2024-08-15 00:48
NEW YORK, Aug 15 (Reuters) - The dollar held gains against the euro on Thursday, pulling the European common currency back from a seven-month peak, after U.S. economic data eased fears of a recession risk and dampened expectations for aggressive interest-rate cuts. U.S. retail sales rose more than expected in July, a sign that demand is not collapsing and which could prompt financial markets to dial back expectations for a 50-basis-point rate cut next month. Additionally, fewer Americans than expected filed for unemployment benefits in the latest week, suggesting an orderly labor market slowdown remained in place, although laid-off workers are finding it a bit difficult to land new jobs. The euro fell 0.36% versus the dollar at $1.0973. It reached $1.10475, its highest level this year, on Wednesday, as markets digested U.S. inflation numbers. The dollar index rose 0.42% to 103.03, and moved away from the eight-month low of 102.15 touched last week. "The data this morning goes counter to the recent market narrative of a Fed that is drastically behind the curve and would have to deliver jumbo rate cuts to avert a recession," said Peter Vassallo, FX portfolio manager at BNP Paribas Asset Management. "Market pricing has adjusted accordingly, and short-term U.S. rates have risen significantly on the day." The pound was up 0.17% at $1.2849, as data showed Britain's economy grew 0.6% in the second quarter, in line with economists' expectations and building on a rapid 0.7% recovery in the first quarter of the year. The pound also strengthened on the euro, which dipped 0.53% to 85.38 pence. Thursday's U.S. data follow Wednesday's release of the consumer price index, which rose moderately in July, in line with expectations, and the annual increase in inflation slowed to below 3% for the first time since early 2021. The figures add to the mild increase in producer prices in July in suggesting that inflation is on a downward trend, although traders now think the Fed will not be as aggressive on rate cuts as they had hoped. "This morning's data absolutely crushed remaining bets on a half percentage-point move at the Federal Reserve's September meeting," said Karl Schamotta, chief market strategist at Corpay. "Fear of a 'hard landing' in the U.S. economy has been almost fully unwound," he said, "and Fed officials are seen responding with a more cautious start to the easing cycle." Markets are now pricing in a 74.5% chance of a 25 bps cut next month and a 25.5% chance of a 50 bps reduction, the CME FedWatch tool showed. Traders were evenly split at the start of the week between the two cut options following last week's sell-off. The yen was at 149.13 per dollar, inching away from the seven-month high of 141.675 per dollar touched during last week's market mayhem and well beyond the 38-year lows of 161.96 it was rooted to at the start of July. Bouts of intervention from Tokyo early last month and then a surprise rate hike from the Bank of Japan at the end of July wrong-footed investors who bailed out of popular carry trades, lifting the yen. "Currency markets are suffering whiplash, with the dollar climbing against its rivals on a re-widening in rate differentials," Schamotta said. "Rumors of the death of the 'U.S. exceptionalism' trade look to have been exaggerated, yet again." Sign up here. https://www.reuters.com/markets/currencies/dollar-soft-ebbing-us-inflation-sets-stage-rate-cuts-2024-08-15/
2024-08-15 00:01
Aug 15 (Reuters) - Britain will grant 13.5 million pounds ($17.31 million) in funding to support Tata Steel's (TISC.NS) , opens new tab workers and supply chain businesses at Port Talbot in South Wales facing job losses, the government said on Thursday. Workers suspended a planned all-out strike after Britain's biggest steel producer warned that it would bring forward the planned closure of its two blast furnaces at Port Talbot if the walkouts went ahead. The closure would cut up to 2,800 jobs. "Negotiations with Tata Steel on the future of the site will continue separately. But this government will not wait for a crisis to overtake us before acting," Welsh Secretary Jo Stevens said in a statement. The closures were announced in January as part of the Indian company's plan to turn around its loss-making UK business by switching to lower carbon electric arc furnaces, a proposal backed by 500 million pounds ($632 million) of government money. ($1 = 0.7797 pounds) Sign up here. https://www.reuters.com/markets/commodities/uk-provides-173-million-protect-tata-steels-port-talbot-workers-2024-08-15/
2024-08-14 23:21
Aug 14 (Reuters) - Goldman Sachs and Morgan Stanley (MS.N) , opens new tab purchased a total of more than $600 million in spot bitcoin exchange-traded funds (ETFs) during the second quarter, regulatory filings showed on Wednesday. The two banks joined a group of hedge funds and financial advisers that have waded into the products, which began trading in January 2024. Goldman Sachs said in its quarterly disclosure to the Securities and Exchange Commission, known as a 13-F filing, that it had acquired about $418 million in several of the recently launched ETFs tied to the price of spot bitcoin. Most of that sum reflected a stake of nearly 7 million shares in the iShares Bitcoin Trust (IBIT.O) , opens new tab, valued at about $238 million as of the end of the quarter, June 30. Goldman also took sizeable stakes in the Fidelity Wise Origin Bitcoin ETF and the Invesco Galaxy Bitcoin ETF (BTCO.Z) , opens new tab, and smaller positions in several other bitcoin ETFs launched in January. Morgan Stanley also favored BlackRock's iShares bitcoin ETF, disclosing a 5.5 million share stake that was valued at $188 million as of June 30. The bank also disclosed smaller holdings in the Ark 21Shares Bitcoin ETF (ARKB.Z) , opens new tab and Grayscale Bitcoin Trust (GBTC.P) , opens new tab. The 13F filings are one of the few ways to get a snapshot of how institutional investors are positioned at the end of every quarter. The positions may not reveal current holdings. While the latest round of filings show the array of institutions in bitcoin ETFs may be growing, ETF issuers and analysts have said that so far, the products have mostly been dominated by individual investors. Neither bank could be reached for comment on whether their positions were acquired on behalf of clients or for each firm's own account. Some of the hedge funds that had established positions in the bitcoin ETFs earlier this year adjusted their holdings over the course of the second quarter, filings showed. New York-based Hunting Hill Global Capital trimmed its exposure to both the Grayscale and Fidelity ETFs, but as of June 30 had a $18.32 million stake in the Bitwise Bitcoin ETF (BITB.P) , opens new tab and acquired a new $25.6 million position in BlackRock's ETF. Adam Guren, founder and CEO of Hunting Hill, said his firm is an active trader of bitcoin products. "At any given time our trading activity can vary, and therefore our positions may shift,” he said. New York-based Millennium Management LLC disclosed that it cut its positions in three of the five bitcoin ETFs in which held stakes in the first quarter, while its exposure to the Ark 21Shares ETF was unchanged, and it increased holdings in the Bitwise product to nearly 2 million shares from about 1.2 million shares at the end of the first quarter. Overall, the hedge fund had about $1.15 billion invested in the bitcoin ETFs at the end of the second quarter, down from the $2 billion it disclosed at the end of the first quarter. A spokesman for the firm declined to comment. The price of bitcoin fell 12% during the quarter. Sign up here. https://www.reuters.com/business/finance/goldman-sachs-morgan-stanley-took-stakes-us-spot-bitcoin-etfs-q2-filings-show-2024-08-14/
2024-08-14 23:14
LONDON, Aug 15 (Reuters) - Britain's aviation regulator has selected six projects, including one by e-commerce giant Amazon (AMZN.O) , opens new tab, to test the use of drones in deliveries, inspection of infrastructure and emergency services, it said on Thursday. The UK's Civil Aviation Authority (CAA) had said earlier this year that it wanted to permit more drone flying for such uses. Currently drone users in Britain are only permitted to fly beyond the visual line of sight as part of trials with strict restrictions. As part of the trials announced by the CAA, selected projects would be able to fly their drones at distances beyond the flyer's ability to see them, using advanced technologies for navigation, control and to detect other aircraft. The projects include Amazon's drone delivery service, called Prime Air, Airspection to carry out inspections of offshore windfarms and Project Lifeline, which aims to deliver medical supplies. CAA said the trial would help the regulator's ongoing efforts to develop policy and regulations so drone flights can be "fully integrated" with other airspace users. "These innovative trials mark a significant step forward in integrating drones safely into UK airspace," said CAA director Sophie O'Sullivan. "Our goal is to make drone operations beyond visual line of sight a safe and everyday reality." Amazon said in October last year it was planning to begin delivering packages through drones in Britain, Italy and a third location in the United States. Sign up here. https://www.reuters.com/business/aerospace-defense/britain-trial-use-drones-deliveries-emergency-services-2024-08-14/
2024-08-14 23:14
TOKYO, Aug 15 (Reuters) - More Japanese companies believe a Kamala Harris presidency in the U.S. would be better for their businesses than a second Donald Trump administration, a Reuters survey showed on Thursday, reflecting the respondents concerns about protectionism and policy unpredictability. The outcome of November's U.S. presidential election is being closely watched by countries around the world. But Japan is a close ally of Washington, with tens of thousands of U.S. troops stationed there, and its businesses would feel the impact of a renewed U.S.-China trade war since both are among its top trading partners. Some 43% of Japanese firms said they preferred Harris in light of their corporate strategies and business plans while 8% picked Trump. A total of 46% said either candidate would be fine, with the remaining 3% saying they preferred neither. "There is a possibility that trade war, economic friction and security threats will be brought about under another Trump administration, forcing us to change our business strategy," a manager at a ceramics manufacturer wrote in the survey. Japan's relations with the Trump administration were at times strained by his demands for more payments towards military assistance and by trade tensions. With Harris, "we can expect current policies to be maintained by and large. That would give us better visibility into the future," an official at a chemicals firm said. Asked what change will likely be necessary under a Trump administration, 34% said their foreign exchange strategy would need to be reviewed, while 28% said their supply chains would be realigned and 21% said they would reduce their China operations. Trump has floated the idea of a 10% universal tariff on U.S. imports, which could disrupt international markets, and a tariff of at least 50% on Chinese goods. Nikkei Research reached out to 506 companies from July 31 to Aug. 9 on behalf of Reuters for the survey, with 243 firms responding. CHINA SLOWDOWN Regardless of who wins the U.S. election, 13% of Japanese companies are considering reducing operations in China, while 3% are looking into expanding their businesses, with 47% planning to maintain their current exposure, the survey showed. Among those thinking about paring down operations in China, 35% said they saw no prospects for economic recovery, 29% cited tough price competition and another 29% pointed to economic security risks as reasons to cut back. China's economy grew much slower than expected in the second quarter and its exports rose at their slowest pace in three months in July, adding to concerns about the outlook for its vast manufacturing sector. Major Japanese companies that have announced cutbacks in their China operations in recent months include Honda Motor (7267.T) , opens new tab and Nippon Steel (5401.T) , opens new tab. The survey also showed 24% of respondents saw recent rounds of intervention in the foreign exchange market by Japanese authorities as appropriate, compared with 9% that found the moves inappropriate and 64% that believed they were unavoidable. The yen kept falling earlier this year despite intervention in April and May, touching a 38-year low of 161.96 to the dollar on July 3. Japanese authorities are suspected to have stepped in again in mid-July to put a floor under the yen. "The extreme weakness in the yen had to be corrected. It just couldn't be helped," an official at an electronics company said. Asked if the Bank of Japan should raise interest rates to shore up the yen, 51% said such a step was allowed only when exchange rates fluctuated excessively, while 22% said they didn't support a monetary policy change aimed at affecting the foreign exchange market. On expectations for the yen, 32% saw it trading in a range of 145 to 150 yen to the dollar at the end of the year, while 25% predicted the Japanese currency to be firmer at 140 to 145 yen, while 22% saw it trading between 150 to 155 yen. During the period of the survey, the yen was volatile and touched its strongest level since the start of the year before reversing course. It has since continued to weaken. Sign up here. https://www.reuters.com/markets/asia/japan-firms-see-harris-presidency-better-business-than-trump-reuters-survey-2024-08-14/
2024-08-14 23:11
S&P 500, Nasdaq extend win streaks to five U.S. CPI rises as expected in July Alphabet dips after report US mulls Google break-up VIX records fastest ever drop from high-fear range Indexes up: Dow 0.61%, S&P 500 0.38%, Nasdaq 0.03% Aug 14 (Reuters) - The S&P 500 ended higher on Wednesday, stretching its winning streak to five sessions, as the latest inflation data reassured investors betting the Federal Reserve would start cutting U.S. interest rates next month. The Nasdaq Composite also posted its fifth straight daily gain, although it barely scraped into positive territory as Alphabet and some megacap tech stocks weighed. Moves were generally subdued with many investors away for August vacations, and new triggers for trading were absent, contributing to an overall listless picture among the benchmarks. The latest U.S. consumer price data, released earlier on Wednesday, reinforced expectations that the Fed would start interest rate cuts in September. U.S. consumer prices rose moderately in July, and the annual increase in inflation slowed to below 3% for the first time since early 2021. A day earlier, softer-than-expected producer prices data indicated inflation continued to moderate, although not yet all the way to the U.S. central bank's 2% target. Money markets now see a 55% chance of a 25-basis point (bps) rate cut at the Fed's Sept. 17-18 meeting, as per the CME FedWatch Tool. Before the data, traders were nearly evenly split between a 25-bps and 50-bps cut. Scott Ladner, chief investment officer at Horizon Investments, said he called days such as this "markets violently going nowhere", adding with CPI painting a similar picture to PPI data, there was no reason for traders to reassess moves put in place on the previous day. "There's no huge rationale to move prices one way or another," he said. The S&P 500 (.SPX) , opens new tab closed at 5,455.21, up 0.38% or 20.78 points. The Nasdaq Composite (.IXIC) , opens new tab closed at 17,192.60, up 0.03% or 4.99 points. The Dow Jones Industrial Average (.DJI) , opens new tab closed up 242.75 points or 0.61% at 40,008.39. Shares of Alphabet, the Google-parent (GOOGL.O) , opens new tab, dropped 2.3% on a media report that the U.S. Department of Justice is considering options that include breaking up the online search engine. Other megacaps were mixed: Tesla (TSLA.O) , opens new tab slumped 3.1% and Meta Platforms dropped 0.3%, while Microsoft (MSFT.O) , opens new tab fell 0.7% and Nvidia (NVDA.O) , opens new tab declined 1.7%. A rebound in megacap and tech stocks has helped markets recoup most losses from a global market rout early this month after data showed the U.S. unemployment rate surged in July. Thursday's release by the Commerce Department's Census Bureau of retail sales data will be keenly watched by those concerned about the overall strength of the American economy, Horizon's Ladner said. These worries had sent the Cboe volatility index (.VIX) , opens new tab, Wall Street's fear gauge, to its highest since 2020 just last week. However, on Wednesday, it stayed below its long term average of 20 points for the second day to close at 16.19. The seven trading sessions it took the VIX to return to its long-term median of 17.6 is the index’s quickest ever drop from 35, a level associated with a high degree of fear, according to a Reuters analysis. A majority of the major S&P sectors were in positive territory, led by a 1.3% rise in financials (.SPSY) , opens new tab. Its advance was aided by gains of more than 4.6% by Progressive (PGR.N) , opens new tab and Charles Schwab (SCHW.N) , opens new tab, which rose after positive July performance numbers, and Allstate (ALL.N) , opens new tab, which climbed after agreeing to sell a business unit. Both of the insurers ended at record closing highs. Kellanova (K.N) , opens new tab surged 7.8% after family-owned candy giant Mars said it would buy the Cheez-It and Pringles maker in a nearly $36 billion deal. Cardinal Health (CAH.N) , opens new tab gained 3.7% after the drug distributor raised its 2025 profit forecast. Sign up here. https://www.reuters.com/markets/us/futures-tread-water-ahead-key-inflation-report-2024-08-14/
