2023-10-31 16:10

FRANKFURT, Oct 31 (Reuters) - The European Central Bank must keep interest rates sufficiently high for long enough because inflation in the euro zone has not been conquered despite a significant fall in the past year, ECB policymaker Joachim Nagel said on Tuesday. "Our tight monetary policy is working, but we must not let up too soon," Nagel, the Bundesbank's president, said in remarks prepared for delivery at an economic think-tank in Berlin. "Rather, the key interest rates will have to remain at a sufficiently high level for a sufficiently long time." He said it was too early to say whether rates had reached their peak, despite several of his colleagues saying they hoped last month's hike would the ECB's last and one even talking about a possible cut next year. Prices rose by just 2.9% in the euro zone in October, their slowest pace since July 2021, and a measure of inflation that excludes energy, food, alcohol and tobacco recorded also fell, data showed earlier on Tuesday. https://www.reuters.com/markets/europe/ecbs-nagel-says-inflation-has-not-been-defeated-yet-2023-10-31/

2023-10-31 14:35

Oct 31 (Reuters) - Brazilian brewer Ambev SA (ABEV3.SA) on Tuesday reported a 19.3% jump in net profit on an organic basis, lifting its shares as lower aluminum prices and favorable exchange rates offset a dip in sales volumes. The Sao Paulo-based company said the exchange rate benefit and lower commodity prices helped reduce costs, which was welcomed by analysts even as its top line fell short of market expectations. Ambev shares were up more than 4% in morning trade, among the top gainers on Brazil's benchmark stock exchange index Bovespa (.BVSP), which was down 0.2%. Total net revenue for the third quarter came in at 20.32 billion reais ($4.03 billion), below analysts' expectations of 21.22 billion reais, based on LSEG data. Overall, sales were lower, with an increase of 13.6% in Central America and the Caribbean overshadowed by a fall of 9.4% in South Latin America and a 13.1% drop in Canada. "Sales weren't great," BTG Pactual analysts led by Thiago Duarte said. "But margins soared, driven by selling, general, and administrative expenses dilution ... That's what we call cost saving." In Brazil, sales continued to grow, led by Brazil Beer. The company said premium beer brands led by Corona, Spaten, Stella Artois and Original grew by a low-teens percentage, outperforming the industry. The subsidiary of Belgium's Anheuser-Busch InBev (ABI.BR) reported a profit of 4.02 billion reais, versus the 3.45 billion reais average estimate of analysts polled by LSEG. Earnings before interest, tax, depreciation and amortization (EBITDA) grew organically 43.7% year-on-year to 6.58 billion reais, with its EBITDA margin jumping 520 basis points on a sequential basis to 32.4%. That represents a "solid earnings beat, despite the topline miss," Bernstein analysts led by Nadine Sarwat wrote in a note to clients. The company forecast fourth quarter EBITDA to surpass the 17.1% growth achieved in 2022. ($1 = 5.0479 reais) https://www.reuters.com/business/retail-consumer/lower-costs-fx-boost-brazils-ambev-net-profit-q3-sales-dip-2023-10-31/

2023-10-31 14:18

OTTAWA, Oct 31 (Reuters) - The Canadian economy stalled in August and likely slipped into a shallow recession in the third quarter, data showed on Tuesday, a sign the central bank's 10 interest rate hikes since last year are weighing on growth. With the economy stumbling along slower than the Bank of Canada forecast just last week, analysts said there is no need to raise rates again from 5.0%, a 22-year high. The Canadian dollar was trading lower, near its weakest level in a year. The August result was slightly lower than 0.1% month-over-month rise forecast by analysts polled by Reuters. July GDP was revised to being marginally negative from an initial report of zero growth, Statistics Canada said. In a flash estimate, the economy was likely also unchanged in September, and Statscan officials said that translated into an annualized 0.1% decline in the third quarter, marking a second consecutive quarter of negative growth after a 0.2% decrease in the previous quarter. "Whether or not the economy is already in recession is less important than the fact that the lagged impacts of monetary policy are likely to materially depress economic activity moving forward," said Tiago Figueiredo, an economist at Desjardins, in a note. "As a result, we expect the economy to more clearly enter a recession in 2024. This data reaffirms our view that the Bank of Canada is done raising rates for this cycle," Figueiredo said. The statistics agency said high interest rates, inflation, forest fires and drought conditions hurt growth in August. The central bank has said its previous rate hikes are sinking in. The projected contraction in third-quarter annualized growth is far lower than the Bank of Canada (BoC) forecast last week. The BoC forecast GDP growth would expand 0.8% in the third quarter, down from 1.5% projected in July. BoC Governor Tiff Macklem said after last week's rate decision that there may not be a need for another rate increase if inflation cools in line with the central bank's expectations. "Given the fact that Canada has yet to feel the full impact of prior rate hikes, there's still more downside risk ahead for the economy," Benjamin Reitzes, macro strategist at BMO Capital Markets, said in a note. "This is yet one more crystal clear sign that the Bank of Canada should be done hiking," Reitzes said. Money markets see a roughly 90% chance the central bank will leave interest rates on hold at its next policy announcement in December, while the Canadian dollar was trading 0.3% lower at 1.3865 to the greenback, or 72.12 U.S. cents. Canada's goods-producing sector contracted 0.2%, dragged down by the third consecutive month of declines in the manufacturing sector. The service-producing sector posted a 0.1% rise, in part helped by the wholesale trade and the transportation and warehousing subsectors. https://www.reuters.com/markets/canadas-economy-flatlined-august-minor-contraction-seen-third-quarter-2023-10-31/

2023-10-31 13:59

MOSCOW, Oct 31 (Reuters) - The Russian rouble weakened on Tuesday, pulling back after soaring to a three-month high past 92 to the dollar earlier in a volatile session, supported by high interest rates, but facing a month-end reduction in foreign currency sales. By 1324 GMT, the rouble was 0.5% weaker against the dollar at 93.28 . It had earlier strengthened to 91.6225, its strongest point since Aug. 1. It had lost 0.3% to trade at 98.90 versus the euro and shed 0.5% against the yuan to 12.70 . The Bank of Russia hiked interest rates by a higher than expected 200 basis points to 15% on Friday, raising borrowing costs for the fourth meeting running in response to a weak rouble, stubborn inflation and increasing budget spending. "The increase in the key rate has led to a decrease in consumer demand and exporters' requests for dollars and yuan have fallen slightly," said Alor Broker's Alexei Antonov. "But at the same time, growth in the money supply is continuing and this will definitely result in rouble weakening." The rouble has now lost support from month-end tax payments, which were due on Monday and usually see exporters convert foreign exchange to pay domestic liabilities. President Vladimir Putin's decree on mandatory FX sales, which came into force this month, is still buttressing the currency. The decree requires 43 groups of exporters to repatriate 80% of FX revenue and then sell 90% of that sum. The rouble has strengthened from beyond 100 to the dollar since the decree was announced. The Financial Times on Tuesday reported that Russia was imposing effective capital controls on Western companies selling their operations in Russia with caps and deadlines on foreign currency transactions, moves that would favour the rouble. Brent crude oil , a global benchmark for Russia's main export, was up 0.7% at $88.02 a barrel. Russian stock indexes were lower. The dollar-denominated RTS index (.IRTS) was down 1.4% to 1,079.1 points. The rouble-based MOEX Russian index (.IMOEX) was 1% lower at 3,195.7 points. https://www.reuters.com/markets/currencies/russian-rouble-gives-up-gains-after-soaring-3-month-high-2023-10-31/

2023-10-31 13:32

Oct 31 (Reuters) - Mexico's economy expanded for the eighth consecutive quarter between July and September, driven by domestic consumption and industrial activity, a preliminary estimate from national statistics agency INEGI showed on Tuesday. Latin America's second-largest economy posted 0.9% gross domestic product (GDP) (MXGDQP=ECI) growth in the third quarter compared with the previous three-month period, and slightly above the 0.8% expected by economists polled by Reuters. However, Jason Tuvey, deputy chief emerging markets economist at Capital Economics, said a "slowdown is on the cards" as monetary policy takes a heavier toll and weaker growth in the U.S. weighs on Mexico’s external sector. The quarterly growth, INEGI said, was driven by a 3.2% jump in the primary sector and an increase of 1.4% in secondary activities. Tuvey also added the breakdown of the data shows strong growth in the primary (agricultural) and secondary (industrial) sectors more than offset weaker growth in the tertiary (services) sector. Carlos Morales, director of Latin America Sovereigns at Fitch Ratings says the results, "continue to signal the increasing demand for Mexican manufacturing production due to nearshoring effects". Last week, Deputy Finance Minister, Gabriel Yorio, said the Mexican economy would grow by at least 3.5% this year. Compared with the same quarter a year earlier (MXGDYP=ECI), the Mexican economy also grew 3.3%, the statistics agency added, also slightly above the projected 3.2% growth, continuing the streak of annual growth. https://www.reuters.com/markets/mexicos-economy-grows-09-third-quarter-exceeding-forecasts-2023-10-31/

2023-10-31 12:00

Oct 31 (Reuters) - U.S. defense contractor Leidos Holdings (LDOS.N) on Tuesday raised its full-year profit and revenue forecasts on the back of strong weapons demand amid rising geopolitical tensions. Defense companies have seen robust demand for weapons from the U.S. and its allies following Moscow's invasion of Ukraine and rising geopolitical tensions in Asia. The Reston, Virginia-based company now expects 2023 revenue of between $15.1 billion and $15.3 billion, above its previous forecast of $14.9 billion to $15.2 billion. It expects annual adjusted profit of between $6.80 and $7.10 per share, compared with a prior range of $6.40 to $6.80 per share. Leidos posted a net loss of $396 million, or $2.91 per share, for the third quarter, reflecting a one-time impairment charge of $699 million related to its Security Enterprise Solutions (SES) reporting unit. Excluding one-off items, quarterly adjusted profit was $2.03 per share, beating analysts' average estimate of $1.67 per share, according to LSEG data. The defense contractor reported quarterly revenue of $3.92 billion, ahead of analysts' forecast of $3.77 billion. https://www.reuters.com/business/aerospace-defense/defense-firm-leidos-raises-outlook-robust-weapons-demand-2023-10-31/