2024-04-22 05:40

Corporate results and US PCE inflation the week's focus Brent, gold prices fall NEW YORK/LONDON, April 22 (Reuters) - Investors scaled back safe-haven bets on Monday as worries over a wider Middle East conflict eased, boosting world equities and pressuring gold, oil and bond prices. MSCI's gauge of stocks across the globe (.MIWD00000PUS) New Tab, opens new tab rose 6.01 points, or 0.81%, to 749.29. In a reversal of Friday's "risk off" mood, spot gold lost 2.59% to $2,328.65 an ounce, poised for its biggest one-day drop since June 2022. On Wall Street, the Dow Jones Industrial Average (.DJI) New Tab, opens new tab rose 253.58 points, or 0.67%, to 38,239.98, the S&P 500 (.SPX) New Tab, opens new tab gained 43.37 points, or 0.87%, to 5,010.60 and the Nasdaq Composite (.IXIC) New Tab, opens new tab gained 169.30 points, or 1.11%, to 15,451.31. Investors have taken cautious positions on Fridays in recent weeks, fearing an escalation in the conflict in the Middle East over the weekend when markets are closed and they are unable to trade. "It seems neither Israel nor Iran want an escalation in the crisis in the Middle East," said Kazuo Kamitani, a strategist at Nomura Securities. "With a subsequent strike from either side not looking like it's coming, investor concerns have eased somewhat." But expectations of Federal Reserve interest rate cuts and concerns about chip sector earnings will continue to keep investors on their toes, he said. More than 150 companies in the S&P 500 and 173 companies in the STOXX 600 are slated to report first-quarter results this week, according to data from LSEG Workspace. These include several big European banks, as well as U.S. tech giants Microsoft and Alphabet, with the latter in particular focus after chip maker Nvidia's 10% drop on Friday, its biggest percentage fall in four years. The STOXX 600 (.STOXX) New Tab, opens new tab index rose 0.6%. MSCI's broadest index of Asia-Pacific shares outside Japan rose 1.08%. Traders were expecting the first Fed rate cut as most likely coming in September following Consumer Price Index data earlier this month, though July was also seen as possible. "The big picture in equities is that they have been able to digest this push back in rate expectations," said Karim Chedid, Blackrock's chief investment strategist for iShares EMEA. "Now earnings have to deliver for them to continue to do well." London's commodities-heavy FTSE-100 (.FTSE) New Tab, opens new tab rose 1.62%, nearing an all-time high as tin and nickel rose to multi-month peaks. It was outpaced by a more than 3% gain for the Portuguese index (.PSI20) New Tab, opens new tab as oil company Galp Energia (GALP.LS) New Tab, opens new tab rose about 20% after saying a field off Namibia could contain 10 billion barrels of oil. Iran said on Friday that it had no plan to retaliate following an apparent Israeli drone attack within its borders, which in turn followed an Iranian missile and drone attack on Israel days before. HAVEN OUTFLOWS Bond yields, which climb when prices fall, were generally heading back toward multi-month highs. The yield on benchmark U.S. 10-year notes fell 0.2 basis points to 4.613%, from 4.615% late on Friday. The 30-year bond yield rose 0.6 basis points to 4.7168% from 4.711% late on Friday. The two-year note yield, which typically moves in step with interest rate expectations, rose 0.2 basis points to 4.9713%, from 4.969% late on Friday. In Europe, the benchmark Bund yield retreated from a five-month high as investors shifted their focus to European Central Bank policy. The dollar index , which measures the currency against six major peers, gained 0.03% at 106.13, as the euro reversed earlier gains to ease 0.01% at $1.0653. "As long as there is this uncertainty about the cutting cycle particularly in the U.S, it's interesting for investors to be in dollar longs because of its dual status as a high-yielding currency and also a defensive currency," said Yvan Berthoux, FX strategist at UBS. Crude oil fell as traders put the focus back on fundamentals with a rise in U.S. stockpiles as the backdrop. Brent crude futures settled at $87.00 a barrel, down 29 cents, or 0.33%. U.S. West Texas Intermediate crude finished down 29 cents, or 0.35%, at $82.85 a barrel. U.S. gold futures settled 2.8% lower at $2,346.4. 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/global-markets-wrapup-1-2024-04-22/

2024-04-22 05:24

Gold posts biggest daily decline in over a year Silver logs biggest one-day decline since February 2021 Wall Street opens higher after Friday sell-off April 22 (Reuters) - Gold prices dropped more than 2% to a one-week low on Monday as worries over a wider Middle East conflict subsided, prompting investors to scale back safe-haven trades in favour of riskier assets like equities. Spot gold was down 2.5% at $2,330.51 per ounce as of 1:52 p.m. ET (1752 GMT), and marked its biggest intra-day fall in more than a year. U.S. gold futures settled 2.8% lower at $2,346.4. "Some risk of an imminent retaliation in the Middle East has been removed, which has attracted some selling activity in gold. But the question is how much scope there is to the downside," said Daniel Ghali, a commodity strategist at TD Securities. Tehran downplayed Israel's retaliatory drone strike against Iran, in what appeared to be a move aimed at averting regional escalation. Gold also came under pressure as Wall Street's main indexes opened higher, cutting demand for the safe-haven and non-interest paying asset. Geopolitical tensions coupled with robust central bank buying had driven gold to a record high of $2,431.29 on April 12. Investors are now waiting for the release on Friday of the U.S. personal consumption expenditures (PCE) report for cues on the prospect of U.S. interest rate cuts. Chicago Federal Reserve President Austan Goolsbee on Friday said progress on bringing down inflation has "stalled" this year, becoming the latest official to drop an earlier focus on the coming need for rate cuts. "Gold could revisit all-time highs in case of a surprise PCE report that shows inflation cooling... We still expect buying activity out of Asia to remain resilient as gold is seen as a currency-appreciated hedge in Asia," Ghali added. Spot silver slipped 5% to $27.22 an ounce, in its biggest daily decline in over three years. Platinum eased 0.9% to $923.55 and palladium shedded 1.3% to $1,013.25. "Any improvement in ICE (internal combustion engines) vehicle sales relative to the BEV (battery electric vehicle)market share could help to support the palladium price," Heraeus Metals wrote in a note. 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/gold-retreats-middle-east-tensions-ebb-2024-04-22/

2024-04-22 05:21

29 of 35 economists predicted no change to interest rates on April 24; six see 25 bps hike BENGALURU, April 22 (Reuters) - Bank Indonesia will cut its key interest rate next quarter and again in the fourth quarter, later than previously expected, as inflation rises and the rupiah weakens on renewed hawkishness from the U.S. Federal Reserve, a Reuters poll found. A major hurdle for the central bank, whose main mandate is currency stability, will be cutting rates too soon as the rupiah hit a four-year low on Wednesday after comments from U.S. Federal Reserve officials boosted the dollar. Inflation touched a seven-month high last month and moved closer to the upper limit of Bank Indonesia's (BI) 1.5%-3.5% inflation target range, suggesting policy rates would need to remain higher for longer. Over 80%, or 29 of 35, of the economists in the April 16-22 poll expected the central bank to hold its benchmark seven-day reverse repurchase rate (IDCBRR=ECI) New Tab, opens new tab at 6.00% at its April 23-24 meeting. Six expected a quarter-point hike. "We recently pushed back our first rate cut forecast ... given the movement of the rupiah on the back of fewer rate cuts expectation from the Fed by the market," said Makoto Tsuchiya, an economist at Oxford Economics. "If the central bank were to deter further currency weakness, a 25 bps (basis points) hike is unlikely to do much ... BI will defend its currency by forex market intervention if necessary." Median forecasts showed the first quarter-point cut coming next quarter, compared to expectations for a cut in the second quarter in a poll in March, followed by another reduction to 5.50% by the end of December, versus 5.25% seen previously. That was in line with expectations around the Fed as a recent poll showed the first U.S. rate cut has likely been pushed to September. Among those who provided interest rate forecasts for the third quarter with nearly two-thirds, 21 of 32 economists expect them to be 5.75% or lower. But seven saw rates at 6.00% and four at 6.25%. "We think the likelihood of a rate hike has risen ... BI is more likely to stay patient and proceed with care, not chasing the initial Fed cut," said Brian Tan, an economist at Barclays. Only Barclays expected interest rates to be at 6.25% by the end of the year. There was a clear hawkish shift among economists as over half of the contributors, 15 of 26, raised their fourth quarter forecasts from a March poll. While 10 kept them unchanged, one lowered their rate expectation. "For Indonesia, the prime driver of monetary policy action is Fed action, not necessarily inflation unless it goes way beyond target," said Kunal Kundu, an economist at Societe Generale. "Headline inflation remaining above its (BI's) median target of 2.5% suggests that the trajectory of ... rate-easing cycle could be shallow." While inflation was expected to average 2.9% this year and 3.0% in 2025, economic growth was seen steady at 5.0% in 2024 from 5.05% in 2023 and is forecast to be 5.1% next year. (For other stories from the Reuters global economic poll:) Get a look at the day ahead in Asian and global markets with the Morning Bid Asia newsletter. Sign up here. https://www.reuters.com/markets/asia/bank-indonesias-first-rate-cut-pushed-q3-smaller-cuts-this-year-rupiah-falls-2024-04-22/

2024-04-22 04:58

Markets on lookout for Japan intervention on dollar/yen Investors looking to BOJ meeting on Friday Easing Mideast tensions temper dollar's gains Focus on U.S. GDP, inflation numbers NEW YORK, April 22 (Reuters) - The U.S. dollar climbed to a fresh 34-year peak against the yen in quiet trading on Monday, with investors taking their cue from the Federal Reserve's higher-for-longer interest rate stance, even as they remained alert to any signs of intervention by Japan to prop up its struggling currency. The dollar rose to 154.85 yen versus the Japanese currency, its highest since mid-1990. It was last up 0.1% at 154.82 yen, a whisker away from the 155-level that is next on traders' radars for possible intervention. The yen hit fresh lows ahead of the Bank of Japan's (BOJ) policy meeting on Friday. Market players took note of the fact that Japan has refrained from intervening in the currency market despite the yen hitting several 34-year lows this year. "I think the MOF (Ministry of Finance) has acknowledged that currency fundamentals have been moving in the wrong direction, i.e. dollar/yen has been going higher because U.S. yields have been going...higher," said Calvin Tse, managing director and head of Americas macro strategy at BNP Paribas in New York. "I think they've been very wary to stand in the way of that. However, if we see an environment where, let's say U.S. yields start to weaken ... then that provides them, at least in their (MOF) minds, with a window of opportunity to act. So long story short, I don't think they will be intervening if the ... driver of dollar/yen is higher U.S. yields," he added. In late afternoon trading, the dollar index, a gauge of the greenback's value against six major currencies, was flat to slightly higher at 106.13 . It was off five-month highs hit last week after comments from Federal Reserve officials and a run of hotter-than-expected inflation data forced a paring back of U.S. rate-cut expectations. Cooling Middle East tensions, which had driven the dollar, gold and oil sharply higher on Friday and battered stock markets, also helped temper volatility. Tehran downplayed Israel's retaliatory drone strike, in what appeared to be a move aimed at averting regional escalation. Last week, Deutsche Bank's index of currency volatility (.DBCVIX) New Tab, opens new tab hit 7.18, the highest level since February. On a weekly basis, the volatility index rose 9.7%, its biggest gain since June 2023. WEAKER EURO Besides the BOJ meeting, the market is looking at U.S. first-quarter gross domestic product data on Thursday and the inflation metric the Fed targets, the personal consumption price expenditures (PCE) index, due out on Friday. Markets are expecting a 0.3% increase in the headline PCE number in March, unchanged from the previous month, and a year-on-year gain of 2.6%, compared with 2.5% in February, according to a Reuters poll. "A hot number puts the Fed in a tricky spot since it starts to run out of runway ahead of the November election," wrote TD Securities in a research note led by Mark McCormick, global head of FX and EM strategy. In addition, TD added that a combination of higher inflation and risk-off sentiment increases the chances of former U.S. President Donald Trump's victory. "That outcome could see the market price in Fed hikes next year, reflecting a mix of corporate tax cuts and tariffs - both inflationary," the TD report said. The issue of the strong dollar also prevailed at last week's International Monetary Fund and World Bank spring meetings in Washington, and the U.S., Japan and South Korea released a rare joint statement on the issue. A rethink on Fed policy easing has led to a general repricing of global rate-cut timelines, but expectations for the European Central Bank (ECB) and the Bank of England (BoE) to start cutting by the middle of this year are still intact. The euro , which is heading for its biggest monthly drop against the dollar since January, was little changed at $1.0651, while sterling slipped 0.1% to $1.2352. In cryptocurrencies, bitcoin was last up 3.6% at $66,384. The world's largest cryptocurrency completed its "halving" at the weekend, a phenomenon that happens roughly every four years and aims to reduce the rate at which bitcoins are created. 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/currencies-calm-cautious-after-weary-week-2024-04-22/

2024-04-22 04:51

A look at the day ahead in European and global markets from Kevin Buckland The relief rally spreading through Asian markets is set to sweep into Europe at the open, with the FTSE in particular set for a 1% pop. Neither Iran nor Israel looks interested in any further escalation in the unprecedented hostilities of last week, and investors appear eager to get back into risk, paring back holdings of safe haven assets such as bonds, gold and the dollar. That's not to say all has gone quiet. A U.S. base in Syria was the target of a rocket attack on Sunday, ostensibly from Iraq-based Hezbollah fighters. And beyond the Middle East, the other weights on world stocks - which dragged them to their worst week in more than a year - still linger, namely later Fed rate cuts and caution over chip sector earnings. Evidence of the latter was on display in Japan, with the tech-heavy Nikkei's 0.7% rise lagging a 1.3% jump for the broader Topix. In a relatively light week for macro data and events, the headliner is the Bank of Japan's policy meeting on Friday, when new inflation forecasts are due, even if economists consider it too soon for another rate hike. For the United States, the main focus is Friday's PCE deflator, the Fed's preferred consumer price gauge. No Fedspeak will be forthcoming, as we enter the blackout period before next week's policy decision. But the message of late from every Fed official has been the same: no rush to cut. There has been no end of ECB rhetoric in recent days, coalescing around a June cut. French central bank chief Francois Villeroy de Galhau said on Sunday that "barring surprises, there is no need to wait much longer" for policy easing, even amid risks from the Middle East. Following June though, reductions should be at a "pragmatic pace." The comments show the split emerging inside the ECB about the pace of easing. Pierre Wunsch and Madis Muller came out separately on Friday backing multiple cuts this year. ECB President Christine Lagarde has a chance to weigh in later today when she gives a lecture at Yale. Key developments that could influence markets on Monday: - ECB President Christine Lagarde's lecture at Yale - Euro zone flash consumer confidence (April) - SAP earnings 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/global-markets-view-europe-2024-04-22/

2024-04-22 04:37

MUMBAI, April 22 (Reuters) - The Indian rupee logged modest gains in early trading on Monday on dollar sales from foreign banks but traders expect the upside to be capped as U.S. bond yields continue to hover at elevated levels. The rupee was at 83.4325 against the U.S. dollar as of 10:00 a.m. IST, up slightly from its close at 83.47 in the previous session. The currency slipped to a record low of 83.5750 on Friday but recovered on the back of heavy intervention from the Reserve Bank of India (RBI), traders said. "Large offers" to sell dollars from foreign banks, likely on behalf of custodial clients, helped the rupee on Monday, a foreign exchange trader at a state-run bank said. Most Asian currencies were muted, somewhat comforted by ebbing fears of a wider conflict in the Middle East. The dollar index held above 106 while the 10-year U.S. Treasury yield rose 5 basis points (bps) to 4.66%. Fears of a escalation in the conflict between Iran and Israel faded after the former said on Friday that it had no plan to retaliate following an apparent Israeli drone attack within its borders. Brent crude oil futures were last quoted down about 0.7% at $86.62 per barrel. The rupee is likely to be in a "consolidation phase" on Monday, Dilip Parmar, a foreign exchange research analyst at HDFC Securities said. The near-term resistance for the rupee is pegged at 83.20, Parmar added. Meanwhile, dollar-rupee forward premiums eased, with the 1-year implied yield down 2 basis points at 1.66%, pressured by a rise in near-maturity U.S. bond yields. The focus this week will be on personal consumption expenditure inflation, due on Friday, for further cues on when the Federal Reserve may begin to cut policy rates. 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/rupee-ticks-up-foreign-banks-dollar-sales-forward-premiums-slip-2024-04-22/