Stocks rise as dollar falls, gold rallies on Fed commentary

NEW YORK/LONDON, Nov 28 – MSCI’s global stock index advanced on Tuesday while the dollar fell as a Federal Reserve official signaled that the US central bank was done raising rates and could even consider rate cuts if inflation keeps easing.

The US dollar index hit a 3-1/2 month low and was on track for its biggest monthly drop in a year as investors took the view that growth in the world’s largest economy is starting to slow down, with the market starting to price in a rate cut by the first half of the year.

Fed Governor Christopher Waller bolstered these bets by flagging the possibility of lowering the Fed policy rate in the months ahead if inflation continues to come down. Waller also said he was “increasingly confident” the current interest rate setting would prove adequate to lower inflation to the Fed’s 2% target.

Another Fed governor, Michelle Bowman, said the central bank will likely need to raise borrowing costs further in order to bring inflation back down to its target.

Traders appeared to take their cues from Waller with increased bets for the first rate cut taking place as soon as March with the probability for a 25 basis-point cut last at nearly 33%, up from 21.5% on Monday, according to the latest data from CME Group’s Fedwatch tool. The majority expected a cut of at least one notch in May, according to CME data.

The market saw Waller’s comments as the first sign the Fed “recognizes they might be able to cut rates next year” while other officials “took some of the euphoria” away, according to Anthony Saglimbene, Ameriprise chief market strategist.

And Saglimbene said, “It’s normal you’ll see stocks consolidate in the last few days of a really strong month. … For the rest of the year, momentum is biased to the upside.”

While trading in stocks was choppy, Wall Street indexes managed to close higher. The Dow Jones Industrial Average rose 83.51 points, or 0.24%, to 35,416.98, the S&P 500 .SPX gained 4.46 points, or 0.10%, to 4,554.89 and the Nasdaq Composite .IXIC added 40.73 points, or 0.29%, to 14,281.76.

MSCI’s gauge of stocks across the globe gained 0.27%.

Also on Tuesday, a survey showed US consumer confidence rose in November after three months of declines, though households still anticipated a recession over the next year.

Later this week the spotlight will be on the US October personal consumption expenditures report (PCE), which includes core PCE, which is the Fed’s preferred measure of inflation. Also, euro zone consumer inflation figures should give further clarity on where prices and monetary policy are headed there.

After the Fed commentary, US Treasury yields dipped with benchmark 10-year notes down 6 basis points to 4.328%, from 4.388% late on Monday.

In currencies, the dollar index =USD fell 0.368%, with the euro up 0.32% to USD 1.0988.

The Japanese yen strengthened 0.82% versus the greenback at 147.47 per dollar, while Sterling was last trading at USD 1.2694, up 0.55% on the day.

With some encouragement from the weaker dollar, spot gold prices were up 1.4% at USD 2,040.79 an ounce after hitting their highest level since May in their fourth consecutive gain.

Oil prices settled higher on Tuesday on the possibility that OPEC+ will extend or deepen supply cuts, a storm-related drop in Kazakh oil output and the weaker US dollar.

US crude settled up 2.07% at USD 76.41 per barrel and Brent settled at USD 81.68, up 2.13% on the day.

(Additional reporting by Sinéad Carew, Gertrude Chavez-Dreyfuss, and Chuck Mikolajczak in New York, Amanda Cooper in London, Ankur Banerjee; Editing by Frances Kerry, Will Dunham, Marguerita Choy, and Chizu Nomiyama)

Financial conditions loosen again

Nov 29 – Interest rate decisions and guidance from New Zealand and Thailand, and inflation figures from Australia will be the main events for Asian markets on Wednesday, as a curiously directionless week for risk assets reaches the midway point.

While emerging markets and Asian equities clocked up decent gains on Tuesday, Wall Street struggled to make much headway despite a seemingly constructive market and economic backdrop.

The dollar, Treasury yields, and stock market volatility all fell, and US consumer confidence was higher than expected. Fed Governor Christopher Waller – thought to be close to Fed Chair Jerome Powell’s thinking on policy – also signaled that US interest rates could be cut in the months ahead.

The dollar and two-year Treasury yield slid to fresh three-month lows, the 10-year yield hit a two-month low and the VIX volatility index fell back to recent lows last seen before the pandemic. Yet the S&P 500 and Nasdaq ended flat.

Perhaps that broad loosening of financial conditions will give Asian markets a bigger boost on Wednesday, although the underperformance of Chinese stocks shows little sign of abating even as the central bank chief pledged to keep monetary policy “accommodative” to provide support to the economy.”

The first of the main policy events in the region on Wednesday will be the Reserve Bank of New Zealand’s policy decision. It is widely expected to hold the cash rate at 5.50%, so investors’ interest will lie more in the bank’s guidance.

Traders expect up to 50 basis points of easing next year, with the first cut coming in July. That’s about half of what the Fed is expected to do, so it’s no wonder the New Zealand dollar is outperforming – it is up 6.5% in the past month.

Thailand’s central bank is also expected to keep rates on hold, at 2.50%, through the middle of 2025. Disappointing third quarter growth and the exchange rate’s 7% appreciation over the last month will have eased any lingering pressure on policymakers to raise rates again.

Finally, figures from Australia are expected to show that price pressures cooled in October, with the annual rate of weighted consumer inflation slowing to 5.20% from 5.60%.

Reserve Bank of Australia Governor Michele Bullock on Tuesday reaffirmed that monetary policy was restrictive and working to dampen demand, though inflation in the service sector was proving sticker than hoped.

The RBA is expected to keep its cash rate on hold at 4.35% next week, although there is around a 10% chance of a quarter-point hike, according to futures market pricing.

Here are key developments that could provide more direction to markets on Wednesday:

– New Zealand interest rate decision

– Thailand interest rate decision

– Australia inflation

(By Jamie McGeever)

US recap: Dollar sold far and wide as Fed cuts gain credibility

Nov 28 – The dollar index fell 0.3% as Treasury yields slid after Fed speakers noted the historically rapid progress being made in reducing inflation and Governor Christopher Waller even allowing that rate cuts are possible in coming months if disinflation persists.

These views were more dovish than the messaging that followed the Fed’s last meeting, prompting the futures market to price in a rate cut in May as being nearly twice as likely as a hold, and 100bp of rate cuts by December 2024.

Two-year Treasury yields fell nearly 9bp and 10-year yields 3bp, briefly breaching important yield supports, allowing the dollar index to approach the 61.8% Fibo of 2023’s uptrend.

EUR/USD rose 0.3%, well clear of its 61.8% retracement of this year’s slide at 1.0960, but off its 1.1009 highs. A 3bp rise in 2-year bund-Treasury yield spreads and risk-on flows stemming from lower US and European yields weighed on the haven dollar, though retreated some from midday peaks.

The even more risk-sensitive sterling rose 0.45%, but backed off before reaching its 61.8% Fibo of its July-October slide at 1.2722. The BoE is seen waiting longer than the Fed to begin cutting rates and only reducing them by 67bp next year.

USD/JPY fell 0.75%, continuing its post-multi-year double-top reversal of 2023’s uptrend, with the decline greased by 2-year JGB yields falling about a quarter as much 2-year Treasury yields from recent peaks.

A close below the daily cloud base and last month’s low at 147.30 would be very bearish and likely to put what’s left of the biggest net spec long position since 2017 under greater duress, with medium-term targets closer to 140. But the current 147.325 low on EBS keeps the focus on Thursday’s key US data.

The BoJ is under some pressure to move away from negative rates and reduce efforts to cap JGB yields because the extraordinarily weak yen and stubborn inflation are seen by many in Japan as doing more harm than good to the economy.

Wednesday features German CPI, revisions to US Q3 GDP, and the beige book, which might contain regional feedback that supports Waller’s rate cut prospecting.

Thursday’s month-end session looks far more pivotal with euro zone inflation data followed by US core PCE, income, consumption, and savings rate for November, as well as jobless claims and pending home sales, the forecasts for which hue toward a more dovish Fed and weaker dollar.

(Editing by Burton Frierson; Randolph Donney is a Reuters market analyst. The views expressed are his own.)

Gold extends gains on Fed pause bets, dollar retreat

Nov 28 – Gold rose for a fourth consecutive session on Tuesday and hit a more than six-month high, driven by a retreating dollar and expectations that the US Federal Reserve has finished hiking interest rates.

Spot gold gained 1.4% at USD 2,041.55 per ounce by 3:00 p.m. ET (2000 GMT), the highest since May 10.

US gold futures for December delivery settled 1.4% higher at USD 2,040.

The near-term outlook for gold remains bullish, with the dollar index in a downtrend on hopes the Fed will no longer raise interest rates and will maybe even cut them by springtime, said Jim Wyckoff, senior analyst at Kitco Metals.

However, “if (US) GDP numbers and inflation indicators are stronger than expected, it will dent traders’ enthusiasm in bullion,” Wyckoff added.

Fed policymakers look increasingly comfortable closing out the year with interest rates on hold and waiting before cutting them. Lower rates reduce the opportunity cost of holding non-interest-bearing bullion.

Fed Governor Christopher Waller said he is “increasingly confident” that policy is in the right spot.

Making bullion less expensive for overseas buyers, the dollar index touched its lowest since mid-August.

Investors will monitor Thursday’s US Personal Consumption Expenditures (PCE) data, the Fed’s preferred inflation indicator. The focus is also on the revised US third-quarter GDP figures scheduled for Wednesday.

“A sense of caution ahead of another busy week for global financial markets is also lending support to the precious metal. Given how the USD 2,000 level proved an extremely tough resistance to conquer, gold could end up dipping without a potent fundamental catalyst,” FXTM senior research analyst Lukman Otunuga said.

Silver rose 1.4% to USD 24.97 per ounce, platinum XPT= was up 2.3% at USD 939.80. Palladium fell 1.4% to USD 1,055.59 per ounce.

(Reporting by Anushree Mukherjee in Bengaluru; Editing by Krishna Chandra Eluri, Barbara Lewis, and Richard Chang)

Dollar around three-month low, set for biggest monthly fall in a year

TOKYO/LONDON, Nov 28 – The US dollar hit a three-month low against a basket of peers on Tuesday before steadying, as traders continued to unwind long dollar positions before this week’s U.S. and euro zone inflation data.

The dollar index =USD, a measure of the greenback against six major currencies, was last at 103.2 up around 0.1% on the day, edging off the 103.15 it touched in Asia trade, the lowest since Aug. 31.

The index is on track for a loss of more than 3% in November, its worst performance in a year.

“Markets have been wanting to get ahead of the next big theme – monetary easing, better conditions for risk assets and a weaker dollar – but as we’ve seen this morning, that’s starting to run out of steam,” said Simon Harvey, head of FX analysis at Monex Europe.

“Shorter term we’re keeping an eye on the general sentiment in markets – the big trade of this month has been long equities short dollar – and then these psychological levels – the euro has bumping against USD 1.0960 and each of its runs at that in the past week has been thwarted.”

The euro and sterling were broadly steady with the common currency at USD 1.09495 and the pound at USD 1.2627, both around their highest in about three months.

Market expectation that the Fed’s rate increase cycle has finally come to an end has also put downward pressure on the greenback. U.S. rate futures showed about a 25% chance that the Fed could begin cutting rates as early as March and increasing to nearly 45% by May, according to the CME FedWatch tool.

Traders are now eyeing U.S. core personal consumption expenditures (PCE) price index – the Fed’s preferred measure of inflation – this week for more confirmation that inflation in the world’s largest economy is slowing.

PCE tops off a slew of other key economic events this week, including flash inflation data from major euro zone economies, with bloc wide data due Thursday, Chinese purchasing managers’ index (PMI) data and OPEC+ decision.

After delaying its policy meeting to this Thursday, OPEC+ is looking at deepening oil production cuts, Reuters reported, citing an OPEC+ source.

The Japanese yen was steady at 148.63 per dollar, continuing its recovery from the brink of 152 per dollar earlier in the month as the dollar weakened.

The Swiss franc was at 0.8810 per dollar, steady on the day, also around its firmest since the start of September, and the Australian dollar briefly touched a near four-month high of USD 0.6632.

The kiwi momentarily hit its highest since Aug. 10 at USD 0.6114 before sliding back. The Reserve Bank of New Zealand has its monetary policy meeting on Wednesday, where it is expected to keep interest rates steady at 5.50% for the fourth straight time.

Oil rises, Brent tops USD80 ahead of OPEC+ meeting

LONDON, Nov 28 – Oil prices rose on Tuesday with the Brent benchmark rising above USD 80 a barrel, supported by expectations that the OPEC+ producer group may deepen and extend output cuts due to concern over softer global demand.

OPEC+, which combines the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, will hold an online ministerial meeting on Thursday to discuss production targets for 2024.

Brent crude futures LCOc1 were up 72 cents, or 0.9%, at USD 80.70 a barrel at 0921 GMT. U.S. West Texas Intermediate (WTI) crude futures CLc1 gained 69 cents, or 0.9%, at USD 75.55.

“Barring any negative surprise, the recent drop in prices will probably be viewed as a buying opportunity, especially if further cuts are agreed,” said Tamas Varga of oil broker PVM, referring to the OPEC+ meeting.

Last week, the market tumbled when OPEC+ – the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia – postponed to Nov. 30 a ministerial meeting to iron out differences on production targets for African producers.

The group has since moved towards a compromise, four OPEC+ sources told Reuters on Friday, potentially helping the group’s de facto leader Saudi Arabia find consensus on the need to deepen output cuts.

“Saudi Arabia may be comforted that U.S. gasoline prices have fallen for 60 straight days. This may soften the U.S. opposition to any move to tighten oil markets and support prices,” ANZ Research said in a note on Tuesday.

Oil also found support from a weak dollar – which makes oil cheaper for holders of other currencies and tends to reflect greater risk appetite among investors – and from expectations U.S. crude inventories declined last week.

Four analysts polled by Reuters estimated on average that the latest round of weekly U.S. supply reports will show crude inventories fell by about 2 million barrels.

The first of this week’s two reports is out at 2130 GMT from the American Petroleum Institute industry group.

(Additional reporting by Sudarshan Varadhan; Editing by Kim Coghill)

Oil settles up 2%; focus on OPEC+, storm-hit Kazakh output

NEW YORK, Nov 28 – Oil prices jumped on Tuesday, settling up about 2% on the possibility OPEC+ will extend or deepen supply cuts, a storm-related drop in Kazakh oil output, and a weaker US dollar.

Brent crude futures settled up USD 1.70, or 2.1%, at USD 81.68 a barrel. US West Texas Intermediate (WTI) crude gained USD 1.55, or 2.1%, to settle at USD 76.41.

OPEC+, the Organization of the Petroleum Exporting Countries (OPEC), and allies including Russia, are due to hold an online ministerial meeting on Thursday to discuss 2024 production targets.

The talks will be difficult and a rollover of the previous agreement is possible rather than deeper production cuts, four OPEC+ sources said.

The market tumbled last week when OPEC+ pushed back the original date for its meeting to iron out differences in production targets for African producers.

“We believe the market’s primary focus surrounds the continuation of Saudi Arabia’s additional voluntary cuts of 1 million barrels per day,” Walt Chancellor, an energy strategist at Macquarie, said in a note. “We believe an extension of these cuts into Q2/Q3 2024 may represent the threshold for this meeting being viewed bullishly.”

One possible compromise could involve Angola and Nigeria accepting reduced production targets for a few months if targets for the other countries were likewise lowered, said Commerzbank’s Carsten Fritsch.

“According to delegates, Saudi Arabia is demanding lower production quotas from the other OPEC+ countries. While Kuwait has signaled that it would be willing to do so, some countries are apparently resisting any such move.”

The United Arab Emirates is likely to oppose this, given that its 2024 production target was increased at its urging when OPEC+ held its previous meeting in early June, he added.

Oil also found support from a weak dollar, an expected decline in US crude inventories, and the drop in Kazakh output.

Kazakhstan’s largest oilfields have cut their combined daily oil output by 56%.

US crude oil inventories dropped by 817,000 barrels last week, according to market sources citing American Petroleum Institute figures.

Weekly US government data on stockpiles is due on Wednesday.

The US dollar sank to a three-month low on Tuesday after US Federal Reserve Governor Christopher Waller flagged the possibility of lowering the Fed policy rate in the months ahead if inflation declines further.

A weaker dollar typically bolsters oil demand, making dollar-denominated oil less expensive for buyers using other currencies.

In the Middle East, Israeli forces and Hamas fighters held their fire beyond the original deadline of a truce, extended at the last minute by at least two days to let more hostages go free.

(Reporting by Stephanie Kelly; additional reporting by Alex Lawler, Natalie Grover, and Sudarshan Varadhan; Editing by Kim Coghill, David Goodman, David Gregorio, and Marguerita Choy)

Beijing bourse tells ‘major shareholders’ to refrain from selling, sources say

SHANGHAI/BEIJING Nov 27 – The Beijing Stock Exchange has de facto implemented a new policy that prevents major shareholders of companies listed on the bourse from selling stock, worried that such sales could douse a long-desired rally, three people familiar with the matter said on Monday.

The bourse said in a statement to Reuters on Tuesday that talk of such a policy was “not factual”, and there was “no change to the spirit of relevant published guidelines”.

A “major shareholder” is one with a stake of 5% or more and is required to make a public filing with the relevant stock exchange before selling shares, according to rules for China’s bourses.

The Beijing exchange has been rejecting those filings, said the people who were not authorized to speak to the media and declined to be identified.

It was not immediately clear how long this new policy would remain in place, they added.

The Beijing Stock Exchange, launched two years ago, was set up to help facilitate funding for innovative small companies, dubbed “little giants”, but had languished due to a lack of investor interest.

But its benchmark 50 Index has surged 46% this month on the back of recent measures by authorities. These include lowering the required amount of funds an investor must have in their stock account to invest, improving trading mechanisms, and encouraging mutual funds to participate in the market.

The bourse had said separately in a statement on Monday morning ahead of this Reuters article that it was closely monitoring trading to ensure normal market order.

The China Securities Regulatory Commission did not reply to a request for comment.

The so-called window guidance – where directives are made orally without written documents – is aimed at protecting the rally, the sources said.

One noted that without the guidance, the share price surge “could prompt institutional shareholders to reduce their holdings which could knock the index down again.”

The Beijing bourse currently houses 232 companies with a combined market capitalization of 366 billion yuan (USD 50 billion).

By comparison, the Shanghai bourse is home to 2,256 firms worth 47 trillion yuan in total, while almost 3,000 companies listed in Shenzhen have a total market capitalization of 31.9 trillion yuan. The Shanghai Composite Index is up 0.4% this month, while the Shenzhen Composite Index is down 0.8%.

(Reporting by Beijing and Shanghai newsrooms; Editing by Edwina Gibbs)

Gold climbs higher on dollar dip, Fed pause bets

Nov 27 – Gold hit a six-month high on Monday as a softer dollar and expectations of a pause in the Federal Reserve’s monetary tightening helped bullion consolidate above the key USD 2,000 an ounce level.

Spot gold was up 0.5% at USD 2,012.34 per ounce by 3:01 p.m. ET (2001 GMT), after reaching its highest since May 16. U.S. gold futures GCcv1 settled 0.5% higher at USD 2012.4.

The dollar hovered near a three-month low, making greenback-priced gold less expensive for holders of other currencies.

Gold is likely to trade around USD 2,000 for a little bit until we get some more information from the Fed on its plan on interest rates, said Bob Haberkorn, senior market strategist at RJO Futures.

“Gold will trade higher if they are done with rate hikes for the time being.”

Traders widely expect the U.S. central bank to hold rates in December, while pricing in about a 50-50 chance of easing in May next year, CME’s FedWatch Tool shows.

Lower interest rates reduce the opportunity cost of holding non-interest-bearing assets, often boosting gold prices.

Investors’ attention will be on the U.S. third-quarter GDP figures on Wednesday and the personal consumption expenditures (PCE) price index due on Thursday, the Fed’s preferred inflation gauge.

“Economic figures coming out of the U.S. this week, both on the growth and inflation front, will make or break a case for whether gold remains above USD 2,000,” said Kyle Rodda, a financial market analyst at Capital.com.

On the physical front, data showed that top consumer China’s net gold imports via Hong Kong fell for a second consecutive month in October as a patchy economic recovery weighed on demand in the key bullion market.

Silver jumped 1.3% to a nearly three-month high at USD 24.62 per ounce. Platinum fell 1.3% to USD 918.51 and palladium was down 0.2% at USD 1,071.32.

(Reporting by Sherin Elizabeth Varghese in Bengaluru; Additional Reporting by Daksh Grover; Editing by David Evans and Shailesh Kuber)

Oil falls, Brent settles below USD 80 ahead of OPEC+ meeting

HOUSTON, Nov 27 – Oil prices fell on Monday, with the Brent benchmark dipping below USD 80 a barrel as investors awaited this week’s OPEC+ meeting and expected curbs on supplies into 2024.

Brent crude futures were down 60 cents, or 0.7%, at USD 79.98 a barrel. US West Texas Intermediate (WTI) crude futures lost 68 cents, or 0.9%, to USD 74.86. Both contracts lost USD 1 in early trading.

Last week, prices tumbled when OPEC+ – the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia – postponed to Nov. 30 a ministerial meeting to iron out differences on production targets for African producers.

Since then, the group, helmed by de facto leader Saudi Arabia, has moved closer to a compromise, four OPEC+ sources told Reuters on Friday. OPEC+ is looking at deepening oil production cuts despite its policy meeting being postponed to this Thursday, an OPEC+ source said on Monday.

“Although there are headlines that Saudi has made progress reaching consensus, there is limited risk appetite to buy crude ahead of the formal announcement,” said Rebecca Babin, senior energy trader at CIBC Private Wealth US.

“Until we get clarity on how this plays out, expect crude to struggle to rally,” she added.

ING analysts said they expected Saudi Arabia to roll over its additional voluntary cut of 1 million barrels per day (bpd) into next year, and Russia to extend its own cuts.

“Clearly, if we do not see this, it would put further downward pressure on the market,” they said in a note.

Estimated exports by OPEC countries have declined to 1.3 million bpd below levels in April, Goldman Sachs analysts said in a note, in line with the group’s supply targets.

“We still expect an extension of the unilateral Saudi and Russia cuts through at least the first quarter of 2024,” the bank added.

The United Arab Emirates, however, is poised to ramp up exports of Murban crude early next year, according to traders and Reuters data.

Efforts by Iraq to resume northern crude exports via Turkey continue. Iraqi oil officials will meet representatives of international oil companies and Iraqi Kurdish officials in early December to discuss contract changes central to the issue, a deputy minister said.

The International Energy Agency said it expects a slight surplus in global oil markets in 2024 even if OPEC+ nations extend their cuts into next year.

Higher crude stockpiles in the United States have also put downward pressure on prices, analysts said. However, four analysts polled by Reuters estimated on average that crude inventories fell by about 2 million barrels in the week to Nov. 24.

Meanwhile, mediator Qatar on Monday said a truce between Israeli and Hamas forces in Gaza had been extended by two days, continuing a pause in seven weeks of warfare. The Middle East crisis had impacted oil prices as investors worried about impacts on supply.

Money managers cut their net long US crude futures and options positions in the week to Nov. 21, the US Commodity Futures Trading Commission said on Monday.

(Reporting by Arathy Somasekhar in Houston, Paul Carsten in London, Florence Tan, and Mohi Narayan; Editing by Peter Graff, Mark Potter, Tomasz Janowski, Cynthia Osterman, and David Gregorio)

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