2025-09-30 10:03

The S&P 500's one-month volatility averaged 10.8 in Q3, lowest level in 6 years Historical patterns show prolonged low volatility periods often succeeded by sharp spikes Potential catalysts for volatility include looming government shutdown, uncertain economic data Systematic, rules-based trading strategies have increased equity exposure thanks to low volatility NEW YORK, Sept 30 (Reuters) - Wall Street is set to close one of its calmest quarters in nearly six years, and the lull after a volatile start to 2025 has many market participants increasingly alert for renewed market gyrations. For the third quarter, the S&P 500's one-month volatility - a gauge of the index's monthly price swings - averaged 10.8, the lowest for any quarter since the three months ended December 2019. Sign up here. The stock market has climbed relentlessly to record highs as investors boosted equity exposure after April's tariff-related selloff, and Wall Street enjoyed a lack of new negative shocks. This crushed volatility. With the measure of market fear near historic lows, investors are growing wary that a spike could be close. "There's a natural floor for volatility. It doesn't go to zero," Matt Thompson co-portfolio manager at boutique investment firm Little Harbor Advisors, said. "We know where we are in the larger volatility cycle, so the next move for volatility is almost guaranteed to be higher at some point," he said. On Monday, the S&P 500 and the tech-heavy Nasdaq composite index both closed not far from the respective record highs. HISTORICAL LOW Historically, volatility at these low levels tends to persist for weeks rather than months. Extended calm has often been followed by sharp spikes, including at the end of the fourth quarter of 2019 just before the pandemic market crash and the third quarter of 2018 when stocks sold off amid concerns about trade and economic growth. For now, optimism around large-cap stocks tied to artificial intelligence and confidence in the resilience of the U.S. economy continue to support investors' appetite for taking risk in equities. Still plenty of catalysts could spark volatility: A potential government shutdown could disrupt a wide range of services as soon as Wednesday. Investors also await economic data that will inform the path of interest rates. With macro risks elevated, a shock on the scale of August 2024 due to the yen carry trade unwind or April 2025's tariff scare would likely inflict greater losses on investors betting on continued calm than any gains from an extension in the current lull in stock swings, Rocky Fishman, founder of Asym 500, a firm that provides data and analytics on the options market, said in a note on Friday. Indeed, Cboe data showed some pick-up in demand for protection last week, with three-month skew - a gauge of demand for insurance against a market drop over the next three months - rising the most versus other tenors. RISKS ABOUND A pick-up in volatility could spark selling by systematic strategies - rules-based funds that use volatility and momentum signals to drive buying or selling decisions. The collapse in market gyrations has driven these types of strategies to raise their equity allocations to historically high levels. According to Deutsche Bank estimates, a jump in volatility could see them turn sellers of equities. Deutsche Bank strategist Parag Thatte estimated such strategies command about $1 to $1.5 trillion in assets, enough to at times amplify market moves even if they are not huge in size relative to the overall equity market. "They don't start the moves but their impact can be a lot higher than one would expect given their size," Thatte said. Still, for many investors the recent low volatility is not reason enough to pull the trigger on hedges that can still prove to be expensive if market calm persists. Little Harbor Advisors' Thompson is content to trim equity exposure rather than buy downside protection, as he waits for more confirmation that market volatility is set to rise, he said. Others advocate taking advantage of the market calm to pick up hedges to complement risk-on positions. "For those who are all-in to the AI-driven FOMO rally, I really think the low volatility levels do allow for protection," said Tobias Hekster, co-CIO at True Partner Capital, using a market acronym for "fear of missing out." True Partner Capital is a global asset management firm specializing in equity volatility strategies. "One can stay with the herd, but have a parachute when the music stops," he said. https://www.reuters.com/business/after-lull-wall-street-eyes-volatility-pickup-risks-build-2025-09-30/

2025-09-30 09:53

ZURICH, Sept 30 (Reuters) - The Swiss National Bank ramped up foreign currency purchases during the second quarter, data showed on Tuesday, as the central bank reacted to appreciation pressure on the Swiss franc after President Donald Trump announced tariffs on U.S. imports in April. The central bank's purchase of 5.06 billion Swiss francs ($6.36 billion) worth of foreign currencies in April-June was its highest quarterly level of foreign currency interventions for more than three years. Sign up here. The SNB declined to comment. SAFE-HAVEN INFLOWS In April, the franc surged 7% versus the U.S. dollar, and 2.2% against the euro, with traders citing inflows into the franc amid heightened uncertainty around U.S. tariff policy, which pressured the dollar and lifted safe-haven currencies. "The SNB most likely intervened to smooth FX volatility after U.S. President Trump announced his reciprocal tariffs in April," said Karsten Junius, an economist at J.Safra Sarasin. "Those increased political uncertainty and market volatility significantly and might have led to inflows into the franc." The SNB buys foreign currencies as a way of cooling appreciation pressure by supplying the market with francs. A big surge in the value of the franc can hinder the SNB's goal of price stability - annual inflation running at 0-2% - by making imports cheaper. The increased SNB forex activity during the second quarter contrasted with small purchases totalling 1.26 billion francs over the previous five quarters. SNB FACES BAD OPTIONS SNB Chairman Martin Schlegel said last week the SNB would continue to use all of its tools, including currency interventions, to meet its inflation target, if necessary. On Monday the SNB and the U.S. Treasury Department reconfirmed that they do not target exchange rates for competitive purposes after Washington added Switzerland to a list of countries being monitored for unfair currency and trade practice in June. Charlotte de Montpellier, an economist at ING Bank, said the statement would not likely change the SNB’s stance, with the central bank likely to use currency interventions in future. "The SNB currently faces two bad options. Either it does more forex interventions, which would attract negative attention in the U.S., or it takes interest rates below 0%, which it really doesn’t want to do," she said. ($1 = 0.7957 Swiss francs) https://www.reuters.com/business/finance/trump-tariffs-led-swiss-national-bank-increase-foreign-currency-purchases-2025-09-30/

2025-09-30 09:32

MUMBAI, Sept 30 (Reuters) - India's central bank will cut interest rates on Wednesday, despite the rupee repeatedly making all-time lows, in a bid to prioritise growth amid worsening trade tensions with the U.S., according to three analysts. The views of analysts at Capital Economics, Nomura and Emkay Global diverge from the consensus call that the Reserve Bank of India will hold rates unchanged. Three-fourths of those polled expect the key policy rate will be kept steady at 5.50%. Sign up here. The rupee, which slipped to a record low on Tuesday, is among the worst-performing Asian currencies year-to-date, down 3.7% against the dollar. Those arguing against a rate cut say the rupee’s weakness could deter the central bank, particularly as Prime Minister Narendra Modi’s growth-supporting measures have reduced the urgency for monetary support. A rate cut could also narrow interest rate differentials with the U.S., adding to the pressure on the currency, the analysts say. India's current account deficit makes it reliant on overseas inflows, leading to authorities guarding against currency weakness. However, Capital Economics argues that with inflation subdued, U.S. tariffs slowing growth, and ample foreign exchange reserves to manage currency volatility, the central bank has room to cut rates to support the broader economy. "While the weak rupee is a consideration, it is unlikely to constrain the RBI," it said in a note. Madhavi Arora, chief economist at Emkay Global Financial Services, says that India's relative loss of export competitiveness, driven by higher U.S. tariffs and the inclusion of services in the trade dispute, justifies a degree of currency depreciation against peers. "Such depreciation would act as a natural stabilizer for a weaker current account deficit, rather than being misread as a rate-easing deterrent," she said. Sonal Varma, managing director and chief economist at Nomura, says that a rate cut is warranted as inflation remains well below target, and as negative effects of U.S. tariffs are likely to outweigh the consumption boost from the recent goods and services tax cuts. https://www.reuters.com/world/india/weak-rupee-not-hurdle-india-rate-cut-analysts-say-2025-09-30/

2025-09-30 09:18

MUMBAI, Sept 30 (Reuters) - The Indian rupee dropped to a record low on Tuesday, with unresolved trade strains with the United States fuelling heavy dollar demand and prompting central bank intervention to support the currency. The rupee hit a lifetime low of 88.80, slipping past the prior low of 88.7975 struck last week. It was last quoting at 88.7550. Sign up here. Market participants have seen little reason to bet on a turn in fortunes for the currency with a trade deal with the U.S. remaining elusive, while a recent hike in U.S. H-1B visa fees has compounded the currency’s weakness. Analysts warn the U.S. decision to hike H-1B visa fees could weigh on revenues in India’s technology sector and trigger renewed equity outflows. Foreign investors have accelerated their selling of Indian stocks following the visa fee increase, pulling more than $2 billion from the market over the past six sessions. That's a marked pickup from the roughly $800 million withdrawn in the first three weeks of September, underscoring the pressure on portfolio flows. The rupee's decline has been exacerbated by dollar demand from jewellery importers ahead of the October festival season. The Reserve Bank of India has been intervening through state-run banks to temper the rupee’s decline, with intervention likely continuing on Tuesday. Bankers said the central bank sold dollars to limit intraday volatility and prevent the currency’s record low from triggering a broader impact. "The RBI is stepping in to keep the rupee from spiralling," said a Mumbai-based currency trader. "While they’re selling dollars to smooth the market, the flows on the other side remain heavy." The RBI intervened in the local spot market and the non-deliverable market last week, per bankers. "RBI is widely expected to slow the pace of move in line with the stated policy of containing volatility and in order to keep market expectations from becoming 'one-sided' ahead of big figure change around 90," BofA Global Research said in a note. However, "all rationale points towards a more measured approach this time" from the RBI. https://www.reuters.com/world/india/indian-rupee-hits-all-time-low-us-india-policy-friction-rbi-continues-support-2025-09-30/

2025-09-30 07:57

LONDON, Sept 30 (Reuters) - Shell (SHEL.L) , opens new tab has started production from its Victory gas field in the North Sea, which at peak production can heat almost 900,000 homes per year, it said on Tuesday. At full capacity, the gas field can produce about 150 million standard cubic feet per day of gas, or about 25,000 barrels of oil equivalent per day. The field will provide gas for Britain's homes, businesses and power generation. Sign up here. Victory will contribute toward Shell's goal to deliver gas projects with total production of more than 1 million boed by the end of the decade. The company expects most of the recoverable gas at the field, which is about 47 km northwest of the Shetland Islands, to have been extracted by that time. Shell will extract gas via a single subsea well and transport it to the Shetland Gas Plant using an existing pipeline network, the company said. It will then be delivered to the Scottish mainland at St. Fergus near Peterhead, and fed into the national gas network. UK gas production is expected to fall by 10% this year from 2024, according to data from the North Sea Transition Authority in March. https://www.reuters.com/business/energy/shell-starts-production-victory-gas-field-north-sea-2025-09-30/

2025-09-30 07:49

BEIJING/SINGAPORE, Sept 30 (Reuters) - A liquefied natural gas (LNG) tanker carrying cargo from Russia's sanctioned Arctic LNG 2 project berthed at China's Beihai terminal on Tuesday, according to ship-tracking data from Kpler and LSEG. If the tanker discharges its cargo, that would make it the seventh load that the Chinese terminal has received from the Arctic LNG 2 project, which is under sanctions because of Russia's war in Ukraine. Sign up here. The Arctic Vostok tanker picked up LNG from a storage facility in Kamchatka, in the Russian Far East, on August 30, before heading towards China's Beihai LNG terminal in the southern region of Guangxi, according to Kpler. LSEG data showed the tanker loaded the cargo on September 6. The storage facility has only received cargoes from the Arctic LNG 2 project. Shipping database Equasis lists the tanker's ship or commercial manager as SMP Techmanagement while the registered owner was Lule One Services. Reuters was not able to find any contact information for the registered owner or manager. PipeChina, operator of the Beihai LNG terminal, did not immediately respond to a request for comment. Despite sanctions, Arctic LNG 2, which is 60% owned by Russia's Novatek (NVTK.MM) , opens new tab, has been sending out LNG since last year, with cargoes being delivered to two storage facilities in Russia and the Beihai LNG terminal. The last two cargoes loaded from the Arctic LNG 2 facility in Gydan in northern Siberia are currently sailing east via the Northern Sea Route on the Christophe De Margerie and Voskhod LNG tankers. Another sanctioned tanker, La Perouse, which also loaded 150,000 cubic meters of LNG from the sanctioned project, travelled south past Europe, Africa and through the Indian Ocean and is now heading toward the Bay of Bengal, according to LSEG and Kpler data. Another sanctioned tanker, Arctic Metagaz, which is carrying cargo from Arctic LNG 2, is also currently near China's Beihai LNG terminal. It picked up a cargo from a floating storage facility in Murmansk, northwest Russia, on July 17, according to Kpler data. This storage facility has also only received cargoes from the Arctic LNG 2 project. https://www.reuters.com/business/energy/tanker-carrying-7th-sanctioned-arctic-lng-2-cargo-berths-china-port-2025-09-30/