2023-12-19 11:16

BERLIN/FRANKFURT, Dec 19 (Reuters) - German energy firm Sefe secured a blockbuster 50-billion-euro ($55 billion) gas deal with Norway's Equinor (EQNR.OL) on Tuesday, covering a third of the industrial gas needs of Europe's largest economy. The deal marks a milestone in Berlin's efforts to replace former long-term supplier Russia, which first cut and later suspended deliveries via the Nord Stream pipeline in 2022, stoking fears of cold German homes during the last winter season. "This is a response to Europe's need for long-term, reliable supply of energy and a viable route to decarbonisation at scale," Equinor CEO Anders Opedal said. The supply deal covers around 10 billion cubic metres (bcm) of natural gas per year from Jan. 1 2024 until 2034 and carries an option for another five years covering 29 bcm, the two companies said in a joint statement. At current market prices, this translates into a contract volume of around 50 billion euros, Equinor said. The agreement also covers a non-binding letter of intent that would make Sefe, formerly known as Gazprom Germania, an offtaker of low-carbon hydrogen from Equinor starting in 2029 and continuing towards 2060, the firms said. Sefe - short for Securing Energy for Europe - was nationalised by Berlin during the continent's energy crisis and, along with Uniper , has been put in charge of securing the country's gas supply. "The procurement of natural gas from the Norwegian continental shelf ensures the sustainable and future-proof supply for European and, in particular, German customers in the household and industrial sectors," Sefe CEO Egbert Laege said. ($1 = 0.9143 euros) https://www.reuters.com/business/energy/norways-equinor-germanys-sefe-strike-55-billion-gas-supply-deal-2023-12-19/

2023-12-19 11:15

MADRID, Dec 19 (Reuters) - The share of electricity generated in Spain from renewable sources rose to 50.8% in 2023 from 42.2% a year earlier as the country moves towards its decarbonisation goals, Energy Minister Teresa Ribera said on Tuesday. "We still have to add energy storage and offshore wind farms," she said in a video posted on the social media platform X, formerly known as Twitter. "There are many things that are still pending, but our contribution to the transformation of the European system is obvious." With its sunny plains, fast-flowing rivers and wind-swept hillsides, Spain seeks to raise the share of renewables to four-fifths by 2030, according to a draft government plan issued in June. Companies from across the globe have been investing in the country to build the infrastructure that should help it reach that goal. https://www.reuters.com/business/energy/spains-share-electricity-generated-renewables-rose-508-2023-2023-12-19/

2023-12-19 11:14

ECB also applies add-ons for leverage Focus remains on credit, liquidity in 2024 FRANKFURT, Dec 19 (Reuters) - The European Central Bank said on Tuesday it had raised capital requirements for 20 banks after judging they had not set aside enough cash to cover for loans that had gone unpaid, a key concern for supervisors after borrowing costs rose sharply. The move was part of the ECB's push, set to continue next year, to ensure banks are preparing for more delinquencies and tighter liquidity after it jacked up interest rates to fight high inflation. Presenting its annual evaluation of the euro zone banking sector, the ECB said it had slapped capital "add-ons" on 20 large banks over their bad loans. "In these cases, a shortfall was identified relative to the ECB's coverage expectations," the euro zone's central bank and top banking supervisor said, without naming individual lenders, as is its policy. It said there were already some early signs of asset quality deterioration given the weak economic environment and warned this could boost the stock of soured credit. The ECB also imposed capital charges on eight banks over their exposure to "leveraged finance" - lending to already indebted borrowers. In addition, it applied an extra capital requirement to six banks, and gave "guidance" to a further seven, for taking on too much leverage or trying to paint an excessively rosy picture of their financial position. "We focused on persistent, and in some cases long-standing, weaknesses in risk management, governance and internal controls," the ECB's outgoing chief supervisor Andrea Enria said at a news conference. Enria's term will run out at the end of the year, when he will be replaced by Claudia Buch, currently the vice-president of Germany's Bundesbank. NEXT YEAR In 2024, the ECB will keep its focus on credit and liquidity risks, the latter of which was thrown into the spotlight by this year's crises at Credit Suisse and Silicon Valley Bank. "The higher interest rate environment is expected to increase both the volatility of some funding sources and banks' funding costs in the medium term, just when substantial amounts of central bank funding are to be replaced," the ECB said. This year, the ECB has told two banks to extend their "survival period", the number of days that their available cash and collateral can buy. Another bank was told to build a liquidity buffer in a foreign currency. Banks will also be urged to remediate their "shortcomings" in the management of climate-related risks, the ECB said. It gave them time to do so until the end of next year, with several interim deadlines. "To support this objective, ECB Banking Supervision stands ready to make use of the tools at its disposal (including, when needed, capital add-ons, enforcement and sanctions and reviews of fit and proper assessments)," the ECB said. https://www.reuters.com/markets/europe/ecb-raises-capital-demands-20-banks-over-bad-loans-2023-12-19/

2023-12-19 11:13

Dec 19 (Reuters) - A number of container ships are anchored in the Red Sea and others have turned off tracking systems as traders adjust routes and prices in response to maritime attacks by Yemen's Iran-aligned Houthis on the world's main East-West trade route. Attacks in recent days on ships in the major Red Sea shipping route have raised the spectre of another bout of disruption to international commerce following the upheaval of the COVID pandemic, and prompted a U.S.-led international force to patrol waters near Yemen. The Red Sea is linked to the Mediterranean by the Suez Canal, which creates the shortest shipping route between Europe and Asia. About 12% of world shipping traffic transits the canal. Major shippers including Hapag Lloyd (HLAG.DE), MSC and Maersk (MAERSKb.CO), oil major BP (BP.L) and oil tanker group Frontline (FRO.OL) have said they will be avoiding the Red Sea route and re-routing via southern Africa's Cape of Good Hope. But many ships are still plying the waterway. Several ships underway have armed guards on board, LSEG data showed. At least 11 container ships which had passed through Suez and were approaching Yemen carrying consumer goods and grains bound for countries including Singapore, Malaysia and the United Arab Emirates, are now anchored in the Red Sea between Sudan and Saudi Arabia, LSEG shiptracking data showed. Four MSC container ships in the Red Sea have had their transponders turned off since Dec. 17, the data showed, likely to avoid detection. Some vessels are attempting to mask their positions by pinging on other locations, as a safety precaution when entering the Yemen coastline, said Ioannis Papadimitriou, senior freight analyst at Vortexa. Denmark's Maersk on Friday paused all container shipments through the Red Sea following a "near-miss incident" involving its vessel Maersk Gibraltar a day earlier. A number of the ships at anchor in the Red Sea are Maersk vessels, LSEG data showed. On Tuesday it said vessels previously paused and due to sail through the southern Red Sea and the Gulf of Aden would be rerouted around Africa. The Iran-backed Houthis, who say they are supporting Palestinians under siege by Israel in the Gaza Strip, have waded into the Israel-Hamas conflict by attacking vessels in vital shipping lanes and even firing drones and missiles at Israel, more than 1,000 miles from the Yemeni capital Sanaa. Houthis attacked two commercial shipping vessels in the southern Red Sea on Monday.(LINK) Industry sources say the impact on global trade will depend on how long the crisis persists, but insurance premiums and longer routes would be immediate burdens. Vortexa's Papadimitriou on Tuesday said the price of a Suezmax to carry crude from the Middle East to Europe has risen 25% in a week. The disruption to energy flows in the Red Sea is unlikely to have large effects on crude and liquefied natural gas (LNG) prices, Goldman Sachs said on Monday, as vessels can be redirected. "We do estimate that a hypothetical prolonged redirection of all 7 million barrels per day of gross (Northbound and Southbound) oil flows would raise spot crude prices relative to long-dated prices by $3-4/per barrel," the investment bank said. An Asian buyer of naphtha, a petrochemical feedstock imported from Europe, said their vessels were still using the Red Sea route as it would take another 7-14 days to re-route via Cape of Good Hope. Some oil tanker owners are inserting a new clause to include a Cape of Good Hope option into their shipping contracts as a precautionary measure, shipbrokers said. A person familiar with Alibaba's Cainiao logistics arm said they may see slightly longer delivery times and shipping fees, but overall the re-routing would have little impact on business. https://www.reuters.com/world/middle-east/shippers-mask-positions-weigh-options-amid-red-sea-attacks-2023-12-19/

2023-12-19 11:01

A look at the day ahead in U.S. and global markets from Mike Dolan The Bank of Japan deferred any further tightening of its ultra-loose money policy until next year, becoming the last of the G4 central banks to clear the decks for the year and leaving Wall St stocks sizing up all time highs. With global investors already pumped up by the prospect of U.S. and European interest rate cuts next year, the Bank of Japan kept its main policy rate negative on Tuesday as expected, waiting for more evidence on wage growth and prices to justify a shift away from its ongoing monetary stimulus. "We still need to scrutinise whether a positive wage-inflation cycle will fall in place," BOJ boss Kazuo Ueda said, making no formal change to the bank's guidance. As some traders had feared, the BOJ may tweak its language to suggest a near-term end to negative interest rates, the status quo saw the yen slide more than 1% and Japanese stocks (.N225) surge more than 1%. All of which appeared to clear the way for increasingly bullish year-end markets, with MSCI's all-country index (.MIWD00000PUS) stalking last week's near 20-month highs. And even though some Federal Reserve and European central banks officials have tried to push back against what they saw as excessive easing speculation in recent days, San Francisco Fed boss Mary Daly underlined the direction of travel at least. Daly told the Wall Street Journal Fed rate cuts are likely be appropriate next year because of an improvement in inflation and there was a risk of the policy stance being too tight. "We don't give people price stability but take away jobs," she said. The comments will encourage bond bulls and may spur ebullient Wall St stock indexes (.SPX) into record territory. Ten-year Treasury yields tested 3.90% again first thing on Tuesday, close to 5-month lows, with the so-called 'term premium' sinking back over the past week to its most negative since September. Stock futures nudged up again ahead of the bell, with the S&P500 (.SPX) hitting 23-month highs on Monday and coming within 1.4% of new all-time records. The Nasdaq 100 (.NDX) got to within a whisker of new records too, with the NYFANG index (.NYFANG) of digital and tech megacaps soaring to unprecedented levels and more than double what it was on January 5. Spotlighting the burst of investor optimism, Bank of America's latest global fund manager survey showed asset managers were are at their most overweight equities relative to cash since January 2022 - and yet with more fuel in the tank because they were still overweight cash per se, even if by the least amount since April 2021. It's been a bruising time for short sellers. The unexpected U.S. share rally last week has sent hedge funds scrambling to cover their bearish short bets against U.S.-listed companies, UBS said on Tuesday. The dollar (.DXY) was mixed again - clearly higher against the yen, but off against the euro and sterling. Background jitters about shipping threats in the Red Sea seemed to dissipate quickly. Crude oil prices fell back again from Monday's highs and are still tracking near 5% year-on-year declines. Shipping prices (.BADI) also continued to ebb from recent highs, and were more than 30% off peaks set two weeks ago. Housing starts top the U.S. data diary later, with Fed speakers in the mix too and FedEx results due as well. Canada's markets will eyeball the latest inflation numbers there. Deals activity remained brisk. UBS (UBSG.S) shares rose 1.6% after activist investor Cevian Capital took a 1.3% stake in the bank. Nippon Steel (5401.T) said on Tuesday its $14.1 billion deal to buy U.S. Steel (X.N) would help it tap into a new growth market as concerns over the huge premium the world's fourth largest steelmaker was paying hit its shares by as much as 6%. Apple (AAPL.O) said on Monday it would pause sales of its Series 9 and Ultra 2 smartwatches in the United States from this week, as it deals with a patent dispute over the technology that enables the blood oxygen feature on the devices. Its stock was off about 0.5% in Frankfurt trading. Key developments that should provide more direction to U.S. markets later on Tuesday: * U.S. Nov housing starts/permits, Oct Treasury TIC data on flows and overseas holdings of U.S. government securities, Canada Nov consumer price inflation * Chicago Federal Reserve President Austan Goolsbee; Atlanta Fed chief Raphael Bostic European Central Bank , Bank of England Deputy Governor, Financial Stability, Sarah Breeden * U.S. corporate earnings: FedEx, Accenture, Factset Research https://www.reuters.com/markets/us/global-markets-view-usa-2023-12-19/

2023-12-19 10:25

LONDON, Dec 19 (Reuters) - The pound rallied on Monday as the dollar struggled against most currencies except the yen, with investors increasingly talking up sterling as a hot prospect for next year. Britain's currency was last 0.71% higher against the dollar at $1.2737. The euro was down 0.19% against the pound, buying 86.19 pence. The pound has climbed around 2.8% over the last three months as optimism that the U.S. Federal Reserve will soon be cutting rates has intensified. That has opened up a gap between British bond yields and their lower U.S. counterparts, making UK fixed income assets more attractive. "The prevailing view that Bank of England rate cuts will be lagging those of the Fed in 2024 has supported the pound," said Jane Foley, head of FX strategy at Rabobank. Investors are currently pricing in around 120 basis points of cuts from the BoE next year but almost 150 bps from the Fed. Many strategists, Foley included, think sterling can continue to profit from the gap in expectations. "We see scope for cable to track up to $1.30 on a nine-to-12 month view on rate differentials," she said. Goldman Sachs thinks sterling is likely to head to $1.35 in 12 months time, a dramatic turnaround from just over a year ago when a chaotic government budget sent the currency to its lowest on record at $1.0327. British inflation data for November is due on Wednesday before traders head off for the Christmas break. Headline inflation is expected to have slowed to 4.4% year-on-year, from 4.6% in October. Inflation is running higher than in the U.S. or euro zone, where it stood at 3.1% and 2.4% respectively in November. That is one reason the Bank of England pushed back against expectations for rate cuts last week. BoE Deputy Governor Ben Broadbent said on Monday that it was too soon to say if wage growth - a driver of inflationary pressure - is on a downward trend. The dollar index , which tracks the currency against six peers, was down 0.3% at 102.18. The yen fell around 0.8% after the Bank of Japan stuck to its ultra-loose monetary policy. https://www.reuters.com/markets/currencies/sterling-climbs-investors-eye-further-gains-2024-2023-12-19/