2024-06-03 05:40

SEOUL, June 3 (Reuters) - Africa's rich mineral resources and its potential as a vast export market are at the top of South Korea's agenda as it hosts a summit with the leaders of 48 nations this week with plans for aid on industrial infrastructure and digital transformation. Africa is a "crucial partner" for South Korea to further its industrial advances and "cooperation with Africa is not a choice but a necessity", President Yoon Suk Yeol's deputy national security adviser Kim Tae-hyo said. At least 30 heads of state are attending the summit on Tuesday, with delegations from 48 countries participating. Yoon and the chair of African Union, President Mohamed Ould Ghazouani of Mauritania, will issue a joint statement, Yoon's office said. On Wednesday, South Korean business leaders will host a business summit focused on investment, industrial development and food security. "Africa's strategic importance has never been greater," Kim said. South Korea is one of the world's largest energy buyers and is home to leading semiconductor producers and the world's fifth largest automaker making a push for electrification. Partnership with Africa with 30% of the world's critical mineral including chrome, cobalt and manganese is crucial, Yoon's office said. Since Friday, Yoon has held meetings with the leaders of Sierra Leone, Tanzania and Ethiopia and is scheduled to meet separately the heads of other states including Zimbabwe, Togo, Rwanda and Mozambique on Monday. By reaching out with offers to help with industrial infrastructure and digital transformation, South Korea is trying to tap into a vast and fast-growing market that is home to 1.4 billion people, the majority of whom are 25 or younger. Agreements aimed at laying the groundwork for trade and investment are expected to be signed with several countries, which will help establish the administrative foundation for freer trade and advanced customs management, Kim said. Aid on agricultural technology and plans for cooperation on climate change responses are also on the agenda. Sign up here. https://www.reuters.com/markets/south-koreas-yoon-hosts-africa-summit-tap-minerals-vast-export-market-2024-06-03/

2024-06-03 05:38

Full-year industry profit forecast to rise to $30.5 bln Passenger yields expected to be 3.2% higher than 2023 Cargo yields to fall 17.5% as freight markets normalise DUBAI, June 3 (Reuters) - Global airlines on Monday raised their profit forecast for 2024 and projected industry wide revenues just shy of $1 trillion as a record number of travellers board flights. The International Air Transport Association (IATA) said it expected the worldwide industry to generate $30.5 billion of profit this year, higher than an upwardly revised $27.4 billion in 2023 as carriers keep a lid on underlying labour costs despite recent strikes. That comes just four years after the industry collapsed to a $140 billion loss in 2020 as a result of the pandemic and is above the $25.7 billion forecast for 2024 issued in December. "The environment is better than we had expected, particularly in Asia," Director General Willie Walsh told Reuters on the sidelines of an annual meeting of IATA's more than 300 members, which account for more than 80% of global air traffic. However, the airline industry warned its ability to serve a strong rebound in travel demand is being hampered by disruption to global supply chains, including deliveries of its own fleets. Passenger yields - or the average amount paid by a passenger to fly one mile - are expected to strengthen by 3.2% compared with 2023, IATA said in a twice-yearly economic outlook. In part, that is because capacity growth is constrained, driving up average fares. By contrast, the corresponding figure for cargo is expected to fall 17.5% in 2024 as freight markets return towards normal patterns after booming during the pandemic. Airline activity is widely seen as a litmus test for business or consumer confidence, as well as trade. The industry has high fixed costs and regulations that discourage most cross-border mergers, meaning it remains fragmented. "The margin remains wafer thin; we're still looking at a margin of just over 3%," Walsh said. "(That) performance is still well below where the industry needs to be." In Asia, IATA more than trebled its industry profit forecast for 2024 to $2.2 billion despite a sluggish recovery in international travel in China. At $14.9 billion, unchanged from earlier forecasts, North America remains the most profitable region with "strong consumer spending despite cost-of-living pressure," IATA said. IATA said airlines had been hit by unforeseen maintenance issues. That appeared to be a reference to repair bottlenecks for engines built by Pratt & Whitney (RTX.N) New Tab, opens new tab, which are expected to leave hundreds of Airbus (AIR.PA) New Tab, opens new tab jets grounded this summer. Industry sources said on Friday that Airbus, the world's largest planemaker, was itself facing a new surge in supply problems, casting doubt on output plans for the second half. The planemaker has said it is sticking by full-year delivery goals. Rival Boeing (BA.N) New Tab, opens new tab is producing far fewer of its best-selling 737 MAX jets than originally planned after a mid-air cabin panel blowout in January prompted U.S. regulators to cap its production. IATA's 2025 annual general meeting will be held in Delhi, India, hosted by Indian carrier IndiGo (INGL.NS) New Tab, opens new tab, the organisation said on Monday. Sign up here. https://www.reuters.com/business/aerospace-defense/global-airlines-raise-profit-outlook-2024-2024-06-03/

2024-06-03 05:23

JAKARTA, June 3 (Reuters) - Copper miner Freeport Indonesia has raised its output guidance for the year as it awaits an extension of its copper concentrate export permit that the government has promised, the company's deputy chief executive told parliament on Monday. Its copper concentrate output target this year was lifted to 3.78 million metric tons, assuming the export permit extension is approved, from an initial 2.84 million tons, the deputy CEO Jenpino Ngabdi said. The company, majority owned by the Indonesian government but operated by U.S. miner Freeport-McMoran (FCX.N) New Tab, opens new tab, also raised its 2024 refined copper output target to 1.73 billion pounds, from 1.42 billion pounds previously, he added. Freeport Indonesia's last export permit was valid until May 31 and its new targets must be approved by the mining ministry. Indonesia banned shipments of all raw minerals from June 2023, but Freeport Indonesia and rival copper miner Amman Mineral Internasional (AMMN.JK) New Tab, opens new tab were given a year-long dispensation to allow them to finish the construction of their copper smelters. The government has promised to extend the dispensation until the end of 2024 so that the companies can continue to export before their smelters reach full capacity, but with additional levies on shipments. The regulation for the new levies was not publicly available as of Monday morning. "We are targeting operational start of the JIIPE smelter in early June with the commissioning of the furnace smelter," Jenpino said, referring to the Java Integrated Industrial and Ports Estate smelter in East Java. "The first copper cathode production is expected in August with a feed rate for concentrate of 50%," he added. Freeport Indonesia produced 3.45 million metric tons of copper concentrate in 2023 while its refined copper output last year reached 1.68 billion pounds. Sign up here. https://www.reuters.com/markets/commodities/freeport-indonesia-says-yet-receive-copper-concentrate-export-permit-extension-2024-06-03/

2024-06-03 05:19

U.S. dollar slides to two-week low vs yen U.S. ISM falls in May, weighs on dollar U.S. construction spending weakens for 2nd month Mexican peso plunges vs dollar after Sheinbaum election NEW YORK, June 3 (Reuters) - The dollar fell to a three-week low on Monday after data showed the U.S. economy is gradually slowing down with weaker-than-expected readings on manufacturing and construction spending, suggesting that the Federal Reserve is on track to start cutting interest rates later this year. The dollar index, a measure of the U.S. currency's value against six major currencies, fell 0.4% to 104.14 . The index earlier dropped to 104.13, the lowest since mid-May. The greenback also slid a two-week trough against the yen following the data and was last down 0.7% at 156.22 . The euro gained 0.5% versus the dollar to $1.0897 , after earlier rising to a three-week high of $1.0898. Monday's data showed the U.S. Institute for Supply Management's (ISM) purchasing managers index (PMI) for manufacturing fell to 48.7 in May, from 49.2 in April, sliding as well from an 18-month high of 50.3 seen in March. In a research note, BMO pointed out that the U.S. manufacturing sector shrank in 18 of the last 19 months. Monday's ISM decline followed weakness in the Chicago PMI, Dallas Fed, Philadelphia Fed, and the Empire State manufacturing indexes. U.S. construction spending also slid unexpectedly for a second consecutive month in April, decreasing by 0.1% after a 0.2% decline in March, amid falls in non-residential activity. "Investors and markets are starting to believe that the U.S. exceptionalism theme is starting to wane," said Boris Kovacevic, global macro strategist at global payments company Convera in Vienna, Austria, referring to the world's largest economy's outperformance versus the rest of the world. "It's not completely over but...but markets are now questioning how long the U.S. exceptionalism theme has to go," he added. After the ISM and construction spending data, fed funds futures increased the chances of a rate cut in September to around 59.1%, according to LSEG's rate probability app, compared with around 55% late Friday. It was slightly below 50% earlier last week. The U.S. dollar posted its first monthly decline of the year in May, weighed down by shifting expectations on when the U.S. central bank will cut rates and by how much. The futures market is fully pricing in one rate cut of 25 basis points (bps) this year. In the euro zone, however, the European Central Bank is holding a meeting on Thursday and is seen as almost certain to cut rates. The comments from ECB officials will be in focus for traders along with economic projections as they assess whether the central bank will provide further cuts after Thursday in the wake of data showing a rise in euro zone inflation in May. Markets are pricing in 57 bps of ECB cuts this year. In other currencies, sterling rose 0.4% against the dollar to $1.2799, boosted by the dollar's fall following the U.S. manufacturing data. The pound pared gains a little after Nigel Farage, who helped lead Britain's departure from the European Union, said he would stand as a candidate in next month's election and will lead the right-wing Reform Party. This is widely seen as a major blow to Prime Minister Rishi Sunak. In Mexico, the peso weakened on Monday after the ruling party declared Claudia Sheinbaum the winner of the presidential election by a "large margin" after polls closed on Sunday. "The peso is underperforming amid seemingly growing concerns amongst investors that by securing supermajority in the lower house the governing coalition could be tempted to implement non-market-friendly policies," said Piotr Matys, senior FX analyst, at In Touch Capital Markets. The U.S. dollar was last up 4.1% against the Mexican unit at 17.704 pesos , after earlier hitting its highest since around mid-April. The Indian rupee, meanwhile, rose to a 2-1/2-month high versus the greenback and was last up 0.4% at 83.08 per dollar as exit polls pointed to a sizable mandate and rare third term for Prime Minister Narendra Modi. Sign up here. https://www.reuters.com/markets/currencies/currencies-tread-cautiously-after-us-inflation-report-focus-ecb-2024-06-03/

2024-06-03 05:03

NEW YORK, June 3 (Reuters) - Donald Trump last week became the first former president convicted of a felony, but Wall Street believes he still has a solid chance of winning the November election and is gaming out how a second term for the Republican candidate could impact markets. Investors said a Trump victory could broadly boost the stock market and buoy the dollar. But his proposed tariffs and extended tax cuts could also stoke inflation and hurt U.S. government bonds, they said. Market participants said it remained too early to gauge how Trump's election prospects will be affected by his conviction for falsifying documents to cover up a payment to silence a porn star. The verdict, which Trump said he would appeal - does not prevent the former president from campaigning or taking office if he wins the election. Recent polls showed U.S. President Joe Biden, a Democrat, and Trump nearly tied in the presidential race, which some believe could be swayed by macroeconomic factors as much as political ones. The options market continues to price a pickup in volatility around the vote, suggesting investors are bracing for political uncertainty. Here is an early look at how investors think Trump 2.0 might affect stocks, bonds and currencies. STOCKS The S&P 500 rose 68% through Trump’s first term, which was marked by tax cuts and infrastructure spending as well as a trade war with China and the start of the COVID-19 pandemic. The benchmark index is up 38% so far under Biden. An analysis by LPL Financial on Friday showed the S&P 500, which is up about 9% year-to-date, has risen alongside Trump’s election odds this year, as measured by betting site Predictit. At the same time, Biden's election odds have remained negatively correlated to the S&P 500 since February, the study showed. Some investors believe a second Trump term could be supportive for equities, especially if Trump is able to avert tax hikes promised by Biden. Much would depend on the makeup of Congress. "In a Trump administration with a divided Congress or with a Republican clean sweep, we can say, a corporate tax hike is off the table," said Sonu Varghese, global macro strategist at Carson Group. A second Trump White House would also seek to reduce the power of U.S. financial regulators, according to a Reuters report. That could be another positive for stocks, especially small cap companies, which may find it more expensive to comply with regulatory requirements, wrote Stephen Auth, chief investment officer, equities at Federated Hermes. Trump's promise to support fossil fuel production and a relatively more business-friendly approach to environmental regulation could also boost sentiment in the energy sector, a Nomura report said. Tariffs and trade wars, however, are potential spoilers. Trump has floated the idea of tariffs of 60% or higher on all Chinese goods and a 10% across-the-board tariffs on goods from all points of origin in a bid to eliminate the U.S. trade deficit. Deutsche Bank analysts said trade protectionism could act as a “negative supply shock,” raising revenues at the expense of weaker growth and higher inflation. Multinational companies deriving revenues from China or with deep supply chain links there could also be vulnerable, Carson's Varghese said. Trump campaign National Press Secretary Karoline Leavitt said in a statement that his “pro growth, anti-inflation economic policies will quickly bring down prices, reduce interest rates, and lower long-term debt levels, which will benefit all Americans, including investors.” Meanwhile, at least one stock appeared to have an immediate reaction to Trump’s conviction: shares of Trump Media & Technology Group (DJT.O) New Tab, opens new tab, majority owned by Trump, fell 5% in on Friday. BONDS AND RATES Republicans, as well as Democrats, have vowed to reduce deficit spending and debt levels. But Trump policies such as extended tax cuts could contribute to the yawning U.S. fiscal deficit and push up inflation, investors said. That, in turn, may hurt demand for U.S. debt, pressuring bond prices and driving up yields. Trump’s tax proposals “would be a big drain on revenues, and I think the bond market wouldn’t react well to that," said John Velis, FX and macro strategist for the Americas at BNY Mellon. Inflation and fiscal expansion could lead the Fed to raise interest rates, another path to higher yields, analysts at Nomura said. Trump's tariff policies could also hurt demand for U.S. debt among foreign investors, said Christopher Hodge, chief economist for the United States at Natixis. Foreign holdings of U.S. Treasuries surged to a record high of $8.09 trillion in March, rising for a sixth straight month, data from the Treasury Department showed earlier this month. CURRENCIES The dollar fell about 10% against a basket of currencies during Trump’s first term. But Trump’s presidency also featured a two-year period that saw the dollar gain about 15%, boosted in-part by safe-haven demand in the face of trade policy worries. Politico reported New Tab, opens new tab in April that economic advisors close to Trump were debating ways to devalue the U.S. currency, a move that could buoy U.S. exports but also spark an inflationary rebound and endanger the dollar’s position as the world’s dominant currency. Some investors, however, believe the dollar could find support if Trump’s policies lead to higher U.S. interest rates and stronger growth. "Between elevated U.S. interest rates and tariffs, a Trump presidency could very well keep the dollar stronger for longer," said Jonathan Petersen, senior markets economist at Capital Economics. Increased trade tariffs could also spell volatility for currencies such as the Mexican peso and Chinese yuan, which experienced big swings during Trump’s first term, Petersen said. Smaller European currencies including the Swedish krona and Polish zloty could also be affected, since they are particularly sensitive to risk sentiment and likely to be impacted by potential tariffs, he said. Sign up here. https://www.reuters.com/markets/us/after-trial-investors-weigh-trump-20-factor-election-looms-2024-06-03/

2024-06-03 04:42

MUMBAI, June 3 (Reuters) - The Indian rupee is expected to rally at the open on Monday after exit polls indicated a third term for Prime Minister Narendra Modi. Non-deliverable forwards indicate the rupee will open at 83.10-83.12 to the U.S. dollar, compared with 83.4625 in the previous session. The "big down move" at the open for the dollar/rupee will "likely run into good buying interest", a forex trader at a bank said. "Only once the actual results confirm what the exit polls are forecasting do I think that a dip below 83.00 is possible." Weekend exit polls projected the alliance led by Modi's Bharatiya Janata Party (BJP) to increase its 303 seats in the 543-member lower house of Parliament and possibly get a two-thirds majority. Exit polls in India have a patchy record, often getting the outcome wrong. The actual results will be announced on Tuesday. "If the exit polls are accurate ... it would leave the BJP with a very strong mandate from which to continue enacting growth-enhancing structural reforms," Capital Economics said in a note. Goldman Sachs said that "political continuity would contribute to a stable macro-economic environment and continuing reforms." The rupee dropped 0.2% on Friday, in the lead-up to the exit polls. On Friday, we witnessed "sizable" hedging from importers and dollar short exits, another fx trader said. "These positions will need to be rebuilt and is good in a way (for the rupee)," he said. Following the election results on Tuesday, the focus will shift to the Reserve Bank of India's policy decision and U.S. non-farm payrolls, both due Friday. KEY INDICATORS: ** One-month non-deliverable rupee forward at 83.18; onshore one-month forward premium at 7 paisa ** GIFT Nifty up 3% ** Dollar index down at 104.54 ** Brent crude futures up 0.6% at $81.6 per barrel ** Ten-year U.S. note yield at 4.49% ** As per NSDL data, foreign investors sold a net $134.5 million worth of Indian shares on May 30 ** NSDL data shows foreign investors bought a net $169.2 million worth of Indian bonds on May 30 Sign up here. https://www.reuters.com/markets/currencies/rupee-set-rally-after-exit-polls-predict-modi-win-2024-06-03/