2024-08-02 00:12

BENGALURU, Aug 2 (Reuters) - The Reserve Bank of Australia will hold interest rates on Tuesday at near a 13-year high and wait until the first quarter of 2025 before reducing them, according to economists polled by Reuters, as price pressures remain elevated. Inflation unexpectedly rose to a six-month high of 4.0% in May from 3.6% previously, triggering a flurry of speculation in markets that the RBA would raise rates. But after inflation dipped to 3.8% last month, along with weaker-than-expected price pressures across the second quarter, that pricing was wiped out. Still, with inflation well above the central bank's 2%-3% target range, the RBA will hold the official cash rate (AUCBIR=ECI) , opens new tab at 4.35% this year, according to the July 31-Aug. 1 Reuters poll. All but one of 33 economists surveyed expected the central bank to leave rates unchanged on Aug. 6. The median forecast and majority view put rates on hold through the end of this year, unchanged from the previous poll. In a survey taken before the June 18 meeting, more than 60% of economists had predicted at least one cut before the end of 2024. No one forecast any change to rates at the September meeting in the latest poll. "The Q2 inflation report almost certainly takes August off the table for a potential rate hike from the RBA. We still think the underlying strength in the economy is sufficient that they will have to maintain a bit of a hawkish bias," said Ben Picton, senior strategist at Rabobank. "Up until (the) inflation report, it was our expectation they would hike rates in 2024. So we think a cut this year is probably a bridge too far. They won't do that," Picton said. Among major local banks, ANZ, and NAB predict rates will stay unchanged through 2024, while CBA and Westpac see one cut before the end of this year. Two-thirds of economists polled, 22 of 33, forecast no change to the key rate before 2025. Only 10 saw at least one 25-basis-point cut in the fourth quarter while one forecast it at 4.60%. Market pricing showed a roughly 55% probability of a rate cut by the end of 2024, suggesting the RBA will lag the U.S. Federal Reserve, which is forecast to cut rates twice this year and four times in 2025. "The view was always that the RBA was a reluctant hiker and it simply meant the official cash rate was going to be held higher for a lot longer relative to other developed markets," said Craig Vardy, head of fixed income at BlackRock Australasia. "The path forward from here is going to be a very slow burn into 2025 ... We've got a terminal RBA cash rate at 3.60%. We've had that for quite a while, so that tells you three rate cuts and they're done." Inflation was forecast to average 3.4% this year and 2.8% in 2025, a separate Reuters poll found. Median forecasts in the latest survey showed the RBA cutting rates by 75 basis points next year, putting the official cash rate at 3.60% by the end of 2025. Sign up here. https://www.reuters.com/markets/rates-bonds/rba-hold-rates-steady-august-first-cut-seen-early-2025-2024-08-02/

2024-08-02 00:03

US manufacturing gauge drops to eight-month low Arm Holdings down after tepid Q2 revenue forecast Eli Lilly up as weight-loss drug cut heart failure risk in trial Indexes down: Dow 1.21%, S&P 500 1.37%, Nasdaq 2.3% NEW YORK, Aug 1 (Reuters) - U.S. stocks kicked off August sharply lower after a round of economic data on Thursday spurred concerns the economy may be slowing faster than anticipated while the Federal Reserve maintains a restrictive monetary policy. Equities initially opened higher, buoyed in part by gains in Meta Platforms (META.O) , opens new tab after its quarterly results topped expectations and the Facebook parent issued an upbeat outlook for the third quarter. Its shares closed 5.87% higher as the biggest boost to the S&P 500. Early gains, however, evaporated after data showed a measure of manufacturing activity from the Institute for Supply Management (ISM) dropped to an eight-month low in July at 46.8, signifying contraction. "It raises a genuine fear that the Fed is behind on cutting rates," Lou Basenese, president and chief market strategist at MDB Capital in New York. "Few investors have confidence in the Fed sticking the proverbial soft landing and now the data is starting to support those concerns." The Dow Jones Industrial Average (.DJI) , opens new tab fell 494.82 points, or 1.21%, to 40,347.97, the S&P 500 (.SPX) , opens new tab lost 75.62 points, or 1.37%, to 5,446.68 and the Nasdaq Composite (.IXIC) , opens new tab lost 405.25 points, or 2.30%, to 17,194.15. August is typically one of the weakest months of the year for stocks. Other data showed the number of Americans filing new applications for unemployment benefits increased to an 11-month high last week, suggesting some softening in the labor market, although seasonal factors also played a role. Investors will eye the government payrolls report on Friday for any signs of further weakness in the labor market. Both the S&P 500 and Nasdaq registered their biggest daily percentage gains since February in the prior session, boosted by a rally in chip shares after the Fed kept rates steady, as expected. Defensive sectors such as utilities (.SPLRCU) , opens new tab and real estate (.SPLRCR) , opens new tab led gains, as geopolitical concerns over rising tensions in the Middle East boosted the dollar and pulled Treasury yields lower. Declines in megacap names such as Apple (AAPL.O) , opens new tab, down 1.68%, and Amazon (AMZN.O) , opens new tab, which lost 1.56% ahead of their quarterly results due after the closing bell weighed heavily on the tech (.SPLRCT) , opens new tab and consumer discretionary (.SPLRCD) , opens new tab indexes, which were among the worst performing of the 11 major S&P sectors. After the closing bell, Amazon shares lost 4.47% following its quarterly results and outlook. Of the 342 companies in the S&P 500 that have reported earnings through Thursday morning, 79.2% have topped analyst expectations, according to LSEG data, slightly above the 79% beat rate over the past four quarters. The estimated earnings growth rate for the quarter is 13.3%, up from 10.6% on July 1. The small-cap Russell 2000 (.RUT) , opens new tab slumped 3.03% for its biggest daily percentage drop since Feb. 13. Small caps have been volatile recently as investors rotate between cheaper names and more expensive stocks. "Without a good economy, these economically sensitive small stocks just won’t do anything, even with rate cuts," said Steve Sosnick, market strategist Interactive Brokers, Greenwich, Connecticut. Nvidia (NVDA.O) , opens new tab dropped 6.67% in a broader chip stocks selloff sparked by Arm Holdings' conservative revenue forecast and Qualcomm (QCOM.O) , opens new tab flagging a revenue hit from the impact of trade curbs. ARM shares plummeted 15.72% while Qualcomm stumbled 9.37% as the PHLX semiconductor index (.SOX) , opens new tab lost 7.14% for its biggest daily percentage drop since March 2020. Moderna (MRNA.O) , opens new tab plunged 21.01% after cutting its 2024 sales forecast for COVID-19 and respiratory syncytial virus vaccines by up to 25%. Eli Lilly (LLY.N) , opens new tab rose 3.5% after trial results showed weight-loss drug Zepbound reduces the risk of hospitalization, death and other outcomes for obese adults with a common type of heart failure. Declining issues outnumbered advancers by a 2.04-to-1 ratio on the NYSE and on the Nasdaq, declining issues outnumbered advancers by a 3.19-to-1 ratio. The S&P 500 posted 54 new 52-week highs and seven new lows while the Nasdaq Composite recorded 65 new highs and 177 new lows. Volume on U.S. exchanges was 14.15 billion shares, compared with the 11.71 billion average for the full session over the last 20 trading days. Sign up here. https://www.reuters.com/markets/us/sp-500-nasdaq-futures-rise-rate-cut-hopes-prevail-meta-jumps-2024-08-01/

2024-08-01 23:19

HOUSTON, Aug 1 (Reuters) - Williams Cos (WMB.N) , opens new tab got the green light to continue building its Louisiana Energy Gateway project (LEG) on Wednesday, a natural gas pipeline, after a court threw out rival company, Energy Transfer's (ET.N) , opens new tab last bid to halt its construction. The two companies have been in dispute over Williams' LEG project, under construction in Texas and Louisiana, after Energy Transfer pushed back on the line for crossing its own systems. Williams crossed the final hurdle on Wednesday, after a favorable ruling from the 30th Judicial Court of Vernon Parish, Louisiana brought an end to the crossing disputes. “Construction can begin in earnest on the Louisiana Energy Gateway, which is expected to be in service by the second half of 2025,” a Williams spokesperson said on Thursday. The 1.8 billion-cubic-feet-per-day (bcfd) line would feed gas from the Haynesville shale field to the U.S. Gulf coast. Sign up here. https://www.reuters.com/business/energy/williams-resume-louisiana-natgas-pipeline-project-ending-feud-with-energy-2024-08-01/

2024-08-01 23:00

LONDON, Aug 1 (Reuters) - The London Metal Exchange (LME) has just listed the Saudi Arabian port of Jeddah as a good delivery location for copper and zinc. This addition to the LME's global delivery network, which becomes effective three months after the approval of the first warehouse, is the first new listing since Amsterdam in 2018. The exchange is also exploring the possibility of adding Hong Kong to the list, no doubt hoping that its owner Hong Kong Exchanges and Clearing (HKEx) (0388.HK) , opens new tab can help overcome the Chinese authorities' historical resistance to LME warehouses. New locations may provide a booster for a warehouse network that has seen capacity contract and the number of operators decline over the last 10 years. However, old problems persist. There was a 253-day queue to load aluminium out of LME warehouses in Malaysia's Port Klang at the end of June, the longest waiting time since November 2016. The LME storage business also remains highly concentrated with four dominant operators, a potential problem when one of them is facing an uncertain future. SHRINKING SPACE Total LME registered storage capacity at the end of June was 3.3 million square metres, down from 4.3 million three years ago. The pace of net shrinkage slowed to 44,000 square metres over the last year and the downtrend shows signs of bottoming out. The number of registered warehouses grew by 15 units to 468 after falling to a multi-year low in June 2023. The three-year decline in registered capacity reflected a period of low exchange stocks as combined warranted and shadow off-warrant inventory fell below one million metric tons over the second half of 2022. Stocks have since risen to 2.3 million as of the end of May, although inflows have been tightly concentrated on just a handful of locations. Russian aluminium has accumulated in the South Korean port of Gwangyang, while non-Russian aluminium has been dumped in Port Klang. This year's heavy inflows of both lead and zinc have mostly ended up at Singapore warehouses. All three locations have bucked the trend of declining storage capacity over the last year and ISTIM UK Ltd's additional 11 warehouse units at Port Klang were the single biggest component of the broader year-on-year increase. JOIN THE QUEUE Rent-sharing is the common denominator behind this year's big deliveries of metal into the LME system. Such deals allow the entity that warrants the metal to earn a slice of the future rental revenue. The buyer of that metal may be understandably reluctant to pay rent to a potential competitor but the only way to escape the contract is to physically load the metal out and deliver it to another warehouse company. The larger the original warranting, the greater the potential for a queue. ISTIM warehouses in Port Klang received 652,525 tons of aluminium in May. The cancellations began almost immediately as buyers looked to move their metal. ISTIM had 505,050 tons awaiting physical load-out by the end of June. It's an echo of the 2010s, when the LME's load-out problems caused user outrage and drew the unwelcome attention of U.S. regulators, who wanted to know why it would take 702 days to take physical delivery from LME warehouses in Detroit. Subsequent reforms to the LME system mean that such self-perpetuating super-queues are no longer possible. What we get now are what the exchange calls "operational" queues. Which may not be much comfort for those late to the aluminium logjam in Malaysia. They're unlikely to see their metal until this time next year. DOMINANT FOUR ISTIM's ability to attract such huge tonnages to its warehouses has made it a dominant presence in the LME delivery system. The company was storing 55% of all warranted LME stocks at the end of June. The other three major players are Access World, C. Steinweg and the Pacorini Group. Between them they were storing 92% of total inventory at the end of June and they currently account for 344 of the total 468 units listed globally. This is also a throw-back to the last decade, when Metro International, then owned by Goldman Sachs (GS.N) , opens new tab, industrialised the queue model and built a dominant LME storage position in Detroit. Access World, acquired by Glencore (GLEN.L) , opens new tab in 2010, did the same in the Dutch port of Vlissingen, generating a load-out queue of 771 days at one stage. Smaller operators struggled to compete then, and clearly they still do. Many who joined the LME warehouse business in hope of getting a slice of the queue action in the 2010s have since withdrawn. The number of LME-registered warehouse operators has declined from 36 to 25 over the last five years and that includes nine that offer LME services in a single location. WAREHOUSE FOR (RE)SALE The uncertain status of Access World highlights the problems that can be caused when LME stocks are concentrated in such a small pool of warehouse operators. Glencore thought it had sold the company to Global Capital Merchants (GCM), a company registered in the British Virgin Islands, in 2022. However, Access World is back on the sales block after the buyers failed to make full payment and Glencore is reportedly scouting for new potential owners. Access World warehouses held almost 12% of LME on-warrant stocks at the end of June. A DECADE OF REFORM The LME, to its credit, has spent a lot of time and effort trying to smooth out the many wrinkles in its delivery system, which - like everything else on the 147-year-old exchange - is quite distinct from what you would find in any other futures market. The queues have never really gone away but multiple tweaks of the rule-book have at least constrained them and the amount of money that can be made from them. The exchange has also massively enhanced transparency around its delivery network. A daily registered stocks report has been supplemented with monthly updates on off-warrant stocks, stocks by warehouse operator and, of course, queue length. This column has drawn heavily on all of them. Yet, just how much more efficient is the LME's delivery network after a decade of reform? A limited number of operators still seem to dominate the on-warrant storage business and 253 days is still a long time to wait to get your metal. The opinions expressed here are those of the author, a columnist for Reuters Sign up here. https://www.reuters.com/markets/commodities/new-horizons-same-old-problems-lme-warehousing-2024-08-01/

2024-08-01 22:26

Aug 1 (Reuters) - Electric and gas utility Consolidated Edison (ED.N) , opens new tab beat second-quarter profit estimates on Thursday, as customers cranked up air conditioners and refrigerators during hotter weather. The company reported an adjusted profit of 59 cents per share for the quarter ended June 30, compared to analysts' average estimate of 57 cents per share, according to LSEG data. Con Edison's quarterly total operating revenue saw a nearly 9.4% rise to $3.22 billion, from $2.94 billion in the year-ago quarter. The United States saw a heat wave stretch from central to eastern portions of the country, boosting earnings for utilities. The company did, however, see 13.9% higher operations and maintenance expenses from the year-ago quarter. Con Edison reaffirmed its full-year per-share earnings forecast of $5.20 to $5.40. The company said the New York State Department of Public Service supported its subsidiary O&R's electric and gas rate cases in May. Rate case proceedings determine the amount customers need to pay for electricity, natural gas, private water and steam services provided by regulated utilities. O&R provides electric service in southeastern New York and northern New Jersey, and gas service in southeastern New York. Another Con Edison subsidiary, CECONY, which services New York City, Westchester County and parts of Manhattan, sees decrease in average annual growth of peak gas demand in its service area, seeing a growth of 0.1% for 2025 to 2029 from an earlier growth of 0.8% between 2024 to 2028. "We expect electric volumes to grow in the coming years, as New Yorkers transition from fossil fuels to heat their buildings and power their vehicles," chief financial officer Kirk Andrews said in a statement. Sign up here. https://www.reuters.com/business/energy/consolidated-edison-beats-second-quarter-profit-estimates-2024-08-01/

2024-08-01 22:12

SANTIAGO, Aug 1 (Reuters) - Workers at BHP's Escondida, the world's largest copper mine, rejected an offer for a new collective bargaining agreement, setting the stage for a potential strike, the union said on Thursday. A total of 2,371 workers, or about 99.75% of union members, voted in favor of the strike. In a statement, the union said the call for a strike was "overwhelmingly backed by partners" that saw the offer made "no legitimate progress towards worker goals." The union reiterated its demand for 1% of dividends to distribute equally among workers and said the current offer by the company also extended work days and cut benefits. The statement said the current offer uses "one-time bonuses that try to hide the definitive loss of conditions." Chilean legislation lets either party call for five days of government mediation, extendable by another five days if both parties agree, to avert a strike. In a statement, BHP said it would request government mediation in "the coming days" and hopes to reach "an agreement compatible with worker aspirations and Escondida's future sustainability." BHP owns more than half of Escondida, along with Rio Tinto and JECO Corp. Sign up here. https://www.reuters.com/markets/commodities/workers-bhps-escondida-mine-chile-reject-contract-offer-union-says-2024-08-01/