2024-05-28 06:11

U.S. PCE data, Fed's inflation gauge, due on Friday Julius Baer lifts 3-month gold price target to $2,450/oz Silver heads for 20% growth in May Platinum on track for 12% gain in May LONDON, May 28 (Reuters) - Gold prices slipped on Tuesday with investors booking profits after a recent rally, amid pressure from the reduced probability of Federal Reserve rate cuts, while the market awaited key U.S. inflation data due later this week. Spot gold fell 0.3% to $2,344.20 per ounce by 1119 GMT, after rising 0.7% on Monday. Bullion fell below its 21-day moving average, which stands at $2,348, but was on track for a fourth consecutive month of growth with a 2.5% gain in May. The spot price hit a record high of $2,449.89 on May 20. "Gold, silver and PGMs (platinum group metals) are subject to some near-term profit-taking after rallies recently," said Amelia Xiao Fu, head of commodity market strategy at Bank of China International. Non-yielding bullion, widely seen as an inflation hedge, took a hit after Fed meeting minutes last week showed that the policy response, for now, would involve maintaining the benchmark rate at its current level, but also reflected discussions of possible further hikes. Traders are pricing in New Tab, opens new tab about a 63% chance of a rate cut by November and await the core personal consumption expenditures price index (PCE), the Fed's preferred inflation gauge, due on Friday. "Nevertheless, gold prices are likely to remain fairly supported by buying-on-dips demand and central bank diversification," Xiao Fu added. Demand from global central banks for gold has been elevated for two years as they diversify their foreign currency reserves. Julius Baer lifted its 3- and 12-month gold price target to $2,450 and $2,550 on Tuesday amid continued central bank gold buying and demand from investors and consumers in Asia. "During the past few months, demand for gold has started to be dominated by Asia, where the willingness to pay for it as a hedge against economic and geopolitical risks seems even higher than what we had expected," said Julius Baer analyst Carsten Menke. Spot silver fell 0.3% to $31.59 after a 4.4% jump on Monday. The metal is heading for 20% growth in May, its largest monthly gain in almost four years. Platinum was down 0.8% at $1,045.96, but was on track for a 12% gain in May, its highest monthly rise since November 2020. Palladium lost 1.5% to $973.49. Sign up here. https://www.reuters.com/markets/commodities/gold-steady-focus-turns-us-inflation-data-2024-05-28/

2024-05-28 06:04

SYDNEY, May 28 (Reuters) - Thousands of residents were ordered to evacuate from the path of a still-active landslide in Papua New Guinea by the government on Tuesday, after parts of a mountain collapsed, burying an initial estimate of more than 2,000 people. Relief teams in the Pacific nation have been trickling into the difficult-to-access northern Enga region since Friday though officials said the odds of finding survivors were slim. Residents said they have been using shovels and bare hands to search for survivors. "The landslide area is very unstable. When we're up there, we're regularly hearing big explosions where the mountain is, there is still rocks and debris coming down," Enga province disaster committee chairperson Sandis Tsaka told Reuters. "The landslide is still active, as people are digging through the rocks, more is still coming down." A state of emergency has been declared across the disaster zone and a neighbouring area, with a combined population of between 4,500 to 8,000, although not all have been ordered to evacuate yet, Tsaka said. Military personnel have set up checkpoints and are helping move residents to evacuation centres, he said. Heavy equipment and aid has been slow to arrive because of the remote location, treacherous terrain and tribal unrest in the area forcing the military to escort the convoys of relief teams. More than 2,000 people were buried in the landslide which occurred early Friday, according to the government. That is sharply higher than the initial estimates by the U.N., which has put the possible deaths at more than 670. Former head of the local government Jiman Yandam estimated the dead at 162. Only five bodies have been recovered so far. The variance in the total number of possible deaths reflects the difficulty in getting an accurate population estimate. The mountainous nation's last credible census was in 2000 and a 2022 voter roll doesn't include those under 18. Tsaka declined to specify the total death toll saying he was not sure how many residents were in the area when the landslide occurred. "From preliminary estimates, we expect it to be a significant number, in the hundreds and it could go beyond but at this point we'd like to be careful with the number," he said. Sign up here. https://www.reuters.com/world/asia-pacific/papua-new-guinea-orders-thousands-evacuate-path-active-landslide-2024-05-28/

2024-05-28 05:32

May 28 (Reuters) - The dollar gained on Tuesday, giving back earlier losses, as benchmark U.S. Treasury yields hit a four-week high following some weak auctions. The Treasury Department saw soft demand for sales of two-year and five-year notes. They came after data showed that U.S. consumer confidence unexpectedly improved in May after deteriorating for three straight months. “The bond market has turned around today and the dollar with it,” said Adam Button, chief currency analyst at ForexLive in Toronto, citing the weak auctions and noting that the improving consumer confidence report reflects “stronger growth.” U.S. economic data was better than expected in the first quarter and so far there are no major signs of deterioration in areas such as the labor market, which some traders are waiting on before taking a more bearish view on the greenback. Concerns that inflation will remain stubbornly above the Fed’s target for longer are also providing some support for the U.S. currency. Tuesday’s data showed that worries about inflation persisted and many households expected higher interest rates over the next year. Minneapolis Federal Reserve Bank President Neel Kashkari said on Tuesday that the U.S. central bank should wait for significant progress on inflation before cutting interest rates and added that the central bank could potentially even hike rates if inflation fails to come down further. Consumer price inflation showing that prices increased less than expected in April briefly boosted hopes that the Fed is closer to cutting rates, but Fed officials have stressed that they want to see several more months of progress before easing policy. “The Fed is in no rush to cut rates,” said Button. He added, “the American economy is uniquely strong. It's tough to bet against the U.S. dollar until the weakness is confirmed.” This week’s main U.S. economic focus will be personal consumption expenditures due on Friday, which is the Fed’s preferred inflation measure. The dollar index was last up 0.03% at 104.59, after earlier dropping to 104.33. The euro gained 0.01% to $1.0859. Sterling weakened 0.05% to $1.276. The European Central Bank's Francois Villeroy de Galhau on Monday confirmed market expectations that, barring major surprises, a first rate cut next week is a done deal. But investors have recently updated their bets on future ECB moves, pricing in less than a cut in every quarter in 2024 and early 2025. German inflation data due on Wednesday and the wider euro zone's reading on Friday will be watched for clues on how soon easing from the central bank could come. The greenback gained 0.18% against the Japanese yen to 157.15 yen. The Bank of Japan's three key measurements of underlying inflation all fell below 2% in April for the first time since August 2022, data showed on Tuesday, heightening uncertainty over the timing of its next interest rate hike. The BOJ will proceed cautiously with inflation-targeting frameworks, Governor Kazuo Ueda said on Monday, noting that some challenges are "uniquely difficult" for Japan after years of ultra-easy monetary policy. In cryptocurrencies, bitcoin fell 2.48% to $67,860.42. Sign up here. https://www.reuters.com/markets/currencies/dollar-ebbs-markets-await-key-global-inflation-reports-2024-05-28/

2024-05-28 05:14

LONDON, May 24 (Reuters) - As Britain prepares for a general election in early July, and polls indicate the opposition Labour party could return to power for the first time in nearly 15 years, market analysts are drawing lessons from recent history to work out what to expect. Prime Minister Rishi Sunak's decision on Wednesday to call a summer election took political pundits, lawmakers and investors by surprise, giving the pound a modest boost, but weighing on utilities as debate about their ownership can end up being a battleground on the campaign trail. Keir Starmer's Labour Party has held a roughly 20-point lead in opinion polls since Sunak took power in late 2022 following the scandal-ridden premiership of Boris Johnson and the upheaval of Liz Truss's 49-day tenure that wreaked havoc in markets - something both party leaders will be at pains to avoid. UK government debt levels cause concern among some investors, while in the stock market, banks, utilities, homebuilders and landlords, defence and energy shares will be in focus. The performance of the pound and the London stock market have also varied in the past, depending on who wins. UK EQUITIES Citi has crunched the numbers and found that UK equities - looking at the FTSE 100 (.FTSE) New Tab, opens new tab and the mid-cap FTSE 250 (.FTMC) New Tab, opens new tab - both tend to be quite flat in the six months after a national election. The mid-cap 250 index, which is more exposed to the domestic British economy, has tended to outperform the more globally focused blue-chip index. During recent government terms as a whole, the FTSE 250 staged its best performance during the Conservative/Liberal Democrat coalition from 2010 to 2015, with a gain of 75%, followed by its performance during the Labour parliament that ran from 1997 to 2001, with a rise of 50%, according to LSEG data. The FTSE 100, meanwhile, has tended to perform worse under a Labour government, with an average gain of just 0.3%, compared with the average 32% rise in the FTSE 250 during Labour terms since 1997. Its strongest showing, like the 250, was under the Con/LibDem coalition, when it rose 32%, followed by its performance under the current Conservative government, with a rise of nearly 15% since December 2019. SOUND AS A POUND The pound always gets twitchy at election time . The currency is the lightning rod for international investor opinion about the UK and whatever key policies the expected next government is promising. Sunak's decision to call the election on July 4 came as a surprise but the political rumour mill and the sterling volatility options market began whirring first thing Wednesday morning as key ministers started cancelling appearances and it became known that foreign minister and former Prime Minister, David Cameron, was suddenly rushing back from an overseas trip. With opposition party Labour enjoying a commanding lead in the polls, traders don't expect too big a spike in volatility from here, but any policy bombshells or sudden wrong moves could trigger some action. SECTORS UNDER SCRUTINY A few sectors will come under close scrutiny. The timing of the election looks to have almost certainly delayed the sale of the government's stake in lender Natwest Group (NWG.L) New Tab, opens new tab to the public and could snarl up other deals in the pipeline. Other key sectors to watch will be housebuilders, as parties jostle for a building bonanza, as well as the water sector as the hot election topic of relentless amounts of raw sewage being dumped into UK rivers and seas means the threat of renationalization of some of the worst-performing and most cash-strapped firms looms large. SPEND... OR DON'T Bond market investors will look very closely at the two parties' spending plans - especially Labour's. UK government bonds, known as gilts, crashed in 2022 when then-PM Truss unveiled plans for large tax cuts that would have caused an already large budget deficit to dramatically widen. The government needs to borrow around 265 billion pounds ($337.27 billion) in international markets in the 2024/25 financial year in the second-largest year for bond sales on record. Bond market stability is paramount. Investors say the similarities in the party's economic plans and Labour's commanding poll leads mean the focus will remain on inflation, Bank of England rate cuts and the U.S. economy as the main drivers for fixed income assets. CREDIT DEFAULT SWAPS Despite all the hand-wringing about empty government coffers and rising debt levels, the credit default swap markets - the place bond investors go to buy insurance against the type of turmoil caused by Truss' disastrous 2022 mini-budget - actually now price the UK as if it had a higher credit rating than it currently does. Five-year CDS on UK sovereign debt currently trade around 24 basis points, according to numbers from S&P Global Market Intelligence. ($1 = 0.7857 pounds) Sign up here. https://www.reuters.com/world/uk/five-uk-market-hotspots-watch-ahead-election-2024-05-24/

2024-05-28 04:34

A look at the day ahead in European and global markets from Tom Westbrook The European Central Bank publishes inflation expectation surveys on Tuesday, which along with policymaker speeches are the highlight of an otherwise quiet calendar. Easing forecasts would reinforce market bets on a rate cut next week, which is priced at a 92% probability. French central bank governor Francois Villeroy de Galhau gave succour to expectations of more cuts, remarking to a German newspaper that policymakers should keep freedom on the timing and pace of future moves. Traders main focus this week is on U.S., European and Japanese inflation statistics due on Friday. Sterling and the New Zealand dollar touched two-month highs as they poked towards the top of recent ranges, while Japanese officials have resumed verbal warnings about the yen's weakness as the currency drifts back towards multi-decade lows. Traders suspect Japan sold in the vicinity of $60 billion to defend the yen late in April and early in May and data due on Friday should reveal the scale of dollar selling in more detail. Japanese corporate services prices rose at their fastest pace since early 2015 in April, data showed on Tuesday, an encouraging sign for sustainable inflation in Japan. Australian retail sales crept higher in April, another sign that miserly household spending will add little to economic growth and may open the door to rate cuts. U.S. markets return from a holiday on Tuesday and move to a shortened settlement cycle, with market participants and regulators on watch for any difficulties. Some dealers say it may draw Asian investors into early-morning currency trade. Key developments that could influence markets on Tuesday: Economics: ECB inflation expectations survey Speeches: Fed's Mester, ECB's Schnabel and Knot Sign up here. https://www.reuters.com/markets/europe/global-markets-view-europe-2024-05-28/

2024-05-28 03:10

MUMBAI, May 28 (Reuters) - The Indian rupee is expected to open little changed on Tuesday, taking direction from speculative and other flows after failing to pierce past an important handle in previous sessions. Non-deliverable forwards indicate rupee will open mostly flat from its previous close of 83.13. The currency had knocked at the psychologically important level of 83 on Friday and Monday, but could not break past it. It's hardly surprising that "taking out 83 is proving difficult," which in a way means "speculators will be at least less inclined" to add more rupee long positions, a forex trader at a bank said. "Having said that, you have the election results looming. That makes what speculators and corporates over the next few days a bit unpredictable." The result of India's national elections is due on June 4. Before that, the exit polls will be released on June 1. Opinion polls releases before the election began had predicted a comfortable victory for Prime Minister Narendra Modi's Bharatiya Janata Party, a positive for the rupee. However, reports of lower turnout and voter fatigue have since fanned doubts about the margin of victory for the BJP, which has prompted foreign investors to take out $2.8 billion from Indian equities this month so far. Meanwhile, broader Asian currencies were mixed while the dollar index was marginally lower. Investors' focus is on the U.S. core personal consumption expenditures price index report, the Federal Reserve's preferred measure of inflation, due on Friday. Sticky U.S. inflation, mostly robust growth data, and comments by Fed policymakers have prompted investors to dial back expectations of rate cuts this year. Futures are pricing in just one-and-a-half rate cuts in 2024. Goldman Sachs last week said it is moving its forecast of the Fed’s first rate cut back one meeting, from July to September. KEY INDICATORS: ** One-month non-deliverable rupee forward at 83.20; onshore one-month forward premium at 7 paisa ** Dollar index down at 104.42 ** Brent crude futures up 0.2% at $83.3 per barrel ** Ten-year U.S. note yield at 4.46% ** As per NSDL data, foreign investors sold a net $112.7 mln worth of Indian shares on May. 24 ** NSDL data shows foreign investors bought a net $78.5 mln worth of Indian bonds on May. 24 Sign up here. https://www.reuters.com/markets/currencies/rupee-eyes-speculative-flows-after-defeat-key-resistance-level-2024-05-28/