2024-10-01 21:11

Oil breaks above $75 a barrel Safe haven gold, Swiss franc, Treasuries firm Upcoming U.S. election, jobs report add to uncertainty LONDON/NEW YORK, Oct 2 (Reuters) - Iran's attack on Israel has rekindled the allure of safe havens and oil prices have surged, but with no clarity yet on how the Middle East situation will evolve, investors are treading tentatively. Their key question is whether Iran's strike marks an escalation, or is more of a one-off backlash at Israel. Mohit Kumar, a strategist at Jefferies, called the reaction "guarded" as investors await Israel's response. Israel has said there will be consequences after Iran fired a salvo of ballistic missiles in what Tehran said was a retaliation for the Israeli campaign against Hezbollah. Classic safe-havens like gold, government bonds and the Swiss franc surged on Tuesday and were holding most of those gains on Wednesday, while oil traded above $75 a barrel. "Geopolitics is impossible to trade and hence keeping a low risk profile would be a prudent strategy," Kumar said. Past bouts of heightened geopolitical tension, such as Russia's invasion of Ukraine in 2022, resulted in sharp but short-lived market moves during which investors fled risky assets and piled in to havens such as gold and the dollar. Global stocks edged lower on Wednesday, while government bonds gave up some gains. Equities and other risky assets sold off in April, when a previous round of missiles fired by Iran at Israel - the first ever - were shot down with the help of the U.S. military and other allies. Israel responded with airstrikes, but wider escalation was averted and markets recovered those initial losses. This time, investors' decisions may rest on Israel's response and whether the conflict with Iran escalates. "It's not just about reacting to headlines, but positioning yourself for both immediate market volatility and long-term impacts," Saxo Bank head of FX strategy and global market strategy Charu Chanana said. "Geopolitical risks are constant and your portfolio should be ready for them," she said. Gold is already up nearly 30% this year, thanks in large part to a decline in the dollar in response to a slowing U.S. economy and the Federal Reserve's decision to deliver steep interest-rate cuts to ward off more weakness. One specific concern for investors is oil prices, which have jumped 5.2% in two days, as the risk of supply disruptions from the Gulf region increases. A more protracted conflict could push up energy prices worldwide. This, in turn, complicates the job of central bankers, who are now intent on lowering borrowing costs to insulate the global economy as it gradually slows, as inflation has subsided since the punishing highs of 2021. "The main message from geopolitics is inflation hasn’t gone away," said Trevor Greetham, Royal London Asset Management head of multi asset. Beyond tensions in the Middle East, there are several potential catalysts that could keep investors on edge, including the U.S. election in November and a key jobs report this week that will help shape the Fed's policy direction. The Cboe Volatility Index (.VIX) , opens new tab, an options-based indicator of demand for protection from market swings, rose on Wednesday, but by just 0.6%, compared with Tuesday's 15% surge to a three-week high of 20.73. "Although the VIX is edging higher it remains sufficiently just below 20 to suggest that markets - including the crude oil market - do not yet envision an all-out military scenario," said Quincy Krosby, chief global strategist at LPL Financial. Either way, trading is likely to remain jittery. "Markets ... are likely to display an incredibly high sensitivity to incoming geopolitical news flow in the coming hours," said Michael Brown, senior research strategist at Pepperstone. Sign up here. https://www.reuters.com/markets/escalating-middle-east-tensions-spook-investors-2024-10-01/

2024-10-01 20:54

Oct 1 (Reuters) - Top U.S. automakers reported a fall in their third-quarter sales on Tuesday, hurt by fewer selling days and weaker consumer spending amid inflationary challenges and higher interest rates. Carmakers have relied on crossovers and pickup trucks for years to drive the bulk of their sales, but that growth is starting to sputter as customers work with tighter budgets because of economic uncertainties. General Motors (GM.N) , opens new tab reported a 2.2% fall in quarterly sales, as demand weakened for some of its big pickup trucks such as its best-selling Silverado. Crosstown rival Ford (F.N) , opens new tab is expected to post weaker sales growth when it reports third-quarter sales on Wednesday, according to data from Cox Automotive. Toyota reported an 8% fall in sales but said it had built extra inventory of vehicles and parts ahead of the U.S. port strikes, which began earlier in the day, to minimize disruption. Industry experts expected automakers to rebound with stronger sales in the third quarter but discounts offered by companies were not enough to invigorate demand. "Consumers in the market continue to be pressured by high interest rates and slow-to-recede vehicle prices, which are translating to high monthly payments," said Chris Hopson, principal analyst at S&P Global Mobility. Chrysler-parent Stellantis (STLAM.MI) , opens new tab on Monday cut its 2024 profit forecast and warned it would burn more cash than expected due to weak global demand and competition from Chinese rivals offering cheaper cars. Buyers are now opting for more affordable models, including compact pickup trucks and SUVs such as Ford's Maverick and Chevrolet's Trax. Subcompact SUVs and compact cars are two of the hottest vehicle segments right now, helped by their relatively affordable price tags, said Charlie Chesbrough, senior economist at Cox Automotive. Hyundai (011760.KS) , opens new tab posted a 5% rise in quarterly sales, aided by sales of hybrid variants of crossovers such as its Tucson and Santa Fe. Its sister company Kia (000270.KS) , opens new tab reported a near 7% decline. Overall, U.S. new vehicle sales in September stood at around 1.17 million units, which represents a seasonally adjusted annual rate of 15.77 million units, according to data released by Wards Intelligence on Tuesday. Sign up here. https://www.reuters.com/business/autos-transportation/us-new-vehicle-sales-q3-seen-be-growing-weaker-pace-2024-10-01/

2024-10-01 20:45

Oct 1 (Reuters) - Restoring power to parts of the rural United States could take several weeks after Hurricane Helene's high winds and flooding decimated stretches of the southeast electrical grid, utility officials said on Tuesday. Helene, which barreled north after making landfall in Florida on Sept. 26, ripped away thousands of miles of transmission lines and power poles in hard-to-reach parts of the country, members of the National Rural Electric Cooperative Association said on a call. "I've been in this business for 38 years, and I've never seen anything like it," said Dennis Chastain, CEO of Georgia Electric Membership Corp. "It is devastation that's hard to describe." Local electric cooperatives, which are owned by their customers, cover more than half of the country's landscape. Georgia's transmission provider for the state's electric co-ops had 166 distribution stations out during the peak of the storm. In South Carolina, Helene wiped out at least 2,000 power poles, said Michael Couick, who heads that state's association of co-ops. In an area around the Blue Ridge Mountains, energy workers are attempting to rebuild 7,300 miles (11,748 km) of transmission line, which is a length that could almost cover the diameter of earth, Couick said. The rebuilding will require scaling mountainsides and drilling into solid rock, but only after accessing roads that may have been washed away by the storm's flooding, Couick said. "When we're thinking about this rebuild, we're thinking about some of the most remote territory in this country," he added. The southeast region's biggest investor-owned electric utilities, including Duke Energy (DUK.N) , opens new tab and Southern Co (SO.N) , opens new tab, which shut coal and nuclear power plant units due to the storm, also had hefty rebuilding tasks in front of them. Duke, the largest utility covering North Carolina and South Carolina, still has nearly 650,000 customers without power as of Tuesday after restoring electricity to 1.6 million homes and business in those states. Investor-owned electric utilities have the largest share of customers in the country, with cooperatives and municipal utilities taking up the rest. "While it will be a long road to recovery, requiring significant rebuilding in many places, we will persist until the job is done,” said Scott Corwin, CEO of the American Public Power Association. More than 1.4 million electric customers across 10 states were still without power five days after Helene touched down in Florida. Sign up here. https://www.reuters.com/world/us/restoring-power-parts-rural-us-after-storm-will-take-weeks-utilities-say-2024-10-01/

2024-10-01 20:31

Recovery will cost billions over several years, DHS says At least 162 dead in six states, CNN reports Some 1.5 million homes and businesses without power ASHEVILLE, North Carolina, Oct 1 (Reuters) - Search-and-rescue teams who have already saved hundreds of people scoured the mountains of western North Carolina for more survivors on Tuesday, working amid washed-out roads, smashed bridges and felled power lines following Hurricane Helene. The storm has killed at least 162 people in North Carolina, South Carolina, Georgia, Florida, Tennessee and Virginia, CNN reported, citing state and local officials, and the death toll is expected to rise once rescue teams reach isolated towns and telecommunications are restored. The death toll rose after North Carolina's Buncombe County reported 57 dead on Tuesday, up from 40 a day earlier. The mountainous area including the county seat of Asheville bore the brunt of the storm, which U.S. Homeland Security Secretary Alejandro Mayorkas said was of "historic magnitude." Recovery will involve a "multibillion-dollar undertaking" lasting years, Mayorkas told reporters at the White House. President Joe Biden vowed to "jumpstart this recovery process" after speaking with governors and other leaders in the impacted areas. "People are scared to death. People wonder whether they're going to make it. We still haven't heard from a whole lot of people. This is urgent," Biden said. Hundreds of people have been reported missing, a number that is expected to decline as more telecommunications come back on line and emergency workers are able to get into remote areas. The North Carolina National Guard has rescued over 500 people, deploying helicopters to ferry in supplies and rescue workers, rescuing survivors and pets along the way, Major General Todd Hunt told a separate press briefing. Among the victims in North Carolina's McDowell County was David Carver, 58, who had attempted to divert water away from his home in Linville Falls, according to a friend who tried to save him. As Carver worked with a shovel in driving rain on Friday, half his house gave way in a mudslide, taking him down the hillside with it. His life-long friend and neighbor Ken Fisher, 60, rushed to help after Carver was swept into a drainage pipe where he was trapped by trees and other debris. Fisher poured water over Carver's face to wash off mud so he could open his eyes, told him his wife was safe and prayed with him. "I told him I wasn't going to let him die there, I said 'I'm going to get you out of there," Fisher recalled. He stayed with Carver for 11 hours until emergency personnel were able to get him out of the pipe. Carver died in hospital at around 4 a.m. on Saturday from trauma to internal organs. A 5,000-YEAR EVENT Some locations of western North Carolina may have experienced a 5,000-year event, so perfect were conditions to create maximum precipitation, said Tennessee state climatologist Andrew Joyner. A storm prior to Helene sucked moisture from the Gulf of Mexico and saturated areas like Mount Mitchell, the highest point in the Appalachian mountains above hard-hit communities like Swannanoa and Black Mountain. Then Helene approached at the perfect angle to rise over the peak, intensifying rainfall. "The event was a perfect storm," Joyner said. Taylor Jones, director of Buncombe County Emergency Services, was surveying the damage in Swannanoa after Friday's flood that consumed several houses and large parts of a church. "This is a true disaster," Jones said, speaking to resident Ryan O'Keefe. "This is not going to be something that can be fixed right away. This is not a sprint. This is more like two or three marathons." Power outages were down to 420,000 from a peak of 1 million in North Carolina with all but two hospitals in the west of the state back on commercial power, said state Health Department Secretary Kody Kinsley. Access to public drinking water systems was scarce. In all 1.5 million homes and businesses in six states from Florida to West Virginia remained without power on Tuesday morning, according to the website Poweroutage.us. Sign up here. https://www.reuters.com/world/us/north-carolina-searches-survivors-cut-off-by-hurricane-helene-2024-10-01/

2024-10-01 20:23

TEGUCIGALPA, Oct 1 (Reuters) - Honduras' coffee exports in the 2024/25 season are seen up 14.5% from the previous period to 5.37 million 60-kg bags, industry leaders said on Tuesday, despite fears that shipments could be hurt by an EU regulation set to take effect at the end of the year. Central America's largest exporter of the bean sees exports boosted by better production this year as harvesting for the new season kicks off, Pedro Mendoza, head of Honduras' coffee organization IHCAFE said. "The farms are better, farmers have given them more care this year," Mendoza said in an interview. He warned, however, of a requirement from the European Union that would demand imported beans come from areas not linked with deforestation. The rule would ban sales of coffee - as well as cocoa, soy, palm oil, wood, rubber and cattle - if companies are unable to prove the product comes from an area where forests haven't been cut down in recent years. Mendoza said that most of Honduras' coffee crop is grown under trees in the shade, a traditional coffee-growing method thought to produce a richer bean. However, farmers still do not have the documentation ready to be able to export to the EU once the rule takes effect at the end of the year, Mendoza said. "We're worried," he said. "Europe is the destination for around 55% of our exports." Mendoza added that Honduran growers were requesting an extension to the deadline, similar to the International Coffee Organization and the Community of Latin American and Caribbean States (CELAC) last month. CELAC called on the EU to find a way which still sought to prevent deforestation while also "taking the reality on the ground into consideration." Sign up here. https://www.reuters.com/markets/commodities/honduras-202425-coffee-exports-seen-up-15-despite-eu-trade-fears-2024-10-01/

2024-10-01 19:41

HOUSTON, Oct 1 (Reuters) - Creditors seeking proceeds from a U.S. court-ordered auction of shares in a parent of Citgo Petroleum to compensate them for Venezuela's debt defaults and expropriations on Tuesday widely criticized terms of a conditional offer selected in the second bidding round. An Elliott Investment Management affiliate on Friday was named the presumptive winner of the share auction with a bid that puts an up to $7.286 billion enterprise value on Venezuela-owned oil refining company Citgo. Amber Energy's bid, subject to the resolution of parallel claims by a group of bondholder, is the best way to get the process started to maximize the value of Citgo for creditors, an attorney for the court officer overseeing the auction told the court. "Our view is: let's get this bid locked down and binding," said attorney Ray Schrock. Creditors objecting to undisclosed terms of the offer would have a future opportunity to review details. "They'll have plenty of time to see the terms," he added. "We have somebody prepared to move forward. What we don't want to do is lose the bird in hand." But Crystallex, the company that in 2017 first brought a case that found Citgo parent PDV Holding liable for unpaid judgments and holds the highest-ranked claim, said terms proposed by Elliott's Amber Energy would mean creditors who are collectively claiming $21.3 billion were "unlikely to ever be paid." Amy Wolf, an attorney representing ConocoPhillips (COP.N) , opens new tab, which holds the largest claims in the case, said the sales process "is not ending in the way we all would have liked." Sign up here. https://www.reuters.com/legal/citgo-share-auction-creditors-oppose-terms-elliott-affiliates-bid-2024-10-01/