2024-10-07 00:50

Strong US jobs growth dampens recession worries 10-yr yield tops 4% for first time since early August Dollar eases after hitting seven-week high versus yen NEW YORK, Oct 7 (Reuters) - A gauge of global stocks declined on Monday and U.S. Treasury yields climbed, with the benchmark 10-year note topping 4%, as investors readjusted their views for the path of interest rates from the Federal Reserve. The U.S. 10-year note climbed to 4.033%, its highest level since Aug. 1 and first time above 4% since Aug. 8 after Friday's stronger-than-expected U.S. payrolls report fueled expectations the Fed will dial back its aggressiveness in cutting interest rates. Expectations for a Fed rate cut of 25 basis points (bps) at the central bank's November meeting stand at 84.6%, with the market pricing in a 15.4% chance it will hold rates steady, according to CME's FedWatch Tool , opens new tab. Markets were completely pricing in a cut of at least 25 basis points just a week ago, with a 34.7% chance for another outsized 50 basis-point cut after the Fed began slashing rates at its September meeting with a 50 bp cut. "The market very quickly flipped from talking about a 50 basis-point cut to possibly no cut in November, just based on the strength of the data," said Gennadiy Goldberg, chief U.S. rates strategist at TD Securities in New York. "It would be very strange for them to give up the ghost on additional cuts this soon after a 50-bp rate cut," Goldberg said. On Wall Street, stocks closed lower, with energy (.SPNY) , opens new tab the sole S&P 500 sector to post a gain as crude prices continued to ascend on concerns a widening conflict in the Middle East could dent supply. The Dow Jones Industrial Average (.DJI) , opens new tab fell 398.51 points, or 0.94%, to 41,954.24, the S&P 500 (.SPX) , opens new tab fell 55.13 points, or 0.96%, to 5,695.94 and the Nasdaq Composite (.IXIC) , opens new tab fell 213.94 points, or 1.18%, to 17,923.90. MSCI's gauge of stocks across the globe (.MIWD00000PUS) , opens new tab fell 3.66 points, or 0.43%, to 843.74, on track for its fifth decline in six sessions. In Europe, the STOXX 600 (.STOXX) , opens new tab index closed up 0.18%, erasing early declines, although gains were capped by rate-sensitive stocks such as real estate and utilities. The yield on benchmark U.S. 10-year notes was last up 4.3 basis points to 4.024%. The 2-year note yield, which typically moves in step with interest rate expectations, climbed 5.7 basis points to 3.989% after rising to 4.027%, its highest since Aug. 20. A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes , seen as an indicator of economic expectations, was at a positive 3.3 basis points after briefly inverting for the first time since Sept. 18. Major U.S. economic data is not scheduled to be released until Thursday, when the consumer price index is issued. Fed Chair Jerome Powell and other Fed officials have commented recently that the central bank has shifted its focus from combating high inflation to labor market stability. Several Fed officials are scheduled to speak this week, including Governor Michelle Bowman and Bank of Atlanta President Raphael Bostic on Monday. Minneapolis Federal Reserve Bank President Neel Kashkari said he feels the economy is resilient and the labor market, though showing some signs of weakening, is still strong, and the Fed's rate cuts are aimed at keeping them that way. Hezbollah rockets early on Monday hit Haifa, the third-largest city in Israel, which looked poised to expand its ground incursions into southern Lebanon on the first anniversary of the Gaza war. U.S. crude settled up 3.71% to $77.14 a barrel and Brent rose to $80.93 per barrel, to settle up 3.69% on the day. The dollar index , which measures the greenback against a basket of currencies, slipped 0.05% to 102.48, with the euro down 0.03% at $1.0973. Against the Japanese yen , the dollar weakened 0.42% to 148.09 after hitting a seven-week high of 149.13. Sterling was off 0.22% to $1.3083. The Bank of Japan said broadening wage hikes were underpinning consumption and prodding more firms in regional areas to pass on rising labor costs, signaling the economy was making progress towards meeting the prerequisite for more interest rate hikes. To read Reuters Markets and Finance news, click on: https://www.reuters.com/finance/markets For the state of play of Asian stock markets please click on: Sign up here. https://www.reuters.com/markets/global-markets-wrapup-1-2024-10-07/

2024-10-07 00:42

Brent futures settle above $80/bbl for first time since August Middle East war risk turns oil investors less bearish Analysts say rally may be overdone OPEC+'s spare supply capacity provides cushion, analysts say OPEC+ poised to start raising production from December NEW YORK, Oct 7 (Reuters) - Oil prices settled more than 3% higher on Monday, with Brent surpassing $80 per barrel for the first time since August as the increased risk of a region-wide Middle East war jolted investors out of record bearish positions amassed last month. Brent crude futures rose by $2.88, or 3.7%, to settle at $80.93 per barrel. U.S. West Texas Intermediate futures advanced by $2.76, or 3.7%, to $77.14 per barrel. Last week, Brent rose more than 8% and WTI advanced by more than 9% week-on-week, the most in more than a year, after Iran's Oct. 1 missile barrage against Israel raised concerns that the response from Israel would aim at Tehran's oil infrastructure. If that happens, oil prices could rise by another $3 to $5 per barrel, said Andrew Lipow, president of Lipow Oil Associates. Rockets fired by Iran-backed Hezbollah hit Israel's third-largest city, Haifa, early on Monday. Israel, meanwhile, looked poised to expand ground incursions into southern Lebanon on the first anniversary of the Gaza war that has spread conflict across the Middle East. "There is growing concern that (the) conflict may continue to escalate - not only putting Iran's 3.4 mmbopd (million barrels of oil per day) of production at risk - but creating further disruptions to regional supply," analysts at Tudor, Pickering, Holt & Co wrote on Monday. Monday's gains were likely driven by money managers closing bearish bets on the rising risk of disruption to Middle Eastern oil supplies, UBS analyst Giovanni Staunovo said. Hedge funds and money managers had amassed record bearish bets in oil futures through mid-September on a reduced outlook for demand, primarily in China, the biggest importer of crude oil. "There's a lot of short-covering in the market that started last week and is still continuing," said John Kilduff, partner at Again Capital in New York. "It's a buy now, ask questions later kind of market," he said. Still, he warned that the fear-driven rally leaves oil prices open to considerable downside if Israel decides not to attack Iranian oil infrastructure. That would send oil prices down by between $5 and $7 per barrel, Kilduff and Lipow estimated separately. "Up until a week ago, I had thought we would be testing low $60s in oil," said Brent Belote, founder of commodities focused hedge fund Cayler Capital. Demand remains weak, and the Organization of Petroleum Exporting Countries have enough spare supply capacity to offset any disruptions to Iranian exports, Belote added. OPEC and allies, including Russia, known collectively as OPEC+, are due to start raising production from December after cutting in recent years to support prices because of weak global demand. However, Brent crude prices will likely have to be closer to $90 or above for OPEC+ to increase supplies, Lipow said. Sign up here. https://www.reuters.com/business/energy/oil-pares-gains-after-strongest-weekly-rise-over-year-2024-10-07/

2024-10-07 00:39

TOKYO, Oct 7 (Reuters) - Japan's top currency diplomat on Monday issued a warning against speculative moves on the foreign exchange market as the yen fell below 149 per dollar. "We will monitor currency market moves including speculative trading with a sense of urgency," Atsushi Mimura told reporters, reviving a verbal warning tactic that his predecessor, Masato Kanda, frequently used. Mimura declined to comment on the specifics of the current market situation. Separately, Katsunobu Kato, the nation's newly appointed finance minister, said the government would monitor how rapid currency moves could potentially impact the economy and would take action if necessary. "The government will consider what action should be taken while monitoring the impacts," Kato said in an interview with a small group of reporters on Monday. The yen depreciated to 149.10 versus the dollar in early trading on Monday, the weakest since Aug. 16, after a surprisingly strong U.S. jobs report for September led traders to cut bets that the Federal Reserve will make further large interest rate cuts. Japan last conducted yen-buying intervention in late July to support its currency after it tumbled to a 38-year low below 161 per dollar. The yen has also been under pressure since new Japanese premier Shigeru Ishiba stunned markets when he said the economy was not ready for further rate hikes, an apparent about-face from his previous support for the Bank of Japan's unwinding decades of loose monetary policy. In Monday's interview, Kato said the government would leave specific policy steps to the Bank of Japan (BOJ), when asked whether the policy rate should be maintained at 0.25%. "The government hopes that the BOJ will communicate with markets thoroughly and take appropriate policy to achieve its 2% inflation target in a stable and sustainable manner," he said. The BOJ in March delivered its first rate hike in 17 years, arguing the pace of price and wage increases showed Japan was finally shaking its entrenched deflationary mindset. The central bank unexpectedly increased rates again in July, triggering a shakeout in domestic markets. Sign up here. https://www.reuters.com/markets/currencies/japans-top-fx-diplomat-warns-against-speculative-moves-yen-falls-2024-10-07/

2024-10-07 00:36

NEW YORK, Oct 7 (Reuters) - The U.S. dollar stalled near a seven-week high on Monday as investors reassessed their positions after last week's strong U.S. jobs data and as fears that Middle East tensions would spill into a wider conflict drove bids for safe havens. The closely-watched jobs report for September showed the biggest jump in nonfarm payrolls in six months, a drop in the unemployment rate and solid wage rises, prompting markets to scale back bets on further hefty U.S. rate cuts. Markets expect the Federal Reserve to cut rates by just 25 bps in November, rather than 50 bps, following the jobs data. According to CME's FedWatch tool , opens new tab, markets are pricing in a 85% chance of a quarter point cut, up from 47% a week ago, and a slim 0.15% prospect of no cut at all. A rise in the yield on the benchmark U.S. 10-year note above 4% for the first time in two months was also a psychological support. Against the Japanese yen, the dollar weakened after Atsushi Mimura, Japan's top currency diplomat, issued a warning against speculative moves on the foreign exchange market. Dollar/yen fell 0.49% on the day to 147.98 after hitting its highest since August 15 at 149.10 overnight. "The market got cautious as we approached 150 on the yen, but I don't think this is a big move yet," said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York. The dollar index measuring the greenback against a basket of six currencies slipped 0.07% to 102.46, having risen on Friday to 102.69, its highest level since mid August. The dollar logged a weekly gain of more than 2% last week, its biggest in two years. In the Middle East, Hezbollah fired rockets at Israel's third largest city Haifa early on Monday as Israeli forces looked poised to expand ground incursions into southern Lebanon on the first anniversary of the Gaza war, which has spread conflict across the region. The euro was off just 0.01% at $1.0975 , feeling some pressure after German industrial orders fell significantly more than expected in August, adding to signs that manufacturing in Europe's largest economy remains in the doldrums. Overall though the tone was still dollar-positive, along with currencies seen as flight-to-safety rivals on worries about the geopolitical picture. "As you look across some of the more risk-sensitive currencies in the G10 space, you do have the dollar generally stronger, but a lot of the traditional safe havens -- yen, Swiss and the dollar -- are relative outperformers today," said Brian Daingerfield, foreign exchange strategist at NatWest Markets, New York. "That does reflect equities turning a little bit lower here and oil prices having edged up further as the markets are watching very closely developments in the Middle East," he continued. Against the Swiss franc , the dollar weakened 0.45% to 0.854. The Canadian dollar weakened 0.37% versus the greenback to 1.36 per dollar. Sterling fell 0.25% to $1.3083. Last week it recorded its biggest daily fall since April after Bank of England Governor Andrew Bailey was quoted as saying the central bank might move more aggressively to lower borrowing costs. The Australian dollar weakened 0.6% versus the greenback and the kiwi weakened 0.63%. In cryptocurrencies, bitcoin gained 1.49% to $63,334.40. Ethereum rose 1.13% to $2,456.20. Sign up here. https://www.reuters.com/markets/currencies/dollar-roll-after-us-jobs-data-middle-east-flare-up-2024-10-07/

2024-10-06 22:46

Rio will need to pay over $5 bln, investors and analysts say Bottom-of-the-cycle play is good timing for Rio Tinto Australian-listed shares of Arcadium rally 50% MELBOURNE, Oct 7 (Reuters) - Rio Tinto (RIO.L) , opens new tab is in talks to buy lithium producer Arcadium Lithium (ALTM.N) , opens new tab, both companies confirmed on Monday, with the global miner pouncing following a slump in prices for the ultralight metal essential to the world's shift to clean energy. If consummated, the deal would turbo charge Rio's (RIO.AX) , opens new tab rise to become one of the largest producers of lithium behind Albemarle (ALB.N) , opens new tab and SQM (SQMA.SN) , opens new tab, in its drive to supply the metal essential for EV batteries and power storage. Reuters exclusively reported on Friday that the companies had been holding talks, and Arcadium could be valued at $4 billion to $6 billion or higher. The approach was confirmed by both parties on Monday in separate statements that did not offer financial. It follows a sharp slump in lithium prices and months of speculation over a potential deal. "The approach is non-binding and there is no certainty that any transaction will be agreed to or will proceed," Rio said in its statement. Both companies said they would not comment further. Australian shares of Arcadium rallied as much as 50% before closing at A$6.09, up 46%, and sparked a jump in other Australian-listed lithium companies, with shares up 2% to 10%. Rio Tinto's shares fell 2%. U.S.-listed shares of Arcadium (ALTM.N) , opens new tab surged nearly 35.4% before the morning bell. The recent slump in lithium prices, due in part to Chinese oversupply, has pushed Arcadium's shares down more than 50% since January, making it an attractive target. But lithium demand is forecast to surge later this decade from growth in lithium-ion batteries. By buying Arcadium, Rio would gain access to lithium mines, processing facilities and deposits in Argentina, Australia, Canada and the United States to fuel decades of growth, as well as a customer base that includes Tesla (TSLA.O) , opens new tab, BMW, (BMWG.DE) , opens new tab and General Motors (GM.N) , opens new tab. The combined group could account for some 10% of global lithium chemicals supply by 2030, analysts at Canaccord said. Rio's own Rincon project in Argentina is due to start producing later this year, while its huge Jadar project in Serbia could take two years to secure permits to go ahead. HEFTY PREMIUM EXPECTED Andy Forster, a portfolio manager with Argo Investments, which holds shares in both companies, sounded a cautious note around high valuations for Arcadium, noting it had many growth projects but not the balance sheet to build them. "The economics of long term pricing for lithium is not what it has been," he said. Another institutional holder of Arcadium said a bid by Rio at the top end of the reported range would "get the deal done". Analysts at TD Cowen highlighted they expect Arcadium's output to grow by 78% over the next three years, which would give it earnings of $1.3 billion in 2028. "While we see no need for ALTM to sell, we imagine that valuation conversations would need to begin at $5+/share," they said in a note on Oct. 4 after Reuters' report on Rio's talks. That would imply a premium of at least 60% on Arcadium's close of $3.08 on Oct. 4. However, Blackwattle Investment Partners in a letter to Arcadium said any offers in the reported range would "significantly undervalue" the lithium company. "In our opinion, a sale price for LTM should be closer to $8 billion, and LTM should be willing to walk away from an opportunistic offer," Blackwattle said. Arcadium was well placed to weather the storm in prices which look set to recover, partner Michael Teran of Blackwattle Investment Partners said, since it has delayed development of some Argentinian and Canadian projects and has avenues to secure new funding opportunities for existing ones. "This is one of our biggest worries that someone like Rio comes and takes it right at the bottom and you miss out on all of the upside when stocks have already taken a beating," Teran said. ($1 = 1.4717 Australian dollars) Sign up here. https://www.reuters.com/markets/deals/lithium-miner-arcadium-confirms-rio-tinto-takeover-approach-2024-10-06/

2024-10-06 22:38

FCC often grants emergency temporary approvals in disasters T-Mobile's network nearly fully restored in affected regions WASHINGTON, Oct 6 (Reuters) - The U.S. Federal Communications Commission on Sunday allowed Elon Musk's SpaceX and T Mobile (TMUS.O) , opens new tab to enable Starlink satellites with direct-to-cell capability to provide coverage for cellphones in areas of North Carolina hard-hit by Hurricane Helene. The FCC often grants such emergency temporary approvals during disasters to help restore wireless and internet services in badly impacted areas and to allow for testing. An FCC spokesperson said on Sunday that the agency remains "committed to helping with recovery efforts in states affected by Hurricane Helene. We stand ready to do all that is necessary to return connectivity to hard-hit areas and save lives." SpaceX said the satellites "have already been enabled and started broadcasting emergency alerts to cellphones on all networks in North Carolina." The company said it may "test basic texting (SMS) capabilities for most cell phones on the T-Mobile network in North Carolina." On Sept. 28, more than 74% of cell towers were out of service in disaster-impacted areas of North Carolina due to the devastation caused by Helene. The FCC said on Sunday that figure has fallen to 17% as crews work to restore service. "While SpaceX's direct-to-cell constellation has not been fully deployed, we felt that getting even this early test version into the hands of people on the ground could provide vital support as teams work to get infrastructure and services back online and help first responders with rescue efforts," T Mobile said on Sunday. The company added that its "network is almost fully restored along affected regions, with less than 1% of network sites in specific areas where conditions remain particularly challenging not connected." FCC Commissioner Brendan Carr said that "the focus is on enabling emergency alerts to smartphones." Carr added that "it is important to manage expectations here. Starlink does not have a full constellation of direct-to-cell satellites in space yet. ... Starlink is giving this a shot nonetheless to help address the serious need for connectivity in these disaster areas." T Mobile said in January that SpaceX had launched a Falcon 9 rocket with the first set of Starlink satellites that can beam phone signals from space directly to smartphones. The companies announced plans to provide mobile users with network access in parts of the United States in August 2022. T Mobile said at the time that the direct-to-cell service would begin with text messaging followed by voice and data capabilities in the coming years. Sign up here. https://www.reuters.com/world/us/us-lets-starlink-provide-direct-to-cell-coverage-hurricane-hit-areas-2024-10-06/