Aurelia Butler

A clutch of recent data from major economies is suggesting moderating inflation and wage pressures as well as stabilizing consumer confidence, the brokerage said in a note dated Monday.”The probability for soft landing has ticked up with moderating inflation and jobs prints, while at the same time, positioning remains at extreme lows,” the brokerage added.Among stocks, the energy sector is trading at a heavy discount and offers a favorable investment opportunity, the analysts said. The brokerage is also bullish on China as COVID-19 restrictions in the country ease and fiscal stimulus expands, boosting bets on risk assets.Surveys from last week showed Europe is almost certainly entering a recession, with inflation running at more than four times the European Central Bank’s 2% target. Deepening cost of living crisis and a gloomy outlook is also keeping consumers wary of spending.But J.P. Morgan said it was expecting European governments to act to shield consumers from biting energy inflation, as natural gas prices skyrocket after sanctions-hit Russia disrupted supply.Corporate earnings in Europe are also “defying economic momentum”, J.P. Morgan said. The U.S. Labor Department’s data last month showed consumer prices did not rise in July due to a sharp drop in the cost of gasoline, delivering a sign of relief for Americans who have watched inflation reach levels not seen in four decades. More

BERLIN/BRUSSELS (Reuters) – Germany said on Tuesday it aimed to expand lending to energy firms at risk of being crushed by spiralling gas prices, the latest effort in Europe to rescue households and industry from an energy crisis sparked Russia’s invasion of Ukraine. The European Union’s securities watchdog is also considering EU-wide measures to help energy firms struggling to find cash to meet rocketing collateral demands after they were caught out by the surging prices as Russia slashed gas sent to Europe. Separate proposals from the European Commision to tackle the crisis are due to be announced on Wednesday, with EU energy ministers scheduled to hold an emergency meeting on Sept. 30 to discuss them. The crisis is already weighing heavily on Europe’s economy, even before the onset of winter when industrial users could face rationing if gas reserves prove inadequate. Industry sentiment in the bloc’s economic powerhouse, Germany, has tumbled. The German Finance Ministry said it wanted to boost state loans for energy firms by using credit authorisations created to offer relief in the COVID-19 pandemic, with a German newspaper putting the value at 67 billion euros ($68 billion). Last week, VNG, one of Germany’s biggest importers of Russian natural gas, became the latest energy firm to ask the government for aid to stay afloat. The German cabinet is expected to approve draft legislation for the boosted credit funds on Wednesday. ENERGY SHORTAGES? A draft of the Commission proposals, seen by Reuters, would impose a cap on the revenues non-gas fuelled generators can make from selling electricity, and force fossil fuel firms to share excess profits. Governments would be required to use the cash to help consumers and companies facing sky-high energy bills. EU diplomats say there is broad support for the revenue cap for non-gas generators, as well as plans to impose electricity demand cuts. But countries are split over other ideas – including a gas price cap, which was not included in the draft Commission proposals. Meanwhile, investor sentiment in Germany fell further than expected in September as concerns over the country’s energy supply increasingly weigh on the outlook for Europe’s largest economy. “The prospect of energy shortages in winter has made expectations even more negative for large parts of the German industry,” said Achim Wambach, president of the ZEW economic research institute. “The question now is how far down the economy can go – and where inflation can still go,” said LBBW bank senior economist Jens-Oliver Niklasch. Separately, the CEO of Ukrainian state energy firm Naftogaz said on Tuesday he hoped to restore production thanks to the recent military successes. Naftogaz produces the lion’s share of Ukraine’s gas, with output totalling 13.7 billion cubic meters (bcm) in 2021. More

The UN is pressing Russia and Ukraine to agree a deal on chemical exports through the Black Sea in a bid to ease global fertiliser prices and solidify Vladimir Putin’s commitment to the current shipment agreement on grain.UN diplomats have been holding discussions with Kyiv and Moscow to reopen a pipeline carrying ammonia — a key ingredient in the production of nitrate fertilisers — from Russia to Ukraine’s Black Sea coast, according to three people briefed on the talks.Rebeca Grynspan, the UN official who has been leading the task force, confirmed the negotiations in a statement to the Financial Times. “Talks are moving in the right direction and every effort is being made by all parties at every level to ensure a positive outcome,” she said, adding that negotiations were continuing “urgently” with the aim of averting “a food crisis on a global scale” in the years ahead.The proposal is part of an agreement on food and fertiliser promised to President Putin in exchange for backing a grain deal between Moscow and Kyiv in July. It would allow Russian ammonia shipments to use the same sea corridor that has transported close to 3mn tonnes of wheat, corn and other foodstuffs from previously blockaded Ukrainian ports.If successful, such a deal would allow 2mn tonnes of the chemical component — worth about $2.4bn at current prices — to be shipped each year from Russia, according to the people briefed on the talks.Negotiators hope it could help assuage a global food crisis as well as bolster the existing deal on grain by giving Putin more of a stake in its success. Discussions have intensified in recent weeks.The Kremlin and the Ukrainian governments did not immediately respond to requests for comment.Putin harshly criticised the grain deal last week, raising fears that the agreement could collapse. His complaints — he wrongly claimed that most of the grain shipments were not headed to poor countries — were echoed by Turkey’s president Recep Tayyip Erdoğan, who helped to broker the grain deal. The two leaders are meeting in Samarkand, Uzbekistan, this week.It is unclear whether the recent military setback Kyiv has inflicted on Russian forces in northeastern Ukraine will weigh on the talks.Ammonia is a key component of fertilisers. Russia was supplying 20 per cent of the world’s seaborne cargos of the chemical ingredient before Moscow’s invasion of Ukraine, according to research company ICIS. Fertiliser prices have more than doubled in the past year, according to the UN, partly because a pipeline linking the southwestern Russian region of Samara to the Ukrainian Black Sea port of Pivdennyi was halted in February. The pipeline used to carry about 2.3mn tonnes of Russian ammonia a year, according to data provider Argus Media.The UN is also seeking the release of 20,000 to 40,000 tonnes of ammonia trapped in Pivdennyi, according to two of the people.Kyiv would benefit from revenues in the “high tens or low hundreds” of dollars in transit and port fees, one of them said. The UN is also pushing Moscow to allow grain shipments from a fourth port, Mykolayiv, which has been under heavy Russian artillery fire and is located close to a current Ukrainian offensive around Kherson in the south.A sticking point is how to share the revenues, and whether to hold them in an escrow account until the war is over.Additional reporting by James Politi in Washington, Emiko Terazono in London, Polina Ivanova in Berlin and Roman Olearchyk in Kyiv More

LONDON (Reuters) – The dollar eased further on Tuesday ahead of U.S. inflation data that could show some signs of softening, while the euro found its footing above parity on hawkish comments from policymakers that rates would need to increase further.The dollar index, which measures the greenback against a basket of six currencies including the euro, eased 0.4% to 107.76, after falling 0.7% on Monday, the largest daily decline since August 10.It’s now fallen over 2.7% from last week’s 20-year peak. The euro rose 0.6% versus the greenback to $1.0180, after hitting a nearly one-month high of $1.0198 in the previous session. The dollar was softer against the yen, down 0.5% at 142.06, as the Japanese currency found support from comments from officials signalling the government could take steps to counter excessive yen weakness.U.S. inflation figures are due at 1230 GMT and the consensus is for the core consumer price index to have risen 0.3% month-on-month in August, at the same pace as July. Headline inflation is expected to decline 0.1% month-on-month. Recent dollar gains have slowed on market expectations that peaking inflation will mean less aggressive interest rate hikes from the Federal Reserve. “I think the Fed will hike by 75 basis points even if it is a soft number,” said Niels Christensen, chief analyst at Nordea. “But they then might say it’s time to slow the pace.” “(Federal Reserve Chair) Jerome Powell was quite firm when he spoke last week. He made it very clear that they will fight inflation.”Fed funds futures are fully pricing in a half point rate rise at next week’s Federal Open Market Committee meeting and currently imply a greater than 85% chance of a larger 75 bp increase.The euro has enjoyed a respite above parity due to hawkish noises from the European Central Bank. Last week, five sources close to the matter said Europe’s benchmark rate could rise to 2% or beyond to tame inflation.On Tuesday, German harmonised inflation was confirmed at 8.8% in August, unrevised from the preliminary reading. Spanish consumer prices rose 10.5% year-on-year in August, slightly higher than the flash estimate.Eyes were also on the gas situation in Europe, with the front month Dutch gas delivery contract, the benchmark for Europe, steady on Tuesday but still down by around 45% from its peak in August. [NG/EU]”The decline in gas prices is one more reason for the bounce in the euro,” Nordea’s Christensen said, although he believes the recent strength to be short-lived as near-term tailwinds for the single currency fade.”The situation would improve for the euro if gas prices were to move even further down, but we have to see that materialising to change our view,” Christensen added, expecting the euro to fall to $0.95 towards the end of the year. Meanwhile, sterling rose to a two-week high against the dollar after the British jobless rate dropped to its lowest level since 1974, while wages excluding bonuses rose by 5.2%, the highest rate since the three months to August 2021.The pound was last up 0.4% at $1.1731. More