2023-11-22 11:02

A look at the day ahead in U.S. and global markets from Mike Dolan The mercurial world of artificial intelligence continues to grab most market headlines into the U.S. Thanksgiving holiday, while a temporary ceasefire in Gaza helped subdue already subsiding volatility gauges even further. While many investors have been thrall to the AI boom all year, the 240% year-to-date surge in Nvidia (NVDA.O) has stolen the show as AI excitement sent demand for its high-end chips soaring. Remarkably, Nvidia managed to vault the sky-high bar for quarterly earnings, revenue and projections yet again in its latest update overnight. But the sheer scale of its share price gain this year makes this market a tough crowd to please and its stock ticked back less than half a percent lower in out-of-hours trade. The firm insisted a retreat in China would be made up by demand from elsewhere and the numbers continue to be eye-popping. It forecast current-quarter revenue of $20 billion, plus or minus 2% - well above analysts' consensus estimate of $17.86 billion. The boardroom rollercoaster at ChatGPT-developer OpenAI, meantime, continued to hog front pages - even if it was in danger of turning into high farce. Sam Altman is now set to return as CEO just days after his ouster, capping frenzied discussions about the future of the startup at the center of the AI craze. The darker reaches of the tech world were also unnerving as Binance chief Changpeng Zhao stepped down and pleaded guilty to breaking U.S. anti-money laundering laws as part of a $4.3 billion settlement resolving a years-long probe into the world's largest crypto exchange. But for all the frenetic newsflow, markets appear to have settled into holiday mode. Wall St stocks (.SPX) ended marginally in the red on Tuesday and futures held steady overnight. Most remarkable running into yearend has been the dissipation of implied volatility, with the VIX (.VIX)'fear index' dropping to 13 - its lowest since mid September. Bond volatility (.MOVE) has also fallen to two-month lows, while currency market 'vol' (.DBCVIX) is plumbing 20-month lows. With Nvidia the last mega cap to report in the Q3 earnings season, scorecards show the aggregate annual profit growth through the quarter running at more than 6% - more than four times consensus forecasts just six weeks ago and with more than 80% of firms beating the Street. Revenue growth of 1.5% is almost twice pre-season consensus. Treasury yields were also on the backfoot, with the Federal Reserve's latest meeting minutes offering little new and with the committee blaming October's bond squeeze largely on a jump in the 'term premium' demand by investors anxious about rising debt supply. However, even the term premia has evaporated again and the New York Fed's gauge has slipped back into negative territory after resurfacing for just two months. CONCERN OVER HOME SALES, HOLIDAY SEASON SALES News of a drop in U.S. existing home sales last month to a 13-year low was perhaps as important as the Fed minutes - as was warnings from more major U.S. retailers, this time Best Buy and Nordstrom, about sticky holiday season sales and the need for discounting. Even though crude oil prices have backed up lately ahead of the weekend OPEC meeting, there was continued good news for U.S. consumers at the pump - with average retail gasoline prices falling to their lowest level since January. The dollar (.DXY) was a touch higher on Wednesday, meantime, with most overseas stock markets firmer too. British stocks were higher ahead of UK finance minister Jeremy Hunt's latest Autumn budget, where speculation of household and business tax cuts is rife. Chinese stocks (.CSI300) underperformed again despite signs of more economic stimulus locally. Chinese government advisers will recommend economic growth targets for 2024 ranging from 4.5% to 5.5% to an annual policymakers' meeting as Beijing seeks to create jobs and keep long-term development goals on track. Key developments that should provide more direction to U.S. markets later on Wednesday: * U.S. Oct durable goods, weekly jobless claims, University of Michigan final Nov sentiment survey. Eurozone Nov consumer confidence * Bank of Canada Governor Tiff Macklem speaks * British finance minister Jeremy Hunt makes his Autumn Statement budget speech * Dutch parliamentary elections * U.S. Treasury auctions 4-week bills * U.S. corporate earnings: Deere, Tremor, Diocal, Jiayin, EHang, GDS, Baozun, Lexinfintech https://www.reuters.com/markets/us/global-markets-view-usa-2023-11-22/

2023-11-22 11:01

LONDON, Nov 21 (Reuters) - An OPEC technical panel invited a top financial market dealer to give a presentation this week which painted a bearish outlook for the oil market, according to materials from the presentation seen by Reuters. "Market sentiment had been fragmented for much of this year, but the evidence is that there has been a recent shift in collective sentiment to bearish as we head towards the end of the calendar year," one of the presentation slides by Onyx Capital Group showed. OPEC - the Organization of the Petroleum Exporting Countries - did not immediately reply to a request for comment. London-based Onyx Capital Group is the world's biggest market maker by volume across oil swaps, trading more than 25 billion barrels equivalent a year. It says it owns a dataset that analyses market positions to predict how the market behaves. Onyx CEO Greg Newman gave the presentation, according to a company tweet on X, formerly Twitter. Its content was not made public, however. According to the materials seen by Reuters, it also showed that Brent futures had undergone two significant sell-offs since the start of the quarter, with the first, from Sept. 27 to Oct. 2, driven by weak U.S. gasoline markets and financial speculators. Saudi Energy Minister Prince Abdelaziz bin Salman, OPEC's most influential minister, famously warned financial speculators against betting heavily in the oil market in 2020, challenging those looking to short the market to "make my day". The second sell-off, which happened in November, moved the oil market to a collective neutral-to-bearish sentiment, with commercial participants like oil producers and airlines joining financial speculators in seeing a weak outlook. "The second aggressive moves were correlated with a weakening forward outlook for underlying crude and refined products market," Onyx said in the presentation materials. It added that the oil market forward curve signalled the market expects supply of heavy crude, which several OPEC members produce, will likely come back next year, and inventories will start to rebuild. The Economic Commission Board (ECB), which OPEC describes as its "think-tank", meets twice a year ahead of the ordinary ministerial OPEC conference to review market conditions and economic developments. While it has no decision-making capacity, the research it produces is important for ministers that will eventually decide on output policy. Ministers from OPEC and allies led by Russia, a group known as OPEC+, are due to meet on Sunday to decide on output policy. The group is likely to discuss output cuts to shore up falling oil prices, which are down more than 13% since the start of this quarter. Goldman Sachs this week said it expected Saudi Arabia and Russia to extend their voluntary oil production cuts into the first quarter 2024. It also sees a 35% possibility the group will deepen production cuts, potentially through another 0.5-1 million barrel per day reduction shared among the large producers, including Saudi Arabia, Russia, the UAE, Iraq, and Kuwait. The ECB on Tuesday also heard presentations from banks JPMorgan and BNP Paribas, three sources told Reuters. It will meet for a second day on Wednesday. https://www.reuters.com/markets/commodities/opec-hears-bearish-message-oil-top-swap-dealers-presentation-2023-11-22/

2023-11-22 10:58

SILKYARA, India, Nov 22 (Reuters) - Rescuers hope to drill through the last third of the debris blocking a collapsed tunnel in the Indian Himalayas by early on Thursday to reach 41 workers trapped for ten days, an official said, so long as there are no new hurdles. The men have been stuck in the 4.5-km (3-mile) tunnel in Uttarakhand state since it caved in early on Nov. 12 and are safe, authorities have said, with access to light, oxygen, food, water and medicines. Authorities have not said what caused the tunnel collapse, but the region is prone to landslides, earthquakes and floods. Efforts to bring the men out have been slowed by snags in drilling in the mountainous terrain. By Wednesday, rescuers drilled through 42 m (130 ft) of an estimated 60 m (197 ft) that need to be cleared in order to push through a pipe wide enough for the men to crawl out, said Mahmood Ahmed, an official of the firm building the tunnel. "Many hurdles can emerge, but if they don’t, we hope that by late in the night or early tomorrow we all will get some good news," Ahmed, the managing director of the National Highways and Infrastructure Development Corporation (NHIDCL), told reporters. Possible obstructions in the debris could include large boulders, stones and metal girders, he said, adding that welding together the evacuation pipe needed more time than drilling. First images from within the tunnel showed workers in white and yellow hardhats standing in the confined space and communicating with rescuers on Tuesday, after a medical endoscopy camera was pushed through a smaller pipeline. The trapped men have been receiving fruits and cooked food items after a second, larger pipeline was pushed through on Monday. Toiletries and clothing have also been pushed through, said Neeraj Khairwal, a rescue co-ordination official. "The workers are very positive and they are in a very good mental state," he added. Physicians and chest specialists are among 15 doctors at the site, said R.C.S. Panwar, the district's chief medical officer, with 40 ambulances set to be placed on standby. The anxious families of 11 of the 41 trapped men have reached the accident site, eager to see them rescued. Those trapped are low-wage workers, most of them from poor states in India's north and east. "I am worried, and will be worried, while my brother is not out of this tunnel, but now it looks like the time has come," said Indrajeet Kumar, who travelled from the eastern state of Jharkhand, worried about his trapped brother, Vishwajeet. https://www.reuters.com/world/india/indian-rescuers-drill-halfway-towards-workers-trapped-tunnel-2023-11-22/

2023-11-22 10:54

BERLIN, Nov 22 (Reuters) - Germany's coalition is weighing up options such as suspending the country's debt brake for this year as it intensifies efforts to find a way out of a deepening budget crisis caused by a court ruling that has forced a freeze on new spending pledges. Financial plans for Europe's biggest economy were upended last week by a constitutional court ruling that stopped the government from reallocating 60 billion euros ($65.44 billion) in unused funds from the pandemic to green investments. The court ruled the budget manoeuvre was incompatible with the debt restrictions enshrined in Germany's constitution. The three parties in Social Democrat (SPD) Chancellor Olaf Scholz's uneasy coalition with the Greens and pro-business Free Democrats (FDP) are trying to hammer out a solution so that as many commitments as possible are kept - and made legally compliant. With talks among various groups of senior politicians from all parties going on through the day, options include drawing up a supplementary budget for 2023 and suspending a self-imposed debt brake before reinstating it for next year. The pressure is even more intense as talks for next year's budget are on the final stretch. After pausing deliberations last week, budget experts from the coalition are due to meet again on Thursday to discuss next year's spending before the Bundestag lower house of parliament debates it next week, culminating in a vote on Dec. 1. Highlighting the gravity of the situation, the government has already imposed a freeze on most new spending commitments on ministries. It has also blocked spending from the 200 billion euro Economic Stabilisation Fund for this year, a letter seen by Reuters showed, and a government source told Reuters the government wanted to close the fund by the end of the year. INDUSTRY CALL FOR CLARITY Almost every item of spending that has not yet been formally approved is up in the air. Among the uncertainties is military aid for Ukraine. Greens Economy Minister Robert Habeck has warned that Germany's place as an investment hub is at stake, as are jobs, and industry chiefs have called for clarity quickly. "German industry is looking at the current political situation with the greatest concern," said Siegfried Russwurm, president of the BDI industry association. So far, Berlin has stuck by an agreement for 10 billion euros in subsidies with U.S. chipmaker Intel (INTC.O), which will develop two chipmaking plants. A government source has told Reuters suspending the debt brake, which was lifted between 2020 and 2022 to cushion the impact of the COVID pandemic and Russia's invasion of Ukraine, would have to follow guidelines set out in the court ruling. One obstacle to reforming the debt brake, which restricts Germany's structural budget deficit to the equivalent of 0.35% of gross domestic product, has been Finance Minister Christian Lindner. His pro-business FDP are strong advocates of fiscal discipline and low taxes. The European Commission said on Tuesday that euro zone fiscal policy would be tighter next year. It had on Nov. 15 forecast that the aggregated budget deficit of the 20 countries using the euro would fall to 2.8% of GDP in 2024 from 3.2% in 2023. ($1 = 0.9168 euros) https://www.reuters.com/markets/europe/pressure-mounts-german-government-find-way-out-budget-hole-2023-11-22/

2023-11-22 10:38

PAVLOHRAD, Ukraine, Nov 22 (Reuters) - After more than a thousand of its workers went to fight Russia's invasion, a coal mining enterprise in eastern Ukraine suffered a huge staff shortage. Its answer was to allow women to work underground for the first time in its history. Over a hundred took up the offer. "I took this job because the war started and there were no other jobs," 22-year-old Krystyna said. For five months, she has worked as a technician 470 metres (1,542 feet) below ground, servicing the small electric trains that haul workers more than 4 kilometres (2.5 miles) from the lift shaft where they descend to the seams of coal. The mine, a vast tower with shafts running more than 600 metres under the surface, juts out against the flat landscape and the grey November weather. Reuters was asked by the mine's management for security reasons not to give the exact location of the mine or use the surnames of those interviewed. Krystyna only resolved to take the job after overcoming her fear of leaving her 4-year-old son, Denys, at home with her mother. Her hometown of Pavlohrad is 100 km (62 miles) from the front, but is often hit by Russian missiles. The work is interesting but difficult, she said: the battery lids are heavy and the steam can be unpleasant. The pay is good, however, and she feels a sense of duty to stay and do her bit for those who have gone to fight. Her beloved older brother worked in the same mine. He joined the army two weeks after the start of the full-scale invasion, Krystyna said, adding that she worries greatly about him. "Our boys were taken to the front, and now we need to support them: there is no one else to work in the mine now." Ukraine's coal industry, once one of the largest in Europe, has suffered decades of decline since the collapse of the Soviet Union. The centrally managed internal market that it supplied suddenly ceased to exist. Russia-backed militias in eastern Ukraine took over many coal-rich regions in 2014. After the 2022 invasion, Russia occupied even more mines. DTEK, the mine's owner and Ukraine's largest private energy company, says nearly 3,000 of its 20,000 mineworkers are fighting. Of the thousand miners at this mine and its nearby twin enterprise who went to fight, 42 have been killed. Although some women worked in the mines before the war, they were barred from doing jobs underground by the government, which considered the work too physically demanding, a policy in place since the Soviet era. After the wartime repeal of that ban, about 400 women now work underground at DTEK's mines — although that is only 2.5% of the total subterranean workforce. According to the company, women only work in auxiliary underground jobs that do not require strenuous physical labour. "We do everything on the same level as the men — unless it's something very heavy that we can't lift," said 43-year-old Natalia, who also works as a technician inspecting the trains. She used to work in a shop selling electronics until she lost that job when Ukrainian businesses closed their doors during the initial shock of the invasion. When Natalia decided to work in the mine, her 19-year-old son had already worked in a neighbouring mine for a year. "Actually, I had been convincing him not to go and work there," she recalled, but she said she was now happily working in the mine and planned to stay, even after the war. https://www.reuters.com/world/europe/ukraines-coal-mines-turn-women-solve-wartime-staff-shortages-2023-11-22/

2023-11-22 07:04

Nov 22 (Reuters) - Barclays said on Wednesday it no longer expects the U.S. Federal Reserve to raise interest rates in January, compared with an earlier forecast of a 25-basis-point hike. Rates will remain unchanged until December next year, the brokerage said. The brokerage expects the U.S. central bank to start trimming rates by 25 bps every other meeting after the end of next year, and that would bring the Fed funds' target range to 5.00%-5.25% at the end of 2024 and at 4.00%-4.25% by 2025-end. "We continue to think, however, that risks are tilted to the upside, with rate hikes likely in 2024, if progress on disinflation stalls," economists at Barclays led by Marc Giannoni said. Fed officials agreed at their last policy meeting that they would proceed "carefully" and raise interest rates only if progress in controlling inflation faltered, the minutes of the Oct. 31-Nov. 1 gathering showed on Tuesday. While several Wall Street banks already signaled the Fed's likely halt in rate hikes, Barclays had decided to stand apart, maintaining its outlook of another rate increase in January 2024 - until this shift in stance. https://www.reuters.com/markets/us/barclays-forecasts-fed-stand-pat-rates-january-2023-11-22/