Gold firms as dollar eases in run-up to Jackson Hole event

Aug 25 (Reuters) – Gold rose on Thursday as the dollar slipped from recent highs, while investors awaited the Jackson Hole symposium for cues on the Federal Reserve’s monetary policy.

Spot gold rose 0.3% to USD 1,756.55 per ounce by 14:20 p.m. ET.

US gold futures settled 0.6% higher at USD 1,771.4.

Focus will be on US Federal Reserve Chair Jerome Powell’s speech at the central banks’ conference in Wyoming on Friday for hints on the Fed’s interest rate hike strategy.

“Gold is just seeing a corrective bounce from recent selling pressure. The dollar has backed off from its highs and there is some positioning ahead of Powell’s speech,” said Jim Wyckoff, senior analyst at Kitco Metals.

“In the near term, gold charts are still bearish. But in the longer-term, there is still upside potential for gold as there will be some safe-haven demand any time the economy is wobbly.”

The dollar index fell 0.2%, making gold cheaper for overseas buyers.

Gold is considered a safe investment amid economic turbulence. However, interest rate hikes increase the opportunity cost of holding bullion.

Investors also took stock of data showing the US economy contracted at a moderate pace than initially thought in the second quarter.

In the physical market, top consumer China’s net gold imports via Hong Kong hit a nine-month high in July.

Spot silver rose 0.2% to USD 19.19 per ounce, platinum gained 0.3% to USD 879.11 per ounce.

Palladium bounced 5.4% to USD 2,144.07 per ounce.

UBS raised its palladium price outlook on “renewed robust imports by China”, forecasting prices at USD 1,900 per ounce in December, but retained a negative outlook on the metal over slowing growth in Europe and North America.

(Reporting by Ashitha Shivaprasad and Rahul Paswan in Bengaluru; Editing by Krishna Chandra Eluri and Vinay Dwivedi)

Tesla shares close lower after 3-1 stock split

Aug 25 (Reuters) – Tesla Inc’s shares closed 2% lower on Thursday as a three-for-one stock split announced by the world’s most valuable automaker to woo retail investors came into effect.

The stock opened at USD 302 and closed at USD 296.07 as the split allowed investors to get two additional shares for each they owned as of Aug. 17. It had closed at USD 891.29 before the split on Wednesday.

This is the second stock split by Tesla in as many years and follows similar moves by high-growth companies such as Amazon.com and Google-parent Alphabet to address the growing need to diversify investor base.

Stock splits “certainly have a higher appeal to retail investors and makes their options more affordable as well,” said Art Hogan, chief market strategist at B. Riley.

“Retail investors are a very important cohort for Tesla and today’s stock split is an acknowledgment of that fact.”

Austin-based Tesla debuted in 2010 at USD 17 and in a decade surged to a peak price of USD 2,000, becoming one of the highest priced shares on Wall Street and making it difficult for small investors to bet on the high-growth stock.

The company decided to split its stock on a five-for-one basis in August 2020 and breached USD 1 trillion in market capitalization in 2021.

The EV maker is the sixth company in the S&P 500 index to split its shares this year, according to Howard Silverblatt, senior index analyst for S&P and Dow Jones indices.

Tesla’s ticker was trending on social media stocktwits.com, indicating increased chatter among individual investors. The shares have lost about 11% of their value since March when the company announced plans to increase its number of shares.

“In typical buy-the-rumor, sell-the-news style, investors tend to drastically scale back purchases of splitting stocks in the weeks ensuing the effective split date, causing price momentum to slow,” analysts at Vanda Research said in a note.

A stock split does not affect the fundamentals of a company, but makes it easier for individual investors to do small trades. The benefits of such splits, however, are becoming less clear as brokerages let customers buy parts of a company’s share.

Tesla’s shares have fallen about 16% so far this year amid a selloff in high-growth stocks due to worries over aggressive interest rate hikes and geopolitical uncertainties.

Tesla shares since its first stock split in August 2020https://tmsnrt.rs/3pPFYuh

(Reporting by Akash Sriram and Medha Singh in Bengaluru; Additional reporting by Devik Jain; Editing by Sriraj Kalluvila and Arun Koyyur)

Energy, tech stocks keep European shares afloat amid recession worries

Aug 25 (Reuters) – European shares ended higher on Thursday as oil and tech stocks rose, although gains were capped by mounting concerns over a possible recession induced by an energy crisis.

The pan-European STOXX 600 rose 0.3%. Energy shares jumped 1.2% to near 12-week highs as crude prices climbed on mounting supply concerns.

Russia will halt natural gas supplies to Europe via Nord Stream 1 for three days from Aug. 31, piling pressure on the region as it seeks to refuel ahead of winter.

“Our year-end target for the STOXX 600 is 410, but the downside risks are growing with higher natural gas prices and increased probability that Europe will fall into a recession,” said Sutanya Chedda, an equity strategist at UBS.

A Reuters poll is indicating that the STOXX 600 may fall to 425 points by year-end.

Technology stocks rose 1.0%, taking cues from their peers across the Atlantic as megacap growth stocks boosted Wall Street, with focus squarely on Federal Reserve’s annual Jackson Hole symposium.

“Stocks are ticking higher after a largely indecisive day that has seen European indices tread water while US tech giants provide a positive influence on the other side of the pond,” said Joshua Mahony, senior market analyst at online trading platform IG.

“Ultimately, markets await the views of one man, with Jerome Powell due to appear in Wyoming tomorrow to bring clarity over how he sees the Fed policy reacting to the economic crisis.”

Germany’s DAX rose 0.4% as data showed its economy expanded by 0.1% in the second quarter, beating expectations. A separate survey showed the economy was set to shrink in the third quarter, while business morale fell in August.

The benchmark STOXX index has lost about 11% this year as markets assess the impact of rapidly rising interest rates and raging inflation on consumer spending and company earnings amid the energy crisis.

Minutes from the European Central Bank’s meeting last month showed policymakers appeared increasingly concerned that high inflation was getting entrenched at a time the bloc risks a recession.

Money markets are now pricing in 100 bps of ECB rate hikes by October. A 50 bps hike is fully priced in for September, plus a small probability of a 75 bps move.

Among individual stocks, Norwegian Air Shuttle fell 7.4% following downbeat second-quarter numbers, while Finnish utility Fortum shed 1.7% after posting a net loss of 7.4 billion euros (USD 7.4 billion).

Shares in Swiss group Novartis, which plans to spin off its generics unit, Sandoz, ended 0.8% lower.

(Reporting by Anisha Sircar and Shreyashi Sanyal in Bengaluru; Editing by Krishna Chandra Eluri, Anil D’Silva and Vinay Dwivedi)

Euro bounces back above parity as investor sentiment improves

LONDON, Aug 25 (Reuters) – The euro rebounded back above parity with the dollar on Thursday as the US currency’s recent rally ran out of steam and investors waited to see whether Federal Reserve Chair Jerome Powell would sound a more hawkish tone at a meeting this week.

A more bullish mood across markets also helped the euro, as well as currencies linked to broad investor sentiment such as the Australian dollar, which rallied nearly 1%.

Investors have also been bracing for the Fed to double down on its commitment to crushing inflation at its annual gathering in Jackson Hole, Wyoming, where Powell is due to speak.

The euro/dollar’s direction this week has largely been driven by soaring natural gas prices, which are correlated with a weaker euro because of the region’s dependence on gas for its energy needs. Worries about the global economy had sent investors into dollars earlier this week.

“The main driver of US dollar weakness overnight has been a temporary easing of global growth concerns,” said Lee Hardman, an analyst at MUFG, citing media reports that Chinese authorities are stepping up economic support measures with more planned funding for infrastructure.

The US dollar index, which measures the greenback against six counterparts, eased 0.4% to 108.17, but remained not far from its highest since September 2002 at 109.29, touched in mid-July.

The euro was 0.4% higher at USD 1.001 after this week hitting a 20-year low below parity.

The Australian dollar rose 1.1% to USD 0.6983, while the Japanese yen rallied 0.4% and sterling by half a percent.

The stronger Aussie dollar came as China’s yuan rebounded from a two-year low, helped by firmer-than-expected official guidance, which traders took as a sign that authorities are becoming increasingly uncomfortable with rapid losses in the currency.

“In terms of the sharp AUD bounce today, an obvious catalyst appears to be the bounce in CNH on the stronger than expected fixing,” said Sean Callow, a strategist at Westpac in Sydney.

“The positive equity mood in much of the region does help the Aussie in the background.”

Key data releases on Thurday in Europe include the German IFO numbers on the business climate and the release of the minutes of the European Central Bank’s July meeting, when it hiked interest rates by 50 basis points.

(Reporting by Tommy Reggiori Wilkes; Additional reporting by Kevin Buckland; Editing by Gareth Jones)

Oil prices rise on potential OPEC+ supply cuts; BP shuts US refinery units

SINGAPORE, Aug 25 (Reuters) – Oil prices rose on Thursday on mounting supply tightness concerns amid disruptions to Russian exports, the potential for major producers to cut output, and the partial shutdown of a US refinery.

Brent crude rose 45 cents, or 0.4%, to USD 101.67 a barrel, while US West Texas Intermediate crude was up 32 cents, or 0.3%, at USD 95.21 a barrel.

Both crude oil benchmark contracts touched three-week highs on Wednesday after the Saudi energy minister flagged the possibility that the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, will cut production to support prices.

“Brent crude oil prices rebounded above the USD 100/barrel mark following Saudi officials showing willingness to defend prices via an OPEC+ production cut if necessary,” Citi analysts said in a note.

Discussions on an agreement on Iran’s nuclear programme remain stalled, calling into question any resumption of its exports.

Talks between the European Union, the United States and Iran to revive the 2015 nuclear deal are continuing, with Iran saying it had received a response from the United States to the EU’s “final” text to resurrect the agreement.

ANZ analysts Daniel Hynes and Soni Kumari said that if a deal eventuates, it will likely weigh on sentiment and lower prices in the short term as the deal raises the prospect of 1 million barrels per day of Iranian oil hitting the market.

“Nevertheless, the market will remain tight as the deal will not offset the fall in Russian supply and the ongoing recovery in demand,” they added.

In the United States, the world’s biggest oil consumer, BP reported shutting some units at its Whiting refinery in Indiana after an electrical fire on Wednesday. The 430,000 barrel-per-day plant is a key supplier of fuels to the central United States and the city of Chicago.

Falling US crude and product stockpiles also added to the upward pressure on prices. Oil inventories fell by 3.3 million barrels in the week to Aug. 19 at 421.7 million barrels, steeper than analysts’ expectations in a Reuters poll for a 933,000-barrel drop.

The bullish impact was countered by a drawdown in gasoline inventories that was less than expected, reflecting tepid demand.

US gasoline stocks fell by 27,000 barrels in the week to 215.6 million barrels, compared with earlier expectations for a 1.5 million-barrel drop.

(Reporting by Jeslyn Lerh in Singapore; Additional reporting by Laura Sanicola in Washington; Editing by Sam Holmes, Christian Schmollinger and Ana Nicolaci da Costa)

BOJ policymaker vows to keep ultra-low rates, dovish guidance

TOKYO, Aug 25 (Reuters) – The Bank of Japan must maintain massive monetary stimulus and its dovish policy guidance until wages show clearer signs of increasing, one of its board members said, reinforcing the central bank’s outlier status in a global wave of monetary tightening.

Board member Toyoaki Nakamura also ruled out the chance of tweaking Japan’s ultra-low interest rates to stem the yen’s falls against the dollar, saying there was not much the BOJ can do to reverse a trend largely driven by US rate hikes.

“We’re not quite there yet,” Nakamura told a news conference, when asked whether the BOJ sees scope to adjust its dovish forward guidance that project interest rates will move at “current or lower levels.”

The BOJ must look at winter bonus payments and next year’s wage negotiations to determine whether it can tweak the guidance to a more neutral one, he said.

“It’s not right for Japan to join the global rate hike competition now,” Nakamura said, stressing the BOJ’s resolve to keep supporting the economy.

The BOJ has refrained from joining a flurry of rate hikes by central banks battling record surges in prices, as it focuses on supporting Japan’s delayed recovery from the pandemic’s hit.

The BOJ has deployed a massive amount of stimulus for nearly a decade to fire up inflation to its 2% target, and continues to cap long-term interest rates around zero to support the economy.

It also maintains a dovish bias on the future monetary policy path. Some analysts speculate the BOJ could tweak the guidance to a more neutral one as inflation creeps up.

In a speech delivered before the news conference, Nakamura said the outlook for Japan’s economy was clouded by a renewed spike in pandemic cases, supply constraints and persistent rises in global commodity prices.

Market jitters over aggressive rate hikes by major central banks to rein in rampant inflation could also trigger an outflow of capital from emerging economies, and hurt global growth, Nakamura added.

Such risks, and the fact Japan’s output gap remains negative, justify keeping monetary policy ultra-loose, he said.

Japan’s consumer inflation, at 2.4%, is much lower than the rate of over 8% seen in the United States and Europe due largely to sluggish wage growth, Nakamura said.

With recent price gains driven mostly by rising raw material costs, Japan must deal with the impact through targeted fiscal measures rather than monetary tightening, he added.

On the yen, Nakamura said the currency’s declines have been “quite sharp” this year and the high volatility likely has had a significant impact on Japan’s economy.

“The pros and cons of a weak yen vary depending on changes in the economic environment,” he added.

(Reporting by Leika Kihara; Editing by Himani Sarkar, Shri Navaratnam and Kim Coghill)

US recap: EUR/USD holds off new lows before ECB, Fed events

Aug 24 (Reuters) – The dollar index hung onto small gains on Wednesday but surrendered most of its earlier advance after attempts to test 20-year highs at 109.27/29 met with rejection before the London close, with markets hesitant to push for a breakout ahead of Friday’s Jackson Hole central bankers symposium.

That rejection unraveled the broad dollar bid resulting from Minneapolis Fed President Neel Kashkari’s comments late on Tuesday, which supported more rate hikes to quash inflation and avoid the possibility of a more persistent strain of elevated price growth.

Markets have positioned for Fed Chair Jerome Powell to echo those sentiments in his Jackson Hole speech, though mixed and mediocre economic data — including Wednesday’s US durable goods and pending home sales — raise the risks of a more nuanced message that investors interpret as dovish.

EUR/USD encountered a strong bid at Wednesday’s 0.9910 low by Tuesday’s nearly 20-year trough at 0.99005 on EBS, but offers at parity squelched the spike higher, with the recent rebound in 2-year bund-Treasury yields spreads unsupportive in the face of soaring European energy prices and ECB hesitance to fight inflation more forcefully.

EUR/USD must break and close below 0.9900 to embark toward support by 0.9600.

Investors will scrutinize Thursday’s release of minutes from the ECB’s July 21 meeting, which resulted in a 50bp rate hike. Another 50bp hike is favored at the Sep. 8 meeting, but the terminal rate is currently priced in just below 2%, seemingly short of neutral or restrictive with euro zone inflation at 8.9%.

Sterling fell 0.35%, deriving no support from the 24.4bp surge in 2-year gilt yields to their highest since 2008 — up an incredible 139bp just since Aug. 2 — with UK inflation expected to peak at least three times as high as the 4.3% terminal policy rate markets are projecting next year.

The technical objective for sterling’s slide from its pandemic peak is right by the March 2020 pandemic nadir at 1.1413.

USD/JPY gained 0.2% on the back of higher Treasury yields, but it will need Powell’s hawkish help to have a go at its 24-year highs.

The dollar was broadly higher against high-beta currencies.

Reports that a Chinese regulator has warned banks against yuan selling had little immediate impact, as it was perceived as aimed at slowing, rather than reversing, USD/CNH gains.

German August Ifo readings and US jobless claims are also among Thursday’s events.

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

Gold steadies as dollar stalls; focus on Jackson Hole event

Aug 24 (Reuters) – Gold steadied on Wednesday as the dollar gave up some gains from earlier in the session, while investors await the Jackson Hole central bankers’ event for clues on rate hikes.

Spot gold was up 0.1% at USD 1,749.35 per ounce by 2:29 p.m. ET (1829 GMT). It rose as much as 1% in the previous session.

US gold futures settled unchanged at USD 1,761.5.

Helping gold reverse some initial declines, the dollar stalled around the 108.6 level, after climbing as high as 109.112 earlier in the session.

A stronger dollar tends to dull appetite for gold among overseas buyers.

“The market is relatively quiet. Metal traders are waiting to see what comes out of the Jackson Hole meet and want to know more about Fed’s rate hike path,” said Bob Haberkorn, senior market strategist at RJO Futures.

Market participants await US Federal Reserve Chair Jerome Powell’s speech at the Jackson Hole Economic Policy Symposium on Friday. The speech could throw some light on the Fed’s monetary policy tightening path.

Gold tends to perform poorly if rates rise, as it yields no interest.

“Whether gold breaks USD 1,730 or not may well depend on what Powell has to say as well as whether traders are in the mood to listen, should he stick to his colleague’s hawkish script,” Craig Erlam, senior market analyst at OANDA wrote in a note.

Investors also await estimates for US second-quarter gross domestic product, and July consumer spending data due later this week.

Spot silver fell 0.7% to USD 19.03 per ounce.

“A mix of negative factors, including fear of recession, rising interest rates and a strong dollar, hit the price of the industrial metal hard,” aid Carlo Alberto De Casa, external analyst for Kinesis Money.

Platinum fell 0.6% to USD 874.64 per ounce while palladium rose 2.5% to USD 2,029.21.

(Reporting by Ashitha Shivaprasad and Seher Dareen in Bengaluru; Editing by Shinjini Ganguli and Vinay Dwivedi)

China regulator warns banks against yuan selling – sources

SHANGHAI/BEIJING, Aug 24 (Reuters) – China’s foreign exchange regulator phoned several banks on Wednesday to warn them against aggressively selling the Chinese currency, people with direct knowledge of the matter said, in a new sign of official discomfort with recent yuan weakness.

The Chinese yuan has been dropping against the dollar, and market participants said the telephone calls suggested authorities may be getting uncomfortable with the speed of the slide. The yuan jumped to 6.8605 per dollar in offshore trade after Reuters published news of the calls.

The currency hit a two-year low at 6.8704 earlier on Wednesday and is down about 1.8% in August so far, partly a reflection of gains in the greenback as U.S. interest rates rise, but also in response to China’s slowing economy.

“Buying too heavily in the dollar ended up with a call from the central bank,” said one of the sources at a bank.

Four people familiar with the calls requested anonymity as they were not authorized to discuss them publicly. They did not provide further details about the calls, either.

Responding to a Reuters request for comment about the regulator contacting banks earlier on Wednesday, the State Administration of the Foreign Exchange (SAFE) said it had not seen institutions unreasonably buying large amounts of foreign exchange in August, when market supply and demand were stable.

It added the yuan remained resilient compared with other non-dollar currencies, following recent rapid dollar gains, while China’s robust trade surplus and utilisation of foreign capital continued to play a fundamental role in stabilising cross-border flows.

“Foreign exchange expectations are stable, which helps to keep the yuan exchange rate basically stable at reasonable and balanced levels,” the SAFE said in an emailed statement to Reuters.

The yuan’s August’s slide is the steepest since April, when China cut banks’ currency reserve requirements to support the yuan.

Earlier on Wednesday, Chinese state media cited market analysts as saying that the yuan has no basis for long-term depreciation, but officials have thus far been publicly quiet on the market moves.

Ken Cheung, chief Asian FX strategist at Mizuho Bank, said the regulator’s move suggested that yuan depreciation expectations had started to pick up.

“The authorities may want to stabilise the market expectations before guiding the yuan to weaken in an orderly manner,” Cheung said.

Recent economic indicators showed that the Chinese economy is in the doldrums, with the latest alarm bell a record surge in unemployment payouts for June.

The country’s robust exports – the sole bright spot – could also face pressure from faltering global demand.

Outflows from the bond market and surprise cuts to two key interest rates last week also have put mounting pressure on the yuan, as yields and policy rates diverge from other big economies, where inflation is prompting hikes.

(Reporting by the Shanghai and Beijing Newsroom; Editing by Toby Chopra and Hugh Lawson)

Euro edges back towards two-decade low as energy supply crunch adds to growth fears

LONDON, Aug 24 (Reuters) – The US dollar recouped some data-inspired losses on Wednesday and edged back towards recent peaks, while the euro remained under pressure amid growing recession fears fuelled by a possible energy supply crunch.

Disappointing US services and manufacturing surveys released on Tuesday and a plunge in new home sales saw the dollar take a breather, after a run that pushed the US currency to its strongest level against the euro in two decades.

But Europe has its own growth concerns, stemming from its greater exposure to Russian gas supplies as the region seeks to refuel ahead of winter.

Front-month Dutch gas, the benchmark for Europe, rose again on Wednesday morning as the prospect of a halt to supplies from the Nord Stream 1 pipeline kept investors on edge.

On Friday, Russian state energy firm Gazprom said Russia will halt natural gas supplies to Europe for three days through Nord Stream 1 due to unscheduled maintenance.

The euro briefly bought USD 1 on Tuesday, but was back under pressure at USD 0.9950 in early European trade – barely above Tuesday’s low of USD 0.99005.

“It’s very difficult for the market to push the euro back above parity,” said Simon Harvey, head of FX analysis at Monex Europe, citing Europe’s energy supply concerns and the prospect of a hawkish Federal Reserve later in the week.

The Kansas City Federal Reserve’s Jackson Hole Symposium kicks off on Thursday with all eyes on a speech from Fed Chair Jerome Powell scheduled on Friday.

The dollar index, which measures its performance against a basket of six currencies, was last up 0.1% at 108.66, within touching distance of July’s two-decade peak of 109.29.

“Market participants remain squarely focused on Friday’s Jackson Hole Symposium as this week’s main event,” said Michael Brown, head of market intelligence at Caxton in London.

“With a hawkish Chair Powell likely on Friday, I’d expect the buck to resume its recent rally before too long,” Brown added, saying he expects the dollar index to breach its July high.

Overnight, Minneapolis Fed Bank President Neel Kashkari repeated the need for more aggressive rate hikes to control inflation.

Meanwhile, cyclical currencies such as the Australian and New Zealand dollars were under pressure amid fears of a global growth slowdown.

The Aussie was down 0.15% at USD 0.6920 and the kiwi slumped 0.23% to USD 0.6199.

The British pound hovered above the 2-1/2 year low of USD 1.1718 reached on Tuesday, while the Japanese yen traded up 0.2% at 136.48 per dollar.

(Reporting by Samuel Indyk in London, additional reporting by Rae Wee in Singapore, Editing by Tomasz Janowski)

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