Connect with us

Economy

Take Five: Goodbye turbulent H1

Published

on


© Reuters. FILE PHOTO: People ride the escalators in the JP Morgan & Chase Co. building in New York October 24, 2013. REUTERS/Eric Thayer/File Photo

Angst is running high over global recession risks as the year’s mid-point approaches. So economic data and central bank talk will bear watching more than usual, and there’s plenty of that coming up.

The European Central Bank will host a forum in Portugal, while a Chinese business activity survey and a closely followed U.S. inflation indicator will be among the data highlights. And Russia could be confirmed in default on external sovereign bonds for the first time in a century.

Here’s your look at the week ahead in markets from Karin Strohecker, Sujata Rao and Dhara Ranasinghe in London, Ira Iosebashvili in New York and Tom Westbrook in Singapore.

1/ HALF THE PICTURESix months studded with rate rises, market turmoil and a war that fuelled runaway inflation are giving way to another half-year featuring … more of the same.

Still, H2 may contain turning points, above all, peak inflation, which may be nearer than thought as economic growth slows and oil prices fall.

Could recession signals temper central bank hawkishness? Markets expect U.S. rates doubling by year-end to 3.25% to 3.5%, and see euro zone rates rising to 0.75% from -0.5%.

Still, stock markets, firmly in bear territory, may get a respite. History shows equities usually fall in the run-up to inflation peaking, then rally, Goldman Sachs (NYSE:GS) notes.

But that also hinges on company profits. Double digit U.S. and European earnings growth is still projected for 2022.

Finally, watch Japan and Turkey, central bank doves in a forest of hawks. The latter is at risk of triggering a serious crisis.

GRAPHIC: Central bank rate hikes in developed economies (https://fingfx.thomsonreuters.com/gfx/mkt/zdvxoeqgqpx/THEME2306.PNG)

2/ HEAD FOR THE MOUNTAINS

The Fed has Jackson Hole, but the ECB has Sintra, its very own central bank forum in the foothills of Portugal’s Sintra Mountains.

The three-day shindig, starting Monday, will be especially interesting, given the biggest inflation surge in decades and worries of an imminent global economic recession.

So, listen even more closely than usual to what ECB chief Christine Lagarde, Fed Chair Jerome Powell and Bank of England Governor Andrew Bailey say at the forum. ECB comments will also be scoured for any insight on a planned anti-fragmentation tool.

Separately, Friday, July 1, will bring latest euro area inflation readings, which in turn could determine whether the ECB will deliver bigger interest rate hikes after a quarter-point move flagged for July.

GRAPHIC: UK US EZ CPI (https://fingfx.thomsonreuters.com/gfx/mkt/lgpdwboqlvo/UK%20US%20Euro%20CPI.PNG)

3/ FLARING TENSIONS

Four months into the war, tensions between Moscow and the West are ratcheting up again. EU leaders formally accepted Ukraine as a candidate to join the bloc, a bold geopolitical move triggered by Russia’s invasion of Ukraine.

Meanwhile, Russian gas flows to Europe via Ukraine and the Nord Stream 1 pipeline have fallen, after the invasion and Europe’s moves to impose sanctions on Moscow. A dozen EU countries are affected and Germany has triggered the “alarm stage” of its emergency gas plan.

Adding to concerns is a standoff over the Russian enclave of Kaliningrad, sparking fresh warnings from Moscow towards Baltic EU member states.

And Russia could slip into sovereign default territory as the grace period for an interest payment on its international bonds runs out, possibly heralding the country’s biggest external default in more than a century.

GRAPHIC: Timeline of key Western sanctions on Russian bond markets (https://fingfx.thomsonreuters.com/gfx/mkt/zdpxoeqwnvx/Pasted%20image%201655988897028.png)

4/ DATA, THERE’S PLENTY

Fed chief Powell says the central bank is not trying to engineer a recession but is committed to containing price pressures even at the risk of a downturn.

A raft of upcoming data should show how the U.S. economy is responding to an aggressive Fed, which has delivered 150 basis points worth of tightening this year, including this month’s 75 bps move.

Highlights include Tuesday’s June consumer confidence index, which analysts polled by Reuters expect to fall to 100 from 106.4 in May.

Monday’s pending home sales and Tuesday’s Case-Shiller home price index should show how much rising mortgage rates are biting, while the May personal consumption expenditures price index – an inflation indicator watched by the Fed – is due on Thursday.

GRAPHIC: Consumer confidence (https://fingfx.thomsonreuters.com/gfx/mkt/gkvlgebwbpb/Pasted%20image%201655938810148.png)

5/ FLASH IN THE PAN

China’s June factory activity figures on Thursday could offer a glimmer of hope to downbeat financial markets.

Zero COVID lockdowns and a slowing global economy are knocking the wind out of commodities, pushing the growth-bellwether copper price almost 10% lower in two weeks in Shanghai.

Iron ore too is on the skids and the red-dust miners in Australia have given up the year’s gains, dragging on the benchmark stock index there.

That gloom might take some piercing. But lockdowns have eased and if the data shows economic momentum carrying output into growth territory, it would be a welcome signal for the economy and for those who see Chinese stocks as a haven from the stagflation fears gripping the West.

GRAPHIC: Commodities tumble as China’s recovery path lengthens (https://fingfx.thomsonreuters.com/gfx/mkt/gkplgebqdvb/Pasted%20image%201655971895821.png)

Economy

Futures rise as easing China COVID curbs lift travel, leisure stocks

Published

on


© Reuters. A trader works on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., June 22, 2022. REUTERS/Brendan McDermid

By Shreyashi Sanyal

(Reuters) – Travel and leisure shares propped up U.S. stock index futures after China relaxed some COVID-19 quarantine requirements for international travelers, raising hopes of a revival in global growth.

Airlines, cruises, casinos and hotels were among the gainers in premarket trading after China’s slashing of the quarantine time for inbound travelers by half boosted hopes of a big jump in international travel and spending.

Shares of Walt Disney (NYSE:DIS) Inc rose 2.5% to top the list of gainers on the Dow Jones Industrial Average, after the company’s Shanghai Disney Resort said it would reopen the Disneyland theme park on June 30 after being shut for more than three months.

Spirit Airlines (NYSE:SAVE) and American Airlines (NASDAQ:AAL) Group Inc were the biggest gainers in the sector, rising 4% and 2% respectively.

Melco Resorts jumped 10% and led the rise in the casino sector, closely followed by Wynn Resorts (NASDAQ:WYNN), MGM Resorts (NYSE:MGM) International.

Wall Street’s main indexes started the week on soft footing after worries of surging inflation and an aggressive Federal Reserve dominated sentiment amid few market moving catalysts till the start of earnings season in two weeks.

Investors are now looking at data to determine whether the economy can withstand large interest rate hikes by the U.S. central bank to stamp out inflation.

A survey from the Conference Board is expected to show its consumer confidence index slipped to a reading of 100.4 in June, from 106.4 in May, at 10 a.m. ET.

The S&P 500 and the Nasdaq are set to post losses in June and are on course to log two straight quarterly declines for the first time since 2015.

At 6:49 a.m. ET, Dow e-minis were up 175 points, or 0.56%, S&P 500 e-minis were up 20 points, or 0.51%, and Nasdaq 100 e-minis were up 52.25 points, or 0.43%.

Nike Inc (NYSE:NKE) shed 2.8% as it forecast first-quarter revenue below estimates on expectations of more discounts and pandemic-related disruptions in China, its most profitable market.

Occidental Petroleum Corp (NYSE:OXY) climbed 3.1% after top investor Warren Buffett raised stake in the shale producer.

China ADRs also rose on Beijing easing its COVID curbs, with e-commerce firms Alibaba (NYSE:BABA).com, JD (NASDAQ:JD).com and Pinduoduo (NASDAQ:PDD) up between 1.2% and 1.4%

Continue Reading

Economy

Euro below $1.06 as Lagarde keeps July policy options open

Published

on


© Reuters. A shopper pays with a ten Euro bank note at a local market in Nice, France, June 7, 2022. REUTERS/Eric Gaillard

By Saikat Chatterjee

LONDON (Reuters) – The Aussie and the Canadian dollar climbed on Tuesday on firmer oil prices while the euro held below $1.06 as European Central Bank (ECB) President Christine Lagarde offered no fresh insight on the central bank’s policy outlook.

The ECB is widely expected to follow its global peers by raising interest rates in July to check soaring inflation though economists are divided on the magnitude of the rate hike to protect a struggling economic recovery due to high oil prices.

Oil prices are up 10% in barely a week on supply constraint concerns with Brent crude holding above $117, pushing the Canadian dollar and the Australian dollar up 0.3% and 0.4% respectively. [O/R]

“Oil is helping the Norwegian crown and the Canadian dollar to outperform and the euro is again running into resistance at the 1.06 level,” said Kenneth Broux, an FX strategist at Societe Generale (OTC:SCGLY) in London.

The euro held below $1.06 after the ECB’s Lagarde said the central bank would move gradually but with the option to act decisively on any deterioration in medium-term inflation, especially if there were signs of a de-anchoring of inflation expectations.

Money markets are pricing in about 238 basis points (bps) of cumulative rate hikes by mid-2023 compared to around 280 bps two weeks ago.

Broader currency market moves were contained in a big week for markets in economic data terms. German inflation figures are due on Wednesday, French data on Thursday and euro zone numbers on Friday.

At the other end of the dial, higher oil prices caused the partially convertible Indian rupee to open at a record low, and fall further to 78.67 per dollar.

The U.S. dollar index struck a two-decade high of 105.79 this month and was last steady at 103.93.

Elsewhere, the offshore Chinese yuan moved higher after China reduced COVID quarantine for international travellers.

Continue Reading

Economy

China’s economy recovering but foundation not solid, premier says

Published

on


© Reuters. FILE PHOTO: Chinese Premier Li Keqiang is seen on a screen as he attends a news conference via video link after the closing session of the National People’s Congress (NPC) in Beijing, China March 11, 2022. REUTERS/Ryan Woo

BEIJING (Reuters) -China’s economy has recovered to some extent, but its foundation is not solid, state media on Tuesday quoted Premier Li Keqiang as saying.

China will strive to drive the economy back onto a normal track and bring down the jobless rate as soon as possible, Li was quoted as saying.

“Currently, the implementation of the policy package to stabilise the economy is accelerating and taking effect. The economy has recovered on the whole, but the foundation is not yet solid,” Li was quoted as saying.

“The task of stabilising employment remains arduous.”

China’s economy showed signs of recovery in May after slumping the previous month as industrial production revived, but consumption remained weak and underlined the challenge for policymakers amid the persistent drag from strict COVID-19 curbs.

China’s nationwide survey-based jobless rate fell to 5.9% in May from 6.1% in April, still above the government’s 2022 target of below 5.5%.

In particular, the surveyed jobless rate in 31 major cities picked up to 6.9%, the highest on record. Some economists expect employment to worsen before it gets better, with a record number of graduates entering the workforce in summer.

Li vowed to achieve reasonable economic growth in the second quarter, although some private-sector economists expect the economy to shrink in the April-June quarter from a year earlier, compared with the first quarter’s 4.8% growth.

Continue Reading

News

Cryptocurrency15 hours ago

Dogecoin price could rally 20% in July with this bullish reversal pattern

Dogecoin price could rally 20% in July with this bullish reversal pattern Dogecoin (DOGE) looks ready to extend its rebound...

Stock Markets15 hours ago

Easing chip shortages to help Volkswagen in H2 – CEO

© Reuters. FILE PHOTO: Volkswagen logo is pictured at the 2022 New York International Auto Show, in Manhattan, New York...

Economy15 hours ago

Futures rise as easing China COVID curbs lift travel, leisure stocks

© Reuters. A trader works on the floor of the New York Stock Exchange (NYSE) in New York City, U.S.,...

Economy15 hours ago

Euro below $1.06 as Lagarde keeps July policy options open

© Reuters. A shopper pays with a ten Euro bank note at a local market in Nice, France, June 7,...

Economy15 hours ago

China’s economy recovering but foundation not solid, premier says

© Reuters. FILE PHOTO: Chinese Premier Li Keqiang is seen on a screen as he attends a news conference via...

Cryptocurrency15 hours ago

3 charts showing this Bitcoin price drop is unlike summer 2021

3 charts showing this Bitcoin price drop is unlike summer 2021 Bitcoin (BTC) bear markets come in many shapes and...

Stock Markets15 hours ago

Reliance Chairman Mukesh Ambani steps down as director of telecom arm

© Reuters. FILE PHOTO: Mukesh Ambani, Chairman and Managing Director of Reliance Industries, arrives to address the company’s annual general...

Stock Markets15 hours ago

UBS Downgrades Ebay, Farfetch to Neutral on Guidance Risks

© Reuters. UBS Downgrades Ebay (EBAY), Farfetch (FTCH) to Neutral on Guidance Risks By Senad Karaahmetovic UBS analyst Kunal Madhukar...

Stock Markets16 hours ago

Bank of America Clients are Selling This Rally

© Reuters. Bank of America Clients are Selling This Rally By Senad Karaahmetovic Bank of America strategist Jill Carey Hall...

Stock Markets16 hours ago

Michelin to hand over Russian operations to local management

© Reuters. FILE PHOTO: The logo of French tyre maker Michelin is seen on tyre of a Formula E racing...

World16 hours ago

U.S. Capitol riot panel promises new evidence at surprise Tuesday hearing

2/2 © Reuters. FILE PHOTO: A video of former U.S President Donald Trump speaking is shown on a screen during...

Economy16 hours ago

Stocks, oil higher as China relaxes quarantine rules

2/2 © Reuters. FILE PHOTO: A man wearing a protective mask, amid the coronavirus disease (COVID-19) outbreak, walks past an...

Cryptocurrency16 hours ago

FTM Begins to Retest Previous Highs As Correction May Be Over

FTM Begins to Retest Previous Highs As Correction May Be Over Fantom (FTM) seems to be retesting previous highs. FTM...

Stock Markets16 hours ago

White House says companies investing $700 million to boost EV charger production

2/2 © Reuters. FILE PHOTO: A electric vehicle charger is seen as a vehicle charges in Manhattan, New York, U.S.,...

Cryptocurrency16 hours ago

SEC Chief Gary Gensler Labels Bitcoin a Commodity, but Other Cryptos Securities

The U.S. regulator has determined: bitcoin is a commodity. Other cryptocurrencies can be securities SEC Chair Gary Gensler reiterated that...

Stock Markets16 hours ago

Explainer-Why the survival of Scandinavian airline SAS hinges on Denmark

© Reuters. FILE PHOTO: A Scandinavian Airlines (SAS) plane is refuelled at Oslo Gardermoen airport, Norway, November 7, 2019. REUTERS/Lefteris...

Forex16 hours ago

Lira Weakens as Corporates Keep Buying Dollars Despite New Rule

© Bloomberg. An electronic board displays exchange rates information at a currency exchange bureau in Istanbul, Turkey, on Friday, June...

Stock Markets16 hours ago

Russia fines foreign firms for alleged data storage violations

© Reuters. FILE PHOTO: Attendees walk past a Twitch logo painted on stairs during opening day of E3, the annual...

Stock Markets16 hours ago

Siemens to invest in Volkswagen’s N.American charging network

© Reuters. A electric vehicle charger is seen as a vehicle charges in Manhattan, New York, U.S., December 7, 2021....

Commodities16 hours ago

Why Russian oil and gas price cap is easier said than done

© Reuters. FILE PHOTO: Model of petrol pump is seen in front of EU and Russian flag colors in this...

Stock Markets16 hours ago

FTX-Robinhood Rumors: Piper Sandler Sees ‘Win-win’ Situation, Others Less Optimistic

© Reuters FTX-Robinhood Rumors: Piper Sandler Sees a ‘Win-win’ Situation, Others Less Optimistic By Senad Karaahmetovic   Robinhood (NASDAQ:HOOD) shares...

Stock Markets16 hours ago

Lufthansa CEO apologises for summer travel chaos

© Reuters. FILE PHOTO: CEO of German air carrier Lufthansa Carsten Spohr delivers a speech at the ILA Berlin Air...

Commodities16 hours ago

G7 agrees to explore cap on Russian oil price – communique

2/2 © Reuters. FILE PHOTO: Yang Mei Hu oil products tanker owned by COSCO Shipping gets moored at the crude...

Cryptocurrency16 hours ago

Uzbekistan warms up to Bitcoin mining, but there’s a catch

Uzbekistan releases requirements for miners Uzbekistan’s National Advanced Projects Agency (NAPP) has required miners to register and use solar power...

Cryptocurrency16 hours ago

Ethereum’s Price Action Suggests Better Upside Potential

Ethereum’s Price Action Suggests Better Upside Potential At the moment, ETH’s price is closer to a bottom than a new...

Stock Markets16 hours ago

From Peru to Uganda, activists call on Deutsche Bank to drop fossil finance

4/4 © Reuters. Ankuash Mitiap Kapuchak and Shapiom Noningo Sesen, indigenous leaders from Peru and Ricardo Perez of the environmental...

Politics17 hours ago

Factbox-Four key races in Illinois, Colorado midterm primaries

© Reuters. FILE PHOTO: An American flag flies outside of the U.S. Capitol dome in Washington, U.S., January 15, 2020....

World17 hours ago

Rescuers dig for survivors after Russian missiles demolish Ukrainian shopping mall

6/6 © Reuters. Rescuers work at a site of a shopping mall hit by a Russian missile strike, as Russia’s...

Stock Markets17 hours ago

Renault teams up with Atos on data gathering

© Reuters. FILE PHOTO: The Renault logo on the Renault Scenic Vision concept-car is seen at its exhibition space, at...

Cryptocurrency17 hours ago

Cardano Has Highest Development Activities in 30 Days: Report

Cardano Has Highest Development Activities in 30 Days: Report Sanbase reports a list of the top 10 coins with the...

Trending