European shares rise on strong China recovery, US bank results on tap

April 18 (Reuters) – European shares rose on Tuesday, as investors awaited more US bank earnings to gauge the health of the sector, while China’s stronger-than-expected economic recovery boosted sentiment.

The pan-European STOXX 600 index edged up 0.2%, after the week started with a pullback from one-year highs, ending a five-day winning run.

Bank stocks rose 0.8%, recovering from losses across the sector on Monday.

China’s economy grew 4.5% year-on-year for the first quarter, eclipsing the expectations of most economists.

Markets will now watch out for reports from Goldman Sachs Group Inc and Bank of America Corp later in the day, while Morgan Stanley is due on Wednesday, after stellar results from the other big US banks last week.

UBS Group AG added 1.1% as the Swiss bank was making changes to its USD 6 billion share buyback program following its takeover of Credit Suisse Group.

EasyJet Plc rose 3.0% as the airline said it expects full-year profit to beat market forecasts, encouraged by summer bookings and strong demand over Easter despite French strikes.

Investors will also monitor Germany’s ZEW survey, due at 0900 GMT, expected to show that economic conditions in region’s largest economy improved in April from the previous month.

(Reporting by Shubham Batra in Bengaluru; Editing by Varun H K)

Japan’s 10-year JGB yield inches down; caution prevails ahead of BOJ meet

TOKYO, April 18 (Reuters) – Japan’s 10-year government bond yield inched lower on Tuesday after hitting over a month-high in the previous session, though caution prevailed ahead of the Bank of Japan’s (BOJ) policy meeting due next week.

The 10-year JGB yield fell 1 basis point (bp) to 0.470%, slipping from 0.480%, its highest level since March 10.

The 20-year JGB yield fell 1 basis point to 1.080%, while the 30-year JGB yield was flat at 1.335%. The 40-year JGB yield rose 0.5 bp to 1.525%.

“In the run-up to the BOJ meeting, it is hard to take positions,” said a fund manager at a domestic asset management firm.

Many market participants speculate the BOJ will tweak its yield curve control policy or abolish by June the latest, which could help yields to rise.

But investors’ ability to hedge against rising yields is limited because of the BOJ’s huge ownership in some lines of 10-year JGBs. The central bank raised costs for bond lending, which has also made it costly for investor short on JGBs.

The BOJ Governor Kazuo Ueda has consistently stressed the need to maintain the stimulus until a more durable rise in wages and inflation can be foreseen.

The two-year JGB yield was flat at -0.040% and the five-year yield was flat at 0.165%.

Benchmark 10-year JGB futures 2JGBv1 rose 0.09 yen to 147.44, with a trading volume of 13,627 lots.

(Reporting by Junko Fujita; Editing by Nivedita Bhattacharjee)

Japan’s Nikkei rises for eighth day on earnings optimism, weaker yen

TOKYO, April 18 (Reuters) – Japan’s Nikkei share average climbed for an eighth straight session on Tuesday, boosted by gains in banks on positive US data and as a weaker yen lifted exporters.

The Nikkei rose 0.51% to close at 28,658.83, nearing the highest level so far this year and marking its longest winning streak since March 2022. The broader Topix climbed 0.69% to 2,040.89.

Chiba Bank Ltd led gains on the Nikkei, jumping 3.38%, while lender Resona Holdings Inc added 2.08%. Mazda Motor Corp climbed 1.87% after the yen held a two-day decline to trade near its weakest in a month.

US shares rose on Monday after several banks kicked off first-quarter reports with strong results and a positive reading from the New York Fed’s barometer of manufacturing activity.

“Earnings expectations have been OK. The yen has settled down, at a level weaker than last year,” said Quiddity Advisors analyst Travis Lundy, who publishes on Smartkarma.

Comments by billionaire investor Warren Buffett last week that he was adding to investments in Japan, along with regulatory pressure on companies with low price-to-book (PBR) ratios, are adding to buying cues, he said.

“There are expectations that lower PBR stocks being ‘forced’ to become higher PBR stocks will mean cross-holding unwinds and buybacks,” he said.

The Nikkei is trading more than 3% over its 25-day moving average, which may be a sign of volatility ahead, Nomura Securities strategist Kazuo Kamitani said.

“It’s too early to say the market is overheating, but it could be a warning sign for high values,” he said.

There were 175 gainers on the Nikkei against 43 that fell. Inpex Corp dropped 2.13%, pacing declines among energy shares after oil prices LCOc1 slid in US. trading.

Sega Sammy Holdings Inc slipped 2.78% after announcing on Monday it planned to acquire Angry Birds game maker Rovio Entertainment Oyj for 706 million euros (USD 776 million).

(Reporting by Rocky Swift; Editing by Sonia Cheema and Subhranshu Sahu)

Gold rises on dollar pullback; clarity on Fed policy awaited

April 18 (Reuters) – Gold prices rose on Tuesday after two sessions of losses as the dollar eased, while investors sought more clarity on the U.S. Federal Reserve’s monetary policy stance.

Spot gold was up 0.3% at USD 2,000.09 per ounce, as of 0642 GMT. US gold futures rose 0.2% to USD 2,010.20.

“Given the sharp moves of late and little tier-1 economic data to guide this week, we should expect gold to consolidate in the USD 1,980-USD 2,020 range,” said OCBC FX strategist Christopher Wong.

The US dollar index was 0.2% lower and made bullion cheaper for overseas buyers.

Gold prices fell to nearly a two-week low on Monday after data showed manufacturing activity in New York state increased for the first time in five months, and confidence among U.S. single-family homebuilders improved for a fourth straight month in April. The data added to bets of an interest rate hike by the Fed at its May meeting.

The CME FedWatch tool shows that markets are pricing in a 87.4% chance of a 25 basis point hike in May.

Gold is considered a hedge against inflation and economic uncertainties, but higher interest rates dim the non-yielding bullion’s appeal.

Focus will now be on comments from Fed officials this week before they enter a blackout period from April 22, ahead of the central bank’s May 2-3 meeting.

“There is too much earnings, political, geopolitical and central bank risk on the table,” Edward Moya, senior market analyst at OANDA, said in a note, adding that only a couple of risks need to rattle markets to trigger safe haven flows towards gold with the metal’s path towards record territory still present.

Meanwhile, top bullion consumer China’s economic recovery gathered pace in the first quarter as the country’s gross domestic product grew 4.5% year-on-year, beating expectations.

Spot silver was flat at USD 25.10 per ounce, platinum edged up 0.1% to USD 1,049.05 and palladium gained 0.9% to USD 1,573.75.

(Reporting by Kavya Guduru in Bengaluru; editing by Uttaresh Venkateshwaran, Sohini Goswami and Sonia Cheema)

Wall Street ends higher; investors await earnings, Fed cues

April 17 (Reuters) – Major US stock indexes posted modest gains on Monday, helped by financial and industrial shares, while investors braced for a heavy week of corporate results and comments from Federal Reserve officials that could give more insight into the path of interest rates.

Markets are gauging the health of corporate profits and the economy after several banks kicked off first-quarter reports with strong results last week.

Meanwhile, the New York Fed said on Monday its barometer of manufacturing activity in New York State increased for the first time in five months in April, helping solidify the case for the US central bank to raise rates at its meeting next month.

“Markets are in a bit of a wait-and-see mode,” said Angelo Kourkafas, an investment strategist at Edward Jones. “We have a lot of corporate earnings ahead of us and the Fed rate decision in a couple of weeks.”

The Dow Jones Industrial Average rose 100.71 points, or 0.3%, to 33,987.18; the S&P 500 gained 13.68 points, or 0.33%, at 4,151.32; and the Nasdaq Composite .IXIC added 34.26 points, or 0.28%, at 12,157.72.

Among S&P 500 sectors, financials rose 1.1%, industrials .SPLRCI gained 0.8% while the lower-weighted real estate group increased 2.2%. Energy fell 1.3%.

Shares of Google parent Alphabet Inc (GOOGL) dropped 2.7%, weighing on the S&P 500 and Nasdaq, after a report that South Korea’s Samsung Electronics 005930.KS was considering replacing Google with Microsoft-owned (MSFT) Bing as the default search engine on its devices.

Investors are awaiting more reports from major US banks this week, including Goldman Sachs Group Inc (GS), Bank of America Corp (BAC) and Morgan Stanley (MS), after heavyweights including JP Morgan Chase & Co (JPM) reaped windfalls from higher interest payments last week.

Other companies due to report this week include Johnson & Johnson (JNJ), Tesla Inc (TSLA) and Netflix Inc (NFLX).

S&P 500 company earnings are expected to have declined 4.8% in the first quarter from the year-earlier period, according to Refinitiv IBES data.

“Corporate profits are emerging as the big driver of what the market is likely to do in the near term and investors want to see what those look like here before they place bets,” said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana.

Investors are also seeking to gauge the outlooks from executives following a banking crisis last month that some expect could hasten an economic downturn.

US Treasury yields rose on Monday, with a slew of Fed speakers due later in the week. The US central bank is widely seen raising rates by 25 basis points to the 5%-5.25% range next month.

In company news, State Street Corp (STT) shares fell 9.2% after the financial services provider’s quarterly profit missed analysts’ estimates, hurt by a fall in fee income.

Advancing issues outnumbered decliners on the NYSE by a 1.42-to-1 ratio; on Nasdaq, a 1.61-to-1 ratio favored advancers.

The S&P 500 posted 15 new 52-week highs and one new low; the Nasdaq Composite recorded 70 new highs and 158 new lows.

About 10 billion shares changed hands in US exchanges, compared with the 10.8 billion daily average over the last 20 sessions.

(Reporting by Lewis Krauskopf in New York, Sruthi Shankar and Ankika Biswas in Bengaluru; Editing by Shounak Dasgupta and Richard Chang)

Dollar gains after strong New York factory survey

NEW YORK/LONDON, April 17 (Reuters) – The dollar rose on Monday after New York state factory activity in April increased for the first time in five months, helping bolster expectations the Federal Reserve will raise interest rates in May.

Also bolstering the dollar was a report showing confidence among US single-family homebuilders improved for a fourth straight month in April.

The dollar index, a measures of the currency against six major peers, rose 0.413% after the Empire State Manufacturing index shot to 10.8 from -24.6 in March, far higher than expectations of -18 in a Reuters poll of 35 economists.

The new orders index rose 47 points to 25.1, while the shipments index added 37 points to 23.9, substantial increases after they had declined in recent months, the New York Fed said.

“It’s the best reading since last July with a big jump in orders and has taken the dollar higher on this,” said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York.

“The economy still looks like it’s growing above what the Fed says is its speed limit,” he said. “The market is under-estimating chances of another hike after May. Now the market says the Fed is going to cut later, but I think that the economy is showing itself to be resilient.”

Futures trading showed the probability of the Fed raising its lending rate to a range of 5.00%-5.25% when policymakers conclude a two-day meeting on May 3 rose to 88.7% from 78% on Friday, CME Group’s FedWatch Tool showed.

Fed funds futures also showed that expectations the Fed will start cutting rates later this year were pushed back to November from September, with a smaller cut now anticipated.

The outlook of US interest rates relative to the monetary policies and economies of other countries can boost or erode the dollar’s value.

The euro slid 0.66% to USD 1.0926 after hitting a one-year high of USD 1.108 on Friday. Traders expect further interest rate hikes from the European Central Bank as last month’s banking crisis fears have faded.

The yen weakened 0.45% at 134.40 per dollar as the Bank of Japan stuck to its easy-money policies, helping the greenback rise to its highest level since March 15.

“The dollar has bounced back but also we’ve had comments from the Bank of Japan indicating that there is no real reason for them to pull back from their ultra easy policy,” said Jane Foley, head of FX strategy at Rabobank.

New Bank of Japan Governor Kazuo Ueda last week made clear that the country would remain a “dovish” outlier by keeping interest rates at ultra-low levels for the time being.

Sterling was last trading at USD 1.2374, down 0.31% on the day.

The Mexican peso lost 0.11% versus the dollar to trade at 18.04, while the Canadian dollar fell 0.25% versus the greenback to 1.34 per dollar.

(Reporting by Herbert Lash, additional reporting by Harry Robertson in London; Editing by Muralikumar Anantharaman, Mark Potter and Andrea Ricci)

Gold slides below USD 2,000, market eyes Fed rate hike cues

April 17 (Reuters) – Gold reversed course to slip below the key USD 2,000 level on Monday, pressured by a stronger dollar and higher Treasury yields, while investors looked for cues on whether the market will see a ‘one and done’ rate hike by the US Federal Reserve in May.

Spot gold was down 0.4% at USD 1,995.42 per ounce by 1:40 p.m. EDT (17:40 GMT) after rising as much as 0.6% earlier in the session. US gold futures GCv1 settled 0.4% lower at USD 2,007.

A stronger US dollar and the rise in bond yields, along with some profit-taking from recent gains, are putting pressure on gold, said Jim Wyckoff, senior analyst at Kitco Metals.

US dollar gained 0.6%, making greenback-priced bullion less attractive for overseas buyers, while benchmark Treasury yields climbed to a more than two-week high.

The trend for gold is still up, and “I wouldn’t be surprised to see gold hit a new record high in the coming weeks,” added Wyckoff.

Gold dropped 2% on Friday after the dollar bounced, with Fed officials suggesting the central bank could hike rates by another 25 basis points (bp) next month.

However, economic data last week began to fill in the portrait of a US economy that is losing momentum, intensifying bets that the Fed’s next increase will be its last.

The CME FedWatch tool shows markets are pricing in an 86% chance of a 25-bp hike in May, followed by 2-in-3 chances of a pause in June.

The USD 1,980-USD 2,000 range is a promising support zone for bullion, said Carlo Alberto De Casa, external analyst at Kinesis Money.

Investors will focus on comments from Fed officials this week before they enter into a blackout period from April 22 ahead of the Fed’s May 2-3 meeting.

Spot silver fell 1.4% to USD 24.99 per ounce, platinum was up 0.4% at USD 1,048.36 and palladium gained 3.4% to USD 1,554.85.

(Reporting by Deep Vakil and Ashitha Shivaprasad in Bengaluru; Editing by Shailesh Kuber)

Nikkei gains in longest rally in 9 months on boost from exporters, banks

TOKYO, April 17 (Reuters) – Japan’s Nikkei share average ended at a more than one-month high on Monday, rising for the seventh straight session, as a weaker yen lifted exporters and bank shares tracked sharp gains of their US peers at the end of last week.

The Nikkei share average edged up 0.07% at 28,514.78, its highest close since March 9 and posted its longest rally since mid-July.

The broader Topix advanced 0.41% to end at 2,026.97.

“Overall, the market is strong, supported by the yen’s weakness, which lifted automakers. And banks tracked sharp gains of US bank shares on Friday,” said Jun Morita, general manager – research at Chibagin Asset Management.

“But I would say the market is stronger than it should be because there are signs of an economic slowdown going forward.”

The dollar hit a one-month high against the yen, as resilience in core US retail sales and impressive Wall Street bank earnings raised market expectations for an interest rate hike from the US Federal Reserve in May.

The S&P 500 banking sector jumped 3.5%, as a series of major US banks, such as Citigroup Inc C.N and JPMorgan Chase & Co beat earnings expectations.

Among individual stocks, Toyota Motor rose 1.44% and Nissan Motor rose 1.43%.

Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group gained 2,57% and 2.50%, respectively.

In Japan, shippers rose 2.52% to become the top performer among the Tokyo Stock Exchange’s 33 industry sub-indexes. Kawasaki Kisen jumped 3.53%.

Uniqlo brand-owner Fast Retailing lost 2.71%, after surging 8.5% in the previous session, becoming the biggest drag for the Nikkei.

Cosmetic maker Shiseido lost 1.97%.

(Reporting by Junko Fujita; Editing by Sohini Goswami and Rashmi Aich)

Oil holds above USD 80/bbl on OPEC+ cuts, traders eye China recovery

SINGAPORE, April 17 (Reuters) – Oil prices edged up slightly on Monday, supported by OPEC+’s plans to cut more output, while investors eyed Chinese economic data for signs of demand recovery in the world’s second-largest oil consumer.

Brent crude futures LCOc1 nudged 6 cents higher to USD 86.37 a barrel by 0650 GMT, while US West Texas Intermediate crude was at USD 82.55 a barrel, up 3 cents.

Both contracts notched their fourth weekly gains last week – the longest-such streak since mid-2022 – after the International Energy Agency (IEA) forecast record demand in 2023 of 101.9 million barrels per day (bpd), up 2 million bpd on last year.

However, the IEA warned in its monthly report that the output cuts announced by OPEC+ producers risked exacerbating an oil supply deficit expected in the second half of the year and could hurt consumers and a global economic recovery.

Rising costs for Middle East crude supplies, which meet more than half of Asia’s demand, are already squeezing refiners’ margins, prompting them to secure supplies from other regions.

Refiners are also ramping up gasoline output ahead of peak summer demand, while cutting diesel production amid worsening margins.

“While the flat price and time spreads have strengthened on the back of expectations of a tighter market, demand concerns clearly remain,” ING analysts said in a note.

“Weaker refinery margins remain a feature, with the weakness predominantly driven by middle distillates. Stronger crude prices will not be helping margins for refiners either.”

Meanwhile, oil exports from northern Iraq to the Turkish port of Ceyhan remained at a standstill almost three weeks after an arbitration case ruled Ankara owed Baghdad compensation for unauthorised exports.

Investors will be watching for the release of China’s first-quarter gross domestic product (GDP) data this week, which is expected to be positive for commodity prices, CMC Markets analyst Tina Teng said.

Earnings from US companies could also provide clues for the Federal Reserve’s policy path and the dollar’s trajectory, she added.

The greenback has been strengthening alongside interest rate hikes, making dollar-denominated oil more expensive for holders of other currencies.

Traders are betting that the Fed will raise its lending rate in May by another quarter of a percentage point and pushed out to late this year expectations of a rate cut, as typically occurs in a slowdown.

The market is pricing in a 78% chance of a 25 basis points (bps) rate hike in May, with fewer than 60bps of cuts priced in by the end of the year, IG Analyst Tony Sycamore said.

“(That) means some of the supportive tailwinds for crude oil demand from expectations of Fed rate cuts are starting to fade,” he said.

(Reporting by Florence Tan and Emily Chow; Editing by Jamie Freed)

Oil drops 2% on higher dollar, interest rate concerns

NEW YORK, April 17 (Reuters) – Oil prices turned lower on Monday as the US dollar strengthened and as investors mulled over a possible May interest rate hike by the US Federal Reserve, which could dampen economic recovery hopes.

Brent crude futures fell USD 1.55, or 1.8%, to settle at USD 84.76 a barrel, while US West Texas Intermediate crude dropped USD 1.69, or 2.1%, at USD 80.83 a barrel.

Both contracts notched their fourth weekly gain in a row last week, the longest such streak since mid-2022.

The US dollar has been strengthening alongside interest rate hikes, making dollar-denominated oil more expensive for holders of other currencies. The dollar index gained around 0.6% on Monday.

“The dollar is a little bit stronger, and that seems to be putting a little bit of pressure on oil here,” Price Futures Group analyst Phil Flynn said.

Traders are betting the Fed will raise its lending rate in May by another quarter of a percentage point and have pushed out to late this year expectations of a rate cut, as typically occurs in a slowdown.

Meanwhile, the release of China’s first-quarter gross domestic product (GDP) data at 0200 GMT on Tuesday is expected to be positive for commodity prices, with the International Energy Agency (IEA) forecasting it will account for most of 2023 demand growth.

However, the IEA also warned in its monthly report that output cuts announced by OPEC+ producers risked exacerbating an oil supply deficit expected in the second half of this year and could hurt consumers and a global economic recovery.

The Group of Seven (G7) coalition will keep a USD 60 per barrel price cap on seaborne Russian oil, a coalition official said, despite rising global crude prices and calls by some countries for a lower price cap to restrict Moscow’s revenues.

In Iraq, the federal government and the Kurdistan Regional Government (KRG) have ironed out technical issues essential to resuming northern oil exports from the Turkish port of Ceyhan to international markets, four sources told Reuters on Monday.

Turkey halted Iraq’s 450,000 barrels per day (bpd) of northern exports on March 25 after an arbitration ruling by the International Chamber of Commerce (ICC), which ordered Turkey to pay Baghdad damages of USD 1.5 billion for the KRG’s unauthorised exports between 2014 and 2018.

In Saudi Arabia, crude oil exports in February fell to 7.455 million bpd from 7.658 million bpd in January, official data showed on Monday.

US shale crude oil production in the seven biggest shale basins is expected to rise in May by 49,000 bpd to 9.33 million bpd, the highest on record, data from the Energy Information Administration showed on Monday.

(Reporting by Stephanie Kelly; additional reporting by Noah Browning, Florence Tan and Emily Chow; Editing by Mark Potter and Josie Kao)

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