2024-08-07 00:02

TOKYO, Aug 7 (Reuters) - A prime potential candidate for Japan's next prime minister endorsed the Bank of Japan's policy of gradually raising interest rates, saying its normalisation of monetary policy could push down prices and boost industrial competitiveness. "The Bank of Japan (BOJ) is on the right policy track to gradually align with a world with positive interest rates," ruling party heavyweight Shigeru Ishiba told Reuters in an interview. "The negative aspects of rate hikes, such as a stock market rout, have been the focus right now, but we must recognise their merits, as higher interest rates can lower costs of imports and make industry more competitive," he said. Japan's ruling Liberal Democratic Party (LDP) is set to hold a leadership election in September. Ishiba, a four-time candidate for the party's president, has yet to officially announce his intention to run in the latest race, but regularly ranks high in voter surveys on future prime ministers. He made the remarks after the BOJ's decision last week to raise interest rates and its readiness for further hikes roiled financial markets. Japan's Nikkei stock average on Monday plunged in the worst sell-off since October 1987 on the prospect of higher rates and U.S. recession fears but recouped most of the loss on Tuesday. "Japan's economy is largely driven by domestic demand," with exports accounting for just a fifth of its gross domestic product, Ishiba said. "Even though some export-oriented companies are benefiting from the weak yen, there is no doubt a majority of people are more affected by higher prices stemming from the weak currency." Ishiba said the general consensus on the ideal range for the yen is 110-140 per dollar, but he declined to comment on his own views on desirable currency levels. The yen traded around 144 to the dollar early Wednesday. He also noted that higher interest rates would help market mechanisms work properly in the economy by promoting a shift of capital to companies with strong growth and boosting Japan's industrial competitiveness as a result. Ishiba has long been a critic of former BOJ governor Haruhiko Kuroda's radical monetary stimulus, which was part of former premier Shinzo Abe's "Abenomics" policies to prop up growth. The BOJ should explain to the public the merits of higher interest rates, Ishiba said, as Japan convenes a special parliament session later this month to discuss the latest market rout, where BOJ Governor Kazuo Ueda is likely to attend. It will take time for benefits to materialise, he said. "There will be a time lag, for example, for the yen to start firming and import prices to go down." He declined to comment how far the BOJ should raise rates, stressing that politics should not weigh into the central bank's monetary policy. Sign up here. https://www.reuters.com/markets/rates-bonds/japan-premier-candidate-ishiba-endorses-bojs-rate-hikes-2024-08-07/

2024-08-06 23:30

Uber jumps after Q2 revenue beat Caterpillar rises after Q2 profit beat Indexes: Dow up 0.8%, S&P 500 up 1%, Nasdaq up 1% NEW YORK, Aug 6 (Reuters) - The S&P 500 and Nasdaq ended 1% higher on Tuesday as investors jumped back into the market a day after a dramatic sell-off, with recent comments by Federal Reserve officials easing U.S. recession worries. The Dow rose as well, but all three major stock indexes pared gains heading into the close and ended well off their highs of the day. U.S. central bank policymakers have pushed back against the idea that weaker-than-expected July jobs data means the economy is headed for a recession, but they have also warned that the Fed will need to cut interest rates to avoid such an outcome. Stocks had sold off as weak economic data raised worries of a U.S. recession. Traders are pricing in a 75% chance the Fed will cut rates by 50 basis points at its next policy meeting in September, and a 25% chance of a 25 basis point reduction, the CME Group's FedWatch Tool showed. All major S&P 500 sectors ended higher, with real estate (.SPLRCR) , opens new tab and financials (.SPSY) , opens new tab up the most. Technology megacap Nvidia (NVDA.O) , opens new tab rose nearly 4%, giving the S&P 500 and Nasdaq their biggest boosts. "The market had just gotten top heavy, but it did reprice a decent amount, particularly the Nasdaq, and people are coming back to the idea that with lower rates it should provide a support for stocks," said Rick Meckler, partner at Cherry Lane Investments, a family investment office in New Vernon, New Jersey. The Dow Jones Industrial Average (.DJI) , opens new tab rose 294.39 points, or 0.76%, to 38,997.66, the S&P 500 (.SPX) , opens new tab gained 53.7 points, or 1.04%, at 5,240.03 and the Nasdaq Composite (.IXIC) , opens new tab advanced 166.77 points, or 1.03%, to 16,366.86. The Nasdaq Composite is still up 9% so far in 2024, driven earlier in the year by strong earnings and optimism over artificial intelligence. "While (recent) earnings were good, in many cases they weren't great," Meckler said. Valuations have been stretched. The S&P 500 was last trading at 20 times forward 12-month earnings estimates, compared with its long-term average of 15.7, LSEG data showed. Recent market concerns were exacerbated as investors wound down yen-funded trades, used to finance acquisition of stocks for years, after a surprise Bank of Japan rate hike last week. The next big Fed event is Chair Jerome Powell's speech at the Jackson Hole, Wyoming, on Aug. 22-24. Uber (UBER.N) , opens new tab shares jumped 11% after the ride-sharing and food delivery provider beat Wall Street estimates for second-quarter revenue and core profit, helped by steady demand for its services. Caterpillar (CAT.N) , opens new tab gained 3% after beating analysts' estimates for second-quarter profit, as higher prices on its larger excavators and other equipment countered moderating demand in North America. Volume on U.S. exchanges was 13.52 billion shares, compared with the 12.48 billion average for the full session over the last 20 trading days. Advancing issues outnumbered declining ones on the NYSE by a 2.59-to-1 ratio; on Nasdaq, a 1.93-to-1 ratio favored advancers. The S&P 500 posted 12 new 52-week highs and seven new lows; the Nasdaq Composite recorded 31 new highs and 144 new lows. Sign up here. https://www.reuters.com/markets/us/futures-recover-positive-fed-rate-remarks-2024-08-06/

2024-08-06 23:25

Aug 6 (Reuters) - BlackRock (BLK.N) , opens new tab and exchange operator Nasdaq (NDAQ.O) , opens new tab have proposed a rule change to list and trade options for the asset manager's spot ethereum exchange-traded fund, according to a regulatory filing on Tuesday. In July, the U.S. Securities and Exchange Commission (SEC) approved exchange-traded funds tied to the price of ether from major firms, including Franklin Templeton (BEN.N) , opens new tab, VanEck, Bitwise and 21Shares. Options give holders the right to buy or sell an asset, such as a stock or exchange-traded product, at a pre-determined price by a set date. "The exchange believes that offering options on the Trust will benefit investors by providing them with an additional, relatively lower cost investing tool to gain exposure to spot ether," the filing said. The SEC oversees technical rule changes that exchanges must make to list options. The comments on the rule change proposal are due in 21 days. Sign up here. https://www.reuters.com/markets/us/blackrock-nasdaq-seek-rule-change-list-options-spot-ethereum-etfs-2024-08-06/

2024-08-06 22:33

Aug 6 (Reuters) - A U.S. court has overturned the Federal Energy Regulatory Commission's (FERC) authorization for NextDecade's (NEXT.O) , opens new tab Rio Grande LNG project for not issuing a supplemental environmental impact statement, the company said on Tuesday. The facility has been in development for several years, suffering repeated delays, and phase 1 is now expected to reach completion by early 2029 at an expected cost of about $18 billion. NextDecade said it was "disappointed in the court's decision and disagrees with its conclusions." "At this time, construction continues on the first three liquefaction trains and related infrastructure (Phase 1)" the company said, adding it "is evaluating the impact of the court's decision on the timing of a positive final investment decision (FID) on Train 4". Earlier this year, Abu Dhabi National Oil Company (ADNOC) acquired an 11.7% stake in phase 1 of the project and NextDecade signed a non-binding agreement with Saudi Aramco (2222.SE) , opens new tab to supply 1.2 million tonnes per annum (MTPA) of LNG for 20 years. NextDecade was planning to start the construction of the fourth liquefaction train in the second half of 2024 after the FID. Sign up here. https://www.reuters.com/legal/us-court-overturns-fercs-authorization-nextdecades-rio-grande-project-2024-08-06/

2024-08-06 22:27

NEW YORK, Aug 6 (Reuters) - Bridgewater Associates said in a commentary sent to investors on Tuesday that it believes the sell-off in Japan's equities the previous day was exaggerated and that the stocks remain somewhat attractive, according to two sources familiar with the letter. According to the sources, the $112.5 billion global macro hedge fund wrote that, in their opinion, the sell-off looked overdone relative to the change in fundamental conditions. Bridgewater did not immediately respond to a request for comment on the analysis shared with investors. On Monday, the Nikkei (.N225) , opens new tab sank 12.4% in its biggest daily sell-off since the 1987 Black Monday crash, after a job data report on Friday showed a higher-than-expected U.S. unemployment rate, raising concerns about a recession in the world's largest economy. On Tuesday, Japan's benchmark index rebounded strongly and closed up 10.2%. Investors also started to unwind yen-funded trades that had been used to finance the acquisition of stocks for years after a surprise Bank of Japan rate hike last week, exacerbating market moves. Bridgewater said in the commentary it considered Monday's brutal sell-off to be shallow and short-lived, not representing major changes in fundamental conditions. A stronger yen after the Bank of Japan raised interest rates last week and a lower rate of growth in developed markets make conditions for Japan's stocks less supportive, but Bridgewater said the unwind of the yen carry trade exacerbated the move. The hedge fund told its investors that it continues to view Japanese equities as somewhat attractive. Bridgewater did not disclose if it was actively involved in the yen carry trade. MACRO FUNDS Global macro hedge funds such as Bridgewater trade across equities, fixed income and commodities in different geographies, betting on global trends. This strategy along with managed futures funds or commodity trading advisers (CTAs) was a strategy most affected by the recent unexpected rally in the yen, according to hedge fund research firm PivotalPath, as the funds had sizeable bets against the Japanese currencies. In the Aug. 1 to Aug. 5 period, global macro quantitative funds posted losses between 1.5% and 2.5% because of their short yen positions, PivotalPath's exposure model calculations showed. After losses of over 2% in July, those funds are down between 4% and 5% year-to-date, after posting gains of almost 8% in April. The drawdown will make a recovery before the year-end more challenging for those funds, according to Jon Caplis, chief executive officer at PivotalPath. “A lot of global macro managers going into this year were pounding the table that these (market) dislocations would be very beneficial to them and they would be able to take advantage of these opportunities. Unfortunately, I think you're going to see some disappointment,” he said. Sign up here. https://www.reuters.com/legal/transactional/bridgewater-says-sell-off-japans-stocks-is-overdone-2024-08-06/

2024-08-06 22:18

Aug 6 (Reuters) - The International Monetary Fund (IMF) on Tuesday said progress had been made in negotiations with El Salvador toward a fund-supported program with the Central American nation, though issues remained such as its use of Bitcoin cryptocurrency. Discussions focused on policies that could be supported by an IMF program, it said in a statement, such as those which could strengthen public finances, boost bank reserve buffers, improve governance and transparency and mitigate risks from the country's investment in Bitcoin. The IMF and El Salvador have reached "preliminary understandings" on improving the nation's primary balance, the IMF said, to around 3.5% of gross domestic product (GDP) over a three-year period. The country also plans to gradually strengthen its reserve buffers by reducing reliance on domestic financing and instead receiving support from the IMF and other development banks, the fund said. On Bitcoin, the IMF said that many potential risks "have not yet materialized," but that there was a joint recognition that El Salvador needed to enhance transparency and mitigate risks from the project. Salvadoran President Nayib Bukele made bitcoin a legal tender and has touted plans for "Bitcoin City," a tax-free crypto haven powered by geothermal energy from a volcano. Sign up here. https://www.reuters.com/markets/imf-reports-progress-negotiations-with-el-salvador-2024-08-06/