2024-01-12 06:19

BEIJING, Jan 12 (Reuters) - China has named Liu Zhenmin, a former vice foreign minister, as its new special envoy for climate change, after his predecessor Xie Zhenhua stepped down due to health reasons, the Ministry of Ecology and Environment said in a statement on Friday. Xie, 74, served as China's top climate representative at 16 rounds of climate talks. His longstanding relationship with counterparts in the United States - including current incumbent John Kerry - has played a major role in securing global consensus on climate issues. His resignation was announced following a video meeting with Kerry, and comes only weeks after he helped secure an agreement to tackle emissions from fossil fuels at the COP28 climate talks in Dubai. Liu, 68, acted as Xie's special adviser in Dubai, and has long experience in climate diplomacy, participating in negotiations to draw up the 1997 Kyoto Protocol as well as the 2015 Paris Agreement. Unlike Xie, Liu is a fluent English speaker. He served as under-secretary-general at the U.N. Department of Economic and Social Affairs (UN-DESA) from 2017 to 2022, with a broad brief that included climate issues. https://www.reuters.com/world/china/china-names-liu-zhenmin-its-new-special-envoy-climate-change-2024-01-12/

2024-01-12 06:18

Jan 12 (Reuters) - The United States and Britain launched strikes from the air and sea against Houthi military targets in Yemen in response to the movement's attacks on ships in the Red Sea, an escalation of the Israel-Hamas war in Gaza. Oil rose 2% on concerns about the potential impact a broader conflict in the Middle East could have on oil supplies from the region, especially those moving through the critical Strait of Hormuz. Comments from investors and analysts: CHRIS SCICLUNA, HEAD OF ECONOMIC RESEARCH, DAIWA CAPITAL MARKETS, LONDON "This morning, the oil price has responded in a relatively measured way - Brent is still below $80 a barrel - and the fixed income market is responding from the perspective that this might well not be so great for growth, but it is not a concern from an inflationary perspective, so there is a slight flight to quality, but not something that is a game-changer." SUSANNAH STREETER, HEAD OF MONEY AND MARKETS, HARGREAVES LANSDOWN, LONDON "Oil prices have climbed sharply following the attacks, with Brent Crude now around 7% higher since early December, before Houthi rebels began targeting ships in the Red Sea. Reports coinciding with the UK/US military action suggest the British government is modelling scenarios which could see prices rise by $10 a barrel, if the Red Sea crisis continues, with gas prices at risk of going up by 25%. "While its highly uncertain what trajectory energy prices will take, especially given the disruption to trade and the slowing global economy, risks of further price rises will be monitored closely by central bank policymakers. With major manufacturers and retailers warning of significant delays to products and components, the price of a vast range of goods threatens to march upwards again." JOSHUA CRABB, HEAD OF ASIA-PACIFIC EQUITIES AT ROBECO, HONG KONG "Clearly this is one of the many geopolitical tail risks currently in the world. It is very hard to price in, given the bifurcated nature, uncertainty and assigning probabilities. As a result, a significant escalation is likely to have notable market impacts, but the probabilities are hopefully low." CHARU CHANANA, HEAD OF FX STRATEGY, SAXO, SINGAPORE "Markets are on edge as risks of an escalation have risen. It will be particularly important to watch any further actions from either side especially going into the long weekend for the US, and particularly the threat of a wider regional conflict. "With the near-term focus on geopolitical escalation risks, yen and gold could see safe-haven buying. Gold has been range-bound lately, but 50DMA at $2,015 is serving as a solid support." SAKTIANDI SUPAAT, REGIONAL HEAD OF FX RESEARCH & STRATEGY, MAYBANK, SINGAPORE "The dollar (has) somewhat been supported on an intra-day basis. There is some reaction but it's muted so far because the impact on oil prices doesn't seem so significant as yet. "I think markets are watching for the ramifications of these attacks and what will be the response from the Houthi rebels. A more sustained retaliation, not just from the Yemenis or Houthis, but from other extreme groups in the region might lead to further risk aversion." KHOON GOH, HEAD OF ASIA RESEARCH, ANZ, SINGAPORE "I think at this stage, it's difficult to predict. Whilst the attacks have already seen disruptions and diversions of shipping and that has already caused quite a sharp jump in shipping freight rates just in the last few weeks, if this strike is able to...resolve the issue and shipping lanes can be secured again and things normalise, then that'll be positive as we'll see a normalisation of freight rates. "I think the concern is that if this starts to escalate... which will cause a potential spike up in oil price in particular, and further disruptions in shipping lanes. "Markets are taking a wait-and-see approach for the time being, hence we're not seeing too much of a reaction. If we see a massive escalation of the situation...then the traditional flight-to-safety will see U.S. Treasuries, safe-haven currencies like yen and Swiss franc benefit." SHANE OLIVER, CHIEF ECONOMIST, AMP, SYDNEY "The U.S. and UK launching air strikes on Houthis in Yemen is adding to the risk of Iran being directly drawn into the conflict which would threaten oil supplies. "The creeping widening in the Israel/Hamas conflict poses a risk to global growth and inflation, for example Houthi attacks on Red Sea shipping adding to transport costs as ships have to go around Africa. "A weaker patch is often evident into February or March after seasonal strength from October. While we expect shares to provide reasonable returns this year, they are likely to be more constrained and vulnerable than last year and worries about delays in rate cuts, recession and geopolitics could drive a deeper first half pullback than seen last year." ROB CARNELL, ASIA-PACIFIC HEAD OF RESEARCH, ING, SINGAPORE "When we got in this morning after what was fairly disappointing U.S. inflation data, you'd have expected bond yields to spike higher on that. In fact, they did the opposite. That's probably a reaction to what's been happening in the Middle East with the U.S., UK air strikes on the Houthis. There will be a shift back towards risk aversion. This hasn't fully blossomed out into a proper risk-off mode. "I think people are looking for a little bit of safety at the moment. Possibly, also, coming ahead of this weekend's Taiwan election, most people are just thinking 'maybe I want to take a little bit of risk off the table', and that's maybe a factor as well. So I think the bond market's probably the clearest indication of where things are going." (This story has been refiled to fix the spelling to Strait of Hormuz, not Straits, in paragraph 2) https://www.reuters.com/world/middle-east/market-analysts-react-us-british-strikes-against-houthis-yemen-2024-01-12/

2024-01-12 06:12

MUMBAI, Jan 12 (Reuters) - The Indian rupee is expected to have a choppy session on Friday, caught between bullish expectations of a U.S. rate cut, despite a higher-than-expected rise in U.S. consumer prices, and pegged back by the repeated failure to sustain past a key level. Non-deliverable forwards indicate the rupee will open flat to slightly weaker to the U.S. dollar than its close of 83.0275 in the previous session. The rupee managed to briefly climb above 83 on Wednesday and Thursday. "It will be a choppy kind of a day, in the sense there are good reasons for a move higher or lower," an fx trader at a bank said. "On one hand, investors remain convinced of big Fed rate cuts year, despite the U.S. data, and on the other, we have the dips (on USD/INR) just not holding." Headline U.S. consumer price index rose 3.4% year-on-year in December, compared to forecasts of a 3.2% increase. On a monthly basis, CPI rose 0.3% versus expectations of a 0.2% increase. Core CPI rose 3.9% year-on-year, against 3.8% expected. While U.S. yields and the dollar index climbed following the data, the moves did not hold up. The dollar index is at 102.20, having rallied to 102.75, and the 2-year U.S. Treasury yield is down 14 basis points off the highs at 4.26%. The odds of a Federal Reserve rate cut in March are slightly higher than before the inflation data and investors now expect 150 basis points of cuts this year compared with about 140 before the data. ING Bank pointed out that the inflation data was "just one measure" and that the CPI outlook "remains encouraging". "The CPI report isn't the only inflation measure the Fed looks at. In fact, the preferred measure – the core personal consumer expenditure deflator – has shown much better performance." KEY INDICATORS: ** One-month non-deliverable rupee forward at 83.12; onshore one-month forward premium at 8.75 paisa ** Dollar index down at 102.18 ** Brent crude futures up 2.2% at $79.1 per barrel ** Ten-year U.S. note yield at 3.98% ** As per NSDL data, foreign investors sold a net $198.5 million worth of Indian shares on Jan. 10 ** NSDL data shows foreign investors sold a net $23.3 million worth of Indian bonds on Jan. 10 https://www.reuters.com/markets/currencies/rupee-caught-between-fed-rate-cut-bets-strong-83usd-resistance-2024-01-12/

2024-01-12 06:10

SHANGHAI/SINGAPORE, Jan 12 (Reuters) - China's central bank is expected to ramp up liquidity injections and cut a key interest rate when it rolls over maturing medium-term policy loans on Monday, as authorities try to get the shaky economy back on more solid footing. Expectations of monetary easing have heightened after major Chinese commercial banks lowered deposit rates late last year, paving the way for further reductions in policy rates at a time when persistent deflationary pressures also warrant additional stimulus. A protracted property crisis, cautious consumers and geopolitical challenges are also pointing to another bumpy year for the world's second-biggest economy. In a Reuters poll of 35 market participants conducted this week, 19 or 54.3% expected the People's Bank of China (PBOC) to cut the borrowing cost of one-year medium-term lending facility (MLF) loans . The central bank last cut the MLF rate in August 2023 by 15 basis points (bps). Thirty, or 85.7% of all respondents, predicted the central bank would inject fresh funds into the financial system exceeding the maturing 779 billion yuan ($108.73 billion) of MLF loans due this month. "Inflation could be of higher priority for the PBOC to prevent a negative feedback loop between deflation and activities," Citi analysts said in a note. "We reiterate our view for a policy rate/LPR cut as early as in coming weeks within January ... We maintain our expectations of 50-basis-point reserve requirement ratio (RRR) cuts and 20-basis-point MLF rate cuts for the whole year." The interest rate on MLF loans currently stands at 2.5%. As it serves as a guide to the loan prime rate (LPR), markets mostly see the rate as a precursor to adjustments in the LPR. China is due to announce the monthly LPR fixing on Jan. 22. "I think the central bank should take action as early as possible: it should lower both interest rates and RRR as early as the beginning of the year," said Wang Tao, chief China economist at UBS. However, she added that the PBOC might be rather cautious as it has to pay close attention to U.S. Federal Reserve and dynamics of interest rate movements in global markets. Wang expects a total of 10 to 20 bps of rate reductions and 25 to 50 bps points of RRR cuts this year. Investors' expectations for an RRR cut also rose after Zou Lan, monetary policy department head of PBOC, highlighted reserve requirements as one of monetary policy options to support credit growth, according to a state media report this week. ($1 = 7.1643 Chinese yuan renminbi) https://www.reuters.com/markets/rates-bonds/china-cbank-set-cut-key-rate-boost-liquidity-monday-aid-economy-2024-01-12/

2024-01-12 05:45

A look at the day ahead in European and global markets from Kevin Buckland Two big stock stories are grabbing investor attention: Apple's slip behind Microsoft as the world's most valuable company, and strong sales at Uniqlo that helped drive the Nikkei to yet another post-Bubble peak. In Japan, the trading day got off to a bang with Fast Retailing, which operates the Uniqlo store chain, surging more than 7% and contributing two-thirds of the Nikkei's total gains in the early minutes. The Nikkei's world-beating 6.3% surge so far this year - its best start in three decades - makes it a global outlier, however, rather than a driver of gains elsewhere. Britain's FTSE is down about 2% and Europe's STOXX 600 has shed 1.3%. The disappointing run for Chinese stocks continues from 2023, with mainland blue chips (.CSI300) and Hong Kong's Hang Seng (.HSI) both slumping more than 4% since the start of the year. Friday's data releases from China show persistent deflationary pressure and weak consumption, keeping the onus on Beijing for more stimulus measures to turn things around. Britain has a fairly heavy calendar of data releases on Friday, with GDP and industrial output due to test sterling's recent resilience. In the U.S., the S&P 500 and Dow are among the very few major stock benchmarks globally that are positive so far this year, although they are just barely better than flat. Turning to Apple, it was briefly pipped by Microsoft overnight as the world's biggest company by market cap. Both tech giants are worth around $2.9 trillion, with Microsoft steadily closing the gap since last year because of its early leap into generative AI investment. Meanwhile, China presents a risk for the iPhone maker given the outsized importance of its market. The world's no. 2 economy could potentially be problematic for Fast Retailing as well this year: It has 931 Uniqlo outlets in greater China, more than anywhere else, including its home base Japan. Key developments that could influence markets on Friday: -UK GDP est. (Nov) -UK industrial and manufacturing output (Nov) -France, Spain CPI final (both Dec) -US PPI (Dec) https://www.reuters.com/markets/europe/global-markets-view-europe-2024-01-12/

2024-01-12 05:39

NEW YORK, Jan 12 (Reuters) - The dollar index pared gains on Friday after U.S. producer prices unexpectedly fell in December, raising expectations of an early U.S. rate cut. It was higher on the day, boosted by safety buying after U.S. and British warplanes, ships and submarines launched dozens of air strikes across Yemen overnight. The producer price index for final demand dipped 0.1% last month, after a decline in the cost of goods, while prices for services were unchanged, increasing the chances of lower inflation in the months ahead. That led traders to add to bets for a rate cut in the coming months. Fed funds futures now imply a 79% chance of a March rate cut, up from 73% on Thursday, according to the CME Group's FedWatch Tool. "Even though you wouldn't say overall that the macroeconomic picture is screaming at you that they need to cut that fast, the market seems to be excited about the prospect of cuts," said Steve Englander, head of Global G10 FX Research and North America Macro Strategy at Standard Chartered Bank NY Branch. Traders maintained their view that a March rate cut is likely even after consumer price inflation data on Thursday came in above economists' expectations. Last week's jobs report for December also showed strong jobs growth, though underlying details of the report were mixed. The dollar index was last up 0.19% at 102.40. The New Zealand and Australian currencies were among the best performers after Friday's data, but pared gains later in the day. "If this is a trade, it's going to be the higher beta currencies that respond the most and take comfort that the market's clearly hot to trot on the Fed cutting. As long as that's the perception in the market, I think the higher yielders will do very well," Englander said. The kiwi was last up 0.22% on the day at $0.62460. The Aussie was little changed at $0.66870. Foreign exchange moves were likely tempered by traders closing positions ahead of a U.S. long weekend, with markets closed on Monday for the Martin Luther King Jr. holiday. The U.S. currency benefited earlier from risk aversion after the strikes on Yemen, which came in retaliation for attacks by Iran-backed Houthi forces on Red Sea shipping, widening regional conflict stemming from Israel's war in Gaza. The Norwegian krone also gained as oil prices increased on the rising geopolitical tensions. The U.S. dollar was last down 0.25% at 10.29 krone. The euro , which is among the most exposed regions to higher energy costs, dipped 0.15% to $1.09555. The dollar fell 0.29% against the Japanese yen to 144.87 . Sterling dropped 0.12% to $1.27470 after data on Friday showed that Britain's economy grew slightly more than expected in November but remains at risk of a mild recession. In cryptocurrencies, bitcoin last stood at $43,643, down more than 5%, having surged to a two-year high of $49,051 on Thursday after the U.S. Securities and Exchange Commission on Wednesday gave the green light to offer ETFs linked to bitcoin. https://www.reuters.com/markets/currencies/dollar-steady-markets-assess-higher-than-expected-us-cpi-2024-01-12/