Aurelia Butler

Under the agreement, Aptiv will not be required to fund the joint venture in the future, while Hyundai will provide additional funding.The transactions are expected reduce Aptiv’s common equity interest from 50% as of March 31, 2024 to about 15%.Motional uses Hyundai’s IONIQ5 electric car for its robotaxi service, which it offers in Las Vegas through Uber (NYSE:UBER) and Lyft (NASDAQ:LYFT).Aptiv’s move follows that of Ford Motor (NYSE:F), Volkswagen (ETR:VOWG_p) and General Motors (NYSE:GM) as they cut down or back away from the autonomous technology, often touted as the future of mobility.Aptiv also cut its full-year 2024 net sales forecast to be between $20.85 billion and $21.45 billion, compared with its prior projection of $21.3 billion to $21.9 billion.”We will continue to benefit from both our portfolio of leading technologies and our relentless focus on cost optimization to drive outperformance through the back half of the year,” said Aptiv CEO Kevin Clark.Aptiv flagged a slowdown in electrification in North America and Europe, along with persistent labor and material cost headwinds impacting operations.But demand for Aptiv’s modern safety equipment helped soften the impact, powering a first-quarter profit beat.On an adjusted basis, it earned $1.16 per share in the quarter, compared with LSEG estimates of $1.01 per share.Its quarterly net sales rose about 1.7% to $4.9 billion over the year earlier. More

Initial claims for state unemployment benefits were unchanged at a seasonally adjusted 208,000 for the week ended April 27, the Labor Department said on Thursday. Economists polled by Reuters had forecast 212,000 claims in the latest week. Claims have been bouncing around in a 194,000-225,000 range this year.Though demand for labor is softening, with job openings falling to a three-year low in March, layoffs remain very low as companies hang on to their workers following challeges finding labor during and after the COVID-19 pandemic.The Federal Reserve on Wednesday kept the U.S. central bank’s benchmark overnight interest rate unchanged in the current 5.25%-5.50% range, where it has been since July. Since March 2022, the Fed has raised its policy rate by 525 basis points. Labor costs and inflation surged in the first quarter.Fed Chair Jerome Powell told reporters on Wednesday that progress lowering inflation had stalled. Powell described the labor market as having remained “relatively tight,” but also noted that “supply and demand conditions have come into better balance.”The number of people receiving benefits after an initial week of aid, a proxy for hiring, were also unchanged at a seasonally adjusted 1.774 million during the week ending April 20, the claims report showed. A separate report from global outplacement firm Challenger, Gray & Christmas on Thursday showed U.S.-based employers announced 64,789 job cuts in April, a 28% drop from March. Planned layoffs were 3.3% lower compared to a year ago. So far this year, companies have announced 322,043 job cuts, down 4.6% from the same period last year. The claims data have no bearing on April’s employment report, scheduled to be published on Friday. Nonfarm payrolls likely increased by 243,000 jobs in April after advancing by 303,000 in March, according to a Reuters survey of economists. The unemployment rate is forecast unchanged at 3.8%. More

BENGALURU (Reuters) – A rallying U.S. dollar will stand resolute and may even trade more strongly than predicted in coming months if the policies of the Federal Reserve and other major central banks diverge, according to FX strategists polled by Reuters.Recovering from a lull in late-2023, the greenback has shrugged off forecasts for dollar weakness from strategists in Reuters polls over the past year with aplomb, and is already up 4.3% this year against a basket of major currencies.It is also more likely to trade higher than predicted rather than lower over the coming three months, according to a near-75% majority of forex strategists, 42 of 58, in an April 29-May 2 Reuters poll.”We remain steadfast in the belief a strong dollar is going to persist. A strong U.S. economy, evident in the activity numbers and stickier inflation, will make it difficult for the Fed to start cutting rates,” said Paul Mackel, global head of FX research at HSBC.”As a result…the dollar will remain in pole position versus other major currencies in coming months,” he added.Fed Chair Jerome Powell said on Wednesday after the central bank’s most recent meeting that policymakers would “take longer than previously expected” to gain adequate confidence in inflation falling back to the 2% target, reinforcing remarks in a recent speech.Financial markets are now pricing in a 56% chance of a first rate cut of at least 25 basis points in September, but a greater 68% chance of a cut in November, according to CME FedWatch tool, in line with economists’ predictions in a separate Reuters survey from two weeks ago, and down from six expected in January.That would lead to considerable policy divergence among the world’s major central banks, which after raising rates in tandem to levels not seen for several decades to tackle runaway inflation, may start cutting at different times.The European Central Bank and the Bank of England are expected to cut rates earlier than the Fed, in June and August, respectively, according to separate Reuters surveys. Median forecasts from 80 currency strategists in the poll were for the euro to hold at its current $1.07-level until end-July and then gain only slightly to $1.08 in six months, down from the $1.10 predicted in last month’s survey and the weakest forecast in Reuters polls so far this year.”We’re really surprised at how (U.S.) inflation has evolved – I would have expected it to be at least a couple-tenths of a percent lower by now,” said Steve Englander, head of G10 FX research at Standard Chartered (OTC:SCBFF). “The backing off of expectations of Fed rate cuts has made a real difference – (the current) episode of dollar strength seems to have more legs to it,” he added.The Japanese yen, down about 10% for the year and marking a 34-year low of 160.03/$ earlier this week, recovered some of its losses on suspected intervention from Japanese authorities.It will strengthen only slightly to 152/$ by end-July, but then be one of the biggest gainers among major currencies and rise about 8% to 143.67/$ in 12 months, the survey showed.However, it was more likely the currency would trade weaker than predictions than stronger in three months, according to 13 of 18 respondents answering an additional question. “With U.S. yields heading higher and the dollar strengthening, what the Bank of Japan is really trying to do is buy time to slow the pace of (recent) weakness until fundamentals start to move in favour of a stronger yen,” said Lee Hardman, senior currency analyst at MUFG.(For other stories from the May Reuters foreign exchange poll:) More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.To the surprise of many, Federal Reserve chair Jay Powell struck a decidedly dovish tone in his press conference on Wednesday. This came immediately following the issuance of the central bank’s periodic policy statement in which the wording on inflation was hardened by stating that “in recent months, there has been a lack of further progress towards the committee’s 2 per cent inflation objective”.I suspect that Powell’s rather relaxed dismissal of sticky inflation will prove appropriate, but not in the way he expects. Economic developments are likely to show that the Fed is unable to get to 2 per cent unless it is willing to impose large and unnecessary damage on the economy. Indeed, 2 per cent may not be the right inflation target for an economy going through so many structural changes, both domestically and internationally.By brushing aside three months of higher-than-expected price and labour cost inflation, Powell initially triggered a significant fall in interest rates and a sharp rise in stocks before a retracement. His dovishness is by no means precedent setting. Indeed, some of Powell’s press conference remarks in the past have been more dovish than the actual committee discussions on policy, as shown by the release of meeting minutes a few weeks later.In contrast to his relatively strong characterisation of the economy, there is mounting evidence that the US economy is slowing. First-quarter GDP, the latest monthly ISM index on manufacturing activity and consumer sentiment measures all came below the consensus forecasts. Moreover, as noted this week by the Financial Times, an increasing number of companies are reporting that “poorer consumers in the US are cutting their spending in the face of persistent price rises”. Starting with limited financial and human resilience, they have experienced the sharpest drawdown in pandemic savings and a significant increase in debt. And now they could well see an increase in unemployment that would then spread weakness up the income ladder.At the same time, sticky inflation is likely to prove more persistent than Powell expects, given ongoing, multi-year structural transitions that are inherently inflationary. Domestically, the US has been moving away from deregulation, liberalisation and fiscal prudence to tighter regulation, industrial policy and chronic fiscal looseness. Internationally, globalisation has been giving way to fragmentation, with systemically influential countries and a rising number of multinationals slowly but surely rewiring supply chains to put national security and resilience ahead of efficiency and immediate cost-effectiveness. Such factors do not appear to have prompted Powell’s dovishness, at least judging by his remarks. But his resistance to validating the more hawkish policy stance priced by markets is appropriate for this world of weakening growth dynamics and structurally sticky inflation. It would avoid the unnecessary damage that would be caused by weaker growth. This includes worsening inequality, greater resource misallocations and a higher risk of financial instability.The biggest risk facing the US and the global economy came from elsewhere in Wednesday’s press conference. Asked about the level of inflation, Powell responded: “3 per cent cannot be in a sentence with satisfactory.” It would not surprise me that the appropriate inflation is closer to 3 per cent than the 2 per cent target, an arbitrary specification that originated in the early 1990s in New Zealand. Yet the internal trauma and external credibility damage caused by the Fed’s big 2021 policy mistake leads it to repeat at every meeting that the Fed “is strongly committed to returning inflation to its 2 per cent objective”.What is at stake here goes beyond the US. A failure to recognise the implications of multi-year structural changes would complicate monetary policy management in much of the world. Emerging economies would find it hard to reduce interest rates as warranted by their domestic conditions, fearing that this would undermine their already depreciated currency in a disorderly way. Japan’s economic and financial normalisation would be hindered by a too-weak yen. And the European Central Bank, while correct in stating that it is not “Fed-dependent”, would find that there is a practical limit on how far it can diverge from the Fed.For now, we should welcome Powell’s dovishness even though it’s not for the reasons he puts forward. We should also hope that, over time, he and his Fed colleagues will become more strategic in their approach to policy signalling and actions. More

Inflation rose to 1.4% in April from 1% in March, outpacing the 1.1% rate forecast by a Reuters poll of economists, strengthening the Swiss franc versus the euro and the dollar.Month-on-month, prices in Switzerland rose 0.3%, higher then the 0.1% rate forecast.The SNB declined to comment.April was the 11th month in a row the rate remained within the central bank’s 0-2% target range, and markets have priced in a 60% probability of a cut to 1.25% at its next meeting on June 20.”With energy prices easing again and the further normalisation expected in services prices due to weak domestic demand, conditions remain in place for the SNB to cut the policy rate again in 2024, perhaps already at the next meeting in June,” GianLuigi Mandruzzato, an economist at EFG Bank, said.Although the April upturn was stronger than expected, it did not indicate inflation was becoming entrenched, for example via higher wages, UBS economist Alessandro Bee said.”We still think that the SNB is willing to bring monetary policy from ‘restrictive’ territory more to a ‘neutral’ territory in 2024,” he said.”The current policy rate of 1.5% is rather on the restrictive side which is why we still think that a rate cut in June to 1.25% is likely – especially when the ECB will most likely start its rate cutting cycle in June.” More