2024-05-30 05:36

NEW YORK/ LONDON, May 30 (Reuters) - MSCI's global equities gauge fell on Thursday and bond yields dropped with the U.S. dollar as investors analysed weaker than expected U.S. growth data and Federal Reserve comments for clues on the outlook for interest rates and the economy. The U.S. economy grew more slowly than expected in the first quarter after downward revisions to consumer spending, according to a Commerce Department report which showed gross domestic product growing at an annualized rate of 1.3% versus advance estimates of 1.6%. The U.S. dollar index lost ground following the data after rising to a two-week high the previous day, while Thursday's decline in U.S. Treasury yields followed two straight days of gains driven by weak government debt auctions. "The initial reaction was that the Fed is more likely to cut rates now than before because a cooling in the economy and consumption might mean slightly less inflation," said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance. But he sees the outlook for rates as only one factor. "It's possible you've got a little bit of a push and pull where there's stock market investors looking for a rate cut, which could potentially put prices higher," he said. "But there's also fundamental investors looking at a slowing economy and corporate profits start to slow as more of a negative than a positive for the stock market." Earlier, Jamie Cox, managing partner for Harris Financial Group, said the "move down in yields reflects the reality that the economy is slowing" implied by the GDP data. Also a weak financial outlook from Salesforce Inc (CRM.N) New Tab, opens new tab late on Wednesday sent that stock down close to 20% on Thursday, prompting a broader sell-off in software that hurt the technology index (.SPLRCT) New Tab, opens new tab, the S&P 500's (.SPX) New Tab, opens new tab biggest drag. As a result, on Wall Street, the Dow Jones Industrial Average (.DJI) New Tab, opens new tab fell 330.06 points, or 0.86%, to 38,111.48, while the S&P 500 (.SPX) New Tab, opens new tab dropped 31.47 points, or 0.60%, to 5,235.48 and the Nasdaq Composite (.IXIC) New Tab, opens new tab lost 183.50 points, or 1.08%, to end the session at 16,737.08. MSCI's gauge of stocks across the globe (.MIWD00000PUS) New Tab, opens new tab fell 3.22 points, or 0.41%, to 780.94. And while investors digested GDP data they also waited anxiously for the main data event of the week - Friday's April report on U.S. core personal consumption expenditures (PCE) price index, which is the U.S. Fed's preferred inflation gauge. The Fed's Bank of New York President John Williams said that while the timing of interest rate cuts is not clear, he does not foresee a need to raise them further. Chicago Fed President Austan Goolsbee said Fed officials are "trying to wrap their head around" whether further improvement in inflation will require higher unemployment, with less help coming from improved supply chains and other forces that can lower price pressures on their own. In Europe earlier, the STOXX 600 (.STOXX) New Tab, opens new tab index closed up 0.6% after falling sharply on Wednesday when data showed German inflation rose slightly more than forecast in May. Investors are waiting for key euro zone inflation data due on Friday. RATES WATCH In Treasuries, yields slid after the data which kept expectations on track for the Fed to start cutting interest rates this year. U.S. two-year to 30-year yields all posted their biggest daily drop in two weeks after hitting four-week peaks on Wednesday after the weaker-than-expected debt auctions. The yield on benchmark U.S. 10-year notes fell 7.6 basis points to 4.548%, from 4.624% late on Wednesday. The 30-year bond yield fell 6.3 basis points to 4.6814% from 4.744% and the 2-year note yield, which typically moves in step with interest rate expectations, fell 5.6 basis points to 4.929%, from 4.985%. "The GDP second release was a little bit more encouraging on the (personal consumption expenditures) side: a small downward revision there that was not anticipated to have more weakness," said Zachary Griffiths, senior investment grade strategist at CreditSights, in Charlotte, North Carolina. In currencies, the dollar index , which measures the greenback against a basket of currencies including the yen and the euro, fell 0.34% at 104.77, with the euro up 0.26% at $1.0828. Against the Japanese yen , the dollar weakened 0.47% at 156.86. In energy, oil prices dropped for the second day in a row after the U.S. government reported weak fuel demand and a surprise jump in gasoline and distillate fuel stockpiles. U.S. crude settled down 1.67% at $77.91 a barrel and Brent futures settled down 2.08% at $81.86 per barrel. Spot gold added 0.13% to $2,341.94 an ounce as the dollar and bond yields retreated. Sign up here. https://www.reuters.com/markets/global-markets-wrapup-1pix-2024-05-30/

2024-05-30 05:18

MUMBAI, May 30 (Reuters) - The Indian rupee, having opened weak on Thursday on worries over the rise in U.S. Treasury yields, received help from dollar offers from public sector banks. The rupee was at 83.4150 to the U.S. dollar at 10:40 a.m. IST, having opened at 83.42, and compared with 83.3450 in the previous session. Public sector banks are on the offer on the dollar/rupee pair, a foreign exchange salesperson at a large bank said. "Do not know for sure if the mild offers are for the RBI (Reserve Bank of India) or for their clients," he said. "If it is for the RBI, the intent is not to hammer it (dollar/rupee) down." Currency traders, accustomed to regular RBI intervention, expect the central bank to step in at specific levels. The RBI is widely expected to not allow the rupee to dip below the 83.50 handle. Other Asian currencies were down much more with the Korean won slipping nearly 1% and the Indonesian rupiah and the Thai baht shedding 0.4%. A further upward move in U.S. Treasury yields, attributed to concerns over the demand-supply mismatch, pressured Asian currencies and dented demand for risk assets. The 10-year U.S. Treasury yield has climbed 16 basis points in two days following two weak auctions. Thursday's decline, if it holds up, will be the fourth day of losses for the rupee. U.S. yields, anxiety over the outcome of Indian elections, importers deciding to take a safety-first approach and exit of short (dollar) positions were cited by a currency dealer at a bank as reasons for the rupee's recent decline. Sign up here. https://www.reuters.com/markets/currencies/rupee-aided-by-mild-dollar-offers-public-sector-banks-2024-05-30/

2024-05-30 04:32

A look at the day ahead in European and global markets from Rae Wee The lack of fresh market moving catalysts on Thursday meant that the higher-for-longer rates narrative was here to stay, at least until the next run of economic readings prove otherwise. It seems unlikely, though, that the highly anticipated data dump at the end of the week - from euro zone inflation to the U.S. PCE report - will significantly alter the outlook for global monetary policy, especially since inflation across major economies continues to blow hot and cold. With consumer prices in Germany rising more than forecast, that puts even more focus on the wider bloc's reading on Friday, which will come ahead of the European Central Bank's (ECB) expected rate cut next week. And though a June cut is pretty much a done deal, the lack of clarity from ECB policymakers over how far and fast rates will be lowered thereafter is keeping markets nervous. Still, ahead of Friday's top-tier releases, investors will first have to navigate through Thursday, and market waters are getting increasingly choppy. European shares are in for a rough start after its Asian counterparts were left in a sea of red, with rising global bond yields also denting risk sentiment. The two-year U.S. Treasury yield flirted with the 5% level on Thursday while the 10-year yield also stayed near its strongest level in weeks. U.S. yield spreads over other jurisdictions may not be widening much in the dollar's favour, but they are staying wide enough to ensure the dollar remains investors' currency of choice. Elsewhere in companies news, BHP Group (BHP.AX) New Tab, opens new tab investors welcomed the top global miner's decision to walk away from a $49 billion plan to take over Anglo American (AAL.L) New Tab, opens new tab, which rejected three proposed offers from its bigger rival over the past six weeks. While BHP's Australia-listed shares fell nearly 2% on Thursday, they were in line with its peers. Key developments that could influence markets on Thursday: - Euro zone unemployment rate (April) - Euro zone business climate (May) - Euro zone economic sentiment (May) - Euro zone industrial sentiment (May) - Euro zone services sentiment (May) Sign up here. https://www.reuters.com/markets/europe/global-markets-view-europe-2024-05-30/

2024-05-30 04:27

NEW YORK, May 30 (Reuters) - The dollar fell on Thursday after revised data showed that gross domestic product, the broadest measure of economic activity, grew at slower pace than previously expected in the first quarter. The Commerce Department reported the U.S. economy grew at an 1.3% annualized rate from January through March, down from the advance estimate of 1.6% after downward revisions to consumer spending. The downgrade of first-quarter growth followed recent softness in readings of retail sales and equipment spending, which had contributed to easing bets on Federal Reserve interest rate cuts. "This is definitely something that the Fed was looking for. All of these figures coming in below expectations ... is taking a bit of heat off of the Fed," said Helen Given, FX trader at Monex USA. A two-day, 15-basis point jump above 4.6% for long-term Treasury yields had helped push the dollar to a two-week high on Wednesday by boosting the attractiveness of U.S. debt. The index tracking the U.S. currency against its major peers climbed to 105.18 overnight, the highest since May 14, but was last down 0.37% at 104.74. The release of the Personal Consumption Expenditures price index - the Fed's preferred measure of inflation - on Friday could provide further indications on how the central bank might proceed with interest rate cuts later this year. That readout could "move the needle a little bit more than today's GDP data," said Eugene Epstein, head of structuring for North America at Moneycorp. Expectations for Fed interest rate reductions this year have been pared back amid signs of sticky inflation, most recently with a surprise uptick in consumer sentiment in data on Tuesday. The dollar was down 0.53% against the Japanese yen at 156.805 after hitting a one-month high of 157.72 the previous day. Market players suspect Japan intervened to prop up its currency at the end of April and early May, which may be confirmed by data out on Friday. "Japanese authorities intervened near this level on May 1, and the market now views 158 as a critical point for potential intervention," said Charu Chanana, head of FX strategy at Saxo Bank. The euro was up 0.3% at $1.083 after dropping 0.5% on Wednesday to touch a two-week low of $1.0789 overnight. Sterling rose 0.26% to $1.2734 after also falling 0.5% on Wednesday. Price data for the euro zone is due on Friday, following a stronger-than-expected April inflation reading for Germany on Wednesday. In cryptocurrencies, bitcoin last rose 2.28% to $68,940.33. Sign up here. https://www.reuters.com/markets/currencies/dollar-ascendant-surging-us-yields-spur-demand-safe-havens-2024-05-30/

2024-05-30 02:52

MUMBAI, May 30 (Reuters) - The Indian rupee is poised to fall on Thursday following a further rise in U.S. Treasury yields amid worries over supply, that pushed the dollar index to the highest in two weeks. Non-deliverable forwards indicate rupee will open at 83.36-83.38 to the U.S. dollar, compared to 83.3450 on Wednesday. After touching a high of 83.0250 on Friday, the rupee has fallen for three straight days and logged its worst day in seven weeks on Wednesday. Unwinding of short dollar/rupee positions, higher-than-usual daily demand from importers and broad weakness in Asian currencies spurred the domestic currency's decline, traders said. Playing a range of 83.00-83.50 and buying/selling when near to the top or bottom of this "continues to be a strategy that works well", a forex trader at a bank said. "We will most likely have a new range once the election results are out." India's national election results will be declared next Tuesday. Exit polls are due over the weekend. The 10-year U.S. yield is up 16 basis points over two sessions, largely due to concerns over heavy issuances. Two lacklustre debt auctions has raised doubts about demand for U.S. Treasuries. The 2-year U.S. yield hit the 5% handle in U.S. trading on Wednesday. Futures are pricing in slightly more than one interest rate this year by the Federal Reserve. The higher U.S. yields dampened the appetite for risk assets and boosted the dollar. U.S. equities dropped and futures indicated to more losses. The dollar index was hovering at the highest in two weeks. Asian currencies dropped. The rising U.S. yields will dampen demand for Asian currencies, Lloyd Chan, an analyst at MUFG Bank, noted. Focus turns to the U.S. weekly initial jobless claims for signs of labor market softening, he said. KEY INDICATORS: ** One-month non-deliverable rupee forward at 83.44; onshore one-month forward premium at 6.75 paisa ** Dollar index up at 105.16 ** Brent crude futures at $83.6 per barrel ** Ten-year U.S. note yield at 4.62% ** As per NSDL data, foreign investors bought a net $256.7mln worth of Indian shares on May. 28 ** NSDL data shows foreign investors bought a net $33.6mln worth of Indian bonds on May. 28 Sign up here. https://www.reuters.com/markets/currencies/rupee-seen-extending-declines-higher-us-yields-dollar-2-week-high-2024-05-30/

2024-05-30 00:50

US gasoline and distillate stocks rose last week US fuel demand fell despite holiday weekend US, eurozone inflation data due Friday OPEC+ meets June 2 to discuss supply cuts NEW YORK, May 30 (Reuters) - Oil prices fell for the second consecutive session on Thursday, after the U.S. government reported weak fuel demand in the country and a surprise jump in gasoline and distillate fuel stockpiles. Brent crude futures fell by $1.74, or 2.1% to settle at $81.86 a barrel. U.S. West Texas Intermediate crude futures fell by $1.32, or 1.7%, to $77.91 a barrel. U.S. crude stocks fell more than expected last week as refiners ramped up to their highest utilization rates in over nine months, data from the U.S. Energy Information Administration showed. However, there was a surprise jump in gasoline and distillate fuel inventories as demand weakened even as output rose. "Weakness in gasoline markets have continued to drag down the rest of the oil complex," Alex Hodes, oil analyst at brokerage StoneX, wrote on Thursday. Analysts had expected the U.S. Memorial Day holiday on May 27, the start of the U.S. summer driving season, would boost fuel demand. Yet EIA's measure of gasoline demand slipped about 2% from the prior week to 9.15 million barrels per day. "I was looking for a draw in gasoline, in particular, ahead of the holiday weekend but when refiners are cranking it out, that is too much to drain product inventories," said John Kilduff, partner at Again Capital. "The gasoline demand is still a good number, even though I would have expected that to be up closer to 9.5 (million bpd) going into the last holiday weekend," he said. U.S. gasoline futures fell more than 2% to a 3-month low of $2.40 a gallon, while ultra-low sulfur diesel futures settled at an over 11 month low. Further pressuring oil prices, investors' risk-appetite has been subdued by the prospect of delayed monetary easing in the U.S. and Europe, analysts at financial brokerage ActivTrades said. "Fear trading" is dominating financial markets ahead of Friday's U.S. consumer price index data, they wrote to clients. Oil investors are also cautious ahead of an OPEC+ meeting this weekend. The producer group will decide whether to extend, deepen or unwind supply cuts. Soft fuel demand and rising global oil inventories may help convince OPEC+ producers, which include the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, to maintain supply cuts when they meet on June 2, OPEC+ delegates and analysts say. Sign up here. https://www.reuters.com/business/energy/oil-prices-down-demand-woes-markets-await-us-crude-stockpiles-data-2024-05-30/