2024-05-03 09:48

LONDON, May 3 (Reuters) - Interest rates at major central banks remained static in April as the prospect of higher-for-longer U.S. Federal Reserve rates exerted some pressure on policymakers, especially in emerging markets, where Indonesia delivered a surprise hike. All four of the central banks overseeing the 10 most heavily traded currencies that held meetings in April - the Bank of Japan, the Bank of Canada, the European Central Bank and the Reserve Bank of New Zealand - kept benchmark lending rates unchanged. Policy makers in Switzerland, Sweden, Australia, Norway and Britain did not hold rate setting meetings. The Fed, whose rate setting meeting straddled April and May, also left rates unchanged when its decision was published on Wednesday. U.S. data, pointing to strong growth but also worrisome inflation pressures, cemented a divergence between the world's top central bank and its G10 peers in April. "The inflation downtrend is alive but unstable, persuading central banks to wait longer and cut key rates more slowly," said Daniel Bergvall, head of forecasting at SEB. "This is now creating different playing fields for major central banks." Money markets show traders see a high chance that the ECB will start cutting rates in June, but the first full quarter percentage point rate reduction for the Fed is now only priced in for November, according to LSEG data. The prospect of higher-for-longer U.S. rates also shaped policy making in emerging economies - which had been ahead of developed peers in both the recent tightening and the easing cycle. The stand out in April, across the Reuters sample of 18 central banks in developing economies, was a surprise interest rate hike by Indonesia - the first since October - and a bid to shore up the rupiah currency which fell to four-year lows against the dollar. Meanwhile, Hungary, Chile and Colombia delivered a total of 175 bps between them. Nine other central banks in developing markets that held rate setting meetings kept benchmark rates unchanged. "For me, the key driver for EM performance this year is a global one, which is the Fed," said Sergei Strigo, co-head of emerging markets fixed income at Amundi Asset Management. "The repricing of interest rate cuts has been very significant as the market is now pricing in barely one cut by the end of the year, and very late this year." The year-to-date tally of rate hikes across emerging markets stood at 775 bps - nearly all of which were delivered by Turkey. This compares to 850 bps of cuts. Sign up here. https://www.reuters.com/markets/rates-bonds/major-central-banks-linger-uneasy-calm-april-2024-05-03/

2024-05-03 09:16

Norges Bank maintains policy rate at 4.50% Tight policy could last longer Had previously signalled September rate cut Norwegian crown strengthens OSLO, May 3 (Reuters) - Norway's central bank kept interest rates on hold at 4.50% on Friday, as unanimously expected by analysts, and said a tight monetary policy stance may be needed for somewhat longer than planned to curb inflation. The central bank said in March that it could start cutting rates in September from the current 16-year high. The Norwegian crown strengthened to 11.74 against the euro at 0901 GMT, from 11.77 just before the announcement. There was no new forecast released on Friday. The next policy prediction is due on June 20. Weakness in the Norwegian currency, coupled with signs of renewed inflation abroad, had led some analysts in recent weeks to predict Norges Bank may eventually postpone its planned cut. "The data so far could suggest that a tight monetary policy stance may be needed for somewhat longer than previously envisaged," Norges Bank said in a statement. The policy committee reiterated that the current policy rate of 4.5% was sufficiently high to return inflation to target within a reasonable time horizon. The central bank statement pointed to a stronger economy, high wage growth and currency weakness, Sparebank 1 Chief Economist Elisabeth Holvik said. "In other words, there probably won't be any rate cut this year," Holvik said in a note to clients. Since its previous policy announcement in March, inflation has been slightly lower than projected while economic activity and wage growth appear to be slightly higher, Norges Bank said. "At the same time, interest rate expectations abroad have risen and the crown is somewhat weaker than assumed," it added. Norway's core inflation rate stood at 4.5% year-on-year in March, a 20-month low, down from a record 7.0% last June but still exceeding the central bank's goal of 2.0%. The U.S. Federal Reserve said on Thursday it would take longer than expected to drive down inflation, which in turn could delay its planned rate cuts. The European Central Bank is expected to cut rates in June, according to a recent Reuters poll, and then twice more later this year, but this was less than analysts had earlier forecast. Sign up here. https://www.reuters.com/markets/europe/norway-keeps-rates-hold-may-extend-tight-policy-2024-05-03/

2024-05-03 06:24

May 3 (Reuters) - Apple's (AAPL.O) New Tab, opens new tab quarterly results and forecast beat modest expectations on Thursday, as the iPhone maker unveiled a record share buyback program, sending its stock up 6% in extended trade. Apple increased its cash dividend by 4% and authorized an additional program to buy back $110 billion of stock. The buyback is the largest in the company's history. Apple's quarterly revenue fell, but less than analysts had expected, and CEO Tim Cook said revenue growth would return in the current quarter. The results and guidance suggest the company may be regaining its footing in the smartphone market, despite stiff competition and regulatory challenges. The surge in Apple's shares following its report lifted its stock market value by over $160 billion. Apple said fiscal second-quarter revenue fell 4% to $90.8 billion, beating the average analyst estimate of $90.01 billion, according to LSEG data. For Apple's current quarter, which ends in June, Cook told Reuters the iPhone maker expects "to grow low-single digits" in overall revenue. Wall Street expected 1.33% revenue growth to $82.89 billion, according to LSEG data. Long considered a must-own stock on Wall Street, Apple shares have underperformed other Big Tech companies in recent months, falling 10% this year as it struggles with weak iPhone demand and tough competition in China. Apple expects current-quarter services and iPad revenue to grow by double digits, CFO Luca Maestri told analysts on a conference call. The company expects gross margins of between 45.5% and 46.5% for the fiscal third quarter. Apple faces a raft of challenges across its business. Smartphone rivals such as Samsung Electronics (005930.KS) New Tab, opens new tab have introduced competing devices aimed at hosting artificial-intelligence chatbots. On the regulatory front, Apple's services business, which contains its lucrative App Store and was one of the few areas of growth in the fiscal second quarter, is under pressure from a new law in Europe. In the United States, the Department of Justice in March accused Apple of monopolizing the smartphone market and driving up prices. For the fiscal second quarter, iPhone sales fell 10.5% to $45.96 billion, compared with analyst expectations of $46 billion. Apple executives said in February that the year-ago fiscal second quarter had benefited from a $5 billion surge in iPhone sales as the company caught up from supply-chain snarls during pandemic lockdowns. Excluding that one-time phenomenon, iPhone sales were down only slightly as the Cupertino, California, company's signature product faces stiff competition. In China, Huawei Technology (HWT.UL) has gained market share. Cook said that iPhone sales still experienced "growth in some markets, including China." Apple's revenue decline in China was not as steep as analysts expected, with Greater China sales of $16.37 billion for the fiscal second quarter that ended March 30, down 8.1% and above analyst expectations of $15.59 billion, according to data from Visible Alpha. Apple has said little about its product plans for artificial intelligence, the technology on which rivals Microsoft (MSFT.O) New Tab, opens new tab and Alphabet's (GOOGL.O) New Tab, opens new tab Google are placing huge bets. The company started ramping up research and development spending last year, and Cook said the company has spent more than $100 billion on R&D in the past five years. "We continue to feel very bullish about our opportunity in generative AI and we're making significant investments," he said. "We're looking forward to sharing some very exciting things with our customers" at events later this year, Cook said. As it races to bring AI into its products, Apple's massive buyback program may appease investors who have been bruised by its sinking stock price. "It's certainly a great time to resort to this strategy as, on the one hand, the stock remains relatively fairly priced, and, on the other hand, it needs to garner solid support for a structural shift that may very well take several quarters to play out," Investing.com analyst Thomas Monteiro said in a client note. Apple's quarterly earnings per share were $1.53, above Wall Street estimates of $1.50, according to LSEG data. Sales in Apple's services segment, which also represents Apple Music and TV offerings, rose to $23.87 billion, above analyst expectations of $23.27 billion, according to LSEG data. Analysts had expected Mac sales to decline in the fiscal second quarter, but they instead grew to $7.5 billion, compared with estimates of $6.86 billion, according to LSEG data. "They were really driven by the strength of the new MacBook Air that's powered by the M3 chip," Cook said. "About half of our MacBook Air buyers during the quarter were new to the Mac." The company's sales in the iPad segment declined to $5.56 billion, below analyst expectations of $5.91 billion. In the company's wearables segment, which represents sales of Apple Watches and AirPods headphones, sales fell to $7.91 billion, compared with analyst estimates of $8.08 billion, according to LSEG data. Sign up here. https://www.reuters.com/technology/apple-unveils-record-110-billion-buyback-results-beat-low-expectations-2024-05-02/

2024-05-03 04:20

May 2 (Reuters) - Collapsed U.S. lender SVB Financial Group said on Thursday that an entity affiliated with Pinegrove Capital Partners will acquire its venture capital business, SVB Capital. A newly-created entity, backed by permanent capital from Brookfield (BAM.TO) New Tab, opens new tab and Sequoia Heritage, will buy SVB Capital for a combination of cash and other economic considerations, SVB Financial said. It did not disclose a financial value. SVB Financial is seeking approval from a bankruptcy court and has requested a hearing on June 5. SVB Capital manages about $10 billion in investments on behalf of about 750 limited partner investors, such as public pensions, that have contributed capital to the investment fund, according to court documents. SVB Financial continues to fight U.S. regulators' seizure of nearly $2 billion in cash. "We believe the agreement maximizes the value for the benefit of SVB Financial Group's constituents, with a significant cash component as well as the ability to participate in the future upside potential of the business," Bill Kosturos, chief restructuring officer of SVB Financial Group said. In January, SVB Financial had said it planned to turn over its remaining venture capital business to a new, creditor-backed company. The coalition backing the deal, which includes MFN Partners, Pacific Investment Management Company, Bank of America Securities, JP Morgan Securities, and King Street Capital, hold about 48% of SVB Financial's most-senior debt. As part of the agreement, Pinegrove and SVB Capital will operate independently, each led by their existing management teams, with common long-term financial backing of Brookfield and Sequoia Heritage. The transaction is also supported by SVB Financial's key creditor groups and is subject to regulatory approval and other customary closing conditions, the firm said. SVB Financial filed for bankruptcy last year after Silicon Valley Bank collapsed. SVB Securities and SVB Capital's funds and general partner entities were not included in the Chapter 11 filing, the company had said last year. Sign up here. https://www.reuters.com/business/finance/svb-financial-sell-investment-platform-business-svb-capital-2024-05-03/

2024-05-03 04:02

Nonfarm payrolls estimated to increase 243,000 in April Unemployment rate seen unchanged at 3.8% Hourly earnings forecast rising 0.3%; up 4.0% year-on-year WASHINGTON, May 3 (Reuters) - U.S. job growth probably slowed to a still-solid clip in April, with wages maintaining their steady rise, which would allay fears that the economy was stalling after activity pulled back considerably in the first quarter. The Labor Department's closely watched employment report on Friday is also expected to show the unemployment rate holding below 4% for the 27th straight month. Labor market endurance, however, leaves the Federal Reserve in no rush to start cutting interest rates, which could significantly slow down the economy. The U.S. central bank on Wednesday left its benchmark overnight interest rate unchanged in the current 5.25%-5.50% range, where it has been since July. "The bloom is off the rose of a strong employment market, but it's still pretty," said Sung Won Sohn, finance and economics professor at Loyola Marymount University. "A slow, but healthy job market will continue well into 2025. The only situation where I see a dramatic decline will be if the Fed keeps rates high for too long." Nonfarm payrolls likely increased by 243,000 jobs last month after rising 303,000 in March, according to a Reuters survey of economists. Job gains would be slightly below the 276,000 monthly average in the first quarter. Estimates ranged from 150,000 to 280,000. The labor market has so far defied predictions of a sharp slowdown flagged by surveys including the Institute for Supply Management and the NFIB. The ISM's services employment measure has been largely weak since last October. The NFIB's gauge of small business hiring slumped to near a four-year low in March before rebounding in April. Most economists have, however, cautioned against reading too much into the surveys, arguing that they have not offered reliable signals on nonfarm payrolls over a long time. They were also not perturbed by a near stall in worker productivity in the first quarter, noting that the trend remained solid. "I don't see any real signs of distress," said Dan North, senior economist at Allianz Trade. UNEMPLOYMENT RATE SEEN STEADY Economists were also dismissive of the continued decline in temporary help staffing, normally viewed as a harbinger for future hiring. Temporary help has dropped in 23 of the last 24 months. They noted that companies continued to hoard workers. Employment gains have been driven by healthcare, state and local governments, construction sectors as well as the leisure and hospitality industry, which are trying to boost staffing levels after losing workers during the COVID-19 pandemic. That pattern is expected to hold in April. Average hourly earnings are forecast rising 0.3%, matching March's gain. There is, however, an upside risk as about half a million workers at California fast food chains started receiving a $20-an-hour minimum wage in April. "We would normally look for another increase of 0.3%, which was the monthly average in both the fourth quarter of 2023 and the first quarter of 2024," said Lou Crandall, chief economist at Wrightson ICAP. "However, we expect the increase in the minimum wage for fast-food workers in California to translate into an increase of nearly 1% in hourly earnings in the leisure and hospitality industry in April, which would nearly add a tenth of a percent to the national average." Wages are forecast increasing 4.0% in the 12 months through April after rising 4.1% in March. Wage growth in a 3%-3.5% range is seen as consistent with the Fed's 2% inflation target. Financial markets continue to expect the central bank to start its easing cycle in September. A minority of economists believe the window is closing. Since March 2022 the U.S. central bank has raised its policy rate by 525 basis points. The unemployment rate was forecast unchanged at 3.8% in April. The labor market has benefited from a surge in immigration over the past year, which economists estimated boosted labor supply by about 80,000 per month in 2023. "While we believe the continued flow of new immigrants into the labor market boosted payroll and household employment in April's report, we do not forecast an impact on the unemployment rate due to the offsetting boost to labor supply," said Spencer Hill, an economist at Goldman Sachs. Sign up here. https://www.reuters.com/markets/us/solid-us-job-wage-growth-expected-april-2024-05-03/

2024-05-03 00:51

OPEC+ could extend supply cuts beyond June, sources say US job growth weaker than expected in April US drillers cut oil and gas rigs for second week in a row NEW YORK, May 3 (Reuters) - Oil prices settled lower on Friday, and posted their steepest weekly loss in three months as investors weighed weak U.S. jobs data and possible timing of a Federal Reserve interest rate cut. Brent crude futures for July settled 71 cents lower, or 0.85%, to $82.96 a barrel. U.S. West Texas Intermediate crude for June fell 84 cents, or 1.06%, to $78.11 a barrel. Investors were concerned that higher-for-longer borrowing costs would curb economic growth in the U.S., the world's leading oil consumer, after the Federal Reserve decided this week to hold interest rates steady. For the week, Brent declined more than 7%, while WTI fell 6.8%. U.S. job growth slowed more than expected in April and the annual wage gain cooled, data showed on Friday, prompting traders to raise bets that the U.S. central bank will deliver its first interest rate cut this year in September. "The economy is slowing a little bit," said Tim Snyder, economist at Matador Economics. "But (the data) gives a path forward for the Fed to have at least one rate cut this year," he said. The Fed held rates steady this week and flagged high inflation readings that could delay rate cuts. Higher rates typically weigh on the economy and can reduce oil demand. The market is repricing the expected timing of possible rate cuts after the release of softer-than-expected monthly jobs data, said Giovanni Staunovo, an analyst at UBS. U.S. energy companies this week cut the number of oil and natural gas rigs operating for a second week in a row, to the lowest since January 2022, Baker Hughes (BKR.O) New Tab, opens new tab said in its closely followed report on Friday. The oil and gas rig count, an early indicator of future output, fell by eight to 605 in the week to May 3, in the biggest weekly decline since September 2023. The number of oil rigs fell seven to 499 this week, in the biggest weekly drop since November 2023. Geopolitical risk premiums due to the Israel-Hamas war have faded as the two sides consider a temporary ceasefire and hold talks with international mediators. Further ahead, the next meeting of OPEC+ oil producers - members of the Organization of the Petroleum Exporting Countries and allies including Russia - is set for June 1. Three sources from the OPEC+ group said it could extend its voluntary oil output cuts beyond June if oil demand does not increase. Money managers cut their net long U.S. crude futures and options positions in the week to April 30, the U.S. Commodity Futures Trading Commission (CFTC) said. Sign up here. https://www.reuters.com/business/energy/oil-steadies-heads-weekly-drop-us-economy-worries-2024-05-03/