2024-03-01 07:19

OSLO, March 1 (Reuters) - Statkraft's fourth-quarter operating profit fell by 51.5% hurt by lower electricity prices and smaller hedging gains, Norway's largest utility said on Friday. Its underlying earnings before interest and tax (EBIT) fell to 11.5 billion Norwegian crowns ($1.08 billion) from 23.7 billion. "The decrease was mainly driven by lower power prices, partly offset by higher power generation. Hedging gains were lower compared to the same quarter in 2022," the company said in a statement. Its net profit declined to 5.9 billion crowns from 14.5 billion. The benchmark Nordic system power price averaged 57.68 euros per megawatt hour in the fourth quarter, down 57.5% from 135.61 euros/MWh a year earlier, data from power exchange Nord Pool showed. Prices were no longer at "crisis-like" levels though still higher than before the 2022 spikes caused by the loss of Russian gas supply to Europe, CEO Christian Rynning-Toennesen told reporters. "We believe prices will rise a little bit again, but not that much," he said. With the impact of prices hedged at 2022's high levels ebbing as well, Statkraft earnings in 2024 would continue to be impacted by the overall lower prices, Rynning-Tønnensen said. Statkraft's fourth-quarter power generation rose to 18.2 terawatt hours (TWh) from 15.3 TWh a year earlier. On a full-year basis, Statkraft posted an underlying EBIT of 41.4 billion crowns, down 23.9% from a record 54.4 billion but still its second highest result. Statkraft proposed a dividend of 13 billion crowns to its owner, the Norwegian state. ($1 = 10.6174 Norwegian crowns) https://www.reuters.com/business/energy/norways-statkraft-q4-earnings-fall-lower-power-prices-2024-03-01/

2024-03-01 07:03

LONDON, March 1 (Reuters) - A Donald Trump redux come November may come with an inflation reboot too. Even though Joe Biden's approval rating as U.S. president has been partly dogged by a post-pandemic cost-of-living spike, the trade proposals of Trump - his presumed challenger in this year's election - are seen by many economists as reigniting the inflation many blamed Biden for. There are of course multiple reasons cited as to why Biden is struggling to get ahead of former President Donald Trump in opinion polls. Issues from immigration to social policies to the president's age are high among them - and, most recently, many Biden supporters' dismay at his stance on the Gaza conflict. But if you still believe "it's the economy, stupid", then the biggest puzzle of the past year has been how a booming U.S. economy, full employment and a roaring stock market have not benefitted the incumbent more in the eyes of the electorate. The simplest answer many offer is the positives were sapped by high inflation and interest rates that hurt the pockets of many Americans. All of which might suggest U.S. voters would be minded to back a candidate promising to keep consumer prices in check. And yet economists parsing Trump's plans to resume his 2018-2020 trade wars via universal import tariffs, with possibly 60% levies on goods from China, reckon there'd be little relief on that score from his return to the White House. Tariff rises of that breadth and scale risk another generalised price squeeze, they say, and may in turn prevent borrowing costs from retreating as much as many now hope. While early soundings from the hustings can shift, Trump floated the idea of a 10% universal import tariff , opens new tab in an interview last August and doubled down last month by claiming he would impost tariffs of 60% or higher on Chinese goods. That could act like another supply shock, Rabobank said this week, and it could complicate the Federal Reserve's mission to get the "genie back in the bottle." "While there are many uncertainties about the impact of a second Trump presidency on economic policy, a rise in import tariffs is highly likely," wrote Rabobank's U.S. strategist Philip Marey. "This will affect the trajectory of inflation and consequently the Fed's rate path." Investors have for months tried to home in on the election to see how the contest might affect world markets. Many focus on differing fiscal policies of tax and spend, tending to postpone judgement given the uncertain constellation of Congress needed to implement either party's plans. But significant trade policy powers rest in the hands of the president, and Trump's proposed Reciprocal Trade Act would give him broad discretion to ramp up retaliatory tariffs on countries when they are determined to have put up barriers of their own. There's some debate over whether Trump's previous tariff campaign actually had a significant price effect before the pandemic, as many had feared, and much debate about the extent to which tariff evasion via re-routed supply chains softened it. But Fed researchers at the time estimated that if all Chinese imports became subject to a 25% tariff, that could lead to a 0.4 percentage point increase in consumer prices and a 14 point hit to business investment prices. Even though Chinese goods as share of overall U.S. imports have fallen significantly since, and the Biden administration's ongoing post-pandemic standoff with Beijing saw none of Trump's 2018 tariffs rolled back, a 60% tariff going forward could be seismic. INFLATION SPURS Marey at Rabobank said the original Trump tariffs were very visible in the protected sectors of the producer price index but they were only levied on about one-tenth of all imports and tended to be muted in overall consumer price rises as a result. A universal tariff hike would be a different matter and immediately feed into both U.S. CPI and PPI, he reckoned. "Although we have learned not to take every threat made by Trump literally, his preference for tariffs was very clear during his first term in office," the Rabobank strategist said. "Therefore, we take his threat of a universal tariff seriously. In fact, we expect it to be one of his main campaign promises." What's more, significant disinflation of the past year owes most to easing supply constraints on energy and goods trade, and it's only domestic service prices and rental gauges that have stayed stubbornly high. If the latter remained sticky through this year and were then met with resurgent goods inflation due to tariff hikes, then the Fed's job gets mighty tricky. The Fed can't and won't consider the election outcome explicitly right now. But if it limited rate cuts to a modest 50-75 basis points in 2024, the prospect of a tariff shock ahead may mean markets have to consider pegging back the 175 bps of easing currently priced for a full easing cycle out to 2027. Even fund managers with a positive view on disinflation and a relatively benign economic take on a second Trump presidency think a 60% tariff hit on Chinese imports could be both "devastating" to Chinese imports and bad for U.S. inflation. Stephen Jen at Eurizon SLJ thinks pressure on third countries that are now increasingly intermediating trade flows between the U.S. and China would be immense and ultimately spur traded goods price inflation. "This would be bad for U.S. inflation and the purchasing power of American consumers," he said. And the growth impact of such a trade war could be large too - most obviously on China. Capital Economics this week estimated a 60% tariff increase and stricter enforcement of them could lop as much as 0.7% from China's GDP. Rabobank's Marey said likely overseas retaliation against a universal tariff, along with tit-for-tat escalations thereafter, could eventually hit U.S. production and employment too. No one doubts this will be a high stakes election on myriad fronts. Yet any prospect of inflation relief from a switch of power may prove well wide of the mark. The opinions expressed here are those of the author, a columnist for Reuters. https://www.reuters.com/markets/us/trump-tariff-plans-spur-talk-inflation-20-mike-dolan-2024-03-01/

2024-03-01 06:49

SNB Chairman to step down after 12 years in the role Says Credit Suisse crisis played no role in his decision Says central bank has established financial and price stability in Switzerland Economists praise Jordan's policymaking record ZURICH, March 1 (Reuters) - Swiss National Bank Chairman Thomas Jordan will step down in September, three years early, after more than a decade at the helm, during which the central bank has wrestled with crises including Credit Suisse's collapse and a supercharged franc. The 61-year-old said on Friday he felt now was right time to step aside from the SNB, which he joined in 1997. As chairman since January 2012 he has steered the central bank through possibly the most tumultuous period in its 117-year history. "Since I was elected to the board on May 1, 2007, there has been virtually no quiet period. One crisis has followed the next," Jordan told a press conference. Despite winning the battle against resurgent inflation, Jordan was criticised for the SNB's slow response to the unfolding crisis at Credit Suisse, which culminated in the collapse of Switzerland's second-biggest bank last year. Jordan said he had been considering his departure for a while, but the Credit Suisse episode had not influenced his decision "in any way". "I started some time ago to reflect about the timing ...and I came to the conclusion that now is a good time," he told Reuters in an interview. "Today we have again re-established financial stability, we have re-established the price stability, so I think it's a good time for leaving office," he added. Jordan said he was proud of having delivered price stability, with average inflation in Switzerland below 1% during his tenure. His term, however, also brought calls for an overhaul in the central bank's governance, with critics saying too much power lies with Jordan, while not enough women have been promoted. He declined to comment when asked whether a woman should replace him or whether the SNB should seek an outsider or an internal candidate as his replacement. Potential successors could include Jordan's deputy Martin Schlegel, the SNB's current vice chairman, or Andrea Maechler, the SNB's first female governing board member who left the bank last year to join the Bank for International Settlements. Renaud de Planta, senior partner at Swiss private bank Pictet, has also been mentioned. The successor must be Swiss. Though Jordan stands down before his term was due to end in 2027, he will be replaced in the conventional manner, with a nomination from the SNB's supervising bank council being submitted for approval to the Swiss cabinet. The procedure allows for an outsider to be nominated. Jordan, who had a heart operation in 2021, told reporters his health was not a factor in his decision to quit. Asked what he would do next, Jordan said he had no plans and would be fully committed to the SNB until his departure at the end of September. The Swiss franc eased against the euro after the announcement, with the single currency gaining 0.2% to reach its highest since November against the Swiss currency. Jordan became a member of the central bank's interest rate-setting governing board just before the global financial crisis began unfolding in mid-2007 and became chairman when his predecessor Philipp Hildebrand was forced to step down after his wife was involved in euro and dollar transactions. In 2020, the Swiss government re-appointed Jordan as chairman until 2027. "He did a superb job and will be very difficult to replace," said Karsten Junius, an economist at J.Safra Sarasin. "But maybe the end of his era is also a chance to broaden decision-making at the SNB." BOLD TECHNOCRAT Seen by many as the epitome of a diligent technocrat, the Harvard-educated economics professor has not been afraid to take tough decisions. In 2015 the SNB upended currency markets by suddenly scrapping the minimum exchange rate against the euro, a move which sent the safe-haven currency soaring. In recent years, Jordan has focused on battling inflation, which although high in Swiss terms has been significantly lower than in other parts of the world. Last year, he was involved in the SNB's provision of emergency liquidity to facilitate Credit Suisse's rescue takeover by its bigger rival UBS (UBSG.S) , opens new tab. The SNB's early response to the crisis has come under fire, with critics saying the central bank was too slow and too cautious to react despite its concerns about the lender dating back as far as February 2020. About six months before Credit Suisse was sold, Jordan wanted to inject 50 billion Swiss francs into the lender and nationalise it, Reuters reported in December, but was blocked by the government and the financial regulator. Economists said Jordan, the architect of the SNB's ultra-loose monetary policy before changing tack by hiking rates in 2022, had been successful in his role. Although instinctively cautious, Jordan did not shy away from unorthodox methods, such as introducing negative interest rates to counter the Swiss franc's strength when the safe haven currency was coming under massive appreciation pressure. "The SNB is characterized by Thomas Jordan's way of thinking so there is unlikely to be much change of approach, at least for the foreseeable future," said UBS economist Alessandro Bee. "Overall, he has done a very good job." Stefan Gerlach, chief economist of Switzerland's EFG Bank and a member of the SNB Observatory, which campaigns for accountability at the central bank, said Jordan's departure still represented seismic change. "Having been a board member since 2007 and with his indisputable expertise, Jordan has become the SNB." https://www.reuters.com/business/finance/snb-chairman-jordan-step-down-end-september-2024-03-01/

2024-03-01 06:48

OPEC+ to consider extending voluntary production cuts US economic data reinforces market bets for interest rate cut US oil rig count rose to highest since September NEW YORK, March 1 (Reuters) - Oil prices rose 2% on Friday and posted weekly gains as traders awaited an OPEC+ decision on supply agreements for the second quarter while also weighing fresh U.S., European and Chinese economic data. Brent futures for May settled $1.64 higher, or 2%, at $83.55 a barrel. The April Brent futures contract expired on Feb. 29 at $83.62 a barrel. U.S. West Texas Intermediate (WTI) for April rose $1.71, or 2.19%, to $79.97 a barrel. For the week, Brent added around 2.4% following the switch in contract months, while WTI gained more than 4.5%. "The expectation that OPEC+ is going to continue with their voluntary production cuts well into the second quarter of 2024 is the main focus on the market," said Andrew Lipow, president of Lipow Oil Associates. A decision on extending OPEC+ cuts is expected in the first week of March, sources have said, with individual countries expected to announce their decisions. "Sticking to the voluntary production cuts until the end of the year would be a strong signal and should therefore be seen as price-positive," Commerzbank analyst Carsten Fritsch said. A Reuters survey showed the Organization of the Petroleum Exporting Countries pumped 26.42 million barrels per day (bpd) in February, up 90,000 bpd from January. Strong expectations of Saudi Arabia keeping term prices of crude it sells to Asian customers little changed in April from March levels also underpinned the market on Friday. Meanwhile, geopolitical tension in the Red Sea also lifted prices on Friday, said Tim Snyder, an economist at Matador Economics. The leader of Yemen's Houthis said on Thursday the group would introduce military "surprises" in the region. U.S. energy firms added oil and natural gas rigs for a second straight week, energy services firm Baker Hughes (BKR.O) , opens new tab said in its closely followed report on Friday. The oil rig count, an early indication of future output, rose by three to 506 this week, the highest since September. On the demand side, Chinese manufacturing activity shrank for the fifth straight month in February, an official survey showed. Euro zone inflation fell in February according to Eurostat, but both the headline figure and core inflation, which strips out volatile food and fuel prices, just missed analysts' expectations. Supporting prices, the U.S. personal consumption expenditures (PCE) index showed January inflation in line with economists' expectations on Thursday, reinforcing market bets for a June interest rate cut. Money managers raised their net long U.S. crude futures and options positions in the week to Feb. 27, the U.S. Commodity Futures Trading Commission (CFTC) said. https://www.reuters.com/business/energy/oil-prices-rise-gaza-deaths-complicate-ceasefire-talks-2024-03-01/

2024-03-01 06:43

Gold heads for 2nd straight weekly gain PCE data shows smallest yearly rise in inflation in nearly 3 yrs Silver, platinum and palladium set for weekly declines March 1 (Reuters) - Gold prices hit a one-month high on Friday and were set for a second straight week of gains as the latest U.S. data pointed to signs of slowing inflation, bolstering investor expectations of an interest rate cut by the Federal Reserve in June. Spot gold edged 0.5% higher to $2,053.10 per ounce, as of 1226 GMT, its highest level since Feb. 2. U.S. gold futures firmed 0.4% at $2,063. "Inflation figures came out pretty much as expected and probably we are going to have the first rate cut very soon," Natixis analyst Bernard Dahdah said. Data on Thursday showed PCE inflation in January rose 2.4%, the smallest annual increase since February 2021, after a 2.6% advance in December. Receding inflationary pressures have helped the U.S. central bank to set the table for rate cuts likely later this year, potentially boosting demand for the non-yielding bullion. "The Fed rate cuts have to be relatively deep, whereby it's no longer interesting to hold bonds and invest into ETFs instead. I think there's still some space before we see a strong pickup in gold holdings," Dahdah said. The world's largest gold-backed exchange-traded fund, SPDR Gold Trust's holdings , fell 3.3% in February and is down 6.4% so far this year. Investors will closely watch for remarks from at least six Fed policymakers due later on Friday. On the physical front, gold demand in India was subdued for the week as an uptick in domestic prices dented sentiment and prompted buyers to delay purchases. Spot silver rose 0.2% to $22.72 per ounce as it looked set of extend declines for a second straight week. Spot platinum was steady at $876 per ounce, and palladium gained 0.8% to $949.39. Both were down on a weekly basis. Platinum group metals producer Impala Platinum (IMPJ.J) , opens new tab said it could shut some of its loss-making South African mining operations if metal prices deteriorate further and restructuring efforts fail to improve margins. https://www.reuters.com/markets/commodities/gold-hovers-near-one-month-peak-slowing-us-inflation-2024-03-01/

2024-03-01 06:28

MUMBAI, March 1 (Reuters) - India's central bank requiring underlying foreign exchange exposure for exchange-traded rupee derivative transactions has confused brokers and left them worried about the potential impact on activity in this growing segment. The Reserve Bank of India (RBI) in a Jan. 5 circular said that stock exchanges may offer forex derivative contracts involving the rupee to users "for the purpose of hedging contracted exposure". In 2008, the RBI had allowed transactions in dollar/rupee currency futures "to hedge an exposure to foreign exchange rate risk or otherwise". The new rule comes into effect on April 5. "The exposure requirement needs explanation," Abhilash Koikkara, head - forex and rates at Nuvama Professional Clients Group, said. "We and other brokers have written to the exchanges and are awaiting clarification." The RBI's January circular differentiates between exposure requirements for rupee and non-rupee derivatives. Derivative contracts not involving the rupee can be offered without "any restriction in terms of purpose". As per the new rule for rupee derivatives, the stock exchanges will inform clients that while they are not required to provide proof of underlying exposure for positions of up to $100 million, the clients have to ensure such exposures exist and that they have not already been hedged. "The way we read this is that no matter the size of the position, you need an underlying exposure," the head of currency derivatives segment at a large broker said. The person did not want to be named since he is not authorized to speak to the media. Only a very small percentage of his clients have an actual forex exposure and most are speculators and arbitrageurs. As such, a large number of clients may decide to not trade in forex derivatives anymore, hurting volumes, he said. It will not be the broker's responsibility to ensure clients have exposure to FX, but they will need to inform clients that exposures are needed to transact in derivatives, the person said. The RBI did not immediately respond to an email seeking clarity about the underlying exposure requirements for rupee derivatives offered by exchanges. Exchange-traded futures and options have grown to occupy an important place in India's foreign exchange markets. Apart from speculators, exporters and importers, the RBI has at times used dollar/rupee futures to intervene in the forex markets. Banks arbitrage between currency futures and the over-the-counter market. The open interest on dollar/rupee futures on the most popular National Stock Exchange is over $5 billion and average daily volumes were $2.8 billion last year. https://www.reuters.com/world/india/india-cenbanks-new-rule-exchange-traded-rupee-derivatives-confuses-brokers-2024-03-01/