Aurelia Butler

NEW YORK (Reuters) -U.S. stocks rallied and crude oil prices rebounded after upbeat economic data on Friday as investors positioned themselves ahead of the long U.S. Memorial Day weekend and the unofficial start to summer.The tech-heavy Nasdaq and the S&P 500 advanced, while the Dow closed nominally higher.The light-volume session capped a week in which minutes from the most recent Federal Reserve policy meeting struck a hawkish tone, solid economic data hinted at the possibility of rising inflation and megacap chipmaker Nvidia (NASDAQ:NVDA)’s beat-and-raise earnings report re-ignited investors’ fervor for artificial intelligence.”After yesterday’s very rough day it was nice to see the bulls make a stand ahead of the long holiday weekend,” said Ryan Detrick, chief market strategist at Carson Group in Omaha, Nebraska. “The economy continues to surprise to the upside. That’s why stocks are flirting with all-time highs.”On a weekly basis, the S&P 500 and the Nasdaq nabbed their fifth straight Friday-to-Friday gains, while the Dow was on track to snap its five-week winning streak.Investors are growing increasingly resigned to the higher-for-longer interest rate narrative after the Fed minutes release on Wednesday, as well as cautious remarks from policymakers who expressed doubt whether inflation is indeed on a reliable downward trajectory. Financial markets are now pricing just one rate cut in 2024, a far cry from the six cuts that were projected earlier in the year. On the economic front, new orders for U.S. durable goods increased more than expected, while the University of Michigan’s final take on May consumer sentiment bumped higher.”The realization that the economy is not slowing down has pushed back on any summer rate cut,” Detrick added. “July is likely off the table, but as (Fed Chair) Jerome Powell has said, with improving inflation data over the summer, a September rate cut has a fighter’s chance.” The Dow Jones Industrial Average rose 4.33 points, or 0.01%, to 39,069.59, the S&P 500 gained 36.88 points, or 0.70%, to 5,304.72 and the Nasdaq Composite added 184.76 points, or 1.1%, to 16,920.79.European shares closed lower and recorded a weekly decline as sentiment was dampened by the re-emergence of interest rate worries.The pan-European STOXX 600 index lost 0.19% and MSCI’s gauge of stocks across the globe gained 0.34%.Emerging market stocks lost 0.73%. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.88% lower, while Japan’s Nikkei lost 1.17%.Treasury yields were mixed after reports confirmed the U.S. economy remains resilient, which could convince the Fed to hold off on cutting interest rates this year.Benchmark 10-year notes last rose 2/32 in price to yield 4.4669%, from 4.475% late on Thursday.The 30-year bond last rose 4/32 in price to yield 4.5729%, from 4.58% late on Thursday.The dollar dipped against a basket of world currencies but remained well-placed to resume its advance as stronger-than-expected economic data has prompted markets to dial back rate cut expectations.The dollar index fell 0.36%, with the euro up 0.31% to $1.0847.The Japanese yen was flat versus the greenback at 156.93 per dollar, while Sterling was last trading at $1.2739, up 0.33% on the day. Crude prices edged higher, after having been under pressure for much of the week as the notion of prolonged restrictive Fed policy dampened the demand outlook.U.S. crude rose 1.11% to settle at $77.72 per barrel, while Brent settled at $82.12 per barrel, up 0.93% on the day.Gold prices rose but recorded their first weekly downturn in three due to lowered rate cut expectations. Spot gold added 0.3% to $2,336.03 an ounce. More

Markets are bracing for the shortening of trade settlements for U.S. securities, while South Africans will head to the polls in the most uncertain election in decades.Here’s your look at what’s happening in markets this coming week from Rae Wee in Singapore, Lewis Krauskopf in New York, and Naomi Rovnick, Sinead Cruise and Marc Jones in London.1/PRICING POWER    Key U.S. inflation data – the personal consumption expenditures (PCE) price index – due on May 31 will give the next hints about whether the Federal Reserve is in position to start lowering interest rates later this year. It follows separate data earlier this month that showed monthly consumer prices increasing less than expected, which kept alive investors’ hopes for rate cuts at some point this year, after hotter-than-expected inflation reports in the first quarter.Minutes of the last meeting showed Fed officials indicated they still had faith price pressures would ease, if only slowly. But they also said the Fed should wait several more months to ensure inflation is back on track to its 2% target before any moves. 2/BEYOND JUNEThe European Central Bank has all but promised to cut its deposit rate from a record high of 4% in June. But it’s expected to keep markets guessing about how far and fast it will lower borrowing costs after that, particularly if monthly inflation data out on May 31 shows price pressures remain volatile. Economists polled by Reuters expect euro zone inflation to have risen to 2.5% in May year-on-year, from 2.4% in April. Societe Generale (OTC:SCGLY) economists predicted the ECB will cut rates in June and September but then pause to wait for the Fed to implement its first rate cut and assess inflationary risks from rising wages. Market pricing is less clear on when that second rate cut might come. “With wage growth running high and the Fed forced to hold off rate cuts for now, we expect the language from the ECB to remain hawkish,” the SocGen team said. 3/KEEPING WATCH Consumer prices across Japan are in the spotlight as markets try to gauge when the Bank of Japan (BOJ) could next raise rates, with Tokyo inflation data scheduled for May 31 taking centre stage.The figures come two weeks before the BOJ’s next monetary policy meeting, where some are betting the central bank could deliver its second rate rise after March’s historic move.Policymakers have thus far remained reticent on how soon further hikes could come, but they face increasing pressure to do so as a fragile yen continues to cripple weak consumption.      May 31 will also see the periodic release of the Ministry of Finance’s intervention data which covers the recent rounds of suspected intervention and the BOJ’s bond buying schedule, where traders will look out for cuts in the amount of central bank purchasing.4/A DASH FOR DOLLARS? A Wall Street boom confounding the old ‘sell in May and go away’ investment adage is adding to worries among those tasked with ensuring a smooth transition from two-day to one-day trade settlement in the United States, Canada and Mexico on May 28 for U.S. stocks, corporate and municipal bonds, and other securities.As trading activity climbs, so too do the risks of so-called trade “fails” – when intermediaries don’t have necessary instructions to settle on behalf of clients within the tighter time frame. This might trigger a rush for dollars among non-U.S. investors who need to borrow at short notice to cover any temporary mismatch in inflows and outgoings. Any disruption is expected to be temporary, and the move to T+1 is broadly considered a crucial step towards more liquid and efficient financial markets. But given time zones, the move to T+1 trade settlement is effectively T+0 for many in Asia, where preparations are seen lagging other regions. 5/ ANC YOU ON WEDNESDAY South Africans vote in a national election on Wednesday and, for the first time since the end of apartheid 30 years ago, polls suggest the ruling African National Congress party (ANC) is at risk of losing its parliamentary majority.If the ANC gets less than 50%, or even 45%, support it would have to seek one or more coalition partners to govern. Get the more business friendly Democratic Alliance (DA) on board and the rand and other South African assets are likely to take it in their stride. But any hint that it might be the far-left Marxist Economic Freedom Fighters (EFF) or recently-formed MK, led by ex-President Jacob Zuma, then that stride might suddenly become a stumble. The drama might not end there either. President Cyril Ramaphosa could face an internal leadership challenge if the ANC is perceived to have performed poorly. (Graphics by Vineet Sachdev, Pasit Kongkunakornkul, Prinz Magtulis and Sumanta Sen; compiled by Karin Strohecker; Editing by Toby Chopra) More

(Reuters) – European stocks ended lower on Friday and down for the week, as signs of persistent U.S. price pressures and a recovering euro zone economy cast doubt over prospects for several interest rate cuts from major central banks this year.The pan-European STOXX 600 index dipped 0.1%, marking a weekly loss of nearly 0.4%, its biggest in three weeks.Rate cuts bring cheaper financing for companies and consumers, which can translate into more business and profits.Investors, however, grew more cautious after European policymakers warned about monetary easing beyond June, keen to avoid a flare up in price pressures, especially if the Fed continues to delay its easing cycle. Traders are currently pricing in 55 bps of cuts from the European Central Bank, down from 67 bps a week ago.Eurozone bond yields recorded their biggest weekly rise in a month, after a survey showed euro zone business activity expanded at its fastest pace in a year in May, while separate data confirmed that Germany’s economy expanded in the first quarter of 2024. [GVD/EUR]”With the pickup in growth momentum and inflation still declining, the (central bank) is in a favourable position to wait for the data in the coming months before making firm commitments on the policy rate path,” Danske Bank analysts said in a note.Defensive stocks less sensitive to economic cycles, such as utilities, healthcare and food and beverage stocks were among the hardest hit, while cyclicals, such as insurance and the auto sector were among top performers.Among single stocks, Acciona slid 7.1% after the Spanish construction and energy conglomerate lowered its forecast for core earnings growth this year based on current forecast energy prices. Renault (EPA:RENA) rose 5.2% and was among top performers on the main index after the French carmaker announced a share buyback plan and UBS upgraded the stock to “neutral” from “sell”.Equinor said it and its partners in the North Sea Troll gas field, Europe’s largest, will invest $1.13 billion to further boost production, sending shares of the Norwegian energy company down by 2.7%.Abrdn rose 1.6% after the UK fund manager said CEO Stephen Bird has stepped down, following a turbulent four-year tenure marked by deep outflows of client cash and a much-criticised re-branding.(This story has been refiled to add a dropped word in the headline) More

PARIS (Reuters) -Shareholders in French oil and gas major TotalEnergies (EPA:TTEF) largely backed the company’s strategy and its CEO on Friday, but support has weakened since last year as some investors called out its insufficient response to climate change.The company’s progress report on its sustainability and climate goals for 2030 was approved by 79.7% of shareholders compared to 88.8% of votes last year.More than 75% of shareholders also voted for CEO and Chairman Patrick Pouyanne to continue another three-year mandate on the board, slightly lower than the 77.4% in 2021.Some investors had said they would oppose his position to protest insufficient attention to climate concerns.The board, meeting at the end of the AGM, reappointed Pouyanne as Chairman and CEO for the duration of his term on the board.Greenpeace activists climbed a building near the company’s western Paris headquarters early on Friday and unfurled a banner printed with a large photo of Pouyanne under a ‘Wanted’ heading.Members of climate movement Extinction Rebellion also entered offices of TotalEnergies investor Amundi, which was also holding its AGM, damaging the building and injuring some security staff, according to the company and police. The company said they would file a complaint and added they will continue to be a major player in responsible investing.Amundi “has the power to prevent destructive fossil fuel projects such as the climate bomb EACOP”, said Extinction Rebellion on X, referring to the East African Crude Oil Pipeline that TotalEnergies is developing in Uganda and Tanzania.Asset manager Amundi held around 9.5% of TotalEnergies’ shares at the end of 2023, both in direct holdings and indirectly through managing the shares owned by TotalEnergies employees.Activists and climate-focused investors have ramped up pressure on the world’s leading oil and gas companies in recent years, frequently derailing shareholder meetings.Earlier this week, climate activists also disrupted Shell (LON:SHEL)’s annual shareholder meeting in Britain, chanting “Shell Kills.”TotalEnergies had moved its AGM to its headquarters in the French capital’s La Defense business district for the first time, after significant disruption in the usual city centre location last year.More than 200 police were stationed around the building, according to Pouyanne, though strict security checks at the entrance caused long lines, prompting investor complaints during the meeting.Others called out the company’s continued exploration of oil and gas, with a member of the Fridays For Future youth climate action group describing the decision to construct the EACOP as a “murderous path”.”We are trying to find a balance between today’s life and tomorrow’s. It’s not because TotalEnergies stops producing hydrocarbons that demand for them will disappear,” Pouyanne responded.Pouyanne is looking into listing the company in New York in addition to its current listing in Paris to seek a higher valuation for the company that has seen rising investment from U.S.-based funds.European investors meanwhile are under pressure to divest from oil and gas companies.Plans to study such a move, first revealed last month, have caused a storm in Paris, with Pouyanne seeking to reassure on several occasions since then that the company would remain headquartered in France.He has also clarified that he is considering a dual-listing, not a primary listing in the U.S. More

Markets currently show traders are pricing in around 60 basis points’ worth of cuts that would bring the ECB’s benchmark interest rate to around 3.4% by December.Piet Haines Christiansen, Danske chief analyst and a closely followed ECB watcher, said in a note he expected a “political cut” in June, but nothing in September.”We have revised our ECB rate path for the first time in more than 12 months and now expect the ECB to deliver two rate cuts this year (June and December), and three cuts next year. This will bring the deposit rate at 2.75% by the end of 2025,” he said.It was Danske’s first change to its forecast in more than a year and Christiansen said his team expected the ECB to repeat its meeting-by-meeting and data-dependent approach to monetary policy beyond June.”The updated June staff projection is expected to suggest that the prevailing economic and monetary policy narrative stays broadly unchanged and we expect the rate cut to be formulated as a roll-back of the ‘insurance hike’ from September last year,” Christiansen added. Markets had expected at least five rate cuts in 2024 just a few months ago, but traders have since revised those estimates due to a stickness in inflation and some bumper recent pay deals that suggest it could stay that way.Analysts at Barclays had also changed their ECB call late on Thursday due to the “elevated uncertainty” around inflation and with economic activity accelerating faster than anticipated.”We now think the ECB Governing Council will move more gradually this year.” “We continue to expect 25 basis points of cuts at each forecast meeting (Jun-Sep-Dec), but no longer expect a cut at July’s nonforecast meeting,” they added, referring to the fact the ECB will not publish new economic projections in July.Inflation is slowing, but growth across the euro zone is picking up, which might limit the ECB’s scope to cut rates. Two-year German bond yields, the most sensitive to changes in expectations for interest rates, are trading around their highest for six months, above 3%, having risen by nearly 70% so far this year. Despite the rejig to its forecasts Barclays said it did still expect 150 basis points of cuts over the duration of the ECB’s rate reduction cycle. More