2024-03-05 11:11

A look at the day ahead in U.S. and global markets from Mike Dolan Has the "Magnificent Seven" become the "Famous Five" or even "Fab Four"? With one eye on the major macro events of the week, Apple (AAPL.O) , opens new tab and Tesla's (TSLA.O) , opens new tab separation from this year's tech-infused stock market buoyancy and their underperformance against the other "Magnificent Seven" megacaps has become more pointed. Apple's stock was down almost 2% again ahead of Tuesday's bell after news that iPhone sales in China fell 24% year-on-year in the first six weeks of 2024 - as the U.S. giant faces increased competition from domestic rivals such as Huawei [RIC:RIC:HWT.UL]. And it has been a bad week already for Apple, which dropped 3% on Monday after the European Union fined it 1.84 billion euros ($2 billion) for thwarting competition from music streaming rivals via curbs on its App Store. It was the iPhone maker's first ever penalty for breaching EU rules. Apple is now down almost 10% for the year to date - underperforming the Nasdaq 100 (.NDX) , opens new tab and S&P500 (.SPX) , opens new tab by about 16%. And even though it is still up 15% over the past 12 months, that's less than a third the gain of the Nasdaq 100. Tesla's stock woes are even deeper as it faces waning demand for electric vehicles and a price war, with its stock now down almost 25% for 2024. It dropped more than 7% on Monday alone after its sales declined in February in China, where it likely faced a slowdown during the Lunar New Year holidays. With artificial intelligence and related chipmaking the buzz of the year, Google-parent Alphabet (GOOGL.O) , opens new tab has not fared much better - and is down almost 5% for the year. With even the equal-weighted S&P500 (.EWGSPC) , opens new tab up 4% this year, the underperformance is notable. Exposure to China's stumbling economy, the geopolitical standoff between Washington and Beijing and this year U.S. elections may be common factors. China's mainland stocks (.CSI300) , opens new tab edged higher on Tuesday after Chinese Premier Li Qiang announced an ambitious 2024 economic growth target of around 5% on Tuesday, promising steps to transform the country's development model and defuse risks fuelled by bankrupt property developers and indebted cities. But with property and tech sector worries smouldering in the background, Hong Kong's Hang Seng (.HSI) , opens new tab were less impressed - sliding 2.6% and with its tech giants (.HSTECH) , opens new tab tumbling 4.3%. Details of Tuesday's National People's Congress plan showed China will boost defence spending by 7.2% this year, fuelling a military budget that has more than doubled under President Xi Jinping's 11 years in office as Beijing hardens its stance on Taiwan. Back on Wall St, politics was also top of mind on "Super Tuesday". Donald Trump won the North Dakota Republican presidential caucuses on Monday, according to projections, ahead of a slew of contests where he is expected to strengthen his grip on the party's presidential nomination. Trump, who has promised universal 10% import tariffs and bilateral trade tariffs of 60% on China's goods if elected, was handed a major victory on Monday as the U.S. Supreme Court barred states from disqualifying candidates under a constitutional provision involving insurrection. That reversed Colorado's exclusion of him from its ballot. Elsewhere, bitcoin's almost 60% charge higher this year seemed to stumble at the final hurdle on Tuesday as it balked at 2021's record high near $69,000 and turned tail. Microstrategy (MSTR.O) , opens new tab fell almost 9% after the bitcoin development company announced a private offering for $600 million in convertible senior notes, with proceeds to be used to buy bitcoin. More broadly, S&P 500 and Nasdaq futures were in the red again after a dour start to the week. Advanced Micro Devices (AMD.O) , opens new tab was off about 3% after a report that the chipmaker hit a U.S. government roadblock in its efforts to sell an AI chip tailored for the Chinese market. With Wednesday's congressional testimony from Federal Reserve chair Jerome Powell now firmly in view, U.S. Treasury yields were calm and the dollar index (.DXY) , opens new tab was steady. Key diary items that may provide direction to U.S. markets later on Tuesday: * U.S. Feb service sector surveys from ISM and S&P Global, Jan factory goods orders * Federal Reserve Vice Chair for Supervision Michael Barr speaks * U.S. Treasury auctions 3-, 6-month bills * U.S. corp earnings: Target, Crowdstrike, Greenlight Capital, Ross Stores https://www.reuters.com/markets/us/global-markets-view-usa-2024-03-05/

2024-03-05 11:06

Gold hits record peak of $2,141.59 per ounce Traders see 70% chance of June rate cut - FedWatch tool March 5 (Reuters) - Gold scaled a record high on Tuesday, moving further above $2,100 per ounce in a rally sparked by growing bets for a U.S. interest rate cut in June and on safe-haven demand due to the conflict in the Middle East. Spot gold gained 0.8% to $2,132 per ounce as of 02:13 p.m. ET (1913 GMT), having hit a record $2,141.59 earlier. U.S. gold futures settled about 0.7% higher at $2,141.9. Bullion last hit a record high in December at $2,135.40. "The big reason here is that we're seeing the market increasingly believing that a Fed rate cut is nearer rather than further away," said Bart Melek, head of commodity strategies at TD Securities. "Markets have to be a little bit more convinced for gold to move higher, but ultimately in the second quarter, we do think it can go to over $2,300 plus." Gold, often used as a safe store of value during times of political and financial uncertainty, has climbed over $300 dollars since the start of the Israel-Hamas war. "Geopolitical risks emanating from the Red Sea and a year with a dense election calendar globally will likely see continued strength in retail demand for gold," Nitesh Shah, commodity strategist at WisdomTree, said. "We wouldn't be surprised if gold gives back some of these gains as the U.S. Federal Reserve talks down imminent cuts, but once rate cuts look certain, we expect gold to trade significantly higher." Fed Chair Jerome Powell's congressional testimony on Wednesday and Thursday will be closely watched for more clarity on the U.S. interest rate path. The next major U.S. economic release will be February's employment report due on Friday. Traders currently see a 70% chance that the Fed will start cutting rates by June, according to the CME FedWatch tool. Gold is pressured when high interest rates to tame inflation raise returns on competing assets such as bonds and boost the dollar, making the precious metal costlier for overseas buyers. , Spot silver eased 0.8% to $23.70 per ounce, having hit its highest since Dec. 28 earlier in the session. Other precious metals fell, with platinum slipping 1.8% to $881.23 per ounce, and palladium shedding 1.1% to $949.68. https://www.reuters.com/markets/commodities/gold-hovers-near-3-month-peak-eyes-powells-testimony-2024-03-05/

2024-03-05 10:25

FRANKFURT, March 5 (Reuters) - Deutsche Boerse (DB1Gn.DE) , opens new tab said on Tuesday that it has launched a regulated platform for the trading of crypto currencies for institutional investors. The German exchange operator had announced plans for the platform last year, and it received additional licenses in February from German regulators. The move comes as bitcoin was perched at a two-year peak, breaking above $68,600 and stalking an all-time high as money keeps rushing into the largest cryptocurrency by market value. Bitcoin has gained 50% this year and most of the rise has come in the last few weeks when inflows into U.S.-listed bitcoin funds have surged. Trading on the Deutsche Boerse platform is expected to start later this week, a spokesperson said. https://www.reuters.com/business/finance/deutsche-boerse-launches-regulated-spot-platform-crypto-assets-2024-03-05/

2024-03-05 10:11

HONG KONG/BEIJING, March 5 (Reuters) - Struggling property developer China Vanke said on Tuesday it has funding in place to repay $630 million in dollar notes due on March 11, amid more selling pressure on its bonds as concern mounts over its liquidity. China's No.2 property developer by sales said in a statement to Reuters that the repayment process for the bond was "orderly". Shares of the company and prices of its 2029 dollar bonds recovered slightly after the statement. Investors have dumped shares and bonds of state-backed Vanke over the past week amid reports that the developer, previously seen by the market as financially sound, was seeking debt maturity extensions with some insurers. A source with knowledge of the matter told Reuters on Tuesday that insurers including Taikang Insurance, state-owned PICC Property and Casualty Co (2328.HK) , opens new tab and New China Life Insurance (601336.SS) , opens new tab have received requests from Vanke for debt extensions. News about New China has been previously reported by other media. Vanke and the three insurers did not immediately respond to requests for comment. The concerns about Vanke's financial health come after a string of defaults by Chinese developers since the country's property sector slipped into a debt crisis in mid-2021, including giants China Evergrande Group (3333.HK) , opens new tab and Country Garden (2007.HK) , opens new tab. Any repayment troubles at Vanke, one of the few remaining Chinese developers with investment grade credit ratings, could further dampen market confidence, analysts said. Moody's downgraded some of Vanke's bonds to "junk" in November, and if another major rating agency such as S&P or Fitch follows suit, those bonds face the prospect of being dumped out of some of the world's most important investment indexes. China has struggled to contain the deepening property crisis despite measures to boost home sales and add liquidity for debt-laden developers. A glut of unfinished homes is scaring away potential buyers, weighing heavily on a sector that had traditionally been a major economic growth driver. On Tuesday, policymakers reiterated their commitment to stabilise the property sector with targeted measures while providing financing to "justified" projects. Premier Li Qiang said in his annual report to parliament that China would also quicken the development of a new model for the property sector, focusing on building more affordable housing and meeting various demand for homes. China Vanke's 2029 dollar bonds recovered slightly and were bid at 40.358 cents on the dollar after its statement, from earlier bids at 39.045 cents. But they were still down 5.4 cents from Monday, data from Duration Finance showed. Bids for its 2027 bonds dropped 7 cents to 46.533 cents. Some of the firm's onshore bonds also eased, with a bond due March 2025 dropping more than 7%. Vanke's Shenzhen-listed shares (000002.SZ) , opens new tab recouped early losses to close up 0.5%. Its Hong Kong-listed shares ended down 2.5% in their seventh straight session of declines, but recovered slightly from a 4.1% drop in morning trade to a record low of HK$5.37. CLUB LOAN? Vanke is seeking to raise a club loan in Hong Kong, with Bank of China (Hong Kong) (2388.HK) , opens new tab, the lead bank of the loan, having already obtained internal approval to commit HK$1.5 billion ($191.73 million), Debtwire reported on Monday. Debtwire reported in January that Vanke was aiming to raise $631 million in a club loan to cover two remaining dollar bonds due in May and June this year. The deal intelligence provider also said in its Monday report that Vanke had received verbal consent from some insurers to defer their put options exercisable in the coming months on some of the so-called insurance debt investment plans, on condition the developer would make interest payments on time on these instruments. Financial media outlet Caixin reported on Tuesday that two of those plans, which involved 3 billion yuan from New Life and 2 billion yuan from PICC and were due in December and January respectively, had been extended for three months with the assistance of regulators. Now, with the extensions expired, Vanke was in talks with both firms again, Caixin said. It added many insurers have issued over 40 billion yuan of these insurance plans in total to Vanke since 2019, including 14 billion yuan from New China and 9 billion yuan from Taikang. Vanke declined to comment on the reports by Debtwire and Caixin. Vanke told a meeting with financial institutions earlier this year that it planned to use its existing offshore funds and club loans to repay the March bond maturity, a person familiar with the talks said. It added at the time that its existing offshore fund was sufficient to cover the repayment even without new loans from banks, the person added. ($1 = 7.8237 Hong Kong dollars) https://www.reuters.com/markets/rates-bonds/china-vanke-assures-repayment-dollar-bond-amid-liquidity-worries-2024-03-05/

2024-03-05 09:44

MOSCOW, March 5 (Reuters) - Russia's finance ministry said on Tuesday that it would increase its purchases of foreign currency and gold in the month ahead, anticipating additional oil and gas revenues in March. Due to other interventions the central bank is carrying out, the Russian state will continue making FX sales throughout March, just at a lower volume than in the previous month. The finance ministry said its purchases of foreign currencies and gold for the period from March 7 to April 4 would amount to the equivalent of 93.7 billion roubles ($1.03 billion), or 4.7 billion roubles per day. The ministry's currency interventions are carried out by the central bank. In August 2023, the central bank deferred foreign currency purchases until the new year as it stopped them to avoid aggravating pressure on the rouble, which tumbled past 100 to the dollar in August and October. The ministry was selling Chinese yuan for the first half of 2023 as Western sanctions imposed over Russia's actions in Ukraine hit energy revenues. It reverted to purchases in August as commodity prices rose and energy revenues recovered. Under its budget rule, Russia sells foreign currency from its National Wealth Fund (NWF) to make up for any shortfall in revenue from oil and gas exports, or makes purchases in the event of a surplus. In the previous period, between Feb. 7 and March 6, the ministry had planned to sell foreign currency worth 73.2 billion roubles. Proceeds from oil and gas sales for Russia's federal budget jumped 40% in February from January to 945.6 billion roubles ($10.36 billion), ministry data showed, thanks to rising revenues from mineral extraction taxes. In March, the ministry expects additional energy revenues for the budget of 125.2 billion roubles. This year, the central bank's mirroring of finance ministry operations, including deferred foreign currency purchases from August to December, is being adjusted by the volume of NWF funds spent on financing the government's budget deficit for 2023 and supporting companies. As a result, net currency sales in March will amount to 7.1 billion roubles a day, calculated Dmitry Polevoy of Astra Asset Management, predicting a limited impact on the rouble. ($1 = 91.2775 roubles) https://www.reuters.com/markets/europe/russias-finance-ministry-increase-fx-purchases-month-ahead-2024-03-05/

2024-03-05 07:53

SINGAPORE/NEW DELHI, March 5 (Reuters) - Private Indian firms have expressed interest in building at least 10 gigawatts (GW) of coal-fired power capacity over a decade, four sources familiar with the matter said, ending a six-year drought in significant private involvement in the sector. Adani Power (ADAN.NS) , opens new tab, JSW Group and Essar Power are among the companies that have told India's power ministry they would be keen to expand old plants or develop stalled projects facing financial stress, according to the sources and a government presentation seen by Reuters. The potential investments, which have not been previously reported, could cumulatively cost billions of dollars and demonstrate renewed appetite in an industry seen by many as financially unattractive. But they also threaten to undermine progress made by the world's No.3 greenhouse gas emitter in weaning its economy off carbon. Prime Minister Narendra Modi's government, which has cited energy security concerns and low per-capita emissions to defend India's coal dependence, has been trying to attract private investment to boost its coal-fired capacity by 80 GW by 2032 , opens new tab. Coal-fired power plants currently account for half, or about 215 GW of India's total installed capacity of 430 GW, with renewables accounting for 135 GW and hydro making up 47 GW. A spokesperson for the power ministry said the private sector had agreed to invest in the coal-fired power sector "in line with the energy requirements of the nation," adding that India was ahead of international commitments to cut emissions. "The private sector is now expressing interest because of financial viability and assurance that payments will be made on time," he said. The companies did not respond to requests seeking comment. India's Association of Power Producers (APP), which represents coal-fired power developers, told Power Minister R K Singh its members were eager to boost capacity, according to a Dec 4 letter reviewed by Reuters. Among the new proposals, Adani Power plans to add 4.8 GW and JSW 1 GW, according to three sources and a government presentation dated Nov 21 reviewed by Reuters. Essar Power plans 1.6 GW of new domestic coal-based power generation in Gujarat state by 2029, one of the sources said. Another source said Vedanta will add 1.9 GW of capacity. The sources - two government officials and two industry executives - declined to be named as the discussions are not public. The presentation, made by an arm of the power ministry in November, estimates that the plants would be commissioned by 2032. PRIVATE FUNDING DROUGHT In the five years to March 2018, private sector investments drove 56 GW, or over 60% of new coal-fired power, government data shows. That dwindled to 1.5 GW, or 5% of additions, in the next five years as projects faced financial stress, shifting the investment burden onto state and federal governments. A total of 24 private sector projects totalling over 23 GW, or over 10% of current Indian coal-fired capacity, are on hold or unlikely to be commissioned due to financial stress, according to power ministry data. However, higher coal dependence in the last three years due to slower renewable installations, heavy power demand, and new emergency laws enabling higher tariffs have made coal-fired power attractive again, boosting profits and pushing shares of generators to record highs. APP asked the government to provide more flexibility in coal and power supply agreements and expansion of existing power plants, ease clearances, and ensure domestic credit availability to expedite investments. "It will be a big challenge for any private developer to raise funds," APP wrote in the Dec 4 letter, adding that state lenders Power Finance Corp (PFC) and Rural Electrification Corp (REC) should be asked to take the lead. PFC and REC did not immediately respond to emails seeking comment. A senior REC executive said it was keen to fund the planned additions with 70% debt as long as lending requirements are met. "REC has made significant progress in reducing non-performing assets and we would like to keep it that way," the executive told Reuters, speaking on condition of anonymity as the matter was not public. https://www.reuters.com/world/india/indian-firms-look-bet-big-coal-fired-power-after-long-absence-2024-03-05/