Philippines airlifts aid to areas cut off since earthquake

BUCLOC, Philippines, July 29 (Reuters) – Philippine authorities on Friday airlifted supplies to districts that have been cut off since a powerful earthquake struck the main island of Luzon this week, as residents pleaded for food and temporary shelter.

The military said it had deployed personnel and helicopters to distribute relief goods to seven isolated towns in Abra province.

Around 3,000 food packs were airlifted to the communities, Romel Lopez, spokesperson for the social welfare ministry, told DZMM radio station.

Residents were still camping out in parks and open spaces in some areas, with their nerves frayed by the regular aftershocks since Wednesday’s magnitude 7.1 earthquake that killed six people and injured more than 270 in the northern part of Luzon.

In Abra’s Bucloc town, which was cut off until Thursday evening, residents were worried about more landslides due to aftershocks and rain, former mayor Gybel Cardenas told Reuters.

The quake damaged nearly 1,600 homes and about 100 pieces of infrastructure, the state disaster agency said, noting there had been more than 1,000 aftershocks with a magnitude ranging from 1.5 to 5.4 recorded so far.

“Our problem is we have yet to receive any assistance. We need food, milk, water and medicines,” Gamalea Dimaampao, a resident in Bangued town in Abra, told DZMM radio.

Families, including children, were sheltering under torn tarpaulin sheets, exposing them to the rains, Dimaampao said.

In Lagangilang town, also in Abra, residents asked for temporary shelter and food.

“Many families are trying to fit into makeshift tents. Adults sleep while seated while children cry during aftershocks,” resident Leonora Baruela told DZMM.

Abra, an area of plunging valleys and rugged mountains that is home to nearly 250,000 people, has accounted for most of the reported landslides and damaged roads since the quake.

The Philippines is prone to natural disasters and is located on the “Ring of Fire”, a band of volcanoes and fault lines around the rim of the Pacific Ocean. Earthquakes are frequent and there are an average of 20 typhoons each year, some triggering deadly landslides.

(Reporting by Neil Jerome Morales in Manila and Adrian Portugal in Bucloc; Editing by Ed Davies)

Wall Street weighs job cuts as deals slide in battered markets

NEW YORK, July 29 (Reuters) – Wall Street bosses are in a bind about whether to cut investment bankers or keep them on staff in hopes of a recovery from a brutal first half.

With risks of a recession looming and the Federal Reserve raising rates aggressively to stem inflation, prospects for arranging and financing deals have dried up.

Some banks are continuing to add staff, but the momentum has slowed from last year’s frenetic pace and some expect cuts to be inevitable.

While executives at US banking giants said market activity could bounce back after the first-half slump, it will probably be modest compared with a record year for transactions in 2021. Government stimulus and low interest rates set off a gusher of deals as companies rejigged their businesses last year, propping up bank divisions that advise corporations.

“There are a lot of people who think that we will get through this brutal uncertainty and that’s why, for example, there’s still much more hiring going on than we might have expected,” said Julian Bell, managing director and head of Americas at Sheffield Haworth, a recruitment firm for top executives.

Investment banks hired 152 managing directors in the Americas in the first half, Sheffield Haworth said in a report. That is a relatively modest decline from the 192 senior bankers who got new jobs in the same period last year, which was the busiest on record for the industry at large.

For now, banks have held off on widespread job cuts, which Bell said is “because people realize that we’re in a pause as opposed to a disaster – at least so far.”

But weakness has emerged in segments of banking.

JPMorgan Chase & Co (JPM), Wells Fargo & Co. (WFC) and other mortgage lenders have cut staff in recent months as the industry downsizes after having expanded to handle a surge in pandemic demand.

Global equity capital market transactions have dropped nearly 69% in the first half from a year earlier, while mergers and acquisitions declined by nearly 23%, according to Dealogic.

‘TOO MANY PEOPLE’

Tough times this year and a “mediocre” outlook for 2023 will prompt investment banks to cut 5% to 10% of their staff and reduce compensation for those who remain, said Alan Johnson, managing director at compensation consultancy firm Johnson Associates.

“They are not going to pay as well,” said Johnson. “People are putting lists together – usually this will begin after Labor Day. With the advantage of hindsight, firms have too many people.”

Goldman Sachs Group Inc GS.N executives said the firm has slowed down hiring, and is restarting employee performance reviews, which had been suspended during the pandemic. That annual exercise typically weeds out underperformers.

“There’s going to be more volatility and there’s going to be more uncertainty,” CEO David Solomon told analysts after the company reported second-quarter results on July 18. Solomon said in light of the current environment “we will manage all our resources cautiously and dynamically.”

The company’s headcount swelled to 47,000 at the end of June, up 15% from a year earlier.

JPMorgan, which boosted its headcount by 8% for corporate and investment banking in the second quarter from a year earlier, was also cautious about the outlook for transactions.

“While our existing pipeline remains healthy, conversion of the deal backlog may be challenging if the current headwinds continue,” Jeremy Barnum, JPMorgan’s chief financial officer, said on in its earnings call.

JPMorgan and Goldman declined to elaborate further when contacted by Reuters.

Executives in financial services and other industries including retail and technology are markedly less positive about dealmaking prospects, according to a market survey by KPMG, an accounting firm.

“The longer a down-cycle persists, more institutions may be forced to consider capacity reductions,” Dylan Roberts, KPMG partner looking at financial services strategy, told Reuters.

“There are other levers that banks can pull before, or in addition to, reducing headcount,” such as cutting bonuses, he said.

A senior investment banker at a European firm New York said the key question would be whether M&A comes back in 2023 and if markets normalize.

“That will be the debate and the discussion that banks will have as we get to the end of the year,” the banker said.

(Reporting by Saeed Azhar in New York; Editing by Lananh Nguyen and Matthew Lewis)

Oil prices steady as market weighs tight supply against recession fears

SINGAPORE, July 29 (Reuters) – Oil prices were broadly steady on Friday, lifted by supply concerns as attention turns to the next meeting between OPEC and its allies, though fears of recession capped gains.

US West Texas Intermediate (WTI) crude futures for September delivery rose 67 cents, or 0.7%, to USD 97.09 a barrel by 0640 GMT, reversing losses from the previous session and on track for a nearly 3% rise for the week.

Brent crude futures for September settlement, due to expire on Friday, dipped 12 cents, or 0.1%, at USD 107.02 a barrel. The more active October contract climbed 48 cents, or 0.5%, to USD 102.31.

“It certainly feels like we are back in trade-off mode again, where sentiment is shifting between recessionary risks in H2 and a fundamentally undersupplied market,” said Stephen Innes, managing partner at SPI Asset Management.

A key driver will be the next meeting of the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, together called OPEC+, on Aug. 3.

Producers have now unwound the record 9.7 million barrels per day (bpd) supply cut they agreed in April 2020, when the COVID-19 pandemic slammed demand.

“Oil prices have little chance of (posting) deep losses on the back of a weak US dollar and the ongoing supply crunch,” said CMC Markets analyst Tina Teng.

OPEC+ sources said the group will consider keeping oil output unchanged for September, but two OPEC+ sources also told Reuters a modest increase would be discussed.

A decision not to raise output would disappoint the United States after US President Joe Biden visited Saudi Arabia this month hoping to strike a deal on oil production.

A senior US administration official said on Thursday the government was optimistic about the OPEC+ meeting, and said extra supply would help stabilize the market.

Analysts, however, said it would be difficult for OPEC+ to boost supply much given that many producers are struggling to meet their production quotas due to a lack of investment in oil fields.

“OPEC production is constrained, though supplies are stabilizing in Libya and Ecuador. Under-investment in many member countries will keep production constrained,” ANZ Research analysts said.

(Reporting by Sonali Paul in Melbourne and Jeslyn Lerh in Singapore; Editing by Kenneth Maxwell and Kim Coghill)

Gold set for best week in nearly 5 months on softer dollar

July 29 (Reuters) – Gold prices rose on Friday and were on course for their best week in nearly five months, as the US dollar extended its retreat in the wake of worrying US economic data.

Spot gold rose 0.5% to USD 1,766.08 per ounce by 0824 GMT. It has gained about 2.1% so far this week, the most since early-March.

US gold futures also rose 0.5% to USD 1,778.50.

Gold remains inversely correlated to the dollar and yields, rather than being a gold story in itself, OANDA senior analyst Jeffrey Halley said.

Despite an upbeat week for gold, it was still poised for a fourth consecutive monthly drop, its worst run of monthly losses since November 2020.

The dollar has spent most of July hovering around 20-year highs, hammering demand for greenback-priced gold among other currency holders.

Also weighing on bullion prices were top central banks adopting an aggressive approach to interest rate hikes and monetary policy tightening in their attempt to combat inflation, along with a strong showing from US Treasury yields earlier in July.

Higher rates lift bond yields, increasing the opportunity cost of holding non-yielding gold.

“Although bullion saw a sell-off below USD 1,700 (earlier this month), it is significant that long-term support at USD 1,675/80 was tested and held. Gold has been trying to form a bottom since,” Halley said.

The US economy unexpectedly contracted in the second quarter, raising risks of an economic slowdown, which helped lift safe-haven gold’s prices by more than 1% on Thursday.

Spot silver firmed 0.2% to USD 20.02 per ounce, but is set for a monthly loss. Platinum rose 0.9% to USD 896.15.

Palladium eased 0.2% to USD 2,072.87, but has gained about 7% this month, its best since February.

(Reporting by Bharat Govind Gautam in Bengaluru; Editing by Sherry Jacob-Phillips and Vinay Dwivedi)

Wall Street ends up sharply for 2nd day; Amazon.com, Apple jump after hours

NEW YORK, July 28 (Reuters) – US stocks on Thursday rallied for a second day, with all three major indexes ending up more than 1% as data showing a second consecutive quarterly contraction in the economy fueled investor speculation the Federal Reserve may not need to be as aggressive with interest rate hikes as some had feared.

The yield on benchmark 10-year Treasury notes retreated following the data, while utilities and real estate – both of which tend to rise when yields fall – were the day’s best-performing S&P 500 sectors.

The decline in yields may suggest “that markets think the Fed will have to pivot and move rates lower at some point, maybe in the next 12-month period,” said Mona Mahajan, senior investment strategist at Edward Jones.

“It does imply the pace of tightening will become more gradual going forward.”

In addition, the growth forecast for second-quarter earnings has risen this week as more S&P 500 companies reported results and beat analyst expectations. Among them, Ford Motor Co F.N shares jumped 6.1% after it reported a better-than-expected quarterly net income.

After the closing bell, Amazon.com (AMZN) shares shot up more than 12% as the online retailer reported quarterly sales that beat Wall Street estimates. Amazon.com ended the regular session up 1.1%. Shares of Apple (AAPL) were up more than 3% after hours following the company’s quarterly report and upbeat forecast, and S&P 500 e-mini futures were up 2% late.

Early in the day, the US Commerce Department said the American economy unexpectedly contracted in the second quarter – the second straight quarterly decline in gross domestic product (GDP) reported by the government.

The news increased the possibility that the economy was on the cusp of a recession, and some investors said it might deter the Fed from continuing to aggressively increase rates as it battles high inflation.

The Dow Jones Industrial Average rose 332.04 points, or 1.03%, to 32,529.63 the S&P 500 gained 48.82 points, or 1.21%, to 4,072.43 and the Nasdaq Composite added 130.17 points, or 1.08%, to 12,162.59.

The Nasdaq registered its biggest two-day percentage gain since May 27.

Stocks had rallied in the previous session when the Fed raised rates and comments by Fed Chairman Jerome Powell eased some worries about the pace of rate hikes.

“More investors are getting in now because they think at least there’s not going to be any big surprises over the balance of the summer,” as far as rates are concerned, said Alan Lancz, president of Alan B. Lancz & Associates Inc, an investment advisory firm based in Toledo, Ohio.

The Fed on Wednesday raised the benchmark overnight rate by three-quarters of a percentage point. The move followed a 75 basis points hike last month and smaller moves in May and March, in an effort by the US central bank to tamp down soaring inflation.

Investors have expressed concern that inflation and aggressive Fed rate hikes could at some point tip the economy into a recession.

Among declining stocks, Facebook and Instagram parent Meta Platforms Inc. (META) fell 5.2% after it posted its first-ever quarterly drop in revenue.

Volume on US exchanges was 11.21 billion shares, compared with the 10.86 billion–share average for the full session over the last 20 trading days.

Advancing issues outnumbered declining ones on the NYSE by a 3.56-to-1 ratio; on Nasdaq, a 1.66-to-1 ratio favored advancers.

The S&P 500 posted three new 52-week highs and 31 new lows; the Nasdaq Composite recorded 67 new highs and 97 new lows.

(Reporting by Caroline Valetkevitch; Editing by Jonathan Oatis)

Potential US recession could feed an already vicious bear market

NEW YORK, July 28 (Reuters) – The prospect of a US recession could mean more pain for battered stocks, despite a recent rebound that has taken the benchmark index to its highest level in more than a month.

Data on Thursday showed the US economy contracted for the second straight quarter – fulfilling an often-cited definition of a recession. Robust job growth accompanying the current slowdown has sparked debate on whether the economy is actually in a recession this time around, and the official arbiter of recessions – the National Bureau of Economic Research – has not yet declared one.

If the US does turn out to be in a recession, however, history shows the rough ride stock investors have endured this year may get even bumpier.

Bear markets accompanied by a recession tend to be steeper than those without an economic downturn, according to the Wells Fargo Investment Institute. Among bear markets since 1946, the average decline with a recession was 35.8% versus 27.9% on average without a recession, their data showed.

At its low point in mid-June, the S&P 500 had dropped 23.6% from its high. It has since rebounded over 10%.

Sameer Samana, senior global market strategist at Wells Fargo Investment Institute, said the stock market may have only partially priced an economic downturn, despite its big drop this year.

“We have gone a good ways toward discounting a recession at least with respect to historical averages. The bad news is there could be as much as another 10% more down” from the recent lows, he said.

To be sure, not everyone believes the US economy is in a recession. Federal Reserve chair Jerome Powell on Wednesday said a strong employment market made it unlikely that a recession had started, while the White House is vigorously pushing back against recession chatter as it seeks to calm voters ahead of the Nov. 8 midterm elections.

Some investors have also pointed to data showing the economy remains on solid footing. Corporate profits, for example, are continuing to rise, with second-quarter S&P 500 earnings on track to have climbed 7.6% from a year ago, according to Refinitiv IBES.

Still, data from Deutsche Bank showed that since 1947, there have never been two successive quarters of negative economic growth without an accompanying recession. Thursday’s data showed gross domestic product fell at a 0.9% annualized rate last quarter.

A recession is “almost a slam dunk over the next 12 months,” wrote Jim Reid, the bank’s head of thematic research, but added that he wants “to see more evidence of employment rolling over before we would call the current US environment a recession.”

In another ominous sign, a key part of the US Treasury yield curve has been inverted for much of this month, with the yield on the 2-year note rising above the 10-year yield. Such inversions have historically preceded US recessions.

Inflation at 40-year highs and weakening growth could further fuel fears of stagflation, a toxic mix of slowing growth and high inflation that has hurt equities in the past. UBS Global Wealth Management earlier this month said the S&P 500 could fall to 3,300 in such a scenario, an 18% decline from Wednesday’s close.

Janus Henderson Investors is recommending “a defensive position within risk assets to weather the slowdown that is unfolding,” the firm’s director of research Matt Peron said in emailed comments. Peron likes shares of healthcare and software companies in the current environment, as well as real estate investment trusts.

“We continue to believe we are not out of the woods yet on the pressure the economy will feel from inflation and rate increases,” Peron said.

(Reporting by Lewis Krauskopf; editing by Ira Iosebashvili and Nick Zieminski)

Gold accelerates on gloomy US economic readings

July 28 (Reuters) – Gold rose more than 1% on Thursday as a contraction in the US economy boosted its safe-haven allure and helped to extend gains driven by a less aggressive tone from the Federal Reserve chairman.

The US economy unexpectedly contracted in the second quarter, with consumer spending growing at its slowest pace in two years and business spending declining, which could fan market fears that the economy was already in recession.

Spot gold extended gains on the data, and was last up 1.1% at USD 1,752.39 per ounce by 1:59 p.m. EDT (1759 GMT), helped along by a subsequent slide in US Treasury yields.

US gold futures settled 1.8% higher at USD 1,750.30.

After the GDP data confirmed recessionary fears, traders anticipate the Fed will be slower to introduce rate hikes, boosting the appetite for gold, Phillip Streible, chief market strategist at Blue Line Futures in Chicago, said.

Higher interest rates usually dull gold’s appeal because they increase the opportunity cost of holding the asset which bears no interest.

After the Fed’s meeting on Wednesday, when it raised overnight interest rate by three-quarters of a percentage point, Powell said another “unusually large” hike may be appropriate at its meeting in September, but the decision will be determined by incoming economic data until then.

Inflation’s not going to end with this Fed hike, and given the downtrend in gold, it’s now at an attractive level and presents an opportunity for investors looking to diversify their portfolio, said Michael Matousek, head trader at US Global Investors.

Silver rose 4.3% to USD 19.94, while platinum fell 0.2% to USD 885.00.

Palladium rose 2.6% to USD 2,083.69.

Top palladium producer Nornickel (GMKN) of Russia, kept its previous 2022 output forecast unchanged despite Western sanctions against Moscow over Ukraine.

(Reporting by Arundhati Sarkar, Arpan Varghese and Kavya Guduru in Bengaluru; Editing by Carmel Crimmins, Shailesh Kuber and Barbara Lewis)

Gold hits a three-week high as less hawkish Fed dims dollar

July 28 (Reuters) – Gold prices hit a near three-week high on Thursday after US Federal Reserve chair Jerome Powell signalled the central bank could slow the pace of rate hikes in coming months, which weighed on the dollar and Treasury yields.

Spot gold rose 0.7% to USD 1,745.20 per ounce by 0912 GMT, its highest since July 8.

US gold futures rose 1.4% to USD 1,743.70.

“The Fed has turned dovish and although signaled rates may rise, likely it will be at a slower pace so as not to spook Main Street – that has had a negative impact on both the US dollar as well as treasury yields, which have given a lift to gold,” independent analyst Ross Norman said.

The Fed raised its benchmark overnight interest rate by three-quarters of a percentage point on Wednesday in an effort to cool the most intense breakout of inflation since the 1980s.

Powell said another “unusually large” increase in interest rates may be appropriate at the September policy meeting, but the decision will be determined by the incoming economic data between now and then.

Traders have cautiously pared back expectations of further rate rises, as the second quarter GDP figures would provide clarity on the strength of the economy, Norman added.

The dollar index fell 0.2% to a more than three-week low, making greenback-denominated gold less expensive for other currency holders.

“Gold’s relief rally has further to go … gains we’re seeing now are part of a much needed retracement against its bearish trend,” City Index senior market analyst Matt Simpson said.

The next obvious target for gold bulls is USD 1,750, a break above which brings USD 1,770 into focus, Simpson added.

Meanwhile, China’s demand for gold jewellery, bars and coins is expected to fall year-on-year in the second half of 2022, a World Gold Council official said, as lockdowns cut consumer spending.

Elsewhere, spot silver jumped 1.3% to USD 19.38, platinum rose 0.7% to USD 892.36, while palladium added 2.9% to USD 2,090.42.

(Reporting by Arundhati Sarkar in Bengaluru; editing by Carmel Crimmins)

Philippine president visits quake-hit area as residents shelter outside

BANGUED, Philippines, July 28 (Reuters) – Philippines President Ferdinand Marcos promised on Thursday to help rebuild homes damaged by a powerful earthquake on the island of Luzon, as terrified residents camped out in parks and on sidewalks after hundreds of aftershocks rattled the area.

The 7.1 magnitude earthquake struck the northern Philippine island on Wednesday morning, killing at least five people and injuring more than 130.

The quake also damaged scores of houses and other buildings, including centuries-old churches in the tourist town of Vigan.

“For the affected and victims, let us make sure we are ready to support them and give them all they need,” Marcos told officials after being briefed during to a trip to inspect the damage.

The streets of Vigan, known for its old Spanish colonial architecture, have been cleared of debris, but shops, hotels and businesses remained closed.

Elma Sia, 52, who works at restaurant recalled the fear of being caught up in such a powerful earthquake.

“Everything was moving, our plates were breaking, our lights swaying. We were terrified,” she told Reuters.

“I could hear people shouting from a nearby McDonald’s restaurant, so people rushed outside to the plaza and started crying out of fear,” she said.

The quake, which hit close to the Marcos family’s political stronghold, also left a trail of destruction in Bangued town in Abra province, which was just 11 km (6.8 miles) from the epicentre.

Residents camped out with their families in shelters because they were too scared to stay at home. Seismologists have recorded nearly 800 aftershocks since the main quake.

“We were so scared,” Erlinda Bisares told CNN Philippines. “We didn’t mind our belongings, we just hurried outside. Life is more important.”

The Philippines is prone to natural disasters and is located on the seismically active Pacific “Ring of Fire”, a band of volcanoes and fault lines that arcs round the edge of the Pacific Ocean. Earthquakes are frequent and there are an average of 20 typhoons a year, some triggering deadly landslides.

Public Works Secretary Manuel Bonoan told DZBB radio his agency had started to remove debris from main roads in Abra and other districts affected by rockslides during the quake.

But efforts to assess damage to irrigation works were hampered as some roads had yet to be cleared of boulders, the National Irrigation Administration said.

Northern Luzon provinces are among the country’s biggest growers of rice and vegetables.

Ricardo Jalad, administrator of the Office of the Civil Defense, told radio station DZRH some parts of Abra were still without power or water and experiencing communication outages.

The budget ministry said authorities were ready to release funds for disaster relief.

(Reporting by Karen Lema and Neil Jerome Morales in Manila, and Adrian Portugal in Vigan; Editing by Ed Davies, Robert Birsel)

Dollar nurses losses vs yen as traders dump rate differential trades

LONDON, July 28 (Reuters) – The U.S. dollar slumped to a three-week low versus the Japanese yen and struggled against its other major rivals on Thursday as markets ramped up bets on a softening in the pace of rate hikes.

While Federal Reserve Chair Jerome Powell delivered a widely expected 75 bps hike in interest rates, it altered its statement to cite some softening in recent data and dropped its commitment to guide markets on the future trajectory of interest rates.

The dollar’s weakness was the most prominent against the yen with the greenback slumping nearly 1% versus the Japanese unit to hit its lowest since early July at 135.10 yen. The yen was the primary recipient of the widening interest rate differential trade between the United States and its global peers.

“Speculation is now building that the dollar may have peaked if the pace of tightening slows in September after consecutive 75bp moves in June and July,” said Kenneth Broux, an FX strategist at Societe Generale in London.

“It is still too soon to draw any firm conclusions and the next move will depend on incoming data.”

Markets have already ramped up bets of a softening in future U.S. interest rate hikes with futures now assigning a 65% probability of a 50 bps hike in September from 50% on Wednesday, according to CME. Bets of a 75 bps hike have been pared back to 35% from 41%.

The dollar index, which measures the greenback against six counterparts including the yen, edged 0.05% lower to 106.31 after dropping 0.59% overnight and just shy of 106.1 which would be the lowest since July 5.

The euro, which is the most heavily weighted currency in the index, was little changed at $1.02045, following a 0.82% jump overnight. Sterling was 0.05% higher at $1.21640, after rallying 1.06% on Wednesday.

Cryptocurrency bitcoin rose 1.33% to $23,081.18, after a more than 8% surge the previous session.

A gauge of currency market volatility settled at its highest level since July 8 above 10%.

(Reporting by Saikat Chatterjee)

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