2024-06-28 07:58

June 28 (Reuters) - Commodity markets face greater fragmentation and supply disruptions if former U.S. president Donald Trump wins the Nov. 5 election to return for a second term, an HSBC economist said on Friday. A weak start by U.S. President Joe Biden in the first the U.S. presidential debate on Thursday has led to heightened speculation over the potential return of a Trump presidency, including the implications of his trade policies and proposed tariffs on China. Commodity markets, already contending with high prices driven by structural supply constraints, also face uncertainties from geopolitical tensions, said Paul Bloxham, HSBC's chief economist for Australia, New Zealand and global commodities. "A rise in global trade protectionism or a shift in the pathway of that trend is a global macroeconomic risk we are watching out for," Bloxham told the Reuters Global Markets Forum New Tab, opens new tab (GMF). "This would increase the risk of greater fragmentation of commodity markets and create a supply disruption supporting commodity prices." Geopolitics, climate change, and the energy transition are combining to drive a global commodity market "super-squeeze", said Bloxham, who previously worked with the Reserve Bank of Australia's economic analysis department. HSBC's statistical model in May indicated a shift to a 'super bull' from a 'weak bull' phase in commodities, despite already elevated prices. According to HSBC, commodity prices are unlikely to return to their previous trend, and are set to stay "permanently higher". Bloxham expects large producers, particularly those involved in the energy transition materials such as copper, will benefit. He also said that Latin American economies, the U.S., Australia, and Indonesia were also potential winners. (Join GMF, a chat room hosted on LSEG Messenger, for live interviews: https://lseg.group/3TN7SHH New Tab, opens new tab) Sign up here. https://www.reuters.com/markets/commodities/trump-re-election-may-lead-commodity-market-fragmentation-hsbcs-bloxham-says-2024-06-28/

2024-06-28 07:48

MADRID, June 28 (Reuters) - Four bidders - China Three Gorges (600905.SS) New Tab, opens new tab, UAE firm Masdar and French energy companies Engie (ENGIE.PA) New Tab, opens new tab and Total (TTEF.PA) New Tab, opens new tab are expected to file final offers to buy Spanish renewables firm Saeta Yield, newspaper Cinco Dias reported on Friday. Saeta Yield, owned by Canadian fund Brookfield (BN.TO) New Tab, opens new tab, is valued at an estimated 1.7 billion euros ($1.82 billion)including debt, the Spanish newspaper reported, citing unidentified financial sources. Brookfield started the sales process last year, sources told Reuters in December. It bought the company from Spanish construction group ACS (ACS.MC) New Tab, opens new tab for 1 billion euros in 2018. Saeta Yield owns 28 wind farms, 10 photovoltaic parks and 7 solar thermal plants in Spain and Portugal, according to its website. Brookfield intends to retain the thermal plants, Cinco Dias reported. Brookfield, Masdar, Engie and Total did not immediately respond to requests for comment. Three Gorges was not immediately available for comment. Spain and Portugal's abundant solar and wind resources and their governments' carbon emission reduction targets are attracting both domestic and foreign investors. ($1 = 0.9350 euros) Sign up here. https://www.reuters.com/markets/deals/brookfields-spanish-renewables-unit-draws-bidders-cinco-dias-reports-2024-06-28/

2024-06-28 07:38

FTSE 100 up 0.5%, FTSE 250 adds 0.1% UK economy grows 0.7% in Q1 Energy stocks gain over 1% on higher oil prices June 28 (Reuters) - Britain's blue-chip stock index opened higher on Friday, on course to log its fourth consecutive quarterly gain, after stronger-than-expected local economic growth numbers offset jitters ahead of U.S. inflation data. The FTSE 100 (.FTSE) New Tab, opens new tab added 0.5%, with energy and financial stocks in the lead, and the midcap FTSE 250 (.FTMC) New Tab, opens new tab was up 0.1%, as of 0716 GMT. Britain's economy grew 0.7% in the first three months of this year, compared with the previous quarter, and came in above an estimate of 0.6% growth, official figures showed. The figures came in as Britons are set to vote on July 4 in the parliamentary elections, which opinion polls suggest will see Labour Party leader Keir Starmer replace Conservative Prime Minister Rishi Sunak. "With less than a week to go, the UK electorate aren't necessarily going to feel better off because of these numbers," said Rebecca Maclean, a UK equities investment director at abrdn. "There's a low level of uncertainty about the outcome. We can look towards more political stability in the UK market." The keenly awaited U.S. personal consumption expenditure (PCE) numbers are due later in the day. A growing view of cooling U.S. inflation prompting the Federal Reserve to ease borrowing costs this year has supported global stocks. UK energy shares (.FTNMX601010) New Tab, opens new tab climbed more than 1%, as expectations of a rate cut by the U.S. Fed buoyed oil prices. Financials also edged higher, with banks (.FTNMX301010) New Tab, opens new tab gaining 0.7%, while the investment banking and brokerage sector (.FTNMX302020) New Tab, opens new tab inched 0.8% higher. Shares of sportswear brand JD Sports Fashion (JD.L) New Tab, opens new tab lost 6.1% and sank to the bottom of the FTSE 100 after U.S. peer Nike (NKE.N) New Tab, opens new tab forecast a surprise revenue fall in 2025 on Thursday. Sign up here. https://www.reuters.com/markets/europe/ftse-100-opens-higher-track-fourth-quarterly-gain-2024-06-28/

2024-06-28 07:28

JOHANNESBURG, June 28 (Reuters) - The South African rand clawed back some losses in early trade on Friday, as the wait for the announcement of President Cyril Ramaphosa's unity government cabinet drags on. At 0700 GMT, the rand traded at 18.4150 against the dollar , more than 0.3% stronger than its previous close. The rand fell sharply on Thursday after media reports of a major disagreement between the pro-business Democratic Alliance (DA) party and Ramaphosa of the African National Congress (ANC) over cabinet posts. The DA agreed to join the ANC and eight other parties in a government of national unity (GNU) after the ANC lost its parliamentary majority in an election last month. "The impasse in negotiations between the ANC and DA and the possibility of a GNU which excludes the DA has put the rand under considerable pressure," said Andre Cilliers, currency strategist at TreasuryONE. Financial markets are eagerly awaiting the composition of the cabinet, which will indicate whether the ANC intends to share power meaningfully with its GNU partners. The ANC and DA officials told Reuters earlier this week that the announcement was expected on Wednesday or Thursday. However, there is still no confirmation of when the cabinet will be announced. South Africa's benchmark 2030 government bond was little changed in early deals, with the yield down 1 basis point to 10.115%. Sign up here. https://www.reuters.com/markets/south-african-rand-gains-cabinet-announcement-wait-drags-2024-06-28/

2024-06-28 07:25

June 28 (Reuters) - French President Emmanuel Macron's shock decision to call a snap election, which polls suggest the far right could win, has rocked financial markets, exacerbating fiscal sustainability concerns in the euro zone's second-largest economy. Markets have stabilised since the June 9 announcement but are far from recovering. Polls put Marine Le Pen's National Rally (RN) first, mostly short of an absolute majority, with investors on edge ahead of two rounds of voting on June 30 and July 7. They weigh up the RN's fiscal reassurances against the risk of a spending splurge by a left-wing alliance, which polls second. Here are five key questions for markets: 1/ Is there more pain ahead for French bonds? The risk premium, or spread, demanded by holders of French debt over Germany's rose to 84 basis points on Friday, its highest since 2012, in the midst of the euro zone debt crisis. With the RN rising in the polls, "I think people are taking their risk off the table," said ING senior rates strategist Benjamin Schroeder. One poll showed it could potentially cross the threshold for an absolute majority. Investors reckon a return to the levels before Macron called the election is off the cards. The spread is up over 30 bps since. Markets staying around current levels would cost France an additional by 800 million euros ($857.92 million) in the first year, 4-5 billion in the fifth and 9-10 billion by the 10th, its finance ministry estimates. An absolute majority for the far-right or the left, which would allow them to implement more of their spending programmes, could push spreads even higher. Encouraged by RN comments on fiscal sustainability, many analysts see a left majority as a worse outcome for markets. Whether Macron resigns may be key. Citi reckons the far-right or left implementing most of their programmes without Macron would raise France's spread to 130-135 bps, compared with 100-105 bps if he stays. 2/ Will turmoil spill into Italy and others? French turmoil has also pushed spreads higher for the bloc's "periphery" of highly indebted member states. Yet the moves have been contained. Italy's spread has risen to the highest since February, but at around 160 bps is hardly a level that causes concern. Any further impact should be smaller than in 2017, when Le Pen's pledges to leave the euro and the European Union she has since abandoned shook the bloc's bonds. "Given the lack of anti-euro rhetoric, contagion to the periphery ought to be limited," said Peter Goves, head of developed market debt sovereign research at MFS Investment Management. Yet tensions between a new government and the EU could limit further European integration and "increase the vulnerability of the periphery to any shock," BofA says. 3/ How could banks fare? French banks have been among the biggest losers from the turmoil. The big three - Societe Generale (SOGN.PA) New Tab, opens new tab, BNP Paribas (BNPP.PA) New Tab, opens new tab and Credit Agricole (CAGR.PA) New Tab, opens new tab - are down 10%-14% since Macron's announcement. "French banks have a large amount of debt and they will suffer if you see higher credit costs or a sharp increase in borrowing at the government level," said Nathan Sweeney, chief investment officer of multi-asset at Marlborough. "If it's Le Pen, does that mean windfall taxes or taxes on dividends? That creates uncertainty for banks," he added. For now, the reaction has been excessive, said Barclays equity analyst Sam Moran-Smyth, given the limited earnings risk facing French banks at this stage, and valuations that were already depressed before the election announcement. But Societe Generale and Credit Agricole are more at risk than BNP, given BNP's more diversified geographic and business mix, Moran-Smyth said. 4/ What about other French stocks? The broader French market has not been spared - the blue-chip CAC 40 index (.FCHI) New Tab, opens new tab is down 6% since Macron dissolved parliament. Infrastructure and utility stocks suffered the most, with Vinci (SGEF.PA) New Tab, opens new tab, Eiffage (FOUG.PA) New Tab, opens new tab and Engie (ENGIE.PA) New Tab, opens new tab down over 10% since the election call. The RN has previously pledged to nationalise highways, but left such plans out of its new programme. In the current campaign, it has laid out plans that disregard EU rules on power prices and to ramp up taxation on power producers' exceptional profits. Corporate debt has also taken a beating . French companies are the biggest group in European corporate bond markets, making up 23% of ICE BofA's index (.MERER00) New Tab, opens new tab, according to Janus Henderson. 5/ Is it lose-lose for the euro? The euro is down 1% against the dollar since the election announcement and hit an eight-week low on Wednesday. A hung parliament would be negative for the euro, but the worst outcome would be an RN majority, said MUFG senior currency economist Lee Hardman. "In that scenario, we would see euro-dollar breaking to a new lower range, we think towards parity." Further political uncertainty would benefit the Swiss franc the most, given its role as a regional safe haven, Hardman said. ($1 = 0.9325 euros) Sign up here. https://www.reuters.com/markets/europe/frances-snap-election-five-questions-markets-2024-06-28/

2024-06-28 06:54

NEW DELHI, June 28 (Reuters) - A roof collapsed under heavy rainfall and winds at the main airport in India's capital New Delhi on Friday, killing one person and leading to the cancellation of flights from a domestic terminal, officials said. A portion of the canopy at the departure area of Delhi airport's Terminal 1 collapsed early in the morning and flight operations were shut down until 2 p.m. (0830 GMT), India's aviation minister told reporters. The entire terminal, one of three at the country's busiest airport, has been evacuated and an inquiry ordered into the collapse, said the minister, Kinjarapu Rammohan Naidu. At least 10 flights were cancelled and 40 were delayed, according to data from flight tracking platform Flightradar24. Eight injured people were taken to hospital and the rescue operation had been completed, said Atul Garg, the director of Delhi Fire Service. Visuals from Indian TV channels showed a taxi crushed under a wrecked metal pillar at the entrance area of the terminal, which is mostly used by low-cost carriers IndiGo and SpiceJet (SPJT.BO) New Tab, opens new tab for domestic flights. Indigo is operated by Interglobe Aviation (INGL.NS) New Tab, opens new tab. The incident happened at 5 a.m. (2330 GMT Thursday), usually a busy time for domestic flights carrying people across the country, a statement from the airport posted on X said. The airport area received about 148.5 millimetres of rain over three hours in the early morning, more than the average for all of June, according to India's weather office. Many other parts of Delhi were flooded as well and cars trapped in thigh-deep water. Metro services were affected and traffic snarls were reported from several parts of the city. Several residents in Delhi also complained of power cuts. In India's most populous state of Uttar Pradesh, at least 20 people died in various rain and flood-related incidents in the last 48 hours, including seven due to lightning strikes, officials said. GMR Airports Infrastructure (GMRI.NS) New Tab, opens new tab, which operates Delhi International Airport, is also its top shareholder with a 64% stake. Its shares fell as much as 2.1% in early trade. Sign up here. https://www.reuters.com/world/india/roof-collapses-airport-indian-capital-departures-cancelled-2024-06-28/