2024-05-22 05:54

Fed minutes of May policy meeting due at 1800 GMT Fed officials urge patience on timing on initial rate cut Central bank buying underpins gold demand - analyst May 22 (Reuters) - Gold prices slipped on Wednesday as investors strapped in for minutes from the Federal Reserve's most recent policy meeting for further insights on the timeline for interest rate cuts. Spot gold eased by 0.3% at $2,413.96 per ounce, as of 1127 GMT. Prices had scaled a record high of $2,449.89 on Monday. U.S. gold futures were down 0.3% at $2,417.60. "Gold is just consolidating after its big run up. In the short term, it can potentially not go higher without additional support from dollar with focus on the outlook for rate cuts. But, it has been an incredibly strong market and buy on dip mentality is still there," Ole Hansen, head of commodity strategy at Saxo Bank said. Minutes of the Fed's May policy meeting are due at 1800 GMT. Lately, economic data has pointed towards a downtrend in inflation, but U.S. central bank policymakers said on Tuesday that the Fed should wait several more months to ensure that inflation really is back on track to its 2% target before cutting interest rates. Bullion is known as an inflation hedge, but the opportunity cost of holding this non-interest-bearing asset increases with higher interest rates. "Fundamentally, the outlook remains constructive for gold whilst central bank buying underpins demand," Tim Waterer, chief market analyst at KCM Trade said in a note. "If gold is to make another run in the direction of $2,450, moderate resistance at $2,436 will need to be cleared first." Spot silver fell 0.5% to $31.81 after hitting a more than 11-year high on Monday. "There is quite a lot of focus on silver. It is potentially easier to buy silver because it has not yet reached record levels relative to gold but at the same time, we need to watch the gold-silver ratio," Saxo Bank's Hansen said. Platinum rose by 0.7% to $1,054.22 and palladium dropped 1% to $1,015.08. Sign up here. https://www.reuters.com/markets/commodities/gold-prices-steady-focus-turns-us-fed-minutes-2024-05-22/

2024-05-22 05:22

Fed minutes show disappointment over data Nvidia forecasts revenue above estimates US existing home sales fall short of estimates Oil slips again on worries over softening demand NEW YORK, May 22 (Reuters) - Wall Street ended lower and oil prices fell on Wednesday as investors parsed minutes from the U.S. Federal Reserve's most recent policy meeting. Nvidia Corp's (NVDA.O) New Tab, opens new tab shares rose over 4% in extended trading after the megacap chipmaker forecast quarterly revenue above estimates. All three major U.S. stock indexes turned decisively lower in afternoon trading, extending losses after the Fed released its minutes showing officials were disappointed in recent inflation data and believed "disinflation would likely take longer than previously thought." "'Higher for longer' is the spark for today's pressure on the markets," said Greg Bassuk, CEO at AXS Investments in New York. "The Fed confirmed its worries that it hasn't seen more progress in inflation." "And that, combined with the investor worries of an over inflated market is fueling the jitters on Wall Street," Bassuk added. Mixed quarterly results from retailers Target (TGT.N) New Tab, opens new tab and TJX (TJX.N) New Tab, opens new tab raised questions about the resiliency of the U.S. consumer. Nvidia's upcoming quarterly report could further test the U.S. stocks rally, largely driven by the promise of artificial intelligence technology. Investor sentiment was growing "that Nvidia, the chip sector generally, and the overall market have advanced too high too fast," Bassuk said. "We think the hype around Nvidia is overblown and we think investors would be prudent to look at the stock with a more cautious eye today." Economic data showed U.S. existing home sales were below analyst estimates, while hotter-than-expected core inflation data from Britain prompted investors to shave bets on a Bank of England rate cut next month. British Prime Minister Rishi Sunak called an election for July 4. His governing Conservatives are widely expected to lose to the Labour Party. "Clearly Sunak is hoping that the element of surprise will go in his favour ... but I don't think markets are going to be particularly moved by this," said Jane Foley, head of FX strategy at Rabobank in London. "It doesn't change the fact that the Labour Party is 20 points ahead in the polls." The Dow Jones Industrial Average (.DJI) New Tab, opens new tab fell 201.95 points, or 0.51%, to 39,671.04, the S&P 500 (.SPX) New Tab, opens new tab lost 14.4 points, or 0.27%, to 5,307.01 and the Nasdaq Composite (.IXIC) New Tab, opens new tab dropped 31.08 points, or 0.18%, to 16,801.54. European shares pulled back on the stronger-than-expected British inflation data following a report about possible Chinese tariffs on imported cars. The pan-European STOXX 600 index (.STOXX) New Tab, opens new tab lost 0.34% and MSCI's gauge of stocks across the globe (.MIWD00000PUS) New Tab, opens new tab shed 0.39%. Emerging market stocks rose 0.12%. MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) New Tab, opens new tab closed 0.31% higher, while Japan's Nikkei (.N225) New Tab, opens new tab lost 0.85%. Yields for 10-year Treasury notes edged up from session lows after the release of the Fed minutes. Benchmark 10-year notes last fell 4/32 in price to yield 4.4276%, from 4.414% late on Tuesday. The 30-year bond rose 5/32 in price to yield 4.5443%, from 4.554% late on Tuesday. The dollar advanced against a basket of world currencies. The dollar index (.DXY) New Tab, opens new tab rose 0.26%, with the euro down 0.29% to $1.0823. The Japanese yen weakened 0.39% to 156.78 per dollar, while sterling was last trading at $1.2713, up 0.05% on the day. Crude prices dropped for the third consecutive session on fears that demand would be hit by prolonged restrictive Fed policy. U.S. crude slid 1.39% to settle at $77.57 per barrel, while Brent settled at $81.90 per barrel, down 1.18% on the day. Gold prices plunged, backing down from recent record highs. Spot gold dropped 1.8% to $2,379.22 an ounce. Sign up here. https://www.reuters.com/markets/global-markets-wrapup-1-2024-05-22/

2024-05-22 05:15

NEW YORK, May 22 (Reuters) - The dollar rose against the euro on Wednesday after minutes of the last Fed meeting showed officials acknowledging disappointment over recent inflation readings, while the pound held its gains after British Prime Minister Rishi Sunak called for a general election for July 4. Federal Reserve officials at their last policy meeting indicated they still had faith price pressures would ease, if only slowly, according to the minutes of the U.S. central bank's April 30-May 1 session. "Participants ... noted that they continued to expect that inflation would return to 2% over the medium term," the minutes said, but "the disinflation would likely take longer than previously thought." While the policy response for now would "involve maintaining" the central bank's benchmark policy rate at its current level, the minutes, released on Wednesday, also reflected discussion of possible further hikes. Investors have been shoring up U.S. rate cut bets after a milder inflation reading last week, even as Fed officials have continued to sound a cautious note. Fed Governor Christopher Waller on Tuesday said he would need to see several more months of good inflation data before he would be comfortable supporting rate cuts. That timeline was echoed by Cleveland Fed President Loretta Mester. "The minutes confirmed what most traders were already thinking prior to the U.S. CPI report a week ago," said Amarjit Sahota, director at foreign exchange risk management firm Klarity FX in San Francisco. "That is, FOMC members were becoming increasingly frustrated with the disappointing inflation reading in the first quarter, but felt that policy was restrictive enough," Sahota said. "The inclusion that some officials were willing to tighten policy further has given the USD a further uplift since the minutes were released," he said. While markets remain hopeful that U.S. inflation will continue to cool, personal consumption expenditures data due on May 31 will be a crucial test, analysts said. The euro was down 0.3% at $1.08205. Meanwhile, the pound was 0.1% higher at $1.2717 after Prime Minister Sunak called a national election on Wednesday, naming July 4 as the date for a vote his governing Conservatives are widely expected to lose to the opposition Labour Party after 14 years in power. The pound rose earlier in the session after data that showed UK inflation did not slow as much as expected but neared the BoE's target in April, prompting investors to pull bets on a rate cut next month. British consumer prices rose by 2.3% in annual terms in April, slowing from a 3.2% increase in March. The BoE and economists polled by Reuters had forecast an annual rate of 2.1%. Money markets now see only a 15% chance of a rate cut in June, according to LSEG data. Earlier this week, pricing in derivatives markets suggested traders saw a 55% chance of a first cut coming in June. Jeremy Stretch, head of G10 FX strategy at CIBC Capital Markets in London, said the inflation data-induced rate repricing looked overdone. "We would be mindful of GBP rallies proving to be short-lived, as the immediate move in rate cut expectations appears overdone, not least should tomorrow’s flash service PMI reading reveal signs of consumer fatigue," he said. Elsewhere, the Reserve Bank of New Zealand left its benchmark cash rate at 5.5% as expected, but lifted its forecasts for peak interest rates at its latest monetary policy meeting as inflation stays stubbornly high. It now sees rates peaking at 5.7% at the end of 2024, compared with 5.6% three months ago. The New Zealand dollar jumped as high as $0.6152, its highest since March 14, before giving up the gains to trade little changed on the day at $0.6086. Against the yen, the dollar rose 0.3% to 156.62 after data showed Japan's exports rose 8.3% in April from a year earlier. Fears of currency intervention by Tokyo still had traders on alert after suspected rounds of intervention earlier this month. In cryptocurrencies, ether eased 0.3% to $3,735 after jumping 22% over the previous two sessions on speculation about the outcome of applications for U.S. spot exchange-traded funds that would track the world's second-biggest cryptocurrency. Bitcoin was about flat on the day at $69,605 on Wednesday. Sign up here. https://www.reuters.com/markets/currencies/dollar-consolidates-fed-urges-patience-markets-await-meeting-minutes-2024-05-22/

2024-05-22 05:05

AI theme still a hot topic in Europe Region's need for data centres in focus Utilities could benefit from higher power demand Infotech firms adopting tech stand out LONDON, May 22 (Reuters) - European stock pickers are turning to more established sectors like utilities, professional data providers and even copper miners to tap into the next wave of the AI boom, a year after AI chipmaker Nvidia's (NVDA.O) New Tab, opens new tab emergence as a driving force. Enthusiasm for artificial intelligence helped drive a rally across equity markets in 2023, propelling Nvidia and Dutch semiconductor equipment supplier ASML (ASML.AS) New Tab, opens new tab into the spotlight. Nvidia shares are hovering close to record highs ahead of its quarterly earnings due late on Wednesday. However, some of the sheen has rubbed off Europe's AI-linked megacaps, prompting investors to seek out cheaper alternatives. Stock pickers are now looking at companies and sectors that are likely to be long-term AI beneficiaries. "The first phase of AI was obviously chipmakers like Nvidia. Then you’ve already seen the second wave move to the industrial companies which actually supply the components to the data centres," said Bernie Ahkong, CIO Global Multi-Strategy Alpha at UBS O’Connor. "And now we’re just starting to get the third phase into utility/power firms in the past several weeks." FIRING UP THE DATA CENTRES Data centres, which are essential to the rise of generative AI, need huge amounts of energy and this is expected to surge as demand for the centres accelerates. The International Energy Agency estimates total power consumption from data centres will top 1,000 terawatt hours (TWh) by 2026 - roughly what Japan consumes now - from 460 TWh in 2022. "One of the most interesting ways within Europe to play AI on a multi-year basis actually is via some of these utilities companies," UBS O'Connor's Ahkong said. Demand for data centre space in Europe is also set to outstrip delivery of new stock for the third straight year and AI demand will exacerbate the issue, said Kevin Restivo, who heads European data centre research at real estate services provider CBRE. In the last five weeks, the utilities index (.SX6P) New Tab, opens new tab has risen over 9%, driven largely by expectations for interest rate cuts, versus a 4.7% rise in the main STOXX 600 (.STOXX) New Tab, opens new tab index. But they are still lagging the rest of the market year-to-date, up just 0.2% versus a 9% rise in the benchmark index. Bank of America said in a recent note European utilities bosses are talking about AI, but upside potential from data centres is "anecdotal at best". Even so, the bank says plenty of companies could benefit from a boom in AI-linked power demand, from Fortum (FORTUM.HE) New Tab, opens new tab, Verbund (VERB.VI) New Tab, opens new tab and renewables supplier EDP (EDP.LS) New Tab, opens new tab, to larger players like RWE (RWEG.DE) New Tab, opens new tab, Iberdrola (IBE.MC) New Tab, opens new tab, Enel (ENEI.MI) New Tab, opens new tab and Engie (ENGIE.PA) New Tab, opens new tab. ADOPTERS VERSUS ENABLERS A year ago, investors had been jittery around the disruptive potential of AI for anything from IT services to media, education and consulting. "How I look at AI in the UK, the US has the enablers, we’ve got the adopters," Trevor Green, head of UK equities for Aviva Investors, said. "When investors will get particularly interested is when we can actually quantify this in revenue potential. The providers are rightly still being a bit evasive on this as we are at such an early stage of adoption," he said. He highlighted the London Stock Exchange (LSEG.L) New Tab, opens new tab, information and analytics group RELX (REL.L) New Tab, opens new tab and software group Sage (SGE.L) New Tab, opens new tab as examples of companies that have been working on AI for years. "Now we are properly starting to see revenue-generating opportunities from it," he said. Marcel Stotzel, co-portfolio manager of Fidelity European Fund and Fidelity European Trust, says a lot of the AI hype has been around the big U.S. names behind the technology. In the past year, shares in the likes of OpenAI backer Microsoft (MSFT.O) New Tab, opens new tab and Alphabet's Google (GOOGL.O) New Tab, opens new tab have shot up 33%-41%. Meanwhile, some European companies have been quietly using AI to develop new products that are already benefiting their customers, said Stotzel. "This has resulted in the European-listed beneficiaries trading at more attractive valuations," he said, listing German software company SAP (SAPG.DE) New Tab, opens new tab and Swiss drugmaker Roche (ROG.S) New Tab, opens new tab among those his team are focused on to play the AI theme. Miners are another area of investor interest, particularly for copper , which has hit record highs above $11,000 a metric ton this week, spurred largely by a shortage of material for prompt delivery. Commodity trader Trafigura believes copper demand linked to data centres and AI could add up to one million tons by 2030 and exacerbate supply deficits towards the end of the decade. "The copper boom is also part of the AI craze," Kathleen Brooks, research director at trading platform XTB, said. Sign up here. https://www.reuters.com/markets/europe/europe-stock-pickers-go-old-school-ride-next-wave-ai-2024-05-22/

2024-05-22 04:56

SYDNEY/CANBERRA, May 22 (Reuters) - Australia reported its first human case of avian influenza on Wednesday in a child who authorities said had been infected in India but made a full recovery, while a different highly contagious strain was found on an egg farm. The H5N1 strain of avian flu has swept the globe in recent years, killing billions of farmed and wild birds and spreading to tens of mammal species. Health authorities in Australia's southeastern state of Victoria said contact tracing had not identified any further cases and there was a very low chance of others becoming infected as the flu does not easily spread between people. "This is the first confirmed human case of highly pathogenic avian influenza in Australia," Dr Claire Looker, the state's chief health officer, said in a statement. It was the first instance of detection of the H5N1 strain in a person or animal in the country, she added. "The child experienced a severe infection but is no longer unwell and has made a full recovery." The case in Victoria involves an H5N1 virus, but the strain is not the same as those responsible for outbreaks in the United States, Looker said. A farm worker in Texas tested positive for the virus earlier this year as it spread through the U.S. cattle herd. Australia is the only continent where animals have so far stayed free of the H5N1 avian influenza virus, but authorities on Wednesday said a different strain of highly pathogenic bird flu had been detected at an egg farm near Melbourne. First laboratory tests showed that virus was an as yet unidentified H7 strain that probably came from the wild bird population and had been seen in Australia before, said Graeme Cooke, Victoria's chief veterinary officer. Curbs were imposed on movement around the farm and the birds would be destroyed, he added. "This area does have a high density of poultry businesses, both egg laying and poultry meat," Cooke told Australian Broadcasting Corporation (ABC) radio. "At this stage we can't say whether there'll be any onward spread to other properties. We are now taking measures necessary to stamp it out to remove any onward spread." The outbreak presented no risk to human health, he said. Only a small part of the industry has been affected, said Rowan McMonnies, chief executive of industry body Australian Eggs, adding that farmers would be "working hard to ensure there are eggs on shelves". Chicken producer Inghams Group (ING.AX) New Tab, opens new tab plunged as much as 16% but pared losses to 5.5% by 0701 GMT after it said operations had not been affected. The Australian Chicken Meat Federation (ACMF) said companies had stepped up biosafety measures as a precaution but added, "No discernible impact is expected on chicken meat supplies at the retail level." In 2020, Victoria was the site of an H7N7 outbreak, the most recent of Australia's nine outbreaks of Highly Pathogenic Avian Influenza (HPAI) since 1976. All were quickly reined in and stamped out, the government says. Sign up here. https://www.reuters.com/world/asia-pacific/australia-finds-cases-avian-influenza-virus-farm-near-melbourne-2024-05-22/

2024-05-22 04:55

MUMBAI, May 22 (Reuters) - The Indian rupee rose to its highest in over a month on Tuesday, aided by dollar sales from large foreign banks and a dip in Treasury yields ahead of the release of minutes from the Federal Reserve’s latest policy meeting later in the day. The rupee was at 83.23 against the U.S. dollar as of 10:00 a.m. IST, up 0.09% from its close at 83.3050 in the previous session. The rupee rose to an intra-day peak of 83.2250, its highest since April 10, in early trading. Dollar sales from at least two large foreign banks, most likely on behalf of custodial clients, helped lift the rupee, a foreign exchange trader at a private bank said. "Some long cutting (on USD/INR) has also been seen," which is contributing to the price action, the trader added. The dollar index was steady at 104.6 while most Asian currencies were rangebound. U.S. bond yields slipped with the 10-year Treasury yield down 2 basis points at 4.41%. "In the short term, one can expect the rupee to approach levels of 83.00 to 83.10," Amit Pabari, managing director of FX advisory firm CR Forex said. Meanwhile, in the absence of key economic data in the U.S. this week has put the attention on remarks from Fed policymakers. In recent remarks, officials have urged patience on when the rate cut cycle may kick off. "We're in a period when patience really matters," Boston Fed President Susan Collins said on Tuesday. "I think the data has been very mixed ... and it's going to take longer than I had previously thought." Investors are currently pricing in a near 65% chance of the Fed cutting rates in September, according to CME's FedWatch tool. Sign up here. https://www.reuters.com/markets/currencies/rupee-climbs-over-one-month-high-foreign-banks-dollar-sales-2024-05-22/