2024-05-31 14:37

LONDON, May 31 (Reuters) - Global investors poured $3.6 billion into investment grade corporate bond funds in the week to Wednesday, Bank of America said on Friday, in the 31st straight week of inflows, the longest streak since 2019. A rise in global interest rates has forced up corporate bond yields, drawing in buyers attracted by the payouts as well as the hope that prices will rally once interest rates start to fall. Investors put $5.1 billion into bond funds in general in the week to Wednesday, BofA said, citing figures from data provider EPFR, in the 23rd straight week of inflows. "Investors are still buying into that additional bit of premium that they can get (on corporate bonds)," said Michael Weidner, co-head of global fixed income at Lazard Asset Management. He said stronger than expected growth in developed markets had supported corporate debt markets. "Reporting seasons have continued to surprise on the upside," he said, "the downside seems to be very limited on buying into credit right now." Despite the strong inflows, bonds have suffered as inflation has remained above central bank targets and interest rates look set to stay higher for longer. Yields move inversely to prices. Investment grade bonds have fallen 1.7% so far this year, according to BofA's measure, while government debt has dropped 5.6%. Emerging market debt outflows resumed in the week to Wednesday at $1.1 bln, the bank said in its weekly Flow Show research note. Investors pulled $6.7 billion from cash funds and put $1.8 billion into stocks and $600 million into crypto, BofA said. Sign up here. https://www.reuters.com/markets/global-markets-flows-update-1-2024-05-31/

2024-05-31 14:13

First quarter GDP up 1.7%, Statscan said Economy stalled on monthly basis in March April economic growth likely to be 0.3% Q4 GDP growth revised to 0.1% from 1.0% OTTAWA, May 31 (Reuters) - The Canadian economy expanded at a slower-than-expected pace in the first quarter, data showed on Friday, boosting expectations for the first interest rate cut by the Bank of Canada next week. The economy grew at an annualized rate of 1.7%, compared with the 2.2% forecast by analysts in a Reuters poll, as well as the central bank's 2.8% estimate. The real gross domestic product (GDP) likely rose 0.3% on a monthly basis in April after the economy stalled in March, Statistics Canada said. Fourth-quarter GDP growth was revised to an annualized rate of 0.1% from 1.0% reported initially. The data prompted financial markets to increase bets for a June 5 rate cut to almost 83% from 66% earlier. The loonie rose 0.31% to trade at 1.3635 per U.S. dollar, or 73.34 U.S. cents, by 1326 GMT. Two-year Canadian government bond yields fell 7.5 basis points to 4.300%. The GDP report indicated that Canada's economy did not rebound from a soft patch last year as strongly as data initially suggested, and may convince the central bank to start lowering borrowing costs in June. The main message from this data to the BoC is that "the economy is really struggling to grow and I think at the margin it slightly increases the chances of them cutting rates next week," Doug Porter, chief economist at BMO Capital markets, said. Friday's report is the last major data to be released ahead of the BoC's interest rate announcement on June 5, when three-quarters of the 29 economists polled by Reuters expect a 25-basis-point cut. Growth in the first quarter was driven by higher household spending on services, Statscan said, adding that slower inventory accumulations moderated overall growth. On a per capita basis, household final consumption expenditures edged up 0.1% in the first quarter, after three quarters of declines, the statistics agency said. Per capita spending on services increased 0.5%, while per capita spending on goods declined for the tenth consecutive quarter. As the economy has shown signs of losing steam, it has led to an almost certainty that a rate cut is coming this summer - either June or July, bolstered by falling wage inflation and an almost steady easing of consumer prices. The BoC has kept its interest rate at a near 23-year high of 5% since the last 10 months which has managed to crimp inflation progressively but had to contend with lackluster growth in the bargain. Canada's Group of Seven (G7) counterparts have signaled a weakening in economic growth as well, increasing bets of interest rate cuts from their peaks. The U.S. economy grew more slowly in the first quarter than previously estimated and Germany, Europe's economic powerhouse, just barely managed to skirt recession in the same period. While both goods-producing and services-producing industries stayed essentially unchanged, the construction subsector recorded a 1.1% rise in March, the largest monthly growth rate since January 2022, Statscan said. However, a likely rebound in GDP in April means the economy started the second quarter on a positive note. The BoC, in economic forecasts released last month, said it expects a 1.5% annualized growth rate in the second quarter. The rebound is likely in part due to the resumption of activity in the auto manufacturing sector after retooling-related shutdowns in March, Royce Mendes, head of macro strategy for Desjardins Group, wrote in a note. "Don't expect the economy to maintain April's growth rate through the rest of the second quarter," he said. Sign up here. https://www.reuters.com/markets/canadian-economy-misses-q1-growth-forecast-april-gdp-likely-up-03-2024-05-31/

2024-05-31 12:56

May 31 (Reuters) - India's economy grew at a faster-than-expected pace of 7.8% year-on-year in the January-March quarter, helped by strong growth in the manufacturing sector, and economists expect the momentum to remain strong this year. The gross domestic product (INGDPQ=ECI) New Tab, opens new tab growth in the first three months of 2024, the fourth quarter of 2023/24 fiscal year, was lower than a revised 8.6% expansion in the previous quarter, government data released on Friday showed. However, it was higher than the 6.7% growth forecast by economists in a Reuters poll. COMMENTARY ADITI NAYAR, CHIEF ECONOMIST, HEAD RESEARCH AND OUTREACH, ICRA, GURUGRAM "With transient factors likely to dampen growth in the first half of FY25, we expect the GDP growth to decelerate from the 8.2% recorded in FY24." SACHCHIDANAND SHUKLA, GROUP CHIEF ECONOMIST, LARSEN & TOUBRO, MUMBAI "Broader story of sustained investment growth and subdued consumption along with flattish government expenditure continues." SAKSHI GUPTA, PRINCIPAL ECONOMIST, HDFC BANK, GURUGRAM "GDP growth surprised again with the wedge with gross value added (GVA) continuing to remain high due to higher growth in net taxes." "Sector wise, manufacturing and construction growth continued to remain strong. On the expenditure side, consumption growth edged up from the previous quarter, although remained in low single digits." "Going forward, we expect the wedge between GDP and GVA to start normalising from the second quarter of FY25 as government spending goes up, and expect overall GDP growth of 6.5% for FY25." SUJAN HAJRA, CHIEF ECONOMIST AND EXECUTIVE DIRECTOR, ANAND RATHI SHARES AND STOCK BROKERS, MUMBAI "This year, we expect a meaningful pickup in private consumption and a possible modest deceleration in investment growth. With robust growth and declining inflation, the Indian economy is in an enviable position, poised to remain the fastest-growing major economy in the world." "While these strong growth figures may present a challenge for the Reserve Bank of India in its monetary policy decisions, slower inflation and ongoing fiscal consolidation should pave the way for modest rate reductions in the first half of 2025." "This emerging scenario bodes well for the Indian equity market." GARIMA KAPOOR, ECONOMIST, INSTITUTIONAL EQUITIES, ELARA SECURITIES, MUMBAI "The high-frequency indicators during the first two months of this financial year suggest FY25 has started on a relatively stable footing." "Although the capex momentum has moderated owing to elections, basis the pipeline of approvals/sanctions, we expect private capex to pick up gradually from the back half." "Amid subdued core inflation prints and forecasts of normal monsoon, there should a fillip to consumption demand hereon. We expect FY25 GDP growth of 7%." Sign up here. https://www.reuters.com/markets/asia/view-indias-economy-grows-faster-than-expected-78-q4-2024-05-31/

2024-05-31 12:51

May 31 (Reuters) - Two people were injured in a Ukrainian missile and drone strike on oil facilities in Russia's southern Krasnodar region, Russian officials said on Friday. The Russian defence ministry said on the Telegram app that its air defence systems had destroyed five missiles and 29 drones which Ukraine had launched early on Friday. The Ukrainian military said missiles fired by the Ukrainian navy had struck an oil terminal at the Russian port of Kavkaz in the Krasnodar region and that drones had struck another oil depot in the same region. Krasnodar Governor Veniamin Kondratyev said on Telegram that falling drone debris had sparked a fire at an oil depot in the Temryuk district, damaging several tanks filled with fuel. The fire has since been extinguished, he said. Two people suffered minor injuries as a result of the attack, the head of the Temryuk district said on Telegram. Temryuk, on the Azov Sea, hosts a terminal for exports of liquefied petroleum gas (LPG). Industry sources said the terminal had not been affected by the attacks. Separately, the Russian defence ministry said its forces had downed single drones over the Voronezh, Belgorod and Tambov regions overnight. It said Russian air defence systems had also destroyed a Ukrainian drone over the Volga river region of Tatarstan, which hosts a number of industrial enterprises as well as oil producing and refining facilities. Reuters could not independently verify the reports. Ukraine has stepped up attacks on Russian energy infrastructure since early 2024. It says targeting Russia's energy, military and transport infrastructure undermines Moscow's overall war effort. Russia, which has repeatedly struck Ukraine's energy, transport and other infrastructure over the past two years, says the attacks on its own facilities amount to terrorist acts. Sign up here. https://www.reuters.com/world/europe/oil-depot-fire-after-ukraines-air-strike-russias-krasnodar-local-official-says-2024-05-31/

2024-05-31 12:47

NEW DELHI, May 31 (Reuters) - India's economy grew at a faster-than-expected pace of 7.8% year-on-year in the January-March quarter, helped by strong growth in the manufacturing sector, and economists expect the momentum to remain strong this year. The gross domestic product (INGDPQ=ECI) New Tab, opens new tab growth in the first three months of 2024, the fourth quarter of 2023/24 fiscal year, was lower than a revised 8.6% expansion in the previous quarter, government data released on Friday showed. However, it was higher than the 6.7% growth forecast by economists in a Reuters poll. In the October-December quarter, the headline growth figure was boosted by a sharp fall in subsidies, while gross value added (GVA), seen by economists as a more stable measure of growth, rose 6.5%. In the March quarter, GVA rose by 6.3%. India's economic growth for the full fiscal year 2023/24 was revised up to 8.2%, the highest among large economies globally, from an earlier government estimate of 7.6%. The growth figures will be a boost for Indian Prime Minister Narendra Modi, who is largely expected to win a third term in the national election, with results scheduled to be released on June 4. Manufacturing output rose 8.9% year-on-year in the three months ending in March, compared with a revised expansion of 11.5% in the previous quarter, while farm output growth accelerated to 0.6% after revised 0.4% growth in the previous quarter, the data showed. Investors are looking ahead to the election results and full-year budget in mid-July to assess any steps by the new government to boost the economy. The Reserve Bank of India's (RBI) record surplus transfer of 2.11 trillion rupees ($25.3 billion) earlier this month is likely to allow the government to increase state spending or cut the fiscal deficit. The RBI's monetary policy committee is expected to hold benchmark repo rate (INREPO=ECI) New Tab, opens new tab at 6.50% at its June 5-7 meeting, with inflation staying above 4%, the mid-point of its 2-6% target, economists said in a Reuters poll. High-frequency indicators data for April including auto sales, housing loans and fuel consumption reflected strong urban consumer demand, though there were concerns about weak rural demand despite forecasts of a above normal monsoon this year. Globally, economic activity remains resilient, with China's economy growing 5.3% year-on-year and the U.S. economy expanding at 1.3% annualised rate in March quarter amid signs of inflation easing, strengthening hopes of a pick up in India's exports. On Wednesday, S&P Global raised its sovereign rating outlook for India to "positive" from "stable", adding that regardless of the outcome of the national elections it expected broad continuity in economic reforms and fiscal policies. It expects the economy to grow at 6.8% in the current fiscal year starting April, and close to 7% annually over the next three years. Sign up here. https://www.reuters.com/world/india/indias-march-qtr-gdp-growth-78-yy-2024-05-31/

2024-05-31 12:40

LONDON, May 31 (Reuters) - A majority of Glencore (GLEN.L) New Tab, opens new tab investors have indicated they were satisfied with the commodities giant's plans to reduce carbon emissions, just as it gets closer to completing its acquisition of Teck Resources' steelmaking coal business. Just 10% of investors rejected Glencore's 2024-2026 Climate Action Transition Plan at the annual general meeting on Wednesday, compared with around 30% who had voted against an earlier plan in 2023. Opposition above the 20% threshold constitutes material dissent among shareholders. The new plan published in March included an intermediate target to reduce emissions by 25% by 2030, following investors' demands for clarity on the company's steps toward achieving net zero by 2050. "The introduction of a new 2030 target, covering all scopes and absolute in nature, is a positive development," proxy adviser ISS said in a report ahead of the AGM. Many of the world's biggest listed companies published their first climate plans in 2020 to cut emissions in line with the 2015 Paris Agreement goal of capping temperature increase to within 1.5 degrees Celsius of pre-industrial levels. Glencore mines and trades thermal coal, used to generate electricity and a major contributor to greenhouse gas emissions, and also has coking coal assets. It plans to run down its thermal coal mines by the mid-2040s, closing at least 12 by 2035. The deal for Teck's (TECKb.TO) New Tab, opens new tab business, known as EVR, set to close by the third quarter, will add 20 million tons of annual steelmaking coal capacity. "Once EVR is completed, we will develop a climate action plan around the assets regardless of whether those remain within a consolidated Glencore or if there's a spun-out coal entity," CEO Gary Nagle said at the AGM. He added that Glencore will immediately consult with shareholders once the deal is completed and if the majority "indicate a willingness to spin off coal, then we will immediately take it to a binding vote." The company had previously said it planned to eventually list the combined coal assets separately in New York. "Although the omission of the EVR assets from the plans is not unreasonable at present, the current plan cannot provide a fully comprehensive picture of the climate strategy," ISS said. Reuters reported in March that a growing group of Glencore investors were keen for it to keep mining coal instead of spinning out the soon-to-be enlarged unit. Investors then said the polluting fossil fuel would be a lucrative option - for a decade or two at least - even as it is phased out in favour of renewable energy. Sign up here. https://www.reuters.com/markets/commodities/glencores-climate-action-plan-wins-more-support-shareholders-2024-05-31/