2023-12-07 06:16

Putin discussed OPEC+ with MbS Putin discussed situation in Middle East MOSCOW, Dec 7 (Reuters) - Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman called on Thursday for all OPEC+ members to join an agreement on oil output cuts, saying they were for the good of producers and the broader global economy. Putin held a hastily-arranged meeting in Riyadh with the Saudi crown prince on Wednesday after a pledge by OPEC+, which groups the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, to further cut output. Hours after Putin's face-to-face talks with the Saudi crown prince, known as MbS, the Kremlin released a joint statement detailing wide-ranging talks between them on oil, OPEC+, the wars in Gaza and Ukraine and even Iran's nuclear programme. "In the field of energy, the two sides commended the close cooperation between them and the successful efforts of the OPEC+ countries in enhancing the stability of global oil markets," the statement released by the Kremlin said. Saudi Arabia and Russia are the world's biggest oil exporters. "They stressed the importance of continuing this cooperation, and the need for all participating countries to join to the OPEC+ agreement, in a way that serves the interests of producers and consumers and supports the growth of the global economy," the statement, which was in Russian, added. The Russian version used the word "join" while an English translation of the statement, also released by the Kremlin, used the word "adhere" to the OPEC+ agreement. The total curbs amount to 2.2 million bpd from eight producers, OPEC said in a statement after last week's meeting. But not all OPEC+ members agreed to extend or deepen the voluntary oil cuts. After the OPEC+ meeting, Saudi Arabia agreed to extend voluntary oil output cuts of 1 million barrels per day (bpd) into the first quarter, while Russia said it would continue to curb oil exports by 300,000 bpd and additionally reduce its fuel exports by 200,000 bpd in January - March. OPEC was founded in 1960 by Iraq, Iran, Kuwait, Saudi Arabia, and Venezuela and expanded to 13 members. In 2016, OPEC signed an agreement with 10 other oil producers, including Russia, to create OPEC+. Russia and Saudi have coordinated supply cuts - both as part of OPEC+ and with side agreements - to support oil prices in recent years. https://www.reuters.com/world/russias-putin-told-saudis-mbs-we-meet-moscow-next-time-2023-12-07/

2023-12-07 06:11

Economic analysts split on recession and rate cut forecasts Earnings forecasts for S&P 500 most dispersed since COVID Lack of consensus means market volatility ahead, some investors say LONDON, Dec 7 (Reuters) - Investment banks and asset managers have wildly varying stock market and currency calls for 2024, reflecting deep division over whether the U.S. economy will enter a long-heralded recession and drag the world with it. The lack of consensus among forecasters is a stark contrast to a year ago, when most predicted a U.S. recession and rapid rate cuts that failed to materialise. The world's largest economy expanded by 5.2% in the third quarter of this year. The divisions this year have produced a scattergram of projections for the U.S. interest rate path and how global assets that are influenced by the Federal Reserve's actions will perform. Market participants are therefore bracing for a bumpy start to the new year after a strong rally last month for both stocks and bonds based on a short-term consensus that inflation and interest rates are on a firm downward path. "Whether the U.S. has a hard landing or a soft landing will dominate the market," said Sonja Laud, chief investment officer at Legal & General Investment Management. "The narrative isn't clear yet," she added, noting that if current interest rate forecasts "were to shift significantly that creates significant volatility" . Options trading data shows that investors are becoming increasingly interested in protecting their portfolios from heightened stock market volatility ahead. ALL TOGETHER...NOT Economists polled by Reuters predict 1.2% U.S. GDP growth for 2024 on average. But while forecasters are united that the Fed's most aggressive rate hiking cycle in decades will cause a slowdown, they are split on whether 2024 will also include a couple of quarters of economic contraction that may prompt rate cuts and weaken the dollar. Amundi, Europe's largest asset manager, now expects a U.S. recession in the first half of 2024, meaning the group is negative on the dollar and likes emerging market assets. In foreign exchange, Japan's yen will be the market's "bright spot" as the Bank of Japan is expected to finally move away from its ultra-easy monetary policy, said Amundi CIO Vincent Mortier. The yen is trading around 147 per dollar , not too far from 30-year lows. Morgan Stanley, however, sees no recession and reckons the Fed may keep rates high well into next year. It views the dollar index rising to 111 points from 104 currently, the euro dropping to $1 and the yen recovering only moderately to 142 per dollar. STOCKS, UP OR DOWN? For U.S. stocks, which drive world equity markets, forecasters are divided between what Citi head of trading strategy Stuart Kaiser calls the "converts and disciples" of last year's strong recession consensus. "Some bears are (still) very dedicated and believe that if it didn't happen this year it has to happen next year," Kaiser said. Deutsche Bank predicts a mild U.S. recession in the first half of 2024 and a whopping 175 basis points of rate cuts, with lower borrowing costs driving the S&P 500 share index (.SPX) to 5,100 points. The S&P 500 has gained 19% this year to 4,567. JP Morgan views a recession as possible and the S&P finishing the year at 4,200, while Goldman Sachs sees only limited recession risk. Equity analysts' estimates of S&P 500 earnings are currently the most dispersed since the COVID-19 pandemic, according to Blackrock Investment Institute (BII). LGIM, which manages roughly $1.5 trillion of assets, is underweight equities and expects a U.S. downturn, Laud said. Some investors meanwhile had moved beyond the U.S. economy debate to seek other opportunities. Luca Paolini, chief strategist at Pictet Asset Management, said the firm's big call was for gains in European equities, which they believed were undervalued (.STOXX). BONDS ARE BACK Most economic forecasters agree that a global inflation surge is over. But whether this means dramatic rate cuts, which generally raise bond prices as yields fall, is not something investors agree on either. Bond giant PIMCO puts the probability of a U.S. recession in 2024 at 50% and recommends government debt over equities. HSBC fixed income strategists target a 3% yield for the benchmark 10-year U.S. Treasury by late 2024, down from about 4.3% currently . But Adrian Gray, global chief investment officer at Insight Investment Management, said government bond markets had moved too exuberantly already. "We're seeing the Fed, the European Central Bank and the Bank of England all cutting (rates) from around Q3 next year," he said. "Right now, government bond markets are pricing in more than that," he said, projecting yields would rise "a little," from here. https://www.reuters.com/markets/global-markets-outlook-analysis-pix-2023-12-07/

2023-12-07 06:03

Yen sees biggest daily jump since January World stocks climb after three straight declines Oil prices edge lower to extend decline NEW YORK, Dec 7 (Reuters) - The Japanese yen jumped on Thursday as Bank of Japan policymakers hinted the central bank may shift away from its ultra-low interest rate plan and a gauge of global stocks rose after three straight falls as investors assessed the latest round of U.S. labor market data. The yen surged 2.39% against the greenback , its biggest one-day jump since Jan. 12, at 143.86 per dollar after Bank of Japan Governor Kazuo Ueda added to speculation that the central bank could move away from negative rates by saying policy management would "become even more challenging from the year-end and heading into next year" and indicated several options of what could be on the horizon. The BOJ is the only central bank not to start tightening policy. Meanwhile, central banks like the U.S. Federal Reserve and European Central Bank (ECB) are seen as nearing or at the end of their rate hike cycles. "The comments last night sort of poured rocket fuel into bets on an eventual move back into positive rates territory for the Bank of Japan," said Karl Schamotta, chief market strategist at Corpay in Toronto. The dollar index fell 0.50% at 103.62 while the euro was up 0.28% to $1.0792. Markets see about a 21% chance that the BoJ hikes rates at its final meeting of the year on Dec. 19, according to LSEG data. Japanese government bonds also saw a sharp sell-off, with yields on the 10-year Japanese government bond up 10.3 basis points, the most since July 28. On Wall Street, U.S. stocks climbed, led by a 3.22% gain in communication services (.SPLRCL) stocks as Google parent Alphabet (GOOGL.O) rallied and the latest piece of data on the labor market showed an uptick in weekly jobless claims. After a run of data this week confirmed some softening in the labor market, the focus will turn to Friday's government payrolls report. The Dow Jones Industrial Average (.DJI) rose 62.95 points, or 0.17%, to 36,117.38, the S&P 500 (.SPX) gained 36.25 points, or 0.80%, to 4,585.59 and the (.IXIC) jumped 193.28 points, or 1.37%, to 14,339.99. European shares closed lower as a recent rally stalled, with the STOXX 600 (.STOXX) index down 0.27%, while MSCI's gauge of stocks across the globe (.MIWD00000PUS) gained 0.48% and was poised for its first advance after three straight declines, its longest streak since late October. Longer dates U.S. Treasury yields were little changed after earlier bouncing slightly off three-month lows, ahead of the U.S. jobs report. The yield on the 10-year was last up 2 basis points at 4.144%. The cooling of economic data and recent comments from Federal Reserve officials, including Chair Jerome Powell, have heightened expectations that the U.S. central bank has ended its interest rate hiking cycle and will begin to cut rates as soon as March. While the market widely sees the Federal Reserve holding rates steady at its next policy meeting on Dec. 12-13, expectations for a U.S. rate cut of at least 25 basis points (bps) in March are about 63%, according to CME's FedWatch Tool, up from about 43% a week ago. Oil prices gave up early gains after a slight move higher and settled at a six-month low, as investors worried about sluggish energy demand in the United States and China while output from the U.S. remains near record highs. U.S. crude settled down 0.06% to $69.34 a barrel while Brent crude settled at $74.05 per barrel, down 0.34% on the day. https://www.reuters.com/markets/global-markets-update-1-2023-12-07/

2023-12-07 05:52

DUBAI, Dec 7 (Reuters) - The world needs to focus on phasing out coal, United Arab Emirates Energy Minister Suhail Mohamed Al Mazrouei said on Thursday on the sidelines of the COP28 climate summit. "I don't think we should talk about (fossil fuel) phase out because the technologies are also improving. What if in the future we have a technology that omits all of the CO2 emissions from fossil fuel and makes it clean, as clean as any other fuel? Why should we fight it before we have the alternative?" he said. https://www.reuters.com/sustainability/climate-energy/uae-energy-minister-world-needs-focus-phasing-out-coal-2023-12-07/

2023-12-07 05:33

A look at the day ahead in European and global markets from Tom Westbrook Oil prices defied worries over war in the Middle East and OPEC+ production cuts with a slump to five-month lows overnight, and are headed for their steepest annual drop since the lockdown year of 2020. Brent crude futures have fallen more than 20% from highs in late September and were sold down to their cheapest since late June, after a bigger-than-expected jump in U.S. gasoline inventories indicated dull demand over the Thanksgiving holiday. That overshadowed Wednesday's meeting between Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman, who discussed further cooperation on prices. For the year, Brent is down more than 13% and, at $74.64 a barrel, is settling into a range. That is good news for inflation, for bonds, and for the chances of interest rate cuts in 2024. Treasury yields crept up slightly in Asia trade on Thursday, although that isn't unusual following a strong rally in bonds in New York. Ten year yields hit three-month lows overnight before rising 2 basis points in Asia to 4.14%. Second-tier data on the European and U.S. calendars later in the day is headlined by German industrial figures and U.S. weekly jobs claims, with U.S. non-farm payrolls the main event on Friday. On Wednesday, data showed that U.S. labour costs fell last quarter, that private hiring had stabilised, and that pay increases slowed down - adding to evidence that the economy is slowing. In sum, it makes for a benign backdrop to central bank meetings in Europe, the U.S. and Japan in the coming weeks. In Asia on Thursday, Chinese trade data showed exports grew for the first time in six months in November, although imports unexpectedly shrank. Chinese stocks plumbed new lows, with Moody's downgrade of China's sovereign debt outlook earlier this week putting additional pressure on Chinese assets. The blue-chip CSI300 index (.CSI300) hit its weakest since early 2019 and the Hang Seng (.HIS) - which is down almost 9% in just 10 trading days - fell to a 13-month low. Key developments that could influence markets on Thursday: Economics: German industrial output, British home prices, final Euro zone GDP, U.S. jobless claims https://www.reuters.com/markets/europe/global-markets-view-europe-2023-12-07/

2023-12-07 05:29

Markets await U.S. non-farm payrolls data on Friday Palladium up about 3% U.S. weekly jobless claims rise moderately Dec 7 (Reuters) - Gold firmed on Thursday on a weaker dollar in the run-up to U.S. non-farm payrolls data, as traders hoped for signs of a weaker labour market to boost chances of a rate cut by the Federal Reserve as early as March. Spot gold edged up 0.3% to $2,029.92 per ounce by 2:25 p.m. ET (1925 GMT). U.S. gold futures settled 0.1% lower at $2,046.40. "The markets have gotten in front of themselves on the interest rate expectations," said Chris Gaffney, president of world markets at EverBank, adding that the only risk to metals prices next year was if "the Fed has to keep rates higher for longer." On Monday, bullion scaled an all-time peak of $2,135.40 on elevated bets for a Fed cut, before dropping more than $100 on uncertainty over the cut's timing. Traders were pricing a 62% chance of a rate cut by March next year, CME's FedWatch Tool showed, but a Reuters poll saw rates unchanged until at least July. Lower interest rates tend to support non-interest-bearing bullion. Benchmark 10-year Treasury yields were near three-month lows, while the U.S. dollar (.DXY) dipped 0.6%, making gold cheaper for other currency holders. While "drivers for a further gold rally are set in place," gold should consolidate and spend some time testing these new price levels, said Everett Millman, chief market analyst at Gainesville Coins. After an uptick in weekly U.S. jobless claims, traders positioned for the non-farm payrolls data on Friday in search of more signs of a weaker labor market. The market consensus is for a soft landing in the U.S., which historically makes gold less attractive. Still, geopolitical tensions in a critical election year alongside central bank buying could support gold in 2024, the World Gold Council said. Spot silver fell 0.4% to $23.79 per ounce, platinum rose 2.1% to $908.74, and palladium climbed 2.8% to $969.94. https://www.reuters.com/markets/commodities/gold-prices-flat-investors-await-us-jobs-more-fed-cues-2023-12-07/