2024-06-09 21:57

Euro falls to lowest in a month Eurosceptic nationalists gain in EU election French President Macron risks losing domestic control French banks slide; government borrowing costs hit 2024 high LONDON/SINGAPORE, June 10 (Reuters) - The euro fell while French stocks and bonds tumbled on Monday, following President Emmanuel Macron's decision to call a snap parliamentary election after being trounced in a European Union vote by the far right. The euro fell by as much as 0.6% to a one-month low of $1.0733 and hit a 21-month trough against sterling of 84.49 pence . French blue-chip stocks (.FCHI) New Tab, opens new tab dropped 1.6%, led by steep losses in the likes of lenders such as BNP Paribas (BNPP.PA) New Tab, opens new tab and Societe Generale (SOGN.PA) New Tab, opens new tab, making the CAC 40 (.FCHI) New Tab, opens new tab the worst-performing index in Europe. Europe's benchmark STOXX 600 (.STOXX) New Tab, opens new tab fell 0.5%. French government bond prices also fell , pushing 10-year borrowing costs to their highest this year, around 3.20%. Centre, liberal and Socialist parties were set to retain a majority after the European Parliament elections, but eurosceptic nationalists made the biggest gains, raising questions about the ability of major powers to drive policy in the bloc. Making a risky gamble to reestablish authority, Macron called a parliamentary election with a first round on June 30. If the far-right National Rally party wins a majority, Macron would be left without a say in domestic affairs. "That is probably somewhat bad news for markets," said Berenberg chief economist Holger Schmieding. "It introduces an unexpected element of uncertainty." Britain holds a general election on July 4 and crucial U.S. elections take place in November, while markets have lately turned fragile as U.S. rate cut expectations have dimmed. Kathleen Brooks, research director at trading platform XTB, said in a note the "shock factor" from Macron's decision to call a snap election would weigh on European markets on Monday, but who prevailed in the actual vote might carry more weight. "The question for traders of the euro and European stock markets is just how radical will Marine Le Pen and Jordan Bardella be if they do well in the French parliamentary elections?" she said, referring to two far-right leaders in France. WAKE-UP CALL? While the euro and euro area assets have been largely cushioned by diminished euroscepticism compared with elections in the 2010s and early 2020s, the results and surprise reaction from France could be a wake-up call. The premium bond investors demand to hold French government debt, rather than benchmark German bonds , touched its highest in six weeks, widening by 7 basis points (bps) to 55 bps. The gap between German and Italian debt, which investors see as a measure of risk appetite in the broader region, also widened to nearly 140 bps , the most since late April. "Obviously, the snap election is a new source of uncertainty, which should have some negative impact on economic and market confidence, at least in France," said Jan von Gerich, chief market analyst at Nordea. But he noted that EU election results do not always translate into domestic ones, due to different voting systems and as EU elections tend to attract a larger protest vote. That said, shares in French banks were battered, with Societe Generale falling almost 8%, while BNP Paribas was down 5% as investors worried their funding costs may increase if French sovereign borrowing becomes more expensive amid higher spending, bankers said. Analysts also noted that a big win for the far right in parliamentary elections could pave the way for a tax on bank profits - another reason why shares in French lenders were hit so hard on Monday. The cost of insuring the debt of both banks against default rose to around the highest in a month, according to data from S&P Global Market Intelligence. The European Central Bank last week delivered its first rate cut in five years and the currency is down almost 2.5% on the dollar this year, mostly driven by the relative outlooks for interest rate cuts in the euro area and United States. In France, where concerns about the country's high debt levels have grown this year, the implications of renewed political uncertainty for the economy could also be in focus. Standard & Poor's last month cut its rating on France's sovereign debt, delivering a painful rebuke to the government's handling of the strained budget days before the EU election. Sign up here. https://www.reuters.com/markets/currencies/euro-falls-warning-sign-markets-after-macron-calls-snap-france-vote-2024-06-09/

2024-06-09 21:49

June 10 (Reuters) - A look at the day ahead in Asian markets. Asian markets on Monday get their first chance to react to the global market fallout from Friday's U.S. employment report, which saw the biggest one-day rise in Treasury yields and the dollar in two months. Traders also pared back Fed rate cut expectations - the probability of a pre-election rate cut is now no more than 50-50, and two full rate cuts are no longer priced in for this year. This counters some of the dovish momentum that had been building earlier last week when the Bank of Canada and European Central Bank cut rates, and the dollar and Treasury yields touched two-month lows. Indeed, the S&P 500, Nasdaq, and the MSCI World index all hit record highs last week before Friday's reversal, and Asian stocks still managed to rise nearly 3% for their fifth weekly rise out of the last seven. But rising U.S. bond yields and an appreciating dollar does not bode well for investors' appetite for risk, so Friday's market moves could put Asian assets on the defensive at the open on Monday. Investors and traders in Asia may already be inclined to reduce risk exposure ahead of two major monetary policy decisions this week from the Federal Reserve and Bank of Japan. Sources familiar with the BOJ's thinking say policymakers are brainstorming ways to slow its bond buying and may offer fresh guidance this week, in what would be a first key step to reducing its almost $5 trillion balance sheet. While details are not finalised, the central bank could trim monthly purchases or clarify plans to proceed with a slow but steady taper with a focus on preventing abrupt yield spikes, the four sources said. Japanese trade and current account figures for April will be released on Monday, as will the final estimate of first-quarter GDP. A Reuters poll suggests there will be no change to the quarter-on-quarter contraction of 0.5%, but the annualised print will be nudged up to -1.9 from -2.0% on the back of stronger capex. Industrial production figures from Malaysia and Indonesian consumer confidence complete a light economic calendar on Monday. Meanwhile, in China-related news, U.S. officials expect G7 countries at this week's summit in Italy to send a tough new warning to smaller Chinese banks to stop assisting Russia in evading Western sanctions, according to two people familiar with the matter. Media reports also suggest Volvo has started to shift production of Chinese-made electric vehicles to Belgium in anticipation that the European Union will crack down on Beijing-subsidised imports. And Turkey said on Saturday it will impose a 40% additional tariff on imports of vehicles from China. Here are key developments that could provide more direction to markets on Monday: - Japan GDP (Q1, final estimate) - Malaysia industrial production (April) - Indonesia consumer confidence (May) Sign up here. https://www.reuters.com/markets/global-markets-view-asia-graphic-pix-2024-06-09/

2024-06-09 21:11

June 9 (Reuters) - Ukraine's grid operator Ukrenergo said it would impose hour-long power cuts throughout the country on Monday evening in connection demand exceeding agreed limits. In a statement on Sunday on Telegram, Ukrenergo said the rolling cuts would apply to domestic and industrial customers and be in effect from 4 p.m. to 10 p.m. (1300 GMT to 1900 GMT). The restrictions, it said, would not apply to "critical infrastructure" sites providing vital services. Russia over the past two months has intensified attacks on the Ukrainian energy system, knocking out the bulk of thermal and hydropower generation capacity. Prime Minister Denys Shmyhal has estimated that about 9 GW of energy-generating capacity has been lost since March. Ukraine's government ordered all ministries and regional authorities last Friday to stop using air conditioning and switch off external lighting. Sign up here. https://www.reuters.com/business/energy/ukraine-grid-operator-announces-power-cuts-monday-2024-06-09/

2024-06-09 20:16

BAGHDAD, June 9 (Reuters) - Iraq's Oil Minister Hayan Abdel-Ghani said there has been progress in talks with Kurdistan region officials and representatives of international companies operating there for a deal to resume oil exports via a pipeline to the Turkish port of Ceyhan. "We have a progress in today’s talks and we expect to reach an understanding in (a) few days," Abdel-Ghani said in an interview with the state owned Iraqiya TV on Sunday. The Iraq-Turkey oil pipeline that once handled about 0.5% of global oil supplies has been stuck in limbo for more than a year after its closure, as legal and financial hurdles impede the resumption of flows from the region. Sunday's meeting in Baghdad, attended by Iraq’s oil minister Hayan Abdul Ghani and officials from the Kurdistan region’s ministry of natural resources, comes after a call by Iraq's oil ministry last month for Kurdish authorities and international energy companies to meet and discuss restarting the exports. “The meeting is still going on to discuss issues that prevent the resumption of oil exports," said a senior oil ministry official on condition on anonymity due to the sensitivity of talks. "It’s still early to say a final deal is possible to reach but we can say the talks have positive aspects.” The talks are expected to focus on the Kurdistan Regional Government's (KRG) production-sharing energy contracts, which Baghdad wants to amend, and the oil production costs that the foreign oil companies claim for oil produced in the Kurdistan region, said the official. Iraq had blamed foreign companies, alongside the Iraqi Kurdish authorities, for the delay in restarting crude exports because they had so far not submitted their contracts to the federal oil ministry for revisions. It was not clear if the Kurdish delegates and the foreign firms have accepted the provision to the oil ministry of their contracts during Sunday's meeting. Sign up here. https://www.reuters.com/markets/commodities/iraq-oil-minister-reports-progress-talks-with-kuridsh-officials-northern-exports-2024-06-09/

2024-06-09 19:52

CAIRO, June 9 (Reuters) - Iraq's oil minister said there had been progress in talks held on Sunday with Kurdish regional government officials to reach a deal to resume northern oil exports. Sign up here. https://www.reuters.com/markets/commodities/iraqi-minister-reports-progress-talks-with-kurdish-officials-resuming-northern-2024-06-09/

2024-06-09 13:44

CAIRO, June 9 (Reuters) - Britain's defence ministry said on Sunday a statement by Yemen's Houthis that they had fired ballistic missiles at a British destroyer in the Red Sea was false. The Houthis did not say whether the attack they said they had carried out on the HMS Diamond had caused any damage, but described it as "accurate". "These claims are untrue," a British Ministry of Defence (MoD) spokesperson said. The Houthis said they had also attacked two commercial vessels which they identified as the Norderney and Tavvishi. The statement said the Tavvishi - which was in the Arabian Sea - and the Norderney had both been hit, and that a fire broke out on the Norderney. The Houthi militia, which controls the most populous parts of Yemen, has staged attacks on ships in the waters off the country since November in solidarity with Palestinians in Gaza. The campaign has disrupted global shipping, forcing firms to re-route to longer and more expensive journeys around southern Africa, and stoked fears that the Israel-Hamas war could spread and destabilise the wider Middle East. The United States and Britain have carried out strikes against Houthi targets in response to the attacks on shipping. Sign up here. https://www.reuters.com/world/middle-east/uk-dismisses-statement-by-yemens-houthis-saying-they-attacked-british-destroyer-2024-06-09/