2024-06-13 14:55

LONDON, June 13 (Reuters) - Britain's opposition Labour party, which is predicted to win a July 4 election, on Thursday unveiled a manifesto pledging to keep spending tight, control sky-high debt, boost homebuilding and upgrade crumbling infrastructure. UK stocks and sterling have rallied ahead of the vote as traders see Britain being steadied by a strong-majority Labour administration after Brexit, successive Conservative leadership changes and a 2022 mini-Budget that rocked the markets. Some investors foresee a post-election market slump, however, doubting whether Labour can fulfill its promises while meeting interest costs on Britain's roughly 2.7 trillion pound ($3.5 trillion) debt pile and as the economy stagnates. "We see an awful lot of opportunity in the UK," Premier Miton CIO Neil Birrell said, because domestically focused small and midsize companies were undervalued. "But given the economic conditions we are in and the state of the public finances there isn't an awful lot (Labour) can do to boost the economy." Here's a look at what Labour's plans could mean for markets. UK stocks have risen almost 6% this year (.FTSE) New Tab, opens new tab as traders backed a Labour agenda that J.P. Morgan analysts deem positive for UK growth. Banks (.FTNMX301010) New Tab, opens new tab and housebuilders (.FTNMX402020) New Tab, opens new tab have been the early winners of pre-election market optimism although both sectors fell on Thursday and the domestically focused FTSE 250 (.FTMC) New Tab, opens new tab dropped 1%. Sterling , however, held near this week's 22-month high against the euro. "Labour has been particularly careful not to do anything that looks rash," AJ Bell investment director Russ Mould said. Labour leader Keir Starmer promised not to raise workers' taxes, to cap corporation tax at current levels and raise 8.6 billion pounds from a combination of oil and gas levies and anti-tax-avoidance measures targeting private equity and non-domiciled individuals. Institutional investors were concerned about future tax rises on dividends, Premier Miton's Birrell said, although the corporation tax cap was "really good news." Some economists see further modest tax rises ahead to support public services and investment because the next government will inherit a Treasury with empty coffers. "The next chancellor's fiscal headroom based on the current fiscal framework has likely been depleted, if not (entering) marginal negative territory," said Deutsche Bank senior economist Sanjay Raja. Institute for Fiscal Studies director Paul Johnson said that if economic growth was not surprisingly strong, Labour would need to cut public services, "fudge" fiscal targets or raise taxes. GILT-Y PLEASURES Labour's manifesto confirmed market expectations that UK debt as a share of GDP would start falling in five years' time, providing support for UK government bonds, known as gilts. Gilts are among the worst performing developed bond markets this year. But 10-year gilt yields have dropped 17 basis points (bps) so far this month to around 4.15%, set for its best month since March as bond prices rise . Investors expect stronger governance and market stability after former premier Liz Truss' mini-Budget pummeled gilts and sterling, while driving mortgage rates almost 200 bps higher. "The UK is a safe, liquid developed market but we've had a few episodes in the past where it has traded like an emerging market," said Lombard Odier macro strategist Bill Papadakis, who is positive on gilts and UK stocks. A strong Labour majority would make markets view the UK as predictable, reducing the risk premium on UK assets, he added. The UK/German 10-year bond yield gap , a measure of the perceived risk of lending to the British government, is close to its lowest in 2024 at around 160 bps. 'NOT BIDENOMICS' Labour's manifesto pledged planning reforms that it said would lead to construction of 1.5 million new homes and "boost growth everywhere" under tough spending rules. Plans to improve roads and rail services were described as a "10 year-infrastructure strategy." "This will not be Bidenomics," Institute for Government (IFG) senior fellow Giles Wilkes added, referring to U.S. President Joe Biden's lavish economic stimulus. Polar Capital UK fund manager Georgina Hamilton said Labour "can't use the public purse as much as they would like to fund public infrastructure." Wilkes added that looser planning rules would not guarantee a wave of new housebuilding in an economy constrained by high mortgage rates and a worker shortage. ($1 = 0.7842 pounds) Sign up here. https://www.reuters.com/world/uk/how-labours-election-pledges-stack-up-uk-markets-2024-06-13/

2024-06-13 13:40

By Promit Mukherjee and David Ljunggren OTTAWA, June 13 (Reuters) - The Bank of Canada is reviewing the extraordinary actions it took during the pandemic to stimulate the economy, in an effort to be better prepared for a future crisis, a top executive said on Thursday. The BoC, like several of its counterparts globally, ramped up its purchase of government bonds to pump money into the system, a policy known as quantitative easing. It also engaged in "extraordinary forward guidance", giving markets an idea of how long rates would stay low. "It is important to take a step back and learn from the experience. That way we can sharpen our response for the next crisis," Deputy Governor Sharon Kozicki told a conference in Ottawa, saying the policies had worked. Last week the BoC became the first central bank among the G7 nations to cut its benchmark rate, lowering it by 25 basis points to 4.75%. Kozicki reiterated the bank's messaging that if inflation continued to ease, further cuts would follow, but said the bank would take its decisions one meeting at a time. The bank is now removing liquidity from the system by letting bonds roll off its books, shrinking the size of its balance sheet which grew during QE, a policy known as quantitative tightening. Kozicki repeated that the bank aimed to end QT at some point next year. The review, which will be assessed by external experts, is due to be released early next year. It will also help in making the bank more accountable and transparent, she said. Quantitative easing was employed by the bank for the first time during the pandemic and "the bar for us to use QE again is very high", she said. (([email protected] New Tab, opens new tab)) Keywords: CANADA CENBANK/ Sign up here. https://www.reuters.com/business/finance/bank-canada-reviewing-extraordinary-actions-taken-during-pandemic-2024-06-13/

2024-06-13 12:13

KYIV, June 13 (Reuters) - Ukraine will receive around $1 billion from allies and G7 countries to support its energy sector, which has been damaged by a series of Russian missile attacks, Ukraine's energy ministry said on Thursday. The new aid was announced during a conference in Berlin earlier this week, where Ukraine sought to reinvigorate flagging Western support. The ministry the assistance would include over 70 million euros in new grant contributions to the Ukrainian energy support fund, $500 million in new funding from the United States, 300 million euros in funding from the EBRD and $47 million of additional grant from the World Bank and the EU states. The Kyiv School of Economics analytical team said in a report that damages to the Ukrainian energy sector as of May 2024 amounted to more than $16.1 billion. It said the worst damages were incurred from the destruction of electricity generation sites ($8.5 billion), transmission facilities ($2.1 billion), oil and gas infrastructure ($3.3 billion). Sign up here. https://www.reuters.com/business/energy/ukraine-power-sector-receive-1-bln-aid-allies-ministry-says-2024-06-13/

2024-06-13 11:47

June 13 (Reuters) - Gold Fields (GFIJ.J) New Tab, opens new tab on Thursday lowered its annual gold production forecast after bad weather impacted the ramp-up at its new Salares Norte mine in Chile, sending its shares down 8%. The South African miner lowered its calendar 2024 gold output forecast to 2.2–2.3 million ounces from 2.33-2.43 million. This was mainly due to lower expected output from Salares Norte, which is now seen at 90,000-180,000 ounces versus a previous forecast of 220,000-240,000 ounces. Lower output from Salares Norte is caused by the early onset and extended duration of winter conditions during the commissioning and ramp-up phase, Gold Fields said in a statement. "These weather events resulted in the freezing of material in the piping of the process plant causing temporary shutdown of the plant," Gold Fields said. As a result of its lower output forecast, Gold Fields' all-in sustaining costs are expected to be $1,470 to $1,530 per ounce versus its previous guidance of $1,410-$1,460. The $1.2 billion Salares Norte mine delivered its first gold on March 28 after suffering several delays due to COVID-19 and bad weather. Salares Norte is situated in Chile's Atacama region at high altitude in an area where winters can be extremely cold. Gold Fields appointed Mike Fraser as CEO from January to lead the Johannesburg-based company's expansion in the Americas where it is investing in new mines in Chile and Canada. Sign up here. https://www.reuters.com/markets/commodities/gold-fields-cuts-output-forecast-after-bad-weather-hits-new-chile-mine-2024-06-13/

2024-06-13 11:42

BAGHDAD, June 12 (Reuters) - Iraq's oil ministry said on Wednesday it is fully committed to compensating for any crude oil overproduction in 2024, referencing estimates by secondary sources of overproduction by 203,000 barrels in May above levels agreed with OPEC+. The ministry "is committed to the production level required in the agreement, of 4 million barrels per day, for June and the subsequent months, in addition to compensating the surplus production since the beginning of this year throughout the compensation period, which will run until September 2025," it said in a statement. OPEC+, which groups the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, has implemented a series of output cuts since late 2022 to support the market. OPEC+ on June 2 agreed to extend 3.66 million bpd of cuts by a year until the end of 2025 and extend the latest cut of 2.2 million bpd until the end of September and then gradually phase it out over the course of a year from October. Ahead of that meeting, Iraq's oil minister said on May 12 his country was committed to voluntary production cuts agreed with OPEC. Sign up here. https://www.reuters.com/business/energy/iraq-committed-compensate-oil-overproduction-2024-ministry-says-2024-06-12/

2024-06-13 11:33

DUBAI/CAIRO, June 13 (Reuters) - Missiles fired by Yemen's Houthi militants struck the Palau-flagged Verbena cargo ship in the Gulf of Aden on Thursday, sparking a fire and severely injuring one of her crew, U.S. Central Command said. The Iran-allied Mouths have launched dozens of attacks on international shipping in the Red Sea region since November in solidarity with the Palestinians in the war between Israel and Hamas. Thursday's attack marked their second direct hit on a merchant ship in two days, and the group said its campaign would continue until hostilities in the Gaza Strip end. Three missiles struck the Verbena on Thursday, sparking a fire and damaging the ship, the United Kingdom Maritime Trade Operations (UKMTO) agency said. While her crew fought the fire, an aircraft from the U.S. Navy's Philippine Sea warship medically evacuated the injured mariner to a partner force ship nearby for medical attention, U.S. Central Command said. Reuters was not able immediately to contact the Verbena's Polish manager. The vessel, loaded with wood construction material, was sailing to Italy at the time of the attack, CENTCOM said. Security and military sources said the Verbena still has power and steering capabilities. A day earlier, Yemen's Houthi militants took responsibility for small watercraft and missile attacks that left the Tutor, a Greek-owned cargo ship, taking in water and in need of rescue near Yemen's Red Sea port of Hodeidah. The Philippines' Department of Foreign Affairs condemned the assault on the Tutor, which had Filipino crew on board. Some media outlets have reported that one person died as a result of the attack on the Tutor. Greek shipping authorities said they had no confirmation of that. Manager Evalend Shipping has not responded to Reuters requests for comment. The Houthi campaign in the Red Sea region has disrupted global shipping, cascading delays and costs through supply chains. The militants have sunk one ship, seized another vessel and killed three seafarers in separate attacks. "Operations will not stop unless the aggression stops and the siege on the Palestinian people in the Gaza Strip is lifted," the Houthis said on Thursday. They claimed to also have directly hit two other ships. UKMTO said the master of one of those reported an explosion near the vessel that did not cause any damage or injury. Reuters was not able to immediately verify the other account. While several near misses have been reported, "the data would also say (the Houthis) are getting more successful with direct hits," Joshua Hutchinson, managing director of intelligence and risk for British maritime security firm Ambrey, said in a post on LinkedIn. Sign up here. https://www.reuters.com/world/middle-east/vessel-reports-missile-impacting-it-129-nm-east-yemens-aden-ambrey-says-2024-06-13/