2024-04-24 10:02

A look at the day ahead in U.S. and global markets from Mike Dolan Ailing Tesla shares (TSLA.O) New Tab, opens new tab caught a rare 10% break overnight despite the electric auto giant's quarterly revenue miss, underscoring a better market mood as Meta (META.O) New Tab, opens new tab steps up to the earnings dock later and U.S. business activity cools in April. Deep in a global price war and hit by waning worldwide demand for electric vehicles, Tesla said its quarterly revenue fell for the first time since 2020 and by more than Wall St analysts had forecast. Revenue per vehicle plunged 5% from year ago. But perhaps reflecting the extent of short-selling that fed this year's 42%-plus stock drop up to Tuesday's close, shares surged once the report was released after the bell - ostensibly cheered by somewhat vague plans to introduce low-cost "new models" by early 2025 and boss Elon Musk's update. More buoyant tech stocks (.NYFANG) New Tab, opens new tab generally helped as the megacaps shape up to report their quarterlies through this week and next. The S&P500 (.SPX) New Tab, opens new tab at large clocked a second straight day of gains on Tuesday, which saw the index recover more than a third of the near-6% peak-to-trough slide this month. Facebook parent Meta Platforms (META.O) New Tab, opens new tab, one the big winners from the artificial intelligence boom of the past 18 months and whose stock is still up more than 40% this year, reports after the market close on Wednesday. In the background, the U.S. Senate voted by a wide margin late Tuesday in favor of legislation that would ban TikTok in the United States if its owner, the Chinese tech firm ByteDance, fails to divest the popular short video app over the next nine months to a year. The move ups the ante in the increasingly tense U.S.-China tech standoff. The four-year battle over TikTok, which is used by 170 million people in the United States, is just one front in a war over the internet and technology between Washington and Beijing. Last week, Apple (AAPL.O) New Tab, opens new tab said Beijing had ordered it to remove Meta Platforms' WhatsApp and Threads from its App Store in China due to Chinese national security concerns. U.S. Secretary of State Antony Blinken arrives in Shanghai on Wednesday with U.S.-China ties fragile and with a daunting array of unresolved issues between the two global rivals. As Blinken hits Beijing, President Joe Biden will sign a bill into law that provides billions of dollars of new aid to Ukraine for its war with Russia, a bipartisan victory for the president as he seeks re-election. Also lifting investor spirits yesterday was this month's flash U.S. business readings from S&P Global that showed a surprising slowdown in overall activity in April and ebbing price pressures and labor costs. Even though the miss may seem worrying, markets read the report as a potential relief to the increasingly hawkish Federal Reserve - helping Fed rate futures and Treasuries rally. Helping the $69 billion two-year note auction in the process, the report dragged two-year Treasury yields back from 5% - although they continue to hover about 4.94% early on Wednesday as another $70 billion of 5-year notes is up for grabs later in the day. The markets didn't run away with the S&P Global business survey for two reasons - they want to see any April slowdown confirmed by equivalent ISM surveys due next week and they were sideswiped by rebounding March new home sales data released shortly after. And that kept the dollar (.DXY) New Tab, opens new tab buoyed, not least against Japan's yen - where it inched ever closer to 155 yen at 34-year highs just as the Bank of Japan meets this week. The weak yen and rallying tech sector saw Japan's Nikkei (.N225) New Tab, opens new tab outperform generally buoyant world stocks on Wednesday, with gains of more than 2%. The U.S. business readings stand in contrast to the better-than-forecast purchasing managers' surveys from the euro zone and Britain. Reinforcing those numbers on Wednesday, German business morale captured by the Ifo survey improved more than expected in April. European bourses and Wall St futures were higher as earnings streamed in on both sides of the Atlantic. Shares in French luxury group Kering (PRTP.PA) New Tab, opens new tab were a standout mover, falling by almost 10% in early trade to their lowest level in over 6 years as the market digested news of a likely 40%-45% plunge in first-half operating profit. Key diary items that may provide direction to U.S. markets later on Wednesday: * US March durable goods orders * US corporate earnings: Meta Platforms, IBM, Ford, Boeing, Lam Research, General Dynamics, CME, AT&T, Hasbro, Norfolk Southern, Universal Health, Molina Healthcare, Amphenol, Chipotle, Masco, Bunge, Otis, Hilton, Fortive, Westinghouse, Interpublic, Teradyne, United Rentals, Tyler Technologies, Align Technology, Avery Dennison, TE Connectivity, Rollins, O'Reilly Automotive etc * European Central Bank board member Isabel Schnabel speaks; Bank of Canada releases minutes of latest policy meeting * US Secretary of State Antony Blinken visits China. German Chancellor Olaf Scholz meets British Prime Minister Rishi Sunak in Berlin * US Treasury sells $70 billion of 5-year notes Sign up here. https://www.reuters.com/markets/us/global-markets-view-usa-2024-04-24/

2024-04-24 09:46

LONDON, April 24 (Reuters) - The pound eased on Wednesday, surrendering some gains from its biggest one-day rally in four months the previous day, after a softer reading of monthly U.S. business activity battered the dollar. Sterling was down 0.1% at $1.2435, having risen 0.8% on Tuesday, the most in one day since mid-December. The euro was steady against the pound at 85.99 pence. The pound has come under pressure this week, having hit its lowest since November on Monday, after Bank of England officials suggested the central bank was becoming more confident that UK inflation is subsiding, which would indicate that interest rates might fall more quickly than the market currently expects. BoE Governor Andrew Bailey last week said inflation in Britain was subsiding in line with the central bank's forecasts, while Monetary Policy Committee member Dave Ramsden, who has recently voted to keep rates where they are, said the risk of price pressures remaining too high has receded. The derivatives market reflects a belief among traders that the BoE could cut rates once at its August meeting and again by the end of the year. Markets show traders believe there is about a 40% chance of a June cut, something roughly half the economists surveyed by Reuters for a poll published on Wednesday expect. "While we would argue that prospect remains plausible it is also clear that the MPC remains divided and that reaching the required majority to cut rates will be difficult over the coming months," MUFG currency strategist Derek Halpenny said. "In that sense, a June rate cut is a close call and lots will have to go favourably from an inflation perspective to get a cut by then," he added. BoE chief economist Huw Pill on Tuesday expressed caution about the prospect of early rate cuts and the date of the first one probably remains "some way off", he said in a speech. Highlighting how tricky the situation is, a survey of purchasing manufacturers on Tuesday showed business activity in Britain picked up at its fastest pace in nearly a year, although an index of input prices hit its highest since last May. Wage growth is another area of focus for the BoE. An industry survey on Wednesday showed British employers reached median basic settlements with staff in the three months to the end of March that were 4.8% higher than a year earlier, although down from February's 5% rate. Before they cut interest rates, most BoE policymakers want to see signs that annual wage growth is heading back to the 3-4% range from the most recent rate of 6%. Sign up here. https://www.reuters.com/markets/currencies/sterling-dips-investors-book-profits-scorching-rally-2024-04-24/

2024-04-24 07:51

BI unexpectedly delivers first rate hike since Oct Rupiah currency had weakened to four-year lows BI forecasts rupiah to recover to 15,800 per dollar in Q4 Says economy remains resilient JAKARTA, April 24 (Reuters) - Indonesia's central bank delivered a surprise rate hike on Wednesday, stepping up efforts to support the rupiah currency which has fallen to four-year lows on rising risk aversion and a delay in the expected timing of any U.S. policy easing. Bank Indonesia (BI) raised the 7-day reverse repurchase rate (IDCBRR=ECI) New Tab, opens new tab by 25 basis points (bps) to 6.25%, its highest since the bank made the instrument its main policy rate in 2016. Six of 35 economists polled by Reuters had predicted the hike, which was BI's first since October. The rest had expected BI to stand pat. BI also increased the overnight deposit facility (IDCBID=ECI) New Tab, opens new tab and lending facility rates (IDCBIL=ECI) New Tab, opens new tab by the same amount to 5.50% and 7.00%, respectively. "This hike in interest rates is to strengthen the stability of the rupiah exchange rate against the risk of a worsening global risks," BI Governor Perry Warjiyo told a briefing. The rupiah extended gains after the announcement and was up 0.4% against the dollar at 0850 GMT at 16,150. But it has still depreciated by around 4% so far this year in the face of persistent dollar strength. In a rare forecast for the rupiah's movement, Warjiyo said it is expected to remain stable at around 16,200 per U.S. dollar in this quarter and to strengthen to 16,000 in the next quarter and to 15,800 by the fourth quarter this year. The central bank has been intervening to defend the currency, which had fallen to around 16,200 per dollar - the weakest since 2020 - amid risk-off sentiment in markets as traders scale back expectations for U.S. rate cuts and worry about tensions in the Middle East. Warjiyo said BI's baseline prediction is for the Federal Reserve to start U.S. monetary easing with a 25-bps rate cut in December, though he noted risks of further delays to 2025. Just two months ago, BI had predicted a total of 75 bps of U.S. rate cuts in the second half of 2024. The governor also said BI expected limited escalation of conflict in the Middle East, resulting in a moderate rise in energy prices. "The BI rate hike should narrow yield differentials, strengthen Indonesia's financial account, and ultimately anchor the under-pressure rupiah," said Satria Sambijantoro, an economist with Bahana Securities who predicted another 25-bps rate hike next month. BI needs to remain hawkish to ensure market participants that it "will be on top of their game" and limit rupiah depreciation, Trimegah Securities analyst Fakhrul Fulvian said. The "forward looking" policy decision is also aimed at ensuring that inflation remains within target as BI looks to mitigate the domestic impact from rising global energy and food prices, Warjiyo said. Indonesia's annual inflation rate climbed to a seven-month high in March, though it remained close to the midpoint of BI's 1.5% to 3.5% target range. BI's assessment showed that Indonesia's economy remains resilient and the central bank kept its outlook for growth in Southeast Asia's biggest economy at a range of 4.7% to 5.5% this year, compared to last year's 5.05% expansion. Sign up here. https://www.reuters.com/markets/asia/indonesias-central-bank-delivers-surprise-rate-rise-support-rupiah-2024-04-24/

2024-04-24 07:27

TOKYO, April 24 (Reuters) - Japan's ruling party is not yet in active discussion on what yen levels would be deemed worth intervening in the market, though the currency's slide towards 160 to the dollar could prod policymakers to act, party executive, Takao Ochi, told Reuters. "There is no broad consensus right now, but if the yen slides further toward 160 or 170 to the dollar, that may be deemed excessive and could prompt policymakers to consider some action," Ochi said in an interview on Tuesday. Right now, however, there has been little active discussion on what yen levels would be deemed appropriate for such action, said Ochi, the secretary-general of the Liberal Democratic Party's (LDP) research commission on the finance and banking systems. "General thinking within the LDP appears that rather than rushing to reverse the yen's declines, we would need to evaluate the impact of the weakness carefully," he said. The currency market has recently been driven largely by the wide interest-rate differential between Japan and the United States and a weak yen has both merits and demerits for the economy, Ochi added. A broad dollar rally driven by receding market expectations of a near-term U.S. interest rate cut has pushed the yen to a 34-year low near 155 yen, heightening the chance of currency intervention by Japanese authorities. On Tuesday, Japanese Finance Minister Shunichi Suzuki gave his strongest warning yet on the chance of intervention, saying last week's meeting with his U.S. and South Korean counterparts laid the groundwork for Tokyo to act against excessive yen moves. The yen has declined about 9% versus the dollar this year. Decisions to intervene in the foreign exchange market are highly political in Japan. Tokyo last intervened in 2022 to prop up the yen when public anger over the weak currency and a subsequent rise in the cost of living put pressure on the administration to respond. Sign up here. https://www.reuters.com/markets/asia/yens-slide-toward-160-level-could-trigger-action-says-senior-ruling-party-2024-04-24/

2024-04-24 06:51

A look at the day ahead in European and global markets from Tom Westbrook Strong business activity indicators in Europe and an unexpected cooling in the U.S. have carried the euro above $1.07. Investors were encouraged by Tesla's (TSLA.O) New Tab, opens new tab promises of new models next year, which sent the electric vehicle maker's shares soaring 13% in after-hours trade, even as its results showed profit, revenue and revenue-per-vehicle fell. Tesla's shares have had a torrid 2024, having fallen 42%. An inflation surprise in Australia lifted the Aussie back to its 200-day moving average on the dollar. But the yen is unloved at 34-year lows, leaving markets on their highest alert for intervention since 2022. Then, the Japanese government sold about $20 billion in a few hours after a dovish Bank of Japan meeting, and traders see the risk of a repeat. Japan is in unfamiliar inflationary territory. The BOJ, the modern pioneer of quantitative easing, is just as alone in the journey back. It grew its balance sheet bigger than the Japanese economy and owns half the government bond market. Governor Kazuo Ueda has said he will raise rates if inflation accelerates, but markets are expecting caution and the rates outlook is pretty modest. About 20 basis points of hikes are priced this year - pretty small beer when the gap between U.S and Japanese short-term rates is more than 500 basis points. The yen traded around 154.85 on Wednesday in the Asia session. Stocks galloped ahead, encouraged by the European business data and some relief for the rates outlook as cooler U.S. numbers suggest the booming economy may be losing momentum. Japan's Nikkei (.N225) New Tab, opens new tab rose 2.3%. German business sentiment, European policymaker speeches and earnings, including Meta (META.O) New Tab, opens new tab and Boeing (BA.N) New Tab, opens new tab, are all in focus on Wednesday before Friday's U.S. core PCE reading. In China, where bond markets have been on a record-breaking rally, yields on long-dated bonds jumped after the central bank warned about risks. Key developments that could influence markets on Wednesday: Economics: German Ifo survey Earnings: Electrolux, Eni, Orange, Meta, Ford, Bunge, AT&T, Hilton, Boeing Policy: ECB's Tuominen, McCaul, Schnabel speak, Bank of Canada minutes published (This story has been corrected to show that U.S. core PCE reading will be on Friday, not Thursday, in paragraph 10) Sign up here. https://www.reuters.com/markets/europe/global-markets-view-europe-2024-04-24/

2024-04-24 06:51

Traders expect first Fed rate cut in September Dollar index U.S. PCE report due on Friday April 24 (Reuters) - Gold prices steadied on Wednesday as risk premiums over tensions in the Middle East eased, while investors strapped in for U.S. economic data due later in the week that could offer clues to the Federal Reserve's interest rate path. Spot gold was flat at $2,322.09 per ounce by 1:45 p.m. ET (1745 GMT), after having hit its lowest since April 5 in the previous session. U.S. gold futures settled 0.2% lower at $2,338.4. Spot silver dipped 0.2% to $27.23. Bullion prices have fallen over $100 after hitting a record high of $2,431.29 on April 12. The dollar index (.DXY) New Tab, opens new tab firmed 0.2%, making greenback-priced bullion less attractive to overseas buyers. "The gold and silver market is seeing correction with a de-escalation in the Middle East conflict. The key question is if these corrections will turn into near-term price downtrend that would signal market tops are in place," said Jim Wyckoff, senior analyst at Kitco Metals. "Market focus is back on economic reports and the Fed. If we see hot inflation data, then it is going to be harder for Fed to cut rates and gold could drop to below $2,200." The U.S. gross domestic product (GDP) data is due on Thursday and the Personal Consumption Expenditures (PCE) report on Friday. Traders now expect the first Fed rate cut to come, most likely in September. Higher interest rates reduce the appeal of holding non-yielding gold. In the long term, gold will rise further, with 2024 being an election year, persistent geopolitical conflict and increasing U.S. debt, said Jonathan Rose, Genesis Gold Group CEO. "Central banks have a monstrous appetite for gold right now, and that is definitely not slowing down," he added. Platinum lost 0.1% to $906.95, while palladium plunged 1.7% lower to $1,002.42. "Both (platinum and palladium) metals have been under pressure as consumers draw down on inventories. However, palladium will be harder hit amid rising electric vehicle sales due to its limited uses elsewhere," ANZ analysts wrote in a note. Sign up here. https://www.reuters.com/markets/commodities/gold-prices-rangebound-traders-focus-us-economic-data-2024-04-24/