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Nov 22 – Gold prices fell below the key USD 2,000 per ounce level on Wednesday as the US dollar rebounded from lows and Treasury yields pared losses, while expectations that the Federal Reserve will pause rate hikes limited the slide in bullion.

Spot gold was down 0.4% at USD 1,991.16 per ounce by 3:05 p.m. ET (2005 GMT) and set for its biggest daily decline since Nov. 10. US gold futures settled 0.4% lower at USD 1,991.30.

“The dollar index has rallied to its daily highs and that’s limiting some buying interest in gold,” said Jim Wyckoff, senior analyst at Kitco Metals, adding that conflicting market forces are making for a steady holiday-type trade.

The dollar index rose 0.3% against its rivals, while Treasury yields pared losses after a strong initial jobless claims data unsettled a market that expects the Federal Reserve to start cutting rates around June as the US economy slows.

Lower interest rates typically boost gold prices as they reduce the opportunity cost of holding non-yielding assets. Bullion scaled a three-week high of USD 2,007.29 in the previous session.

“The increase in the market expectations for the Fed cutting cycle to commence earlier in 2024 has been the prime force driving gold prices higher over the last week,” said Daniel Ghali, commodity strategist at TD Securities.

Fed officials agreed at their last policy meeting that they would proceed “carefully” and only raise interest rates if progress in controlling inflation faltered, minutes of the Oct. 31-Nov. 1 gathering showed.

In other metals, spot silver fell 0.4% to USD 23.66 per ounce. Platinum fell 1.2% to USD 923, while palladium slipped 2% to USD 1,056.91, both eyeing their biggest daily decline since Nov. 10.

(Reporting by Anushree Mukherjee in Bengaluru; Editing by Marguerita Choy and Arun Koyyur)

 

BENGALURU, Nov 22 – Most key global stock indexes are forecast to rise modestly over the coming year, closing 2024 below record highs, while a slim majority of stock market experts polled by Reuters expected their markets to touch new peaks within the next six months.

Much will depend on interest rate expectations now central banks are mostly done with a season of aggressive rate rises since the COVID pandemic to dampen a burst of inflation still not completely under control.

Traders and analysts mostly assume the US Federal Reserve will be cutting interest rates by the middle of next year, an outcome that is far from certain and does not clearly align with policy statements from top central bankers.

Those rate-cut expectations are partly behind the views of a slim majority of survey respondents, 46 of 82, who said most key indexes would reclaim record highs by then.

However, only a handful of the 15 top stock indexes were predicted to trade at record peaks by end-2024, based on a wider Nov. 9-22 poll of more than 120 stock market experts.

“After two straight quarters recommending cash over stocks and bonds, we now expect equities to eke out high single-digit returns in 2024 and outperform core fixed income,” noted Ajay Rajadhyaksha, global chairman of research at Barclays.

“Yes, we expect the economy to grow more slowly next year, in both real and nominal terms…But the downside risks to the world economy have diminished greatly. We think stocks will benefit from a fairly benign bottom to this business cycle.”

A strong majority of respondents, 72 of 85, expected corporate earnings in their local market to increase over the coming six months. The remaining 13 said they would decrease.

Despite high interest rates, cooling global inflation, and with it, economic activity, only a slim majority of respondents, 44 of 80, said value stocks would outperform growth stocks over the next six months.

LOWER BOND YIELDS

For now, markets are pricing in a series of 2024 rate cuts, which is sending bond yields lower and stock prices higher.

US 10-year Treasury note yields breached 5.00% last month for the first time since July 2007 but are not expected to revisit that level according to a separate Reuters poll of bond strategists who were proven wrong on the same call for three straight months.

Lower bond yields will likely be required to further any expected gains in stocks, as they had reached a point where investors had got used to years of paltry yields but now represent good value along with security.

But it is not at all guaranteed that trend will continue, having fallen around 60 basis points on US 10-year yields in the last few weeks alone.

“Falling bond yields are being interpreted by equity markets as a positive in the near-term,” said Marko Kolanovic, chief global markets strategist at J.P. Morgan.

“However, we believe that equities will soon revert back to an unattractive risk-reward as the Fed is set to remain higher for longer, valuations are rich, earnings expectations remain too optimistic, pricing power is waning, profit margins are at risk and the slowdown in topline growth is set to continue.”

The benchmark S&P 500 index was forecast to finish next year at 4,700, only about 3% higher from its Monday close, with a possible US economic slowdown or recession among the biggest risks for the market in 2024.

European equity markets were also expected to eke out modest gains in 2024 as optimism that global interest rates have peaked is offset by worries the economy could fall into a recession.

The pan-European benchmark STOXX 600 index was forecast to rise 4.1% to 475 points by the end of next year, from Monday’s close at 456.26.

Canada’s main stock index was expected to rise less than previously thought over the coming year as a slowdown in the global economy weighs on the outlook for corporate earnings.

Among the indices surveyed Japan’s Nikkei 225 and India’s BSE index were expected to continue their strong performance into the next year with the Nikkei expected to reach a three-decade high of 35,000 by end-June of next year and the BSE forecast to hit new highs in 2024.

(Reporting by Hari Kishan and Indradip Ghosh; Additional reporting and polling by correspondents in Bengaluru, Buenos Aires, London, Mexico City, Milan, New York, San Francisco, Sao Paulo, Tokyo, and Toronto; Editing by Ross Finley and Alex Richardson)

NEW YORK, Nov 22 – Oil prices fell nearly 1% in a volatile session on Wednesday as OPEC+ producers unexpectedly delayed a meeting on production cuts, raising questions about global crude supplies.

Brent futures settled 49 cents lower to USD 81.96 a barrel, after falling more than 4% to a low of USD 78.41 earlier in the session. US West Texas Intermediate crude settled 67 cents lower at USD 77.10, after declining more than 5% to a session low of USD 73.79 earlier in the day.

OPEC+ postponed the meeting, originally scheduled for Nov. 26, to Nov.30, it said in a statement, a surprise development that drove prices sharply lower in early trading. The group was expected to discuss whether to expand oil output cuts.

Prices bounced back after news that the disagreement was related to African countries, which are among the smaller producers in the group, rather than the top oil exporters.

Some traders also pointed to low liquidity ahead of the US Thanksgiving holiday.

The OPEC+ meeting, which includes major producers Saudi Arabia, Russia and other allies and members of the Organization of the Petroleum Exporting Countries, had been expected to consider further changes to a deal that already limits supply into 2024, according to analysts and OPEC+ sources.

The delay stoked concerns that more production could come online from oil producers in the coming months, said Dennis Kissler, senior vice president of trading at BOK Financial.

A rise in inventories also pressured prices lower on Wednesday morning, he said.

US crude oil inventories rose by 8.7 million barrels last week on higher imports, the Energy Information Administration (EIA) said.

The US dollar bounced back from a 2-1/2-month low after economic data showed lower unemployment claims. A rise in the greenback makes dollar-denominated oil more expensive for buyers in other currencies.

Both crude benchmarks have fallen for four straight weeks.

To support prices, OPEC and its allies will need to not only extend, but increase cuts, said John Evans of oil broker PVM in a note.

Earlier this week, an OPEC technical panel invited a top financial market dealer to give a presentation, seen by Reuters, which painted a bearish outlook for the oil market.

Even if the OPEC+ nations extend their cuts into next year, the global oil market will see a slight supply surplus in 2024, the head of the International Energy Agency’s oil markets and industry division said on Tuesday.

(Reporting by Nicole Jao, Paul Carsten, Ahmad Ghaddar, Laura Sanicola, and Colleen Howe; editing by Jason Neely, Marguerita Choy, David Gregorio, and Deepa Babington)

 

NEW YORK, Nov 21 – The S&P 500 will end next year only about 3% higher than its current level, with a possible US economic slowdown or recession among the biggest risks for the market in 2024, according to strategists in a Reuters poll released Tuesday.

The benchmark index will finish next year at 4,700, according to the median forecast of 33 strategists polled by Reuters during the last week and a half. That is 3.4% higher than Monday’s close of 4,547.38.

Nine of 13 strategists who also answered a question on whether US stocks will hit a record high in the coming six months said yes, and most of them said they expect it to happen in the early part of 2024.

Wall Street stocks have rallied strongly in recent weeks, boosted by the view the Federal Reserve is done hiking interest rates and may begin to cut them at some point next year.

Investors cheered benign October inflation data last week as Americans paid less for gasoline. The S&P 500 is up about 18% for 2023 to date.

The Fed earlier in November held rates steady, but, since 2022, the US central bank has hiked its policy rate 525 basis points in an effort to curb inflation.

Worries persist the economy could fall into a recession next year or at least slow.

“We see the economy weakening further into 2024, and, at some point the consumer will break,” said Paul Christopher, head of global investment strategy at Wells Fargo Investment Institute.

But he said the firm thinks the US economy could quickly switch to recovery mode in the second half of the year. WFII sees the S&P 500 ending next year between 4,600 and 4,800.

Markets are anticipating inflation will decelerate and are currently pricing in a greater than 50% chance of a rate cut of at least 25 basis points by May, according to CME’s FedWatch Tool on Monday.

Still, Goldman Sachs’s economic team wrote in a recent note the Fed will hold off cutting rates until the fourth quarter of next year, with stronger-than-expected economic growth helping to forestall a recession.

Geopolitical problems are among other risks to the market heading into 2024, strategists said, with investors closely watching the war between Israel and Hamas militants in Gaza.

Ten of the 13 strategists who responded to a question on the US corporate profit outlook said they expect earnings to grow in the next six months.

Overall S&P 500 earnings growth for 2023 is estimated at 2.3% after a weak first half of the year, according to LSEG data.

Analysts expect earnings to rise 11.2% in 2024 over the previous year.

But valuations have risen with recent market gains. The S&P 500 index’s forward 12-month price-to-earnings ratio is now at 19.1, up from 17 at the end of 2022 and its long-term average of about 16, based on LSEG data.

For some strategists, technology, which is up 52% for the year so far and S&P 500’s best-performing sector, is still a favorite going into 2024.

“The technology revolution continues,” said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York.

Based on the poll, the Dow Jones industrial average will finish next year at 38,000, up about 8% from Monday’s close. The Dow is up 6% so far in 2023.

(Reporting by Caroline Valetkevitch; additional reporting by Chuck Mikolajczak, Sinead Carew and Stephen Culp in New York; Additional polling by Pranoy Krishna, Rahul Trivedi, and Sarupya Ganguly in Bengaluru; Editing by Alexandra Hudson)