2023-12-02 00:01
NEW YORK, Dec 1(Reuters) - The benchmark S&P 500 index (.SPX) closed at its highest level of the year on Friday amid growing optimism the Federal Reserve was done raising U.S. interest rates and could begin to cut them next year as inflation cools. The index closed at 4,594.63 points, up 26.83 points, or 0.59%, and topping the close on July 31 at 4,588.96, which had been the prior high of 2023. U.S. stocks rebounded in November following three straight months of declines on better-than-expected earnings and as evidence of easing inflation boosted bets that the Fed was at the end of its monetary tightening campaign. On Friday the benchmark S&P 500 got another boost when Federal Reserve Chair Jerome Powell vowed to move "carefully" on interest rates, describing the risks of going too far with tightening as "more balanced" with risks of not controlling inflation. "Markets view today’s comments as inching toward the dovish camp," said Jeffrey Roach, chief economist at LPL Financial in Charlotte, North Carolina, in an email. "A few weeks ago, Powell said policy is restrictive but today, he believes policy is 'well into restrictive territory.' I think it’s fair for markets to latch on to that subtlety." https://www.reuters.com/markets/us/futures-muted-traders-gear-up-powells-remarks-2023-12-01/
2023-12-01 23:12
CHISINAU, Dec 1 (Reuters) - Pro-European authorities in Moldova on Friday dismissed as groundless a ban imposed by Russia on imports of its fruit and vegetables, the latest display of deteriorating relations between Moscow and the ex-Soviet state. Russia's farm goods oversight agency, Rosselkhoznadzor, said on Thursday it was reinstating restrictions last imposed in 2022. It cited "continuous, systematic observation of elements subject to quarantine" and said Moldovan authorities had taken no action to right the situation. Moldova's food safety agency ANSA said the restrictions, to take effect on Monday, had nothing to do with the quality of its goods. No other importing countries had filed complaints. "The decision by the Russian authorities contradicts phytosanitary principles and is in no way grounded in real arguments," it said in a statement. "Laboratory evidence underscores the absence of any harmful organisms." Russia has periodically over the past two decades barred farm goods from the country lying between Ukraine and Romania, measures generally coinciding with a downturn in relations. Moldovan President Maia Sandu who is heading a drive to join the European Union, has denounced Russia's invasion of Ukraine and accused Moscow of trying to foment a coup to remove her. She also accused Russia of meddling in Moldova's local elections last month. Exchanges between the two sides have become increasingly acerbic. Russian Foreign Minister Sergei Lavrov, dismissing Western criticism of Moscow's 21-month-old conflict in Ukraine, on Thursday said that Moldova was "being readied as the next victim in the hybrid war that the West unleashed against Russia". Lavrov did not elaborate on his comments. Moldovan producers said Moscow deliberately imposed the measures at a time of the year when their goods flooded on to the Russian market, but added that they were prepared. "We have managed partly to reorient markets for Moldovan apples. We ship to 28 countries," Iurie Fala, Executive Director of the Moldovan Fruit Producers Association, told Reuters. "There is a shortage of apples this year on EU markets and that will boost our sales." https://www.reuters.com/world/europe/moldova-denounces-new-russian-ban-fruit-imports-2023-12-01/
2023-12-01 23:07
Dec 1 (Reuters) - Oil and gas pipeline firm Equitrans Midstream (ETRN.N) was in the early stages of considering a sale, Bloomberg News reported on Friday, citing people familiar with the matter. While there is no certainty the company would decide to proceed with the sale, it would likely attract interest should it launch a sale process in early 2024, the report said. Equitrans owns a 48.1% ownership interest in the Mountain Valley pipeline and will operate it once it is online - which is expected to be in the first quarter of 2024. When the company started construction in February 2018, Equitrans estimated the 2.0 billion cubic feet per day project would cost about $3.5 billion and enter service by late 2018. Now, the project stands to cost nearly $7.2 billion, having faced numerous legal challenges and labor issues. Bloomberg, citing Citi analyst Spiro Dounis, highlighted that with the pipeline close to being complete, exploring a potential sale would make sense. Equitrans did not immediately respond to a Reuters request for comment. https://www.reuters.com/business/energy/equitrans-early-stages-discussing-asset-sale-bloomberg-news-2023-12-01/
2023-12-01 22:59
Dec 1 (Reuters) - Exchange-traded funds (ETFs) had a bumper month in the United States in November, with assets climbing to a record $7.65 trillion, State Street Global Advisors said on Friday. ETF investors aggressively bought "risk on" assets in November as "the switch flipped," said Matthew Bartolini, head of SPDR Americas Research at State Street, citing lower interest rates and renewed confidence in the economic outlook. Signs of cooling inflation have fueled bets that the Federal Reserve will begin unwinding its restrictive monetary policy earlier than expected, driving the S&P 500 (.SPX) to its biggest monthly gain for more than a year in November. The U.S. benchmark 10-year Treasury yield , which moves inversely to price, registered its steepest decline in more than a decade in November. Investors' rekindled risk appetite could be seen in the popularity of high-yield bonds, with a record $11 billion in inflows, Bartolini said. Investors also rediscovered sector funds, directing some $7.5 billion into these ETFs in November. That reversed about half of the outflows in the previous 10 months, Bartolini said. Treasury bond ETFs were about the only segment with significant outflows in November, according to data in a monthly report published Friday by team of strategists at Citi Research, a division of Citigroup (C.N). The iShares 3-7 Year Treasury Bond ETF (IEI.O) had outflows of $920 million, while the iShares 1-3 Year Treasury Bond ETF (SHY.O) lost $1.1 billion, the Citi report showed. Still in terms of price, "everything rallied, including bonds, which had their best returns since 1980, and bond ETFs," Bartolini noted. By far the lion's share of November's outflows was in the ultra-short end of the fixed income spectrum, analysts and market participants reported. These ETFs, tied to Treasury bills and other fixed income securities expiring in only three to six months, "saw a quick turn in sentiment in November," said Bartolini. In the first 10 months of 2023, ETFs in this group had attracted $50 billion of assets, only to lose $7.1 billion in outflows in November, he added. Another 61 ETFs made their debut in November, bringing the year-to-date total to 452 and putting ETF launches firmly on track to setting a new record in 2023, Bartolini and other analysts said. In 2021, the industry rolled out 475 ETFs, the previous record. "We're likely to see new funds arrive throughout December," said Todd Rosenbush, ETF analyst at VettaFi. https://www.reuters.com/markets/us/us-etf-assets-hit-record-765-trillion-november-state-street-global-advisors-2023-12-01/
2023-12-01 21:54
Dec 1 (Reuters) - A searing late-year rally has brought the S&P 500 (.SPX) to a fresh 2023 closing high, as investors bet the Federal Reserve is done raising interest rates and the U.S. economy will remain resilient in the face of tighter monetary policy. The benchmark index closed at 4,594.63, nearly 6 points above its previous closing high for 2023 set in late July. The index gained 0.6% on Friday after bullish investors grew more confident the rate cycle had peaked following comments from Fed Chair Jerome Powell. Signs that inflation is cooling after reaching a four-decade high last year have made investors more confident that the Fed will start cutting rates sooner than expected. At the same time, the Fed’s aggressive rate increases so far appear to have done little damage to the U.S. economy, despite fears that tighter monetary policy would hurt growth. The S&P 500 is up over 19% year-to-date after posting its biggest monthly rise in over a year in November. The index stood about 4% below its all-time closing high from January 2022. Stocks have faced down several crises this year, starting with the implosion of Silicon Valley Bank in March that sparked worries over the health of the broader banking system. A legislative showdown over raising the U.S. debt ceiling became a key concern for investors months later, with equities gaining support once a deal was reached. The S&P 500 reached its previous 2023 closing high on July 31, also spurred in part by excitement over developments in artificial intelligence technology. A steady rise in Treasury yields - which dulled the allure of stocks compared to bonds and other investments - began eroding those gains, resulting in a sell-off that eventually erased more than half of the index’s year-to-date advance. However, many investors came away from the Fed’s Nov. 1 meeting more confident that the central bank was close to wrapping up its rate increases. Data on Nov. 14 showed that consumer prices were unchanged on a monthly basis for October, the first such reading in more than a year, sparking a sizable stock rally. Federal funds futures, a widely used security for hedging short-term interest rate risk, imply a Fed funds rate of 4.54% by the end of July, versus 5.12% expected three months ago for that period, according to LSEG data. Cooling inflation has been accompanied by little of the economic damage that many expected to come with the Fed’s rate hikes - giving rise to hopes of a so-called Goldilocks scenario where the central bank is able to staunch the growth in consumer prices without badly hurting growth. The economy appears to have avoided a recession this year that was widely forecast at the beginning of 2023, though growth in key areas such as employment has slowed. The Citigroup Economic Surprise Index (.CESIUSD), which measures how economic data performs versus expectations, has been positive for virtually all of 2023. Of course, some investors worry that the cumulative effects of the Fed’s 525 basis points of tightening are only starting to manifest and will eventually cool growth far more than currently expected. A cadre of massive stocks has been the key engine of most of the S&P 500’s 2023 gains thanks to their outsized weightings in the index. The so-called "Magnificent Seven" -- Apple (AAPL.O), Microsoft (MSFT.O), Alphabet (GOOGL.O), Amazon (AMZN.O), Nvidia (NVDA.O), Meta Platforms (META.O) and Tesla (TSLA.O) -- have seen stock gains of between about 47% and 220% so far this year. The companies perceived safety as investments given their size and competitive advantages has benefited the stocks, while a number of them have also been fueled by enthusiasm about the profit potential of artificial intelligence. The megacaps' outperformance has increased their combined weight to well over one-fourth of the entire S&P 500, meaning the stocks' moves have outsized influence on the benchmark index. To be sure, the S&P 500’s rapid rise has also made it richly valued compared to its historic levels, which could be an obstacle for the rally. The S&P 500 currently trades at roughly 19 times forward earnings estimates, compared to a historical average of 15.6 times. https://www.reuters.com/markets/us/resurgent-sp-500-crests-new-2023-closing-high-after-roller-coaster-year-2023-12-01/
2023-12-01 21:31
TSX ends up 1.1% at 20,452.87 Posts its highest closing level since Sept. 18 Industrials and bond proxies among biggest gainers National Bank of Canada rallies after Q4 results Dec 1 (Reuters) - Canada's main stock index rose on Friday to a two-and-a-half-month high as comments by Federal Reserve Chairman Jerome Powell raised investor hopes that major central banks will shift to cutting interest rates in 2024. The Toronto Stock Exchange's S&P/TSX composite index (.GSPTSE) ended up 216.58 points, or 1.1%, at 20,452.87, its highest closing level since Sept. 18. "Santa (Claus) is coming to town and he is rewarding all stock holders," said Barry Schwartz, portfolio manager at Baskin Financial Services. "Today, Federal Reserve Chairman Powell spoke and I think the markets are thinking that global synchronized rate cuts are coming in 2024." U.S. stocks also advanced as Powell reaffirmed the U.S. central bank's intent to be cautious on raising interest rates further to tame inflation but also offering fresh optimism on its progress so far. The industrials sector rallied 2.1%, while bond proxies, such as real estate and utilities, which tend to produce predictable cash flows and could particularly benefit from a peak in interest rates, were among the other standout performers. Real estate rose 2.2% and utilities ended 2% higher. The TSX notched in November its biggest monthly advance in three years. Financials added 0.7% on Friday as National Bank of Canada (NA.TO) reported higher fourth-quarter profit. Its shares rose 4.8% while shares of Bank of Montreal (BMO.TO) also climbed, rising 2%, as the bank forecast more cost savings from its $16 billion acquisition of U.S. lender Bank of the West. The banks "are tightening up on lending and could face another challenging year ahead, but we're not seeing growth falling off a cliff," said Angelo Kourkafas, a senior investment strategist at Edward Jones. Domestic data showed the economy adding 24,900 jobs in November, more than analysts expected. https://www.reuters.com/markets/tsx-eyes-higher-open-most-metal-prices-rise-2023-12-01/
