European shares steady at the end of brutal week

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June 17 (Reuters) – European stocks inched higher on Friday but were set for sharp weekly losses as a slew of interest rate hikes from major central banks fuelled worries about a sharp economic slowdown.

The pan-European STOXX 600 index .STOXX gained 0.1% by 0710 GMT, but was on course to mark a 4.7% weekly decline in what could be its worst since early March.

World stock markets were heading for their biggest weekly decline since markets’ pandemic meltdown in March 2020, hit by growing worries about a recession after rate increases in the United States and Britain were followed by a surprise move in Switzerland to quell an inflation surge. nL1N2Y31LZ

The final reading of euro zone inflation for May will be out later in the day.

Among single stocks, Britain’s biggest retailer Tesco TSCO.L slipped 0.3% after it said it was seeing early indications of changing customer behaviour due to surging inflationary pressures. nL8N2Y40U8

Spain’s Santander SAN.MC gained 1% after it named Hector Grisi as its new chief executive officer, replacing long-time executive Jose Antonio Alvarez. nL1N2Y407O

(Reporting by Sruthi Shankar in Bengaluru; Editing by Subhranshu Sahu)

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Oil edges down as demand concerns weigh, heading for weekly fall

June 17 (Reuters) – Oil prices edged slightly lower on Friday as worries about global economic growth and uncertainty weighed on markets following numerous interest rate hikes around the world this week.

Brent crude futures fell 83 cents, or 0.8%, to USD 118.98 a barrel, while US West Texas Intermediate (WTI) crude futures fell to USD 116.79 a barrel, down 80 cents, or 0.7%.

If losses hold through the day, Brent crude futures would post their first weekly dip in five weeks, while US crude futures would see their first dip in eight weeks.

Central banks across Europe raised interest rates on Thursday, some by amounts that shocked markets, and hinted at even higher borrowing costs to come to tame soaring inflation that is eroding savings and squeezing corporate profits.

Argentina’s central bank raised its benchmark interest rate by the most in three years on Thursday, as the South American country fights inflation running at over 60%.

Those moves came on the heels of a 75 basis point rate hike this week by the US Federal Reserve, the highest since 1994.

Federal Reserve policymakers are less confident than at any time since the height of the pandemic about what will happen with the economy, data showed.

US stock indexes also closed sharply lower on Thursday in a broad sell-off as recession fears grew.

The International Energy Agency on Wednesday also warned that sky-high oil prices and weakening economic forecasts dimmed the future demand outlook.

Investors also remained focused on tight supplies after the United States announced new sanctions on Iran.

“A rebound in China demand sentiment, and expected seasonal ramp-up in OECD oil demand into August leaves price risk to the upside through 3Q 2022,” said Baden Moore, head of commodities research at the National Australia Bank.

(Reporting by Arathy Somasekhar in Houston; Editing by Lincoln Feast.)

Wall Street plunges as recession fears grow

NEW YORK, June 16 (Reuters) – US stock indexes closed sharply lower on Thursday in a broad sell-off as recession fears grew following moves by central banks around the globe to stamp out rising inflation after the Federal Reserve’s largest rate hike since 1994.

The benchmark S&P 500 suffered its sixth decline in seven sessions. Stocks had rallied on Wednesday as the Fed delivered an aggressive 75 basis point rate hike, as expected, to help the index snap its longest daily losing streak since early January.

But rate hikes by Switzerland and Britain on Thursday reignited fears that attempts by central banks to curb inflation could lead to sharply slower growth worldwide or a recession.

“That is what people reassessing today – what is the probability of a potential recession and will corporate profits come in where analysts estimates are or will those get taken down,” said Tom Hainlin, global investment strategist at US Bank Wealth Management’s Ascent Private Wealth Group in Minneapolis.

“The Swiss came out and surprised everybody today and said we are less worried about the strength of our currency and more worried about inflation.”

The Dow Jones Industrial Average fell 741.46 points, or 2.42%, to 29,927.07, the S&P 500 lost 123.22 points, or 3.25%, to 3,666.77 and the Nasdaq Composite dropped 453.06 points, or 4.08%, to 10,646.10.

Each of the 11 major S&P sectors were lower, although the defensive consumer staples was outperforming the broader market as names like WalMart (WMT), General Mills (GIS) and Procter & Gamble (PG) were among the few advancers as only 14 S&P 500 components finished higher for the session.

Growth stocks were hit hard with the S&P growth index down 3.75% while the Nasdaq Composite saw its fifth decline of 4% or more since the start of May.

Hopes the Fed could engineer a soft economic landing are fading and Wells Fargo analysts now see a greater than 50% chance of a recession. Other banks that have warned of rising recession risks include Deutsche Bank and Morgan Stanley.

The benchmark index has slumped about 23% year-to-date and recently confirmed a bear market began on Jan. 3, while the Dow Industrials was on the cusp of confirming its own bear market.

The CBOE volatility index, also known as Wall Street’s fear gauge, rose to slightly below the one-month high of 35.05 touched earlier this week. Many analysts are looking for the VIX to reach around 40 as one of the signals that selling pressure may be reaching its apex.

Volume on US exchanges was 13.98 billion shares, compared with the 12.16 billion average for the full session over the last 20 trading days.

Declining issues outnumbered advancers on the NYSE by a 7.58-to-1 ratio; on Nasdaq, a 4.48-to-1 ratio favored decliners.

The S&P 500 posted one new 52-week high and 99 new lows; the Nasdaq Composite recorded seven new highs and 779 new lows.

(Reporting by Chuck Mikolajczak; Editing by Richard Chang)

Philippine central bank says stagflation not immediate risk to economy

MANILA, June 16 (Reuters) – The Philippines’ central bank does not see stagflation as an immediate risk to the economy and is optimistic recovery will be sustained, its governor said on Thursday.

Central banks across Asia are under pressure to tighten policy rates to tame inflation, though the move risks stunting growth and increasing unemployment.

A steady upturn in credit activity, ample domestic liquidity and improving labour market conditions will help boost economic activity, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said in a statement.

“The BSP will remain vigilant over emerging price and output conditions and will undertake necessary action to ensure that monetary policy settings remain appropriately calibrated,” Diokno said.

The Philippines has signalled another rate increase for its June 23 policy meeting as risks to the inflation outlook tilt toward the upside for both 2022 and 2023.

The central bank last month started unwinding its easy money policy, lifting the overnight reverse repurchase facility rate by 25 basis points to 2.25%, to combat inflationary pressures.

(Reporting by Neil Jerome Morales; Editing by Martin Petty and Ed Davies)

Dollar off two-decade high as Fed delivers on 75-bp hike

SINGAPORE, June 16 (Reuters) – The dollar retreated from a 20-year high on Thursday after the Federal Reserve delivered its biggest rate hike in decades but then tempered its outlook by telling investors that such sharp moves higher were unlikely to become a habit.

Markets had expected the 75 basis point hike and priced in several more after a surprisingly hot inflation reading last week. The dollar had scaled new heights as US yields rose, but it lurched lower after Chair Jerome Powell’s press conference.

It last traded at USD 1.0464 per euro, while in the Asia session the Australian dollar tacked another 0.4% on to its almost 2% overnight surge to hit USD 0.7031.

The dollar index, which made a two-decade high of 105.79 on Wednesday, traded at 104.84 in Asia.

“Today’s 75-basis-point increase is an unusually large one,” Powell told reporters.

“I do not expect moves of this size to be common,” he said, though adding that next month either a 50 bp or 75-bp hike was likely.

Fed members also drastically lifted their projections for the peak in the benchmark funds rate, with the median forecast having it around 3.8% in 2023, much higher than the 2.8% peak they had last projected in March.

That, however, was met with initial relief as it was a bit lower than the 4%-and-above that futures markets had implied earlier this week.

“Against a market pricing in a ~3.75% Fed funds rate by year-end, (Powell’s) comments soothed the market and that weighed on the dollar,” analysts at ANZ Bank said in a note.

“Some unwind of volatility is likely in coming days as US policy expectations fall back to earth, but the Fed still has plenty to do… risk appetite has breathed a sigh of relief – let’s see if it lasts.”

A small dip on the yen was already being unwound on Thursday morning as the Fed’s tone is in stark contrast with the Bank of Japan’s redoubling of efforts to pin interest rates near zero.

The yen JPY=EBS last traded at 134.39 per dollar after finding a 24-year low of 135.60 on Wednesday.

The Bank of Japan meets on Friday amid a speculative attack on its yield-curve-control policy that has made for erratic trade in Japanese government bonds this week.

The dollar eased against the New Zealand dollar, but the kiwi struggled to make further progress on Thursday after data showed an unexpected contraction in the economy.

It last bought USD 0.6292.

Sterling held overnight gains at USD 1.2178 ahead of a Bank of England meeting later in the day that is expected to bring at least a 25 bp hike, with swaps pricing implying about an 80% chance of a 50-bp hike.

Traders will also be closely watching several speakers from the European Central Bank after the ECB promised to control borrowing costs for the currency’s bloc’s periphery after an emergency meeting on Wednesday.

(Reporting by Tom Westbrook; Editing by Lincoln Feast)

Nasdaq-listed 26 Capital to pursue USD 2.5 billion SPAC deal with Manila casino

MANILA, June 15 (Reuters) – Nasdaq-listed 26 Capital Acquisition Corp.’s (ADER) CEO said on Wednesday the blank check firm was committed to its USD 2.5 billion purchase of the Philippines’ biggest integrated casino-resort, despite a wrangle for control at the casino’s current owners.

The 44-hectare (108-acre) Okada Manila, owned by subsidiaries of Japan’s Universal Entertainment Corp., agreed in October to go public in the United States through a merger with 26 Capital.

But the deal has become mired in a long-running dispute between Universal and its deposed chairman and founder, Kazuo Okada.

That dispute took a dramatic turn on May 31 when Okada’s Filipino partners took physical control of the USD 3.3 billion casino in the Philippine capital with the help of private security guards and local police.

“I believe Universal will be back in control of Okada Manila soon,” Jason Ader, chairman and CEO of 26 Capital, told Reuters. “Both parties plan to close this transaction.”

The seizure of the casino came after the Philippine Supreme Court ruled in April that Okada should be reinstated as chairman of the casino’s owner and operator.

Universal’s domestic unit, Tiger Resorts, has appealed that ruling and complained of what it said was an “illegal and violent” takeover.

Universal and its subsidiaries, and the camp of Okada and his Filipino partners did not immediately respond to requests for comment outside of office hours.

Listing in the United States will give Okada Manila access to a wide array of funds, customers and lenders, Ader said, adding investors see the potential for the Philippines to be one of the world’s best gaming markets.

The Philippines, which has one of Asia’s most freewheeling gaming industries, has started to recover from the pandemic. Its gross gaming revenues rose 14% to 113 billion pesos (USD 2.12 billion) in 2021, though still below the record 256 billion in 2019, data from the gaming regulator show.

In contrast, top gaming hub Macau, of which 90% of visitors typically come from mainland China, continues to reel from Beijing’s “zero-COVID” policy.

In 2017, Okada was ousted from the board of both Universal and its Philippine unit on suspicions of misappropriating millions of company funds, which he has denied.

(Reporting by Neil Jerome Morales; Editing by Mark Potter)

Growth stocks lift Wall Street ahead of Fed’s rate decision

June 15 (Reuters) – Wall Street’s main indexes climbed more than 1% on Wednesday, boosted by gains in beaten-down growth and financial stocks, with investors waiting to see how high the Federal Reserve would raise interest rates at its policy meeting to quell inflation.

Ten of the 11 major S&P sectors advanced in early trading, with nine of them up more than 1%. Leading the pack were consumer discretionary and financials, which rose 1.6% and 1.7%, respectively.

The energy .SPNY sector was the lone decliner, dropping 0.5%.

Market heavyweights Apple Inc. (AAPL), Meta Platforms (META), Alphabet Inc. (GOOGL), Microsoft Corp. (MSFT) and Amazon.com Inc. (AMZN) added between 1.3% and 2.5%.

Traders are almost fully pricing in a 75 basis point hike from the Fed, up from 8.2% a week ago, according to CME’s FedWatch Tool. Such a big hike would lift the Fed’s short-term target policy rate to a range of 1.5% and 1.75%.

The central bank will release its statement at 2 p.m. ET (1800 GMT), with a press briefing by Fed Chair Jerome Powell expected at 2:30 p.m. ET.

“The Fed is going to go 75 basis points and attempt to talk very hawkish to try to regain control of the narrative, and when it’s all over, investors will breathe a sigh of relief,” said Zach Hill, head of portfolio strategy at Horizon Investments.

“But the medium-term (market) outlook is the Fed wanting to tighten financial conditions and so that means lower equity valuations.”

Worries about surging inflation, higher borrowing costs and rising challenges to economic growth have walloped global equities this year.

The benchmark S&P 500 index on Monday marked a more than 20% decline from its record closing high on Jan. 3, confirming it has been in a bear market, according to a commonly used definition.

Data showed US retail sales unexpectedly fell 0.3% in May as motor vehicle purchases declined amid shortages, and record high gasoline prices pulled spending away from other goods.

Economists polled by Reuters had forecast retail sales gaining 0.2% last month.

At 9:44 a.m. ET, the Dow Jones Industrial Average was up 315.84 points, or 1.04%, at 30,680.67, the S&P 500 was up 48.12 points, or 1.29%, at 3,783.60, and the Nasdaq Composite was up 179.38 points, or 1.66%, at 11,007.73.

Goldman Sachs (GS) rose 2.4% to lead gains among the big banks.

Nucor Corp. (NUE) jumped 4.6% after it forecast upbeat current-quarter profit on strong steel demand.

Boeing Co. (BA) surged 4.7% after China Southern Airlines Co. Ltd. this week conducted test flights with a 737 MAX plane for the first time since March, in a sign the jet’s return in China could be nearing as demand rebounds.

Advancing issues outnumbered decliners by a 5.79-to-1 ratio on the NYSE and by a 3.81-to-1 ratio on the Nasdaq.

The S&P index recorded one new 52-week highs and 30 new lows, while the Nasdaq recorded seven new highs and 77 new lows.

(Reporting by Anisha Sircar, Devik Jain and Sruthi Shankar in Bengaluru; Editing by Anil D’Silva)

European stocks rally as ECB holds surprise meeting

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June 15 (Reuters) – European stocks rallied in early trade on Wednesday, after a spokesperson of the European Central Bank said its rate-setting Governing Council would hold an unscheduled meeting to discuss the recent sell-off in government bond markets.

An index of euro zone shares .STOXXE climbed 1.3% by 0706 GMT, while the pan-European STOXX 600 index .STOXX added 0.8%.

Italian bank stocks, which have taken a hit recently on fears about Rome’s surging debt costs, rallied. nL8N2Y2128

Shares of Unicredit CRDI.MI, Intesa Sanpaolo ISP.MI and BPER Banca EMII.MI rose between 4.5% and 6.5%, while the broader Italian banking index .FTITLMS3010 climbed 6.4%.

Euro zone banks have fallen sharply in the past week, hit by a selloff in southern European bond markets after the ECB said last week it saw no need to create a new tool to help weaker economies cope with rising borrowing costs as it ends bond buying and looks to hike rates.

The ECB’s surprise meeting was scheduled for 0900 GMT but it was not yet clear whether a statement would be published, several sources with direct knowledge said. nL1N2Y20BH

(Reporting by Sruthi Shankar in Bengaluru; Editing by Rashmi Aich)

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Dollar towers over peers as markets bet on large Fed rate hike

HONG KONG, June 15 (Reuters) – The dollar held near its overnight 20-year peak on Wednesday ahead of the outcome of the Federal Reserve policy meeting at which markets are pricing in an outsized 75 basis point interest rate hike as policymakers try to rein in rampant inflation.

A key US currency index, which tracks its performance against six peers, was at 105.3 having hit 105.65 on Tuesday, its strongest since December 2002.

Sterling was at USD 1.20135 after slumping to a 15-month low versus the dollar at USD 1.1934 the previous day, not helped by the possibility of a new referendum on Scottish independence, while the euro was at USD 1.0428 just above its overnight one-month low.

Market pricing indicates a 99.7% chance of a 75 basis point rate hike at the Fed’s meeting which concludes later on Wednesday, according to the CME’s Fedwatch tool, up from only 3.9% a week ago.

The sharp pick up in expectations followed media reports, first by the Wall Street Journal that a bigger rate increase was on the cards after data released last week showed the US consumer price index surged 8.6% in the 12 months to May, the largest year-on-year increase in four decades.

The US dollar had already been gaining ground in the past few months thanks to the Fed raising rates ahead of most other major central banks, and has been given another leg up in recent weeks as investors seek safe havens fearing the economic impact of rapidly tightening financial conditions.

At least in the near term, analysts feel that the dollar has not much further to go.

“Given current aggressive market pricing, there is a risk the (Fed)is deemed ‘not hawkish enough’, pulling down US interest rates and the USD modestly after the meeting,” said CBA analysts in a morning note.

“In our view, it will take more than a 75bp hike tomorrow, or a nod to a 100bp hike for the FOMC’s July meeting, to push the USD up significantly after the FOMC meeting.”

Higher US rates versus rock bottom Japanese yields have been weighing on the yen, which hit a fresh 24-year low of 135.58 per dollar in early trade, before recovering to 135.05.

Expectations for higher rates have also hurt risk friendly assets such as tech stocks, while in currency markets, the Australian dollar, often seen as a proxy for risk appetite, is at USD 0.68950 near a one-month low.

The Aussie is down 7.9% so far this quarter, which would be its worst quarter since the first three months of 2020 when the COVID-19 pandemic hit.

The New Zealand dollar was at USD 0.62185 just off its two-year low of USD 0.6197 hit overnight.

Bitcoin, another risk friendly asset class, was down slightly, trading just under USD 22,000. It hit an 18-month low of USD 21,800 on Tuesday, also hurt by major crypto lender Celsius Network’s freezing withdrawals earlier this week.

(Reporting by Alun John. Editing by Shri Navaratnam)

Sanctions-hit Kremlin stages ‘Russian Davos’ bereft of elite, Putin speaks Friday

June 14 (Reuters) – Russia for years hosted world leaders and business titans at its annual economic forum in St Petersburg, but the “Russian Davos” will see little of the global financial elite this year with Moscow isolated by sanctions over its actions in Ukraine.

This week, to make up for the lack of major Western attendees, Russia is giving pride of place to smaller players or countries like China – the world’s second largest economy – that have not joined in sanctions.

“Foreign investors are not only from the United States and European Union,” Kremlin spokesperson Dmitry Peskov told reporters on Tuesday, pointing to the Middle East and Asia.

President Vladimir Putin will give a major speech on Friday focusing on the international economic situation and Russia’s tasks in the near future, Interfax news agency cited Kremlin aide Yuri Ushakov as saying.

He will also meet media on the sidelines of the forum at about 8 p.m. Moscow time (1600 GMT) that day, he said.

The Kremlin launched the St Petersburg International Economic Forum (SPIEF) in 1997 to attract foreign investment, discuss economic policy and project an image it was open for business after the demise of Soviet rule.

Russia long compared SPIEF with the World Economic Forum, the annual blue-ribbon event for global VIPs held in the Swiss Alpine resort of Davos.

Now, with Western leaders shunning dealings with Russia, Putin will have no traditional meeting with political movers and shakers and corporate bigwigs from the United States and Europe.

There were no names of US and European companies or their CEOs on the published schedule for the June 15-18 SPIEF – reflecting fears of punishment under the most sweeping sanctions regime ever imposed on a major power.

Even companies that have hung on in Russia despite the general exodus of Western investors were not listed.

Ushakov said high-level delegations from more than 40 nations were expected while 1,244 Russian and 265 foreign companies had confirmed they would be there.

In one exception to the absence of Western figures, the head of the American Chamber of Commerce in Russia along with French and Italian counterparts will speak at a session on Thursday called “Western Investors in Russia: New Reality.”

TOXIC RELATIONS

Russia’s relations with the West have turned toxic since it sent armoured forces into Ukraine on Feb. 24 in what it calls a “special military operation” to remove threats to its security. Ukraine and its Western backers call Russia’s actions an unprovoked invasion aimed at grabbing territory.

SPIEF will therefore look and feel very different.

Having once welcomed then- German chancellor Angela Merkel, ex-IMF chief Christine Lagarde, Goldman Sachs’ Lloyd Blankfein, Citi’s Vikram Pandit and ExxonMobil’s Rex Tillerson, Russia will give top billing this week to the presidents of allied states Kazakhstan and Armenia.

Egyptian President Abdel Fattah al-Sisi will address the meeting via video link, RIA news agency cited Ushakov as saying.

As foreign companies write down billions of their once promising Russian investments, domestic firms and banks are rushing to take over businesses left behind.

“Sanctions are for the long haul. Globalisation as it used to be has ended,” Andrey Kostin, CEO of sanctioned bank VTB, Russia’s second-largest, told RBC business daily.

‘NEW OPPORTUNITIES IN A NEW WORLD’

In past years, SPIEF’S sessions would focus on investment-oriented topics such as privatisation by Moscow and initial public offerings (IPOs).

This year, SPIEF’s official title is “New Opportunities in a New World”. Session topics include new possibilities for Russian economic growth, improving trade with the five non-Western BRICS powers and the future of Russia’s sanctioned financial sector.

Another session – “A new form of international cooperation: how will payments be made?” – touches on Russia’s ejection from the global SWIFT payment system and its move to circumvent the ban by demanding payments for gas exports in roubles. It will have speakers from allies Cuba and Venezuela as well as Turkey and Egypt, which have also eschewed sanctions.

There will be a session on “fake news” – a panel attended by state media, the General Prosecutor’s Office and the Foreign Ministry as Moscow pursues an information war with the West.

Other countries sending officials to attend or speak there via videolink include China, Belarus, Central African Republic, India, Iran, Nicaragua, Serbia and the United Arab Emirates.

Some participants asked their employers’ names not be printed on their personal badges, RBC reported, citing Rosgoncress, the state company organising the forum.

“Money loves silence now as never before,” said Denis Denisov, head of the Russian branch of international advisory firm EM.

(Reporting by Reuters; Editing by Mark Heinrich and Grant McCool)

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