2023-12-15 06:17
NEW YORK, Dec 15 (Reuters) - Wall Street stocks wobbled to a mixed close and the dollar bounced back on Friday as market participants caught their breath at the end of a week loaded with central bank policy decisions and crucial economic data. Treasury yields edged down past multi-month lows. Euphoria over the U.S. Federal Reserve's dovish pivot was dampened a bit after New York Federal Reserve President John Williams pushed back against rate cut expectations, reiterating that the central bank remains focused on bringing inflation down to its 2% target. All three major U.S stock indexes oscillated for much of the session, but by closing bell the S&P 500 was nominally lower, the Dow was modestly higher and interest rate-sensitive tech- and tech-adjacent momentum stocks put the Nasdaq out front. "We’ve been hovering around the flatline all day today," said Bill Northey, senior investment director at U.S. Bank Wealth Management in Helena, Montana. "After moving through some critical macroeconomic data points, including the Fed meeting, the market is digesting the news." All three indexes registered their seventh consecutive weekly gains, marking the S&P 500's longest streak of weekly gains since September 2017, and the Dow's longest since late 2018-early 2019. "It’s important to step back to early November when we saw the October price index print," Northey said. "Since that time we’ve seen real evidence of a decelerating inflation trend, which has allowed the Fed to pivot and reconcile with views that were already reflected in the market." "Our expectation is that trends in place over the past six weeks are likely to follow through to year end albeit at a somewhat slower pace," Northey added. Economic data released on Friday signaled an uptick in U.S. business activity but also showed the manufacturing sector continues to struggle. The Dow Jones Industrial Average (.DJI) rose 56.81 points, or 0.15%, to 37,305.16, the S&P 500 (.SPX) lost 0.36 points, or 0.01%, to 4,719.19 and the Nasdaq Composite (.IXIC) added 52.36 points, or 0.35%, to 14,813.92. European shares ended nearly flat to cap a week of rising rate cut expectations, posting their fifth consecutive weekly gain. The pan-European STOXX 600 index (.STOXX) rose 0.01% but MSCI's gauge of stocks across the globe (.MIWD00000PUS) shed 0.06%. Emerging market stocks rose 0.72%. MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) closed 1.03% higher, while Japan's Nikkei (.N225) rose 0.87%. U.S. Treasury yields dipped put trimmed their decline after the Fed's Williams reined in the rate cut fervor. Benchmark 10-year notes rose 5/32 in price to yield 3.911%, from 3.93% late on Thursday. The 30-year bond rose 24/32 in price to yield 4.0138%, from 4.054% late on Thursday. The dollar rebounded against a basket of world currencies. But the index registered its biggest weekly drop in a month after the Fed's dovish pivot. In contrast, the Fed's European counterparts maintained a tougher stance, which had boosted the euro and the pound on Thursday. The dollar index (.DXY) rose 0.56%, with the euro down 0.89% to $1.0893 The Japanese yen weakened 0.24% to 142.22 per dollar, while sterling was last trading at $1.2672, down 0.74% on the day. Oil prices eased back from the previous session's sharp gains with U.S. crude settling 0.21% lower at $71.43 per barrel, while Brent settled at $76.55 per barrel, down 0.08% on the day. Gold notched a weekly gain, but dropped 0.8% on the day to $2,018.91 an ounce. https://www.reuters.com/markets/global-markets-update-1-2023-12-15/
2023-12-15 06:08
PARIS, Dec 15 (Reuters) - Global coal use is expected to reach a record high in 2023 as demand in emerging and developing economies remains strong, the International Energy Agency (IEA) said in a report on Friday. Demand for coal is seen rising 1.4% in 2023, surpassing 8.5 billion metric tons for the first time as usage in India is expected to grow 8% and that in China is seen up 5% due to rising electricity demand and weak hydropower output, the IEA said. In the European Union and United States, however, coal use is set to drop by around 20% each in 2023, the report said. Coal use is not expected to decline until 2026, when the major expansion of renewable capacity in the next three years should help lower usage by 2.3% compared to 2023 levels, even with the absence or stronger clean energy policies. However, global consumption is forecast to remain well over 8 billion metric tons in 2026, the report said. To reach goals set by the Paris Agreement, the use of unabated coal would need to fall significantly faster, it added. China is expected to account for more than half of the global renewable expansion over the next three years, causing coal demand in the country to fall in 2024 and plateau through 2026, the IEA said. Half of the world's coal use comes from China, so the outlook for coal will be significantly affected in the coming years by the pace of clean energy deployment, weather conditions, and structural shifts in the Chinese economy, the report said. This year, China, India and southeast Asia are expected to account for three-quarters of global coal consumption, up from a quarter in 1990, with consumption in southeast Asia expected to eclipse the U.S. and EU in 2023, the report said. Through 2026, India and southeast Asia are the only regions where coal consumption is expected to grow significantly, the report said. https://www.reuters.com/sustainability/climate-energy/global-coal-use-all-time-high-2023-iea-2023-12-15/
2023-12-15 06:04
NEW YORK, Dec 15 (Reuters) - Investors wondering whether markets can continue their torrid rally are eyeing one important factor that could boost assets: a nearly $6 trillion pile of cash on the sidelines. Soaring yields have pulled cash into money markets and other short-term instruments, as many investors chose to collect income in the ultra-safe vehicles while they awaited the outcome of the Federal Reserve’s battle against surging inflation. Total money market fund assets hit a record $5.9 trillion on Dec. 6, according to data from the Investment Company Institute. The Fed’s unexpected dovish pivot on Wednesday may have upended that calculus: If borrowing costs fall in 2024, yields will likely drop alongside them. That could push some investors to deploy cash into stocks and other risky investments, while others rush to lock in yields in longer-term bonds. Cash has returned an average of 4.5% in the year following the last rate hike of a cycle by the Fed, while U.S. equities have jumped 24.3% and investment grade debt by 13.6%, according to BlackRock data going back to 1995. "We are getting calls ... from clients who have a significant level of cash and are realizing they need to do something with it," said Charles Lemonides, portfolio manager of hedge fund ValueWorks LLC. "This is the beginning of a cycle that will start to feed on itself." Recent market action shows the scramble to recalibrate portfolios may have already kicked off. Benchmark 10-year Treasury yields, which move inversely to bond prices, have fallen around 24 basis points since Wednesday’s Fed meeting to 3.9153%, the lowest since late July . The S&P 500 is up 1.6% since Wednesday's Fed decision and stands less than 2% below a record high. The index is up nearly 23% this year. "If you think the Fed is done with the hiking cycle, then it's time to deploy cash as the opportunity is there,” said Flavio Carpenzano, fixed-income investment director at Capital Group. Not all the cash in money market funds may be available as "dry powder" to be invested in stocks and bonds. Some of it is held by institutions that might otherwise have that money in bank deposits and is needed for cash purposes, said Peter Crane, president of Crane Data, which tracks money market funds. History also shows that the bulk of cash in money markets tends to remain even as rates come down, said Adam Turnquist, chief technical strategist for LPL Financial. "I think you could start to see some flows come out of money markets and chase this rally, but I don't think we are going to see anything to the tune of a trillion dollars or some massive flows that some people might expect," Turnquist said. And while money market assets are at record highs, their size relative to the S&P 500 is smaller than it has been during past peaks. Total money market fund assets as a percentage of market capitalization stand at about 15.5%, in line with the long-term median and well below the record high of 64% hit in 2009 in the aftermath of the global financial crisis. For now, however, investors' appetite for risk has been easy to spot. In the options market, for example, traders are spurning protection from a near-term drop in stocks even though the price of such hedges is attractive from a historical standpoint. The Cboe Volatility Index (.VIX), which reflects demand for insurance against market swings, fell to pre-pandemic lows this month. "No one is interested in buying insurance," said Chris Murphy, co-head of derivative strategy at Susquehanna Financial Group, noting that the low level of defensive positioning leaves the market vulnerable to a sharp reversal in the event of an unforeseen negative shock. Indeed, the sharp rebound in equities from their October lows has made some investors wary that markets have risen too quickly. “There’s enough money out there that it doesn't take a lot to directionally move the markets higher," said Jason Draho, head of asset allocation, Americas, at UBS Global Wealth Management. Still, the swift gains over the past six weeks in both equities and stocks "makes you a little concerned about where the upside is from here for the markets overall," he said. https://www.reuters.com/markets/us/6-trillion-cash-hoard-could-fuel-more-us-stock-gains-fed-pivots-2023-12-15/
2023-12-15 05:48
MOSCOW, Dec 15 (Reuters) - Blizzards swept across swathes of Russia on Friday, carpeting Moscow in one of the biggest snow falls in decades and sowing chaos on major roads where truck drivers battled with more than 20 centimetres of snow and strong winds. A cyclone brought more than a day of constant blizzards to the Russian capital in what could be one of the strongest snow storms to hit Moscow in 60 years, according to meteorologists. More than one fifth of the average snow fall for December was recorded over just 24 hours at metrological stations across Moscow where streets were blanketed in snow and motorists struggled to get their cars out of parking spaces. The Gismeteo weather website said total December snow fall in Moscow could reach 50 cm - the highest recorded for that month. Schools in some regions of European Russia were closed due to the snowfall, Russian television reported. A vast 10 kilometre traffic jam formed overnight on one of Russia's major roads - the M4 - to the south, trapping motorists in freezing temperatures. The Kommersant newspaper said that Moscow prices to dig out cars had soared to around 5,000 roubles ($55). ($1 = 89.7975 roubles) https://www.reuters.com/world/europe/blizzards-sweep-across-russia-bringing-massive-snow-falls-2023-12-15/
2023-12-15 05:33
A look at the day ahead in European and global markets from Kevin Buckland The feel-good Fed rally is showing no signs of slowing down into the weekend: Asian stocks climbed to a four-month peak, setting Europe up for another strong session. Things would need to go terribly wrong over the rest of the day to prevent the MSCI World index from notching a seventh straight winning week, its longest run in six years. The bullish narrative global investors are running with is that the U.S. economy will achieve an improbable soft landing, giving the Fed room to pivot towards rate cuts earlier than many had thought. Even the cautious postures of the ECB and BoE chiefs couldn't dampen the mood. But the parade of key central bank decisions that dominated this week still has further to run, with the Bank of Japan convening a two-day meeting from next Monday. Speculation for an imminent end to negative rates may have come off the boil, but if December gets a bye, the next opportunity is only a month later, and markets seem to be bracing for Governor Kazuo Ueda to prepare the path at his press conference next Tuesday. What it means for markets isn't clear, but the BOJ's position as a dovish outlier has provided an anchor for global bond yields throughout 2023. As for the global stocks rally, it definitely has room for a pullback - even before the weekend. The Dow reached a record high on Thursday, potentially tempting investors to take money off the table. There are also worries that markets have already overshot: 150 bps of Fed rate cuts are priced for next year - twice as much as the Fed's median forecasts indicate. Other developments that could influence markets on Friday: -France, Italy CPI (both Nov) -France, Germany, UK, euro area PMIs (all Dec) -US industrial production (Nov), NY Fed manufacturing (Dec), PMIs (Dec) -BoE Deputy Governor Dave Ramsden speaks, as does Bank of Canada Governor Tiff Macklem https://www.reuters.com/markets/global-markets-view-europe-2023-12-15/
2023-12-15 05:31
MUMBAI, Dec 15 (Reuters) - The Indian rupee was little changed on Friday as local dollar demand kept up the pressure despite the dollar index hovering near its weakest level in four months. The rupee was at 83.3025 as of 10:55 a.m. IST, little changed from its close of 83.33 in the previous session. The dollar index was slightly lower in Asia hours at 101.89 after dropping nearly 0.9% on Thursday. Strength in the euro and British pound drove down the dollar after the Bank of England and European Central Bank pushed back on expectations of rate cuts in 2024. "We did not discuss rate cuts. No discussion, no debate on this issue," ECB President Christine Lagarde said on Thursday. U.S. Federal Reserve Chair Jerome Powell had said on Wednesday that the question of when it will be appropriate to cut rates is "coming into view." Investors are currently pricing in 150 basis points (bps) worth of rate cuts over 2024 in the United States, according to CME Group's FedWatch tool. But the rupee has been largely unable to gain on the turn in the dollar as dip-buying interest from importers has kept gains capped, traders said. "Will watch for a drop below 83.20 (on USD/INR) to enter short position ... Otherwise range play as usual," a foreign exchange trader at a foreign bank said. Asian currencies were mostly rangebound but the Chinese yuan rose 0.2% to the U.S. dollar and was hovering near its strongest level in about six months. The rupee has strong support at 83.40 with "high potential," to log gains amid supportive global cues, Amit Pabari, managing director at fx advisory firm CR Forex, said. Meanwhile, rupee forward premiums declined on likely profit booking. The 1-year implied yield was lower by 4 bps at 1.71%. https://www.reuters.com/markets/currencies/rupee-barely-changed-even-dollar-extends-decline-forward-premiums-drop-2023-12-15/
