2025-10-17 05:01

AI investments in Sweden and UK create demand for local currency Sweden and UK rank third and fourth in global AI investment Microsoft, Meta, Alphabet choose Sweden for data centres US-UK tech pact impacts sterling sentiment LONDON, Oct 17 (Reuters) - The boom in investment in artificial intelligence is starting to be felt for the first time in currency markets across Europe, and analysts reckon the Swedish crown and sterling stand to benefit the most. Trading in the almost $10 trillion-a-day FX markets this year has been driven by broad dollar weakness given tariff-related concerns and U.S. rate cut expectations. Sign up here. But dig deeper and the impact of AI, which has helped drive stocks to record highs, is rippling across to currencies. According to JPMorgan, the resilience of the Swedish crown , or krona, and sterling in recent months may be partially attributable to tech as Sweden and Britain stand out on measures of AI investment and their currencies are receiving a tailwind from this dynamic, even if only a small one. By one measure, the UK and Sweden received just over $4 billion each last year in private AI investments, ranking third and fourth in a Stanford University AI index of biggest beneficiaries of such investments, behind the United States and China. Sweden's krona is the strongest-performing major European currency against a weak dollar so far this year, having climbed almost 15%. Sterling has rallied 7%. Dissecting the exact impact of AI on currency moves is hard, analysts say, given other factors at play such as interest rate expectations or fiscal unease, especially with sterling. "Large AI investments have been announced for both countries," said Rabobank's head of FX strategy Jane Foley. "The inward investment could certainly have created some demand for sterling and Swedish crown respectively and created some resilience". The crown is also up against the euro and other Scandinavian currencies. Sterling, hurt by fiscal worries, is down against the euro and Swiss franc, however. Investments in Swedish AI companies, which bring higher demand for crowns, would cause a visible spike in the currency, while the impact of such investments on sterling would be less visible because it is already so heavily traded, Rabobank's Foley said. Sterling is the world's fourth most-traded currency, accounting for just over 10% of all trades, while Sweden's crown accounts for less than 2%, according to the Bank for International Settlements. BIG PROMISES Britain and the United States last month agreed a technology pact, with top U.S. firms led by Microsoft (MSFT.O) , opens new tab pledging 31 billion pounds ($42 billion) in UK investments. AI giant Nvidia (NVDA.O) , opens new tab plans to provide its data centre platform to Swedish companies including telecoms gear maker Ericsson (ERICb.ST) , opens new tab, and drug developer AstraZeneca (AZN.L) , opens new tab. Microsoft, Facebook's owner Meta (META.O) , opens new tab, Google's owner Alphabet (GOOGL.O) , opens new tab and Canada's Brookfield Asset Management (BAM.TO) , opens new tab plan data centres in Sweden given the country's reliable electricity supplies and infrastructure. While it's too soon to say what impact AI will have on economic growth or unemployment, which could potentially add to strains on public finances, the announcements offered a favourable backdrop for the krona and sterling, analysts said. A report by SEB released earlier this year looking at major Swedish participants in the FX market showed their net overweight position in the crown was close to record highs. Societe Generale head of corporate research for FX and rates Kenneth Broux said U.S. tech investment pledges can diminish pessimism ahead of Britain's November budget, when taxes are expected to rise, lifting sterling's appeal. Latest CFTC positioning shows investors are neither heavily in favour nor against sterling. Speculators have eroded bullish dollar positions against the pound from August's almost three-year high of $3.3 billion to just $165 million, reflecting waning conviction that the greenback will rally against sterling. "What AI does potentially change is the outlook for productivity growth, the Achilles' heel of the UK economy", said Broux. An aging population in the West opens the door to “reskilling and upskilling” which can help keep a lid on welfare payments and potential unemployment benefits caused by AI, he added. Some are broadly positive on sterling. Investment firm St James's Place has an overweight position. Deutsche Bank expects sterling to rise to $1.45 over the next couple of years, compared with roughly $1.34 currently. And HSBC Private Bank's global CIO Willem Sels said that while his near-term view on sterling was not too positive given the looming budget, he sensed that investor sentiment towards the UK was more "constructive" than it appears. "One of the reasons for that is that people see the UK as a relatively interesting destination for AI-related investment," Sels said. "This is why we also saw (Nvidia CEO) Jensen Huang sitting next to the Prime Minister (Keir Starmer earlier this year) and talking about the strength of the UK." https://www.reuters.com/world/europe/ai-boom-rippling-across-britains-pound-swedish-crown-2025-10-17/

2025-10-17 04:33

A look at the day ahead in European and global markets from Stella Qiu It was already a troubling set-up for stocks, with valuations stretched, the whiff of an AI bubble, a shut U.S. government and the ongoing break-up between Washington and Beijing. Now, add in jitters about U.S. regional banks. Sign up here. Overnight, Zions (ZION.O) , opens new tab sank 13% after disclosing it would take a $50 million loss in the third quarter on two loans from its California division. Western Alliance's (WAL.N) , opens new tab stock slumped 11% after it initiated a lawsuit alleging fraud by Cantor Group V, LLC. The banks' selloff comes more than two years after Silicon Valley Bank's 2023 failure, when high interest rates drove paper losses on its bonds, sparking a fatal deposit run that felled Signature Bank days later. Worries of a repeat drove shares in the red and had markets baying for more U.S. rate cuts. MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) , opens new tab fell 0.9% on Friday and Japan's Nikkei (.N225) , opens new tab slid 1.1% as its banking index tumbled. Wall Street futures fell 0.4% ahead of more earnings from U.S. regional banks later in the day. European stock futures lost 0.8%, while FTSE futures dropped 1%. The flight to safety saw gold hit a record of $4,378.69 per ounce and was poised to finish the week 8.9% higher - the biggest weekly rise since September 2008 when the collapse of Lehman Brothers fuelled the global financial crisis. How is that not ominous? Treasuries also found their safe-haven mojo back, rallying for a third straight week. Two-year Treasury yields hit a fresh three-year trough of 3.3890% as investors bet the Federal Reserve will have to cut rates twice by year end, with some chance of an outsized 50 bps move. While financial stability risks seem contained for now, Jamie Dimon has said "When you see one cockroach, there are probably more, and so everyone should be forewarned." Investors assume the Fed will ride to the rescue, because of course it will. But cutting rates when inflation is at 3% and the full impact of tariffs on prices is only starting to be felt could be just a taster of what to expect when Trump gets to appoint his very own Fed chair. Key developments that could influence markets on Friday: - Little data released as US government is shut - Fed official Alberto G. Musalem speaks, as well as Bank of Japan's Deputy Governor Shinichi Uchida - US earnings include American Express, State Street and more regional banks https://www.reuters.com/business/finance/global-markets-view-europe-2025-10-17/

2025-10-17 00:48

Kashkari sees more risk of labor market downturn than inflation surge Sees rate cuts as insurance against unlikely dire outcomes The longer government shutdown, the less confident in read on economy: Kashkari Oct 16 (Reuters) - Minneapolis Federal Reserve President Neel Kashkari said Thursday he does not think that there is a big chance the labor market will weaken sharply or inflation will surge, though of the two, "there's more risk of a labor market negative surprise than a big uptick in inflation." "On the other hand, if I were to guess which mistake we're more likely making, I think we're more likely betting that the economy is really slowing more than it really is," Kashkari told a town hall in Rapid City, South Dakota. Sign up here. Kashkari supported the Fed's quarter-point interest-rate cut in September and feels two more such cuts will be warranted by the end of the year, he said last month. Like many of his colleagues, he sees the rate cuts as a form of insurance against dire outcomes that may not actually materialize. Last year, for instance, the Fed cut rates to shore up what many policymakers feared was a rapidly softening labor market, and the economy proved to be unexpectedly resilient, he said. As for inflation, Kashkari said Thursday that he thinks it is unlikely the inflation rate will rise to 4% or 5%, "because we can do the math of what tariff rates translate into what inflation. So I think the risk of inflation is more of one of persistence - that it's not so much of a one time event, but that it stays at 3% for an extended period of time." The Fed targets 2% inflation; in August it was 2.7% by the Fed's targeted measure. Some of Kashkari's policymaking colleagues say the Fed should be cautious about cutting rates when the inflation rate is too-high and rising Though the ongoing federal government shutdown is delaying the publication of economic data, Fed policymakers have enough unofficial data through private sources and their own community and business outreach efforts to have a pretty good idea of economic conditions, Kashkari said. "We can make our way through while the shutdown is happening," Kashkari said. "But the longer it goes on, the less confidence I have that we are reading the economy appropriately, because there's no substitute for the gold standard government data that we rely on." https://www.reuters.com/markets/us/feds-kashkari-economy-may-not-be-slowing-much-we-think-2025-10-16/

2025-10-16 23:30

Laos to prioritise power for metals refining, AI, EVs Laos in talks with Vietnam to boost power exports Laos expects Singapore exports to resume soon KUALA LUMPUR, Oct 16 (Reuters) - Laos is considering halting electricity supply to cryptocurrency miners by the first quarter of 2026, as it seeks to redirect domestic power to industries that contribute more to economic growth, the country's deputy energy minister told Reuters. Crypto operators, drawn by cheap non-fossil energy, flocked to the landlocked Southeast Asian nation following a 2021 policy shift that triggered a rapid expansion in mining activity. Sign up here. But the government now aims to prioritise power for sectors such as AI data centres, metals refining and electric vehicles, its deputy energy minister Chanthaboun Soukaloun said on Thursday. Laos has already begun scaling back supply to crypto miners, who currently consume around 150 megawatts of electricity, down 70% from a peak of 500 MW in 2021 and 2022, Soukaloun said. BETTER VALUE FOUND ELSEWHERE "Crypto doesn't create value compared to supplying it to industrial or commercial consumers. We proposed to the government in 2021 to supply to crypto mining due to the oversupply of electricity domestically," Soukaloun told Reuters, adding that the industry creates few jobs and does not have a supply chain that benefits the economy. Soukaloun said that Laos had initially planned to end supply this year, but continued due to abundant rainfall that boosted hydropower output and enabled increased exports to neighbouring Thailand and Vietnam. "I think by the end of the first quarter of 2026, we might stop (supply to crypto) entirely," he said on the sidelines of the ASEAN energy ministers meeting. Reuters was unable to find associations representing the crypto mining industry, or ascertain which miners operate there. Laos, often dubbed the "battery of Southeast Asia" for its hydropower export potential, plays a key role in the region’s clean energy transition. Hydropower exports are crucial for decarbonising neighbouring countries that face challenges scaling up solar and wind. Laos, which exports most of its hydropower to independent power producers in cross-border deals with Thailand and Vietnam, is considering further increasing its bilateral export capacity to Vietnam from 8,000 MW currently, Soukaloun said. CHINA ARBITRATION, EXPORTS TO SINGAPORE Soukaloun said Laos has had bilateral talks with China about an arbitration suit filed by a unit of state-owned Power Construction Corp of China against its state utility Electricite du Laos (EDL), seeking $555 million in unpaid dues from its $2.73 billion hydropower project. "It's their right to do so (sue) under the power purchase agreement. We have to move on until the process is completed or unless the claimant withdraws the claim," Soukaloun said. He declined to comment on whether Laos had sought a revision of the claims, citing confidentiality, but said the dues stemmed from a mismatch between projected and actual demand. Laos also expects exports to Singapore through the Lao-Thailand-Malaysia-Singapore (LTMS) power transmission corridor to "resume soon," Soukaloun said, without providing further details. Exports through the corridor had been halted as Thailand is yet to finalise terms of an extension to the deal, Thai and Singapore authorities said last year. On Thursday, the four countries issued a joint statement reaffirming their commitment to continue advancing multilateral cross-border power trade and continue discussions, but did not specify when exports would resume. https://www.reuters.com/sustainability/boards-policy-regulation/laos-plans-pull-plug-crypto-miners-by-early-2026-2025-10-16/

2025-10-16 23:05

WASHINGTON, Oct 17 (Reuters) - Britain's government said on Friday it has launched what it hopes will be one-stop, concierge service to make it easier for financial services firms to invest in the country. The new Office for Investment: Financial Services will seek to attract investment to cities around Britain, finance minister Rachel Reeves said. The service will include helping investors pick locations and navigate British regulation. Sign up here. Reeves announced the plan earlier this year as part of a broader push to reduce regulatory uncertainty. The new agency will involve the Treasury, financial regulators and the City of London Corporation. On Thursday, Reeves said she did not disagree with arguments from finance firms that taxes on them in Britain were relatively high, suggesting they will not bear the brunt of tax increases she is expected to announce in her November 26 budget. https://www.reuters.com/business/finance/uk-opens-new-concierge-service-bid-woo-more-finance-investment-2025-10-16/

2025-10-16 22:30

Fiscal 2025 tariff revenues rise to record $195 billion Department of Education bears brunt of Trump's spending cuts Outlays on Social Security, health care, interest on debt continue to climb Treasury Department reports monthly surplus of $198 billion in September WASHINGTON, Oct 16 (Reuters) - The U.S. budget deficit shrank by $41 billion to $1.775 trillion in the 2025 fiscal year as an increase in revenue from President Donald Trump's tariffs and cuts to education spending helped offset higher outlays on healthcare and retirement programs and interest on the debt, the Treasury Department said on Thursday. The results for the year ended September 30, which include nearly nine months of Trump's second term in the White House, compared to a $1.817 trillion deficit in fiscal 2024. It was the first time the annual deficit had fallen since 2022, when the unwinding of COVID-19 relief programs brought spending down. Sign up here. The smaller deficit was aided by a record $195 billion in net customs receipts for the fiscal year, an increase of $118 billion from the prior year as new Trump tariffs rolled in. Customs receipts in September reached a new record high of $29.7 billion, but the pace of increase slowed from August, when $29.5 billion was collected. Customs receipts were $7.3 billion in September 2024. But this powerful new revenue source was partly offset by a $79 billion reduction in gross corporate tax collections for fiscal 2025, to $486 billion. About $45 billion of that reduction occurred in September, reflecting implementation of full capital equipment expensing and research deductions made retroactive to January 1 in the spending and tax-cut bill passed by the Republican-controlled Congress in July. Total receipts for fiscal 2025 were a record $5.235 trillion, up $317 billion, or 6%, from fiscal 2024, largely driven by increases in withheld and non-withheld individual tax collections. Fiscal 2025 outlays also were a record at $7.01 trillion, up $275 billion, or 4%, from the prior year. A U.S. Treasury official said the department calculated an estimated deficit-to-GDP ratio of 5.9% for fiscal 2025, compared to an actual fiscal 2024 ratio of 6.3%. The official declined to say what GDP estimate was used to calculate the ratio. Data on third-quarter GDP, which would be close out the 2025 fiscal year, has been delayed by the partial U.S. government shutdown. U.S. Treasury Secretary Scott Bessent said on Wednesday that he wants to bring the ratio down to the 3% range by boosting economic growth and cutting or constraining spending. Budget analysts said the number released on Thursday showed little progress toward that goal. "Most of the fiscal policy changes are simply replacing tax revenue and spending with other sources without lowering the deficit," said Kent Smetters, director of the University of Pennsylvania's Penn Wharton Budget Model analysis group. "So, we are still very much on an unsustainable path." TREASURY REPORTS SURPLUS FOR SEPTEMBER For the 2025 fiscal year's final month of September, the Treasury reported a record surplus of $198 billion, up $118 billion, or 147%, from the same month in the prior year. September is often a month of surplus due to quarterly tax filing deadlines for companies and individuals. Receipts last month were up $17 billion, or 3%, to $544 billion, while outlays were down $101 billion, or 23%, to $346 billion. The latest monthly surplus was boosted by a $131 billion cut to the Department of Education budget that was mandated in the recent spending and tax bill. For September, the education outlays were $123 billion lower than in September 2024. For the full 2025 fiscal year, the Department of Education suffered the biggest cut in outlays, down $233 billion, or 87% from the prior year to just $35 billion. That cut and the higher customs receipts masked continued increases in outlays for the Social Security retirement plan, the Medicare and Medicaid healthcare programs and interest on the U.S. federal debt. The interest expenditure reached a record $1.216 trillion for the full fiscal year, up $83 billion, or 7%, from fiscal 2024, making it the second-largest expenditure item after Social Security. Expenses for that program reached $1.647 trillion, up $127 billion, or 8%, from the prior fiscal year. "There's good news that the tariffs are generating higher revenue, but all major categories of spending are higher with mandatory spending and interest significantly so. The fundamentals remain deeply troubling," said Maya MacGuineas, president of the Committee for a Responsible Federal Budget. https://www.reuters.com/world/us/us-budget-deficit-falls-41-billion-1775-trillion-fiscal-2025-2025-10-16/