2023-10-31 11:54
Euro zone inflation lowest since July 2021 in Oct GDP shrinks slightly in Q3 FRANKFURT, Oct 31 (Reuters) - Inflation in the euro zone is falling fast and the economy has begun contracting, data showed on Tuesday, illustrating the dual impact of a steady diet of European Central Bank interest rate hikes. Prices rose by just 2.9% in October, their slowest pace since July 2021, a Eurostat flash reading showed, a time when the ECB was still worried about inflation getting stuck below its 2% target. But the brisk decline from double-digit figures just a year ago is coming at a cost: the euro zone economy shrank by 0.1% in the three months to September, according to a separate Eurostat release, and is flirting with a recession. The two sets of data mean the ECB has almost certainly finished raising interest rates, which are at record highs after an unprecedented streak of 10 consecutive hikes, and will now watch their impact play out before making further moves. "We expect a plateau in rates at current levels, in the context of slowing inflation and economic growth, followed by cuts from the middle of next year," said Daniele Antonucci, chief investment officer at Quintet Private Bank. Later on Tuesday, Greek central bank governor Yannis Stournaras became the first ECB policymaker to talk about a possible rate cut towards the middle of next year if inflation were to stabilise below 3%. His more hawkish German colleague Joachim Nagel, however, would not rule out more hikes, while France's Francois Villeroy de Galhau, seen as a centrist, said rates should stay "at their current level" for as long as needed. BASE EFFECTS Headline inflation started falling sharply last month as the massive increase in energy prices recorded a year earlier set a higher "base" for the annual comparison - an effect set to fade or even reverse in upcoming readings. A measure of inflation that excludes energy, food, alcohol and tobacco recorded a more moderate decline, to 4.2%, the lowest level since July 2022, from 4.5%. While all components in the inflation basket increased by less than a month earlier, the slowdown was minimal in services, at 4.6% from 4.7%, probably as a result of rising wages. "The ECB needs to see wage inflation slowing and this could take a further six months," Deutsche Bank economist Mark Wall said. HARD LAST MILE The last mile may well prove the hardest, however, with inflation not seen returning to the ECB's 2% target until 2025 even on its own numbers. "It's now down to weaker demand grinding down inflation and that's a slow process," Natixis' economist Dirk Schumacher said. It is a painful one too, with gross domestic product across the 20 countries that share the euro expected to continue contracting in the final quarter. Tuesday's reading was skewed by a 1.8% fall in Irish GDP, which is volatile and often subject to revisions relating to its large multinational sector. But economists generally agreed it marked the start of a shallow recession in the euro zone, which may be aggravated by the armed conflicts taking place on Europe's doorstep in Ukraine and in Gaza. "It does look like the economic environment is weakening at the moment, but no sharp recession is in sight either," ING economist Bert Colijn said. "Still, continued economic and geopolitical uncertainty alongside the impact of higher rates on the economy will weigh on economic activity in the coming quarters." https://www.reuters.com/markets/europe/wrapup1-euzo-zone-inflation-growth-slow-ecb-hikes-weigh-2023-10-31/
2023-10-31 11:47
LONDON, Oct 31 (Reuters) - The British pound was strengthening against a weaker dollar on Tuesday but still on track for its third straight monthly drop as traders looked ahead to the Bank of England's policy announcement on Thursday. Britain's central bank is expected to keep interest rates unchanged at a 15-year high of 5.25% when it announces policy this week, amid signs that the labour market is cooling even as it faces an inflation rate more than three times as high as its target. The British Retail Consortium said annual shop price inflation dropped to 5.2% from 6.2% in September, its weakest since August 2022, supporting the view that the BoE will refrain from policy changes at this meeting. "The BoE won't hike this time around," said Dane Cekov, senior macro and FX strategist at Nordea. Money market traders are betting that the BoE is finished with rate increases in this tightening cycle, with rate cuts priced towards the end of next year. Most economists also said the BoE is likely to be done with tightening and will leave the Bank Rate at 5.25% later this week, a Reuters survey found. By 1126 GMT, the pound was up 0.2% versus the dollar at $1.2190 but was still on track for a third consecutive monthly loss. Sterling was last at 87.48 pence per euro , down around 0.3% on the day. Against the yen, the pound was up 1.4%, on track for its biggest daily gain against the Japanese currency since July, after the Bank of Japan made only a small tweak to its yield curve control policy, sending the yen tumbling. The BoJ maintained its -0.1% target for short-term interest rates and that for the 10-year government bond yield around 0% set under its yield curve control, but redefined the 1.0% limit as a loose "upper bound" rather than a rigid cap. Markets were now on the lookout for potential intervention in the Japanese yen, which could have knock-on implications for other currencies. "I think the only thing that is stopping the yen from being weaker is the threat of intervention from authorities," Nordea's Cekov said. "Markets will continue to test how willing the Japanese government is to protect the yen." Meanwhile, the dollar index , which measures the currency against six major peers including the pound and the yen, was last down 0.2% at 105.95, but in close proximity to an 11-month high of 107.34 hit earlier this month. https://www.reuters.com/markets/currencies/sterling-edges-higher-vs-dollar-jumps-against-yen-after-boj-2023-10-31/
2023-10-31 11:35
NEW YORK, Oct 31 (Reuters) - Midstream energy company MPLX transported 2% more products including natural gas and crude oil in the third quarter of 2023 versus the same time the year prior, and reported higher earnings on Tuesday. Total pipeline throughputs were 5.9 million barrels per day (bpd) in the third quarter, while the average pipeline tariff rate was $0.99 per barrel for the quarter, an increase of 13% versus the same quarter of 2022, the company said in an earnings release. MPLX's adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) was nearly $1.6 billion, compared with $1.47 billion for the third quarter of 2022. Adjusted EBITDA for the company's logistics and storage segment increased by $122 million compared to the same period in 2022, in part driven by higher rates and higher total throughputs. During the quarter, MPLX returned $799 million to unitholders and announced a third-quarter 2023 distribution of $0.85 per common unit. "We announced a 10% increase to our distribution, and through the first nine months of the year we have grown distributable cash flow over 6% compared to the same period in 2022," said Michael J. Hennigan, MPLX chairman, president and chief executive officer. Adjusted EBITDA for the company's gathering and processing segment increased by $3 million compared to the same time the year prior, as lower natural gas liquids prices offset higher volumes and throughput fees, the company said. In the Permian basin, MPLX completed its Whistler pipeline expansion from 2.0 billion cubic feet per day (bcfd) to 2.5 bcfd at the end of the third quarter, the company said. Construction is progressing on the associated Agua Dulce Corpus Christi Pipeline lateral, expected to be in service in the third quarter of 2024. It expects to complete in the first half of 2025 its expansion of the BANGL joint venture pipeline to a capacity of 200 thousand barrels per day (bpd). In the Permian's Delaware basin, MPLX is progressing construction of its sixth natural gas processing plant, Preakness ll, expected online in the first half of 2024, the company said. MPLX is also planning to build Secretariat, its seventh processing plant in the basin, expected online in the second half of 2025. These new plants will bring MPLX processing capacity in the Delaware basin to 1.4 bcfd. In the Marcellus, MPLX is progressing construction of the Harmon Creek ll processing plant, which is expected online in the first half of 2024. https://www.reuters.com/business/energy/midstream-company-mplx-reports-higher-pipeline-volumes-earnings-q3-2023-2023-10-31/
2023-10-31 11:34
BEIJING, Oct 31 (Reuters) - Authorities issued their highest warnings for fog and haze on Tuesday as smog enveloped major cities in northern China, warning the public that visibility could drop to less than 50 metres (164 feet). Northern province Hebei launched an anti-pollution emergency response, listing traffic safety controls for when necessary including suspending flight takeoffs and landings, temporarily closing highways and suspending ferries, China's meteorological bureau said in a notice. Authorities also warned road users to stop in safe parking areas when conditions required and asked people to stay indoors. Beijing said it would implement traffic control measures if the capital activates its highest air pollution warning. Heavy smog has engulfed the country's north for a few days while autumn temperatures soared to typical early summer levels close to 30 degrees Celsius (86 degrees Fahrenheit) in some areas. Experts said weak cold air currents from the north pole were a key factor behind the unusual weather. As air pollution levels in the wider Beijing-Tianjin-Hebei area and northern part of Henan province reached moderate to severe, pollution control experts said increased industrial activities, heavy trucking and crop fires had contributed to the haze, state media CCTV reported. Regional power consumption in late October was up 5% compared with first half of the month, more significantly in the cement, brick and tile industries, worsening conditions, CCTV said. Parts of Tianjin municipality and Hebei and Shandong provinces, as well as eastern areas of Jiangsu province saw heavy fog resulting in visibility of less than 1 km (0.62 mile) on Tuesday morning, the National Meteorological Center (NMC) said. Until Thursday, light to moderate haze will continue to cover the central and southern parts of China's northern region, with severe haze forecast in the central parts, NMC said. Cold air currents are forecast to stream in the north from Thursday night, creating conditions that could weaken and dissipate the haze, the weather forecaster said. https://www.reuters.com/world/china/chinas-smog-covered-north-highest-pollution-alert-visibility-drops-2023-10-31/
2023-10-31 11:33
Oct 31 (Reuters) - South Africa's Impala Platinum (IMPJ.J) will reduce planned spending across its business to reflect current low metal prices, the company said on Tuesday. The prices of platinum group metals (PGM), which are used by automakers for catalysts that help curb toxic emissions, have fallen steeply this year, squeezing miners still facing high operational costs. Platinum prices are down about 15% so far in 2023 amid concerns over global economic growth, while palladium is currently trading around $1,127 an ounce after peaking above $3,000 in March 2022 after top producer Russia invaded Ukraine. The price of rhodium, a scarce, corrosion-resistant PGM, peaked at nearly $30,000 an ounce in 2021 but is currently trading around $4,500. Impala, the world's second largest PGM producer after South African rival Anglo American Platinum (AMSJ.J), last year announced a 50 billion rand ($2.66 billion) five-year capital investment programme across its mining and processing assets. Much of the investment was earmarked for mine development and upgrades as well as processing facilities and solar power generation at Impala's 87% owned Zimplats Ltd (ZIM.AX) in Zimbabwe. "Planned elevated levels of spend across the portfolio will be adjusted to reflect the prevailing current reality of compressed industry margins," Impala CEO Nico Muller said in a quarterly production update. The company did not immediately respond to a request for details of specific projects that could be impacted by the reduced spending. Impala's refined PGM production volumes increased by 25% to 885,000 ounces during the September quarter after integrating the newly acquired Royal Bafokeng Platinum. ($1 = 18.7626 rand) https://www.reuters.com/markets/commodities/impala-platinum-cut-spending-after-metal-price-decline-2023-10-31/
2023-10-31 11:25
Oil prices above $100/bbl not sustainable - analysts Main upside risk to crude from an escalation in war-poll For a table of crude price forecasts, click Oct 31 (Reuters) - Slow global economic growth will keep crude prices anchored below $90 a barrel this year and next, unless the Israel-Hamas conflict draws in more countries in the Middle East and exacerbates supply tightness, a Reuters poll showed on Tuesday. A survey of 40 economists and analysts forecast Brent crude would average $84.80 a barrel this year, and $86.62 in 2024, little changed from estimates of $84.09 and $86.45 projected in September. The global benchmark Brent crude has averaged around $82.60 a barrel so far this year. U.S. crude forecasts were also a tad higher at $80.32 a barrel for 2023 and $83.02 next year, from the $79.64 and $82.99 consensus last month. "The major drivers will continue to be geopolitics and the extent of economic growth," said John Paisie, president of Stratas Advisors. If the Middle East situation spins out of control, the price of Brent crude will likely test $115 or higher if there is a disruption to oil supply, Paisie added. Military clashes between Israel and Hamas ignited fears that a wider conflict could hit supply from the Middle East, the world's biggest oil-supplying region. So far, the impact has been limited as Israel is not a big producer. "If the U.S. were to conclude Iran played a significant role in the Hamas’ attack, this could lead it to greater enforcement of sanctions on Iran's oil exports. Given the current crude market tightness, this could lead to prices spiking above $100," Capital Economics' Bill Weatherburn said. Most poll respondents do not see oil holding above $100 per barrel for a prolonged period of time as recessionary pressures loom large. On the supply side, Saudi Arabia and Russia said they would continue with their voluntary output cuts until the end of 2023, keeping the market tight and supporting oil prices. "The Saudi output cuts will eventually cease, and supplies should tighten less than feared in parts due to stagnant demand," said Julius Baer analyst Norbert Rücker. Global oil demand was expected to increase by about 1.5-2.2 million barrels per day (bpd) in 2023 and by 1-2 million bpd in 2024, led by China and India. https://www.reuters.com/business/energy/growth-risks-restrain-oil-2024-mideast-risks-loom-large-2023-10-31/
