappointing investors who had banked on more support. With mounting tensions surrounding a potential trade war between Europe and China following last week's European Union decision to back tariffs on Chinese electric vehicle imports, the outlook becomes edgier in both regions. And that is before you consider what happens after the U.S. election. European spirits makers and luxury goods firms (.STXLUXP) , opens new tab fell sharply as China imposed temporary anti-dumping measures on brandy imports from the European Union on Tuesday, hitting brands from Hennessy to Remy Martin, after the 27-member bloc voted last week for tariffs on Chinese-made EVs. China also said it was studying measures such as raising tariffs on imported large-displacement fuel vehicles. Europe's STOXX (.STOXXE) , opens new tab was down almost 1% early on Tuesday, even though Wall Street futures recovered ground after Monday's pullback in New York. Although Middle East anxieties remain high, oil prices retreated sharply again as an Israeli response to last week's Iranian rocket attack was still awaited - even as the conflict on the ground in Lebanon ratcheted up on Tuesday. U.S. crude prices fell back to $75 per barrel - sustaining annual losses of close to 9% - and reflecting how recent gains may have been as much to do with a potential Chinese demand boost as supply worries from Iran. In the background, however, Hurricane Milton intensified into a Category 5 storm on its way to Florida after forcing at least one oil and gas platform in the Gulf of Mexico to shut on Monday. Despite a small bounce in U.S. stock futures on Tuesday, perhaps the most revealing reflection of markets this week has been a rise in implied volatility captured by the VIX (.VIX) , opens new tab index to its highest in a month. That tick higher is itself partly related to the fact that the 30-day contract now covers the Nov. 3 election, with the third-quarter corporate earnings season due to kick off this week. The real volatility this week has been in rates markets, however, with the MOVE (.MOVE) , opens new tab index of Treasury volatility hitting its highest since the first week in January. The shock of such a robust U.S. employment report last week saw seismic shifts in Federal Reserve rates speculation - taking out at least one projected Fed rate cut from next year and even sowing doubts about whether there will be second cut as soon as next month. Adding to the pressure on Treasuries was a focus on post-election fiscal plans of both candidates, with Republican Donald Trump's policy outlines estimated to have twice the negative effect on the already bloated budget deficit than those of Democrat Kamala Harris. Opinion polls and betting markets have the two virtually neck and neck with less than a month to go. With some $72 billion of 3-year Treasury notes under the hammer later, the rates picture calmed a touch first thing today. Ten-year yields clung on to 4%, but the 2-10-year yield curve gap flipped back positive after its first inversion in almost a month on Monday. The dollar (.DXY) , opens new tab slipped a touch but held the bulk of last week's gains - the biggest weekly rise in two years. Fed officials indicated that if they get the green light on inflation they are prepared to keep easing to support the clearly still strong labor market. And that ups the ante for Thursday's September consumer price inflation report. "The labor market remains resilient, but I support a balanced approach to the FOMC's dual mandate so we can continue making progress on inflation while avoiding an undesirable slowdown in employment growth," Fed Governor Adriana Kugler said on Tuesday. Kugler added that there were several metrics suggesting that the jobs market was cooling to pre-pandemic levels but the Fed does not want to cause "undue" pain. New York Fed boss John Williams echoed that view in comments to the Financial Times and underlined standing Fed projections as the best guess on how things unfold. "If you look at the SEP (Summary of Economic Predictions) projections that capture the totality of the views, it's a very good base case with an economy that's continuing to grow and inflation coming back to 2 per cent." Key developments that should provide more direction to U.S. markets later on Tuesday: * US August international trade balance, Canada August trade balance, * Federal Reserve Vice Chair Philip Jefferson, Fed Board Governor Adriana Kugler, Boston Fed President Susan Collins, Atlanta Fed chief Raphael Bostic all speak * European Union finance ministers ECOFIN meeting in Luxembourg, joined by European Central Bank Vice President Luis de Guindos * US corporate earnings: PepsiCo * US Treasury auctions $72 billion of 3-year notes Sign up here. https://www.reuters.com/markets/us/global-markets-view-usa-pix-2024-10-08/

2024-10-08 09:46

LONDON, Oct 8 (Reuters) - The British pound drifted near more than three-week lows against the dollar on Tuesday as investors assessed geopolitical risks in the Middle East and the next steps in the Bank of England's easing cycle. Sterling tumbled last week after BoE Governor Andrew Bailey was quoted as saying the central bank might move more aggressively to lower borrowing costs. The pound firmed to $1.30945 , about 2.5% below its more than two-and-a-half year peak in late-September when speculation about a slower easing cycle from the BoE boosted its appeal versus most major currency pairs. "With inflation remaining stubbornly high, the real economy picking up and the prospect of a more stable government, we expect the pound to remain well supported in the coming months," said Michael Pfister, FX analyst at Commerzbank. "However, recent comments from the BoE have increased the risks, and it remains to be seen whether the hopes associated with the change of government will be realised." The euro ticked 0.1% higher to 83.92 pence. Latest data showed British shoppers faced increased pressure on their budgets last month after grocery price inflation edged higher. "Sterling looks to be under more pressure, with GBP-USD slipping below 1.31 ahead of UK monthly GDP figures and industrial production data on Friday," strategists at Unicredit said in a note. The usually more market-moving releases, including UK jobs data and the consumer price index report, are due next week. Later in the month, investors will look to the first tax-and-spending budget statement on Oct. 30 from the new Labour government of Prime Minister Keir Starmer. Finance minister Rachel Reeves needs to strike a positive tone at her first budget in order to give businesses the confidence to invest, the Confederation of British Industry said on Tuesday. Sign up here. https://www.reuters.com/markets/currencies/sterling-drifts-near-three-week-low-against-dollar-2024-10-08/

2024-10-08 08:07

FRANKFURT, Oct 8 (Reuters) - The U.S. jobs market has started to cool but remains resilient and the Federal Reserve is keen to avoid a drastic weakening of the labor market, Fed Governor Adriana Kugler said in Frankfurt on Tuesday. "The lower unemployment that we saw in Friday's jobs report is very welcome," Kugler told a European Central Bank Conference. "We don't want a drastic slowdown in the labor market." Kugler said there were several metrics suggesting that the labor market was cooling back to its pre-pandemic levels but the Fed does not want it to cool so much that it causes "undue" pain. Sign up here. https://www.reuters.com/world/us/us-jobs-market-cooling-still-resilient-feds-kugler-says-2024-10-08/

2024-10-08 07:49

BEIJING, Oct 8 (Reuters) - China is studying measures such as raising tariffs on imported large-displacement fuel vehicles, the Chinese commerce ministry said on Tuesday. China will take all necessary measures to firmly safeguard the legitimate rights and interests of Chinese industries and enterprises, a spokesperson for the commerce ministry said. China is also currently conducting other investigations, which will fully protect the rights of all stakeholders and make an objective and fair ruling based on the results of the investigations on EU pork and dairy, the spokesperson added. Sign up here. https://www.reuters.com/business/autos-transportation/china-weighing-raising-tariffs-imported-large-displacement-fuel-vehicles-2024-10-08/

2024-10-08 07:36

Oct 8 (Reuters) - European stocks dropped to two-weeks lows on Tuesday as lack of fresh details over China's stimulus measures sparked a selloff in sectors linked to the world's second-largest economy such as mining and luxury. The pan-European STOXX 600 index (.STOXX) , opens new tab was down nearly 1%, as of 0714 GMT, touching its lowest levels since Sept. 23. Luxury firms such as LVMH (LVMH.PA) , opens new tab, Kering (PRTP.PA) , opens new tab, Burberry (BRBY.L) , opens new tab and Hermes (HRMS.PA) , opens new tab, which draw a large part of their revenue from China, fell in the range of 3.1% to 5%. Spirits makers Remy Cointreau (RCOP.PA) , opens new tab and Pernod Ricard (PERP.PA) , opens new tab dropped 5% and 2.8%, respectively, as China announced provisional anti-dumping measures on brandy imports from the European Union. Miners (.SXPP) , opens new tab fell the most among European sectors, down 3.7%, as copper and iron ore prices dropped after initial optimism over top consumer China's stimulus measures faded. China's runaway stocks rally began losing steam on Tuesday and Hong Kong shares slumped as officials disappointed markets by providing few specific details on plans to bolster the country's slowing economy. Among single stocks, Vistry (VTYV.L) , opens new tab plunged about 30% after the British homebuilder cut its fiscal 2024 profit outlook by 80 million pounds ($104.7 million), hurt by increased build costs in one of its divisions. Sign up here. https://www.reuters.com/markets/europe/european-shares-two-week-lows-china-stimulus-disappointment-2024-10-08/