UPDATE 2-Sterling edges up against dollar, little changed versus euro

Recasts, adds background

May 11 (Reuters) – Sterling barely changed against the euro on Wednesday, while it edged up versus the dollar but still within striking distance with its lowest since June 2020.

The dollar weakened after moving sharply off its lows and briefly turned positive on the day after economic data showed inflation was unlikely to cause the Federal Reserve to adjust their aggressive path of monetary policy. nL2N2X31E0

Analysts said the pound would be capped by markets scaling back hawkish expectations about the Bank of England’s policy stance and by uncertainty around the British economic outlook.

Money markets were pricing in around 110 basis points (bps) of Bank of England rate hikes by year-end, from 120 bps late last week and around 145 bps at the end of April. BOEWATCH

Expectations for rising interest rates usually boost the value of a currency.

“Sterling is the easier short because the rate hikes are priced in, the slowdown is happening before our eyes, and the political backdrop is a threat to sterling too,” SG forex analysts said.

Britain is on course to enter a technical recession in the second half of this year, an economic think tank said on Wednesday. nL5N2X2762

At 1509 GMT, the pound was up 0.1% against the U.S. dollar at $1.2336, GBP=D3 just above its lowest level since June 2020, which was $1.2262, reached on Monday.

It was down 0.02% versus the euro at 85.47 pence. EURGBP=

“Politics is never far from sterling and could weigh on it at any time,” ING analysts said, mentioning risks of UK-EU trade relations deteriorating again.

Britain rejected on Wednesday European Union proposals to resolve a standoff over post-Brexit trade rules for Northern Ireland, saying it might take direct action in a move Ireland said would trigger legal action by Brussels. nL5N2X325R

Britain wants a full overhaul of the agreement, while the EU is looking for changes within the terms of the existing deal.

(Reporting by Stefano Rebaudo; Editing by Angus MacSwan)

((stefano.rebaudo@thomsonreuters.com ; +39. 0266129431; Reuters Messaging: stefano.rebaudo.thomsonreuters.com@reuters.net))

UPDATE 2-Brazil’s inflation hits highest for April in 26 years, +12.1% in 12 months

Adds comments from economists

By Marcela Ayres

BRASILIA, May 11 (Reuters) – Brazil’s inflation slowed in April but still posted the steepest rise for the month in 26 years, pushing the 12-month figure to over 12% amid continued pressures on food and fuel, official figures showed on Wednesday.

Consumer prices as measured by the benchmark IPCA index rose 1.06% in April, slightly above the 1.0% increase forecast by economists in a Reuters poll, but lower than the 1.62% increase seen in March.

According to the statistics agency IBGE, the monthly result was again driven by the rise in food and beverages (+2.06%), and transport (+1.91%), groups that have been impacted by skyrocketing commodities and disrupted supply chains in the wake of the Russia-Ukraine war.

Eight of the nine groups surveyed showed increases in April, reinforcing the spread of inflation in Latin America’s largest economy. Only expenditures with housing fell (-1.14%) due to cheaper energy tariffs.

In the 12 months through April, prices were up 12.13%, against 12.07% expected in the poll, and higher than the 11.3% print seen through March.

That is even further from this year’s official target of 3.5%.

Deteriorating inflation has made economists worsen their outlooks not only for 2022, but also for next year, which led the central bank to signal a likely interest hike in June, after already raising rates to 12.75% from a 2% record low in March 2021. nL2N2X20U6

The latest figures point to a broad-based increase in price pressures, said William Jackson, Chief Emerging Markets Economist at Capital Economics, who expects additional 75 basis points of hikes over the coming months, to 13.5%.

Felipe Oliveira, an economist at MAG Investimentos, said that inflation should slow down due to cheaper electricity and a lower increase in food prices from June, the harvest season.

But he pointed out that gasoline is about 20% below international prices, with possible adjustments helping to keep inflation high, “although below the rates observed in recent months”.

(Reporting by Marcela Ayres; Editing by Angus MacSwan)

((marcela.ayres@thomsonreuters.com; +55 11 5047-2444;))

UPDATE 1-Philippines’ Marcos to ‘hit the ground running’ as president

Marcos says economic team crucial

Political affiliation not issue in cabinet selection – Marcos

Nominates president’s daughter for education minister

Recasts, adds details, quotes

By Neil Jerome Morales

MANILA, May 11 (Reuters) – Philippines election winner Ferdinand Marcos Jr said on Wednesday he would hit the ground running as president and was looking very carefully at candidates for his economic team, with infrastructure, jobs and energy prices his priorities.

Marcos, the son and namesake of the late dictator who ruled for 20 years before his 1986 overthrow, said his first nominee for his cabinet was Sara Duterte-Carpio, his vice presidential running mate and daughter of incumbent President Rodrigo Duterte.

“My intention is to hit the ground running. If the proclamation pushes through later this month, we have to be ready. We are already talking about the appointments,” Marcos told a news conference.

“The economic managers are going to be critical for the next several years because of the pandemic and the economic crisis. So that is something that we are looking at very carefully.”

Marcos said political affiliation was not a factor in selecting people to work in his government.

“I continue to be guided by, as I said before, competence and willingness to work with the next administration. In our discussions, we removed immediately what their political leanings have been.”

Duterte-Carpio was the only potential cabinet member mentioned by Marcos.

She was a vital component of the Marcos campaign, making inroads for him in new voter territory and helping him to tap her father’s huge support base.

He had said very little about his objectives during his campaign, focusing on an ambiguous message of unity in a country that has long been divided in its opinions of the Marcos family and its far-reaching political influence.

His skipping of debates and media appearances frustrated business and university groups, who said he was avoiding scrutiny and denying voters the chance to hear his platforms.

In his statement, he said critical focus areas for his presidency were energy prices, jobs, infrastructure and education.

He said he wanted a government that gives voice to everyone who wants to help and that he was guided by the 31 million Filipinos who voted for him and “have agreed to unify and help us unify the country”.

(Reporting by Neil Jerome Morales; Additional reporting by Karen Lema; Writing by Martin Petty; Editing by Nick Macfie)

((martin.petty@tr.com; +66896070413))

UPDATE 1-No quiet retirement for Philippines’ Duterte when Marcos takes over presidency

Adds attempts to reach Marcos and Duterte paragraph 15

By Karen Lema and Neil Jerome Morales

MANILA, May 11 (Reuters) – A quiet retirement for Philippines President Rodrigo Duterte is unlikely when he makes way for successor Ferdinand Marcos Jr., but efforts to put him on trial for thousands of killings in his “war on drugs” appear unlikely to prosper.

Duterte’s daughter, Sara Duterte-Carpio, helped get Marcos elected by agreeing to be his vice presidential running mate, allowing the son of the late dictator to tap her father’s huge support to seal a comeback for the disgraced Marcos dynasty.

Though there has been no formal quid-pro-quo, political experts say it is unlikely Marcos would risk burning crucial bridges by allowing the International Criminal Court (ICC) to investigate Duterte over the alleged execution-style killings in his war on drugs.

Duterte, 77, will be stripped of the legal armour shielding him from legal action once he becomes a private citizen next month, making him an open target. Unbowed, he has said he will search for drug peddlers after he retires and “shoot them and kill them”.

At least 6,200 people have been killed in the war on drugs during Duterte’s six-year rule. Rights groups and critics say law enforcers summarily executed drug suspects, but police say those killed were armed and had violently resisted arrest.

The ICC in September approved an investigation into the killings, but temporarily suspended it in November at Manila’s request. The ICC did not immediately respond when asked for an update on the probe’s status. nL1N2SA2YK

“He will be safe, untouchable. Worse, even as ex-president, he could still weigh in on policy,” said Carlos Conde, senior Philippines Researcher at Human Rights Watch.

Marcos, during the campaign, has already intimated what he might do with the ICC investigators. “I will let them into the country, but only as tourists,” he said in January.

“We have a functioning judiciary that is why I do not see the need for a foreigner to come and do the job for us,” Marcos said, mirroring the position of Duterte, who has repeatedly said he will not cooperate with the ICC.

POLITICS IN HIS DNA

However, it is not only the ICC that Duterte would have to contend with but also families of victims and human rights groups demanding accountability for the killings and other violations in the past six years.

Randy delos Santos, an uncle of high-school student Kian delos Santos, whose death in 2017 led to rare convictions of police officers in the drug war, hoped the ICC would resume its probe.

“There are so many families of drug war victims, not just me,” said Delos Santos, who cited many other cases belying government claims the victims had fought back.

Cristina Palabay of human rights group Karapatan said: “We are also preparing cases to file against Duterte after he steps down from office.”

Spokespersons for Rodrigo Duterte and Marcos did not immediately respond to requests for comments.

Duterte has only given hints on his future plans. He said this week he will return to his hometown of Davao city, where he served as mayor for more than two decades before becoming president in 2016.

“I will stay here in Davao. Even as a civilian, I will still help you. Just like what I promised when I first became mayor,” Duterte said after casting his vote on Monday.

Earl Parreno, author of a biography of Duterte entitled “Beyond Will & Power”, said he finds it difficult to imagine the president totally dropping out of politics. “Will he really retire quietly?” he said.

Duterte may decide to run for local office in the mid-term polls in 2025, Parreno said. It is not uncommon for former presidents in the Philippines to seek lower posts in office.

“If you have politics in your DNA, it would be difficult to stay away from it,” he said.

True to form, Duterte did not mince words when telling supporters of his plans after the presidency.

“I will go riding on a motorcycle and roam around…and I’ll search for drug peddlers, shoot them and kill them,” he said.

(Reporting by Karen Lema
Editing by Ed Davies and Raju Gopalakrishnan)

((karen.lema@thomsonreuters.com; +632 841-8938;))

Philippines presidential election winner Marcos says will hit the ground running

MANILA, May 11 (Reuters) – Philippines presidential election winner Ferdinand Marcos Jr said on Wednesday his intention was to hit the ground running when he takes office next month, and said he was looking very carefully for economic managers, whose roles are critical.

Marcos, the son and namesake of the late dictator who ruled for 20 years before his 1986 overthrow, told a news conference his first nominee for cabinet was Sara Duterte-Carpio, his running mate and winner of the vice presidency, who is daughter of the incumbent president.

He said critical areas for his presidency were energy prices, jobs, infrastructure and education.

(Reporting by Neil Jerome Morales; Writing by Martin Petty)

((martin.petty@tr.com; +66896070413))

UPDATE 2-Russian rouble surges past 67 vs dollar, stocks mixed

Updates with further gains in the rouble, adds analyst quote on stocks

May 11 (Reuters) – The Russian rouble pared early short-lived losses and surged past 67 against the U.S. dollar on Wednesday, artificially boosted by capital controls, while stocks were mixed after a long weekend.

The rouble has been volatile for weeks in thin trade in Moscow, propped up by capital controls but pressured by concerns about more sanctions being imposed on Moscow over what it calls a “special military operation” in Ukraine.

At 1508 GMT, the rouble was up 3% to 67.28 against the dollar on the Moscow Exchange RUBUTSTN=MCX after hitting 66.50, not far from last week’s high of 65.31 – its strongest level since March 2020.

“Exporters are likely to beef up FX sales starting today, as they need roubles to pay taxes in two weeks. Also, they will be selling FX revenues accumulated over the long weekend,” Sberbank CIB said in a note, explaining gains in the rouble.

Against the euro, the rouble jumped 4% to 70.33 EURRUBTN=MCX, around levels where it used to trade before the COVID-19 pandemic hit in 2020.

The rouble is currently being supported by the mandatory conversion of foreign currency by exporters and restrictions on capital outflows, while demand for FX from importers remains weak. Without the emergency measures imposed by the central bank the rouble would have been weaker.

“The Russian rouble’s fortunes are increasingly disconnected from the health of the Russian economy as international sanctions tighten,” ratings agency Scope said in a note.

Further rouble appreciation could pose risks for the budget, analysts say. Addressing the issue, the central bank has indicated it could ease some of its capital controls.

The rouble may see downside pressure mounting in the medium term as the country’s trade surplus should decline after Russia issued details on so-called parallel imports of goods, Promsvyazbank analysts said in a note.

Last week, Moscow published a list of goods from foreign carmakers, technology companies and consumer brands that the government has included in a “parallel imports” scheme aimed at shielding consumers from business isolation by the West. nL5N2WY56S

Russian stock indexes were mixed. The dollar-denominated RTS index .IRTS rose 2.5% to 1,115.5 points. The rouble-based MOEX Russian index .IMOEX shed 0.3% to 2,385.1 points, dragged lower by the firmer rouble.

The nearest technical support for the MOEX index is at 2,160, while the resistance lies at 2,840, Finam brokerage said.

For Russian equities guide see RU/EQUITY

For Russian treasury bonds see 0#RUTSY=MM

(Reporting by Reuters
Editing by Mark Potter and Angus MacSwan)

S&P 500, Nasdaq end higher in choppy session

NEW YORK, May 10 (Reuters) – The S&P 500 and Nasdaq ended higher on Tuesday, with big growth shares rising after the previous day’s selloff as Treasury yields tumbled.

Bank shares fell along with yields. The benchmark 10-year note yield dropped from more than a three-year high to below 3%.

The Dow also ended lower, and the day’s trading was choppy, with major indexes moving between gains and losses as investors were nervous ahead of the release of Wednesday’s U.S. consumer price index data and Thursday’s producer prices data.

Investors will be looking for signs that inflation is peaking.

Worries that the U.S. Federal Reserve may have to move more aggressively to curb inflation have driven the recent selloff in the market. A host of other concerns have added to the pressure.

“It’s just fear-based selling,” said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma.

“It can’t just be the Fed’s going to raise rates to stave off inflation, because we’ve seen that before,” he said. Instead, investors have been worried about everything from rates and inflation to the war in Ukraine, supply chain problems and China’s COVID-19 lockdowns, Dollarhide said.

Shares of Apple Inc AAPL.O rose 1.6% and gave the S&P 500 and Nasdaq their biggest boosts.

The Dow Jones Industrial Average fell 84.96 points, or 0.26%, to 32,160.74, the S&P 500 gained 9.81 points, or 0.25%, to 4,001.05 and the Nasdaq Composite added 114.42 points, or 0.98%, to 11,737.67.

Technology and growth stocks, whose valuations rely more heavily on future cash flows, have been among the hardest hit in the recent selloff. The Nasdaq is down about 25% for the year so far.

S&P 500 technology rose 1.6% on the day and led S&P 500 sector gains. The S&P 500 growth index was up 0.9%, while the S&P 500 value index was down 0.4%.

Investors digested comments from Cleveland Fed President Loretta Mester, who said the U.S. economy will experience turbulence from the Fed’s efforts to bring down inflation running at more than three times above its goal and recent volatility in the stock market would not deter policymakers.

U.S. President Joe Biden in a speech Tuesday addressing high inflation said he was considering eliminating Trump-era tariffs on China as a way to lower prices for goods in the United States.

Among the day’s gainers, Pfizer Inc PFE.N shares rose 1.7% after it said it will pay USD 11.6 billion to buy Biohaven Pharmaceutical Holding Co BHVN.N. Biohaven shares jumped 68.4%.

On the down side, Peloton Interactive Inc (PTON) dropped 8.7% as the fitness equipment maker warned the business was “thinly capitalized” after it posted a 23.6% slide in quarterly revenue.

Volume on U.S. exchanges was 15.45 billion shares, compared with the 12.55 billion average for the full session over the last 20 trading days.

Declining issues outnumbered advancing ones on the NYSE by a 1.36-to-1 ratio; on Nasdaq, a 1.34-to-1 ratio favored decliners.

The S&P 500 posted 1 new 52-week highs and 63 new lows; the Nasdaq Composite recorded 19 new highs and 1,066 new lows.

Big Tech & growth stocks lose over USD 1 trillion in market capitalization since Fed hike in May.

(Reporting by Caroline Valetkevitch; additional reporting by Amruta Khandekar and Devik Jain in Bengaluru; Editing by Sriraj Kalluvila, Shounak Dasgupta and Aurora Ellis)

UPDATE 2-New car sales in Russia slump by record 78.5% y/y in April

Adds analyst comments, detail

May 11 (Reuters) – New car sales in Russia fell by a record 78.5% year on year in April, dropping for a tenth month in a row as the sector was hit by acute shortages and soaring prices caused by disrupted logistics and a volatile rouble.

New car sales of 32,706 cars in April were less than one-quarter of those sold a year earlier, the Association of European Businesses (AEB) said on Wednesday.

“The depth of contraction exceeded that in April 2020 when sales were suspended due to epidemiologic restrictions,” analysts at Promsvyazbank said in a note.

“Such a sharp drop can be explained by a shortage of cars at warehouses, by rising prices and prohibitive rates on car loans.”

The Russian central bank raised its key rate to 20% in late February in an emergency move aimed at containing financial risks days after Russia launched what it calls “a special military operation” in Ukraine. It has since trimmed the rate back to 14%. nL5N2WR43U

Sales of new cars this year are expected to shrink by at least 50%, the AEB said last month, after a 4.3% increase in 2021. nL2N2WI0QW

Demand is unlikely to recover due to a decline in real incomes, making the car industry the most affected industrial sector, VTB Capital analysts said.

“Parallel imports won’t help lower the deficit tangibly due to high costs,” VTB Capital said.

In April, sales of Lada cars by Russia’s largest automaker AvtoVaz AVAZ.MM fell 78%, AEB data showed.

In the first four months of 2022, Russia’s sales of new cars and light commercial vehicles declined 43% to 293,846 units, AEB said.

The Russian car market had ranked among the most promising globally until 2014, encouraging foreign automakers to build factories there.

Before the latest Western sanctions over Ukraine, Russian car sales stood at 1.67 million last year compared with almost 3 million sold a year in the 2000s.

(Reporting by Reuters; editing by Jason Neely, Kirsten Donovan)

No quiet retirement for Philippines’ Duterte when Marcos takes over presidency