2023-11-30 06:41
Bullish bets on most Asian FX prevail Rupee and ringgit most shorted currency Long bets on Taiwan dollar highest since Feb. 9 Nov 30 (Reuters) - Investors turned bullish on most emerging Asian currencies, as prospects of a potential end to U.S. interest rate hikes led to weakness in the greenback and triggered a rush into riskier assets in the region, a Reuters poll showed on Thursday. Bullish bets on South Korean won , Taiwanese dollar , and Philippine peso were at their highest since Feb. 9, while long positions on the Singapore dollar and Indonesian rupiah stood at a four month high, the fortnightly survey of 12 respondents showed. Market participants are betting on prolonged weakness in the U.S. dollar, taking cues from a spate of economic data that reinforced optimism that the U.S. Federal Reserve is probably done raising interest rates this cycle, with markets even anticipating a cut in mid-2024. The dollar index , which measures the U.S. currency against six rivals, has lost nearly 0.6% so far in November, helping emerging Asian currencies recover some ground. Poon Panichpibool, a markets strategist with Krung Thai Bank, however, said there is still a possibility of a rebound in the dollar depending on risk of data in the U.S. coming in stronger than expected. "The dollar could edge higher in the third and fourth quarter of 2024, when markets would start pricing in political risks arising from a presidential election in the U.S., though, dollar weakness could prolong until the third quarter of 2024," Panichpibool said. Back in Asia, the Taiwan dollar has strengthened over 3.5% so far in November, snapping a seven-month losing streak. The unit is set log its best month in a year. Increased political uncertainty in Taiwan has led to volatility in the local currency, with two main opposition parties naming their vice presidential candidates after talks about running a joint ticket to take on the ruling party failed. The Korean won, too, has performed considerably well, adding over 4% in value. The unit is set log its best month since last November. Investors, however, remained bearish for the Indian rupee , Chinese yuan , and the Malaysian ringgit despite an improvement in sentiment. "I think people, including myself, are not confident about the economical recovery in China, though I still make a call that China's economy has already passed the worst point but remains full of uncertainty going forward," Panichpibool said. Investors were most bearish on the Malaysian ringgit among the pack. Confidence in the local unit has faltered lately, amid lingering uncertainty around demand for palm oil and other commodities. The Asian currency positioning poll is focused on what analysts and fund managers believe are the current market positions in nine Asian emerging market currencies: the Chinese yuan, South Korean won, Singapore dollar, Indonesian rupiah, Taiwan dollar, Indian rupee, Philippine peso, Malaysian ringgit and the Thai baht. The poll uses estimates of net long or short positions on a scale of minus 3 to plus 3. A score of plus 3 indicates the market is significantly long U.S. dollars. The figures include positions held through non-deliverable forwards (NDFs). The survey findings are provided below (positions in U.S. dollar versus each currency): https://www.reuters.com/markets/currencies/investors-bullish-most-asian-fx-us-interest-rate-bets-shift-2023-11-30/
2023-11-30 06:29
NEW YORK, Nov 30 (Reuters) - Renewed appetite for stocks is helping to drive investors' interest in volatility-linked options that could buffer their portfolios against stock swings, putting those contracts on track for record trading volume this year. The S&P 500 is up 18% so far this year, compared to last year's 19% decline - a rally turbocharged in recent weeks by expectations the U.S. Federal Reserve is done raising interest rates. That has come alongside record average trading volume in contracts betting on the Cboe Volatility Index (.VIX) or VIX -- known as Wall Street's fear gauge -- as looming economic and geopolitical risks keep investors cautious about a potential return of volatility. "This indicates people are nervous," said Mandy Xu, head of derivatives market intelligence at Cboe. "This year, the consensus is that we are at or near the end of the hiking cycle but there is no good consensus view of what is next." Markets appear tranquil now, she added, but such an environment is one where a black swan event could make volatility spike with its unpredictability and far-reaching consequences. VIX options contracts averaged nearly 760,000 daily, surpassing the record set in 2017, according to Cboe Global Markets (CBOE.Z), data as of Nov. 27. That's a 42% increase from 2022 and up 5% from the previous record, with VIX options-trading in October at a high for the year. Trading in VIX call options, which would profit if the VIX rises and are typically used for protection, including tail hedges which guard against larger unexpected market losses, have risen 54% this year. Put options on the VIX, which benefit from declining volatility, rose by 24%. Joe Ferrara, investment strategist at Gateway Investment Advisers, whose strategies seek to capitalize on the difference between implied and realized volatility, said investors see a growing list of potentially volatile events including wars and elections on the horizon. Such investors are "looking at trading VIX options as a way to potentially monetize their thinking", he said. The VIX tends to move inversely with the S&P 500, rising when stocks fall. Currently at 13, the VIX is below its long-term median of 18, meaning investors can buy relatively cheap insurance and position in potentially profitable trades. "What we're seeing now is inexpensive given the amount of potential turmoil in the market," said JJ Kinahan, president of tastytrade, a retail broker. The rise in VIX options trading is a change from 2022 when investors were reducing equities exposure and hoarding cash, according to CBOE data. With the VIX averaging 17 this year, VIX options' trading volume as a share of overall options volume is at 1.76%, the highest since 2020 - a much more volatile year when the VIX averaged 29, according to a Reuters analysis based on Trade Alert data. Seth Hickle, derivatives portfolio manager at Innovative Portfolios in Indiana, said returns on volatility strategies can be erratic in the short term, but can be consistent over long periods. "In an average volatility year, I would not be shocked to see volume trends continue to rise in VIX options as more market participants accept and embrace volatility as an alternative asset class and the need to hedge that exposure grows," said Hickle. Timing profit-taking on VIX options in an environment where jumps in the volatility index are fleeting can be difficult, said Roni Israelov, chief investment officer at NDVR. The potential for the index to make huge moves in very short periods also makes it "an attractive instrument" for speculators, said Hickle. "I think there's speculators out there saying with a 14 handle on the VIX, maybe it's worth taking that bet and making that trade." https://www.reuters.com/markets/us/appetite-stocks-drives-vix-options-investors-guard-portfolios-2023-11-30/
2023-11-30 06:28
Best month for world stocks in 3 years ICE BofA index of IG bonds set for best month on record Equity investors pin hopes on soft landing for world economy LONDON, Nov 30 (Reuters) - November has shaped up to be a fairytale month for equities, with the festive Santa rally investors traditionally hope for coming early as traders bet on a Goldilocks scenario of inflation falling and central banks lowering interest rates. MSCI's world stock index (.MIWO00000PUS) is set to close the month up almost 9%, its best performance since November 2020, when markets cheered the arrival of COVID-19 vaccines. Easing inflation has boosted talk that the U.S. Federal Reserve, the European Central Bank and others are done with aggressive rate hikes, lifting bond and stocks while hurting the dollar. Global bond prices have soared, with an ICE BofA index of global investment-grade bonds in major markets set to return almost 4% in November, the best month on record going back to 1997. (.MERGBMI). Yields on U.S. Treasuries, which move in the opposite direction to prices, are set for the biggest monthly drop since 2008. That's taken the sting out of a summer bond rout, while major stock markets are on track to reverse 2023's sharp falls. But there's a caveat, warn investors, cautioning that equities could be ignoring the recession risks that typically bode well for safe-haven government debt. "The equity market is too optimistic right now and bond markets have it right," said Altaf Kassam, head of investment strategy and research, EMEA, for State Street Global Advisors. "There is still room for interest rates to come down and disinflation to continue but we think for that to happen growth will also slow down and the lagged effect of monetary tightening will come." BROAD BASED November's equity rally has been broad based, with Wall Street's S&P 500 (.SPX) 8.5% higher on the month and Europe's Stoxx 600 index (.STOXX) adding 6%. Global growth stocks in high-tech sectors are up 11% (.dMIWO0000GNUS) while value stocks, which are mainly in cyclical industries and offer high dividends, have gained around 6.7% (.dMIWO0000VNUS). Major central banks have jacked up rates by a hefty 3,965 bps since late 2021 and investors sense a peak has been reached. Traders are already pricing over 100 bps of Fed and ECB rate cuts next year while most big economies have paused rate rises to see how much the tightening bites. "We've now had this rebound (in equities) and what we need to see is tangible supporting evidence that this is not a head fake policy pivot," said Zurich Insurance Group chief market strategist Guy Miller. Joost Van Leenders, senior investment strategist at Dutch bank Van Lanschot Kempen, said he expected U.S. and European equities to fall from here as monetary tightening impacts the economy. U.S. home sales slumped to a 13-year low in October, euro zone bank lending to businesses fell for the first time since 2015 last month as a recession in the bloc looms, while data on Thursday showed China's manufacturing activity fell deeper into contraction in November. Equity markets are also ignoring the downside of lower inflation, Van Leenders said, because companies that have passed on higher prices to customers have achieved higher nominal growth in revenues and profits. "It's all the more difficult (for company earnings) when inflation is falling," he said. And a cloudier outlook for stocks suggests a divergence could open up between again between stocks and bonds. Until recently eyeing a third year of straight losses, November's rally means government bonds have eked out a 1.2% positive annual return. (.MERW0G1). The broader global index is set to return 1.6% for the year. Asset managers had expected a good year for bonds, a scenario that failed to materialise as rates rose further and government and consumer spending buoyed the U.S. economy. Van Leenders said he expected further gradual falls for Treasury yields. Ten-year Treasury yields, trading at 4.2%, are down from a peak above 5% hit in October. Germany's benchmark Bund yield too has pulled back from recent highs above 3%. "We're looking for softness in the U.S. next year," State Street's Kassam said. "And on balance we prefer fixed income right now because the lack of growth is what's going to keep equities in check." https://www.reuters.com/markets/global-markets-monthend-2023-11-30/
2023-11-30 06:21
PARIS, Nov 30 (Reuters) - French private equity firm Antin Infrastructure Partners (ANTIN.PA) has met a target to raise 1.2 billion euros for its latest fund tied to energy transition despite headwinds for fundraising in the sector, it said on Thursday. The fund, dubbed NextGen, is set to be invested in Europe and North America and is the first of its kind at Antin IP, which has about 30.8 billion euros ($33.8 billion) of assets under management. It has already spent an undisclosed amount from the NextGen fund in companies including electric vehicle charging groups and a tyre recycling joint venture with Enviro and Michelin (MICP.PA). Antin said NextGen was backed by investors from Europe, North America, Asia and the Middle East, including new and existing investors from its funds. "We're facing a market that's slowing down," Chief Executive Alain Rauscher said in an interview. "But we're clearly one of the winners in this slowdown," he added, brushing off Antin's stock price fall of 46% over the last twelve months. Asked about the fundraising for the fifth generation of its Flagship fund, which secured 8.6 billion euros of commitments at the end of the third quarter, Rauscher said he was confident that it could reach the set target of 10 billion euros or more. "We're confident that we'll raise, I'd say, between 10 and 12 (billion), and honestly, closer to 12 (billion) than 10," he said. ($1 = 0.9114 euros) https://www.reuters.com/business/french-pe-firm-antin-ip-raises-12-bln-euro-fund-in-line-with-targets-2023-11-30/
2023-11-30 06:07
Gold, silver on track for 2nd straight month of gains Dollar set to log worst month in a year Fed Chair Jerome Powell speech on Friday Nov 30 (Reuters) - Gold slipped on Thursday but remained on track for a second straight monthly gain as expectations that the Federal Reserve may soon cut interest rates enhanced the appeal of non-yielding bullion. Spot gold slipped 0.4% to $2,036.47 per ounce by 2:40 p.m. ET (1940 GMT) after hitting a near seven-month peak in the previous session. Prices have gained 2.7% so far this month. U.S. gold futures settled 0.5% lower at $2,057.2. Contributing to gold's slight dip, the dollar index (.DXY) rose for the day. But the currency was headed for its worst month in a year, while 10-year Treasury yields hit a two-and-a-half month low. "Gold might be a little tired here but it's had a very nice run. The pullback (in prices) should be limited to $2,015-$2,020 and no concerns will be felt unless we fall back below $2000," Tai Wong, a New York-based independent metals trader. Traders have advanced bets for a rate cut from an 80% chance in May to a one-in-two chance in March, according to CME's FedWatch tool. "We're expecting gold prices to break into new highs in the first half of 2024 as we approach the Fed pivot and (with) the economy likely to slow," said Daniel Ghali, commodity strategist at TD Securities. Traders took stock of data showing U.S. consumer spending rose moderately in October, while the annual increase in inflation was the smallest since early 2021. Jobless claims rose slightly. Focus will be on comments from Fed Chair Jerome Powell on Friday. J.P. Morgan in its 2024 commodities outlook highlighted that across commodities the only structural bullish call they held was on gold and silver. Silver rose 0.9% to $25.22 per ounce and was set for its second straight monthly gain. Platinum was down 0.3% at $929.09. Palladium dipped 1.4% to $1,013.15. https://www.reuters.com/markets/commodities/gold-holds-ground-ahead-us-inflation-test-2023-11-30/
2023-11-30 06:07
DUBAI, Nov 30 (Reuters) - Countries will for the first time assess how far off track they are to curb global warming at this year's COP28 climate change summit, a process known as the "global stocktake". Governments will look at progress so far as well as what action is still needed to get the world on track. The aim is to yield a plan by the end of the two-week U.N. conference in Dubai. The assessment could become politically divisive as it sets the stage for the next few years of global action in cutting planet-warming emissions. Here is what you need to know about the stocktake. WHY IS A GLOBAL STOCKTAKE IMPORTANT? Each country sets its own targets and policies for meeting the 2015 Paris Agreement's overall goal of holding global warming to within 2 degrees Celsius of preindustrial times, and aiming for just 1.5 C of warming. Under the 2015 pact, countries must gauge their progress as of this year, and then every five years afterwards. Based on the results, countries may be pressed to set more ambitious climate policies or to contribute more financing to help developing countries adopt clean energy. This year's stocktake could also offer important guidance as countries prepare to update their emissions-cutting targets again by 2025. For example, the stocktake could advise that CO2-cutting targets should cover a country's entire economy, not just certain sectors. IS THE WORLD OFF COURSE IN MEETING CLIMATE GOALS? In September, the United Nations offered an early stocktake assessment that revealed countries were far behind in meeting climate goals. It said action was required "on all fronts" to keep the global average temperature rise limited to 1.5 C - the threshold beyond which scientists say more severe and irreversible climate impacts will occur. Despite a huge increase in the number of countries setting CO2-cutting targets since the Paris Agreement, current emissions plans still put the world on track to warm by at least 2.5 C, the U.N. estimates. Many countries also have yet to set strong enough short-term policies to steer their economies towards emissions targets for 2030 and 2050. The global average temperature has already warmed by 1.2 C since pre-industrial times, which is causing widespread drought along with more frequent deadly heat waves, wildfires and storms around the world. HOW WILL THE STOCKTAKE DRIVE CLIMATE ACTION? Before the stocktake has even started, countries are squabbling over the scope of future plans - including whether they should commit to phase out fossil fuel use, end investments in new coal power plants or triple renewable energy capacity within this decade. COP28 delegates will also need to decide if the stocktake should recommended action for specific sectors, such as the energy or manufacturing sectors. The U.N.'s report in September urged countries to cut CO2-emitting coal power by 67% to 82% from 2019 levels by 2030. The report also called for more finance to help poorer countries adopt clean energy, and noted that billions of dollars were still being invested in fossil fuels every year. The European Union wants the stocktake to produce "concrete policy signals" for countries to follow. Some developing countries have suggested the stocktake should focus on pressuring wealthy nations to do more, since they have contributed the most emissions to the atmosphere since the Industrial Revolution, diplomats said. "This is where we take stock and see where we are - where are the gaps between the targets and our ambitions, and the actual action. What then needs to be decided... what do we then do from here," Dan Jorgensen, Denmark's Global Climate Policy Minister, told Reuters. https://www.reuters.com/business/environment/how-will-countries-measure-climate-action-cop28-2023-11-30/
