2024-03-08 09:54

LONDON, March 8 (Reuters) - The United Nations food agency's world price index fell in February for a seventh consecutive month as lower prices for all major cereals more than offset the rising price of sugar and meat. The Food and Agriculture Organization's price index, which tracks the most globally traded food commodities, averaged 117.3 points in February, down from a revised 118.2 points the previous month, the agency said on Friday. The February reading was the lowest since February 2021. The cereal index fell 5% month-on-month in February to stand 22.3% below its level a year ago thanks to expectations of large maize harvests in South America and competitive prices offered by Ukraine. Vegetable oil prices fell 1.3% in February from January to stand 11 percent below year ago levels amid prospects for abundant South America supplies. Rapeseed and sunflower oil prices also fell, thanks to ample exports. The UN agency's sugar index, by contrast, rose 3.2% month-on-month in February, reflecting persistent concerns over top producer Brazil’s upcoming output and forecast production declines in Thailand and India. In a separate report on cereal supply and demand, the agency raised its estimate for 2023 cereal output by 1.1% from the previous year to 2,840 million metric tons thanks to increased maize supplies in Brazil, China and the United States. Looking ahead to 2024, the UN agency pegged wheat output up 1% from a year earlier at 797 million tons thanks to favourable weather in North America and top exporter Russia, as well as in China, India, Iran, Pakistan and Turkey. https://www.reuters.com/world/world-food-price-index-falls-february-seventh-straight-month-un-fao-2024-03-08/

2024-03-08 08:56

Nonfarm payrolls forecast increasing 200,000 in February Unemployment rate seen unchanged at 3.7% Average hourly earnings expected to rise 4.4% year-on-year WASHINGTON, March 8 (Reuters) - U.S. job growth likely slowed in February after two straight months of robust gains, but the labor market probably remains too strong for the Federal Reserve to consider cutting interest rates by June as currently anticipated by financial markets. The Labor Department's closely watched employment report on Friday is also expected to show the unemployment rate unchanged at 3.7% for the fourth consecutive month and the annual increase in wages only slowing marginally. The labor market is supporting the economy, which is outperforming its global peers. Fed Chair Jerome Powell told lawmakers this week that rate cuts would "likely be appropriate" later this year, but emphasized they "really will depend on the path of the economy." "There really is no slowing this labor market down materially," said Ryan Sweet, chief economist at Oxford Economics. "The Fed can wait and they are most likely going to wait longer than what we anticipate. We currently have a cut in May, but it looks like they may take their time." Nonfarm payrolls likely increased by 200,000 jobs last month after surging 353,000 in January, according to a Reuters survey of economists. Estimates ranged from 125,000 to 286,000. Payrolls increased 333,000 in December. January's employment gains were the largest in a year and were partially flattered by below normal end-of-year layoffs, a boost that is expected to be lost in February. That is likely to be offset in part by mild temperatures last month, which are expected to have led to more hiring at construction sites. If payrolls come in well below expectations, economists said the slowdown should be read in the context of January's surge. "February payrolls could fall well short of our forecast of 130,000 without looking truly 'soft,'" said Lou Crandall, chief economist at Wrightson ICAP in New York. Economists will also be watching to see if the December and January payrolls counts are revised down. February's anticipated job growth would be below the monthly average of 255,000 in 2023 and the 287,000 reported for the same month a year ago. Payroll gains would, however, be double the roughly 100,000 jobs needed per month to keep up with growth in the working age population. Despite a rash of high-profile layoffs at the start of the year, employers are generally holding on to their workers having struggled to find labor during the COVID-19 pandemic. Though labor supply and demand are falling back into balance, amid a rise in immigration, some sectors of the economy remain desperate for skilled workers. CONDITIONS STILL TIGHT There were 1.45 open jobs for every unemployed person in January, still above the average of 1.2 during the year before the pandemic, government data showed this week. The Fed's Beige Book report also showed "difficulties persisted attracting workers for highly skilled positions" in February. Job growth last month was likely led by acyclical sectors such as education and healthcare, which are still rebuilding headcount that was reduced during the pandemic. Leisure and hospitality hiring is expected to have picked up after losing speed in January. Employment in that industry is just above pre-pandemic levels. "The pandemic may be in the rear-view mirror, but reopening forces are still influencing the U.S. labor market and the ability of the economy to withstand higher policy rates," said Michael Gapen, chief economist at Bank of America Securities in New York. "This informs our view that the economy can continue to grow, with low rates of unemployment and falling inflation." There had been concerns that job growth was too concentrated in a few industries, fears that were allayed by January's employment report. Economists will be keen to see if the breadth of employment gains continued to widen in February. With the labor market still fairly tight, wage growth remains elevated. Average hourly earnings are forecast to have increased 0.3% after rising 0.6% in January. That would lower the year-on-year increase in wages to a still-high 4.4% in February from 4.5% in January. Wage growth is likely to continue trending lower as fewer people are job-hopping. Milder temperatures last month likely resulted in the average workweek rebounding after being shortened by winter storms in January. The average workweek is forecast rising to 34.3 hours from 34.1 hours in January. That, combined with the anticipated solid job gains, is expected to push up total hours worked considerably, which would bode well for economic growth and productivity in the first quarter. "This is indicative of an economy that is chugging along just fine," said Dan North, senior economist at Allianz Trade North America in Baltimore. "It doesn't ask for any interest rate cuts." https://www.reuters.com/markets/us/slower-strong-us-job-growth-expected-february-2024-03-08/

2024-03-08 08:33

March 8 (Reuters) - Bitcoin is back in the headlines, having roared to a new record high, just as many of the world's major central banks are starting to pave the way towards cutting interest rates, but only if inflation behaves. Investment flows into cryptocurrencies, inflation numbers from the United States, China and the UK, as well as a potentially market-moving snap election in Portugal will all be under the microscope in the coming week. Here is your week-ahead look at global markets from Lewis Krauskopf in New York, Li Gu in Shanghai and Dhara Ranasinghe, Elizabeth Howcroft and Amanda Cooper in London. 1/ BOOMING BITCOIN Bitcoin has hit a new all-time high above $70,000, bringing it back above where it was in November 2021, when rates were low and "blockchain" and "Web3" were all the rage. That 2021 boom was followed by a "crypto winter" fraught with bankruptcies and collapses at the biggest crypto firms that left millions out of pocket. Various crypto executives were hit with criminal charges and regulators stepped up their warnings about the risks. But this does not seem to have deterred a new wave of money from coming in. No one knows for sure what's driving the gains, although analysts point to the billions of dollars that have flowed into U.S. spot bitcoin ETFs that launched this year. Crypto fans say the industry has matured, but central bankers and regulators are still wary. Now investors are wondering: how much bigger can it get and is it different this time? 2/ EYE ON CPI Tuesday's U.S. inflation report could help answer one of the key questions hovering over markets -- when can the Federal Reserve start cutting interest rates? The consumer price index for February is expected to rise 0.4%, after January's CPI rose at a faster-than-expected 0.3%. Investors have dialled back expectations for the number of interest rate cuts in 2024 amid lingering concerns about strength in the economy reigniting inflation. Fed Chair Jerome Powell told Congress in recent days that rate reductions will still "likely be appropriate" later this year, if officials gain more confidence in the steady decline of inflation. With the fourth-quarter corporate earnings season ending, economic and inflation data is front and centre ahead of the Fed's next meeting later in March. 3/ OPENING DAY DISAPPOINTMENT Investors weren't throwing any parties after the opening of China's week-long National People's Congress, as Beijing announced a stable and as-expected 5% growth target for 2024, but didn't break down what stimulus it would deploy to get the economy up and dancing. The ailing property sector may be getting worse instead of better, with bonds in state-backed developer Vanke having sold off sharply. New home prices could fall further this year as support measures so far have had little impact, with the latest data due on March 15. There is potentially room to loosen monetary policy, because although Chinese interest rates are already low compared with the U.S., the deflationary environment means real rates could come down. Weekend data showed price pressures in China picked up more than expected in February, but investors are still wary about deflation. 4/ PAY DAY Britain's economy has narrowly avoided recession, as business activity is expanding at a healthy clip and consumers hit the shops in earnest - even with interest rates at 16-year highs and persistent inflation. The Bank of England is less concerned about growth and far more focussed on inflation. The jobs market is showing signs of moderating. Vacancies fell for the 19th time in a row in the three months to January. But businesses are still struggling to find and retain staff. High levels of long-term sickness are also hampering employers. Average regular pay - key for the BoE - decelerated to a rate of 6.2% in December, the slowest pace of growth in over a year, but not slow enough to convince policymakers rates will need to fall sooner rather than later. Data on March 12 might shift that thinking. 5/ PORTUGAL VOTES Portugal's centre-right Democratic Alliance (AD) won Sunday's election, but its leader Luis Montenegro said it was unclear if he could govern without the support from far-right Chega, with whom he has refused to negotiate. Chega's position in parliament more than quadrupled to at least 48 lawmakers in the 230-seat legislature, giving the combined right a majority. Markets have largely ignored political uncertainty, with the election not expected to change the downward trajectory of debt. The premium investors demand to hold Portuguese bonds over top-rated Germany is around 65 bps and near its tightest level in two years. Ratings agency S&P Global just raised Portugal's rating to "A-" from "BBB+", citing an improved debt outlook. But the election underscores a political tilt to the far right across Europe. With EU elections in June, the rise of right-wing populism is one to watch. https://www.reuters.com/business/take-five/global-markets-themes-graphic-2024-03-08/

2024-03-08 08:00

March 8 (Reuters) - Britain's antitrust regulator said on Friday that T&L Sugars's purchase of Tereos UK & Ireland's assets could result in higher sugar prices for UK shoppers. T&L Sugars, which refines and distributes packaged sugar across supermarkets in the UK, under brand name Tate& Lyle bought Tereos' consumer facing operations in the UK and a distribution facility in West Yorkshire in November 2023. The deal, if approved, would see two of the three sugar suppliers in the UK merge, leaving Associated British Food's (ABF.L) , opens new tab British Sugar as its only competitor, the Competition and Markets Authority (CMA) said. "The supply of sugar to grocery retailers in the UK is already highly concentrated. This deal would bring together two of the three players in the UK sugar sector, reducing competition and choice further for people and businesses," said Sorcha O'Carroll, senior director of mergers at the CMA, in a statement. The deal could be referred to a deeper probe if the parties fail to offer remedies within five working days, CMA added. https://www.reuters.com/markets/deals/uk-watchdog-says-tl-sugars-deal-with-tereos-may-lead-higher-sugar-prices-2024-03-08/

2024-03-08 07:49

SYDNEY, March 6 (Reuters) - BYD (002594.SZ) , opens new tab and other Chinese automakers are bringing new electric car models in droves to Australia, a market where they haven't faced trade barriers and sales have surged due to EV subsidies and tax benefits as well as high gasoline prices. Since coming to power in 2022, Prime Minister Anthony Albanese's government has aggressively promoted EV adoption as part of the country's plans to cut down on emissions - a change that came after a decade of weak climate action under conservative leaders. That's created a powerful tailwind for electric car demand. EVs accounted for 7.2% of Australian new car sales in 2023, up from 3.1% a year earlier. While Tesla (TSLA.O) , opens new tab too is greatly benefiting, it is the Chinese manufacturers in the non-premium end of the market which pose the biggest threat to incumbent automakers like Toyota (7203.T) , opens new tab and Ford (F.N) , opens new tab whose wide line-ups of gasoline-engine cars mean they have more to lose. Last year, sales for EV giant BYD, which entered the market in 2022, climbed nearly six times to more than 12,000 vehicles. The Warren Buffett-backed automaker now has 14% of Australia's EV market, second to Tesla which has 53%, data from the Federal Chamber of Automotive Industries shows. "The opportunity is very clear," said David Smitherman, chief executive at EVDirect, BYD's distributor in Australia. "We need to now get into the mainstream market because we've sold to the early adopters and the passionate EV purchasers." BYD will add two SUVs and a pickup truck to take its product line-up in Australia to six this year, Smitherman said. EVDirect will also open 30 more dealerships in the next 18 months for total of a 55 and has embarked on fleet sales to companies like Uber (UBER.N) , opens new tab. Chinese state-owned SAIC Motor (600104.SS) , opens new tab will launch three new models this year under its MG brand, including the MG3 plug-in hybrid and MG Cyberstar electric roadster, taking its EV/hybrid product line-up in Australia to five. Incumbent automakers are also looking to up their game. Ford has two electrified vehicles in the Australian market and another three on their way, according to a company spokesperson. Toyota has just launched its first electric car, which joins its nine hybrids in Australia in offering lower emissions than comparable gasoline-engine vehicles. It is confident in its strategy of providing a wide range of hybrids and steadily increasing battery electric cars, it said. 'GIVING IT A GO' Although Australia is a relatively small market on a global scale with 1.2 million cars sold last year, it's highly attractive to Chinese automakers given that it doesn't have a car manufacturing industry and is seen as unlikely to introduce protectionist trade barriers. Chinese startup Leapmotor (9863.HK) , opens new tab, which has partnered with Stellantis (STLAM.MI) , opens new tab to expand globally, has designated Australia as a priority market noting its lack of local car makers. In key markets, tensions abound. European authorities have launched a probe into whether Chinese EV makers unfairly benefit from state subsidies, while the U.S. has launched an investigation into whether Chinese-made cars could be used to spy on Americans. But relations between Canberra and Beijing have warmed after years of tensions, with both sides agreeing to turn the page and expand cooperation. Albanese's government has not given any sign it is worried about cybersecurity risks posed by Chinese cars. Australia's Department of Foreign Affairs and Trade declined to comment on the matter. To spur electric car demand, the government has introduced tax exemptions for EV car leasing/purchase agreements available to some consumers through their employers. The country's three most populous biggest states - home to Sydney, Melbourne and Brisbane - have also set goals for EVs to account for 50% of all new car sales by 2030, giving generous rebates on EV purchases and investing heavily to build charging stations. That was a major motivating factor for Mark Adamson, a 61-year-old TV director in the state of Queensland. He gained A$6,000 ($3,900) off the A$54,000 retail price of his extended range BYD Atto 3 SUV through state government rebates and then BYD offered a discount of roughly A$2,000. "I figured why not give it a go? It's sort of really worth doing and I have excess solar at home so I'll mainly charge from at home, so it makes it a no-brainer in a lot of ways," he said. Indeed in Queensland, state government rebates alone mean that an Atto 3 can cost less than Toyota's gasoline-engine RAV4 crossover - a comparable model. For Sydney union organiser Peter Alley, 63, who drives out once a week to see family who live 370 km (230 miles) away, it was the need to cut down on gasoline costs near record highs that persuaded him to switch from a 2008 Volkswagen diesel van to an Atto 3. He now spends about A$20 per week on charging instead of $130 a week on fuel. Expectations are high that EV demand will continue to surge, although forecasts vary. PwC estimates half of Australia's new car sales will be EVs by 2027. BMI, a unit of Fitch Group，predicts 18% by 2032. ($1 = 1.5333 Australian dollars) (This March 5 story has been corrected to attribute a prediction to BMI, a unit of Fitch Group, and not Fitch Ratings, in paragraph 25) https://www.reuters.com/business/autos-transportation/byd-spearheads-chinese-electric-car-push-australia-friendlier-market-2024-03-05/

2024-03-08 07:16

LONDON, March 8 (Reuters) - If the British government is trying to steer more domestic investors back into unloved UK stocks, it has a mammoth task on its hands given the scale of the desertion over recent years. In his budget speech this week, finance minister Jeremy Hunt unveiled a new "UK ISA", or Individual Savings Account, that allows individuals to invest 5,000 pounds ($6,403) tax-free in UK equities annually, in addition to the 20,000 pounds allowed under existing tax-free ISA schemes. Hunt reckoned this meant that "British savers can benefit from the growth of the most promising UK businesses as well as supporting them with the capital to help them expand". Downplaying the impact of the tweak, many experts reckoned the added incentive to stay local would only likely appeal to a small proportion of investors already maxed out on ISA limits. But what it did serve to do is spotlight just how increasingly unwanted British stocks are even among Britons - who, unlike Americans for example, appear to be abandoning any sense of 'home bias' as they drift away from actively managed UK funds to cheaper and more globally-spread index trackers. A spiral seems to have ensued as persistently lagging UK performance merely tempts savers further into overseas funds - cutting demand for new UK equity fund launches, which have dwindled in favour of shiny new global offerings instead. The problems of the British economy over the past decade are well documented of course - not least due to outsize hits from the banking crash of 2008, the protracted and messy exit from the European Union, and the pandemic and subsequent energy shock more recently. For many global fund managers, UK exposure has become a far less significant part of portfolios and many even bat away questions on the whys and wherefores of British markets. At its most basic, the startling underperformance of both the blue-chip FTSE100 (.FTSE) , opens new tab index of largely globally-exposed UK stocks and the FTSE250 (.FTMC) , opens new tab index of mid-sized domestic-facing stocks over the past decade speaks volumes. In sterling terms, both the FTSE100 and FTSE250 have gained a meagre 13-17% over the past 10 years compared to the 260% boom in Wall Street's S&P500 (.SPX) , opens new tab, a near quintupling of the tech-laden Nasdaq (.IXIC) , opens new tab, a 140% rise in Japan's Nikkei (.N225) , opens new tab and even a 62% jump in the euro zone benchmark (.STOXXE) , opens new tab. While those major markets surge anew since 2022's interest rate setbacks, UK indexes are still in negative territory for the past 12 months - and also for 2024 to date. The valuation discount of the FTSE All-Share index (.FTAS) , opens new tab versus MSCI's World index (.MIWO00000PUS) , opens new tab is now at a record near 40%, and UK weightings in that World index have more than halved to just 4% over the past 15 years. It may be 'cheap' of course - but investment flows are streaming in the other direction. "EXISTENTIAL CRISIS" Numbers released by the Invest Association on Thursday show the scale of what's happening. UK savers took 24.3 billion pounds out of all funds in 2023 - the second consecutive year of net withdrawals and the only two such years ever recorded. The relative attraction of higher interest rates in cash savings accounts was partly to blame. But the really alarming bit is a record 14 billion pound exit from UK equity funds - the eighth straight negative year since the Brexit vote in 2016, outstripping a dire 2022 outcome and continuing a bleed that long precedes the recent rise in interest rates. While there was some switching to money market and fixed income funds last year, index tracking funds also saw a healthy 13.8 billion of inflows. It's the whopping 38 billion pound record outflow from actively-managed UK funds that's particularly stark. And it didn't end last year. Net retail and institutional fund sales of the 1.42 trillion pound industry were both negative at more than a billion pounds each again for January. "The UK funds industry is going through a dark age," said Laith Khalaf, AJ Bell's head of investment analysis, commenting on the IA figures. "The scale of these withdrawals is absolutely unprecedented." "This doesn't augur well for confidence in the UK stock market, which is leaking members and performance to overseas competitors," he said, adding that it was an "existential crisis" for UK active funds, where less than a third have outperformed passive equivalents over the past 10 years. That "crisis" partly reflects worldwide changes in asset management trends toward passive, process-driven and more global strategies - and an exit of many 'star' fund managers from the UK scene. Rising annuity sales, which jumped 46% last year, may also have taken from those seeking UK equities in pension pots. But there's a clear unwinding of 'home bias' among British investors too, Khalaf noted, showing the share of UK equities in the average balance fund has almost halved since 2009 to just 27% while U.S. equity holdings more than trebled to 39%. The mere 4% weighting of UK equity in the MSCI World could spell much further reductions ahead if the global index tracking boom continues. And to the extent that higher interest rates may have exaggerated the issue over the past couple of years, hopes for rate cuts ahead seem unlikely to give the UK much of an advantage over anywhere else this year. The Bank of England is currently expected to start cutting rates later than its U.S. or euro zone counterparts, around August at current pricing, and also deliver fewer cuts over the course of the year. Tweaking ISA rules won't do any harm of course, but may just be a cotton wool ball to soak up a flood. The opinions expressed here are those of the author, a columnist for Reuters. ($1 = 0.7809 pounds) https://www.reuters.com/world/uk/uk-equity-dark-age-reflects-alarming-desertion-mike-dolan-2024-03-08/