2023-12-06 11:35
Dec 6 (Reuters) - U.S. gasoline prices are the lowest they have been since January and by Christmas could fall below $3 a gallon for the first time since 2021, analysts said, which should boost consumer confidence during the holiday shopping season. The national average price for a gallon of gasoline stood at $3.23 on Tuesday, down 15% since mid-September, data from the motorist group AAA showed. Lower pump prices have given American consumers some relief from inflation and left more cash for discretionary spending. "Gas prices being down this year has allowed me to invest more into my small business than I could last year," said Macey Ropes, a tie-dye clothing store owner in Lafayette, Indiana. Tamer fuel bills have also helped her set aside money for personal shopping and travel around the holidays, she said. Gasoline prices averaged $3.008 a gallon in Indiana on Tuesday, almost half a dollar cheaper than last year. Prices have softened with benchmark global oil prices, which settled on Tuesday at their lowest since July as traders worried about China's economy. Oil prices have fallen despite fresh oil supply cuts announced on Thursday by OPEC+, the Organization of the Petroleum Exporting Countries and its allies. Global oil supplies are less strained than they were in the months following the start of the war in Ukraine. The cost of crude is the biggest component in retail gasoline pricing. U.S. West Texas Intermediate crude futures settled at $72.32 a barrel on Tuesday, down about 10% this year. U.S. refiners have lifted gasoline output since last year, helping to build inventories in recent months. Total U.S. motor gasoline inventories stood at 218.18 million barrels as of Nov. 24, 2% higher than a year ago and the highest for this time of the year since 2020, according to data from the Energy Information Administration. The national average price of gasoline is set to decline up to half a cent daily through the end of year. This could bring it below $3 a gallon for the first time since early 2021, said Andrew Gross, a spokesperson with the American Automobile Association. Declining gasoline prices could boost the consumer confidence index, which rose for the first time in November after three consecutive months of declines. "It is argued that gasoline rising towards $4 a gallon gasoline hurts consumer psyche, so a drop towards $3 should help keep it strong" said John Kilduff, partner at New York-based Again Capital. https://www.reuters.com/markets/commodities/us-gasoline-pump-prices-11-month-low-time-holiday-shopping-2023-12-06/
2023-12-06 11:31
TORONTO, Dec 6 (Reuters) - Analysts see less upside for the Canadian dollar than previously thought over the coming year as recent data showing a slowdown in the domestic economy brings forward the expected start of Bank of Canada interest rate cuts, a Reuters poll found. The median forecast of 35 foreign exchange analysts surveyed in the Dec. 1-5 poll was for the Canadian dollar to strengthen 0.4% to 1.3533 per U.S. dollar, or 73.89 U.S. cents, in three months, compared with 1.3450 in a November poll. It was then expected to advance to 1.3130 in a year, versus 1.3000 in last month's forecast. "Our view is the Canadian dollar is going to face a difficult next three months as the data starts to look like the Canadian economy is teetering on the edge of recession if not in a mild recession," said Simon Harvey, head of FX analysis for Monex Europe and Monex Canada. The Canadian economy unexpectedly contracted at an annualized rate of 1.1% in the third quarter, avoiding a recession after an upward revision to the previous quarter but showing growth stumbling. Soft domestic data "should bring forward expectations of BoC easing, especially relative to the Federal Reserve," Harvey said. "Earlier Bank of Canada easing is going to widen rate differentials in favor of USD-CAD." Money markets expect the Canadian central bank to leave its benchmark interest rate on hold at a 22-year high of 5% at a policy announcement on Wednesday and then begin easing policy as soon as March. As recently as October, there were no rate cuts priced in for 2024. A separate Reuters poll, from last week, showed economists expect the BoC to start cutting rates in the second quarter of next year and borrowing costs will drop by at least one percentage point by the end of next year. The Canadian 2-year yield has fallen further below its U.S. equivalent in recent weeks to a gap of 54 basis points, which is the widest since March. A lower yield tends to make a currency less attractive to investors. (For other stories from the December Reuters foreign exchange poll:) https://www.reuters.com/markets/currencies/canadian-dollar-forecasts-turn-less-bullish-boc-rate-cuts-eyed-2023-12-06/
2023-12-06 11:31
NEW DELHI, Dec 6 (Reuters) - India's Shree Cement (SHCM.NS) plans to bid for lithium mining rights under a government plan to secure critical minerals production through auctions that are expected to raise more than $5 billion. A source with direct knowledge of the matter told Reuters the company would apply for the rights to lithium mining blocks in Jammu and Kashmir, the federally administered region where an estimated 5.9 million tonnes of deposits were found in February. Shree Cement, India's second biggest cement company by market capitalisation, will also bid for blocks in the eastern state of Chhattisgarh, said the source, who asked not to be identified due to the commercial sensitivities. The move would be Shree Cement's first venture into mining and it has contacted Australia-based mining experts to work out details such as the premium that it should quote in its bid, the source added. The company is also seeking expert advice on the quality and grades of lithium reserves in Jammu and Kashmir. If it acquires a lithium block there it would team up with an Australian company for technical assistance on setting up a refinery, which would cost around $600-700 million, the source said. Last week, New Delhi launched the first part of its critical minerals auction that is expected to raise an estimated 450 billion rupees ($5.4 billion) by Feb. 20. The first tranche, which will cover blocks in a number of regions, will auction 20 blocks and is part of a planned auction of 100 blocks. India has been exploring ways to secure supplies of lithium, a critical raw material used to make electric vehicle batteries. Electric vehicles made up about 2% of total car sales in India of 3.9 million last fiscal year but the government wants to grow this to 30% by 2030. Prime Minister Narendra Modi's government in June this year listed 30 minerals, including lithium, nickel, titanium, vanadium and tungsten, as critical to drive its clean energy push. India has committed to cutting its emissions intensity - the amount of emissions released relative to its economic growth - by 2030 to 45% of its 2005 level and net zero by 2070. https://www.reuters.com/world/india/shree-cement-plans-bid-indias-lithium-auction-source-2023-12-06/
2023-12-06 11:29
BEIJING, Dec 6 (Reuters) - China has started commercial operations at a new generation nuclear reactor that is the first of its kind in the world, state media said on Wednesday. Compared with previous reactors, the fourth generation Shidaowan plant in China's northern Shandong province is designed to use fuel more efficiently and improve its economics, safety and environmental footprint as China turns to nuclear power to try to meet carbon emissions goals. Xinhua news agency also said the 200 megawatt (MW) high-temperature, gas-cooled reactor (HTGCR) plant developed jointly by state-run utility Huaneng, Tsinghua University and China National Nuclear Corporation, uses a modular design. Modular plants refer to those of less than 300MW that can be constructed off site. Proponents say they can operate in remote locations and power traditionally hard-to-abate heavy industry sectors, but critics say they are too expensive. NuScale Power, previously expected to be the first U.S. company licensed to build a small modular reactor, said this month it was terminating a planned 462MW project in Utah because of rising costs. China has a goal to produce 10% of electricity from nuclear by 2035 and 18% by 2060, but as of September this year had not met its 2020 target to install 58 gigawatts of nuclear capacity. China has also not signed a pledge by 20 countries at the COP28 climate conference taking place in Dubai to triple nuclear power capacity by 2050. https://www.reuters.com/world/china/china-starts-up-worlds-first-fourth-generation-nuclear-reactor-2023-12-06/
2023-12-06 11:11
Dec 6 (Reuters) - A look at the day ahead in U.S. and global markets by Amanda Cooper The first week in the month is always a crucial one for economic data and the market is finding plenty to like so far. Job growth is still happening, but at a slower pace, activity in the mighty U.S. services sector is expanding, but modestly. The oil price is down, taking more heat out of the inflation picture, but not so much that the world's major producers have expressed alarm about the demand outlook. The past few weeks have witnessed a dramatic shift in expectations for Federal Reserve monetary policy, from a "higher for longer" scenario to one of "lower, more quickly". Futures are pricing in a whopping 130 basis points of cuts in 2024, which many in the market say is far too optimistic, given the resilience of the economy, the evidence of tightness in the labour market and the fact that inflation is still above the central bank's 2% target. The 1980s were a period of higher interest-rate volatility. But in the past 30 years, the quickest the Fed has flipped to cutting rates has been the seven months between February 1995 and July that year, when they fell 25 bps to 5.75% in response to GDP virtually halving to 1.3% in the second quarter. The U.S. economy grew at a clip of 5.2% in the third quarter, well above expectations, which, in theory, would argue against a drop in rates any time soon. But recent data suggests momentum since then may have waned, as higher borrowing costs erode hiring and spending. It's been four months since the Fed last raised rates. Money markets show the earliest opportunity for a cut is priced in for March - eight months from the last rate hike - with a cut fully priced in by May, 10 months from the July hike. The strength of the U.S. consumer has taken most observers, including Fed policymakers, by surprise this year. Employment is holding up, wage growth means households' purchasing power hasn't suffered in the face of high inflation and higher interest rates in the last year. A lot is riding on Friday's jobs report. Job growth has to be decent, but not so decent as to suggest rate cuts might not be necessary as quickly as some believe. It's also got to show some sort of softening, but not enough to herald a sharper slowdown in the economy. Today's ADP survey of private sector employment is expected to show a rise of 130,000 workers in November, while non-farm payrolls is forecast to show growth of 180,000. The economy has generated around 2.4 million jobs so far this year, compared with 4.26 million at this point in 2022. The pace is slowing, but so is the breadth of job creation, according to Deutsche Bank. The bank's economists estimate that the end of the autoworkers strike will give a 30,000 boost to the headline payrolls number. But beyond that, they are looking at the report's diffusion index, which they say shows 70% of the private job gains in the past year have come from just two sectors, leisure and hospitality and private education and healthcare. They say that outside of those areas, job creation in the last 12 months has run at just 0.7% and over the last six months, a mere 0.2%. Key developments that should provide more direction to U.S. markets later on Wednesday: * November ADP national employment survey * October international trade https://www.reuters.com/markets/us/global-markets-view-usa-2023-12-06/
2023-12-06 10:06
BUENOS AIRES/NEW YORK, Dec 6 (Reuters) - Luis Caputo was once nicknamed the "Messi of finance" for reopening Argentina's access to credit markets after lengthy negotiations with debt holdouts. He now faces a World Cup-sized challenge to fix the South American country's worst economic crisis in decades. Caputo, 58, a sports-loving former finance minister and central banker, will take the reins of Argentina's economy ministry on Sunday, tasked with taming triple-digit inflation, rebuilding reserves deep in the red, and battling a recession. The market-friendly pick will also need to balance the demands of his new boss, incoming libertarian President Javier Milei, whose campaign pledges included shutting the central bank and dollarizing the economy. Those radical policies seemed worth betting on for many voters, as inflation heads towards 150% and two-fifths of the population live in poverty. Meanwhile, a debt time-bomb with bondholders and the International Monetary Fund (IMF) is ticking away. "The situation is very delicate," said Jose Echague, head of strategy at local firm Consultatio, which runs a $400 million mutual fund. The challenges would be much tougher than in 2015 when Caputo ran the finance portfolio, he said - no matter who was on the team. "Even if you have Messi and Maradona together on the same team, success is not guaranteed," he said, a tongue-in-cheek reference to the country's two soccer icons, the late Diego Maradona and recent World Cup winner Lionel Messi. Caputo, a father of six, has had an auspicious start. His appointment has already buoyed local markets, where investors are hopeful he will act as a brake on Milei's more extreme ideas and bring orthodox economic policies. "It signals a less radical approach in terms of dollarization," said Robert Simpson, co-head of emerging markets debt at Pictet Asset Management in London, which holds Argentine sovereign bonds. In a May report for his former consultancy Anker, Caputo's team said dollarization was "tough to implement" but not impossible, though argued that the "backbone" of Argentina's issues was its fiscal deficit. A CLEAN SLATE WITH THE IMF? Caputo previously worked at lenders JPMorgan and Deutsche Bank. He was finance minister from 2015 to 2017 and later central bank president in the government of conservative former President Mauricio Macri. After settling a multi-year debt battle with creditors in 2016, he helped raise some $3 billion in 2017 selling a 100-year bond. A signal of bullishness at the time, it has since burned many creditors as inflation and interest rates soared and bonds sunk into distressed territory. "He was the one who managed to obtain financing for the fiscal deficit," said Camilo Tiscornia, director of C&T Asesores Economicos and a former central bank official. This time around that may prove harder, with Argentina even more tightly locked out of financial markets, an estimated $10 billion hole in net foreign currency reserves, and an array of currency controls warping the foreign exchange market. Caputo also helped negotiate a 2018 IMF deal that rose to $57 billion. That eventually failed and was replaced by the current one. Alejandro Werner, who led talks as the then-IMF Western Hemisphere director with Caputo at the time, said that both sides would look to start with a clean slate to help revive the program, the IMF's largest by far worldwide. "I think the Fund will start the relationship with him from scratch," said Werner, now director of the Georgetown Americas Institute. "The past won't influence things." A former government official who worked closely with Caputo when he was finance minister said he was "straightforward" and a good listener, often surrounded by his core team of confidants, including Santiago Bausili, set to become the governor of the country's central bank. Caputo's priorities will be finalizing his economic team and having a strong economic policy adviser to balance his own finance focus, the official added. The person, who asked not to be named, said Caputo was "hooked" on sports and while at the finance ministry would often ensure meetings finished on time to make time to see his family. "Sometimes there were meetings on Fridays at the last minute and he would say that he wanted to finish so he could go see his children," he said. "He's a serious type but not prickly." https://www.reuters.com/world/americas/messi-finance-argentina-economy-chief-faces-world-cup-crises-2023-12-06/
