2023-12-01 06:00

NEW YORK/LONDON, Dec 1 (Reuters) - MSCI's global stock index rose on Friday and marked its fifth straight weekly gain while U.S. Treasury yields and the dollar fell on the day as investors were encouraged by Federal Reserve Chair Jerome Powell's vow to move "carefully" on interest rates. Treasury yields fell after Powell said the risks of hiking interest rates too much and slowing the economy more than necessary have become "more balanced" with the risks of not hiking enough to control inflation. "Powell is trying to be balanced, trying to make sure the market doesn't get ahead of itself. He doesn't want the market or traders to speculate on rate decreases," said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York. "He's all about the data, and the core inflation data over the last six months has been good. But he reiterates the objective is still 2% and he doesn't want all the work the Fed has done to bring inflation down to suddenly be reversed." While Powell tried to "subtly convince markets" of the Fed's commitment to keep rates high, Karl Schamotta, chief market strategist at Corpay in Toronto doubted this would "deter investors betting on a dramatic pivot in early 2024." This view appeared to be confirmed by a risk-on mood on Wall Street with all three of its major averages closing higher and the S&P 500 registering its highest closing level since March 2022. Investor optimism about rate cuts surged earlier this week after Fed Governor Christopher Waller - widely seen as a hawkish policymaker - flagged the possibility of lower interest rates in coming months if inflation continued to ease. "The lack of pushing back on Waller leads the market to conclude that Powell's okay with where equities and long-term treasury yields have been going recently," said Josh Jamner, investment strategy analyst at Clearbridge Investments, New York. The Dow Jones Industrial Average (.DJI) rose 294.61 points, or 0.82%, to 36,245.5, the S&P 500 (.SPX) gained 26.83 points, or 0.59%, to 4,594.63 and the Nasdaq Composite (.IXIC) added 78.81 points, or 0.55%, to 14,305.03. MSCI's gauge of stocks across the globe (.MIWD00000PUS) gained 0.60%. For the week, the index was on track for a gain of 0.9% marking its fifth consecutive week of gains, which is its longest winning streak since the five week stretch ended Nov. 5, 2021. Earlier on Friday, the Institute for Supply Management (ISM) said its manufacturing PMI was unchanged at 46.7 last month. It was the 13th consecutive month the PMI stayed below 50, indicating a contraction in manufacturing and the longest such stretch since the period from August 2000 to January 2002. Mona Mahajan, senior investment strategist at Edward Jones said Friday's data supported the idea of lower inflation, a gradually cooling economy and the Fed staying on the sidelines. In currencies, the dollar fell after two days of gains. Jeffery J. Roach, chief economist at LPL Financial noted that a few weeks ago, Powell described policy as restrictive but today, he said it is 'well into restrictive territory.' Roach said "it's fair for markets to latch on to that subtlety." The dollar index fell 0.232%, with the euro down 0.06% to $1.0879. The Japanese yen strengthened 0.93% versus the greenback at 146.84 per dollar. Sterling was last trading at $1.2709, up 0.69% on the day supported by expectations the Bank of England will take longer than either the Fed or the ECB to cut rates. In Treasuries, the benchmark 10-year notes were down 13.7 basis points to 4.213%, from 4.35% late on Thursday. The 30-year bond was last down 11.6 basis points to yield 4.3952% while the 2-year note was last was down 16 basis points to yield 4.5549%, from 4.715%. Oil prices settled more than 2% lower for a second consecutive day, with the market unconvinced the latest round of OPEC+ production cuts will be enough to lift prices from a recent slump. U.S. crude settled down 2.49% at $74.07 per barrel and Brent ended at $78.88, down 2.45% on the day. Gold surged to a record high of $2,075.09, also lifted by expectations the Fed was done with policy tightening and could cut rates next year. Spot gold added 1.7% to $2,071.21 an ounce. U.S. gold futures gained 1.62% to $2,071.10 an ounce. https://www.reuters.com/markets/global-markets-wrapup-1-2023-12-01/

2023-12-01 05:39

A look at the day ahead in European and global markets from Ankur Banerjee With a blockbuster November in the rear view mirror, investors are gearing up for a bright start to December in Europe, full of expectations that central banks will soon start cutting rates, although a "fireside chat" with Fed Chair Jerome Powell later in the day could spoil the party. A calendar full of manufacturing PMIs from countries across Europe will provide a clearer picture of the region's economy, but in the meantime futures indicate a higher open for European bourses. Data on Thursday from both the euro zone and the U.S. showed inflation was easing, spurring expectations of rate cuts by central banks, with money markets pricing in more than 100 basis points in rate cuts next year from both the Fed and the ECB. The disconnect between financial markets and central banks has only deepened as central banks push back against talk of rate cuts while markets take in the relatively more benign inflation data of recent weeks. Fed policymaker Christopher Waller, an influential and hawkish Fed voice, shook things up a bit this week, however, saying he was increasingly confident inflation would return to its 2% target. That helped to embolden markets to take on rate-cut bets. Markets are now pricing in a 46% chance of the central bank cutting rates in March, the CME FedWatch tool showed. A week earlier it was priced at 27%. With that backdrop, the spotlight will shine brightly on Powell when he takes the stage later on Friday. Whether Powell chooses to stay away from policy comments or talk about rates remains to be seen. Whatever he says, or not, will sway the markets. Over in Asia, the last month of the year got off to a tentative start, with shares lower, the dollar on the defensive and oil prices extending their recent decline. In company-related news, Tesla's (TSLA.O) long-delayed Cybertruck is here. The vehicle, made of shiny stainless steel and shaped into flat planes, will be priced from $60,990, more than 50% above what CEO Elon Musk had touted in 2019. Key developments that could influence markets on Friday: Economic events: UK nationwide house prices for November, Manufacturing PMI data from France, UK, Germany and euro zone. Speakers: Bank of England MPC member Megan Greene, ECB President Christine Lagarde, Fed Chair Jerome Powell. https://www.reuters.com/markets/europe/global-markets-view-europe-2023-12-01/

2023-12-01 05:15

Congo emboldened by breakthrough with China's CMOC Gecamines in off take talks with Glencore State miner seeks copper, cobalt marketing rights JOHANNESBURG, Dec 1 (Reuters) - Congo's state mining group Gecamines said it will push to secure the rights to buy copper and cobalt at mines it has holdings in, as it attempts to build its own stocks and trade the metals. To do so, Gecamines needs to amend some terms of its joint venture agreements in Democratic Republic of Congo, which is the world's top supplier of battery-grade cobalt and the third largest copper producer after Peru and Chile. Gecamines Chairman Guy Robert Lukama said its joint venture partners "can no longer get all the off take of the production". In an off take agreement, a buyer usually agrees to buy all or a large portion of a producer's future output. Lukama told Reuters that Gecamines now wants to be able to buy copper and cobalt proportional to its stakes in joint ventures in Congo with partners including Glencore (GLEN.L) and Chinese investors, with its holdings ranging from 20% to 49%. It then plans to trade this on its own, which will enable Gecamines to be directly involved in supplying the metals the world needs in the green energy transition, he added. Lukama said the plan to renegotiate the joint ventures had the backing of Congo's President Felix Tshisekedi, who is vying for a second term in Dec. 20 presidential elections. The proposal should not unnerve investors, he added. Tshisekedi has made reforming Congo's mining a priority, saying the sector was the backbone of the minerals-rich nation's economy and should benefit its citizens. "The rationale is to have a better role for the state, and Gecamines, in the supply of critical minerals to the world," Lukama said, adding: "We cannot just be sitting passively, seeing people taking all of the cobalt and copper." CHINA After renegotiating a 2008 minerals-for-infrastructure deal with China, Tshisekedi's government will if re-elected push for a greater say in commercialisation of its minerals. Congo has since been re-negotiating key terms of a $6 billion metals for infrastructure deal with China. The government says the Sicomines copper and cobalt joint venture with Sinohydro Corp and China Railway Group Ltd is heavily skewed in favour of the Chinese companies. During a visit by Tshisekedi to China in July, Gecamines reached a deal with China's CMOC Group (603993.SS). This includes conditions that secured it a right to acquire copper and cobalt, produced from Tenke Fungurume Mining equal to its 20% stake in the operation, on market terms. Lukama said the right to buy and market the metals need to be extended to all its joint ventures and Gecamines is able to finance the purchase of metals or it could seek bank financing. The mining group is holding talks with Glencore to receive a share of the off take of metals produced at Kamoto Copper Co (KCC), equal to its 25% stake in the mine, Lukama said. "The ongoing discussions we have is to extend it to KCC with Glencore and we want to make it a general rule on every joint venture," Lukama said in an interview. Glencore declined to comment on the talks. Zijin (601899.SS), which is one of the biggest investors in Congo, declined to comment on its joint venture, while another, China Nonferrous Metals Corp, did not respond to emailed questions. Gecamines' copper output peaked at 486,000 metric tons in 1986 but last year, it was 4,562 tons and 19,907 tons of cobalt. Directly trading the metals that are key for products from power lines and industrial machinery to electric vehicles, shields Gecamines from a lack of returns when its joint venture partners make losses, Lukama said. Lukama said Gecamines plans to conclude negotiations at all partnerships by end of 2024, adding that the CMOC deal made it "obvious" Congo wants a role in the supply of critical metals. The company was emboldened after emerging from "tough" negotiations with CMOC and the Tshisekedi's stance on the issue had enabled a breakthrough, he added. https://www.reuters.com/markets/commodities/congos-gecamines-push-copper-cobalt-trading-share-2023-12-01/

2023-12-01 04:27

BEIJING, Dec 1 (Reuters) - Lithium carbonate prices in top consumer China could fall by more than 30% next year from the current level, analysts say, as growing supply from all major producers outpaces the rise in demand from battery users. Prices of the chemical used in batteries in China, also the world's largest producer, have already tumbled 77% this year after Beijing slashed subsidies for electric vehicles from January, dragging down lithium ore prices and hurting global miners' profit margins. The spot price of lithium carbonate hit a more than two-year low of 115,500 yuan ($16,185.54) per metric ton this week, and is likely to drop to as low as 80,000 yuan next year as global supply continues to rise, said four China-based analysts. One of them expects the price to hit 100,000 yuan by end of this year. Prices outside China tend to follow a similar trend, with benchmark lithium carbonate prices to China, Japan and South Korea of $18.50 per kg on Thursday, down 77% from a peak of $81 per kg in November 2022. The most-traded January contract on the Guangzhou Futures Exchange hit a fresh low of 106,200 yuan per ton on Thursday, less than half of its listing price when trading began in July. The price plunge will hit high-cost lithium producers, but offer some support to a slowing EV sector. China produces about 70% of the world's batteries and over half of its EVs. Domestic EV car sales are forecast to grow 25% to 9.44 million units next year, slowing from annual growth of 31% and 89% in 2023 and 2022 respectively, CITIC Futures said last month. A slower growth rate is also projected for the energy storage sector, the second-biggest lithium consumer, due to softening domestic and overseas demand, the brokerage added. SUPPLY SURGE Global lithium supply, meanwhile, will jump by 40% in 2024, UBS forecast last week, to more than 1.4 million tons of lithium carbonate equivalent. Output in top producers Australia and Latin America will rise 22% and 29% respectively, while that in Africa is expected to double, driven by projects in Zimbabwe, the bank said. Chinese production will also jump 40% in the next two years, said UBS, driven by a major CATL (300750.SZ) project in southern Jiangxi province. The supply surge will result in a global lithium surplus of 12%, up from 4% this year, according to CITIC Futures. It expects Chinese lithium carbonate prices as low as 80,000 yuan a ton in 2024, averaging at around 100,000 yuan, equivalent to production costs in Jiangxi, China's biggest producing region of the chemical. Producers there mostly use locally mined lepidolite, a hard rock lithium ore, for production, and costs for those who own mining assets range from 80,000 to 120,000 yuan, according to two producers and two analysts. For producers relying on external ore supply, costs can rise to 200,000 yuan per ton, analysts said. Some major producers in Jiangxi, normally a third of the country's output, have already lowered production since September, according to information provider Mysteel. But producers elsewhere like the lakes of northwestern Qinghai province, with costs estimated at about 50,000 yuan per ton, are still expanding. Costs for major producers using spodumene, another ore, imported from their own mines are estimated by analysts at about 70,000 yuan. ($1 = 7.1360 Chinese yuan renminbi) https://www.reuters.com/markets/commodities/china-lithium-price-poised-further-decline-2024-analysts-2023-12-01/

2023-12-01 04:19

MUMBAI, Dec 1 (Reuters) - The Indian rupee is likely to open higher on Friday following robust domestic economic data, while a separate report indicated U.S. inflation was cooling. Non-deliverable forwards indicate the rupee will open at around 83.33-83.34 to the U.S. dollar compared with 83.3950 in the previous session. The local currency was a significant underperformer compared to Asian peers in November, and it is expected that there is not much room for the rupee to appreciate. Despite opening higher, the rupee is likely to edge lower through the session, with depreciation likely capped near 83.40, a foreign exchange trader at a state-run bank said. India's economy expanded by 7.6% in the September quarter, much better than the 6.8% expected by economists polled by Reuters. Economists raised their forecasts for India's GDP growth for the current fiscal year. "The GDP print has surprised on the upside for three consecutive quarters, indicating underlying strength in certain pockets of the economy," Morgan Stanley said in a note. "We mark our F2024 GDP growth estimate to market, to 6.9% from 6.4%." U.S. core personal consumption expenditure inflation rose 0.2% month-on-month in October, lower than 0.3% in September, while initial jobless claims ticked up, supporting expectations that the Federal Reserve is likely to cut interest rates from May next year. U.S. yields rose on Thursday despite the data, pushing the dollar index higher. The rise in yields was probably a reflection that the recent rally in bond prices may have been too quick, according to analysts. Meanwhile, TV exit polls showed on Thursday that India's main opposition Congress party is likely to win two of five state assembly elections while it is in close contest with Prime Minister Narendra Modi's ruling nationalist party in two heartland states. KEY INDICATORS: ** One-month non-deliverable rupee forward at 83.36; onshore one-month forward premium at 5.25 paisa ** Dollar index down at 103.33 ** Brent crude futures down 0.6% at $80.4 per barrel ** Ten-year U.S. note yield at 4.33% ** As per NSDL data, foreign investors bought a net $517.7mln worth of Indian shares on Nov. 29 ** NSDL data shows foreign investors bought a net $36.5mln worth of Indian bonds on Nov. 29 https://www.reuters.com/markets/currencies/rupee-open-higher-robust-india-gdp-cooling-us-inflation-2023-12-01/

2023-12-01 04:04

OPEC+ agreed to 2.2 mln bpd of cuts for the first quarter US Fed to move carefully on interest rates Global manufacturing data sluggish in November Israel-Hamas war resumes after week-long truce expired NEW YORK, Dec 1 (Reuters) - Oil prices slumped more than 2% on Friday on investor skepticism about the depth of OPEC+ supply cuts and concern about sluggish global manufacturing activity. Brent crude futures for February settled down $1.98, or 2.45%, at $78.88 a barrel. U.S. West Texas Intermediate crude futures (WTI) dropped $1.89, or 2.49%, to $74.07 a barrel. For the week, Brent posted a decline of about 2.1%, while WTI lost more than 1.9%. OPEC+ producers agreed on Thursday to remove around 2.2 million barrels per day (bpd) of oil from the global market in the first quarter of next year, with the total including a rollover of Saudi Arabia and Russia's 1.3 million bpd of current voluntary cuts. Traders viewed the announcement with some skepticism, OANDA analyst Craig Erlam said. "(It) seems traders either aren't buying that members will be compliant or don't view it as being sufficient," Erlam added. OPEC+, which pumps more than 40% of the world's oil, is reducing output after prices fell from about $98 a barrel in late September on concerns about the impact of sluggish economic growth on fuel demand. The cuts "will not stop a billowing cloud of confusion that is going to take the oil market weeks and months to figure out, and only if the self-reporting data is indeed reliable," PVM analyst John Evans said. The cuts agreed by OPEC+ on Thursday are voluntary, so there was no collective revision of OPEC+ production targets. The voluntary nature of the cuts led to some skepticism about whether or not producers would fully implement them, and also from what basis the cuts would be measured. In the United States, Federal Reserve Chair Jerome Powell said on Friday that the central bank would move "carefully" on interest rates as risks of "under- and over-tightening are becoming balanced." U.S. manufacturing remained subdued and factory employment fell in November, according to a survey. Investors are keeping a watchful eye on global manufacturing activity, which remained weak during the month on poor demand, surveys showed. On Friday, talks to extend a week-long truce between Israel and Palestinian militant group Hamas collapsed, prompting a resumption in the war in Gaza. The conflict had initially supported oil prices on concern that any escalation that involved surrounding oil producers could disrupt supply. So far, the conflict has had no significant impact on global oil flows. On the supply side, the United States on Friday imposed additional sanctions related to the price cap on Russian oil, targeting three entities and three oil tankers. U.S. oil rigs rose five to 505 this week, their highest since September, energy services firm Baker Hughes (BKR.O) said in its closely followed report on Friday. Meanwhile, U.N. Secretary General Antonio Guterres on Friday called for a future with no fossil fuel burning at all while speaking at the two-week COP28 summit in the UAE. Money managers cut their net long U.S. crude futures and options positions in the week to Nov. 28 by 7,663 contracts to 62,070, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday. https://www.reuters.com/business/energy/oil-prices-fall-extend-slide-after-opec-cuts-underwhelm-2023-12-01/