2024-03-20 05:57

Dollar falls as Fed projects three rate cuts in 2024 Stocks extend gains after Fed's announcement Yen hovers near 4-month low a day after BOJ ends negative rates Benchmark bond yields dip from recent peaks Oil weakens, gold sags from record high NEW YORK/LONDON, March 20 (Reuters) - World stocks jumped on Wednesday and the dollar snapped a winning streak, after the Federal Reserve indicated that it still expects to cut U.S. interest rates three times this year despite projecting slightly slower progress on inflation. Fed Chair Jerome Powell said recent high inflation readings had not changed the underlying story of slowly easing price pressures, but added that recent data also had not bolstered the central bank's confidence the inflation battle had been won. Equity investors nonetheless cheered the Fed did not dial back the number of rate cuts that it projects. MSCI's gauge of stocks across the globe (.MIWD00000PUS) , opens new tab climbed 0.61% to hit a record high, as stocks on Wall Street extended gains following the Fed's announcement. The Dow Jones Industrial Average (.DJI) , opens new tab jumped 1.03%, the S&P 500 (.SPX) , opens new tab added 0.89%, and the Nasdaq Composite (.IXIC) , opens new tab leapt 1.25%. "The market is relieved that the Fed is still projecting three rate cuts this year," said Irene Tunkel, chief U.S. equity strategist at BCA Research in Florida. "Recent too-hot inflation readings have not derailed the Fed’s plan so far. This is a 'no-harm-done' outcome." The prospect of rate reductions weighed on Treasury yields. The 2-year note slid 7.9 basis points to yield 4.6129%. Benchmark 10-year notes were down 1.5 basis points at 4.281%. "The most interesting thing, though, is that they significantly increased their GDP projections for not only 2024, which they sort of had to do given how the data has been coming in, but also for 2025 and 2026," said Ellen Hazen, chief market strategist at F.L.Putnam Investment Management in Massachusetts. It "says to me that they are increasingly believing that they do not need to see a recession in order to achieve the soft landing," she added. The dollar reversed into losses after the Fed's meeting. The dollar index fell 0.433%, and a softer dollar helped the Japanese yen claw back some losses. It was down 0.30% versus the greenback at 151.29 per dollar, off a four-month low of 151.82 hit earlier on Wednesday. The yen has been struggling since the Bank of Japan raised rates for the first time in 17 years this week, a move that traders believe will keep the yield differential between Treasuries and Japanese government bonds wide enough to sustain selling pressure on the yen. FED AHEAD The pan-European STOXX 600 index (.STOXX) , opens new tab was unchanged for the day, although shares of Kering (PRTP.PA) , opens new tab, the maker of luxury Gucci goods, tumbled after a hefty profit warning. Tokyo's Nikkei (.N225) , opens new tab was closed for a holiday in Japan on Wednesday, while MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) , opens new tab finished flat although Seoul jumped 1.3% (.KS11) , opens new tab, driven by a 5.6% surge in Samsung's share price (005930.KS) , opens new tab after Nvidia (NVDA.O) , opens new tab said it was qualifying the South Korean chipmaker's high bandwidth memory (HBM) chips. Chinese shares closed fractionally higher after the central bank there left benchmark lending rates unchanged, as widely expected. The Shanghai Composite (.SSEC) , opens new tab gained 0.5%, while Hong Kong's Hang Seng index (.HSI) , opens new tab crept up 0.2%. Top European Central Bank rate setters have endorsed June as the likely month to start its cuts, and some would like as many as four this year. "Our decisions will have to remain data-dependent and meeting-by-meeting," ECB President Christine Lagarde told a conference in Frankfurt on Wednesday. "This implies that, even after the first rate cut, we cannot pre-commit to a particular rate path." The euro gained on the dollar by the end of the day, up 0.51% at $1.092. Oil prices retreated from multi-month highs, however, due to recent gains in the dollar. Brent fell 1.95% to $81.68 per barrel, and gold prices 2,185.69 an ounce, some distance away from this month's record high of $2,194.99. 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-1-2024-03-20/

2024-03-20 05:33

A look at the day ahead in European and global markets from Vidya Ranganathan A holiday in Japan is giving markets time to digest the BOJ's momentous monetary policy decision and to focus on the equally consequential Fed policy decision due Wednesday. Before that, there's German inflation data and the more intensely debated UK inflation numbers that markets reckon the Bank of England has been misreading. The BoE meets on Thursday and is expected to hold rates. A first easing in June is put at 50-50, with 25 bps fully priced in for August and 60 bps for all of 2024. . Already a top performer among major currencies this year, sterling made more headway against the yen overnight, as did the euro rising to 16-year highs against the yen. For, while the BOJ has abandoned negative rates, the yen remains undeniably the cheapest funding currency on the block, and the Fed's certain to drive that message home further. The U.S. central bank is considered certain to keep rates at 5.25-5.5% on Wednesday and all eyes will be on the FOMC dot plots for rates and inflation. Analysts assume policy makers will look through the recent run of unhelpfully high inflation readings as a seasonal and statistical aberration, but there has to be a risk the median dot plot shifts to two 25 bps rate cuts this year rather than the former three cuts. Futures now imply markets have pushed back the timing for the first Fed cut to June, and maybe even July. A slew of European Central Bank officials including Christine Lagarde speak later in the day. Some officials have endorsed June as the likely month to start discussing ECB rate cuts. Luxury stocks in Europe will be in focus after Kering (PRTP.PA) , opens new tab warned on Tuesday that its first-quarter sales are likely to drop by around 10%, weighed by star label Gucci, knocking back hopes that it had stemmed sales declines. Key developments that could influence markets on Wednesday: Data: UK inflation, German inflation, Euro zone consumer confidence, FOMC. Speakers: ECB policymaker Pablo Hernandez de Cos; ECB President Christine Lagarde, chief economist Philip Lane Lagarde and board member Isabel Schnabel at a conference in Frankfurt. Debt auctions: Germany-Reopening of 28-year debt. 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-2024-03-20/

2024-03-20 05:03

KUALA LUMPUR, March 20 (Reuters) - Malaysia's central bank on Wednesday called for an acceleration of structural reforms to ensure long-term sustainable economic strength and support for the ringgit currency. Favourable economic conditions expected in 2024, including moderate inflation and a projected pick-up in trade activity, provided space for the government to carry out much-needed changes such as subsidy rationalisation, Bank Negara Malaysia said in documents released along with its annual report. Malaysia's government plans to shift away from blanket subsidies to a targeted system that mainly aids low-income groups but has not finalised when it will introduce the measures, which could see a rise in fuel costs. "With the positive macroeconomic prospects, this presents a window of opportunity to undertake... key structural reforms to ensure growth in the Malaysian economy becomes stronger and more sustained," BNM Governor Abdul Rasheed Ghaffour told reporters after the report's release on Wednesday. Any move to targeted subsidies, however, would need to be carefully calibrated and assessed to minimise its impact on growth and inflation, Abdul Rasheed said, noting that previous subsidy policies had not required any monetary policy intervention from the central bank. BNM maintained its 2024 growth forecast at between 4% and 5%, the report showed. Exports were projected to rise 5%, rebounding after an 8% contraction last year. New taxes and changes to utility tariffs aimed at boosting government revenue were expected to have a marginal impact on inflation, BNM said. Headline inflation was forecast at between 2% to 3.5% this year, compared to 2.5% in 2023, though upside risks remained due to increased prices from subsidy and price control adjustments, and higher input costs stemming from Malaysia's weakened currency. The ringgit has gained since falling to a 26-year low last month, but is still down about 3.2% to the U.S. dollar so far this year. Abdul Rasheed, who contends that the currency is undervalued, said the central bank has seen positive results from steps taken to increase inflows, including encouraging companies to repatriate and convert their foreign investment incomes. "We have also seen the positive response from the forex traders and most of them agree the ringgit is undervalued and they appear more willing to hold onto their positions for longer," he said, adding that expected rate cuts by the U.S. Federal Reserve this year should further ease pressure on the currency. Longer term support for the ringgit would come from reforms tackling longstanding structural issues in the labour market, as well as increased investments in decarbonisation and high-value industries, he said. 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/business/finance/malaysias-cbank-calls-reforms-with-economy-firmer-footing-2024-03-20/

2024-03-20 04:30

U.S. Federal Reserve sticks to three rate cut view EIA data shows crude oil stocks fell unexpectedly Crude oil and gasoline stockpiles fell last week - API NEW YORK, March 20 (Reuters) - Oil prices fell on Wednesday as the U.S. Federal Reserve held interest rate steady and demand concerns continue to weigh. Brent crude futures for May settled down $1.43, or 1.64%, at $85.95 a barrel. U.S. West Texas Intermediate futures for April delivery , which expire on Wednesday, ended $1.79, or 2.14%, lower at $81.68. The more active May WTI contract settled down $1.46 at $81.27 a barrel. Brent had settled at its highest since Oct. 31 in the previous session at $87.38 a barrel, while WTI hit its highest since Oct. 27 at $83.47. On Wednesday, the Federal Reserve kept interest rates in the 5.25% to 5.50% range, but policymakers indicated they still expect to reduce them by three-quarters of a percentage point by the end of 2024. The Fed's rate decision was within expectations and the impact on oil markets was limited, said Andrew Lipow, president of Lipow Oil Associates. The U.S. Energy Information Administration (EIA) said crude oil stockpiles fell unexpectedly last week as exports rose and refiners continued to increase activity. The draw in crude oil inventories was due to higher refinery runs and strong crude oil exports, said Matt Smith, lead oil analyst at Kpler. The American Petroleum Institute also reported crude oil and gasoline stockpiles fell last week, while distillate inventories rose, according to sources. Elsewhere, Ukrainian attacks on Russian refining assets have helped propel crude prices higher as market participants assessed the impact on crude and fuel supply balances. "If these disruptions are prolonged, it could eventually force Russian producers to reduce supply if they are unable to export all of this crude oil," ING analyst Warren Patterson said. The Reuters Power Up newsletter provides everything you need to know about the global energy industry. Sign up here. https://www.reuters.com/business/energy/oil-pulls-back-multi-month-highs-strong-dollar-dents-demand-2024-03-20/

2024-03-20 03:05

MUMBAI, March 20 (Reuters) - The Indian rupee is set for a quiet session on Wednesday, eyeing whether the U.S. Federal Reserve will signal fewer rate cuts this year, compared to its December projections. Non-deliverable forwards indicate the rupee will open in the 83.01-83.03 range to the U.S. dollar, compared with the previous session's 83.0350. It is expected to maintain a narrow range through the day. The local currency on Tuesday weakened past the 83 level for the first time in a month on dollar buying by foreign banks for their custodial clients and by public sector banks for oil companies, according to traders. "Yesterday, (the dollar/rupee pair) climbed past its near-term 82.95-83.00 resistance, suggesting that the immediate trend has turned from down to neutral," a currency dealer at a bank said. "This has opened the upside potential if Fed deals a hawkish surprise." The Fed is not expected to make changes to the policy rate, with the primary focus on projections on the interest rate trajectory. In December, the median estimate for Dec 2024 was 4.6%, signalling expectations for three 25 basis points rate cuts. The median was centred on forecast of only six members, a slim majority of one, ANZ Bank said in a note. Five members predicted two rate cuts and four predicted four cuts. "The tight clustering leaves potential for the median dot plot to shift to signalling two cuts this year," ANZ said. Expectations for rate cuts have changed significantly since the beginning of the year, with investors now pricing in fewer cuts compared to the initial projections of more than six. Asian currencies saw narrow moves before the Fed decision expected at 23.30 IST. The dollar index edged higher, while U.S. Treasury yields dipped. KEY INDICATORS: ** One-month non-deliverable rupee forward at 83.08 ** Dollar index at 103.90 ** Brent crude futures down 0.3% at $87.2 per barrel ** Ten-year U.S. note yield at 4.29% ** As per NSDL data, foreign investors sold a net $140.7mln worth of Indian shares on Mar. 18 ** NSDL data shows foreign investors sold a net $94.2mln worth of Indian bonds on Mar. 18 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/rupee-awaits-feds-forecast-number-interest-rate-cuts-2024-03-20/

2024-03-20 02:53

HOUSTON, March 19 (Reuters) - Pipeline operator Williams Companies (WMB.N) , opens new tab looked at acquiring struggling liquefied natural gas (LNG) developer Tellurian (TELL.A) , opens new tab, but considered its export project not that attractive, the company's strategy chief said on Tuesday. Tellurian said this week it would consider offers for its proposed Driftwood LNG gas export terminal after unsuccessfully pursuing long-term sales and purchase agreements to finance the Louisiana project. It also put its natural gas production unit on the block last year as losses mounted. Williams Executive Vice President of Strategy Chad Zamarin said Williams was looking at opportunities to continue investing in LNG projects but Tellurian's 27 million metric tons per annum Driftwood project did not have the commercial strength. "There is the advantage of it being permitted, it does have a speed to market that is interesting to us, but it does not have the commercial contracts on the demand side," said Zamarin in an interview on the sidelines of CERAweek by S&P Global energy conference. Williams is interested in LNG projects that are already advanced, Zamarin said, where new-build projects like Driftwood are at a disadvantage to expansions of existing plants. Tellurian earlier this year hired investment banker Lazard to explore a sale of its Haynesville gas production business in East Texas and Louisiana as part of efforts to raise new capital to continue the Driftwood project. Lazard also is focused on alternative debt and equity financing, the sale of equity interests in Driftwood or Tellurian, a potential sale of the company, and assisting in securing commercial partners, Tellurian said on Monday. (This story has been corrected to clarify that the executive said the export project was not attractive, and not that it was too risky, in paragraph 1) The Reuters Power Up newsletter provides everything you need to know about the global energy industry. Sign up here. https://www.reuters.com/business/energy/ceraweek-williams-companies-ruled-out-bid-tellurian-executive-says-2024-03-19/