2024-04-22 10:07
A look at the day ahead in U.S. and global markets from Mike Dolan The so-called 'Magnificent 7' of U.S. megacap tech stocks has retreated sharply as first-quarter earnings updates kick off this week, with AI-chip star Nvidia (NVDA.O) New Tab, opens new tab swooning 10% on Friday after a nervy week for the sector. World markets stabilised more broadly on Monday as another tense weekend in the Middle East passed without another direct exchange of missiles between the Israel and Iran - even though a cooling of situation had been well flagged already on Friday. Still, the post-weekend unwind of 'safety trades' has seen U.S. crude prices fall back to their lowest level this month and gold prices retreated 1%. But with four of the Magnificent 7 due to report corporate updates this week - Tesla (TSLA.O) New Tab, opens new tab, Meta (META.O) New Tab, opens new tab, Microsoft (MSFT.O) New Tab, opens new tab and Alphabet (GOOGL.O) New Tab, opens new tab - the alarming recoil in tech behemoths is now top of mind. The 10% drop of artificial intelligence bellwether Nvidia on Friday is perhaps the most eye-catching move of a pretty dour week for sector. Even though shares in the chip giant are still up more than 50% for the year to date, they have now dropped 22% from last month's peaks to their lowest since February. It's not clear what triggered the rout, although some analysts pointed to a 23% drop in a smaller related stock Super Micro Computer (SMCI.O) New Tab, opens new tab over a lack of guidance on its upcoming earnings report as a factor. But it had been a lousy week for tech and chip stocks before that. Although Nasdaq futures are back up about 0.5% ahead of Monday's bell, the index recorded its worst week last week since 2022 with a drop of more than 5%. A sharp recoil in Taiwan's TSMC after its earnings update earlier in the week started the ball rolling and then a near 10% dive in Netflix (NFLX.O) New Tab, opens new tab on Friday was another blow after the video streaming company's second-quarter revenue view fell short of analysts' expectations. The once-dominant NYFANG index (.NYFANG) New Tab, opens new tab lost a whopping 8.3% last week. UBS analysts on Monday downgraded what they dub the 'Big 6 Tech+' stocks - basically the Magnificent 7 minus Tesla - to neutral from overweight. And elsewhere in the Magnificent 7, 2024 losses in Apple are now running at more than 14% - while Tesla's bruising slide of more than 40% this year shows no sign of abating. Tesla's woes are legion - from a sharp fade in electric vehicle demand worldwide to a full-blown price war with Chinese competitors, corporate governance issues with boss Elon Musk's payout and numerous product glitches to boot. But the 'higher-for-longer' view of Federal Reserve interest rates clearly doesn't help stretched valuations in the sector - where the earnings season so far shows there's an extremely high bar to wow the market gallery at this stage. Elsewhere in the macro world, U.S. Treasuries and the dollar continue to chomp at the bit on the unfolding stubborn Fed view, strong incoming economic numbers and the contrasting picture in Europe that means interest rates there look set to fall first. Two-year U.S. Treasury yields probed above 5% again on Monday, with an auction of two-year paper due Tuesday. The dollar continue to push higher to within a fraction of last week's highs against Japan's yen just under 155 per dollar, with the Bank of Japan meeting later this week. But with the European Central Bank crystal clear about plans to cut its key policy rates as soon as June, the dollar remains pumped up against the euro too. According to the latest CFTC data, speculative long positions in dollar built further in the week ending April 16, hitting $28.51 billion - the biggest position since June 2019. The big mover on Monday was sterling , which skidded to 5-month lows after a surprisingly dovish speech on Friday from Bank of England deputy governor David Ramsden flagged how the BoE expected inflation to fall to 2% this quarter and stay there for the next couple of years. With U.S. stock futures higher, most other world bourses were firmer, too. Hong Kong stocks (.HSI) New Tab, opens new tab climbed more than 1.5% even as mainland shares slipped (.SSEC) New Tab, opens new tab, as investors found comfort in the China securities regulator's decision on Friday to promote the city's status as a global financial centre. China will facilitate Hong Kong listings by leading Chinese companies and expand the Stock Connect cross-border investment scheme, the China Securities Regulatory Commission said. China left benchmark lending rates unchanged at a monthly fixing on Monday, in line with market expectations. European bank earnings will be in the stock market spotlight there this week as BNP Paribas (BNPP.PA) New Tab, opens new tab, Deutsche Bank (DBKGn.DE) New Tab, opens new tab, Barclays (BARC.L) New Tab, opens new tab and Lloyds (LLOY.L) New Tab, opens new tab all report. Among the top stock movers on Monday, Galp Energia (GALP.LS) New Tab, opens new tab surged 17% after the Portuguese firm said that the Mopane field off Namibia could have at least 10 billion barrels of oil. Key diary items that may provide direction to U.S. markets later on Monday: * US corporate earnings: Verizon, Ameriprise Financial, Truist Financial, Globe Life, Nucor, Cadence Design, Alexandria Real Estate, Brown & Brown, Packaging Corp of America * Chicago Federal Reserve March business survey; Euro zone April consumer confidence survey * US Treasury sells 3-, 6-month bills Get a look at the day ahead in U.S. and global markets with the Morning Bid U.S. newsletter. Sign up here. https://www.reuters.com/markets/us/global-markets-view-usa-2024-04-22/
2024-04-22 08:16
LONDON, April 22 (Reuters) - The pound held steady against the dollar and nudged up against the euro on Monday, after hitting its weakest since November last week. Investors have cut back their bets in either direction on the pound and hold a fairly neutral stance, based on weekly data from the U.S. markets regulator. Sterling was flat at $1.2367 at 0757 GMT, having touched its lowest in five months last week. The performance of the pound is often more obvious against the euro, as it keeps the dollar out of the equation. Sterling has lost around 3% in value against the dollar in 2024, mostly due to traders drastically reassessing how much U.S. interest rates might fall by this year. Investors are pricing in roughly two quarter-point cuts from the Bank of England this year, compared with fewer than two from the Federal Reserve and with nearly three from the European Central Bank. Against the euro, the pound is still up 0.45%, but its advantage over the single European currency has eroded sharply in the last week or so. The euro was up 0.1% against the pound at 86.21 pence. "We feel the rebound in EUR/GBP might have happened a bit too early, and still see risks below 0.8600 in the short term as markets hold greater dovish conviction on the ECB than the BoE," ING strategist Francesco Pesole said. "Ultimately, beyond the short run, the upside potential for EUR/GBP should still be unlocked by the BoE cutting more aggressively than the market currently prices in, in our view," he added. The next risk event for sterling is the release of preliminary business activity surveys for April on Tuesday. The UK is currently top of the leaderboard of major economies in terms of purchasing managers' surveys. With a reading of 53, above the 50 line that separates growth from contraction, the UK has outperformed even the United States every month so far this year. Coming soon: Get the latest news and expert analysis about the state of the global economy with Reuters Econ World. Sign up here. https://www.reuters.com/markets/currencies/sterling-gains-some-traction-after-drop-below-124-2024-04-22/
2024-04-22 06:47
SINGAPORE, April 22 (Reuters) - Australia's BHP Group (BHP.AX) New Tab, opens new tab is planning to receive its first ammonia-fuelled bulk carrier in 2026 as part of the company's plans to cut shipping emissions, a senior executive said. The global mining giant has shortlisted eight companies for the building, operation and fuel supply for at least one such vessel, Rashpal Singh Bhatti, vice president of maritime and supply chain excellence at BHP told Reuters late last week. However, it has not yet decided on the total number of vessels that it will order and is also assessing costs, technical and safety submissions, Bhatti said. Ammonia is among several alternative fuels that shippers are considering to reduce carbon emissions, as it does not emit carbon when burned. However, adoption of ammonia could take time as the industry is also working on safety and infrastructure standards for handling of the toxic fuel. The world's first ammonia-fuelled ship engines are expected for delivery between late-2024 and early-2025, based on statements by top engine makers MAN Energy and Wartsila. The proposed ships are likely to refuel ammonia at ports in Australia, Japan and China, Bhatti added. "Australia is going to be a very strong hydrogen player or a very strong ammonia player. Yara is investing or has invested very heavily in Australia," he said, referring to the Norwegian chemical maker. "Mitsui, Sumitomo, JERA have invested very heavily in Japan... there is no doubt that China is (also) investing in ammonia... and when they invest, the scale is going to be massive," he added. BHP also plans to use bio-blended fuels for bunkering regularly to meet Europe's shipping emissions requirements, after conducting more than 30 trials, Bhatti said. The European Union has extended its emissions trading system to cover shipping to and from Europe. Shippers can adopt bio-blended fuels to meet the EU's emissions requirements, though these fuels are at a price premium to conventional marine fuel. "These costs are absolutely shared and passed on to our customers because our customer base is very keen," Bhatti said. BHP is also using liquefied natural gas to fuel five of its ships. Get weekly news and analysis on the U.S. elections and how it matters to the world with the newsletter On the Campaign Trail. Sign up here. https://www.reuters.com/sustainability/bhp-says-it-aims-receive-first-ammonia-fuelled-bulk-carrier-2026-2024-04-22/
2024-04-22 06:46
ZURICH, April 22 (Reuters) - The Swiss National Bank (SNB) is raising the minimum reserve requirement for domestic banks, it said on Monday, potentially saving it hundreds of millions of Swiss francs in interest payments each year. The SNB said in a statement that it is also raising the minimum reserve ratio from 2.5% to 4% and that because deposits held by banks to meet minimum reserve requirements are not remunerated, interest costs for the SNB would be lowered. The SNB would save about 600 million Swiss francs ($659.05 million) a year as a result of the adjustments, a person familiar with the matter said. Shares in Switzerland's biggest bank UBS (UBSG.S) New Tab, opens new tab fell more than 1.5% in morning trade, underperforming European peers. Zuercher Kantonalbank analyst Ausano Cajrati Crivelli said the change was significant and would be felt. "Because banks will have higher minimum reserves on which interest is not earned," he said, adding that the change would need further analysis to assess the exact impact on lenders' profitability, he added. The Swiss government this month set out proposals aimed at making the banking sector more robust and in particular to prevent UBS from suffering the kind of collapse that hit its long-term rival Credit Suisse. UBS bought Credit Suisse after its implosion, stirring fears that the enlarged bank had the potential to upend the economy. In a statement, the central bank said it would amend the National Bank Ordinance as of July 1 to raise the minimum reserve requirements, and noted that the changes would not affect its current monetary policy stance. Liabilities arising from cancellable customer deposits, excluding tied pension provision, would in future be fully included in calculations of the minimum reserve need, it said. That revokes the previous exception whereby only 20% of such liabilities counted towards the calculation, the bank added. ($1 = 0.9104 Swiss francs) Get a look at the day ahead in European and global markets with the Morning Bid Europe newsletter. Sign up here. https://www.reuters.com/markets/europe/snb-raises-minimum-reserve-requirement-domestic-banks-2024-04-22/
2024-04-22 06:46
This content was produced in Russia where the law restricts coverage of Russian military operations in Ukraine MOSCOW, April 22 (Reuters) - Metals giant Nornickel (GMKN.MM) New Tab, opens new tab will close its copper plant that seeks to cut sulphur dioxide emissions in the Russian Arctic and build a new one in China, CEO Vladimir Potanin said, after Western technology partners refused to supply parts. Nornickel, the world's largest palladium producer and a major producer of high-grade nickel, launched a multibillion-dollar project in October aimed at reducing sulphur dioxide emissions by 45% in Norilsk, Russia's most polluted city, through a complex capture programme. Nornickel, though not directly targeted with Western sanctions over Moscow's actions in Ukraine, has changed the timing, cost and configuration of the programme several times, highlighting issues over foreign vendors' refusal to supply to Russia. "The negative impact of sanctions against Russia's non-ferrous metals contributed to this decision," Potanin said in an interview with the Interfax news agency, published on Monday. "We, like other producers of Russian raw materials ... have faced customer refusals and the need to provide discounts." This month, Washington and London prohibited metal-trading exchanges from accepting new aluminium, copper and nickel produced by Russia and barred the import of the metals into the United States and Britain to try to disrupt Russian export revenue. "This pressure forced us to think about how to get our goods to the distribution market in the right way," Potanin said. "And one of these non-standard solutions is to transfer part of production to markets of direct consumption." Potanin said Nornickel would create a joint venture in China to build the new plant, which should be constructed by mid-2027. The transfer will mean the plant can be built using affordable technology, resolve possible sanctions issues, ensure proximity to markets and allow Nornickel to enter the battery production business, Potanin said. China has become a major destination for Russian companies seeking to export their commodities after the United States imposed sanctions on Russia after it sent its army into Ukraine in February 2022. Potanin said a joint project with German chemicals group BASF (BASFn.DE) New Tab, opens new tab in Finland had been put on hold. Get a look at the day ahead in U.S. and global markets with the Morning Bid U.S. newsletter. Sign up here. https://www.reuters.com/markets/commodities/russias-nornickel-move-copper-plant-china-ceo-tells-interfax-2024-04-22/
2024-04-22 06:43
LUXEMBOURG, April 22 (Reuters) - The European Union's next package of sanctions should include steps against a shadow fleet of tankers moving Russian oil to circumvent sanctions, Swedish Foreign Minister Tobias Billstrom said ahead of a meeting of EU foreign ministers in Luxembourg. "Adopting the 14th sanctions package is one of the most important things," Billstrom said as he arrived at the meeting. "We will see to it that we both include an import ban on liquefied natural gas as well as measures to curb the Russian shadow fleet." Discussions on the sanctions package are in an early stage and it is not set to be adopted at the Luxembourg meeting. Coming soon: Get the latest news and expert analysis about the state of the global economy with Reuters Econ World. Sign up here. https://www.reuters.com/world/europe/next-russia-sanctions-must-target-shadow-oil-fleet-sweden-says-2024-04-22/
