2024-10-01 05:26
Fed Powell signals 25-bp rate cuts Goldman Sachs raises gold price forecast to $2,900 U.S. job openings data due later in the day Oct 1 (Reuters) - Gold prices rose on Tuesday on safe-haven demand due to Middle East tensions and lower U.S. bond yields, although the metal hovered below recent record highs after the Federal Reserve chief signalled smaller rate cuts in the future. Spot gold was up 0.6% at $2,649.59 per ounce, as of 1057 GMT, after hitting an all-time high of $2,685.42 last Thursday. U.S. gold futures edged 0.4% higher to $2,671. The benchmark U.S. 10-year bond yield slipped on Tuesday, making non-yielding bullion more attractive for investors. Gold dropped from historical highs due to profit-taking and some upside capped by Chinese stimulus measures directing investor flows to China's stock market, said Ricardo Evangelista, senior analyst at ActivTrades. However, the causes of the recent rally, including expectations of lower U.S. interest rates and safe-haven demand driven by geopolitical instability, remain intact, Evangelista added. Israel said intense fighting erupted with Hezbollah in south Lebanon on Tuesday. Bullion on Monday posted its worst day in over four weeks after Fed Chair Jerome Powell suggested the central bank will likely pursue quarter-percentage-point rate cuts moving forward. Lower interest rates reduce the opportunity cost of holding bullion. Market focus is now on U.S. ADP employment data, due on Wednesday, and the non-farm payrolls on Friday, which will provide more clarity on the health of the U.S. labour market. Speeches from various Fed officials along with U.S. job openings data are also expected later in the day. "A higher-than-expected U.S. unemployment rate that forces the Fed into a more aggressive easing stance could restore gold back to its all-time high," said Han Tan, chief market analyst at Exinity Group. "We should see $2,700 for gold over the near term as long as expectations for Fed rate cuts remain intact." Goldman Sachs raised its gold price forecast to $2,900 per ounce from $2,700 per ounce for early 2025, citing gradually rising ETF flows with interest rate cuts in the West and China, and higher central bank purchases. Elsewhere, spot silver was up 0.7% at $31.37 per ounce, platinum gained 0.4% to $979.83, while palladium shed 0.8% to $991.36. Sign up here. https://www.reuters.com/markets/commodities/gold-off-record-highs-feds-powell-signals-smaller-rate-cuts-2024-10-01/
2024-10-01 05:26
Oct 2 (Reuters) - Some 45,000 union workers walked off the job at seaports on the U.S. East and Gulf Coasts on Oct. 1, cutting off vital trade arteries just weeks ahead of the nation's presidential election. The International Longshoremen's Association (ILA) union, which represents dockworkers across 36 ports on the U.S. East Coast and the Gulf of Mexico, remains deadlocked with the United States Maritime Alliance (USMX) employer group on wage issues. The stoppage is the first coast-wide ILA strike since 1977 and halts the flow of about half the nation's ocean shipping. A two-week strike could mean that ports would not return to normal operations until 2025, according to Sea-Intelligence, a Copenhagen-based shipping advisory firm. Here is what global companies and stakeholders have said regarding a potential strike: Sign up here. https://www.reuters.com/world/us/companies-have-planned-us-east-coast-ports-strike-2024-10-01/
2024-10-01 05:07
Oct 1 (Reuters) - Shares of Indian non-bank gold lenders Manappuram Finance (MNFL.NS) , opens new tab and Muthoot Finance (MUTT.NS) , opens new tab dropped 2.9% and 3.6% early on Tuesday due to growth concerns, a day after the central bank found "several irregular practices" in the industry. These irregularities, the Reserve Bank of India said, included the use of third parties to source and appraise gold loans, not valuing gold in the customer's presence and inadequate due diligence. Those comments are "a sentimental negative for the gold lenders", brokerage Motilal Oswal said in a note. The central bank gave lenders three months to fix the lapses and report back in order to avoid supervisory action. "Tightening of these processes may affect growth, (and) asset quality recognition at gold financiers," Jefferies said in a note late on Monday. Indian banks have consistently clocked double-digit loan growth over the past few months as strong economic growth helped drive retail loans. The rate of growth in gold loans, however, has outshone the industry average, helped by bullion prices hitting record-highs. For instance, outstanding loans against gold jewellery grew nearly 41% on-year in August, much higher than overall loan growth of 13.6% and also doubling from the 20.1% gold loan growth rate in August 2023, the RBI's latest data shows. The RBI, worried about the risk of bad loans, has publicly warned all lenders against "all forms of exuberance". It has previously taken action against gold loan companies, including barring IIFL Finance (IIFL.NS) , opens new tab in March, from offering such loans due to "material supervisory concerns". While those restrictions were lifted last month after a special audit, it wasn't soon enough to prevent IIFL Finance from swinging to a net loss in its April-June quarter. Sign up here. https://www.reuters.com/markets/commodities/indian-gold-loan-lenders-stocks-dip-cenbank-scrutiny-sparks-growth-fears-2024-10-01/
2024-10-01 04:53
MUMBAI, Oct 1 (Reuters) - The Indian rupee weakened slightly on Tuesday, tracking declines in its Asian peers, while dollar-rupee forward premiums retreated as traders pared bets on aggressive rate cuts by the Federal Reserve. The rupee was at 83.8150 against the U.S. dollar as of 10:15 a.m. IST, marginally weaker than its close at 83.7925 in the previous session. Asian currencies were down 0.1%-1% after Fed Chair Jerome Powell's remarks on Monday helped boost the dollar and U.S. bond yields. "This is not a committee that feels like it is in a hurry to cut rates quickly," Powell said. The dollar index was at 100.8 after rising 0.3% on Monday while the two-year U.S. Treasury, the most sensitive to Fed rate cut expectations, climbed 9 basis points (bps) to 3.64%. The odds of a 50 bp rate cut in November declined to about 39% after Powell's remarks, down from 53% a day earlier, according to CME's FedWatch tool. Dollar-rupee forward premiums dipped, with the one-year implied yield down 1 bp at 2.38%. "Overall message from the Fed is that the labour market is key, and this Friday’s non-farm payrolls will be important in this regard to gauge the path of Fed policy," MUFG Bank said in a note. U.S. labour market data on Friday is expected to show that the economy added 140,000 jobs in September, while the unemployment rate was unchanged at 4.2%, according to a Reuters poll. Weaker-than-expected data, though, may once again raise hopes of a larger-than-usual November rate cut. The rupee "should be back in the 83.90-84.00 range in the next five to six days and will stay in that range for some time," a foreign exchange trader at a private bank said. Sign up here. https://www.reuters.com/world/india/rupee-tad-weaker-tracking-asian-peers-forward-premiums-slip-2024-10-01/
2024-10-01 04:41
BANGKOK, Oct 1 (Reuters) - Thailand's exports are expected to rise 2% this year, the upper end of a previous forecast of 1% to 2% growth, but the rapidly strengthening baht could be a challenge for the rest of the year, the Thai National Shippers' Council said on Tuesday. The baht reached its highest level in 31 months this week trading at 32.125 against the greenback. Year-to-date, the baht has risen 5.2%, making it the region's second best-performing currency after Malaysia's ringgit. The rapid appreciation of the baht was hitting exporters and tourism spending, the central bank said on Monday, and that it had managed the baht's volatility. "The baht's appreciation is too fast when compared with our partners and competitors," said Chaichan Chareonsuk, chairman of the council, adding the currency's strength would hit agriculture and food shipments. "This is the biggest risk ... there are no supportive factors in the final stretch, we have to fight to drive exports." In the first eight months of 2024, exports rose 4.2% from the same period a year earlier, helped by a weaker baht, Chaichan said. Exports, a key driver of the economy, fell 1% in the whole of 2023. They rose 7% in August, though the baht's rise is expected to impact fourth-quarter shipments. Exporters also urged the government to further delay plans to raise the minimum wage. "This would impact the cost structure and our competitiveness. It should be delayed further, don't consider it now," said Chaichan. The government so far has delayed plans to increase the daily minimum wage in October, which would rise by 8% to 20%, depending on the region. Sign up here. https://www.reuters.com/markets/asia/thai-exports-seen-up-2-this-year-strong-baht-challenge-shippers-say-2024-10-01/
2024-10-01 04:35
A look at the day ahead in European and global markets from Tom Westbrook European inflation figures are due on Tuesday and the risk is to the downside, which will reinforce bets that the European Central Bank cuts interest rates later in the month. Already this week Germany's September inflation came in below forecasts and, at 1.8% year-on-year, was the lowest since 2021. Inflation is also easing in France, Italy and Spain and markets moved to fully price in an October rate cut after President Christine Lagarde said on Monday the trend will be taken into account at the next policy meeting, which is on Oct. 17. Traders have another ECB cut priced in for December and have been selling dollars on the assumption that inflation is under control globally and that U.S. rates have the furthest to fall. The euro has been unable to sustain a break of $1.12, but is holding above $1.11 while the yen and yuan have been the main movers in currency markets. The yuan was flat at 7 per dollar in offshore trade with Chinese markets shut and holidays in Hong Kong and South Korea further lightening Asia session trade. The yen steadied at 143.89 per dollar. Earlier, in New York, U.S. yields bounced when Federal Reserve Chair Jerome Powell said the policy committee was not in a hurry to cut rates, though that will unwind quickly if data due on Tuesday and through the rest of the week turns soft. The U.S. manufacturing ISM has been parked in contractionary territory for months, even though the economy has hummed along, but focus will be intense on the employment index and the August job openings figures. If there are signs of weakness, traders will be ramping back up bets on a 50-basis-point Fed cut for November. Current market pricing is for about a 36% chance of a 50 bp cut, according to CME FedWatch, down from 53% before Powell's remarks. Israel's widely expected ground invasion of Lebanon appeared to be getting underway as its military said troops had begun "limited" raids against Hezbollah targets in the border area. Oil prices climbed very slightly. Broader trade in Asia was lightened by holidays, though with China's soaring markets shut investors pared some of the exuberance about a recovery in the world's second-biggest economy and iron ore miners in Australia, for example, fell. Asia's factory activity weakened in September as soft Chinese demand and global economic uncertainty pointed to a challenging outlook, private surveys showed. Shigeru Ishiba was set to be voted in by parliament as Japan's next prime minister, while upbeat retail sales data in Australia gave a slight boost to the Aussie dollar. Key developments that could influence markets on Tuesday: - Eurozone inflation - U.S. job openings, ISM survey Sign up here. https://www.reuters.com/markets/europe/global-markets-view-europe-2024-10-01/
