2024-08-01 21:53

Aug 2 (Reuters) - A look at the day ahead in Asian markets. Falling bond yields and the prospect of lower interest rates may have helped fuel investors' animal spirits and the recent mega rally in world stocks, but it's a different story when borrowing costs are falling because recession fears are rising. That's the market landscape investors in Asia wake up to on Friday after disappointing U.S. factory data on Thursday slammed U.S. Treasury yields, Wall Street, and stocks, prompting traders to start betting on a possible 50 basis point rate cut from the Fed next month rather than 25 bps. Figures showing a much larger-than-expected contraction in U.S. manufacturing activity last month followed purchasing managers index data earlier on Thursday that painted a similar picture in Germany, Japan and China. China's 'unofficial' Caixin manufacturing PMI was particularly galling at 49.8, signaling a contraction, compared with a consensus forecast of 51.5 and fairly steady growth. With China's economy already in the doldrums, renewed weakness in Europe and the U.S. is bad news for global growth. Central bank rate cuts, the latest of which came from the Bank of England on Thursday, may have to be deeper and faster than analysts and policymakers had bargained for. The 10-year U.S. Treasury yield tumbled 13 basis points, its biggest one-day fall this year, and is now below 4.0%. Never mind the great rotation out of Mega Tech into small caps, investors seem to be rotating out of stocks and into the safety of U.S. Treasuries. Apple, Amazon and Intel reported earnings after the U.S. close on Thursday and the early signs are investors were not impressed. Intel's outlook, in particular, was bleak, and shares fell 15% in after-hours trading. Investors in Asia will be hoping for a calmer end to a momentous week, the highlight of which was a rate hike in Japan. As Washington-based economist Phil Suttle puts it: "Judged by the actions of other central banks, these were hardly major moves. Judged by Japanese policy over the past 25 years, these were major moves." So far this year the Bank of Japan has raised rates twice, ended yield curve control and started QT, Suttle noted. Asia's economic calendar on Friday is light, with only South Korean inflation likely to be a market-mover. A Reuters poll suggests the annual rate ticked up to 2.50% in July from a one-year low of 2.40% in June. Swaps market pricing points to 35 basis points of easing from the Bank of Korea this year. Barclays economists on Thursday forecast quarter-point rate cuts in October and November. Asia's corporate calendar on Friday is busier, with earnings reports due from Japan including Nintendo and Sumitomo Mitsui Financial Group. Here are key developments that could provide more direction to markets on Friday: - South Korea inflation (July) - Australia producer price inflation (Q2) - U.S. non-farm payrolls (July) Sign up here. https://www.reuters.com/markets/global-markets-view-asia-graphic-pix-2024-08-01/

2024-08-01 21:39

SANTIAGO, July 31 (Reuters) - Not a single drop of rain fell in Santiago or Chile's metropolitan region this July for the first time since records have been kept. Alicia Moya, a meteorologist for Chile's government, said that multiple meteorological stations across the metropolitan region had registered zero millimeters of precipitation and others around the country had registered record-low readings. "This hasn't happened since the 1950s, which is when we have records," Moya said, adding that the "abnormally dry" July is unusual during the austral winter. Chile has been suffering a devastating drought for more than a decade and while heavy rains in June brought some relief to drought-hit lakes, the dry July is a sign that drier conditions are likely to persist. Raul Cordero, a climatologist at the University of Santiago, says that historically Santiago sees at least 50 millimeters (2 inches) of rain in July and any month under 1 millimeter (0.04 inch) is "extraordinary." Cordero said the city registered less than 1 millimeter in 2021, adding climate change and chances of La Nina weather phenomenon increase the chances of extraordinarily dry months. "Unfortunately we're going to have more dry Julys, without precipitation, sooner rather than later," Cordero said. Sign up here. https://www.reuters.com/business/environment/chiles-capital-sees-first-rainless-july-record-2024-08-01/

2024-08-01 21:25

NEW YORK, Aug 1 (Reuters) - Wall Street's most watched gauge of investor anxiety jumped to a more than three-month high on Thursday as U.S. stocks fell sharply after a round of data on Thursday spurred concerns the economy may be slowing faster than anticipated. The Cboe Volatility Index (.VIX) , opens new tab hit 19.48, its highest since April 19, before paring gains to finish at 18.59. The jump came as the S&P 500 (.SPX) , opens new tab fell nearly 1.4%. A 2.3% drop in the tech-heavy Nasdaq Composite Index (.IXIC) , opens new tab, meanwhile, brought it within two percentage points of a 10% decline from a record high reached last month. The options-based VIX index, which has been largely subdued with an average reading of 13.96 so far this year, has perked up in recent weeks as investors have grown increasingly apprehensive about the outlook for corporate earnings and economic growth. The concerns, which have pulled the S&P 500 Index (.SPX) , opens new tab down about 4% from its July 16 record closing high of 5,667.2, have also spurred a jump in trading in VIX options. The index is up 14% year-to-date. On Thursday, some 1.5 million VIX options contracts changed hands, nearly twice the average daily volume for the options, according to Trade Alert data. Thursday's jump brought the index closer to its long-term average of 19.5. Meanwhile, the VVIX index (.VVIX) , opens new tab - a gauge of expected swings in the fear index - closed up 16.93 points at 111.18, signaling investors expect sharp near-term swings in the VIX. Sign up here. https://www.reuters.com/markets/us/wall-street-fear-gauge-jumps-three-month-high-stocks-resume-slide-2024-08-01/

2024-08-01 20:53

Aug 1 (Reuters) - U.S. oil and gas producer Coterra Energy (CTRA.N) , opens new tab missed analysts' estimates for second-quarter profit on Thursday, hurt by subdued natural gas prices. U.S. natural gas prices have tumbled this year amid lukewarm demand due to a hotter-than-expected winter and a build-up in storage. The company's average sales price for natural gas fell to $1.26 per thousand cubic feet (mcf) compared with $1.65 per mcf a year earlier, with prices at the Permian Basin dropping below zero. Total production rose to 669,200 barrels of oil equivalent per day (boepd) from 664,900 boepd. However, natural gas production declined. It sees oil production for the year rising to 105,500 barrels per day (bpd) to 108,500 bpd, from the 102,000 bpd to 107,000 bpd forecast earlier. Coterra's 7.3% higher operating revenues were partly offset by a 7.4% rise in operating expenses. The company reported an adjusted earnings of 37 cents per share for the three months ended June 30, compared with analysts' average estimate of 39 cents, according to LSEG data. Shares of the company were marginally down in extended trading. Sign up here. https://www.reuters.com/business/energy/coterra-energy-misses-quarterly-profit-estimates-2024-08-01/

2024-08-01 20:48

Aug 1 (Reuters) - The U.S. Environmental Protection Agency (EPA) on Thursday issued an emergency waiver to help alleviate fuel shortages in four Midwest states where the supply of gasoline has been impacted by the shutdown of a refinery in Joliet, Illinois. Exxon Mobil (XOM.N) , opens new tab shut down the 251,800 barrel-per-day Joliet refinery due to a power outage after a storm on July 15. Although power was restored to the refinery by July 24, the refinery is likely to restart operations only in mid-August, industry monitor IIR Energy said on Thursday. The EPA's waiver, which applies to Michigan, Wisconsin, Indiana and Illinois, suspends federal anti-smog rules that require the sale of less volatile but more expensive gasoline in the summer. The agency often issues such waivers to places hit by unforeseen supply disruptions. The waiver applies through Aug. 20, the EPA said. It comes in response to requests from governors of the four states. Gasoline prices have surged in the Midwest as a result of the Joliet refinery outage. Average retail prices in Illinois rose nearly 18 cents since the Joliet outage to over $4 a gallon as of Thursday, according to data from tracker GasBuddy.com. Prices in Michigan jumped by 15 cents and in Wisconsin by 14 cents, the data showed, even as the national average price declined marginally over the same time frame. Prices should decline over the coming days as a result of the waiver, GasBuddy analyst Patrick De Haan said. As the waiver allows Midwest suppliers to use more volatile fuel, it should expand the pool of gasoline available to them, De Haan said. "This should certainly alleviate some of the price pressure," he said. "Until Aug. 20, they can use just about any different type of gasoline they can get their hands on," he said. Gasoline stockpiles in the U.S. Midwest dropped by 2.3 million barrels over the past two weeks to 45.81 million barrels by July 26, the lowest since November, according to data from the U.S. Energy Information Administration. Sign up here. https://www.reuters.com/business/energy/us-epa-grants-fuel-waiver-midwest-states-impacted-by-joliet-refinery-shutdown-2024-08-01/

2024-08-01 20:47

Aug 1 (Reuters) - U.S. rare earths producer MP Materials (MP.N) , opens new tab on Thursday reported a steeper-than-expected second-quarter loss due to falling prices for the strategic minerals and operational challenges, although executives forecast a rebound for later this year. The company, which held unsuccessful merger talks this year with rival Lynas Rare Earths (LYC.AX) , opens new tab, has struggled in recent months with falling prices and stiff competition from Chinese rivals. The Las Vegas-based company posted a net loss of $34.1 million, or 21 cents per share, compared to a net profit of $7.4 million, or 9 cents per share, in the year-ago quarter. Excluding one-time items, MP lost 17 cents per share. By that measure, analysts expected a loss of 9 cents per share, according to IBES data from LSEG. Shares fell 2.2% $12.40 in after-hours trading. "We had a very challenging quarter, operationally and financially," MP CEO Jim Litinsky said in a press release. Litinsky, the company's largest shareholder, said he was "cautiously optimistic" that the company's rare earths production should rebound in the third quarter. For the past four years, MP has processed rock it extracts from its Mountain Pass mine in California into rare earths concentrate that is shipped to China for refining. The company sold 5,839 metric tons of that concentrate during the quarter, about 43% lower than the year-ago period. MP has been working to refine its own rare earths for some time. The company said its refining equipment in California produced 272 metric tons of neodymium and praseodymium - the two most in demand rare earths - during the quarter, with 136 metric tons sold. Litinsky said production of those two rare earths should increase 50% in the third quarter. The company said it signed a rare earths supply agreement "with a global automaker for a significant volume commitment," without providing details. Sign up here. https://www.reuters.com/markets/commodities/mp-materials-swings-quarterly-loss-sliding-prices-rare-earths-2024-08-01/