2024-06-05 10:32

LONDON, June 5 (Reuters) - Stock exchanges and other trading platforms should draw up and make public plans for dealing with outages to provide greater predictability for customers, global securities watchdog IOSCO said on Wednesday. Exchanges worldwide have been hit by glitches and outages for various reasons, such as software changes. A glitch at the New York Stock Exchange (NYSE) on Monday triggered massive swings in the shares of Berkshire Hathaway (BRKa.N) New Tab, opens new tab and Barrick Gold , and trading halts in dozens of other companies, before the problem was fixed. "Where trading venues have effective playbooks and outage plans in place, this provides market participants with certainty about the steps that trading venues will take in the event of an outage," IOSCO, which is comprised of regulators from across the world, said in a report New Tab, opens new tab. The report highlighted "the need for improved preparedness and management of market outages to ensure market resilience and investor confidence". Exchanges could also set out their "reopening strategies" to explain the steps taken for restarting trading and how orders will be managed, the IOSCO 'best practice' guidance said. Trading venues that run closing auctions that determine prices used in benchmarks should also spell out what happens after an outage. "Where a closing auction cannot be run at the scheduled time, trading venues may need to consider postponing the closing auction before cancelling it," IOSCO said. "If the operation of a closing auction is not possible, trading venues may need to consider how to ensure the market is provided with alternative closing prices." Exchanges could also seek feedback from users for a "lessons learnt" exercise following an outage, the watchdog said. Sign up here. https://www.reuters.com/markets/us/stock-exchanges-told-improve-how-they-deal-with-outages-2024-06-05/

2024-06-05 10:22

June 5 (Reuters) - Sterling edged up versus the dollar and the euro on Wednesday ahead of key U.S. economic data, while market participants mull over the impact of a potential victory for the Labour Party in next month's general elections. The UK data calendar is light this week, barring Thursday's release of the Bank of England's (BoE) Decision Maker Panel on inflation expectations. ING analysts recently argued that they expect one-year inflation expectations to have fallen and remind markets that they are being too conservative in pricing less than two BoE rate cuts this year. ING expects the BoE to ease its policy three times in 2024. Investors are currently pricing more than a 50% chance of 25 bps of BoE rate cuts by September while discounting 35 bps by year-end, which means one cut and a 40% chance of a second move in 2024. The U.S. employment data throughout the week will dominate the macro calendar, after Wednesday's U.S. services data. Sterling was up 0.1% at $1.2776. It hit $1.2817 the day before, its highest since March 14. On May 22, Prime Minister Sunak announced that the next UK general election will occur on July 4. Britain's main opposition party is set to win by a larger margin than in 1997 under former prime minister Tony Blair, opinion pollsters YouGov said on Monday. "Labour's focus will likely start with ambitious supply-side policies, from planning reform to boosting employment and education," said Sanjay Raja, senior economist at Deutsche Bank, arguing that he expects a Labour government to pay for spending rises with tax hikes. "Deeper integration with Europe could also boost potential growth, allowing for more spending further down the parliamentary period," he added. According to a Nomura client survey, "many clients think Labour will pursue closer relations with the EU; nearly 90% of clients think it is likely or very likely." The euro fell 0.1% at 85.11 pence per pound. "The pound continued to comfortably outperform the euro in the past month, as markets view a Labour majority as perhaps the most market-friendly outcome of the pending general election," said Matthew Ryan, head of market strategy at global financial services firm Ebury. Keir Starmer, a 61-year-old former lawyer, has pulled Labour's politics back to the centre ground after a spell of electorally unsuccessful left-wing leadership. Sign up here. https://www.reuters.com/world/uk/sterling-edges-up-versus-dollar-euro-ahead-us-data-2024-06-05/

2024-06-05 10:15

TOKYO, June 5 (Reuters) - Sumitomo Corp (8053.T) New Tab, opens new tab aims to install 500 megawatts (MW) or more of battery storage in Japan by March 2031, from 9 MW now, to help mitigate renewable energy fluctuations and improve the efficiency of the energy system, a company official said. As resource-poor Japan expands renewable energy to meet decarbonisation goals and enhance energy security, battery usage is expected to rise to smooth out the intermittent supply of solar and wind energy. Sumitomo's battery storage initiative is part of the Japanese trading house's broader efforts to bolster its energy transformation business. "We aim to contribute to the stabilisation and decarbonisation of the electricity system by developing and operating large battery storages," Shigenobu Hamada, head of Sumitomo's energy storage business unit, told reporters. "Our goal is to develop a competitive battery storage business by leveraging our proprietary operational systems," he said on Wednesday, adding that Sumitomo is also looking to invest in the business abroad. Sumitomo expects Japan's local battery storage capacity to grow from 2 gigawatt hours (GWh) in 2023 to 40 GWh by 2030, while global capacity is anticipated to expand from 190 GWh to 2,206 GWh. Battery storage is expanding rapidly worldwide, led by China and the United States, but Japan lags due to smaller price differences in the wholesale electricity market, making it hard for storage developers to generate profits, Sumitomo said. But the Japanese market will likely take off on the back of government support and institutional changes such as the development of a market for adjusting electricity supply and demand, the company said. Sumitomo has so far installed three energy storage facilities, including 6 MW at Chitose in the northern island of Hokkaido, near where chipmaker Rapidus plans to build a plant. The trading company plans to select suitable sites from 1,700 potential locations to add battery storage. In Japan, as renewable energy deployment expands, output controls by utilities to balance power supply and demand have become more frequent nationwide, wasting potential clean energy that could otherwise be utilised. Sign up here. https://www.reuters.com/business/energy/sumitomo-aims-install-500-mw-battery-storage-japan-by-early-2031-2024-06-05/

2024-06-05 10:10

A look at the day ahead in U.S. and global markets from Mike Dolan Any investor trepidation about a slowing U.S. economy is once again being offset by renewed interest rate cut hopes - seeing the third day in row that Wall St stocks have turned around early losses to end higher by the close. In a week packed with employment updates, Tuesday's hat-trick of late market rallies followed further signs of a cooling U.S. labor market. U.S. job openings fell more than expected in April to the lowest in more than three years, with the ratio of vacancies to job-seekers also back at mid-2021 levels. With one eye on Friday's May employment report, Wednesday's release of ADP's private sector job survey is next on the slate and a modest slowdown in job creation to 175,000 is forecast. But already Federal Reserve rate cut speculation is back on the boil - with 45 basis points of 2024 Fed easing back in the futures strip and a near 80% chance of pre-election first move priced by September. Aided by this week's plunge in energy prices and crude oil back at February levels, U.S. Treasury yields ebbed further on Tuesday before steadying today as they await the big jobs release later in the week. Whatever the Fed does, the Bank of Canada is set to beat it to the punch and is widely expected cut as soon as Wednesday. With inflation back in the BoC's 1-3% target range and following disappointing early year growth readings, money markets have priced an 80% chance of a quarter point cut later today and three quarters of economists polled also expect one. Reflecting the forecasts, the Canadian dollar was steady ahead of the decision. More broadly, monetary easing around the world is the main reason renewed Fed rate cut speculation has done such little damage to the U.S. dollar (.DXY) New Tab, opens new tab. With a European Central Bank rate cut also widely expected on Thursday, four of the G7 economies would then be in easing mode. And following rate cuts in Switzerland and Sweden already this year, four central banks of the G10 most traded currencies will likely have cut by the end of this week. Even though the Bank of Japan is heading in the opposite direction, the yen fell back again on Thursday. Japan's inflation-adjusted 'real' wages fell 0.7% in April from a year earlier - extending a record streak of 25 consecutive monthly declines - but slowed the pace of decline as the BoJ watches closely. Japanese (.N225) New Tab, opens new tab and Chinese (.CSI300) New Tab, opens new tab benchmark stocks were in the red on Wednesday - bucking a more upbeat day for other bourses across Asia and Europe (.STOXXE) New Tab, opens new tab. China markets were dragged lower by consumer and property shares, despite an unexpected pickup in service activity in May. China's services activity in May accelerated at the quickest pace in 10 months, while staffing levels expanded for the first time since January, a private sector survey showed on Wednesday. Indian shares recovered some of Tuesday's withering election-related losses, jumping back 3% after two key allies pledged their support to form a new government following a narrow win for Prime Minister Narendra Modi's alliance. Back on Wall St, S&P500 futures were higher ahead of the opening. And a potential rival to the New York Stock Exchange was gaining some attention. A group backed by BlackRock (BLK.N) New Tab, opens new tab and Citadel Securities is planning to start a new national stock exchange in Texas, a spokesperson for Citadel Securities said on Tuesday. The Texas Stock Exchange, which has raised about $120 million, plans to file registration documents with the Securities and Exchange Commission later this year, The Wall Street Journal reported. Key diary items that may provide direction to U.S. markets later on Wednesday: * Bank of Canada policy decision * US May ADP private sector jobs report, US May service sector surveys from ISM and S&PGlobal * US President Joe Biden visits France for 80th D-Day anniversary * US corporate earnings: Dollar Tree, Lululemon, Campbell Soup, Brown-Forman Sign up here. https://www.reuters.com/markets/us/global-markets-view-usa-2024-06-05/

2024-06-05 09:54

TORONTO, June 5 (Reuters) - The Canadian dollar is set to strengthen less than previously expected over the coming year if the Bank of Canada begins cutting interest rates ahead of the Federal Reserve and the U.S. election raises global trade uncertainty, a Reuters poll found. According to the median forecast of 40 foreign exchange analysts in the May 31-June 4 poll, the loonie will be little changed at 1.37 per U.S. dollar, or 73.17 U.S. cents, in three months, compared to 1.36 in last month's poll. It was then predicted to advance 2.5% to 1.33 in a year, versus 1.32 expected previously. The Canadian central bank will trim interest rates to 4.75% later on Wednesday, according to three-quarters of economists in a separate Reuters poll which showed three further cuts this year. Money markets expect 65 basis points of easing by the BoC this year compared to 45 basis points from the Fed. "You are just too far away from Fed cuts at this point whereas the Bank of Canada is more imminent," said Benjamin Reitzes, Canadian rates & macro strategist at BMO Capital Markets. "While some of that rate differential is priced in, it's likely to go a little bit further, which is not going to be positive for the Canadian dollar near-term." The Canadian central bank would be willing to cut interest rates three times ahead of the Fed's first move before a declining currency threatens to endanger the inflation outlook, a recent straw poll of analysts showed. The U.S. election in November could be an additional headwind for the Canadian dollar if it were to lead to increased tariffs that reduce prospects for global trade, say analysts. Canada is a major producer of commodities and sends about 75% of its exports to the United States. "It's one more reason to be cautious with your outlook," Reitzes said. (For other stories from the June Reuters foreign exchange poll:) Sign up here. https://www.reuters.com/markets/currencies/canadian-dollar-outlook-dims-expected-interest-rate-divergence-2024-06-05/

2024-06-05 09:38

SINGAPORE, June 5 (Reuters) - India's closer-than-expected election should increase the prospect of productive reforms, the country's chief economic adviser said on Wednesday, while the fundamental drivers of growth remain largely independent of government policy. Voters returned Prime Minister Narendra Modi for a third term but with a reduced margin that has left his Hindu nationalist party needing coalition partners to govern. Stock markets tumbled on Tuesday on investor concerns that thorny economic reforms may be postponed but recovered some losses on Wednesday. The government's chief economic adviser, V Anantha Nageswaran, said many tricky reforms were in state government hands and he viewed them as more likely to progress. "In some cases the responsibility is disproportionately on state governments, sub-national governments," he said, addressing an investor conference hosted by Nomura in Singapore. "I would even say that the election outcome increases the probability of some of these factor market reforms happening, rather than lowering it, because it creates avenues for dialogue and consensus building." The factor market refers to land, energy, labour and other inputs in economic production. Nageswaran was appointed to his role in 2022 and is one of the government's key advisers on economic policy. He also authors India's economic survey, a document that indicates the government's policy direction and serves as a precursor to the budget. He said the next government will deliver "policy continuity with some change," without detailing any possible changes. "The supply side infrastructure improvements that have happened - they are for real and they will continue," he said. Future growth also draws on the health of the banking system and corporate sector, he said. "Both are going to be important drivers, not so much government policy, and those have not been affected by the election outcome." Sign up here. https://www.reuters.com/world/india/tight-election-promote-reform-india-economic-adviser-2024-06-05/