2024-01-06 07:27

Jan 6 (Reuters) - The commander of Iran’s Revolutionary Guards vowed on Saturday to reach "the enemy" far and near as tensions soar on key shipping routes where Tehran’s allies have been attacking vessels. "Today, we are facing an all-out battle with the enemy," said Guards commander Hossein Salami at a ceremony in the southern Gulf port city of Bandar Abbas, where the Guards' navy unveiled a new ship named "Abu Mahdi" and 100 missile launchers. Salami did not name the enemy, but 22 nations have agreed to participate in a U.S.-led coalition to safeguard commercial traffic in the Red Sea from attacks by Yemen's Iran-backed Houthi movement. The Houthi attacks since November are a show of support for the Palestinian group Hamas in its war with Israel. In response, many major shipping companies have switched to the longer and more costly route around the Africa's Cape of Good Hope rather than pass through the Suez Canal, which handles about 12% of global trade. "We need to defend our national interests to wherever they extend," Salami said in a televised speech. "It will be harmful for the enemy to be found near and at a half distant. They should stay away from this area." The Guards’ navy, he said, had made a "brilliant leap in its offensive and defensive powers" to challenge the world’s naval powers. According to Iranian media, Iran’s Alborz warship entered the Red Sea earlier this month to secure shipping routes. https://www.reuters.com/world/middle-east/iran-guards-commander-challenges-enemy-naval-presence-region-2024-01-06/

2024-01-06 00:41

NEW YORK, Jan 5 (Reuters) - Investors’ hopes are running high to start 2024, which could set up U.S. stocks for a rocky stretch if some expectations are not met. Despite a shaky start to the year, the S&P 500 (.SPX) stands only around 2% below a fresh record high. Most investors have maintained a rosy view on everything from the U.S. economy and corporate profits to the Federal Reserve’s monetary policy trajectory. For example, the narrative of resilient growth and gradually cooling inflation that helped boost the S&P 500 to a 24% gain last year has become the consensus view among investors. The latest BofA Global Research survey, released last month, showed 66% of fund managers believed the economy will achieve a soft landing in 2024. Only 15% of fund managers expected a recession in the next 12 months, BofA’s data showed, a sharp contrast from a year earlier, when 68% of investors expected a recession. Bets on easier monetary policy have gone hand-in-hand with the soft-landing outlook. Futures tied to the Fed’s policy rates show investors pricing in around 140 basis points of interest rate cuts this year, nearly twice what the central bank itself has projected. Not surprisingly, many investors have a positive outlook on stocks. Bullish sentiment rose to 48.6% in the latest week -- a notch down from its recent peak in December, but well above the historic average of 37.5%, the American Association of Individual Investors survey showed. Those views have been shaped in large part by tangible evidence of cooling inflation, a comparatively strong economy and the Fed’s own guidance, after policymakers surprised markets with a dovish pivot last month. With stocks near historical highs and at elevated valuations, however, some investors worry the market’s sunny outlook leaves more room for disappointment if any of those scenarios do not materialize. “Anything that throws off the current economic narrative or market narrative – the risk of that disappointment flowing through to prices in equities is higher," said Yung-Yu Ma, chief investment officer at BMO Wealth Management. One test of investors' optimism comes with next week's consumer price data, which could show whether recent bets on ebbing inflation have been premature. Expectations for a cooling economy that could set the stage for Fed rate cuts took a hit on Friday, after jobs data showed employers hired more workers than expected in December while raising wages at a solid clip. The S&P 500 fell 1.54% this week, the biggest weekly decline since late October. Major banks including JPMorgan Chase (JPM.N) and Citigroup (C.N) kick off earnings season next week, testing elevated expectations for corporate profits. Analysts expect S&P 500 earnings to rise by 11% in 2024 after increasing just 3% in 2023, according to LSEG data. Pressure to meet higher earnings targets may be more intense than a year ago, as the market's overall valuation has climbed. The S&P 500 trades at a forward price-to-earnings ratio of 19.5 compared with about 17 times at the start of 2023, LSEG Datastream data showed. "We don’t expect multiples to expand significantly from here because valuations are stretched a bit, so it’s going to come down to where the earnings come in," said James Ragan, director of wealth management research at D.A. Davidson. Ragan puts fair value for the S&P 500 at 4,700, roughly where it is trading now. Looking further ahead, investors will parse the message from the Fed at the end of its Jan. 30-31 policy meeting. Markets expect the central bank to leave rates unchanged this month, and bets on a cut at the March meeting have been pared back. Futures markets on Friday priced a roughly 62% chance that the Fed cuts rates by 25 basis points in March, from around 73% a week ago, CME's FedWatch Tool showed. Still, stocks have historically responded well to rate cuts. Over the past 12 easing cycles since 1970, the S&P 500 has tended to rally for the six or seven months after the first rate cut with an average gain of about 12%, according to Ned Davis Research. Keith Lerner, co-chief investment officer at Truist Advisory Services, said in a recent note that the bar for positive surprises has risen and he expects a “digestion period” for the market after its strong run. He still believes, however, that stocks are likely to rise in 2024. "Stick with the underlying positive market trend and be prepared to use pullbacks as opportunities," Lerner said. https://www.reuters.com/markets/us/wall-st-week-ahead-high-market-hopes-raise-stakes-us-stocks-face-inflation-data-2024-01-06/

2024-01-06 00:17

Jan 5 (Reuters) - Investment management firms, stock exchanges and the U.S. Securities and Exchange Commission on Friday discussed final wording changes on filings for spot bitcoin ETFs, a step that could lead to U.S. approval of the funds for the first time next week, sources familiar with the matter said. Issuers held discussions with SEC officials about the S-1 prospectus documents that every exchange-traded fund (ETF) must submit for approval, according to executives and representatives of five firms who declined to be identified due to the confidentiality of the ongoing talks. Multiple issuers said Friday they expect to receive final approval of S-1 filings by late Tuesday or Wednesday. The SEC sought what three issuers described as "minor" changes. Some asset managers are expected to amend their filings to disclose fees or identities of the market-makers for their ETFs. Those updates are due by 8 a.m. ET (1300 GMT) on Monday and could become public that day, sources familiar with the process said. An SEC spokesperson said the agency did not comment on individual filings. Separately, regulators have been working with exchanges to finalize 19b-4 filings, which spell out the rule changes the SEC must approve for spot bitcoin ETFs to launch. Late Friday, exchanges submitted revisions to 11 of those filings. People familiar with the filing process have said issuers that met end-of-year filing revision deadlines may be approved to launch by Jan. 10, the date when the SEC must either approve or reject the Ark/21Shares ETF, the fund that is first in line. Multiple asset managers have applied for permission to launch spot bitcoin ETFs since 2013, but the SEC rejected them, arguing the products would be vulnerable to market manipulation. Fourteen firms including BlackRock (BLK.N), Fidelity and WisdomTree (WT.N) submitted applications for spot bitcoin ETFs last year and await a decision from the SEC. In a move that three issuers described as unusual, the SEC has asked issuers that hope to launch next week to also prepare written requests for the regulator to accelerate the effective date for those ETFs. The normal process is for regulators to discuss the timing more informally with issuers. Bloomberg previously reported that SEC commissioners are expected to vote on the 19b-4 rule changes next week. A source at one of those issuers told Reuters that vote is likely to take place on Wednesday. https://www.reuters.com/markets/us/us-spot-bitcoin-etfs-could-win-approval-next-week-after-last-minute-application-2024-01-06/

2024-01-05 23:44

Data releases offer something for rate hawks and doves US job growth beats expectations, but service sector slows Peloton up on TikTok accord; Palantir dips on Jefferies report Friday indexes up: Dow 0.07%, S&P 0.18%, Nasdaq 0.09% Weekly indexes down: Dow 0.59%, S&P 1.54%, Nasdaq 3.26% Jan 5 (Reuters) - U.S. stock indexes endured a topsy-turvy session on Friday but ultimately closed marginally higher, although the small gains did not stop the S&P 500 and Nasdaq Composite from starting 2024 with their worst weekly showing in months. All three benchmarks recorded their first weekly declines for ten weeks: the S&P 500 (.SPX) dropped 1.54%, while the Nasdaq Composite (.IXIC) slumped 3.26%, and the Dow Jones Industrial Average (.DJI) dipped 0.59%. For the S&P 500, it was its worst weekly performance since late October, while the Nasdaq posted its worst week since late September. Investors have been cautious in the opening sessions of 2024, as they awaited further clarity on when interest rate cuts will begin, and how quickly they will happen. Hopes for a swift pace of easing had triggered a blistering rally in the final weeks of 2023, which took the S&P 500 to within 1% of its all-time high, so any undermining of that hypothesis has been a cue for profit-taking. "For now, it probably looks like a healthy correction for a market that was overbought at the end of last year," said Greg Boutle, head of US equity & derivative strategy at BNP Paribas. Friday's session saw markets gyrate throughout the day, as investors absorbed the latest macroeconomic data which offered contrasting views on when interest rate cuts may begin. Initially, robust jobs data in a report from the Labor Department, which showed U.S. employers hired more workers than expected in December, doused expectations of rapid easing of interest rates, pushing futures lower. However, a survey from the Institute for Supply Management (ISM) then showed activity in the services sector fell in December, pointing to a weaker economy. That encouraged those betting on rapid easing, sending markets higher through the morning and into the afternoon. Despite further undulations in the afternoon, ultimately the three benchmarks eked out a winning finish to the day - the first positive sessions of 2024 for the S&P and Nasdaq. "In terms of the macro data, I think there's something for everybody, in terms of the data that we're seeing," said BNP's Boutle. He added though that this week's data releases were unlikely to have convinced anyone to have changed their minds from their position on rate-cuts coming into the year. Traders see a 66.4% chance of at least a 25-basis point cut in March, according to the CME Group's FedWatch tool. The yield on the benchmark U.S. Treasury 10-year note , reflecting interest rate expectations, finished the week at 4.05%. The financials index (.SPSY) led gainers among the S&P 500 sectors, rising 0.5%, as banks continued to perform well ahead of the start of earnings season next week. Large regional banks were buoyant, with Zions Bancorporation (ZION.O), Citizens Financial Group (CFG.N) and Comerica Inc (CMA.N) all rising between 2.6% and 3.3%. The S&P Banks index (.SPXBK) gained 1.3%, hitting an 11-month high. On Friday, the S&P 500 (.SPX) gained 8.56 points, or 0.18%, to end at 4,697.24 points, while the Nasdaq Composite (.IXIC) gained 13.77 points, or 0.09%, to 14,524.07. The Dow Jones Industrial Average (.DJI) rose 25.77 points, or 0.07%, to 37,466.11. Applied Therapeutics (APLT.O) tumbled 40.6% after the drug developer's heart disease drug showed disappointing results in a late-stage trial. Palantir Technologies (PLTR.N) lost 1.7% after Jefferies downgraded the data analytics firm to "underperform" on high stock valuations. Peloton (PTON.O) jumped 9.6% after the fitness equipment maker said it will bring its workout content to short-form video platform TikTok in an exclusive partnership. The volume on U.S. exchanges was 11.2 billion shares, compared with the 12.3 billion average over the last 20 trading days. https://www.reuters.com/markets/us/futures-point-declines-first-week-2024-jobs-data-tap-2024-01-05/

2024-01-05 22:14

U.S. Secretary of State Blinken visits Middle East U.S. employment data shows increased hiring and wages Rig count declines for third time in four weeks Maersk diverts vessels from Red Sea for foreseeable future HOUSTON, Jan 5 (Reuters) - Oil prices settled higher on Friday as U.S. Secretary of State Antony Blinken began a week-long sweep through the Middle East in an attempt to contain regional tensions stoked by the Israel-Hamas conflict. Brent crude futures settled up $1.17, or 1.51%, at $78.76 a barrel. U.S. West Texas Intermediate crude futures finished up $1.62, or 2.24%, at $73.81. Crude rebounded from losses on Thursday triggered by hefty increases in U.S. gasoline and distillate stocks, and both benchmarks ended the first week of the year higher. "With the tensions in the Middle East, the geopolitical trading premium has to get pushed higher," said John Kilduff, partner at Again Capital LLC. "It's hard for traders to fight the headlines." Shipping giant Maersk (MAERSKb.CO) said it will divert all vessels away from the Red Sea for the foreseeable future, warning customers of disruptions. A U.S. government report showing employment grew in December would support demand in the coming year, Kilduff said. U.S. employers hired more workers than expected in December while raising wages at a solid clip, prompting financial markets to dial back expectations that the Federal Reserve would start cutting interest rates in March. Non-farm payrolls increased by 216,000 jobs last month, the Labor Department said. Economists polled by Reuters had forecast payrolls rising by 170,000 jobs. "Strong employment should point to strong demand for fuel," Kilduff said. Bank of America said it was taking a defensive stance toward oil stocks because of the long-term price forecast for oil. It said it expects the $70-$90 a barrel Brent trading range in place since OPEC+ intervened to hold, adding that "a permanently backward oil curve steepened by spare capacity" is a headwind for sector value. Oilfield services company Baker Hughes said the count of active drilling rigs - oil and natural gas rigs combined - fell by one last week to 621, the third decline in four weeks. Crude oil drilling rigs were up by one at 501 while natural gas drilling rigs fell by two to 118. Money managers cut their net long U.S. crude futures and options positions in the week to Jan. 2, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday. The speculator group cut its combined futures and options position in New York and London by 33,051 contracts to 51,215 during the period. https://www.reuters.com/markets/commodities/us-crude-futures-rise-2-middle-east-tensions-2024-01-05/

2024-01-05 21:58

WASHINGTON, Jan 5 (Reuters) - The Department of Energy's loan office on Friday conditionally approved a $189 million loan to support the build-out of a methane monitoring network in key oil-producing basins that would provide real-time data for tens of thousands of oil and gas sites, which it estimates could prevent the equivalent of at least 6 millions tons of carbon dioxide per year. Houston-based Long Path Technologies will use the loan to deploy its Emissions Overwatch System across 24,000 square miles (62,160 square km) in several states. The technology uses lasers - placed on 50-foot (15-meter) towers - to monitor areas for methane leaks. Unlike optical gas imaging, which takes less frequent measurements of methane, the Long Path system can continuously monitor 8-square mile (21-square km) areas, which could provide updates every two hours and notify operators in the event of a leak, according to DOE's Loan Program Office. Some of Long Path's current subscribers include oil and gas firms like Conoco Phillips (COP.N) and pipeline company Williams (WMB.N). The DOE said the loan is the latest commitment by the Biden administration to tackle methane, a potent, short-lived greenhouse gas that can leak into the atmosphere undetected from drill sites, gas pipelines and other oil and gas equipment. Methane has more warming potential than carbon dioxide and breaks down in the atmosphere faster, so reining in methane emissions can have a more immediate impact on limiting climate change. The U.S. Environmental Protection Agency last month unveiled regulations that would ban routine flaring of natural gas produced by newly drilled oil wells, require oil companies to monitor for leaks from well sites and compressor stations, and establishes a program to use third-party remote sensing to detect large methane releases from so-called "super emitters" in places like the Permian Basin. https://www.reuters.com/business/energy/us-approves-189-million-loan-real-time-methane-oil-monitoring-2024-01-05/