Aurelia Butler

LSEG data showed investors shed a net $2.08 billion worth of global equity funds during the week, marking the first weekly net outflow since Feb. 21.This cautious stance came as the ISM report indicated U.S. manufacturing growth in March, the first since September 2022, lessening the likelihood of imminent rate cuts. Further bolstering this view was the rise in U.S. job openings in February.By region, investors offloaded U.S. and European equity funds of $3.28 billion and $1.63 billion, respectively. Asian funds still witnessed about $2.02 billion worth of net purchases.The healthcare sector suffered net selling for a fourth successive week as it lost about $1 billion in outflows. Consumer staples and utilities also saw $239 million and $225 million worth of outflows, respectively.Global investors, meanwhile, acquired a net $14.71 billion worth of bond funds, posting the largest weekly net purchase in four weeks.Medium-term U.S. dollar bonds saw a significant uptick in demand as they secured about $4.55 billion, the most in a week since May 3, 2023. Corporate and government debt funds meanwhile, had $2.36 billion and $776 million worth of net purchases, respectively.Money market funds attracted significant capital during the week, valuing about $104.32 billion on a net basis, the largest amount since January 3.Among commodities, investors purchased precious metal funds worth $663 million, a turnaround from $586 million in net disposals in the prior week. Conversely, energy funds had $52 million in net outgo.Data covering 29,583 emerging market funds showed bond funds accumulated about $1.42 billion in net purchases, the highest since early December 2023. Equity funds, however, faced an outflow, amounting to a net $851 million. More

WASHINGTON (Reuters) – U.S. employers hired far more workers than expected March while raising wages, suggesting the economy ended the first quarter on solid ground and potentially delaying anticipated interest rate cuts from the Federal Reserve this year.Nonfarm payrolls increased by 303,000 jobs last month, the Labor Department’s Bureau of Labor Statistics said in its closely watched employment report on Friday. Data for February was revised slightly lower to show 270,000 jobs added instead of 275,000 as previously reported. Economists polled by Reuters had forecast 200,000 jobs, with estimates ranging from 150,000 to 250,000. The economy is outshining its global peers, despite 525 basis points worth of rate hikes from the U.S. central bank since March 2022 to quell inflation. Economists say most businesses locked in lower borrowing costs prior to the Fed’s tightening cycle, providing some insulation from higher rates and allowing them to keep their workers. Household balance sheets are mostly healthy, helping to support consumer spending. The labor market has also benefited from a rise in immigration over the past year. Easing financial conditions are boosting hiring in interest rate-sensitive industries like construction, which should provide a base for job growth even as payroll gains are expected to slow.The National Federation of Independent Business’ measure of small businesses planning to add jobs over the next three months fell in March to the lowest level since May 2020. It is seen as a good predictor of payroll gains. Employment in some sectors such as healthcare, leisure and hospitality as well as state and local government remain below pre-pandemic trends. Average hourly earnings rose 0.3% in March after gaining 0.2% in the prior month as some weather-related distortions faded. The annual increase in wages slowed to a still high 4.1% in March from 4.3% in February. Wage growth in a 3%-3.5% range is seen as consistent with the Fed’s 2% inflation target. Inflation by most measures is running above target. Financial markets expect the Fed will start easing rates in June. Fed Chair Jerome Powell, however, reiterated on Wednesday the central bank was in no rush to cut after leaving its policy rate unchanged in the current 5.25%-5.50% range last month.The unemployment rate fell to 3.8% in March from 3.9% in February. It has remained below 4% for 26 straight months, the longest such stretch since the late 1960s. The strength in payrolls has not been replicated in the smaller and volatile household survey, from which the jobless rate is derived. Economists attributed the divergence between the two surveys to an increase in labor supply through immigration that is not yet being captured in the household survey. The Congressional Budget Office recently upgraded its immigration estimate for 2023 to 3.3 million from 1.0 million. The BLS uses Census population estimates and will likely update the population flows in its annual benchmark revision next year. Researchers at the Brookings Institution in Washington estimated that the new CBO projections suggested that the labor market in 2023 could accommodate employment growth of 160,000 to 230,000, compared to previous projections of 60,000 to 130,000, without adding pressure to wages and price inflation.Economists said this could allow the Fed to let the economy to run a little bit stronger before cutting rates. More

(Reuters) – U.S. stock indexes were set for a higher open on Friday after stronger-than-expected March jobs data pointed to resilience in the labor market even as it meant the Federal Reserve would be in no rush to cut interest rates.A Labor Department report showed nonfarm payrolls increased by 303,000 jobs in March compared with expectations for an increase of 200,000, as per economists polled by Reuters.The unemployment rate stood at 3.8% compared with expectations that it would remain steady at 3.9%, while average wages earned rose 0.3% on a monthly basis, in line with estimates.”The meaningful data point … is average hourly earnings, which have now fallen down to 4.1% year over year, which is the lowest level since June of 2021,” said David Waddell, CEO and chief investment strategist at Waddell & Associates.”So the employment report was hot, but it was a cooling inflation report and that’s why the market can digest it .. this doesn’t really change anything.”Money markets are now pricing in about 56% chance of at least a 25 basis point rate cut from the central bank in June, down from about 60% prior to the data release, according to the CME FedWatch tool. The Friday report followed a broader market selloff in the previous session, when all three major stock indexes fell more than 1% after hawkish comments from Fed officials.Minneapolis Fed Bank President Neel Kashkari said while he had penciled in two rate cuts for this year at the U.S. central bank’s meeting last month, none may be required if inflation continues to elude the Fed’s target. Investors will be now looking for more clues on the monetary policy in comments from Fed Governor Michelle Bowman, Dallas Fed President Lorie Logan and Richmond Fed President Thomas Barkin, scheduled to speak during the day. Mounting tensions in the Middle East, with oil prices extending their gains amid supply disruption concerns, is another area of concern for the markets. [O/R]A slew of mixed economic data during the week, such as the soft services activity report, the stronger manufacturing report and comments from policymakers have pressured equities, with all three indexes heading for weekly losses.At 8:51 a.m. ET, Dow e-minis were up 85 points, or 0.22%, S&P 500 e-minis were up 16.5 points, or 0.32%, and Nasdaq 100 e-minis were up 68.25 points, or 0.38%.Krispy Kreme gained 5.4% in premarket trading after Piper Sandler upgraded the doughnut chain to “overweight” from “neutral”.Chipmaker Advanced Micro Devices (NASDAQ:AMD) rose 1.0%, recouping some losses after shedding over 8% on Thursday. The Philadelphia Semiconductor Index fell about 3% in the last session. Shockwave Medical (NASDAQ:SWAV) gained 1.7% after Johnson & Johnson (NYSE:JNJ) agreed to buy the medical device maker for $12.5 billion. More

LONDON (Reuters) -An upgraded gold price forecast for 2024 from Nicky Shiels, head of metals strategy at Swiss gold refinery MKS PAMP, drew an unexpected follow-up question this week from market participants. The enquiry was: “Will or can gold ‘go cocoa’?”Cocoa prices have more than doubled since the start of 2024 due to poor harvests in Ivory Coast and Ghana.Meanwhile, spot gold, a much more global and liquid market, hit record highs on five previous trading sessions as investors jumped in looking for exposure to the metal used to preserve wealth.Gold’s record high at $2,305.04 an ounce hit on Thursday amounts to a gain of 12% since the start of the year.”There is almost zero probability gold can replicate those gains in that amount of time,” Shiels said.While cocoa price growth is driven by supply shortage, the gold market is protected by significant stocks held by individuals and reserves of central banks, which own one-fifth of all the gold ever mined. “One cannot de-stock chocolate bars at the same rate as one can de-stock gold bars,” she said. Her forecast for the 2024 average gold price was raised by $150 to $2,200 an ounce.However, while the market may not exactly “go cocoa”, analysts retain a bullish tone even as technically the market feels ripe for hefty falls due to it being overbought.”It is hard to say where values are going to top out as there are no resistance “signposts” on the charts,” said Marex analyst, Edward Meir. Gold’s April rally came on top of its 9.3% jump in March, the strongest since July 2020, which unfolded despite traditional macro headwinds such as a strong dollar and elevated U.S. real interest rates. Over-the-counter and futures gold markets have been buoyant, with an estimated 40% rise in trading volumes, said Johan Palmberg, senior quantitative analyst at the World Gold Council.”And there is outsized activity in the gold options market, in comparison with the likes of equities and bonds, which implies that the current interest is specifically in gold.”Further out, many analysts expect gold to test new highs once the U.S. Federal Reserve starts cutting key rates triggering demand from investors sitting on the sidelines such as holders of physically-backed gold exchange traded funds (ETFs).”We had previously proposed a $2,400 per ounce price estimate if the Fed cut rates in the first quarter of 2024; we commit to that estimate for this year, even if rate cuts come later,” analysts at BofA said in a note. More

LEUVEN, Belgium (Reuters) – The United States and the European Union committed to extend by three years their cooperation on identifying disruptions in the semiconductor sector, with a particular emphasis on mainstream “legacy” chips from China.The two sides concluded a two-day session of their Trade and Technology Council on Friday with a l2-page joint statement on the meeting’s outcomes.It said the two partners would share market intelligence about “non-market” policies and practices, which they argue prevail in China, and consult on planned action to address distortions on the global supply chain.European Commission Vice President Margrethe Vestager, who oversees EU policy on technology, said the EU and U.S. were taking “the next steps” regarding legacy semiconductors. U.S. Commerce Secretary Gina Raimondo told a news conference that China was producing some 60% of legacy chips, found in cars, household appliances and medical devices, and would continue to do so in the coming years.”And we know there’s a massive subsidisation of that industry on behalf of the Chinese government which could lead to huge market distortion. And so that’s why we’re focused on it,” she said.The Commerce Department has already launched a survey to assess market distortion, she said, adding that the EU would do a similar exercise soon, with the two set to share their results.The two partners have also committed to join forces in research to find alternatives to per- and polyfluoroalkyl substances (PFAS) in chips. The “forever chemicals” do not readily break down and studies show they can harm human health. More

LONDON (Reuters) -The dollar and bond yields rose on Friday after much stronger than expected growth in March U.S. payrolls sent investors scurrying to review their bets on when the Federal Reserve will cut interest rates.The U.S. Labor Department reported that nonfarm payrolls increased by 303,000 in March, far ahead of a forecast rise of 200,000 from economists polled by Reuters, potentially delaying rate cuts.U.S. Treasury yields rose on the prospect that the Fed would be in no rush to cut rates, while U.S. interest rate futures pared back the odds of cut in June to 54.4%.Hopes of the Fed beginning a cycle of rate cuts in June have helped to propel shares to record highs.”It definitely pushes out rate cut expectations. You can see the market is already pricing after September now,” said Brad Bechtel, global head of FX at Jefferies in New York, adding it would continue to support the dollar.The jobs data initially knocked U.S. stock index futures,, but they quickly found their feet to trade firmer, recovering some ground after the three key U.S. indexes fell more than 1% each on Thursday on hawkish Fed comments and Middle East tension.With payrolls out of the way, investors will look to next week’s U.S. CPI inflation data for March to feed their Fed bets.The dollar firmed against peer currencies after rebounding from a two-week low.Gold eased after the data, but was still headed for its third straight week of gains, underpinned by safe haven flows.The MSCI All Country stock index was down 0.4% at 770.2 points as it continued to ease in the first week of the quarter after hitting a lifetime high at 785.62 points on March 21.In Europe, the STOXX index of 600 companies dropped to more than a two-week low, with the benchmark on track for its worst day since mid-October. It was down 1% at 505.45 points after Tuesday’s lifetime high of 515.77 points.A cooling U.S. services sector and comments this week from Fed Chair Jerome Powell reinforced the view that rate cuts were likely to commence at some point this year. However, some other Fed officials have taken a more conservative view, with Minneapolis Fed President Neel Kashkari, in particular, striking a more hawkish stance overnight, saying rate cuts might not be required this year if inflation continues to stall.Mark Ellis, CEO of Nutshell Asset Management, said that so far, there appears to be a healthy pullback in markets after grinding higher in a very tight trendline to leave it looking a bit stretched.He pointed to a jump in the VIX, Wall Street’s “fear gauge”, which posted its highest close on Thursday since Nov. 1.”It suggests we are at a bit of a turning point now, whether this is a natural pullback in a bull market, or whether it’s going to turn into something a little bit more,” Ellis said.ASIA EASESMSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.45%, tracking Thursday’s late tumble on Wall Street as risk aversion dominated the market mood. The index was set to end the week little changed. A holiday in China also made for thinner trade.Tokyo’s Nikkei fell 2%, pressured in part by a stronger yen, thanks to the prospect of further rate hikes there and more jawboning from Japanese officials. (T) Hong Kong’s Hang Seng Index was little changed. The dollar was up 0.336% against a basket of currencies, helping to send the euro down 0.26%. The yen edged up 0.2%.The 10-year yield on U.S. Treasuries was firmer at 4.3855%. [US/] The two-year yield firmed at 4.7106%. Bond yields move inversely to prices. In commodities, Brent crude edged up 0.25% to $90.88 a barrel, after striking a more than five-month high on Thursday. U.S. crude was slightly firmer at $86.64 per barrel. Gold gained was flat at $2,290 an ounce, nearing its record high on Thursday. [GOL/] More

The court in Milan ordered a one-year receivership for Giorgio Armani Operations, described as an industrial company of the Armani Group, according to the ruling seen by Reuters.It said Giorgio Armani Operations had entrusted the production of its bags to two firms that subcontracted the work to four Chinese companies which paid their workers 2 to 3 euros ($3.25) per hour.Armani Group said in a statement it had “always had control and prevention measures in place to minimise abuses in the supply chain,” adding it would work with the authorities to clarify its position.The Milan public prosecutors’ office has for years been investigating the outsourcing of production by large groups in the fashion and other industries to subcontractors who allegedly exploit workers.The fashion company Alviero Martini, which had its bags produced by external Chinese workshops, was recently placed under judicial supervision.With its tradition of sophisticated craftsmanship, Italy is home to thousands of small manufacturers that cover 50-55% of the global production of luxury clothing and leather goods, consultancy Bain calculates, against 20-25% for the rest of Europe.($1 = 0.9231 euros) More