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Stocks set to snap 9-week winning streak on interest rate rethink

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Stocks set to snap 9-week winning streak on interest rate rethink
© Reuters. A man is reflected on an electric stock quotation board outside a brokerage in Tokyo, Japan April 18, 2023. REUTERS/Issei Kato/File Photo

By Naomi Rovnick and Kevin Buckland

LONDON/TOKYO (Reuters) -Global equities were on track to snap a nine-week winning streak, while the dollar was poised for its strongest weekly advance since mid-May, as bets on aggressive central bank rate cuts were rolled back.

MSCI’s broadest index of global stocks was flat on the day, but heading for a 1.78% decline this week.

Europe’s index sank 0.8%, Asia-Pacific shares outside Japan dropped 0.5% and government bond yields rose as prices of the interest rate-sensitive debt securities fell.

The moves came as Euro zone inflation data on Friday showed prices in the currency bloc rose 2.9% year-on-year in December, up from 2.4% in November, easing pressure on the European Central Bank to start cutting borrowing costs from record highs.

Caution was also rising ahead of the keenly watched U.S. monthly non-farm payrolls figures later in the day.

Global markets rallied hard at the end of last year as traders priced in about six rate cuts for 2024 by the U.S. Federal Reserve and significant monetary easing by the ECB.

“A weak opening to equity markets in 2024 suggests that investors are experiencing a hangover after December’s exuberance, waking up to the reality that the optimistic upturn may have been too much too soon,” said Lewis Grant, senior portfolio manager for global equities at Federated Hermes (NYSE:) Limited.

Traders on Friday saw little better than 2-in-3 odds that the Fed would start cutting its funds rate from a 22 year high of 5.25% to 5.5% as soon as March, down from a 71% chance priced in a week ago, according to the CME Group’s (NASDAQ:) Fedwatch tool.

Fed chair Jay Powell “is only going to go as far as the data is going to let him go, so the question about pricing is whether the six rate cuts that were priced in were too many,” added Joe Kalish, chief global strategist at Ned Davis Research.

“They may be too many or not enough, but that will all depend on the data.”

Overnight, Wall Street’s retreated 0.34%, taking its losses this week to 1.7%, setting up its first weekly decline since late October. Futures pointed to a further 0.2% drop at the reopen.

The , which measures the currency against a basket of six major peers, added 0.3% to 102.73. For the week, it is up 1.35%.

The , which tracks expectations of long-term borrowing costs and rises as the price of the debt security falls, climbed 4 basis points (bps) to 4.034%. This key debt yield has risen almost 18 bps this week.

Germany’s 10-year bund yield rose 6 bps to 2.16% on Friday, up 13 bps over the week.

In Asia, bucked the downtrend for global equities, bouncing 0.3% on Friday as exporters got a boost from a weaker yen. The dollar rose 0.4% to 145.2 yen.

A deadly New Year’s Day earthquake on Japan’s sea coast has also forced wagers for the ultra-dovish Bank of Japan to tighten monetary policy this month off the table.

“The Bank of Japan’s continued reluctance to give a timetable for normalisation is running up against the Fed’s push-back on the aggressive rate-cut path the market was pricing in a week ago,” said James Kniveton, senior corporate forex dealer at Convera.

“That has seen the dollar climb against the yen as the interest rate differentials reassert themselves.”

Elsewhere, gold slipped 0.3% $2,037 per ounce, on track for a 1.3% weekly slide.

Oil markets remained volatile on Friday as expectations of weak demand from China clashed with concerns about Red Sea supply disruptions following attacks on ships by Yemen’s Iran-backed Houthis. futures were up 0.9% at $78.28 per barrel, after settling down 0.8% overnight. [O/R]

For the week, the global oil benchmark is up 1.6%

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Palestinians say Israeli strike killed 22 in shelter, army says militants hit

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By Dawoud Abu Alkas and Nidal al-Mughrabi

GAZA/CAIRO (Reuters) -Palestinians said an Israeli strike killed at least 22 people in a school sheltering displaced people in southern Gaza City on Saturday, while the Israeli military said the attack targeted a command centre of militant group Hamas.

The Gaza health ministry said most of those killed were women and children. The Hamas-run government media office said 13 children and six women were among the dead.

The military said it hit a Hamas command centre embedded in the compound that previously served as a school, repeating an accusation that the group uses civilian facilities for military purposes. Hamas denies that.

Reuters footage from the site showed blasted walls, wrecked and burnt furniture, and holes in the ceiling of one room as people tried to salvage what they could of belongings.

“The women and their children were sitting in the playground of the school, the kids were playing, and suddenly two rockets hit them,” said one witness Said Al-Malahi.

Some of the dead were wrapped in blankets and carried away on donkey carts, as ambulances transferred other bodies.

“I couldn’t take it, I did not see a single man that is injured, it was all women and children, let the Arab countries rejoice, let them rejoice and clap for (Israeli Prime Minister Benjamin) Netanyahu and the United States of America,” said another eyewitness, Ahmed Azzam, bitter that regional neighbours were not taking a tougher line against Israel.

MEDICS KILLED

In Rafah, in the southern Gaza Strip, the Gaza health ministry said four health workers were killed by an Israeli strike that hit ministry warehouses. Ambulance crews could not reach the dead or treat the wounded, it added.

In a statement, the Israeli military said forces, operating in Rafah since May, have killed dozens of militants in recent weeks and dismantled military infrastructure and tunnel shafts.

Israel’s demand to keep control of the southern border line between Rafah and Egypt has been a major sticking point in international efforts to conclude a ceasefire deal.

Hamas says it is focused on an agreement to end the war and get Israeli forces out of Gaza, while Israel says the war can only end once Hamas is eradicated. Another sticking point has been the specifics of an exchange of Israeli hostages for Palestinian prisoners held by Israel.

© Reuters. Palestinians inspect a school, which was sheltering displaced people, after it was hit by an Israeli strike, amid the Israel-Hamas conflict, in Gaza City, September 21, 2024. REUTERS/Dawoud Abu Alkas

This war in the decades-old Israeli-Palestinian conflict was triggered on Oct. 7 when Hamas attacked Israel, killing 1,200 people and taking about 250 hostages, according to Israeli tallies.

Israel’s subsequent assault on the enclave has killed more than 41,000 Palestinians, according to the local health ministry, and displaced nearly the entire 2.3 million-strong population.

(Reporting and writing by Nidal al-Mughrabi; Additional reporting by Dawoud Abu Alkas in Gaza, Adam Makary in Cairo and Ali Sawafta in Ramallah; Editing by Andrew Heavens and Andrew Cawthorne)

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Trump to visit North Carolina as scandal swirls around Republican ally

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By James Oliphant

(Reuters) – Republican presidential candidate Donald Trump will not be joined by his party’s embattled pick for North Carolina governor when he visits the critical electoral state on Saturday, the Trump campaign said.

Trump previously endorsed Mark Robinson, who was the subject of an explosive CNN report this week that he once called himself a Black Nazi and proposed bringing back slavery in comments posted on a pornography website. 

Robinson, the state’s lieutenant governor, denied the allegations and has said he will remain in the governor’s race. His campaign could not be reached for comment.

Some Republicans fear his candidacy in one of the country’s highest-profile down-ballot races this year could damage Trump’s chances in the battleground state, where polls show Trump essentially tied with Democratic rival Kamala Harris ahead of the Nov. 5 election.

Ahead of Trump’s afternoon rally in Wilmington, North Carolina on Saturday, the Democratic National Committee launched new advertising across the cities of Raleigh, Charlotte and Greensboro tying the former president to Robinson. 

The billboard ads show a photo of the two men together, along with direct quotes from Trump previously calling Robinson an “outstanding person” and an “incredible gentleman.” 

The Harris campaign also began running a TV ad in the state on Friday featuring Trump’s past praise for Robinson.  

In March, Trump called Robinson “Martin Luther King on steroids” after Robinson delivered remarks in Greensboro, and Robinson appeared at a Trump event as recently as last month. Robinson would be the state’s first Black governor if elected.  

Robinson has a history of inflammatory rhetoric, at times referring to Muslims as “invaders” and calling gay and transgender people “filth.” He has made comments denying the Holocaust. 

Trump has yet to address the latest allegations against Robinson. One Trump adviser, who asked not to be named, said Trump should stay silent and not fan the controversy.

“Ignore it, and let it die,” the adviser said.

Trump’s campaign did not respond to a request for comment.

Harris’ campaign and its allies have made a significant investment in North Carolina, including two stops by the vice president last week. A Democratic presidential candidate has not won the state since 2008, but voters elected Democrat Roy Cooper as governor in 2016 and 2020. 

Robinson had been trailing his opponent, Democrat Josh Stein, even before the CNN report, suggesting that he could be a drag on Trump’s chances in the state if some disaffected Republicans stay home on Election Day or defect to Harris. 

Chris Cooper, a professor of political science at Western Carolina University, said in a state that Trump won by just 1.3 percentage points in 2020, the Robinson scandal could damage Republicans’ chances up and down the ballot in November, including Trump’s. 

“If some people feel that the Republican brand is stained enough that they’d rather stay home, then that’s going to matter,” Cooper said. “It doesn’t take a big difference to flip the state.”

© Reuters. A Secret Service officer stands next to bulletproof glass on a stand from which Republican presidential nominee and former U.S. President Donald Trump will hold his campaign rally in Wilmington, North Carolina, U.S., September 21, 2024.  REUTERS/Carlos Barria

Thom Tillis, a Republican U.S. senator from North Carolina, responded to the allegations against Robinson by telling voters on X that “we must focus on the races we can win,” citing the presidential contest but omitting the gubernatorial vote.

“If Harris takes NC, she takes the White House,” Tillis wrote. “We can’t let that happen.” 

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GM to begin laying off about 1,700 workers at Kansas plant, WARN notice shows

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(Reuters) – General Motors (NYSE:) will begin laying off 1,695 workers at its Fairfax Assembly plant in Kansas, the company said in a Worker Adjustment and Retraining Notification (WARN) notice earlier this week.

The first of two rounds of layoffs will begin Nov. 18 and will include the temporary layoff of 686 full-time workers and the termination of 250 temporary employees, Automotive News reported on Saturday citing a company filing to the state of Kansas.

Starting Jan. 12, 759 full-time workers will be temporarily laid off, the report added.

GM did not immediately respond to a Reuters request for comment on the details of the latest layoffs.

© Reuters. FILE PHOTO: The new GM logo is seen on the facade of the General Motors headquarters in Detroit, Michigan, U.S., March 16, 2021. .  REUTERS/Rebecca Cook/File Photo

Earlier in May, GM had said that it would pause production of the Cadillac XT4 after January 2025 in Kansas, resulting in layoffs of production employees until production resumes in late 2025 for both the Bolt EV and XT4 on the same assembly line.

The company had also said in August that it was laying off more than 1,000 salaried employees at its software and service units worldwide.

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