2024-08-08 11:49
LONDON, Aug 8 (Reuters) - British Airways is halting flights to Beijing from Oct. 26 until November 2025, it said on Thursday without elaborating on the reason. The carrier, owned by IAG (ICAG.L) , opens new tab, said it would continue flying daily to Shanghai and Hong Kong. European and British carriers are unable to fly over Russian airspace, which means flying to Asia takes a few hours longer than it used to. That makes it more expensive and less appealing to customers. Groups such as Lufthansa (LHAG.DE) , opens new tab have said competition from Chinese carriers, which are allowed to fly over Russian airspace, has cut into their earnings, with Lufthansa's yields falling on routes on which it competes with the carriers. Sign up here. https://www.reuters.com/business/aerospace-defense/british-airways-halt-flights-beijing-oct-26-2024-08-08/
2024-08-08 11:45
TOKYO, Aug 8 (Reuters) - Japan's biggest oil and gas explorer Inpex (1605.T) , opens new tab on Thursday reported a 14.5% drop in its first-half net profit, but raised its annual dividend forecast and unveiled an additional share buyback plan to improve shareholder returns. For the full year, it stuck to its profit forecast of 360 billion yen ($2.5 billion) despite lower than expected output at its key Ichthys liquefied natural gas project in Australia. Net profit for the six months through June 30 fell to 212.6 billion yen from 248.5 billion a year earlier due to increased exploration expenses in Australia and higher tax payments. Still, the company raised its annual dividend forecast to 86 yen per share from 76 yen and boosted its annual share buyback plan to 130 billion yen from 50 billion yen, resulting in a record total shareholder return of about 65%. "Given our strong full-year earnings outlook, we decided to buy back additional shares and significantly increase the dividend," Daisuke Yamada, senior vice president, told a news conference. Slower LNG output at Ichthys due to operational issues will reduce annual profit by 4 billion yen from the company's May estimate, but this will be offset by a positive impact from the yen's depreciation, among other factors, Yamada said. Ichthys' Train 2 was shut down due to a gas leak on July 20, but came back online on July 28. Overall LNG production at Ichthys has recovered to 85% of pre-issue levels and is expected to return to full capacity after fully resolving the problem during planned one-week maintenance in early October, Yamada said. The slower production will reduce the number of cargoes to be shipped from Ichthys in 2024 by between one and five cargoes, according to a company spokesperson. The plant shipped 76 cargoes from January to July. ($1 = 146.1500 yen) Sign up here. https://www.reuters.com/business/energy/inpex-h1-profit-falls-145-unveils-dividend-hike-share-buybacks-2024-08-08/
2024-08-08 11:29
NEW YORK/SINGAPORE, Aug 8 (Reuters) - This week's huge selloff in global markets, triggered by an unwinding of yen-funded trades, is far from over and could eventually spread to credit markets, impair some banks and possibly hurt the U.S. dollar, fund managers say. By Thursday, market volatility had subsided but stock markets struggled for direction and investors tried to guess how many more yen-funded leveraged trades remained to be unwound. The market mayhem since last Friday - which pushed Japan's Nikkei index (.N225) , opens new tab into bear market territory and caused the benchmark U.S. S&P 500 (.SPX) , opens new tab to crumble 6% in five trading days - was triggered by a Bank of Japan rate rise last week, that gutted billions of dollars worth yen-funded trades as the yen soared 10% in a month. "I think we've seen the panic stage of forced liquidation etc, but going forward I'm sure there will still be investors that are now looking to at least reduce exposure," said Khoon Goh, head of Asia research at ANZ. The problem is no-one knows what will be unwound and how much is at stake. Hundreds of billions of yen found their way into juicy carry trades over more than a decade when Japanese interest rates were at zero. And on top of that, there are carry trades funded in cheap Swiss francs and China's yuan. Trades worth even larger sums could be at risk, assuming hedge funds and leveraged investors amplified their bets with cheap borrowings. UNDER PRESSURE ”The concern is if anything blows up and loans can’t get paid back," said Quincy Krosby, chief global strategist for LPL Financial. "One of the things we’re watching is if any banks are under pressure right now, because they’ve been lending too much, either to hedge funds or retail investors. It’s buried under the larger equation of how we look at the carry trade." Measures of the yen carry trade, which is at the crux of this week's rout, vary widely. Some analysts use Japan's foreign portfolio investments, which are near $4 trillion, as a rough gauge. Analysts at TS Lombard narrow it down to the total overseas borrowing from Japan since the end of 2022, and Japanese investment in foreign securities over that period. "Investors may need to find up to $1.1 trillion to pay off yen carry-trade borrowing," they said in a note. UBS Japan macro strategist James Malcolm reckons the trade is worth about $500 billion and less than half has been unwound so far; Nikolaos Panigirtzoglou and other analysts at J.P. Morgan put the yen carry trade at $4 trillion. "While yen positions swung from oversold to overbought territory, the broader yen carry trade ... has likely seen much more limited unwinding," they said. Goldman Sachs global head of hedge fund coverage Tony Pasquariello also notes that the bank's prime brokerage data "curiously" does not show a lot of selling. "Is the entire trading community fully cleansed of risk? Of course not," Goldman said in a note. WATCH BONDS Some of the answers to that question, and clues to which shoe might drop next, lie in bonds, which have not sold off as aggressively as equities even in the riskiest tranches. U.S. short-term Treasury yields have fallen since last Friday, primarily because of dismal U.S. jobs data that heightened expectations for swift Fed rate cuts and drove some of the panic equities selling. U.S. junk bond spreads (.MERH0A0) , opens new tab over risk-free Treasury yields have widened, but only slightly, and investment-grade bond index spreads (.MERC0A0) , opens new tab have narrowed. "I struggle to square credit bonds (being) largely unmoved versus other risk markets," said Rong Ren Goh, a portfolio manager in the fixed income team at Eastspring Investments. "Assuming equities continue to struggle, I suspect there will be some adjustment in (the) credit space." It is also possible that Japanese investors will bring their massive Treasury and other overseas bond investments home, said Carlos Casanova, senior economist for Asia at UBP. While that could be an unhurried repatriation, it is a flow big enough to give global bond markets another scare. The crowded long-dollar trade is another one to watch. "If the Fed embarks on an aggressive easing spree, the dollar is going to weaken a lot. People are going to get squeezed," said Harish Neelakandan, co-chief investment officer of AlphaEngine Global Investment Solutions. "People who have currency positions, either outright speculative positions or they've been using the strategy to fund, they're going to be forced out of those trades. So that's the risk that I see.” Sign up here. https://www.reuters.com/markets/global-markets-selloff-analysis-pix-2024-08-08/
2024-08-08 11:13
Aug 8 (Reuters) - U.S. activists opposed to offshore wind development are forming a national coalition aimed at fighting projects from California to New England, according to the effort's founder and two other organizations. The National Offshore-wind Opposition Alliance, or NOOA, aims to bring a national profile to what is currently a fractured movement of dozens of local groups, according to its president, Mandy Davis. Offshore wind is a nascent industry in the United States and a key pillar of U.S. President Joe Biden's plan to combat climate change. His administration's push to install turbines along every U.S. coastline has attracted pushback, including multiple lawsuits, from residents concerned about the industry's impact on tourism, property values, fishing and marine habitats. "Sometimes the little guy just doesn't get noticed," said Davis, who is also the founder of a Morro Bay, California-based offshore wind opposition group called REACT Alliance. Davis said representatives from about 20 local groups from both U.S. coasts attended NOOA's first official meeting, held virtually this week. She did not say how many groups had yet formally signed on to the coalition, saying the list should become clear in the coming days and weeks. Green Oceans, a group that has sued to stop projects being built off the coast of Rhode Island, is among those that has already signed on, according to Green Oceans co-founder Bill Thompson. He said he hoped the coalition would lead to better information and strategy sharing. She said NOOA will maintain political neutrality and will not accept donations from fossil fuel interests. The group's acronym, NOOA, is intentionally a riff on that of the National Oceanic and Atmospheric Administration (NOAA), the U.S. agency that oversees federal ocean conservation policies and assists in permitting offshore wind facilities. "It's a little bit of a dig," Davis said. Sign up here. https://www.reuters.com/business/energy/us-offshore-wind-opponents-seek-form-national-group-fight-projects-2024-08-08/
2024-08-08 10:37
MUMBAI, Aug 8 (Reuters) - The Indian rupee ended at its lowest closing level on record as global risk appetite remained shaky but dollar sales by state-run banks, likely on behalf of the central bank, curbed further losses, traders said. The rupee settled at 83.9625 against the U.S. dollar, against 83.9550 at previous close. India's benchmark equity indices, the BSE Sensex (.BSESN) , opens new tab and Nifty 50 (.NSEI) , opens new tab, closed lower by 0.7% each, tracking weakness in global stocks. Europe's continent-wide STOXX 600 (.STOXX) , opens new tab index fell 1% in early trading while Japan's Nikkei share index (.N225) , opens new tab ended 0.7% lower. Global risk sentiment has soured this week as investors have been unwinding carry trades funded by the Japanese yen and amid concerns of a economic slowdown in the United States. The dollar index nudged higher to 103.1 and most Asian currencies rose with the Indonesian rupiah, up nearly 0.9%, leading gains. The rupee, however, diverged from its Asian peers and lingered in a narrow range supported by intermittent dollar sales from state-run banks, likely on behalf of the Reserve Bank of India (RBI). Multiple interventions by the RBI and directions to top banks to avoid large speculative bets against the rupee have made traders wary of taking short positions on the currency, a foreign exchange trader at a state-run bank said. The central bank kept policy rates unchanged for a ninth straight policy meeting on Thursday, as expected. Dollar-rupee forward premiums rose, aided by the RBI's decision to retain its monetary policy stance at 'withdrawal of accommodation'. The 1-year implied yield was rose 4 basis points to 2.05%. "We continue to expect the RBI to start easing from December 2024," Barclays Bank said in a note. India's foreign exchange reserves rose to a record high of $675 billion as of Aug. 2. Sign up here. https://www.reuters.com/markets/currencies/rupee-ends-record-closing-low-risk-appetite-wavers-2024-08-08/
2024-08-08 10:12
A look at the day ahead in U.S. and global markets from Mike Dolan Seeking some calm, markets remain edgy following the volatility jolt of the past week and traders now seek some re-assurance the real economy has not shifted underneath them. Volatility spikes like the one seen on Monday rarely disappear instantly and, with the VIX 'fear gauge' (.VIX) , opens new tab still above historical averages of about 20, some turbulence remains. At less than half Monday's peak, however, some healing is underway. The jangled nerves were evident on Wednesday as an initial bounce in Wall St stocks faded by the close, with anxiety fed by another red flag on the artificial intelligence theme from Super Micro's poor results and after a messy 10-year Treasury auction. To be sure, the 10-year note sale was allocated at 3 basis points above pre-auction levels and demand at 2.32 times the paper on offer was the lowest in almost two years. But that mostly reflected the week's sudden swoon in yields below 4% and the $42 billion sale went off with funding for Treasury almost 15bp cheaper than it would have got a week ago. Some $25 billion of 30-year bonds are up for grabs later on Thursday and provide the latest test - with the 2-to-30-year Treasury yield curve now positive to the tune of 27bps, having hit its steepest in two years on Monday. The 2-to-10 curve remains slightly inverted. Attention now turns back to whether the U.S. labor market is weakening at a pace that Friday's payrolls report suggested and the release on Thursday of the weekly jobless claims report takes on elevated significance for markets still largely priced for a Federal Reserve rate cut of up to 50bps next month. New unemployment claims have been rising and hit their highest since August last year in the most recent week. Stock futures , were steady ahead of the open today, however, with the VIX remaining below 30. European (.STOXXE) , opens new tab and Asian benchmarks were slightly lower - but with far less movement than earlier in the week. China's mainland index (.CSI300) , opens new tab was marginally higher. It was nervy still in Japan - the epicentre of much of the past week's angst due to unwinding short yen 'carry trades' that seeded wild 10%-plus swings in the Nikkei stock index (.N225) , opens new tab. But with a loss on Thursday of less than 1%, it appeared almost serene by comparison with Monday and Tuesday. There were some concerns from the minutes of last week's rate-raising Bank of Japan meeting, which showed board members calling for the need to keep raising interest rates. But that was recorded before the market turbulence that has since seen BOJ top brass say they would stall on that if it were just to fuel more market disruption. And Finance Minister Shunichi Suzuki said on Thursday the authorities were closely watching stock market developments, even if not yet planning specific actions yet. With estimates that most of the outstanding yen carry trades had now been unwound, the dollar/yen exchange rate steadied and retained a perch above 146. The dollar index (.DXY) , opens new tab more broadly edged lower as two and 10-year Treasury yields subsided once more in early trading on Thursday. In earnings, there will be a close look at pharma giant Eli Lilly's results. European rival Novo Nordisk (NOVOb.CO) , opens new tab on Wednesday reported weaker-than-expected quarterly sales of its popular weight-loss drug Wegovy, stirring worries among investors about stiffening competition from Eli Lilly and sending its shares down 8%. Novo is spending billions of dollars to lift Wegovy production to meet demand and fend off Lilly, which launched its rival therapy Zepbound in the U.S. last December. While the two companies are now going head-to-head with obesity treatments in a number of markets - the most lucrative one by far is the U.S., where more than 70% of adults are obese or overweight. Key developments that should provide more direction to U.S. markets later on Thursday: * US weekly jobless claims, June wholesales sales; Mexico July inflation * Richmond Federal Reserve President Thomas Barkin speaks * Central Bank of Mexico policy decision * US corporate earnings: Eli Lilly, Gilead Sciences, News Corp, Paramount Global, Expedia, Insulet, Solventum, Take-Two Interactive Software, Akamai Technologies, Epam Systems, Viatris, Martin Marietta Materials, Parker-Hannifan, NRG Energy, Vistra * US Treasury sells $25 billion of 30-year bonds, $95 billion of 4-week bills Sign up here. https://www.reuters.com/markets/us/global-markets-view-usa-2024-08-08/
