2023-11-07 11:57

BRASILIA, Nov 7 (Reuters) - Brazil's central bank said on Tuesday that there remains a substantial journey ahead to bring inflation back to the official target, stressing it has ignited a wide-ranging discussion on the increasingly challenging external scenario. In the minutes of the meeting held on October 31-November 1, when the bank cut the benchmark interest rate by 50 basis points to 12.25%, it said that its rate-setting committee was unanimous in its assessment that the increased uncertainty in the global scenario calls for caution. One of its members stressed that this scenario introduces an asymmetric upward bias in the balance of risks for inflation. "There has been significant disinflationary progress, in line with what the Committee had anticipated, but there is still a long way to go to anchor expectations and return inflation to the target," it said. Last week, policymakers emphasized an "adverse" external backdrop for emerging economies, but still anticipated further cuts of the same size for the next meetings. The central bank deliberated in the minutes on the various ways in which higher U.S. interest rates could impact the Brazilian economy, highlighting potential effects on interest rates, forward premium in the interest rate curve, external demand, exchange rates, neutral interest rates, and commodity prices. Following the outbreak of the Israeli-Hamas conflict, the bank noted that the exchange rate and the oil price have had moderate changes so far, despite the severity of such events and "the substantial movement in the prices of international assets". "When incorporating the multiple transmission channels into a more uncertain environment, (rate-setting committee) Copom evaluates as appropriate to adopt a more cautious stance in face of the risks involved," the minutes said. Policymakers also pointed out higher uncertainty related to Brazil's fiscal target, which led to an increased risk premium, reaffirming the importance of firmly pursuing such goal. President Luiz Inacio Lula da Silva recently said his government did not need to erase its primary budget deficit next year, as previously proposed to Congress under new fiscal rules, triggering a negative reaction from local markets amid concerns that the country's public debt might grow more than expected. https://www.reuters.com/markets/brazil-central-bank-stresses-long-journey-return-inflation-target-2023-11-07/

2023-11-07 11:03

A look at the day ahead in U.S. and global markets from Mike Dolan World markets are trying to calibrate last week's steep rally in stocks and bonds - tempering some of the overcaffeinated rate cut hopes that emerged but sustaining the bulk of the gains and lapping up a fresh oil price slide. With Federal Reserve officials unlikely to commit either way yet, as they devour more data on the unfolding fourth quarter, investors now look to three days of Treasury debt sales to gauge whether October's bond rout was an anomaly rather a new trend. The Treasury sells $112 billion of new notes and bonds this week, starting with $48 billion of 3-year notes later on Tuesday - before new benchmark 10-year and 30-year tenors hit the Street on Wednesday and Thursday. Aided by a renewed slide in oil prices, where U.S. crude fell below $80 per barrel for the first time since August after disappointing Chinese export readings, 10-year Treasury yields are on the back foot again on Tuesday and hovered around 4.60% ahead of the open. Both 10- and 30-year yields are still more than 40bps below last month's peaks. The oil price slide was helped by signs from Israel that it's open to pauses in the Gaza fighting. But the wider picture of U.S. economic health continued to throw up some mixed signals. The Fed's quarterly loan officer survey late Monday showed banks tightened lending standards for businesses and households over the third quarter - but the pace of change appeared to ease even as demand for loans fell broadly. No game changer then. And that's seen Fed rate futures give back a little of last week's repricing - with a first quarter point policy rate cut still nailed on by June but a second no longer fully priced until September. The typically hawkish Minneapolis Fed boss Neel Kashkari insisted it was still too early to take another rate hike off the table. "I'm a little nervous about declaring victory too soon," he said late on Monday. Attention now turns to U.S. international trade - although the U.S. data on Tuesday still just reports the tail end of the third quarter. China's poor October export numbers paint a worrying picture of global demand at large - but the wider report was more mixed and imports surprised on the upside last month. What's more, the International Monetary Fund upgraded its forecasts for China's economic growth this year and next - at least partly based on assumptions of government policy supports. Elsewhere, the Reserve Bank of Australia raised its policy interest rate again, as expected, by another quarter point to a 12-year high of 4.35%. But the Aussie dollar skidded lower as the RBA appeared to signal it's now on pause along with other major central banks. Overall, the global stocks picture reflected some of the cooling of last week's rally and some of the China export numbers. Asia bourses were lower, with Japan and Hong Kong losing more than 1% and South Korea's Kospi recoiling 2% after Monday's surge. European stocks were down more modestly. Even though the S&P500 (.SPX) eked out another gain on Monday, futures were slightly in the red ahead of today's open. UBS (UBSG.S) stock jumped more than 3% after the Swiss banking giant signalled its core wealth business is stabilising after it reported a $785 million loss in the third quarter due to expenses tied to its takeover of Credit Suisse. And WeWork, the SoftBank-backed startup whose meteoric rise and fall influenced the office sector globally, sought U.S. bankruptcy protection on Monday after its bets on companies using more of its office-sharing space soured. Key developments that should provide more direction to U.S. markets later on Tuesday: * U.S. Sept international trade balance, Sept consumer credit; Canada Sept trade balance * Federal Reserve Bank of New York issues Q3 Household Debt and Credit Report * Federal Reserve Board Governor Christopher Waller, Fed Vice Chair for Supervision Michael Barr, New York Fed President John Williams, Dallas Fed chief Lorie Logan, Kansas City Fed President Jeffrey Schmid all speak * U.S. corporate earnings: DR Horton, eBay, Gilead Sciences, Mosaic, Emerson Electric, Occidental Petroleum, Devon Energy, Zimmer Biomat, Axon, STERIS, DaVita, Wair Products & Chemicals, Viatris, Extra Space, Jack Henry, Akamai, Gen Digital, Evergy, Expeditors, Fidelity National Information * U.S. Treasury auctions $48 billion of 3-year notes https://www.reuters.com/markets/us/global-markets-view-usa-2023-11-07/

2023-11-07 10:52

Nov 7 (Reuters) - A Russian fibre optic cable under the Baltic Sea was damaged last month only 28 km (17 miles) from where a gas pipeline linking Finland and Estonia was damaged soon afterwards, Russian state company Rostelecom said on Tuesday. Finnish police believe damage to the Balticconnector gas pipeline was caused by a Chinese container ship dragging its anchor along the seabed but have not concluded whether this was an accident or a deliberate act. Security of sub-sea cables and pipelines in the Baltic has become a top concern against the background of the Ukraine war, especially since the blowing-up of Russia's Nord Stream gas pipelines last year. Investigators have yet to establish who was responsible. In a statement, Rostelecom did not comment on what had caused the "accident" to the fibre cable that links Russia's Baltic exclave of Kaliningrad to the rest of the country. However, it noted the proximity of the incident to the damaged Balticconnector gas pipeline, in terms of both geography and timing. "Damage to the Rostelecom company's fiber optic cable in the Baltic Sea was recorded on October 7, 2023 at 23:30 (Moscow time). The location of the cable damage is located 28 km from the section of the Baltic Connector gas pipeline damaged on October 8," it said. Finnish police leading the pipeline investigation have named the Hong-Kong-flagged container carrier NewNew Polar Bear as the prime suspect in damaging the gas pipeline. A large anchor was found nearby, and the investigators believe the pipe was broken as a ship dragged it across the sea bed. Operator Gasgrid has said the pipeline could be out of commission until April or longer. China has said it is willing to provide the necessary information in accordance with international law. Two other Baltic telecoms cables, connecting Estonia to Finland and Sweden, were also damaged on Oct. 7 and 8. In its statement, Rostelecom said a specialised vessel had started repairs on the fibre optic cable on Nov. 5 and the work was expected to take 10 days, depending on weather conditions. It said users had not been affected because data was transmitted via terrestrial routes and backup satellite channels. https://www.reuters.com/world/europe/russia-says-telecoms-cable-damaged-last-month-just-before-nearby-baltic-gas-2023-11-07/

2023-11-07 08:51

Nov 7 (Reuters) - Sterling dropped against a strengthening U.S. dollar on Tuesday, with investors closely watching economic data and market bets on the Bank of England’s future moves. Higher yields and a strong economy usually increase demand for the nation's currency. The pound rose more than 2% versus the greenback last week, its biggest gain in almost four months, after the BoE held interest rates at a 15-year high and stressed the need to continue fighting inflation, while U.S. yields and the greenback tumbled after the Fed suggested its tightening path was over. Money markets priced in more than a 50% chance of rates being unchanged until June 2024 and a higher chance of a 25 basis points rate cut in August next year. The Bank of England might wait until the middle of next year before cutting interest rates from their current 15-year high, the BoE's Chief Economist Huw Pill said on Monday. "We think these comments are a mild sterling negative, and given the risk that Fed-speak puts equities on the back foot again, risk-sensitive sterling could hand back some of its recent gains," said Chris Turner, head of forex strategy at ING. The dollar advanced on Tuesday as last week's rally in riskier currencies took a breather. Sterling was last down 0.15% at $1.2320. It hit $1.2428 on Monday, its highest in more than a month. "Markets expect the BoE to lower rates in 2024, but starting a bit later than the Fed and probably acting with less intensity," said Roberto Mialich, global forex strategist at Unicredit, adding that the U.S. curve of policy rate forwards is leading the whole foreign exchange market. Investors remain on hold ahead of Friday's economic data, including gross domestic product, the balance of trade and industrial production. "Come Friday, there is a raft of UK activity indicators released, which should paint a familiar message. UK growth is anaemic, and GBP does not warrant being in a stronger position," said Paul Mackel, global head of forex Research at HSBC. British consumer spending grew at the slowest pace in more than a year last month, reflecting concerns about the cost of living in the run-up to Christmas, according to a survey released on Tuesday. Sterling was roughly unchanged against the euro, with the single currency down 0.01% at 86.81 pence. https://www.reuters.com/markets/currencies/sterling-falls-versus-dollar-focus-economic-data-boe-2023-11-07/

2023-11-07 07:35

2022/23 adjusted operating profit up 5% Expects year of "meaningful progress" for group Expects Primark's margin to recover Shares up 5.7%, biggest FTSE riser LONDON, Nov 7 (Reuters) - British fashion retailer Primark is heading into Christmas in good shape and with trading momentum after its strategy of passing on only limited price rises kept shoppers on its side. Shares in parent AB Foods (ABF.L) were up 5.7% in morning trading, extending 2023 gains to 41%, after it signalled the retailer's margin in the new financial year would also benefit from lower material and freight costs. In its 2022/23 year, Primark's sales rose 17%, helped by a decision to pass on only part of the input cost increases it faced to consumers through higher prices. AB Foods CEO George Weston said Primark had raised "a few" prices in some of Primark's autumn/winter ranges, but lowered them in childrenswear. "We have no plans to move any prices through the rest of the year," he told Reuters in an interview. Echoing comments of rival Next (NXT.L) last week, Weston said Primark's trading had been strong since the return of autumnal weather in mid-October. He said shopping for Christmas lines had started early, as consumers spread the cost over more than one pay packet. Weston expects further growth in Primark's sales in the 2023/24 year, driven by some 1 million square feet of new retail space and "modest" levels of like-for-like sales growth. Lower material and freight costs should result in a "substantial recovery" in Primark's gross margin and overall it expects Primark's adjusted operating profit margin to recover to over 10% from 8.2% in 2022/23. Rival H&M (HMb.ST) said in September its goal was to lift its operating margin to 10% next year after it reached 8% in its third quarter. AB Foods forecast "meaningful progress" for the group as a whole in 2023/24. It expects a stable performance from its grocery business, which includes Twinings tea, Jordans cereals, Kingsmill bread and Ovaltine drinks. It forecast a "substantial improvement" in profit in its sugar business, progress in agriculture, and a modest decline in sales and profit in its ingredients division. "Whilst the environment is still challenging for the consumer, inflationary pressures have eased and there is less volatility than there was 12 months ago. The group is well positioned as a result," it said. For the year to Sept. 16 it made an adjusted operating profit, its key profit measure, of 1.51 billion pounds ($1.86 billion), up from 1.44 billion. Revenue rose 16% to 19.75 billion pounds. The group announced an additional share buyback of 500 million pounds after concluding a programme of the same amount last month. The total dividend, including a special dividend, rose 37%. ($1 = 0.8121 pounds) https://www.reuters.com/business/retail-consumer/primark-owner-ab-foods-expects-growth-new-year-after-profit-rises-5-2023-11-07/

2023-11-07 07:33

Oil prices fall over $3/bbl, hit lowest since July 24 Chinese data raises concerns around country's oil demand Fed Chair Powell to speak later this week US crude stocks rose by 11.9 million barrels last week - API BENGALURU, Nov 7 (Reuters) - Oil prices fell more than 4% on Tuesday to their lowest since late July, as mixed Chinese economic data and rising OPEC exports eased fears about tight markets and as the dollar strengthened. Brent crude futures closed below $84 a barrel for the first time since Hamas Islamists' Oct. 7 attack on Israel. The global benchmark settled at $81.61 a barrel, down $3.57, or 4.2%, while U.S. West Texas Intermediate crude futures settled at $77.37 a barrel, down $3.45, or 4.3%. "Traders will remain on high alert for signs of a wider conflict emerging in the region that could disrupt supplies, but it seems those fears are subsiding," OANDA analyst Craig Erlam said. A recovery in oil exports from the Organization of Petroleum Exporting Countries also added to the pressure on oil prices, UBS analyst Giovanni Staunovo said. "OPEC crude exports are up by about 1 million barrels per day (bpd) since their August low, as a result of seasonally lower domestic demand in the Middle East. It seems it is too much supply to be absorbed by oil consuming nations," Staunovo said. The premium on front-month loading Brent contracts over ones loading in six months was at a 2-1/2-month low, indicating less concern about supply deficits. On the demand side, China's crude oil imports in October showed robust growth but its total exports of goods and services contracted at a quicker pace than expected. "The data signals the continued decline in the Chinese economic outlook driven by deteriorating demand in the country's largest export destination: the West," City Index analyst Fiona Cincotta said. U.S. crude oil stocks rose by almost 12 million barrels last week, market sources said citing American Petroleum Institute figures. Oil prices extended losses slightly in post-settlement trading, with Brent futures down to $81.51 by 5:02 p.m. ET. The U.S. Energy Information Administration now expects total petroleum consumption in the country to fall by 300,000 bpd this year, reversing its earlier forecast of a 100,000 bpd increase. Fading investor hopes for a peak in global interest rates also helped lift the U.S. dollar (.DXY) from recent lows, making oil more expensive for holders of other currencies. The U.S. central bank may have to do more to reduce inflation to its 2% target, Minneapolis Federal Reserve President Neel Kashkari said. Investors are awaiting comments from Fed Chair Jerome Powell, due on Wednesday and Thursday. "There are concerns in the oil markets about both rising supply and sliding demand," said Mizuho analyst Robert Yawger. "It's certainly not a tight market right now," he added. https://www.reuters.com/markets/commodities/oil-prices-ease-market-awaits-china-data-gauge-demand-2023-11-07/