Aurelia Butler

SYDNEY (Reuters) -Global shares inched higher on Friday after data showed the U.S. economy was growing robustly and a U.S. core inflation report signalled price pressures are continuing to abate. MSCI’s all-country equity gauge rose 0.2% following reassuring news on Thursday that the U.S. economy expanded at its fastest rate for almost two years in the third quarter, while the European Central Bank (ECB) also held interest rates steady. Futures tracking Wall Street’s tech-heavy Nasdaq 100 index added 0.8% in response to Amazon (NASDAQ:AMZN) beating sales estimates. Europe’s Stoxx 600 share index was 0.3% lower. The yield on the 10-year U.S. Treasury, which moves inversely to the price of the debt security and functions as a benchmark for global borrowing costs, rose 2 basis points (bps) to 4.845% after scaling 5% earlier in the weekA report on Friday showed U.S. core personal consumption expenditure, the U.S. Federal Reserve’s favoured inflation measure, declined to 3.7% in September from 3.9% a month earlier. Still, bond markets held off applauding the news ahead of the Federal Reserve’s interest rate setting meeting next week and as oil prices climbed in response to geopolitical tensions. “This is a bond market that at the moment doesn’t need much of an excuse to fire a tantrum,” said Simon Harvey, head of FX analysis at Monex Europe. “In the current environment, uncertainty for monetary policymakers has increased significantly,” added Martin Wolburg, senior economist at Generali (BIT:GASI) Investments. Amid growing concerns that the Israel-Hamas conflict could spread, two U.S. fighter jets struck weapons and ammunition facilities in Syria on Friday in retaliation for attacks on U.S. forces by Iranian-backed militia. Brent crude futures climbed 1.9% to $89.71 a barrel on Friday, now about 5% higher since Hamas militants burst out of Gaza to attack southern Israel on Oct. 7.The 10-year Treasury yield, which can hit stock prices when it rises by varying the discount rate investors use to value companies’ future cashflows, has climbed from around 4% in early August. The Fed is widely expected to keep its funds rate in a range of 5.25%-5.5% next week, although chair Jay Powell has said a strong economy and tight jobs market could warrant more rate rises. The ECB on Thursday also held its deposit rate at a record high of 4%, although president Christine Lagarde signalled in comments after the decision that further monetary tightening was possible. In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan closed 1.1% higher after hitting a fresh 11-month low on Thursday. In currency markets, the euro was steady at 1.0556 per dollar, now down almost 14% in the last three months.Thanks to rate rises and a robust U.S. economy, the index that measures the dollar’s strength against competing currencies has risen almost 5% in three months and was on Friday on track for a 0.5% weekly gain. The yen hit a fresh one-year low of 150.77 per dollar overnight and was last at 149.89. That put it not far off the three-decade low of 151.94 it touched in October last year that led Japanese authorities to intervene to prop up the currency. In recent weeks the Bank of Japan (BoJ) has also intervened heavily in its bond market to suppress yields, pitting itself against market forces as global rates have risen. The BoJ will face pressure at its meeting next week to shift away from bond yield control, with any nod to tighter Japanese policy potentially strengthening the yen and encouraging domestic investors to sell overseas assets. More

Consumer spending, which accounts for more than two-thirds of U.S. economic activity, surged 0.7% last month, the Commerce Department’s Bureau of Economic Analysis reported on Friday. Data for August was unrevised to show spending rising 0.4%.Economists polled by Reuters had forecast spending gaining 0.5%. The data was included in the advance gross domestic product report for the third quarter published on Thursday, which showed consumer spending accelerating sharply, contributing to the fastest pace of economic growth in nearly two years. While the robust rate of growth in consumer spending is likely unsustainable, the strong hand-off from the last quarter bodes well for spending in the fourth quarter amid growing challenges. Consumer spending is being driven by solid wage growth from a tight labor market, as well as households drawing down on excess savings accumulated during the COVID-19 pandemic. But the resumption of student loan repayments in October by millions of Americans could pressure household budgets and sap momentum. Low income household are believed to have exhausted their excess savings and some are relying on debt to fund purchases, made expensive by higher borrowing costs. Though credit card balances are rising, most economists do not believe they are at levels that could cause alarm, and argue that the labor market remains the key factor for spending.The personal consumption expenditures (PCE) price index gained 0.4% in September after increasing by the same margin in August. In the 12 months through September, the PCE price index advanced 3.4%, matching August’s rise. Excluding the volatile food and energy components, the PCE price index climbed 0.3%, after increasing 0.1% in the prior month. The so-called core PCE price index rose 3.7% on a year-on-year basis in September. That was the smallest gain in more than two years and followed a 3.8% increase in August. The U.S. central bank tracks the PCE price indexes for its 2% inflation target. The Fed is expected to leave interest rates unchanged next Wednesday following a recent surge in U.S. Treasury yields and stock market sell-off, which have tightened financial conditions. Since March 2022, the central bank has raised its policy rate by 525 basis points to the current 5.25%-5.50% range. More

Global consumer goods companies have been bumping up product prices over the past year to counter spiraling costs linked to raw materials, labor and supply chain.Price increases helped Colgate-Palmolive boost its gross profit margins by 130 basis points to 58.5% during the quarter ended Sept. 30. The company said it raised prices by 9.5% in the reported quarter, while a mere 0.5% drop in organic volumes signaled that higher prices have not substantially hit demand. “Our volume performance improved sequentially from the second quarter, despite continued strong pricing,” the management said in prepared remarks. Peer Kimberly-Clark (NYSE:KMB) on Tuesday also lifted its annual profit forecast for a third time, while raising the lower-end of its organic sales outlook on the back of higher product prices.Colgate-Palmolive now expects annual organic sales to grow between 7% and 8%, compared with previous projections of 5% to 7% growth.It expects full-year adjusted earnings per share growth to be in high-single digits, compared with the high end of mid-single digits it forecast earlier.Organic sales for the Hill’s Pet Nutrition brand, which contributed about 22% to company’s sales in the quarter, rose 15%, driven by demand in the U.S. and Europe.The company’s overall quarterly sales rose 10.3% to $4.92 billion, compared with analysts’ average estimate of $4.81 billion, according to LSEG data.Excluding items, profit per share was 86 cents, compared with expectations of 80 cents. (This story has been refiled to correct the brand name in paragraph 9) More

SAO PAULO/BUENOS AIRES (Reuters) – Brazil’s central bank will likely cut its benchmark Selic rate by another half-percentage point next week, maintaining a steady pace of easing as the global economic and geopolitical backdrop worsens, a Reuters poll of economists showed.If realized, it would be the third 50 basis point reduction since June, when the Banco Central do Brasil (BCB) ended a “hawkish pause” that had kept rates at a peak of 13.75% since August 2022 after an anti-inflation policy drive.All 40 economists polled over Oct. 23-27 expect the BCB’s rate-setting committee, known as Copom, to announce a cut in the cost of credit to 12.25% at the end of its meeting on Wednesday, Nov. 1.”Copom should keep the tone of its last statement, indicating it will maintain its easing pace at the next meeting as well, and reinforcing that the bar for accelerating it is quite high,” said Luciano Rostagno, chief strategist at Mizuho.”Risks abroad are growing: long interest rates in the United States are rising and geopolitical risks are increasing, which in turn could generate oil price shocks.”A surge in U.S. Treasury yields as the Federal Reserve’s higher-for-longer message gains traction is becoming a major concern for emerging market economies that last month saw net outflows of $13.8 billion due to the implications of the sovereign bond selloff, among other factors.Meanwhile, the Middle East conflict draws a new set of risks into the forecasts made by central banks, with a potential jump in energy costs looming over an already weakened global economy. The BCB is sticking to what it calls a “parsimonious” approach characterized by elevated real rates that have proved instrumental in avoiding significant capital flight.While the tough monetary strategy is beginning to hurt economic activity, “services inflation is still resilient and inflation expectations continue above (the center) target,” Mizuho’s Rostagno said, further supporting BCB’s caution.But well-behaved biweekly inflation could stir market speculation of 75 bp rate cuts in coming months, said Nicolas Borsoi, chief economist at Nova Futura Investimentos, although he said this was not currently his personal view.Of 37 analysts who gave quarterly estimates in the poll, 34 saw the Selic at 11.75% at the end of 2023, while the remaining three expected 11.50% – implying a 75 basis points reduction at Copom’s next meeting in December.(Other stories from the Reuters global economic poll) (Reporting and Polling by Gabriel Burin in Buenos Aires and Luana Benedito in Sao Paulo; Editing by Kirsten Donovan) More

BRUSSELS (Reuters) -Most European Union leaders on Friday backed granting more financial support to Ukraine as it fights a Russian invasion, but Hungary and Slovakia voiced reservations ahead of a decision the bloc needs to make unanimously in December.The EU executive has proposed that the bloc’s 27 countries chip in more funds in a revision to its shared budget to finance additional shared spending through 2027, including extending 50 billion euros ($52.8 bln) in new aid to Kyiv. “There is a strong view that we need more money for Ukraine, almost unanimity for that,” Irish Prime Minister Leo Varadkar said in EU leaders’ talks on the matter in Brussels. “But there is very little agreement on where we would find the money.”Overall EU support for Ukraine has totalled almost 83 billion euros since Russia invaded in February 2022, the Brussels-based executive European Commission said this week.Beyond sending it money and arms, the bloc has also imposed rounds of sanctions on Russia. The summit in Brussels is meant to highlight the bloc’s continued support for Kyiv even as a new war rages in the Middle East.”The European Union will continue to provide strong financial, economic, humanitarian, military and diplomatic support to Ukraine and its people for as long as it takes,” a draft joint statement from the EU leaders reads. SLOVAKIA JOINS HUNGARYBut Hungary has emerged as a vocal critic of the policy, and Slovakia’s Robert Fico, recently installed as prime minister for the second time, seemed to have joined the Hungarian camp in his first summit since being appointed in Bratislava on Wednesday. Fresh from meeting Russian President Vladimir Putin, Orban said on Friday that EU strategy of sending money and military aid to Ukraine to help it fight against Russia has failed.”The Ukrainians will not win on the battlefield,” he said as footage from the start of the summit on Friday showed him standing alone while other EU leaders greeted one another on arriving in their discussions chamber. Orban has also said he would not endorse in its current form the proposed EU budget revision, which includes the 50 billion in new aid for Kyiv.But he did not reject the proposal outright either, suggesting there is scope for horse-trading ahead. Budapest is trying to unlock billions in aid earmarked for Hungary in the EU budget but blocked by the European Commission over accusations that Orban has damaged democracy in his country.Fico said there was endemic corruption in Ukraine as he demanded that any new aid include guarantees that the funds not be misappropriated, according to a statement from his office on Friday. He also said Bratislava would stop providing military support to Ukraine. “Ukraine is among the most corrupt countries in the world and we are conditioning what is excessive financial support on guarantees that European money (including Slovak) not be embezzled,” he said. Fico himself resigned as Slovakia’s prime minister in 2018 amid protests after the murder of a journalist who had spent years investigating state corruption. The leftist veteran of Slovak politics has repeatedly swatted away accusations of graft that have dogged his party.”What I can say is that both of them didn’t refuse the possibility for providing aid to Ukraine, even for a long time,” Bulgarian Prime Minister Nikolai Denkov told reporters. “The questions are, what type of aid and how it is used, how we are sure, the European Union is sure, that this aid is used efficiently,” he said.($1 = 0.9477 euros) More