2024-07-25 06:01

S&P 500, Nasdaq end lower; Dow ends higher US oil prices settle higher IBM shares jump following results NEW YORK, July 25 (Reuters) - World stock indexes mostly fell in choppy trading Thursday, adding to losses after a tech-led selloff in the previous session, while the Japanese yen drifted near flat after reaching a 2 1/2-month high against the U.S. dollar. U.S. megacap stocks were mostly in positive territory throughout afternoon trading before losing some ground by session's end. Tesla (TSLA.O) , opens new tab shares were last up 2%, while shares of Nvidia (NVDA.O) , opens new tab were down 1.7%. The small-cap Russell 2000 index (.RUT) , opens new tab rose 1.3%. "You could surmise there were some dip buyers coming in ... just because of how quickly things moved yesterday," said Chad Oviatt, director of investment management at Huntington Private Bank. "Small caps are winning this week relative to large caps," he said. "When you get a GDP report that's better than expected, that helps to support the narrative of a potential soft landing." Data showed the U.S. economy grew faster than expected in the second quarter amid solid gains in consumer spending and business investment, but inflation pressures subsided, leaving intact expectations of a September interest rate cut from the Federal Reserve. The Fed is scheduled to hold its next policy meeting at the end of July. Markets see only a slight chance for a rate cut of at least 25 basis points (bps) at that meeting, but are fully pricing in a September cut, according to CME's FedWatch Tool. Much focus remains on earnings, especially reports this week from top U.S. tech-related names. Shares of International Business Machines (IBM.N) , opens new tab jumped 4.3% on Thursday after it reported upbeat revenue results late Wednesday. The Dow Jones Industrial Average (.DJI) , opens new tab rose 81.20 points, or 0.20%, to 39,935.07, the S&P 500 (.SPX) , opens new tab lost 27.91 points, or 0.51%, to 5,399.22 and the Nasdaq Composite (.IXIC) , opens new tab lost 160.69 points, or 0.93%, to 17,181.72. The S&P 500 and Nasdaq on Wednesday suffered their biggest daily percentage declines since late 2022 in the wake of lackluster quarterly reports from Alphabet (GOOGL.O) , opens new tab and Tesla. Investors have been assessing what happens next in markets following the retreat in the glitzy megacaps. MSCI's gauge of stocks across the globe (.MIWD00000PUS) , opens new tab fell 5.80 points, or 0.72%, to 796.78. The STOXX 600 (.STOXX) , opens new tab index fell 0.72%. Investors are looking ahead to next week's Bank of Japan meeting which could see a potential rate hike. The dollar index , which measures the greenback against a basket of currencies including the yen and the euro, gained 0.01% at 104.39. Against the Japanese yen , the dollar was near flat at 153.91. The Japanese yen this week rallied sharply as market participants unwound their long-held bets against the currency. Also, the selloff in global stocks had driven investors toward the yen. Longer-dated U.S. Treasury yields eased as the recent fall in equities helped fuel a safe-haven bid for bonds, while the solid reading on U.S. economic growth failed to shift expectations for a Fed rate. The yield on the benchmark U.S. 10-year Treasury note fell 2.8 basis points to 4.258%. A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes , seen as an indicator of economic expectations, was at a negative 18.5 basis points after steepening to a negative 11.3, its least inverted since Oct. 23. Oil prices edged higher after the strong U.S. economic data boosted demand expectations. U.S. crude rose 69 cents to settle at $78.28 a barrel and Brent rose 66 cents to settle at $82.37. Spot gold dropped by 1.61% to $2,358.99 an ounce. Earlier, China's central bank sprang a surprise cut in longer-term interest rates, stoking further worries about the world's second-largest economy. Sign up here. https://www.reuters.com/markets/global-markets-wrapup-1-2024-07-25/

2024-07-25 05:52

US GDP data due at 1230 GMT Platinum, palladium to stay sub-$1,000 in 2024 -poll July 25 (Reuters) - Gold prices fell 1% on Thursday as investors booked profits ahead of U.S. economic data that could offer more cues on when the central bank will cut interest rates this year and by how much. Spot gold fell 1% to $2,372.74 per ounce by 0725 GMT. U.S. gold futures dropped 2.1% to $2,366.00. "When you look from a fundamental perspective, there are no factors pressuring gold. So, it looks like we are seeing some profit-taking and from a technical perspective, prices could move lower," said Kelvin Wong, OANDA's senior market analyst for Asia Pacific. The markets are awaiting U.S. gross domestic product data, due at 1230 GMT, and personal consumption expenditure (PCE) data -- the Federal Reserve's favoured measure of inflation -- on Friday to calibrate their expectations of the timing of rate cuts. Traders are expecting that the Fed will deliver a long-awaited rate cut in September. Non-yielding bullion's appeal tends to shine in a low-interest-rate environment. If PCE data shows that inflation is slowing and the Fed can cut rates in September, then "we will see a resurgence in gold prices", Wong said. A Reuters poll showed that gold prices are poised for a fresh run to record highs in the coming months, while platinum and palladium will stay below $1,000 per ounce in 2024. "A continuation of election-related uncertainty and rising geopolitical threats will add more volatility and likely impact broader macro variables," the World Gold Council said. "This, in turn, could drive investors to evaluate how they might mitigate risk in their own portfolios and draw them towards a safe-haven asset like gold." Among other metals, spot silver fell 3.7% to $27.91 per ounce. Platinum eased 1% to $938.30 and palladium slipped 2.1% to $913.25. Sign up here. https://www.reuters.com/markets/commodities/gold-skids-profit-taking-us-economic-data-radar-2024-07-25/

2024-07-25 05:34

U.S. GDP rises more than expected in Q2 U.S. jobless claims fall unexpectedly U.S. durable good orders plunge in June Futures market prices higher chance of BOJ rate hike Dollar falls to lowest since May vs Chinese yuan NEW YORK, July 25 (Reuters) - The yen edged lower from a 2-1/2-month high against the U.S. dollar on Thursday, as financial markets stabilized, with investors looking ahead to next week's Bank of Japan meeting which could see a potential rate hike. The Japanese unit this week rallied sharply as market participants unwound their long-held bets against the currency. At the same time, a plunge in global stocks in recent sessions had driven investors toward traditionally safe assets such as the Swiss franc and yen. U.S. equities, however, recovered on Thursday after a steep sell-off in the previous session. For the week, the yen has risen 2.4%, on track for its best weekly gain since late April. The greenback was last slightly down at 153.84 yen . The dollar, however, trimmed losses against the yen and euro after data showed the world's largest economy expanded faster than expected and inflation slowed in the second quarter. That reduced brewing expectations of a larger-than-expected rate cut in September, or a sudden Federal Reserve easing at next week's meeting. "The Japanese yen is flatlining on diminished safe-haven demand, and the speculative fervor behind its recent bull run seems to be running out of steam," said Karl Schamotta, chief market strategist at Corpay in Toronto. "We think markets have gotten a little too far over their skis given that underlying economic fundamentals don't yet support a rapid tightening cycle from the Bank of Japan, and that rate differentials will remain wide even if the Fed begins cutting in coming months." The rate futures market has priced in a 67.2% chance that the BOJ will raise rates next week by 10 basis points (bps), up from about 40% earlier in the week, according to LSEG estimates. The euro was slightly up against the dollar at $1.0846 , with the dollar index flat at 104.36 . The index was at 104.21 just before the release of economic growth data. Advance estimates showed that U.S. gross domestic product (GDP) grew at a 2.8% annualized rate in the last quarter. Economists polled by Reuters had forecast GDP rising at a 2.0% rate. The personal consumption expenditures (PCE) price index, excluding the volatile food and energy components, increased at a 2.9% rate after surging at a 3.7% pace in the first quarter. Against the Swiss franc, the dollar dropped 0.5% to 0.8806 francs . AHEAD OF ITSELF "The market got ahead of itself on Fed cuts. Before the GDP number, the market is pricing as if the Fed is going to cut 50 basis points in September," said Marc Chandler, chief market strategist at Bannockburn Forex in New York. He also cited comments from former New York Fed President Bill Dudley in a Bloomberg column on Wednesday, who said the Fed should cut rates next week, citing recent employment data. "The GDP number shows that the Fed is not under that kind of urgency," Chandler said. The Fed remains firmly on track to cut interest rates in September, according to fed funds futures data. The futures market has also priced in about 68 basis points (bps) of cuts this year, based on LSEG calculations. U.S. jobless claims data were also consistent with an economy still holding up well. Initial claims for state unemployment benefits dropped 10,000 to a seasonally adjusted 235,000 for the week ended July 20, the data showed. Economists polled by Reuters had forecast 238,000 claims for the latest week. The only blemish, however, was the U.S. durables report, which showed durable goods orders fell 6.6% in June on slumping transportation orders, compared with expectations for a 0.3% rise. In other currencies, the Australian dollar fell to US$0.6519, its lowest since early May. It was last down 0.6% against the greenback at US$0.6541. China's yuan rallied against the dollar, which fell to its lowest since early May at 7.205, as the yen's rally spilled over to the Chinese unit. The dollar was last down 0.2% at 7.245 Sign up here. https://www.reuters.com/markets/currencies/yen-rises-carry-trades-unwind-risk-sentiment-takes-hit-2024-07-25/

2024-07-25 05:12

A look at the day ahead in European and global markets from Kevin Buckland The global equity sell-off looks set to extend into Europe on Thursday although the region may be spared the carnage in parts of Asia, where Japan's Nikkei (.N225) , opens new tab tumbled as much as 3% and Hong Kong's Hang Seng (.HSI) , opens new tab slumped close to 2%. Earnings this week from the likes of Alphabet and Tesla have not supported the market's sky-high tech valuations, sending not just mega-cap stocks but all of Wall Street sliding back to earth from near-record peaks. Japan's exporter-heavy equity market was hit particularly hard by a reversal in the yen, which has rebounded to about 152 per dollar from a three-decade trough near 162 yen per dollar around the start of this month. The yen has regained its safe-haven appeal right when traders were bailing out of short yen positions, amid a barrage of suspected currency interventions by Tokyo and before crucial policy decisions by the Bank of Japan and Federal Reserve, both on July 31. Meanwhile, ailing Chinese markets continue to take a beating. Beijing's latest surprise rate cut on Thursday only stoked worries about the economy, rather than shoring up sentiment. The more muted performance of European stocks relative to Wall Street and Japan over the past couple months means there's less froth to come off the top, potentially leading to a shallower sell-off. But there are plenty of risk events to brace for as earnings season gathers momentum. From drugmakers AstraZeneca (AZN.L) , opens new tab and Sanofi (SASY.PA) , opens new tab to Stellantis (STLAM.MI) , opens new tab and BAT (BATS.L) , opens new tab, a wide swath of industry giants report on Thursday. Nestle (NESN.S) , opens new tab will be one to watch, particularly if you're a fan of KitKat or Smarties. The company may be set to hike prices again in the run-up to Halloween and Christmas, after ruling out changing recipes as a way to deal with soaring cocoa prices. Hermes (HRMS.PA) , opens new tab merits attention as well, after earnings at LVMH (LVMH.PA) , opens new tab and Gucci-owner Kering (PRTP.PA) , opens new tab were battered by flagging Chinese demand. Clues to the overall business environment around Europe will also be offered in surveys from France, Germany and the UK. Key developments that could influence markets on Thursday: -France business climate (July), Germany Ifo business climate (July), UK CBI business optimism (Q3) -Earnings from AstraZeneca (AZN.L) , opens new tab, BAT (BATS.L) , opens new tab, Hermes (HRMS.PA) , opens new tab, Nestle (NESN.S) , opens new tab, Sanofi (SASY.PA) , opens new tab, Stellantis (STLAM.MI) , opens new tab Sign up here. https://www.reuters.com/markets/europe/global-markets-view-europe-2024-07-25/

2024-07-25 04:34

July 25 (Reuters) - China surprised financial markets with an off-cycle cut to bank funding costs on Thursday. Stocks fell and bonds rallied after the announcement of a 20 basis point reduction in the one-year medium-term lending facility (MLF) . Here are reactions from market analysts: LEMON ZHANG, FX & EM MACRO STRATEGIST, BARCLAYS, SINGAPORE "The fact that scale is bigger than 10 basis points suggests there's more to come in terms of benchmark rate cuts. "I would think it helps on the margin. But after all, you still have a very subdued growth momentum." MARCO SUN, CHIEF FINANCIAL MARKET ANALYST, MUFG BANK (CHINA), SHANGHAI "The risk of another slowdown in China's economic growth is on the rise. China's GDP growth slowed in the second quarter ... and a cut in the policy rate could reduce the cost of financing and release liquidity to maintain the momentum of the economic recovery. A large amount of MLF loans are coming due, and it could be another reason explaining the MLF operation." GARY NG, ASIA-PACIFIC SENIOR ECONOMIST, NATIXIS, HONG KONG "It shows the PBOC wants to be more accommodating to banks in lowering their medium-term funding costs ... cutting the MLF rate at a larger scale can help shield the net interest margin. "The yuan may still be under pressure if investors continue to expect lower interest rates in China. If confidence improves ... the yuan may not necessarily depreciate as net capital inflows may return." FRANCES CHEUNG, HEAD OF FX AND RATES STRATEGY, OCBC BANK, SINGAPORE "The MLF was done when there is no near-term maturity, showing that PBOC intends to send an easing signal. The cut in the MLF rate is of a bigger magnitude than the cut in 7-day reverse repo rate, primarily because the MLF rate was at an elevated level compared to other sources of funds." KHOON GOH, HEAD OF ASIA RESEARCH, ANZ, SINGAPORE "In terms of the challenges facing the Chinese economy, rate cuts by themselves, particularly of this magnitude, is not really going to be that material. "Issues facing the property sector (and) the lack of confidence that is holding back consumer spending ... need more concrete fiscal support or other type of policy measures to address." Sign up here. https://www.reuters.com/world/china/market-analysts-react-surprise-rate-cut-china-2024-07-25/

2024-07-25 03:00

MUMBAI, July 25 (Reuters) - The Indian rupee is expected to decline to a lifetime low at open on Thursday on weak risk appetite and a drop in Asian peers. Non-deliverable forwards indicate the rupee will open at 83.74-83.75 to the U.S. dollar, slipping past the previous all-time low of 83.72 and compared with 83.7175 on Wednesday. It would be the fourth day in a row that the local currency has hit a low. The Reserve Bank of India has intervened regularly to support the rupee, capping its decline. The rupee is down just 0.2% this week. "While we keep making fresh highs (on dollar/rupee), there is no way you can think of a breakout," a currency trader at a banks. "The RBI is doing what it does, and managing the extent of price moves." The rupee has had to contend with the increase in the tax rate on profit from equity investments, which has impacted foreign investor flows. In the last two sessions, overseas investors have taken out nearly $800 million from equities. Prior to that, these investors had poured in $5 billion in July. ASIA FX STRUGGLES Asian currencies and equities were down, weighed by the overnight selloff on Wall Street. The S&P 500 Index suffered its worst day in one-and-half years. The technology dominated Nasdaq Composite fared worst. The risk-off mood in markets has continued amid US election uncertainty, technology earnings disappointment, and signs of softness in world growth, MUFG Bank said in a note. The risk aversion prompted a rally on the Japanese yen. U.S. Treasury yields dipped in Asia after inching up on Wednesday. KEY INDICATORS: ** One-month non-deliverable rupee forward at 83.82; onshore one-month forward premium at 7 paise ** Dollar index down at 104.26 ** Brent crude futures down 0.8% at $81.1 per barrel ** Ten-year U.S. note yield at 4.26% ** As per NSDL data, foreign investors sold a net $185.1mln worth of Indian shares on Jul. 23 ** NSDL data shows foreign investors bought a net $294.6mln worth of Indian bonds on Jul. 23 Sign up here. https://www.reuters.com/markets/currencies/all-time-low-looms-rupee-risk-aversion-rbi-watched-2024-07-25/