2024-03-20 12:08
JERUSALEM, March 20 (Reuters) - Israel's central bank said its foreign exchange reserves portfolio made a return of 8.3% in 2023 after a 5.7% drop in 2022, boosted by a rebound in global financial markets. Overall last year, the level of reserves (ILFXR=ECI) , opens new tab rose $10.5 billion to $204.7 billion, helped by capital gains from equity holdings as well as capital gains and interest income from bond holdings, the Bank of Israel said. The big gain in reserves came despite the central bank selling $8.5 billion of foreign currency to defend the shekel after the Oct. 7 attacks on Israel by gunmen from Palestinian Islamist group Hamas. The Bank of Israel launched a plan in October to sell up to $30 billion of forex but after selling $8. 2 billion worth in October and another $338 million in November, it has not needed further sales in the wake of a sharp rebound in the shekel without intervention. Israel's forex reserves are 54 percent in government assets - largely foreign government bonds - 21 percent in equities, 15 percent in spread assets, and 10 percent in corporate bonds. While the return on the portfolio jumped in 2023, the return has just been 3% over the past five years and 1.7% in the past three years. In shekel terms, the portfolio grew 12.4% in 2023. Keep up with the latest medical breakthroughs and healthcare trends with the Reuters Health Rounds newsletter. Sign up here. https://www.reuters.com/markets/currencies/bank-israels-forex-portfolio-returned-83-2023-reached-205-billion-2024-03-20/
2024-03-20 11:52
BRUSSELS, March 20 (Reuters) - Airline executives called for further industry consolidation on Wednesday as the EU weighs a deal between Germany's Lufthansa (LHAG.DE) , opens new tab and Italy's ITA Airways and hits pause on a separate transaction between IAG (ICAG.L) , opens new tab and Air Europa. Europe's airline industry has been gradually consolidating for the last 20 years but remains fragmented, with small national carriers struggling to compete with bigger rivals, often needing expensive government bailouts. The European Commission should "get on with it and approve these mergers because, ultimately, it is the way forward in Europe," Ryanair (RYA.I) , opens new tab CEO Michael O'Leary said at an industry event in Brussels. He added there was a need to "tidy up" small-scale, struggling carriers in Europe, pointing to Portugal's TAP as requiring an "unsustainable" amount of taxpayer support to survive during the pandemic. Others highlighted that smaller airlines have a much greater chance of success as part of larger groups, such as Air France-KLM (AIRF.PA) , opens new tab, IAG and Lufthansa. "If we don't allow consolidation in Europe, we will destroy airlines in Europe," IAG CEO Luis Gallego told the conference. The European Commission declined to comment. LUFTHANSA NEXT STEPS The European Commission is due to say this week how it views Lufthansa's bid to acquire a 41% stake in state-owned ITA for 325 million euros ($352 million) while offering up a statement of objections to the deal. EU antitrust regulators opened an investigation into the potential deal in January, with warnings it could reduce competition in flights to and from Italy. Potential remedies could include opening up slots, traffic rights and planes to allow a rival to operate on some routes. Lufthansa CEO Carsten Spohr said he wanted to close the deal "as soon as possible", and was optimistic ahead of the expected EU statement of objections, with rivals such as easyJet and Ryanair vying to take over slots that could be given up in Italy as part of the deal. ($1 = 0.9225 euros) Make sense of the latest ESG trends affecting companies and governments with the Reuters Sustainable Switch newsletter. Sign up here. https://www.reuters.com/business/aerospace-defense/european-airline-ceos-say-industry-consolidation-vital-2024-03-20/
2024-03-20 11:24
JERUSALEM, March 20 (Reuters) - Half the workers at Israel's Eilat Port are at risk of losing their jobs after the seaport took a major financial hit due to the crisis in Red Sea shipping lanes, officials said on Wednesday. Eilat sits on a northern tip of the Red Sea and was one of the first ports to be affected as shipping firms rerouted vessels to avoid attacks by Iran-backed Houthi militants in Yemen. Port management has announced it intends to fire half of the 120 employees. The dock workers, in response, on Wednesday held a protest. Eilat, which primarily handles car imports and potash exports coming from the Dead Sea, pales in size compared to Israel's Mediterranean ports in Haifa and Ashdod, which handle nearly all the country's trade. But Eilat, which sits adjacent to Jordan's only coastal access point at Aqaba, offers Israel a gateway to the East without the need to navigate the Suez Canal. Eilat Port CEO Gideon Golber said the move was the final option after months of losses and inactivity. "I hoped the coalition countries would have solved the issue in a few months," Golber said, referring to a U.S.-led multi-national security initiative to protect the crucial shipping lane. "But they are not solving the problem." Ships, he said, are still not docking in Eilat. And unless the government intervenes to help pay salaries, the layoffs are inevitable. The remaining workforce can maintain minimum operations, he said. The Histadrut labour federation, the umbrella organisation for hundreds of thousands of public sector workers, opposed the decision. "It would have been right for the company at this time to have embraced the workers and their families, and not chose the easy way of attempting mass layoffs," said Eyal Yadin, chairman of the transportation workers union on Wednesday. "We won't be a part of this." The Houthis have also fired drones and missiles at Israel in a campaign they say aims to support Palestinians in the Gaza war, where Hamas is also backed by Iran. The alternative route to the Red Sea takes shipping around the southern tip of Africa, extending voyages to the Mediterranean by two to three weeks which will add extra costs down the line, Israeli officials say. The Reuters Daily Briefing newsletter provides all the news you need to start your day. Sign up here. https://www.reuters.com/world/middle-east/israels-eilat-port-faces-layoffs-amid-red-sea-shipping-crisis-union-says-2024-03-20/
2024-03-20 11:21
March 20 (Reuters) - Boeing (BA.N) , opens new tab said on Wednesday it would burn more cash in the first quarter than previously expected and pushed back a company cash-flow goal as it constrains 737 production to improve quality amid a worsening crisis at the U.S. planemaker. CFO Brian West said Boeing would produce fewer than the maximum 38 737 aircraft allowed each month under a Federal Aviation Administration (FAA) imposed limit. Shares of the company were down 1% before the bell. "We're deliberately going to slow to get this right," West told a Bank of America conference. "We are the ones who made the decision to constrain rates on the 737 program...And we'll feel the impact of that over the next several months." Manufacturing quality at Boeing and major supplier Spirit AeroSystems (SPR.N) , opens new tab is under scrutiny following a Jan. 5 incident in which a door plug blew off a 737 MAX 9 plane mid-flight. The two companies are now engaged in tie-up talks. West added that Boeing's cash burn in the first quarter will be somewhere between $4 billion and $4.5 billion, "higher than we originally planned back in January." That is due to a combination of lower deliveries, lower production volumes at its commercial division as well as some working capital pressure. It will also take longer for Boeing to hit a goal outlined in 2022 of achieving annual cash flow of about $10 billion by 2025 or 2026. "It's going to take us longer to get there than we planned," West said, without elaborating further. "But we believe that the actions that we're taking right now better position us for that long term." West said margins at the commercial airplanes business would be "more like negative 20%" in the first quarter, in part due to customer compensation for delivery delays. They will improve through the year but still be negative overall in 2024, he added. The CFO said that in future Boeing would only take deliveries of fully conforming fuselages from Spirit. Spirit currently assembles the fuselage for the 737 before it is shipped to a Boeing factory in Washington state to be completed. The door panel that blew off the 737 MAX 9 jet appeared to be missing four key bolts, according to a preliminary report from U.S. investigators. "For years, we prioritized the movement of the airplane through the factory over getting it done right, and that's got to change," West said. On a possible buyout of Spirit, West said Boeing would fund any deal with a mix of cash and debt, rather than using stock. Make sense of the latest ESG trends affecting companies and governments with the Reuters Sustainable Switch newsletter. Sign up here. https://www.reuters.com/business/aerospace-defense/boeing-has-decided-keep-737-production-below-38month-cfo-says-2024-03-20/
2024-03-20 11:20
March 20 (Reuters) - Sibanye Stillwater (SSWJ.J) , opens new tab on Wednesday said it has suspended production at its Siphumelele shaft in Rustenburg, which accounts for nearly 4% of its South African platinum group metal output, after an accident damaged surface infrastructure. The diversified miner said in a statement no injuries were reported from the Feb. 29 incident when an ore collector bin attached to the shaft headgear collapsed to ground, damaging a surface ore conveyor belt system. The damage to the ore collector bin and collapse of the conveyor system had resulted in the suspension of production from the shaft, Sibanye said. Investigations into the cause of the incident were underway, while its impact on annual production from the Siphumelele shaft is being assessed, it added. The shaft was forecast to produce an average of 54,000 platinum group metal ounces in 2024, approximately 3.5% of Sibanye's annual output from its South African PGM mines. (This story has been corrected to fix the shaft name to Siphumelele in paragraph 1) 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/sibanye-halts-production-rustenburg-shaft-after-damage-2024-03-20/
2024-03-20 11:18
Lagarde spells out conditions for cutting rates Lane says ECB's recalibration will last 'long time' De Cos warns of risk to growth from high rates FRANKFURT, March 20 (Reuters) - The European Central Bank tried to dampen speculation on a streak of interest rate cuts on Wednesday even as it acknowledged encouraging data about slowing price and wage rises. Many ECB policymakers have expressed support for a first reduction in borrowing costs from their current record highs, most likely in June, with the debate now focused on how many more cuts would follow. But President Christine Lagarde said the ECB could not commit to a certain number of rate cuts even after it starts reducing borrowing costs. "Our decisions will have to remain data dependent and meeting-by-meeting, responding to new information as it comes in," Lagarde said. "This implies that, even after the first rate cut, we cannot pre-commit to a particular rate path," she told a conference in Frankfurt. Echoing Lagarde, the ECB's chief economist Philip Lane said he and colleagues will be "calibrating for a long time to come" the appropriate level of rates. And fellow board member Isabel Schnabel even raised the prospect of a new era of structurally higher interest rates. "The exceptional investment needs arising from structural challenges related to the climate transition, the digital transformation and geopolitical shifts may have a persistent positive impact on the natural rate of interest," Schnabel said. Money markets are pencilling in three cuts by December with some chance of a fourth, which would lower the 4% rate the ECB pays on bank deposits to 3.25% or 3.0%. Inflation in the euro zone has fallen from a double-digit percentage increase in the autumn of 2022 to 2.6% last month. And Lagarde hinted that this fall was likely to be "more durable and less beholden to assumptions about commodity prices" than in the past due to an expected fall in underlying inflation, which strip out volatile food and energy prices. She also welcomed ECB data showing annual pay growth had slowed for 4.4% in January to 4.2% in March. STAGNATION On the flipside, the euro zone's economic growth has stagnated and Spanish central bank governor Pablo Hernandez de Cos said event there was some evidence that the ECB's rate hikes were having a bigger impact than anticipated. "We shall be closely monitoring the materialisation of such risks and calibrate accordingly the degree of monetary restriction," de Cos told the same event. But Lagarde spelled out the conditions needed for the ECB to start cutting rates: slowing wage growth, a continued fall in inflation and new internal projections confirming that price growth is returning to its 2% target. "If these data reveal a sufficient degree of alignment between the path of underlying inflation and our projections, and assuming transmission remains strong, we will be able to move into the dialling back phase of our policy cycle and make policy less restrictive," Lagarde said. The ECB will hold policy meetings on April 11, June 6, July 18, Sept 12, Oct 17 and Dec 12. Some ECB governors, including Latvia's Martins Kazaks and the Netherlands' Klaas Knot have highlighted the advantage of moving when new forecasts are published -- that is in June, September and December. By contrast, Greek central bank governor Yannis Stournaras , opens new tab said two cuts before the ECB's summer break in August seemed reasonable, followed by two more by the end of the year. Frederik Ducrozet, head of macroeconomic research at Pictet Wealth Management, said Lagarde's comments on Wednesday would form the basis for reaching consensus among policymakers. "We expect the ECB to cut rates in June, pause in July (although the doves may push harder), and resume cutting at every meeting from September," he said on Twitter. The Reuters Daily Briefing newsletter provides all the news you need to start your day. Sign up here. https://www.reuters.com/markets/rates-bonds/ecb-cannot-commit-rate-path-even-after-first-cut-lagarde-says-2024-03-20/
