Gold flat as investors mark time ahead of Fed outcome

July 27 (Reuters) – Gold prices were little changed on Wednesday, as investors stayed away from taking big positions ahead of a US Federal Reserve interest rate decision that could influence the outlook for bullion.

Spot gold was nearly flat at USD 1,716.59 per ounce at 0308 GMT. US gold futures dipped 0.2% to USD 1,713.90.

The US central bank is widely expected to raise interest rates by another 75 basis points (bps) at the conclusion of its policy meeting on Wednesday, as it attempts to tame runaway inflation without triggering a recession.

With a 75-bp hike already priced in, bullion could hold ground or trend lower after the Fed meeting, depending on how much short covering takes place, said Michael Langford, director at corporate advisory firm AirGuide.

Higher interest rates and bond yields increase the opportunity cost of holding non-yielding bullion.

Benchmark US 10-year Treasury yields firmed, while the dollar eased after a sharp rise on Tuesday, increasing the greenback-priced gold’s appeal among buyers holding other currencies.

“Interest rate rises will continue for the next three months. This will put downward pressure on gold prices and should see gold break below USD 1,700/oz. The key reason for this is the ongoing flow of funds to the dollar,” Langford said.

Meanwhile, US consumer confidence dropped to the lowest in nearly 1-1/2 years this month amid persistent worries about increasing inflation and higher interest rates, which could undercut spending, pointing to slower economic growth at the start of the third quarter.

The global economy is in the grips of a serious slowdown, with some key economies at high risk of recession and only sparse meaningful cooling in inflation over the next year, according to Reuters polls of economists.

Spot silver dipped 0.1% to USD 18.61 per ounce, platinum fell 0.3% to USD 870.77, and palladium firmed 0.5% to USD 2,019.91.

(Reporting by Bharat Govind Gautam in Bengaluru; editing by Uttaresh.V and Subhranshu Sahu)

Oil steady as demand concerns offset US crude stock drawdown

KUALA LUMPUR, July 27 (Reuters) – Oil prices held steady on Wednesday as concerns about weaker demand offset industry data that showed a larger-than-expected drawdown in US crude stockpiles.

Brent crude futures were at USD 104.35 a barrel at 0250 GMT, down 5 cents, or 0.05%. US West Texas Intermediate (WTI) crude rose 9 cents, or 0.1%, to USD 95.07 a barrel. WTI had climbed nearly USD 1 earlier in the session.

“A sharper decline in inventories should support oil prices, but the rebound was limited by concerns about potential weak demand, and the White House stated that it will further release strategic reserves,” said Leon Li, a Shanghai-based analyst at CMC Markets.

In addition, the prospect the US Federal Reserve will announce an aggressive rate rise later on Wednesday weighed on sentiment and limited the rise in oil prices, he said.

After Tuesday’s settlement, industry group the American Petroleum Institute said crude stocks in the United States fell by 4 million barrels last week.

That was four times bigger than the decline expected by analysts in a Reuters poll.

Gasoline inventories fell by 1.1 million barrels, compared with expectations for a build of 3.5 million barrels, the data showed.

The US government’s Energy Information Administration releases its weekly oil report later on Wednesday.

The Biden administration said on Tuesday it will sell an additional 20 million barrels of oil from the country’s Strategic Petroleum Reserve as part of a previously announced plan to tap the facility to calm oil prices boosted by Russia’s invasion of Ukraine and a recovery in demand following the COVID-19 pandemic.

The administration said in late March it would release a record 1 million barrels of oil per day for six months from the SPR. The United States has already sold 125 million barrels from the reserve with nearly 70 million barrels delivered to purchasers.

Meanwhile, the US Federal Reserve is expected to raise interest rates by 75-basis-points later on Wednesday, underlining concern about the outlook for US demand and the prospect of a stronger dollar, which would make dollar-denominated commodities more expensive for buyers holding other currencies.

(Reporting by Emily Chow in Kuala Lumpur and Laura Sanicola; editing by Richard Pullin and Neil Fullick)

Powerful 7.1 earthquake strikes Philippines; at least 5 dead

VIGAN, Philippines, July 27 (Reuters) – A powerful 7.1 magnitude earthquake struck the northern Philippine island of Luzon on Wednesday killing at least five people, damaging buildings and sending strong tremors through the capital, Manila.

At least 64 people were injured and 173 buildings damaged, officials said, many in Abra province, just 11km (six miles) from the epicentre of the quake. Over 200 aftershocks have been recorded in the area, according to the state seismology agency, and 58 landslides were also reported in the aftermath.

“Despite the sad reports about the damages caused by the earthquake, we are assuring quick response to those in need and affected by this calamity,” President Ferdinand Marcos Jr. said on Facebook.

The quake hit close to the Marcos family’s political stronghold.

A hospital in Abra province was evacuated after the building partially collapsed but there were no casualties reported there, officials said.

Abra’s vice governor, Joy Bernos, posted photos of the damaged Abra hospital on her Facebook account, which showed a gaping hole in its facade.

Other photos showed hospital beds, including one with a patient, being wheeled across a road and evacuated hospital staff.

Two people were killed in Benguet province, one in Abra province, one Kalinga and another in Cagayan Valley.

AFTERSHOCKS

Abra, home to nearly 250,000 people, is a landlocked province in the northern Philippines. Its deep valleys and sloping hills are enclosed by rugged mountains.

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 each year, some triggering deadly landslides.

Eric Singson, a congressman in Ilocos Sur province, also in the north, told DZMM radio station the quake had been felt strongly there and lasted 30 seconds or more.

“I thought my house would fall,” said Singson. “Now, we are trying to reach people …. Right now there are aftershocks so we are outside our home.”

The quake damaged heritage buildings in the northern city of Vigan, known for its old Spanish colonial architecture, on the west coast of Luzon.

Tourist Edison Adducul told radio he was taking photos of the Bantay Church Bell tower in Vigan when the quake struck, shaking the tower for up to three minutes.

Vigan’s normally busy streets were deserted on Wednesday evening and shops, hotels and businesses remained closed. Many of the streets had been cleared of debris.

Senator Imee Marcos said several churches were damaged.

“The antique bricks and coral stones fell down from the Bantay Bell Tower,” she said.

The quake was also felt in Manila where several buildings were evacuated, with some people forced to flee from the 30th floor of one building, and the city’s metro rail systems were halted at rush hour.

(Additional reporting by Enrico dela Cruz and Karen Lema; Writing by Ed Davies: Editing by Michael Perry, Robert Birsel and Kanupriya Kapoor)

Indexes drop as Walmart profit warning spooks investors

NEW YORK, July 26 (Reuters) – US stocks ended sharply lower Tuesday as a profit warning by Walmart dragged down retail shares and exceptionally weak consumer confidence data also fueled fears about spending.

Walmart (WMT) shares sank 7.6% after the retailer cut its full-year profit forecast late on Monday. Walmart blamed surging prices for food and fuel, and said it needed to cut prices to pare inventories.

Shares of Target Corp. (TGT) fell 3.6% and Amazon.com Inc AMZN.O dropped 5.2%, while the S&P 500 retail index declined 4.2%.

On Tuesday, data showed US consumer confidence dropped to nearly a 1-1/2-year low in July amid persistent worries about higher inflation and rising interest rates.

“The majority of companies that reported today beat (on) earnings, and that’s been the case. But of course there have been some warnings, and that’s what the market is focusing on,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

Amazon, which said it would raise fees for delivery and streaming service Prime in Europe by up to 43% a year, was the biggest drag on the Nasdaq and S&P 500, while consumer discretionary fell 3.3% and led declines among S&P 500 sectors.

The Federal Reserve started a two-day meeting, and on Wednesday it is expected to announce a 0.75 percentage point interest rate hike to fight inflation. Investors have worried that aggressive interest rate hikes by the Fed could tip the economy into recession.

The Dow Jones Industrial Average fell 228.5 points, or 0.71%, to 31,761.54, the S&P 500 lost 45.79 points, or 1.15%, to 3,921.05 and the Nasdaq Composite dropped 220.09 points, or 1.87%, to 11,562.58.

A busy week for earnings also included reports from Alphabet Inc. (GOOGL) and Microsoft Corp. (MSFT) after the bell.

Shares of Microsoft were down 0.5% in after-hours trading while Alphabet was up 3% following the companies’ results. Microsoft ended the regular session down 2.7% and Alphabet ended 2.3% lower on the day.

Investors had been looking to see if this week’s earnings news from mega-cap companies might help the stock market sustain its recent rally.

Earnings from S&P 500 companies were expected to have risen 6.2% for the second quarter from the year-ago period, according to Refinitiv data.

Also during the regular session, Coca-Cola Co. (KO) gained 1.6% after the company raised its full-year revenue forecast. McDonald’s Corp. (MCD) rose 2.7% after beating quarterly expectations.

3M Co. (MMM) rose 4.9% after the industrial giant said it planned to spin off its healthcare business. General Electric Co. (GE) gained 4.6% after the industrial conglomerate beat revenue and profit estimates.

In other outlooks, the International Monetary Fund cut global growth forecasts again.

Volume on US exchanges was 9.60 billion shares, compared with the 10.93 billion average for the full session over the last 20 trading days.

Declining issues outnumbered advancing ones on the NYSE by a 1.73-to-1 ratio; on Nasdaq, a 1.72-to-1 ratio favored decliners.

The S&P 500 posted 1 new 52-week highs and 30 new lows; the Nasdaq Composite recorded 39 new highs and 138 new lows.

(Additional reporting by Shreyashi Sanyal and Aniruddha Ghosh in Bengaluru; Editing by Arun Koyyur, Anil D’Silva and David Gregorio)

Gas woes drag euro lower, dollar gains on recession worry

NEW YORK, July 26 (Reuters) – The dollar rose against a basket of major currencies on Tuesday, reversing course after three straight sessions of declines as recession fears grew and investors awaited a Federal Reserve policy statement, while energy supply concerns weighed on the euro.

European Union countries approved a weakened emergency plan to lessen gas demand on Tuesday, after striking compromise deals to limit the cuts for some countries, as they gird for further Russian reductions in supply.

Risk-off sentiment helped boost the dollar, as US equities were pulled lower following a profit warning from retail giant WalMart (WMT), which said it would slash prices to reduce inventory.

The Fed is widely expected to raise interest rates by 75 basis points on Wednesday, with investors keeping a close eye on the central bank’s forward guidance as it grapples with high inflation and the potential for a recession. Last week, the European Central Bank (ECB) raised rates by 50 basis points.

“The writing is on the wall for the euro. I know it has been a punching bag for quite some time, but these growth concerns are not going to get any better, the energy crisis it just seems like it is only going to get worse,” said Edward Moya, senior market analyst at Oanda in New York.

“There are growing risks we could see investors become a little bit more nervous that it might not just be a very brief recession, that it could be a little bit more hard-hitting so you are probably still going to see that safe-haven flows into the dollar are likely to remain the focal point for many traders.”

The dollar index =USD rose 0.714% at 107.180, with the euro down 0.98% to USD 1.012. The euro was on pace for its biggest daily percentage drop since July 11.

Data showed US consumer confidence fell for a third straight month in July, while new home sales dropped to their lowest level in more than two years, signaling an economy that may be susceptible to a recession.

On Thursday, investors will get the advance reading for second-quarter gross domestic product, while Friday will bring the release of personal consumption expenditures, the Fed’s preferred inflation measure.

A second straight quarter of negative growth would result in what is known as a technical recession by analysts, although an official declaration of a recession from the National Bureau of Economic Research, which uses a more comprehensive definition, would likely come much later.

On Monday, Russian energy giant Gazprom (GAZP), citing instructions from an industry watchdog, said gas flows to Germany through the Nord Stream 1 pipeline would fall to 33 million cubic meters per day from Wednesday, or half of the current flow, which was already at only 40% capacity.

The euro also fell 0.87% against the safe-havens yen to 138.450 and was down 1.1% against the Swiss franc at 0.975.

The Japanese yen weakened 0.07% versus the greenback to 136.78 per dollar, while sterling was last trading at USD 1.2024, down 0.15% on the day.

In cryptocurrencies, bitcoin last fell 5.75% to USD 20,894.37 after Bloomberg News reported the US Securities and Exchange Commission (SEC) is investigating whether Coinbase Global (COIN) improperly let Americans trade digital assets that should have been registered as securities.

(Reporting by Chuck Mikolajczak; Editing by Mark Potter)

EUR/USD sold, havens bought on EU’s gas crisis pre-Fed

July 26 (Reuters) – The euro fell broadly Tuesday as euro zone recession risk ramped up as crucial supplies of natural gas to Europe from Russia fell enough to heighten fears of an energy crisis this winter, forcing EU ministers to agree to emergency gas cut plans.

Dutch natural gas prices gained almost 20% on Tuesday and are up 31.7% this week and 207% from a year ago.

EUR/USD fell 1% as Bund and other euro zone government debt yields slid more than Treasury yields amid risk-aversion flows. Two-year bund-Treasury yield spreads fell 7bps and tested July’s trend lows by -2.7%. That eventually got EUR/USD briefly below the 1.01155 daily tenkan support that had earlier marked Tuesday’s lows.

A grouping of mostly weaker-than-forecast US data, particularly consumer confidence and new home sales nAPN0OD4EK, didn’t stop Treasury yields from recovering intraday drops that were led by tumbling European yields, in part because the Fed remains priced to hike rates Wednesday by 75bps again and at least 50bps in September.

Wednesday’s Fed meeting will not provide economic projections or Fed fund dot plots, so unless the Fed does something other than a 75bp rate hike the focus will be on any change in the statement or Fed Chair Jerome Powell’s remarks that would shift rate hike expectation from September through December, when the market sees Fed funds peaking near 3.4%.

And despite euro zone inflation at 8.6% vs 9.1% in the US, the market isn’t convinced the ECB will hike rates by 50bps again in September and only sees rates rising about 110bps in total by mid-2023.

EUR/USD’s brief break below parity this month might foreshadow further weakness if the Fed doesn’t signal a willingness to slow rate hikes before there is a clear downtrend in inflation, and if Russia continues to use nat gas supplies as economic leverage against the EU.

Sterling was only down 0.1%, with the BoE much further along the rate-hiking path than the ECB, and because the UK is less directly at risk from Russian gas supply reductions.

But sterling needs help from a less hawkish Fed, or a more forceful BoE, to extend its rebound from July’s lows.

USD/JPY was about flat, with both the dollar and yen sought as havens. Early Treasury yield weakness reversed after holding key support and despite US data again proving disappointing, partly in advance of the 5-year auction and the Fed.

That got prices back up by the pivotal 21-day moving average and Tuesday’s high at 136.845 after the New York morning lows at 136.28 on EBS couldn’t break the overnight session low at 136.265.

The pandemic recovery rise in USD/JPY has been slowed by 2-year Treasury-JGB yield spreads remaining well below their June 14, pre-Fed June meeting peak.

The Canadian and Australian dollars were modestly weaker amid Tuesday’s risk aversion, as was the yuan.

Bitcoin and ether wilted further from recent recovery highs.

Ahead of Wednesday’s Fed event risk will be US durable goods orders, wholesale inventories and pending home sales, as well as EIA data that’s partly overshadowed by the Biden administration announcing Tuesday it will sell an additional 20 mln bbls of oil from the SPR.

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

Gold stalls as pre-Fed verdict jitters grip investors

July 26 (Reuters) – Gold prices were stuck in a narrow range on Tuesday, as lower Treasury yields amid lingering recession woes offset a firmer dollar, while investors turned their attention to the US Federal Reserve’s two-day meeting.

Spot gold eased 0.1% to USD 1,716.91 per ounce by 1:50 p.m. EDT (1750 GMT). US gold futures settled down 0.1% at USD 1,717.70.

US Treasury yields fell sharply, as a looming gas supply crisis in Europe kept the markets on edge about global recession risks.

“The relief we’ve seen in yields is a good sign for gold… persistent fear in the equities market, geopolitical issues and if the energy squeeze intensifies, there will be strong demand for safe-haven,” Edward Moya, senior analyst with OANDA, said.

But “if investors feel the Fed is still ready to deliver another 75 bps hike in September, that’s going to be trouble for gold.”

The International Monetary Fund cut global growth forecasts again, warning that downside risks from high inflation and the Ukraine war were materializing.

But capping gold’s gains, the US dollar rose 0.7%, making bullion less appealing for overseas buyers.

Since gold in a non-interest yielding asset, rising interest rates make it less appealing. However, gold is widely regarded as an inflation hedge and safe-store of value amid economic uncertainties.

The market expects the Fed to increase rates by 75 basis points at the conclusion of its policy meeting on Wednesday. A hike of that magnitude would effectively close out pandemic-era support for the economy.

“We expect a further lift to real interest rates this year, particularly as inflationary risk fades in the second half of 2022. As such, additional liquidation of exchange-traded funds can be expected,” UBS analyst Giovanni Staunovo said, forecasting gold to fall to USD 1,600 by year-end.

Spot silver rose 1.1% to USD 18.61 per ounce, platinum was down 0.7% at USD 872.63.

Palladium fell 0.2% to USD 2,004.00.

(Reporting by Ashitha Shivaprasad and Arundhati Sarkar in Bengaluru; Editing by Shailesh Kuber and Andrea Ricci)

Nascent US stock rally hangs in balance as Wall St awaits megacap earnings

NEW YORK, July 26 (Reuters) – Results from the four largest US companies by market value highlight a busy week of corporate earnings and could help determine whether the stock market can sustain its recent rally.

Microsoft Corp. (MSFT) and Google-parent Alphabet Inc. (GOOGL) are set to report after the market closes on Tuesday, with Apple Inc. (AAPL) and Amazon.com Inc. (AMZN) due on Thursday, in a week that will see reports from about 170 companies representing some 47% of the S&P 500’s market value, according to Credit Suisse.

Those four companies, which have helped power gains for the benchmark S&P 500 for the past decade, account for nearly one-fifth of the weigh in the index.

What they forecast is “pretty representative of how the economy is doing,” said King Lip, chief strategist at Baker Avenue Asset Management in San Francisco. “If Microsoft comes in and says things are ok, if Google says things are ok, then that represents a significant weight in not just market cap but the overall economy.”

The heart of the second-quarter earnings period is overlapping with Wednesday’s decision from the Federal Reserve on interest rates. The central bank is expected to hike by 75 basis points as it seeks to fight the worst inflation in 40 years.

With inflation surging and rate hikes weighing on risk sentiment this year, the S&P 500 is down about 17% in 2022, but has rebounded 7% since its closing low for the year in June.

“This week could be very critical to whether we can continue to recover or whether this is just some kind of bear market rally on the way back down towards lows,” said Rick Meckler, partner at family investment office Cherry Lane Investments.

The S&P 500 was down 0.6% early Tuesday after retailer Walmart (WMT) slashed its profit forecast as rising prices for food and fuel prompted customers to cut back on discretionary purchases.

Investors’ expectations for second-quarter results were downbeat heading into the period, given concerns about a potential recession as well as inflation raising costs for businesses and consumers.

With 107 S&P 500 companies reported so far, about 75% have posted earnings above analysts’ expectations, according to Refinitiv IBES data as of Monday. However, that trails the 81% beat rate for the past four quarters.

Earnings are expected to have climbed 6.1% for the second quarter from the year-ago period, according to Refinitiv. Tech sector earnings are projected to rise 2.4%.

The four megacap companies plus Facebook owner Meta Platforms (META) — which reports on Wednesday — are projected in aggregate to increase revenues by 6.7% but see earnings fall by 14.4%, according to Credit Suisse strategists.

When Alphabet and Meta report, focus will be on advertising spending after Twitter Inc. (TWTR) and Snapchat’s owner Snap Inc. (SNAP) last week signaled advertisers had tightened their purse strings in response to a darkening economic outlook.

Investors will be keen for insight on consumer demand from Apple, maker of iPhones and MacBooks, and online retail giant Amazon.

Microsoft has already warned of financial headwinds from currency effects from the strong dollar, a factor that is expected to loom over an array of companies this period.

Overall, investors will want to learn how these companies are “navigating what has really become a difficult economic environment for them,” marked by supply chain snags, rising costs and slowing demand, Meckler said.

“The megacaps have historically proven incredibly resilient,” Meckler said.

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

Nikkei inches lower while traders wait on Fed

SINGAPORE, July 26 (Reuters) – Japan’s Nikkei .N225 notched a small decline on Tuesday, while the broader Topix was flat, as investors kept to the sidelines ahead of Wednesday’s US Federal Reserve meeting.

The Nikkei closed 0.16% lower, its second straight daily drop. Turnover, as on Monday, was light.

“Markets are definitely in a wait-and-see mode, what you’re seeing is gentle position adjusting,” said Jeffrey Halley at brokerage OANDA in Singapore, ahead of the Fed, US growth data and a slew of US earnings. “It’s the calm before the storm.”

Tech investor SoftBank Group Corp. rose 3.2% – its biggest daily gain in about a month – after Hong Kong shares rose for one of its holdings, Chinese tech giant Alibaba. Alibaba plans to add a primary listing in Hong Kong.

Other gainers included insurer Tokyo Marine Holdings Inc., up 1.6%, engineering firm JGC Holdings 1963.T, and oil and gas exporter Inpex, up 3.3%. Supply concerns in Europe are lifting global energy and gas prices.

Japan also upgraded its overall view on the economy for the first time in three months in July, with the government turning more positive on consumption and jobs.

Minutes from last month’s Bank of Japan meeting underscored policymakers resolve to keep interest rates low.

Underperformers among the Topix 30 were Nidec Corp., down 1.57%, followed by Nintendo Co. Ltd., losing 1.20%.

The dollar traded firmly at 136.68 yen. Traders expect a 75 basis point US rate hike on Wednesday, but there are doubts around the future path for rates amid signs of a few wobbles in the US economy.

The volume of shares traded on the Tokyo Stock Exchange’s main board was 0.91 billion, compared to the average of 1.21 billion in the past 30 days.

(Reporting by Tom Westbrook and Vidya Ranganathan in Singapore; Additional reporting by Junko Fujita in Tokyo; Editing by David Holmes)

Philippines raises $629 million from 2035 T-bond re-issue

MANILA, July 26 (Reuters) – Following are the results of the Philippine Bureau of the Treasury’s (BTr) auction of re-issued 2035 T-bonds on Tuesday:

* BTr fully awards 35 billion pesos (USD 628.59 million) offer

* Tenders total 93.998 billion pesos

* Average yield at 6.894%

* Bonds were originally issued in December, 2010

* Details on the BTr’s website www.treasury.gov.ph

(USD 1 = 55.68 Philippine pesos)

(Reporting by Enrico Dela Cruz; Editing by Ed Davies)

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