Aurelia Butler

(Reuters) -Wall Street’s main indexes eyed a higher open on Thursday as chip stocks rebounded, while investors awaited commentary from Federal Reserve officials to ascertain the outlook for interest-rate cuts.Micron Technology (NASDAQ:MU) rose 1.6% after a report that the memory-chip maker is set to get more than $6 billion in grants from the U.S. Commerce Department to help pay for domestic chip factory projects.Other chip-related stocks such as Advanced Micro Devices (NASDAQ:AMD), Nvidia (NASDAQ:NVDA) and Broadcom (NASDAQ:AVGO) gained between 0.4% and 1.3% in premarket trading.The gains follow a more than 3% drop in the Philadelphia Semiconductor Index on Wednesday. It was also down nearly 13% from the record high levels seen last month amid receding bets on rate cuts.”Generally, fundamentals will be supportive of chip stocks, but also after such a strong rally, it’s not unusual to see a bit of profit-taking,” said Fiona Cincotta, senior market analyst at City Index. All three major indexes closed lower in the last session, with the S&P 500 and the Nasdaq logging their fourth straight day of losses as investors remained jittery about the Fed’s interest-rate outlook.Cleveland Fed President Loretta Mester said she expected price pressures to ease further this year, allowing the central bank to cut borrowing costs, but only when it is “pretty confident” about inflation heading sustainably to its 2% goal.Fed Governor Michelle Bowman said progress on lowering U.S. inflation may have stalled. She said it remained an open question whether interest rates were high enough to ensure a return to the 2% inflation target.”If we have a look at data at the moment, I don’t think there is anything that really screams the Fed needs to be cutting rates right now,” Cincotta said. Investors will keenly listen to remarks from New York Fed President John Williams and his Atlanta counterpart Raphael Bostic later in the day.On the data front, the number of Americans filing new claims for unemployment benefits for the week ended April 13 came in at 212,000 against a forecast of 215,000 as per economists polled by Reuters.At 8:34 a.m. ET, Dow e-minis were up 48 points, or 0.13%, S&P 500 e-minis were up 4.25 points, or 0.08%, and Nasdaq 100 e-minis were up 20.5 points, or 0.12%.D.R. Horton rose 3.8% after the U.S. homebuilder raised its annual revenue forecast as tight housing supply boosted sales. Alaska Air (NYSE:ALK) Group gained 2.8% after forecasting current-quarter profit above estimates.Elevance Health added 3.1% after the health insurer reported quarterly profit above Wall Street estimates and slightly raised its annual earnings forecast. Las Vegas Sands (NYSE:LVS) Corp lost 3.6% after brokerages cut their price targets on the casino operator due to weakness in its Macau operations.Tesla (NASDAQ:TSLA) slipped 2.5% after Deutsche Bank downgraded its rating on the stock to “hold” from “buy”. More

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LONDON (Reuters) – Development agencies gathering in Washington this week face one of their toughest battles in years: getting a rich world worried about wars abroad and elections at home to commit more cash to the world’s poorest countries. The poor world’s development is backsliding at an historic rate amid debt crises, higher-for-longer global interest rates and mounting investment needs. At the same time, it needs trillions more per year to meet climate spending goals alone. At the last round of IMF and World Bank meetings in October, global leaders expected rich-world inflation to ease more quickly than it has, and thus for interest rate cuts to take pressure off financing costs. Since then, an expanding conflict in the Middle East and the ongoing war in Ukraine have thrown up additional funding pressures, curbing the rich world’s already waning appetite to spend on development aid.”Budgetary constraint in a number of countries is increasing,” Odile Renaud-Basso, president of the European Bank for Reconstruction and Development told Reuters in London ahead of the meetings. “There is more expenditure for defense and there is tension about support for development aid.””The global situation is becoming increasingly challenging,” she added.Renaud-Basso said lenders trying to raise funds, such as World Bank’s International Development Association (IDA), would provide a bellwether for the rich world’s appetite to donate. The World Bank’s lending arm to poor countries is targeting record commitments above its last replenishment of $93 billion, which it used early due to the COVID-19 pandemic and the fallout from Russia’s invasion of Ukraine. It has begun issuing bonds to leverage its lending.”We’ve been able to do more with the same level of donor contributions,” IDA director Dirk Reinermann told Reuters. “The problem is that this party is slowly coming to an end…the zero point where we are fully leveraged, it’s coming closer and closer.” In its last replenishment, 52 high- and middle-income countries contributed, led by the United States, Japan, Germany, the United Kingdom and France. But many of those are grappling with donor fatigue. France and the UK have made large cuts to overseas aid in recent years, while in the United States political battles ahead of the presidential election have stalled other foreign spending commitments, including to Israel and Ukraine. According to a recent United Nations report, official development assistance globally hit a record in 2022, but the share of it going to developing countries fell by 2%. “I don’t think the world has ever been in such a state,” said Vera Songwe, chair of the Liquidity and Sustainability Facility, a group that aims to lower debt costs for Africa. Songwe herself worked on IDA’s replenishment round during her time at the World Bank, and described a whirlwind global tour to press finance ministers, parliamentarians and other officials for funding.It is never an easy sell, she said. But this year is different.”Even in 2008, China was still growing then. This is much more difficult.” It amounts to a perfect storm for poor countries. In the decade after the global financial crisis, with record-low interest rates, money flowed freely and the external public debt stock in low and middle income rose to $9 trillion, from $5.6 trillion in 2012. China during that time also opened its financial taps, lending billions via its Belt and Road Initiative. But amid simmering debt problems at home, it has since pulled back. This has significantly narrowed the availability of affordable finance for developing countries. “There are very few such pots of money with such low concessional rates the world over, especially pots of money that come from a multilateral lender that has certain checks and balances,” said Giulia Pellegrini, a senior portfolio manager for emerging market debt at Allianz (ETR:ALVG) Global Investors.Getting money from IDA, or another multilateral lender such as EBRD, can spur private lenders and eurobond investors to open their wallets, she added. “Seeing a strong vote of confidence from some of these multilateral bodies, giving them concessional finance is a way to say these countries are embarking on a positive reform,” she said. Reinermann said IDA’s backing from the World Bank itself and other institutions is strong. But that would not, he said, make securing commitments easy. “Fiscal situations are not flush anywhere,” he said. “Right now it looks like a real mountain to climb.” More

BEIJING (Reuters) -There is still room for China’s central bank to take steps to support the economy, but efforts are needed to prevent cash from sloshing around the banking system as real credit demand weakens, senior officials at the bank said on Thursday.The world’s second-biggest economy grew faster than expected in the first quarter, but several March indicators, such as property investment, retail sales and industrial output showed that domestic demand remains frail, weighing down momentum.The People’s Bank of China (PBOC) has pledged to step up policy support for the economy this year and promote a rebound in prices.”A series of monetary policy measures introduced earlier are gradually taking effect, and the economy continues to rebound with a good start,” Zhu Hexin, a deputy governor of the PBOC, told a news conference on Thursday.”There is still room for monetary policy going forward, and we will closely watch the policy effectiveness, economic recovery, and achievement of goals, and make good use of reserve tools at the appropriate time.”China’s central bank cautioned on Thursday against a “one-sided” pursuit of credit expansion after data showed a slowdown in bank lending, vowing to prioritise the quality of credit over size and move to revitalising existing loans.Zou Lan, head of the PBOC’s monetary policy department, told the briefing that efforts should be made to prevent the accumulation of “idle funds” as some banks extend more loans than actually needed and some firms use low-cost loans to buy wealth management products or lend to other firms.”Credit demand has weakened compared to previous years, and the credit structure is also being optimised and upgraded,” Zou said, adding that China’s money supply growth could slow down and people should not simply look at year-on-year growth.The central bank has in recent weeks delivered modest cuts in banks’ reserve requirement ratio (RRR) and interest rates as part of broad measures to support the economy, with more policy easing expected in the coming months.RATES CANNOT BE TOO LOWReal interest rates, when adjusted for producer prices, remain elevated for some industries – including ferrous metal producers, but high borrowing costs will help promote capacity control and inventory reduction among firms, Zou said.”We should avoid weakening the driving force of structural adjustments and prevent excessively low interest rates,” he said.New bank lending in China rose less than expected in March from the previous month, while broad credit growth hit a record low, boosting the case for the central bank to roll out more stimulus steps to help achieve an ambitious growth target.China has set an economic growth target for 2024 of around 5%, which many analysts say will be a challenge to achieve without much more stimulus.The central bank said 2024 growth of money supply and total social financing – a broad measure of credit and liquidity in the economy – would match expected goals for economic growth and inflation.Analysts polled by Reuters expected the central bank to cut the banks’ reserve requirement ratios (RRR) by 25 basis points (bps) in the third quarter, following a 50-basis point cut earlier this year, which was the biggest in two years.China’s central bank might include the buying and selling of treasury bonds in its policy tool reserve in future, Financial News – a publication backed by the PBOC – quoted experts as saying.China has the conditions to keep its foreign exchange market stable, Zhu said. China’s “goal and determination in keeping the yuan exchange rate basically stable will not change,” he added. More