2024-10-07 06:10

FRANKFURT, Oct 7 (Reuters) - Germany's Thyssenkrupp (TKAG.DE) , opens new tab said on Monday it is reviewing its plans for the production of green steel, casting doubt over its ambitions to use hydrogen in its push to decarbonise what is one of the most polluting industrial processes. Shares in the group were 4% lower following the comments, which highlight the challenges German industry faces in meeting emissions targets while staying competitive in a sector that suffers from high energy costs and cheaper products from Asian rivals. "We are continuously examining the best and most economically viable solutions under the given conditions in terms of technology and results in order to make Thyssenkrupp's steel business climate-neutral in the long term," it said. The comments came in response to a report in German business daily Handelsblatt, citing internal documents as saying the group was considering halting a 3 billion euro ($3.3 billion) hydrogen-based direct reduction project that forms the core of its decarbonisation strategy. Thyssenkrupp Steel Europe (TKSE), in which Czech billionaire Daniel Kretinsky owns a 20% stake, already warned last month that the planned direct reduction site in Duisburg could cost more than initially expected. Around 2 billion euros of the project's funding comes from the German government and the state of North Rhine-Westphalia, where Thyssenkrupp is based, and TKSE said possible cost increases had no impact on the subsidies. Germany's Economy Ministry said the grant was tied to the necessary commitment of the recipient, adding it would continue to ensure that the commitment was met. Thyssenkrupp confirmed earlier statements saying that it currently assumed the site would be built. TKSE is at loggerheads with parent Thyssenkrupp over how much money the business needs to survive on its own, a dispute that caused the steel division's leadership to resign at the end of August. ($1 = 0.9108 euros) Sign up here. https://www.reuters.com/markets/commodities/thyssenkrupp-reviews-plans-green-steel-production-2024-10-07/

2024-10-07 06:05

BP had aimed to cut output by 25% by 2030 BP eyeing investments in Iraq, Kuwait CEO Auchincloss to unveil new strategy in February LONDON, Oct 7 (Reuters) - BP (BP.L) , opens new tab has abandoned a target to cut oil and gas output by 2030 as CEO Murray Auchincloss scales back the firm's energy transition strategy to regain investor confidence, three sources with knowledge of the matter said. When unveiled in 2020, BP's strategy was the sector's most ambitious with a pledge to cut output by 40% while rapidly growing renewables by 2030. BP scaled back the target in February last year to a 25% reduction, which would leave it producing 2 million barrels per day at the end of the decade, as investors focused on near-term returns rather than the energy transition. The London-listed company is now targeting several new investments in the Middle East and the Gulf of Mexico to boost its oil and gas output, the sources said. Auchincloss took the helm in January but has struggled to stem the drop in BP's share price, which has underperformed its rivals so far this year as investors question the company's ability to generate profits under its current strategy. The 54-year-old Canadian, previously BP's finance head, has sought to distance himself from the approach of his predecessor Bernard Looney, who was sacked for lying about relationships with colleagues, vowing instead to focus on returns and investing in the most profitable businesses, first and foremost in oil and gas. The company continues to target net zero emissions by 2050. "As Murray said at the start of year... the direction is the same – but we are going to deliver as a simpler, more focused, and higher value company," a BP spokesperson said. Auchincloss will present his updated strategy, including the removal of the 2030 production target, at an investor day in February, though in practice BP has already abandoned it, the sources said. It is unclear if BP will provide new production guidance. Rival Shell has also scaled back its energy transition strategy since CEO Wael Sawan took office in January, selling power and renewable businesses and scrapping projects including offshore wind, biofuels and hydrogen. The shift at both companies has come in the wake of a renewed focus on European energy security following the price shock sparked by Russia's invasion of Ukraine in early 2022. BP has invested billions in new low-carbon businesses and sharply reduced its oil and gas exploration team since 2020. But supply chain issues and sharp increases in costs and interest rates have put further pressure on the profitability of many renewables businesses. A company source said that while rivals had invested in oil and gas, BP had neglected exploration for a few years. BACK TO THE MIDDLE EAST BP is currently in talks to invest in three new projects in Iraq, including one in the Majnoon field, the sources said. BP holds a 50% stake in a joint venture operating the giant Rumaila oilfield in the south of the country, where it has been operating for a century. In August, BP signed an agreement with the Iraqi government to develop and explore the Kirkuk oilfield in the north of the country, which will also include building power plants and solar capacity. Unlike historic contracts which offered foreign companies razor-thin margins, the new agreements are expected to include a more generous profit-sharing model, sources have told Reuters. BP is also considering investing in the re-development of fields in Kuwait, the sources added. In the Gulf of Mexico, BP has announced it will go ahead with the development of Kaskida, a large and complex reservoir, and the company also plans to green light the development of the Tiber field. It will also weigh acquiring assets in the prolific Permian shale basin to expand its existing U.S. onshore business, which has expanded its reserves by over 2 billion barrels since acquiring the business in 2019, the sources said. Auchincloss, who in May announced a $2 billion cost saving drive by the end of 2026, has in recent months paused investment in new offshore wind and biofuel projects and cut the number of low-carbon hydrogen projects down to 10 from 30. BP has nevertheless acquired the remaining 50% in its solar power joint venture Lightsource BP as well as a 50% stake in its Brazilian biofuel business Bunge. Sign up here. https://www.reuters.com/business/energy/bp-drops-oil-output-target-strategy-reset-sources-say-2024-10-07/

2024-10-07 06:04

Robust jobs numbers could mean smaller Fed cuts this year Expectations of lower rates have anchored trades across markets Bearish bets on dollar at risk of unwind NEW YORK, Oct 7 (Reuters) - The reverberations from a blowout U.S. employment number could threaten an assortment of trades predicated on falling interest rates, if stronger-than-expected growth spurs investors to radically shift views on how much the Federal Reserve will need to cut borrowing costs in the months ahead. Expectations of steep rate cuts spurred bets on everything from rising Treasury prices to a weaker dollar in recent months, while juicing corners of the stock market such as utilities. The Fed delivered a jumbo-sized 50 basis-point cut last month, temporarily vindicating that view. But the trajectory of rates is less certain after Friday’s labor market report, which showed the U.S. economy creating over 100,000 more jobs than expected last month. That suggests there is less need for more large cuts this year and raises the prospects of a reversal in many of the trades that hinged on lower rates. Futures tied to the fed funds rate on Friday showed traders had ruled out another 50 basis-point cut at the central bank’s November meeting. Market pricing on Thursday reflected a greater than 30% chance for such a cut, according to CME FedWatch. On Monday, the possibility that the Fed would leave rates unchanged in November jumped to 14% from 3% on Friday. Here is a look at some corners of the market that could be affected in a rates rethink. DOLLAR REBOUND Net bets on a weaker dollar stood at $12.91 billion in futures markets last week, the highest level in about a year, data from the Commodity Futures Trading Commission showed, after the dollar notched its worst quarter in nearly two years. But the dollar shot to a seven-week high against a basket of currencies on Friday and may have more gains ahead if bearish investors are forced to unwind their bets. "Dollar bears had unquestionably gotten too far over their skis coming into this week, and are now suffering the consequences," Karl Schamotta, chief market strategist at payments company Corpay in Toronto. TREASURY REVERSAL Bets on a stronger-than-expected economy could also accelerate a recent rebound in Treasury yields. Yields on the benchmark 10-year U.S. Treasury, which move inversely to bond prices, hit a 15-month low of 3.6% in September, as investors rushed to price in rate cuts. That move has reversed in recent days. Yields hit 3.985% on Friday, following the data, their highest level in about two months. They drifted higher on Monday, breaching 4% for the first time since early August. Zhiwei Ren, portfolio manager at Penn Mutual Asset Management, said the jobs report was a big surprise that went against “consensus and crowded trades” in the Treasury market that bet on bond prices rising as rates fell further. HEDGE DEMAND Expectations of economic strength could also push investors to turn their focus from options hedges to chase further stock market gains, spurring more upside in the S&P 500 (.SPX) , opens new tab, according to Charlie McElligott, managing director of cross-asset strategy at Nomura. As investors chase upside "it could quite rationally act as the fuel for the melt-up to 6,000 and beyond," he wrote. That would constitute a gain of about 4%. In options markets, various measures of skew - a gauge of relative demand for downside protection versus upside speculation - have remained elevated after hitting their highest levels of the year in an August stock sell-off, even as the S&P 500 recovered. The benchmark stock index rose 0.9% on Friday and finished at 5,751.07, near a fresh high. "The rip higher post the massive Labor data 'beats' tells you people don't have 'right tail' on," McElligott said, referring to the possibility of an extremely large rise in stock prices. A countervailing force in the short term, however, may be a too-sharp rise in yields that could dim the allure of stocks compared to bonds, said Jeffrey Schulze, head of economic and market strategy at ClearBridge Investments, in a note on Friday. The 10-year yield is still about 100 basis points below where it stood a year ago. “However, this release should be positive over the intermediate-term for risk assets generally and US equities in particular as economic growth expectations should improve on the back of today's release,” he added. BYE TO BOND PROXIES? Investors may also need to rethink trades in some stock sectors that came in to favor as yields fell. Among those are the market’s bond proxies, high dividend-paying stocks in sectors that had grown popular with income-seeking investors as yields fell. One such area, the S&P 500 utilities sector (.SPLRCU) , opens new tab, is up 28% year-to-date, compared with a 20.6% gain for the S&P 500. "The economy may not be in as much trouble as people were worried about, and it may not need these large rate cuts that fueled the interest in the higher-yielding areas of the market," said Robert Pavlik, senior portfolio manager at Dakota Wealth. Sign up here. https://www.reuters.com/markets/us/how-rates-rethink-after-strong-us-jobs-data-could-shake-up-markets-2024-10-07/

2024-10-07 05:55

Oct 7 (Reuters) - Swedish engineering consultancy company Sweco (SWECb.ST) , opens new tab said it would design one of Europe's largest battery energy storage systems, called Green Turtle, in Belgium. Sweco is designing the battery park on behalf of the company GIGA Storage Belgium. WHY IT MATTERS: Sweco said the park would make a significant contribution to the energy grid by providing stored renewable energy during periods of low solar and wind energy production — thereby reducing Belgium's reliance on gas power plants. BY THE NUMBERS: The planned Green Turtle battery park will have a capacity of 700 megawatts, resulting in a storage capacity of 2,800 megawatt hours, which is equivalent to the average annual energy consumption of 385,000 households. Construction on the project is due to begin in 2025, with the new battery park expected to be completed by 2028. CONTEXT: Europe wants to obtain 42.5% of its energy from renewable sources by 2030, but the procedure for grid permitting has been sluggish and the zone's power networks are being upgraded slowly. Amid this backdrop, EU regulators last month approved a 682 million euro Belgian state aid scheme to support renewable offshore wind energy. KEY QUOTE: "The agreement concluded with our contractors, including Sweco, to be GIGA Storage Belgium’s partner for the design of the Green Turtle battery park comprises an important milestone," said Joeri Siborgs, General Manager of GIGA Storage Belgium. "This is a flagship project for us in Belgium and an important project in realising the energy transition in Europe, where access to large-scale electricity storage plays a vital role," he added. Sign up here. https://www.reuters.com/business/energy/sweco-design-one-europes-largest-battery-energy-storage-systems-belgium-2024-10-07/

2024-10-07 05:02

MUMBAI, Oct 7 (Reuters) - The Indian rupee hovered close to its all-time low on Monday as a host of negative cues were blunted by the central bank's stern defence of the currency, while dollar-rupee forward premiums slumped after robust U.S. data dashed hopes of aggressive Federal Reserve rate cuts. The rupee was at 83.9675 against the U.S. dollar as of 10:20 a.m. IST, nearly unchanged from its close at 83.9725 on Friday and just shy of its all-time low of 83.9850. Outflows from local equities, higher oil prices and a stronger dollar have weighed on the rupee since last week but the currency held its ground, largely due to the Reserve Bank of India's (RBI) interventions. The RBI has likely intervened in the non-deliverable forwards (NDF), local spot and currency futures market to help the rupee hold above the 84 handle, traders said. The open interest on NSE dollar/rupee currency futures expiring on Oct. 29 more than doubled to $2.4 billion over the last two trading sessions, signalling intervention by the central bank, a senior trader at a state-run bank said. The RBI intervened in the NDF market on Friday to support the rupee before the local spot market opened, while traders have also pointed to persistent dollar sales from state-run banks, likely on behalf of the central bank, helping the rupee during local market hours. "We expect the rupee to trade in a narrow range of 83.80 to 84.05 in the short term," Amit Pabari, managing director at FX advisory firm CR Forex, said. Meanwhile, dollar-rupee forward premiums slumped on Monday after stronger-than-expected U.S. labour market data almost dispelled hopes of 50-basis-point (bp) Fed rate cut in November. The one-year implied yield dropped 8 bps to 2.30%. The repricing of Fed expectations also boosted the dollar. The dollar index was hovering close to its highest in nearly seven weeks on Monday, while Asian currencies were mostly lower. Sign up here. https://www.reuters.com/markets/currencies/rupee-near-record-low-far-forward-premiums-slump-fed-repricing-2024-10-07/

2024-10-07 04:33

A look at the day ahead in European and global markets from Kevin Buckland What a difference a payrolls report makes. From worries about a U.S. economic "hard landing", the debate has shifted to the potential for a so-called "no landing", where the labour market continues to burn hot even as inflation cools. The story is so compelling that it completely absorbed the attention of traders and investors, even as Israeli bombs fell in Gaza and Lebanon, with Monday marking one year since the Hammas attack that triggered war. Asian stocks picked up where Wall Street had left off, and Japan's Nikkei led the charge with a 2% surge, getting extra help from a sharply weaker yen. The U.S. exceptionalism narrative, which had been on shaky footing last month, is standing tall - and king dollar is straddling its shoulders. The yen, euro and sterling all fell, although the return of Japanese finance ministry jawboning helped to put a floor under the yen. Traders' scars from Japan's last round of currency intervention may have started to twinge when top currency diplomat Atsushi Mimura said he was watching speculative moves "with a sense of urgency". Sterling, of course, has been caught in the crosscurrents of a shock dovish shift by Bank of England boss Andrew Bailey last week, which were then countered by BoE chief economist Huw Pill less than 24 hours later. The euro, though, continues to suffer that sinking feeling, as more ECB officials join their president, Christine Lagarde, in signalling a brisk pace of further easing. ECB policymaker Francois Villeroy de Galhau was the latest, saying the central bank will "quite probably" cut this month amid the risk of an inflation undershoot. There will be no shortage of additional central bank speakers on Monday. ECB chief economist Philip Lane and board member Piero Cipollone both give speeches in Frankfurt, and peer Jose Luis Escriva speaks in Madrid. There is also a Eurogroup meeting in Luxembourg, with Lagarde in attendance. Out of the United States, we'll hear Fedspeak from Governor Michelle Bowman and no fewer than three regional heads: Minneapolis' Neel Kashkari, Atlanta's Raphael Bostic and St. Louis' Alberto Musalem. Chicago Fed President Austan Goolsbee already had his say on the jobs data on Friday. In back-to-back interviews on Bloomberg and Yahoo! Finance, he called the figures "superb", giving the Fed "both time and runway to figure out where the settling point is". He added, though, that rates still need to come down "a lot" from here. Additional developments that could influence markets on Monday: -German industrial orders, manufacturing output, consumer goods (all Aug) -UK Halifax house prices (Sep) -Italy retail sales, trade balance (both Aug) -Euro area sentix index (Oct), retail sales (Aug) Sign up here. https://www.reuters.com/markets/europe/global-markets-view-europe-2024-10-07/