Aurelia Butler

NEW DELHI (Reuters) -India’s retail inflation rate rose for the first time in five months in June due to a sharp rise in food prices, government data showed on Friday.Annual retail inflation was 5.08% in June, up from 4.75% in May. Economists polled by Reuters had forecast inflation at 4.80%.Prices of food, which account for nearly half of the retail inflation, rose 9.36% from last year in June compared to an 8.69% rise in May. Food prices have been accelerating at more than 8% year-on-year since November 2023.Vegetable prices rose 29.32% in June against 27.33% in the previous month, as extreme heat and heavy floods in India’s northern states disrupted agricultural production.”The heatwave impact has been seen on vegetables … These products will continue to witness high inflation,” said Madan Sabnavis, economist at Bank of Baroda.Higher rural inflation coupled with food prices “is a cause of concern both for consumption and investment growth,” said Devendra Pant, an economist at India Ratings.For June, rural inflation was 5.66% compared to 4.39% in urban areas, government data showed.Inflation rate for cereals was 8.75% in June compared to 8.69% in the previous month, while that of pulses eased to 16.07% from 17.14%.Core inflation, which strips out volatile food and energy prices, continued to hover around 3% and was estimated between 3.08% and 3.14% in June from 3.12% in May, according to three economists. The Indian government does not release core inflation data.High food prices have led to the Reserve Bank of India (RBI) keeping its key interest rate unchanged at 6.50% for eight consecutive meetings.RBI Governor Shaktikanta Das on Thursday said it will be too early to talk about a change in the monetary policy stance till inflation is somewhere close to the central bank’s 4% target.”Any rate action can be considered only in October, and will be heavily data dependent,” Sabnavis said. More

(Reuters) – Wall Street was set for a subdued open on Friday as investors digested mixed results from big banks, while slightly hotter-than-expected producer price numbers reined in bets that the Federal Reserve would begin easing interest rates in September.JPMorgan Chase (NYSE:JPM)’s second-quarter profit increased on a boost from rising investment banking fees and an $8 billion accounting gain from a share exchange deal with Visa (NYSE:V). However, shares of the world’s largest bank edged 0.2% lower in choppy premarket trading.Wells Fargo slid 5.5% as the lender missed estimates for quarterly interest income, while Citigroup rose 2.8% after posting a surge in investment banking revenue and gains in its services division.The results come against a backdrop of expectations that some of the largest U.S. banks would report weaker second-quarter profits due to lower interest payments and higher provisions for deteriorating loans.As the S&P 500 and the Nasdaq scale new peaks, investors are hoping for strong profit growth from companies beyond heavyweight tech names such as Nvidia (NASDAQ:NVDA), so that the U.S. stocks rally can broaden out.”Big bank earnings, big tech earnings and consumer company earnings will be the most important to watch, as these companies are highly levered to the strength of the economy,” said Clark Bellin, president and chief investment officer, Bellwether Wealth.Analysts, on average, expect earnings for S&P 500 firms to grow by 10.1% during the quarter from a year ago, compared to a decline of 2.8% last quarter, according to LSEG IBES data. Financial firms are likely to post a profit growth of 6.7%.After data showed a surprise fall in U.S. consumer prices on Thursday, solidifying bets on a September rate cut, the latest report showed producer prices rose 0.2% on a monthly basis in June, compared to an expectation of a 0.1% rise. Annually, it rose 2.6%, versus an estimated 2.3% rise.”Friday’s stronger-than-expected PPI is an important reminder that inflation is still here and that the inflation data can be volatile,” Bellin said.Traders still see a 93% chance of a rate cut in September, up from 72% a week ago, according to CME Group’s (NASDAQ:CME) FedWatch tool.Focus now turns to the University of Michigan’s consumer survey report, due after markets open.At 8:47 a.m. ET, Dow e-minis were up 22 points, or 0.05%, S&P 500 e-minis were up 1.25 points, or 0.02%, and Nasdaq 100 e-minis were down 1.5 points, or 0.01%. The S&P 500 and Nasdaq logged their worst sessions in more than two months on Thursday, on a rotation out of high-flying large-cap stocks in favor of small-cap shares, which have underperformed this year. The rotation has also set the blue-chip Dow on track for its best week in four. Tesla (NASDAQ:TSLA) dropped 1.7% after UBS downgraded the EV maker’s stock to “sell” from “neutral”.BNY climbed 2.5% after the U.S. bank posted a 10% rise in second-quarter net profit.AT&T (NYSE:T) dropped 1.5% after the telecom firm said data from about 109 million customer accounts containing records of calls and texts from 2022 had been downloaded illegally in April. More

According to LSEG data, investors sold a net $3.57 billion worth of U.S. equity funds during the week, partly reversing a net $8.56 billion worth of purchases the previous week.U.S. stocks set new records this week, driven by a softer jobs report last Friday and weaker consumer price inflation data on Thursday, which fueled expectations of a Federal Reserve rate cut.The S&P 500 and Nasdaq Composite reached new highs on Thursday but later faced selling pressure in some heavyweight sectors.Investors digested second-quarter earnings from major U.S. banks on Friday, following disappointing results from bellwethers PepsiCo (NASDAQ:PEP) Inc and Delta Air Lines (NYSE:DAL) that left markets underwhelmed on Thursday.Among segments, investors withdrew $3.24 billion from large-cap funds, ending a two-week buying streak, and also exited multi-cap, mid-cap, and small-cap funds, totaling $873 million, $664 million, and $87 million, respectively.However, U.S. sectoral equity funds saw $443 million in inflows, buoyed by a significant $615 million investment in technology funds, the largest weekly gain since June 12.Meanwhile, U.S. bond funds continued to attract capital, with a sixth consecutive week of inflows totaling $3.77 billion.Investors heavily favored U.S. government & treasury fixed income, short/intermediate government & treasury, and national municipal debt funds, with inflows of $1.52 billion, $861 million, and $810 million, respectively.Additionally, money market funds received $3.98 billion, marking the second consecutive week of inflows. More

(Reuters) -Wells Fargo’s second-quarter profit declined and the lender missed analysts’ estimates for interest income on higher deposit costs amid intense competition for customers’ money, sending its shares down more than 5% in premarket trading.Net interest income (NII) — or the difference between what a bank earns on loans and pays out for deposits — slid 9% to $11.92 billion. Analysts on average had expected $12.12 billion, according to LSEG data.NII could fall 7% to 9% this year, it reiterated on Friday.”At this point in the year, we expect that to be in the upper half of that range, or approximately down 8% to 9%,” Wells Fargo’s finance chief, Michael Santomassimo, told reporters on an earnings call.Higher net interest income was part of the investor “bull thesis” coming into the quarter, so the management’s new guidance of NII is likely to pressure the stock, said Citigroup analyst Keith Horowitz in a note.Average deposit costs jumped to 1.84% in the second quarter, from 1.13% a year earlier, the bank said. Banks are having to pay more to retain customers who are hunting for greater yields while also dealing with the fallout of higher-for-longer interest rates as borrowers balk at taking out new loans. “Rate expectations continue to change… We’ll hopefully have to see how that plays out and how that translates into action,” Santomassimo said.Net income fell to $4.91 billion for the three months ended June 30 versus $4.94 billion, a year earlier.The lender also said it expects 2024 noninterest expense to be about $54 billion, up from its prior forecast of about $52.6 billion. Wells Fargo’s profit, however, beat expectations in the second quarter, buoyed by a jump in fees from investment banking.On a per-share basis, the company reported $1.33, compared with LSEG estimates of $1.29.The fourth largest U.S. bank said its net charge-offs — or the amount of loans that are unlikely to be recovered — for commercial real estate (CRE) came in at $271 million, or 74 basis points of average loans, predominantly driven by the office segment.The bank has worked to reduce its CRE exposure over the last year as the sector’s troubles exacerbated. While it had hiked provisions to cover potential defaults, particularly in the office space, executives have said the CRE portfolios remain manageable. INVESTMENT BANKING BOOSTInvestment banking was a bright spot for the bank in the second quarter. Rival JPMorgan Chase (NYSE:JPM) also reported a 25% jump in second-quarter profit on Friday, buoyed in part by rising investment banking fees.Citigroup’s profit was boosted by a 60% surge in investment banking revenue in the second quarter.”We continued to see growth in our fee-based revenue offsetting an expected decline in net interest income,” Wells Fargo CEO Charlie Scharf said in a statement. Investment banking revenue surged 38% to $430 million for the bank. Under Scharf, Wells Fargo has beefed up its investment banking and trading activities, recruiting some top executives from rivals. Merger and acquisition volumes hit $1.6 trillion globally in the first half of the year, up 20% from a year earlier, Dealogic data showed. Equity capital market volumes climbed 10% during the same period.Still, Wells Fargo remains shackled by a $1.95 trillion asset cap that prevents it from growing until regulators deem it has fixed problems from a fake accounts scandal. The bank still has eight open consent orders after the U.S. Office of the Comptroller of the Currency in February terminated a 2016 punishment. More

The producer price index for final demand rose 0.2% last month after being unchanged in May, the Labor Department’s Bureau of Labor Statistics said on Friday. Economists polled by Reuters had forecast the PPI nudging up 0.1%.In the 12 months through June, the PPI increased 2.6% after advancing 2.4% in May.The government reported on Thursday that consumer prices fell for the first time in four years in June amid cheaper gasoline and a broad deceleration in the costs of goods and services, including rents. The tame inflation data followed news last week of a rise in the unemployment rate to a 2-1/2 year high of 4.1%.With the Federal Reserve now wary of labor market weakness, economists and financial markets are increasingly betting on a rate cut in September, with another reduction in borrowing costs expected in December. Fed Chair Jerome Powell acknowledged the improving inflation environment during his testimony before lawmakers this week, but also highlighted the risks to the labor market saying “we have seen considerable softening.” The U.S. central bank has maintained its benchmark overnight interest rate in the current 5.25%-5.50% range since last July. It has hiked its policy rate by 525 basis points since 2022. More

LONDON (Reuters) – Global stocks drifted on Friday, masking a strong rotation on Wall Street out of big tech stocks and into small companies expected to benefit from rate cuts, while strong signals that Japan had propped up the yen kept currency trading cautious. MSCI’s broad index of world shares was steady, while futures contracts on Wall Street’s S&P 500 share index and the tech-heavy Nasdaq 100 implied both indices would flatline in early dealings. However, futures contracts on the U.S. small-cap Russell 2000 index were 1% higher, building on a strong performance for this domestically-focused index on Thursday as shares in big tech groups like Apple (NASDAQ:AAPL) fell.Traders on Friday were looking ahead to easier financing conditions for companies in the world’s biggest economy after data on Thursday showed U.S. inflation had dropped unexpectedly to 3% in June, fuelling bets for a September rate cut. The Federal Reserve has held its main funds rate at a 23-year high of 5.25-5.5% for almost a year, a period where rate cut bets have shifted rapidly on volatile economic data. Barclays strategist Emmanuel Cau cautioned that most long-term U.S. investment institutions still expected rates to stay high for longer, so the small-cap stock bounce could be short lived. “Rotation on lower rates into under owned parts of the market, like small caps or bond proxies, seems to be the new pain trade,” he said. Meanwhile, shares in big U.S. banks JPMorgan Chase (NYSE:JPM), Wells Fargo and Citigroup edged lower in pre-market trading after their earnings updates presented a mixed picture of current economic conditions. WILD YEN The dollar was steady against peers on Friday and slipped by only 0.2% against its Japanese counterpart to 159.2 yen, following a wild ride for the currency pair in the previous session. The yen surged by almost 3% on Thursday in a move traders attributed to official intervention to pull the currency up from 38-year lows, as well the drop in U.S. inflation having loaded extra pressure onto the dollar. While Tokyo did not confirm any move to prop up the flailing yen, the Bank of Japan’s daily operations report on Friday suggested between 3.37-3.57 trillion yen ($21.18-22 billion) had been spent on strengthening the currency the day before. Japan’s top currency diplomat Masato Kanda also said on Friday: “Currency interventions should certainly be rare in a floating rate market, but we’ll need to respond appropriately to excessive volatility or disorderly moves.” Currency strategists at Bank of America, however, said yen interventions looked unlikely to halt the currency’s decline in the long term, noting Japan’s trade deficit and its retail investors’ tendency to park money abroad for higher expected returns. STERLING BOUNCE Elsewhere in markets, Europe’s Stoxx share index hit a one-month high and headed for a second consecutive week of gains, helped by upbeat earnings from Sweden’s Addtech and Ericsson (BS:ERICAs). The 10-year U.S. Treasury yield, a benchmark for global borrowing costs, was steady at around 4.21% on Friday after dropping by almost 9 basis points (bps) in the previous session as the price of the debt instrument rose on rate cut hopes. Sterling rallied 0.4% to $1.296 and headed for its best two-week gain in eight months after comments from Bank of England policymakers and better-than-forecast GDP data led traders to reduce earlier bets for an August rate cut.The 10-year UK gilt yield rose 6 basis points (bps) to around 4.14% as the price of the government bond fell. Global oil prices rose to reflect optimism about U.S. rate cuts lifting business activity, with Brent futures gaining 0.6% to $85.93 per barrel and U.S. West Texas Intermediate (WTI) crude 0.8% higher at $83.29 a barrel.Gold was 0.6% lower at $2,401 an ounce. [GOL/] More