2025-10-16 06:41

UK GDP grows 0.1% in August, revised July data shows 0.1% fall Economists predict limited growth in Q3, budget uncertainty impacts spending Bank of England faces high inflation, weak growth LONDON, Oct 16 (Reuters) - Britain's economy returned to growth in August when it expanded by a marginal 0.1% from July, official data showed on Thursday, offering a little bit of relief to finance minister Rachel Reeves as she prepares her November budget. However, gross domestic product in July was revised to show a 0.1% fall from June having previously been seen as unchanged, the Office for National Statistics said. Sign up here. Britain's economy is on course to have the second-fastest growth among the Group of Seven nations in 2025 after the United States, the International Monetary Fund said this week. But at 1.3% its annual pace of expansion is not enough to avoid the need for tax increases in Reeves' budget. Fergus Jimenez-England, an associate economist with the National Institute of Economic and Social Research, a think tank, said early indicators for September pointed to limited growth in the third quarter. "Regaining momentum hinges on restoring business confidence and reducing uncertainty, which the government can support by setting aside a larger fiscal buffer in the upcoming budget," Jimenez-England said. Sanjay Raja, chief UK economist at Deutsche Bank, said the data showed that the services and construction sectors were in a "pre-budget funk" and he thought growth in the third quarter would be about half the Bank of England's estimate of 0.4%. "The UK economy has yet to see the full ramifications of the U.S. trade war," Raja said. "Budget uncertainty is hitting its peak too – likely dampening discretionary household and business spending." Economists polled by Reuters before Thursday's data release had forecast that GDP would expand by 0.1% in August. In the three months to August, growth picked up slightly to 0.3% from 0.2% in the three months to July, boosted by public health service work while consumer-facing services shrank, the ONS said. BoE policymakers, who held interest rates at 4% in September, are trying to steer their way between stubbornly high inflation and weak growth. Governor Andrew Bailey said on Tuesday that the jobs market was softening and inflation pressures were cooling after official data showed unemployment rose to its highest since 2021 and private sector wage growth slowed. Monetary Policy Committee member Alan Taylor, also speaking on Tuesday, said the British economy risked a "bumpy landing", partly due to the impact of U.S. President Donald Trump's trade tariffs. Data published earlier this week showed weak growth in retail sales, partly reflecting worries about possible tax increases in Reeves' budget on November 26. https://www.reuters.com/sustainability/sustainable-finance-reporting/uk-economy-grows-01-august-ons-says-2025-10-16/

2025-10-16 06:34

French markets ride high on political progress Investor focus remains on fiscal outlook Suspension of pension reform a longer term concern LONDON, Oct 16 (Reuters) - France's financial markets are riding a roller-coaster, as the country grapples with one of its worst political crises in decades, and while sentiment is improving, the bumpy ride is not over. French Prime Minister Sebastien Lecornu has promised to suspend a landmark pension reform until after the 2027 election, sacrificing one of President Emmanuel Macron's achievements to ensure the government's survival. Sign up here. He is facing no confidence votes in parliament Thursday but appears likely to survive. Here's a look at where markets stand, and what comes next. BOND VIGILANTES IN HIDING? The gap between 10-year French and German bond yields, the premium investors require to lend to France, is around 77 basis points , down from almost 90 bps last week. It could tighten towards 75 bps, said Citi's senior rate strategist Aman Bansal. It narrowed as investors focused on political stability over long-term fiscal worries. Lecornu's plan to suspend pension reform means he'll likely stay in his job, avoiding snap elections, even if some parties have called a no-confidence vote for Thursday. RBC BlueBay Asset Management senior portfolio manager Kaspar Hense said the firm had closed out of its short position - a bet on price falls - in French bonds last week on expectations a political compromise would be found. "Demand for OATs (French bonds) remains strong at these levels of real and nominal yields," said Reinout De Bock, head of European rate strategy at UBS. RATINGS WATCH French borrowing costs remain among the highest in the euro zone, and because suspending the key pension reforms keeps pressure on public finances, France is vulnerable to further ratings downgrades. Lecornu says the suspension would cost 400 million euros ($463 million) in 2026 and 1.8 billion euros in 2027. Without offsetting measures, France's debt-to-GDP ratio would fail to stabilise, analysts say. Goldman Sachs reckons permanent suspension of the pension reform would add 0.5% of GDP to the deficit by 2035, so debt as a share of GDP over the next decade stabilises closer to 130% compared to around 113% now. Moody's, which rates France at Aa3 with a stable outlook, reviews its long-term rating on October 24. "We expect some downgrade pressure but this is priced in by markets," said BlueBay's Hense. STOCKS SOAR France's blue chip share index (.FCHI) , opens new tab rose 2% on Wednesday, its best day since early May, but that's not much to do with politics -- luxury giant LVMH (LVMH.PA) , opens new tab surged 12% after results. French midcaps (.CACMD) , opens new tab are up around 0.25% but have underperformed longer term, up 9% in the past two years, compared to 15% for the blue chip index, and 26% for the overall European benchmark. (.STOXX) , opens new tab And that could continue. Claudia Panseri, chief investment officer at UBS Wealth Management France, said that even if politics stabilises, fiscal and political challenges would still hang over domestic stocks. "European investors may prefer to focus on more internationally diversified companies within the CAC 40, which are less exposed to domestic risks," she said. BANKS BOUNCE BACK But politics does matter for French banks. "Banks have been the most sensitive sector to the political situation in France, and the most (bond) spread sensitive as well," said Barclays head of European equities strategy Emmanuel Cau. Higher spreads typically mean higher wholesale funding costs for banks, hurting profits. Societe Generale (SOGN.PA) , opens new tab, BNP Paribas (BNPP.PA) , opens new tab and Credit Agricole (CAGR.PA) , opens new tab shares jumped over 2% in early trade Wednesday before steadying, having underperformed other European banks and broader French stocks last week when Lecornu stepped down. Societe Generale's share price has doubled this year and any underperformance in banks may present a buying opportunity. EURO RECOVERS FROM A COLD A stellar euro rally has been dented by the political turmoil and it too is expected to benefit from stability. ING currency strategist Francesco Pesole said the euro was looking less "fragile" with the French/German bond spread below 80 bps, adding he was watching no-confidence motions. "If Lecornu survives the no-confidence vote, euro/dollar could edge higher and potentially build strong support around $1.160," he said. It's trading around $1.166 , up 12% this year. https://www.reuters.com/business/finance/markets-relieved-frances-fiscal-fire-still-burns-2025-10-15/

2025-10-16 06:28

Silver hits record high of $54.15 /oz HSBC lifts 2025 gold forecast to $3,355/oz U.S. shutdown halts data; Treasury warns $15 bln weekly hit Traders see 25 bps Fed cuts in Oct and Dec Oct 16 (Reuters) - Gold hit a record high for the fourth straight session on Thursday and soared past $4,300 an ounce as investors flocked to the safe-haven metal on brewing U.S.-China trade tensions and the U.S. government shutdown, with rate cut bets fueling the momentum. Spot gold was up 2.6% at $4,316.99 per ounce as of 4:07 p.m. ET (2007 GMT) after bullion touched a record high of $4,318.75 earlier. Sign up here. U.S. gold futures for December delivery settled 2.5% higher at $4,304.60, after touching a record high of $4,335/oz. The yellow metal has gained over 60% year-to-date, driven by geopolitical tensions, aggressive rate-cut bets, central bank buying, de-dollarisation and robust ETF inflows. "Gold's trajectory will hinge on the rate-cut picture heading into 2026 as well as the developments around U.S.-China. If no deal is reached between the U.S.-China and the relationship continues to deteriorate, that could be the spark gold needs to cross the $5,000/oz barrier," said Zain Vawda, analyst at MarketPulse by OANDA. Investors this week have stayed focused on the simmering U.S.-China trade spat, with Washington on Wednesday criticizing China's expanded rare earth export controls as a threat to global supply chains. Meanwhile, Donald Trump said he and Russian President Vladimir Putin agreed on Thursday to another summit to discuss ending the war in Ukraine, one day before the U.S. president was due to speak with Ukrainian leader Volodymyr Zelenskiy. Traders are pricing in a 25 basis-point U.S. Federal Reserve rate cut in October, and another in December, with probabilities of 98% and 95%, respectively. Non-yielding gold typically performs well in a low-interest-rate environment. Short-term pullbacks in gold are likely to be temporary, as bullish investors tend to use dips to re-enter positions, Vawda said. HSBC raised its 2025 average gold price forecast to $3,355 an ounce on Wednesday, citing safe-haven demand from geopolitical tensions, economic uncertainty and a weaker U.S. dollar. Meanwhile, the ongoing U.S. government shutdown has halted scheduled economic data, with a Treasury official warning it could cost the economy up to $15 billion a week in lost output. Spot silver rose 1.8% to $54.04 per ounce, after hitting a record high of $54.15 earlier in the session, tracking gold's rally and supported by tightness in the spot market. Platinum rose 3.2% to $1,706.65 and palladium climbed 4.6% to $1,606.00. https://www.reuters.com/world/china/gold-extends-record-rally-us-china-tensions-rate-outlook-2025-10-16/

2025-10-16 06:20

Victorinox boosts US inventory to mitigate tariff impact Survey finds 45% of Swiss firms report declining orders Firm considers US end-of-line work to cut dutiable value IBACH, Switzerland, Oct 16 (Reuters) - Swiss Army Knife maker Victorinox is trying to hold down its U.S. prices, while exploring new markets, as it experiments with new tools to navigate President Donald Trump's trade tariffs. Popularised in the United States by soldiers who were based in Europe after World War Two, the distinctive red-and-silver multi-tool is made at a factory in Ibach, central Switzerland. Sign up here. There, rolls of stainless steel are punched into blades, which are rounded with abrasive ceramic stones and baked at more than 1,000 degrees Celsius before being sharpened. Victorinox, which produces 10 million Swiss Army Knives a year alongside kitchen and commercial knives, watches and luggage, is one of many Swiss manufacturers worried about the higher cost of doing business with the United States. Trump imposed tariffs of 39% on imports of goods from Switzerland in August in a bid to cut the U.S. trade deficit with the country. "If the tariffs stay in place, that's an exceptionally challenging situation," said CEO Carl Elsener, whose great-grandfather founded the company in 1884, adding the higher levy would cost Victorinox some $13 million a year. The U.S. accounted for around 13% of Victorinox's 417 million Swiss franc ($519 million) sales in 2024 and if the 39% tariff stays in place every product it ships to the U.S. will lose money, Elsener told Reuters. Victorinox has responded by sending extra stock to the U.S. to build up inventories and pushing efficiencies at its Swiss plants. It is also considering doing some polishing and packaging work in the U.S. to lower its cost at time of import. "We are trying to reduce our dependence on the U.S. market by trying to expand more strongly in other markets like Latin America and Asia," Elsener said of Victorinox, which has around 100 U.S. staff in sales, marketing and logistics. AVOIDING US PRICE HIKES Family-owned Victorinox is not alone in feeling the pinch. A survey last month by the Swiss Mechanic trade body showed 45% of Swiss small- and medium-sized manufacturing companies had experienced lower order intakes since the U.S. tariffs. Swiss firms' profit margins are already being eroded by a 12% rise in the franc against the dollar this year. Novartis (NOVN.S) , opens new tab and Roche (ROG.S) , opens new tab are among those potentially in the firing line if the tariffs extend to drugmakers, while Swiss watchmakers like Omega-owner Swatch Group, as well as food giant Nestle (NESN.S) , opens new tab, which exports Nespresso capsules, are already being hit. "Our priority is to defend market share while the situation is so unpredictable," said Elsener, adding: "Our investment in the United States right now is to avoid price increases and accept the losses - that's our sacrifice to keep market share." Victorinox sent two extra 40‑foot containers with about 200,000 Swiss Army Knives, plus 200,000 kitchen and commercial knives, to the United States in February and March. That should mean it has sufficient stock in the U.S. until the end of this year, and up until March for some products, and be able to keep prices there steady into 2026. MAKING SWISS ARMY KNIVES ABROAD 'NOT AN OPTION' Victorinox - which is raising some targeted prices - is accelerating automation and efficiency programmes at its Ibach facility, where 25 members of the family still work. It considered moving some production to the United States or elsewhere in Europe to lessen the tariffs impact, but ultimately decided against this because it lacks the scale, Elsener said. Instead, it is looking at limited end-of-line work in the U.S. — such as cleaning and packaging of commercial knives — to cut the dutiable value, he added. What it cannot do is make its products elsewhere, as to qualify for the coveted Swiss-made label, at least 60% of manufacturing costs must be in Switzerland. "Producing the Swiss Army Knife abroad is not an option," said Elsener, adding the brand depends on its Swiss heritage. Nevertheless, he is confident for the future. "We got through the First World War, the Depression, the Second World War, the global economic crisis, the oil crisis," he said. "This is just the latest challenging situation, which I'm confident we can overcome." ($1 = 0.8034 Swiss francs) https://www.reuters.com/business/autos-transportation/swiss-army-knife-maker-tries-new-tools-blunt-trump-tariff-blow-2025-10-16/

2025-10-16 06:00

International Energy Agency expects heavy oversupply in oil market Agency however reports 1.5 million bpd of 'unaccounted' oil in August IEA bearish outlook clashes with OPEC forecasts LONDON, Oct 16 (Reuters) - The International Energy Agency continues to forecast a significant supply glut in the oil market, but uncertainty over the whereabouts of almost 1.5 million barrels per day of crude oil is throwing this projection into doubt. The oil market has struggled for months to establish a clear direction, keeping prices stuck in a narrow range, as traders have sought to make sense of starkly divergent supply and demand projections from the IEA, OPEC and other forecasting agencies. Sign up here. The IEA has long forecast a severe oil glut this year and next due to rising global production. In its latest report released on Tuesday, the Paris-based agency provided an even more bearish outlook, forecasting a surplus of 2.35 million barrels per day in 2025 and 4 million bpd - or nearly 4% of global demand - next year. OPEC, on the other hand, expects global oil supply to closely track demand through 2026. Given that we're already in the fourth quarter of 2025, this difference is striking, with few precedents in the long history of the world's largest commodity market. MISSING BARRELS The murky crude picture got even muddier on Tuesday when the IEA report also noted that it was unable to account for 1.47 million bpd of oil in its global balances for August, the equivalent of 1.4% of annual demand. By comparison, the IEA "unaccounted for balance" figure for July was 850,000 bpd, or 370,000 bpd for the second quarter overall. This 1.47 million bpd figure is a staggeringly big blind spot with significant implications for the overall balance between global supply and demand. The IEA's figures show supply outstripping demand by 2.04 million bpd in August, meaning that the oversupply could, in theory, grow to 3.5 million bpd or shrink to 500,000 bpd. That's a huge difference that could have a meaningful effect on crude prices. The IEA calculates global oil balances using official government data as well as figures from private companies and analysts on production, consumption, exports and storage. It is quite common for forecasters to have "holes" in their calculations due to delays in government reporting and the periodic absence of some data sets given the sheer size of the global oil market. Indeed, the IEA regularly updates historical data. In its monthly report in May, the agency made significant upward revisions to recent years' oil demand, including increasing 2024 oil consumption by 350,000 bpd, thereby flipping a previously reported surplus into a deficit. But the sheer scale of the missing barrels in the IEA's August report should give traders and investors pause, particularly because this is coming at a time when the market is already trying to make sense of forecasters' wildly divergent projections. DISAPPEARING BARRELS The IEA said the August discrepancy “may stem from the time-lag of reported data or unavailable data for non-OECD countries." Fully accounting for the missing barrels will take time. But it is reasonable to assume that the gap may be due, in large part, to two factors that have been confounding the crude market all year: the trading of heavily sanctioned oil and China's vast stockpiling. First, there's the question of how much sanctioned oil is actually being traded. The volume of seaborne crude oil last week hit 1.25 billion barrels, the highest since the start of the Covid-19 pandemic, according to analytics firm Kpler. Excluding the pandemic era, oil being held at sea - or "oil on water" - has never been higher. This maritime buildup could well be a precursor to a sharp increase in overland storage - and thus significant global oversupply. Yet the picture is complicated by the fact that over a quarter of oil on water comes from three countries facing western sanctions: Russia, Iran and Venezuela. The majority of the oil from these producers is transported on so-called "shadow fleet" tankers that evade sanctions, often hiding their whereabouts by switching off satellite transponders. This makes it harder to track seaborne oil movements, potentially accounting for some of the IEA's missing barrels. CRUDE HOARDING Next, there is the uncertainty surrounding China's massive oil storage volumes. Global observed inventories - oil in storage and in vessels - swelled by 225 million barrels between January and August to the highest level in four years, according to the IEA, which expects stocks to rise further in September. A large part of the inventory build clearly took place in China, the world's largest oil importer. However, Beijing does not officially disclose the scale of its oil storage capacity or changes in inventories. In the absence of government data, traders rely on secondary sources to estimate the size and fill rate of China's rapidly expanding storage network. The IEA estimates that Chinese crude stocks rose by 110 million barrels between April and August 2025, citing data from satellite analytics firm Kayrros. But given the lack of firm data, it is possible that China's crude stocks have increased much more than this, accounting for another part of the IEA's missing barrels. Calculating production, consumption, exports and storage in the massive global oil market has never been easy, but the IEA's missing barrels mystery may be an indication that it is going to get even harder moving forward as geopolitics obscure large parts of the market. Want to receive my column in your inbox every Monday and Thursday, along with additional energy insights and links to trending stories? Sign up for my Power Up newsletter here. The opinions expressed here are those of the author, a columnist for Reuters Enjoying this column? Check out Reuters Open Interest (ROI), , opens new tab your essential new source for global financial commentary. ROI delivers thought-provoking, data-driven analysis. Markets are moving faster than ever. ROI , opens new tab can help you keep up. Follow ROI on LinkedIn , opens new tab and X. , opens new tab https://www.reuters.com/business/energy/where-are-oil-barrels-iea-gap-deepens-confusion-over-looming-glut-2025-10-16/

2025-10-16 05:54

Pernod's results show absence of green shoots, analysts say U.S. and Chinese markets experience steep declines Overall 7.6% drop slightly worse than expected Shares broadly flat in early trade PARIS, Oct 16 (Reuters) - French spirits maker Pernod Ricard (PERP.PA) , opens new tab endured steep declines in all but one of its key markets in the first quarter, it said on Thursday, as global tariffs and weak economies further pressure the embattled spirits sector. Pernod, the world's second-biggest Western spirits group behind Diageo (DGE.L) , opens new tab, said it still expected sales to improve in the current fiscal year to June 30, 2026, while reporting a well-flagged 7.6% fall in first-quarter sales, blaming weak consumer demand and destocking in China and the United States. Sign up here. Pernod said it continued to expect the improving sales trends to be skewed towards the second half of the year, boosted by higher sales of cognac in duty-free stores and an easier base of comparison against a year ago. However, it remained cautious on the key Chinese market ahead of the festive Chinese New Year season that starts in mid-February. The owner of Martell cognac, Mumm champagne and Absolut vodka brands reported sales of 2.384 billion euros ($2.78 billion) from July to September, marking a deeper like-for-like decline than a 7.1% drop forecast by analysts in a company-compiled poll. Pernod Ricard's fiscal year started on July 1. Edward Mundy, analyst at Jefferies, said Pernod's first quarter showed an "absence of clear green shoots" that might disappoint investors. The company's shares were up 0.6% by 0715 GMT. Pernod Ricard and its rivals have suffered amid falling sales and tariff uncertainty in the key markets of China and the United States. A deal removing steep tariffs on European cognac exports to China was reached in July, while the U.S. and European Union also agreed a 15% tariff rate that month. Even before tariffs, spirits companies were grappling with a widespread downturn as a sales boom seen after the COVID-19 pandemic went into reverse. Some investors have worried that a societal shift towards lower alcohol consumption could drive long-term declines, but spirits executives say current trends are more driven by economic difficulties than by fundamental changes in how much people drink. In the United States, where tariff uncertainty led distributors to boost inventory levels at the end of fiscal year 2025, adjustments continued in the quarter, with sales falling 16%. In China, sales fell 27% as consumer demand stayed soft over the summer and into the Mid-Autumn Festival. In India, another key market for Pernod, sales rose 3% despite adverse changes in excise tax in the nation's second-most populous state of Maharashtra, in July. Pernod - which has launched a restructuring plan to cut costs - reiterated its guidance for between 3% and 6% annual organic sales growth for 2027-2029, along with annual organic margin expansion. ($1 = 0.8579 euros) https://www.reuters.com/world/china/weak-chinese-us-markets-weigh-pernod-ricard-q1-sales-2025-10-16/