Sterling briefly jumps after British government tax U-turn

LONDON, Oct 3 (Reuters) – The pound briefly jumped on Monday on news Britain would reverse plans to cut the highest rate of income tax, one contentious part of a package of financial measures that last month sent sterling and British government bonds tumbling.

“It is clear that the abolition of the 45p tax rate has become a distraction from our overriding mission to tackle the challenges facing our country,” finance minister Kwasi Kwarteng said in a statement.

The pound rose as high as USD 1.128 after news of the U-turn was reported by the BBC, the currency’s highest level since Sept. 22, the day before Kwarteng announced a new “growth plan” that would cut taxes and regulation, funded by vast government borrowing.

Sterling then gave up most of those gains and was last at USD 1.1177 up 0.1%.

The euro was down 0.27% against the pound at 87.61 pence.

“From a markets perspective, it is a good step in the right direction. It will take time for markets to buy the message but it should be ease the pressure, ” said Jan von Gerich, chief analyst, Nordea

“Questions still remain and sterling will likely remain under pressure,” he added.

Philippines rejects all bids at T-bills auction

MANILA, Oct 3 (Reuters) – Following are the results of the Philippine Bureau of the Treasury’s (BTr) auction of T-bills on Monday:

* BTr rejects all bids for 91-day, 182- and 364-day T-bills

* Details are on the BTr’s website

(Reporting by Neil Jerome Morales)

((neiljerome.morales@thomsonreuters.com; +632 8841 8914;))

Gold climbs on weaker dollar even as rate hikes loom

Oct 3 (Reuters) – Gold prices rose on Monday as a softer dollar rekindled some of bullion’s appeal for overseas buyers, although the prospects of sharp interest rate hikes by the US Federal Reserve and other major central banks capped further gains.

Spot gold was up 0.5% at USD 1,667.89 per ounce, as of 0603 GMT. US gold futures GCv1 were 0.2% higher at USD 1,675.30.

The dollar index was down 0.4% against a basket of currencies, making greenback-priced bullion less expensive for overseas buyers. Benchmark US 10-year Treasury yields were also lower after rising for two days.

“Recovery (gold’s) seems to be more of a near-term moderation from oversold technical conditions, as no slack in Fed’s tightening policies may suggest that any upside could potentially be sold into,” IG market strategist Yeap Jun Rong said.

The Federal Reserve’s No. 2 official on Friday added her full endorsement of the US central bank’s higher-for-longer game plan for interest rates to curb inflation.

Last month, the Fed raised its policy interest rate by 75 basis points, its third straight increase of that size, and signalled more large hikes to come this year.

Gold posted its sixth straight monthly decline in September, marking its longest streak of monthly losses in four years.

Though gold is often seen as a hedge against inflation, rising US interest rates increase the opportunity cost of holding the non-yielding asset and boost the dollar.

Meanwhile, euro zone inflation hit a record high last month, reinforcing expectations for another jumbo rate hike this month from the European Central Bank.

On investors’ radar are the US non-farm payrolls data due on Friday and a host of manufacturing PMI data for insight into the health of the global economy.

“A more lukewarm (payrolls) reading may be preferred by gold bulls for a relief rally, but the absence of any pause in Fed’s policies could still suggest that the overall downward trend may remain intact,” IG’s Yeap Jun Rong said.

Spot silver climbed 2.3% to USD 19.44 per ounce, platinum rose 0.6% to USD 864.45 and palladium was up 0.5% at USD 2,169.19.

(Reporting by Eileen Soreng in Bengaluru; Editing by Sherry Jacob-Phillips and Subhranshu Sahu)

Oil jumps about $4 as OPEC+ weighs biggest output cut since 2020

HOUSTON, Oct 3 (Reuters) – Oil prices jumped nearly USD 4 a barrel on Monday as OPEC+ considered reducing output by more than 1 million barrels per day (bpd) to buttress prices with what would be its biggest cut since the start of the COVID-19 pandemic.

Brent crude futures for December delivery rose USD 3.72 to USD 88.86 a barrel, a 4.4% gain. US West Texas Intermediate crude rose USD 4.14, or 5.2%, to USD 83.63 a barrel.

Oil prices have declined for four straight months since June, as COVID-19 lockdowns in top energy consumer China hurt demand while rising interest rates and a surging US dollar weighed on global financial markets.

The Organization of the Petroleum Exporting Countries (OPEC) and its allies, known collectively as OPEC+, is considering an output cut of more than 1 million bpd ahead of Wednesday’s meeting, OPEC+ sources have told Reuters.

That figure does not include additional voluntary cuts by individual members, one OPEC source added.

Most traders were expecting cuts of about 50,000 bpd, said Dennis Kissler, senior vice president of trading at BOK Financial.

If agreed, it will be the group’s second consecutive monthly cut after reducing output by 100,000 bpd last month.

“After a year of tolerating extremely high prices, missed targets and severely tight markets, the (OPEC+) alliance seemingly has no hesitation when it comes to acting rapidly to support prices amid a deterioration in the economic outlook,” Oanda market analyst Craig Erlam said.

OPEC+ missed its production targets by nearly 3 million bpd in July, two sources from the producer group said, as sanctions on some members and low investment by others stymied its ability to raise output.

US crude oil stockpiles were expected to have increased by around 2 million last week, a preliminary Reuters poll showed on Monday. Inventories at storage hub Cushing, Oklahoma, built by 730,297 barrels to 29.6 million barrels, according to a market source, citing Genscape data.

While prompt Brent prices could strengthen short term, concerns about a global recession are likely to limit the upside, consultancy FGE said.

“If OPEC+ does decide to cut output in the near term, the resultant increase in OPEC+ spare capacity will likely put more downward pressure on long-dated prices,” it said in a note on Friday.

The dollar index fell for a fourth consecutive day on Monday after touching its highest level in two decades. A cheaper dollar could bolster oil demand and support prices.

Goldman Sachs said it believes the OPEC+ supply cut could help remedy large exodus of oil investors that has left prices under-performing fundamentals.

(Reporting by Noah Browning; Additional reporting by Florence Tan and Muyu Xu; Editing by Paul Simao, David Gregorio and Lisa Shumaker)

Japan ready to take ‘decisive’ steps on yen – finance minister

TOKYO, Oct 3 (Reuters) – Japan stands ready to take “decisive” steps in the foreign exchange market if excessive yen moves persist, Finance Minister Shunichi Suzuki said on Monday, in a new warning against investors selling off the currency.

“It’s important for currencies to move stably as sharp and one-sided moves are undesirable,” Suzuki told a news conference after a cabinet meeting, referring to recent sharp falls in the yen.

“We intervened the other day and we have said we would take decisive steps as needed. There’s no doubt this has guarded against speculative moves,” he said.

The remarks did little to prevent the yen from weakening further. The dollar briefly rose to 145.40 yen later on Monday, marking the highest level since Japan intervened in the currency market to prop up the yen on Sept. 22.

“There’s no change to our stance that we will take decisive steps in the currency market as needed,” Suzuki told reporters after the dollar’s rise to the daily high.

Japan spent up to 2.8 trillion yen (USD 19.34 billion) intervening in the foreign exchange market last month to slow the yen’s decline when it fell to a 24-year low near 146 to the dollar.

Excessive currency moves, whether up or down, make it difficult for Japanese firms to plan their business, policymakers say.

The head of Japan’s biggest business lobby, Keidanren, hailed the government’s action against speculative yen moves.

“It was meaningful for the government to show its will, not to leave speculative moves unattended, although such action won’t be taken so frequently,” Keidanren head Masakazu Tokura told reporters.

Asked about the large size of intervention, Suzuki said the amount was decided by taking comprehensive factors into account.

(USD 1 = 144.7700 yen)

(Reporting by Tetsushi Kajimoto
Editing by Shri Navaratnam and Christian Schmollinger)

Global hedge fund launches plunge, liquidations rise amid turmoil

NEW YORK, Sept 30 (Reuters) – New hedge fund launches dove in the second quarter to the lowest level since the 2008 global financial crisis, while fund liquidations spiked, industry data provider HFR said on Friday.

There were 80 hedge fund launches between April and June, down 57% from the first quarter and the lowest number of new funds since the fourth quarter of 2008, when 56 funds were launched, according to HFR.

Another 156 hedge funds closed their doors between April and June, 24% more liquidations than the previous quarter. Overall, the number of hedge funds fell to 9,237 in the second quarter from 9,313.

“Risk-off sentiment drove investor risk aversion, with investors maintaining exposures to established funds through the current volatile market paradigm of unprecedented geopolitical and macroeconomic uncertainty,” said Kenneth J. Heinz, president of HFR.

The data underscores the challenges faced by the hedge fund industry in 2022 amid market turmoil, with USD 7.7 billion in net outflows in the first half of the year.

Still, hedge funds on average have outperformed the S&P 500. The HFRI fund-weighted composite index is down 4% this year through August, while the S&P plunged 17% in the same period.

(Reporting by Carolina Mandl in New York; Editing by Cynthia Osterman)

Sterling dips from high above 1.12 as month-end USD selling ebbs

Sept 30 (Reuters) – GBP/USD weakened on Friday, falling 130 pips from early session highs by 1.1235 as quarter-end and post-BoE intervention dollar selling ebbed, and it is likely to slide further as traders question the merits of the UK’s fiscal stimulus amid more hawkish monetary policy.

Technically, Wednesday’s close above 1.1033, the 50% Fib of 1.1738-1.0327 signals GBP/USD bears are retreating and bulls focus is turning to a series of daily moving averages from the 21-DMA at 1.1311 to the 55-DMA at 1.1728.

However, reduced quarter-end dollar selling and Friday’s hot euro zone and US inflation data should keep the Fed, and ECB, on a higher-for-longer hike path, usurping recent sterling gains.

Despite Friday’s significant fall from one-week highs by 1.1235, the break of 1.1033 should be respected and bulls are in control while GBP/USD is above 1.0781, the 50% Fib of 1.0327-1.1235.

The key roadblock for sterling remains conflicting fiscal and monetary policies. While the BoE’s gilt intervention calmed markets in the near-term, sterling traders may be less optimistic as they await finance minister Kwasi Kwarteng’s medium-term fiscal plan on Nov. 23.

(Paul Spirgel is a Reuters market analyst. The views expressed are his own)

Gold bound for dismal quarter on aggressive rate hike fears

Sept 30 (Reuters) – Gold rose to a one-week high on Friday as the dollar retreated from recent highs but bullion was headed towards its worst quarter since March last year, buckling under fears of impending large interest rate hikes by the US Federal Reserve.

Spot gold was 0.1% higher at USD 1,661.89 per ounce by 1:45 p.m. EDT (1745 GMT) and gained 1.1% so far this week.

US gold futures settled 0.2% higher at USD 1,672.

“The gold market’s at an area where we can see some movement higher… (but) that’s all dependent on what the dollar does and rates going into the weekend,” said Daniel Pavilonis, senior market strategist at RJO Futures.

Gold is down 8% for the quarter so far. This would also be bullion’s sixth straight monthly drop, its longest streak of monthly declines in four years.

Gold showed muted reaction after Russian President Vladimir Putin signed treaties to annex four Ukrainian regions partly occupied by his forces.

“We’re really facing high-inflation environment, which is ultimately the reason why the Fed has to be so aggressive. These macro forces really sap investment appetite from gold and so investors aren’t looking at the metal as proper safe haven hedge,” said Daniel Ghali, commodity strategist at TD Securities.

Rising interest rates dim bullion’s appeal as they increase the opportunity cost of holding the non-yielding asset.

Spot silver added 1.1% at USD 19.02 per ounce, while platinum fell 0.6% to USD 859.88. Both metals were headed for their second straight quarterly decline.

Palladium shed 1.2% to USD 2,174.75 per ounce, and has gained about 12.3% so far this quarter.

“We expect PGMs to perform better than other metals as the prospects of the auto sector improve in 2023, particularly demand for auto catalyst metals platinum and palladium,” analysts at ANZ said in a note.

“Issues with mine supply from South Africa mean that both platinum and palladium markets are likely to remain relatively tight.”

(Reporting by Kavya Guduru in Bengaluru; Editing by Marguerita Choy and Shailesh Kuber)

Japan spent record of nearly $20.0 billion on intervention to support the yen

TOKYO, Sept 30 (Reuters) – Japan spent up to a record 2.8 trillion yen (USD 19.7 billion) intervening in the foreign exchange market last week to prop up the yen, Ministry of Finance data showed on Friday, draining nearly 15% of funds it has readily available for intervention.

The figure was less than the 3.6 trillion yen estimated by Tokyo money market brokers for Japan’s first dollar-selling, yen-buying intervention in 24 years to stem the currency’s sharp weakening.

The ministry’s figure, indicating total spending on currency intervention from Aug. 30 to Sept. 28, is widely believed to have been used entirely for the Sept. 22 intervention. It would surpass the previous record for dollar-selling, yen-buying intervention in 1998 of 2.62 trillion yen. Confirmation on the dates of the spending will be released in November.

“This was a big burst of intervention, if it had happened on a single day, underscoring Japanese authorities’ determination to defend the yen,” said Daisaku Ueno, chief forex strategist at Mitsubishi UFJ Morgan Stanley Securities.

“But the impact of further intervention will diminish as long as Japan continues to intervene solo,” he said.

The intervention, conducted after the yen slumped to a 24-year low of nearly 146 to the dollar, triggered a sharp bounce of more than 5 yen per dollar from that low, although the currency has since drifted down again to around 144.25.

“Recent sharp, one-sided yen declines heighten uncertainty by making it difficult for companies to set business plans. It’s therefore undesirable and bad for the economy,” Bank of Japan Governor Haruhiko Kuroda was quoted as saying at a meeting with cabinet ministers on Friday.

Japan held roughly USD 1.3 trillion in reserves, the second biggest after China, of which USD 135.5 billion was held as deposits parked with foreign central banks and the Bank for International Settlements (BIS), according to foreign reserves data released on Sept. 7. Those deposits can easily be tapped to finance further dollar-selling, yen-buying intervention.

“Even if it were to intervene again, Japan likely won’t have to sell US Treasury bills and instead tap this deposit for the time being,” said Izuru Kato, chief economist at Totan Research, a think-tank arm of a major money market brokerage firm in Tokyo.

If the deposits dry up, Japan would need to dip into its securities holdings sized around USD 1.04 trillion.

Of the main types of foreign assets Japan holds, deposits and securities are the most liquid and can be converted into cash immediately.

Other holdings include gold, reserves at the International Monetary Fund (IMF) and IMF special drawing rights (SDRs), although procuring dollar funds from these assets would take time, analysts say.

(USD 1 = 144.4000 yen)

(Reporting by Leika Kihara and Tetsushi Kajimoto; Editing by Sam Holmes, Edmund Klamann & Shri Navaratnam)

Philippines’ BPI to merge with smaller Robinsons Bank

MANILA, Sept 30 (Reuters) – The Philippines’ oldest lender said on Friday it is merging with a smaller commercial bank to expand its client base and fast-track growth.

In a disclosure, Bank of the Philippine Islands (BPI) said it will be the surviving entity merging with unlisted Robinsons Bank. Stockholders of Robinsons Bank will own around 6% of BPI, it added.

(Reporting by Neil Jerome Morales)

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