Bigger banks rise while regionals slump as Q1 earnings season kicks off

April 14 (Reuters) – Shares in US banks were a mixed bag on Friday with JPMorgan Chase (JPM) soaring 7.0% after its quarterly report impressed investors while PNC Financial (PNC) was among regional bank decliners after it reduced growth expectations for 2023.

JPMorgan, the biggest US lender by assets, reported a first-quarter profit that beat estimates with interest income offseting weakness in dealmaking. Shares in Citigroup (C) climbed after its first-quarter profit also beat expectations as it earned more from borrowers paying higher interest on loans.

Also boosted by their rivals’ reports were Bank of America BAC.N and to a lesser degree Goldman Sachs (GS) – both due to report results on Tuesday. Morgan Stanley (MS) reports results on Wednesday.

However, Wells Fargo (WFC) investors were less impressed, with its shares down 0.2%, after it beat first-quarter profit expectations as it benefited from higher interest rates, but executives said they expect the US economy to slow in response to tighter monetary policy.

In the regional banking sector, which was hit by a crisis last month with the failure of Silicon Valley Bank and Signature Bank, First Republic (FRC) and Zions Bancorp (ZION) fell in sympathy with PNC, which gave loan and revenue growth guidance for 2023 that fell short of Wall Street’s expectations.

PNC’s net interest income, while higher than the year-ago quarter, was roughly 1% shy of the mean analyst expectation.

Credit Suisse analyst Susan Katzke also noted in research that PNC’s 2023 revenue guidance for growth of 4% to 5% was lower than previous expectations for 6% to 8% growth, while its estimate for average loan growth fell to a 5% to 7% range from a 6% to 8% range.

PNC shares were last down 1.9% while Zions was off 3.3% and Comerica Inc (CMA) shares fell 3.0%. First Republic shares fell 1.5%.

JPMorgan shares hit their highest level since early March and were on track for their biggest one-day percentage gain since November 2020.

Citi shares rose 4.2% and Bank of America was up 3.0% as their investors appeared to be encouraged by JPM’s news. Morgan Stanley shares rose 0.9% while Goldman shares were up 1.1%.

The S&P 500 bank index rose 3.1% after the reports.

Friday’s big jump in bank stocks helped a trader reap a big gain on a timely trade in Financial Select Sector SPDR Fund’s options. The ETF was last up 0.6%.

A trader, who had bought 100,000 of the XLF April USD 33.5 call options for about USD 1.2 million on Thursday, appeared to have sold the position for a profit of about USD 800,000, or 67%, early on Friday, according to data from options analytics firm Trade Alert.

(Reporting By Sinéad Carew; Editing by Josie Kao)

Gold beats sharp retreat as dollar bounces, rate hike bets grow

April 14 (Reuters) – Gold prices pulled back sharply on Friday after surging to a more than one-year peak in the last session, as the dollar bounced and a Federal Reserve official flagged the need for another interest rate hike.

Spot gold was down 1.8% at USD 2,003.60 per ounce by 01:52 EDT (17:51 GMT). US gold futures settled 1.9% lower at USD 2,015.80.

The dollar index bounced off a one-year low and Treasury yields rose after a key Fed official warned that the central bank needs to continue hiking rates to tame inflation.

Gold competes with the dollar as a safe haven amid economic or political turmoil, while gains in the US currency also dim appetite for bullion among overseas buyers.

Also holding back zero-yield gold, the CME FedWatch tool showed traders were now pricing in a 80.2% chance of a 25 basis-point hike in May compared with a 70% chance at the beginning of the week.

The metals market will likely weaken as we go into the “blackout period” ahead of the Fed decision in May with a 25 bps hike expected, said Daniel Pavilonis, senior market strategist at RJO Futures.

“Prices will stabilize somewhere around USD 2,000.”

But analysts said bullion’s outlook remained positive, following the stellar run over the past couple of sessions amid growing recession worries that could prompt the Fed to eventually end its rate-hike cycle.

“I still expect prices to hit record highs and extend gains to USD 2,100,” said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.

On the physical front, rally in prices made physical gold buying unattractive across major Asian hubs this week.

Silver was down 1.8% at USD 25.34 per ounce, after rising to a year’s high of USD 26.07 earlier in the session, and is set for a fifth weekly gain.

Platinum fell 0.6% to USD 1,040.42, while palladium slipped 0.4% to USD 1,493.61, but both were on track for weekly rises.

(Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Christina Fincher, Shailesh Kuber and Shweta Agarwal)

Global money market funds see huge demand for a seventh straight week

April 14 (Reuters) – Global investors were big buyers in money market funds for a seventh straight period in the week to April 12 after a strong US jobs report heightened expectations that the US Federal Reserve would raise interest rates in May.

Funds in the global money market drew a net USD 40.83 billion worth of inflows compared with a net USD 61.12 billion worth of purchases in the previous week, data from Refinitiv Lipper showed.

Money market funds continue “to benefit from high US real rates that forces deposits out of the banking system,” brokerage Jefferies said in a note to clients.

If the fed funds rate is discounted by core personal consumption expenditure (PCE) inflation, the real interest rate is currently a positive 0.275%.

The yield on the 3-month US Treasury bill, in which money market funds invest the most, surged to near a 16-year high of 5.175% on Thursday.

Global equity funds, meanwhile, obtained USD 545 million, marking their first weekly inflow in three weeks.

Investors purchased communication services and financial sector funds of USD 974 million and USD 664 million, respectively, while selling a net USD 845 million worth of healthcare funds.

Global bond funds saw inflows dipping to USD 3.43 billion in the week from USD 16.45 billion worth of net buying a week ago.

Inflows in government bond funds slipped to a nine-week low of USD 2.33 billion, while high-yield funds faced outflows of USD 172 million. Global short- and medium-term bond funds received USD 1.57 billion, the biggest inflow in five weeks.

Among commodities, investors purchased USD 402 million of precious metal funds in their fifth consecutive week of net buying, while disposing of a net USD 147 million worth of energy funds.

Data for 23,942 emerging market funds showed equity funds received a third weekly inflow, worth USD 227 million, while bond funds had USD 913 million worth of outflows after two weekly net purchases in a row.

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Tom Hogue)

China’s yuan hits 3-week high on strong exports, trade fair as dollar weakens

SHANGHAI, April 14 (Reuters) – The yuan on Friday hit the strongest level against the dollar in three weeks, and was set for the biggest gain in a month bolstered by China’s robust export performance in March and broad weakness in the greenback.

The spot yuan was changing hands at 6.8465 at midday, 215 pips firmer than the previous late session close, after China’s central bank set a stronger midpoint rate.

Data released on Thursday showed China’s exports shot up 14.8% in March from a year ago, after five straight months of declines. Optimism generated by the upcoming Canton Fair also helped counter some concerns over the soft outlook for global growth.

Free of the restrictions imposed during the pandemic, the Canton Fair – the country’s biggest trade expo – will be welcoming overseas attendees in person for the first time in three years from Saturday.

Also aiding yuan sentiment, China’s central bank governor Yi Gang said in remarks published on Friday that China’s economy is stabilising and likely to grow around 5% this year.

The yuan’s strength comes at a time when the dollar is weakening, as signs of softening inflation has strengthened expectations that the US Federal Reserve may be close to ending its aggressive tightening cycle.

The greenback took another leg down on Friday and the US dollar index, which measures the currency against six major peers, slid to a roughly one-year low of 100.78.

US Labor Department data released on Thursday showed the producer price index (PPI) fell by the most in nearly three years last month. Data released a day earlier had showed consumer price inflation moderating

(Reporting by Li Gu and Tom Westbrook)

Dollar sinks to one-year low as cooling inflation raises Fed pause expectation

By Rae Wee

SINGAPORE, April 14 (Reuters) – The U.S. dollar tumbled to a one-year low against a basket of currencies on Friday while the euro hit a one-year peak, as traders ramped up expectations of an imminent end to the U.S. Federal Reserve’s rate-hike cycle on signs of cooling inflation.

Data from the U.S. Labor Department on Thursday showed the producer price index (PPI) fell by the most in nearly three years last month, coming a day after inflation data pointed to moderation in consumer prices.

The greenback took another leg down on Friday and the U.S dollar index =USD, which measures the currency against six major peers, slid to a roughly one-year low of 100.78.

It was last 0.15% lower at 100.82, and was headed for a weekly decline of more than 1%, its steepest drop since January.

Meanwhile, the euro EUR=EBS rose to a fresh one-year top of $1.1075, pushing past its previous high from Thursday.

The common currency was last 0.2% higher at $1.1070, and on track for a weekly gain of more than 1.5%.

“The easiest way to express a dollar negative view has been with the euro,” said Ray Attrill, head of FX strategy at National Australia Bank.

“The significant downside surprise in U.S. PPI has made people a bit more convinced of the view that the Fed will (soon) be done … and (strengthened) conviction that inflation will allow the Fed to be cutting rates before the end of the year.”

Similarly, the British pound GBP=D3 hit a 10-month high of $1.2545, and was last 0.14% higher at $1.25405.

Money markets are pricing in a 69% chance the Fed will raise interest rates by 25 basis points next month, though a series of cuts are also being priced in from July through to the end of the year, with rates seen just above 4.3% in December. FEDWATCH

Adding to signs that global inflationary pressure is waning was an unexpected surge in Chinese exports, which in March shot up 14.8% from the same month a year earlier, stunning economists who predicted a 7.0% fall in a Reuters poll.

The upbeat Chinese data, alongside a robust March employment report in Australia, kept the Australian dollar AUD=D3 supported at around $0.6783 on Friday, having surged 1.3% in the previous session on the back of the data releases. The Australian and New Zealand dollars are often used as liquid proxies for China’s yuan.

“It was almost like a perfect positive storm for the Aussie,” said Attrill. “Starting with the employment numbers … and the China trade numbers which looked exceptionally good.

“You layer on top of that, the dollar weakness from the data last night and positive risk sentiment, and it was a (raft) of good news for the Aussie.”

The New Zealand dollar NZD=D3 similarly gained 0.19% to $0.6309, after jumping 1.3% on Thursday.

Elsewhere in Asia, Japan’s yen JPY=EBS rose marginally to 132.47 per dollar, while the offshore yuan CNH=D3 gained more than 0.5% to 6.8327 per dollar.

(Reporting by Rae Wee; Editing by Christopher Cushing)

((Rae.Wee@thomsonreuters.com;))

Gold set for 2nd weekly gain on weak dollar, Fed pause hopes

April 14 (Reuters) – Gold prices edged higher on Friday, set for a second consecutive weekly gain, as the US dollar tumbled and recent economic data prompted bets that the Federal Reserve is nearing the end of its rate-hike cycle.

Spot gold was up 0.1% at USD 2,042.01 per ounce, as of 0534 GMT, hovering near a one-year high reached on Thursday. US gold futures rose 0.1% to USD 2,056.70.

The dollar index slid to a one-year low, making bullion cheaper for buyers holding other currencies.

“The appetite to sell the US dollar in the wake of soft inflation data, lower yields and calls for a lower terminal Fed rate have been a huge driver for gold,” said Matt Simpson, a senior market analyst at City Index.

Data this week showed the US producer price index in March dropped the most since April 2020, while the consumer price index rose less than expected.

Moreover, the number of Americans filing new claims for unemployment benefits increased more than expected last week, signalling labour market conditions were loosening as higher borrowing costs dampened demand in the economy.

These readings, along with fears of a mild recession, have helped bullion gain about 1.7% so far this week.

The CME FedWatch tool shows markets are pricing in a 67.8% chance of a 25 basis-point hike in May, with rate cuts seen in the back half of the year.

“All eyes will be on US retail sales, consumer sentiment and inflation expectations today,” said Simpson, adding gold could head towards its all-time high, should the data come in soft enough.

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

“Silver prices moved in tandem with gold,” ANZ said in a note.

Spot silver rose 0.5% to UDS 25.90 per ounce, hitting a one-year peak earlier, while platinum gained 0.5% at USD 1,051.93. Both metals were bound for a fifth straight weekly gain.

(Reporting by Kavya Guduru in Bengaluru; Editing by Subhranshu Sahu and Uttaresh Venkateshwaran)

Oil climbs on tightening supply; IEA demand outlook awaited

April 14 (Reuters) – Oil prices rose on Friday on worries over tightening supply, with the market looking ahead to the International Energy Agency’s (IEA) monthly report later in the day to clarify the global demand outlook.

Brent crude futures climbed 36 cents, or 0.42%, to USD 86.45 per barrel by 0600 GMT. West Texas Intermediate crude futures (WTI) rose 43 cents, or 0.52%, to USD 82.59 a barrel.

Both benchmarks fell more than 1% in the previous session.

“Russian exports are showing signs of weakening as production is reported to have been curtailed by 700,000 barrels per day (bpd),” said analysts from ANZ Bank in a client note.

Investors are also focused on the IEA’s monthly oil market report to be released later on Friday. The possibility that the agency might downgrade the global demand outlook over faltering macroeconomic growth is helping to cap prices.

A report from the Organization of the Petroleum Exporting Countries (OPEC) released on Thursday pointed to downside risks in summer demand, citing a weaker growth backdrop, tighter monetary policy and instability in the global financial sector.

Chinese trade data on Thursday, however, showed that crude imports by the world’s second-largest oil consumer rose 22.5% year-on-year in March, stoking bullish sentiment regarding China’s economic recovery.

“Despite renewed economic pressures in the US and Europe, global demand for mobility fuels has increased 2.2 million bpd during the reference week ending April 8, compared to year-ago levels,” JP Morgan analysts said in a client note.

A rebound in China along with other Asia countries accounted for two-thirds of global mobility fuel demand growth, the analysts said.

Friday morning’s marginally higher levels come at the end of a week in which both benchmarks reached their highest levels in more than two months on decelerating US inflation data and a weakening dollar.

WTI has jumped 2% so far this week and Brent is 1.3% higher, with both heading for a fourth straight week of gains.

The US dollar index was trading at roughly a one-year low, after US consumer and producer price data releases this week raised expectations that the Fed was approaching the end of its rate hiking cycle.

The weakening greenback makes dollar-denominated oil cheaper for investors holding other currencies, boosting demand.

Analysts say current prices could be close to a technical ceiling, however.

“It looks like the rally in crude prices has finally hit a wall,” OANDA analyst Edward Moya said in a note.

Oil prices are expected to record an upward trend but the increments are expected to be capped at USD 90 a barrel, said CMC Markets analyst Leon Li.

(Reporting by Andrew Hayley in Beijing and Trixie Yap in Singapore; Editing by Sonali Paul and Tom Hogue)

Oil rises, logs weekly gains after IEA predicts record demand

NEW YORK, April 14 (Reuters) – Oil prices were up on Friday and secured a fourth straight week of gains after the West’s energy watchdog said global demand will hit a record high this year on the back of a recovery in Chinese consumption.

The International Energy Agency (IEA) also warned that deep output cuts announced by the Organization of the Petroleum Exporting Countries (OPEC) and other producers led by Russia – a group known as OPEC+ – could exacerbate an oil supply deficit and hurt consumers.

Brent crude futures settled at USD 86.31 a barrel, rising 22 cents, or 0.3%. West Texas Intermediate crude futures (WTI) settled at USD 82.52 a barrel, gaining 36 cents, or 0.4%.

Both contracts posted a fourth consecutive week of gains amid easing concerns over a banking crisis that struck last month and the surprise decision last week by OPEC+ to further cut output.

Brent is set to post a 1.5% weekly gain, while WTI was up 2.4% on the week. Four weeks of increases would be the longest such streak since June 2022.

In its monthly report on Friday, the IEA said world oil demand is set to grow by 2 million barrels per day (bpd) in 2023 to a record 101.9 million bpd, driven mostly by stronger consumption in China after the lifting of COVID restrictions there.

Jet fuel demand accounts for 57% of the 2023 gains, it said.

But OPEC on Thursday flagged downside risks to summer oil demand as part of the backdrop for its decision to cut output by a further 1.16 million bpd.

The IEA said the OPEC+ decision could hurt consumers and global economic recovery.

“Consumers confronted by inflated prices for basic necessities will now have to spread their budgets even more thinly,” it said in its monthly oil report. “This augurs badly for the economic recovery and growth.”

The IEA said it expected global oil supply to fall by 400,000 bpd by the end of the year, citing an expected production increase of 1 million bpd from outside of OPEC+ beginning in March versus a 1.4 million bpd decline from the producer bloc.

“The narrative has taken hold again of rising demand and relative supply tightness, and that’s what’s keeping oil buoyed,” said John Kilduff, partner at Again Capital LLC.

Also helping to boost prices was the US oil and gas rig count, an indicator of future supply, which fell for the third week in a row, according to Baker Hughes data. US oil rigs fell by two to 588 this week, their lowest since June 2022, while gas rigs fell by one to 157.

The US dollar index was trading at roughly a one-year low, after US consumer and producer price data releases raised expectations that the Fed was approaching the end of its rate-hiking cycle.

Still, the greenback edged up on Friday, making dollar-denominated oil more expensive for investors holding other currencies and limiting oil price growth.

(Additional reporting by Ron Bousso in London, Andrew Hayley in Beijing, Trixie Yap in Singapore and Arathy Somasekhar; editing Sharon Singleton, Susan Fenton and Josie Kao)

Soft landing hopes fuel that Friday feeling

April 14 (Reuters) – Asian markets are poised to end the week on a positive note, spurred by a powerful rally on Wall Street and growing optimism that the Fed might achieve the holy grail of a ‘soft landing’ for the US economy.

Thursday’s surge across US markets followed the stunning Chinese trade figures for March earlier in the day that suggested global demand may be stronger than most people had anticipated.

The upside surprise to the export and trade balance figures was so big that China’s broader economic surprises index jumped to its highest in 17 years, and one of the highest on record.

Little wonder investors in Asia go into the final day of the week in buoyant mood, especially after US data on Thursday showed cooling inflation and labor market pressures, trends that could convince the Fed to pause its rate-hiking campaign.

The Nasdaq surged 2% for its best day in a month, the VIX ‘fear gauge’ of S&P 500 index volatility fell to its lowest in over two months and US bond market volatility fell back below the pre-banking shock levels of a month ago.

Another good indication of how broad the ‘risk on’ rally is globally is the dollar. It continues to weaken and on Thursday fell to its lowest in over two months – it is a whisker away from a one-year low.

The dollar is on track for its biggest weekly fall in three months and has weakened five weeks in a row – a downturn not recorded since mid-2020.

Asian currencies are enjoying the ride too – Indonesia’s rupiah which hit an eight-month high on Thursday, and Singapore’s dollar rose to a two-month peak.

The ‘Sing dollar’ is liable to move further on Friday, with traders braced for first quarter GDP growth data and the central bank’s semi-annual monetary policy decision.

The Monetary Authority of Singapore (MAS) is expected to tighten monetary policy for the sixth time in a row, amid persistent price pressures in the Asian financial hub due to global supply chain disruptions.

A slim majority of analysts polled by Reuters expect MAS to tighten, although this could be the last time if the growth picture is any guide – the first estimate of Q1 GDP is expected to show growth slowing sharply on an annual basis and shrinking from the previous quarter.

Lastly, Indian wholesale price inflation is expected to virtually halve in March to a 1.87% annual rate from 3.85%. It was 16% less than a year ago.

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

– IMF/World Bank spring meetings in Washington

– Singapore Q1 GDP and policy decision

– India WPI inflation (March)

(By Jamie McGeever; Editing by Josie Kao)

US recap: EUR/USD hits 1-year high as US data favor end of Fed hikes

April 13 (Reuters) – EUR/USD hit a 1-year high as markets coalesced around the Fed having maybe one more 25bp rate hike before a spate of rate cuts begin later this year in the wake of March US PPI, which fell far more than forecast while jobless claims inched higher.

The dollar’s initial slide on the data, in the wake of other somewhat disinflationary numbers of late, was curtailed by Treasury yields rebounding from earlier lows, in part because the Fed remains well favored to hike in May.

Data point to an economy that is cooling but not drastically enough to force the US central bank to abandon its focus on inflation just yet.

Markets, see the delayed impact of aggressive rate hikes, tighter bank credit after March’s record fall in smaller banks’ deposits and a shrinking pool of savings from the pandemic pointing to economic weakness later this year and next.

Weekly Fed bank data late Thursday and Friday will be checked for banking crisis fallout. But Friday’s March retail sales and April Michigan sentiment data will set the pre-May Fed meeting tone and likely extend dollar weakness.

EUR/USD rose 0.5% even with Reuters reporting ECB policymakers were converging on a 25bp May hike while markets still project a 41% probability of a 50bp increase and a total of 78bp of tightening by October.

Two-year Bund-Treasury yield spreads are their least negative since 2021 and EUR/USD prices are now well clear of the 100-week moving average with room to run.

Sterling rose 0.3% after making new 10-month highs. Fed rates are seen falling below the BoE’s by November. Longer-term charts suggest a rise to roughly 1.29 is plausible.

USD/JPY fell 0.3% after recovering with Treasury yields from a dive toward this week’s lows.

Aussie surged 1.4% amid risk-on flows, strong jobs data and China growth hopes.

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

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