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Dollar tramples yen and safe-haven status, gold gains

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NEW YORK (Reuters) – The strong dollar got stronger on Thursday, rising to a three-year high against a basket of trading partner currencies, after a steep slide in the Japanese yen called into question its safe-haven status while the rally in U.S. equities took a pause.

Traders work on the floor of the New York Stock Exchange shortly after the opening bell in New York, U.S., February 6, 2020. REUTERS/Lucas Jackson

Gold prices hit their highest level in seven years as investors sought safe-haven assets after a rise in the number of new coronavirus cases in South Korea and the price of oil rose, supported by China’s efforts to bolster its virus-weakened economy.

The dollar has surged almost 2% since Tuesday against the yen, reaching its highest in almost 10 months, and the greenback climbed to near three-year highs against the euro.

The dollar index of the world’s most-traded currencies rose 0.12% to its highest level since May 2017.

The index is up 3.6% this year. It also gained to its best levels of the year against China’s offshore yuan and MSCI’s index of emerging-market currencies.

A host of reasons were cited for the dollar’s move, ranging from the outperformance of the U.S. economy and corporate earnings to potential recessions in Japan and the euro zone.

A run of dire economic news out of Japan has stirred talk the country is already in recession and that Japanese funds were dumping local assets in favor of U.S. shares and gold.

“The strongest explanation (for the yen’s decline) is a widespread selling by Japanese asset managers amid growing fears about the health of Japan’s economy,” said Raffi Boyadijian, investment analyst at XM.

The yen’s slide is unusual because the exchange rate with the dollar has been unraveling from its close correlation to the price of gold and U.S. Treasury yields, a development that must be watched, he said.

“This raises question marks about whether the yen is losing some of its shine as the world’s preferred safe-haven currency,” Boyadijian said.

China reported a drop in new virus cases and announced an interest rate cut to buttress its economy. But South Korea recorded an increase in new cases, Japan reported two deaths and researchers said the pathogen seemed to spread more easily than previously believed.

A rally that had lifted major U.S. and European stock indexes to record highs this week lost steam, as investors fretted about the spread of the coronavirus outside of China.

MSCI’s gauge of stocks across the globe shed 0.84% and emerging market stocks lost 0.95%.

The pan-European STOXX 600 index lost 0.62%.

The Dow Jones Industrial Average fell 283.03 points, or 0.96%, to 29,065. The S&P 500 lost 30.99 points, or 0.92%, to 3,355.16 and the Nasdaq Composite dropped 131.33 points, or 1.34%, to 9,685.85.

Morgan Stanley’s multibillion-dollar buyout for E*Trade Financial boosted the discount brokerage’s shares.

E*Trade jumped 24.4% after Morgan Stanley offered to pay $13 billion in an all-stock deal, the biggest acquisition by a Wall Street bank since the financial crisis.

Morgan Stanley’s shares fell 3.6%.

MSCI’s broadest index of Asia-Pacific shares outside Japan slipped 0.5% overnight, led by drops in Hong Kong’s Hang Seng and South Korea’s KOSPI.

Spot gold rose 0.3% to $1,616.74 an ounce, after hitting its highest since February 2013 at $1,622.19.

Oil prices rose further after a U.S. report showed a draw in gasoline inventories and a much smaller-than-anticipated rise in crude stocks.

U.S. gasoline stockpiles fell 2 million barrels in the week to Feb. 14. Analysts had estimated an increase of 400,000 barrels.

Data from the U.S. Energy Information Administration (EIA) showed that crude inventories rose only 414,000 barrels last week, compared with a 2.5 million-barrel rise that analysts had expected in a Reuters poll. [EIA/S]

Brent crude futures rose 58 cents to $59.70 a barrel and West Texas Intermediate gained 91 cents to $54.20 a barrel.

Demand for safe-haven U.S. Treasury debt was robust, driving the 30-year bond yield below the psychologically significant 2% level to its lowest since September 2019.

The 30-year bond last rose 39/32 in price to push its yield down to 1.9626%.

Benchmark 10-year notes last rose 17/32 in price to yield 1.5135%.

Reporting by Herbert Lash; additional reporting by Ritvik Carvalho in London; editing by Jonathan Oatis

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Investors charge back into stocks on signs coronavirus spread is slowing

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LONDON (Reuters) – A drop in the number of new coronavirus cases and the Federal Reserve chairman’s optimistic view of the economy lifted world stocks for a third day on Wednesday and sparked a 2% rally in oil prices, on hopes the epidemic’s effects would be contained.

FILE PHOTO: An investor monitors share market prices in Kuala Lumpur, Malaysia, August 25, 2015. REUTERS/Olivia Harris.

China reported its lowest number of new coronavirus cases since late January, lending weight to a prediction from its senior medical adviser that the outbreak might be over by April. A continued decline in new cases would inflict would keep the epidemic from doing as much economic damage as initially feared,

Those reports encouraged investors to get back into equities at the expense of bonds, gold and the Japanese yen — safe-haven assets that benefited as the virus death toll mounted.

“The virus may retard the modest upturn in global trade and manufacturing output which we predict to unfold from the second quarter of 2020s. But it seems unlikely to derail it,” analysts at Berenberg told clients.

The damage to Western economies in particular “will likely be modest and mostly temporary,” the bank said.

MSCI’s global equity index rose 0.12% to stand just off Tuesday’s record highs .MIWD00000PUS. A pan-European equity index rose to a record as automobile stocks — which depend on exports to China — jumped 1.2% .SXAP.

Futures indicated Wall Street would extend gains from Tuesday, when the S&P 500 and Nasdaq posted record closing highs ESC1 [.N].

In Asia, mainland Chinese and Hong Kong shares rose almost 1% .CSI300. The offshore-traded yuan reached two-week highs CNH=D3. The Thai baht, Korean won and Taiwanese dollar, reliant on Chinese tourism and trade, gained 0.3% to 0.5% THB= KRW= TWD=. The yen slipped 0.3% JPY=EBS to a three-week low against the dollar.

Brent crude futures rose from 13-month lows, helped by the likelihood producers would cut output LCOc1. Brent is still down almost 20% from its peaks in early January.

Some noted it remained unclear whether the coronavirus had peaked. Some Chinese companies said they were laying off workers as supply chains for goods had ruptured.

“Evidence suggests the positive mood will continue, and we see some coordination in markets with oil rallying, base metals up and Treasuries coming under pressure,” said Michael McCarthy, chief market strategist at CMC Markets in Sydney. But “I am not ready to buy risk assets yet.”

U.S. RESILIENCE

Yields on U.S. Treasuries and German Bunds US10YT=RR rose 3 to 4 basis points. Ten-year U.S. yields are now 13 bps off the four-and-a-half-month lows hit late January though almost 30 bps below where they started 2020.

Yields had risen on Tuesday after U.S. Federal Reserve Chair Jerome Powell said the U.S. economy was “resilient”. Powell also said he was monitoring the coronavirus, because it could lead to disruptions that affect the global economy.

The dollar had risen to four-month highs against a basket of currencies .DXY but inched off those levels on Wednesday.

U.S. markets also got a boost from signs President Donald Trump might be re-elected in November, since centrist candidates for the Democratic nomination appear to be struggling .

“Trump had a great start into the U.S. election season. After the early end of the impeachment trial in the Senate and the Iowa caucus chaos for the Democrats, betting markets suggest that Trump has a 58% probability of winning re-election on 3 November,” Berenberg noted.

The day’s big currency mover was the New Zealand dollar NZD=D3, which rose 0.8% for its biggest daily gain since December, after the central bank dropped a reference to further rate cuts, suggesting its easing cycle might be over.

Additional reporting by Stanley White in Tokyo, editing by Larry King

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U.S. judge expected to rule in favor of merger of Sprint, T-Mobile: sources

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(Reuters) – A U.S. district judge is expected to rule in favor of allowing Sprint and T-Mobile to merge over the objections of a group of state attorneys general, according to two sources familiar with the matter.

A smartphones with Sprint logo are seen in front of a screen projection of T-mobile logo, in this picture illustration taken April 30, 2018. REUTERS/Dado Ruvic/Illustration

Shares of Sprint surged 69% in after hours trade and T-Mobile stock rose 8%.

U.S. District Court Judge Victor Marrero is expected to make his decision public on Tuesday, one source said.

Approval of the deal would be a high profile defeat for state attorneys general, led by New York and California, who had argued that a merger of the No. 3 and No. 4 U.S. wireless carriers would lead to higher prices, especially for customers who use prepaid plans popular with people with poorer credit.

The deal has already been approved by federal regulators.

The companies had said the deal was needed to help them build out next generation of wireless, called 5G, and better compete with sector leaders Verizon Communications Inc and AT&T Inc.

Executives from the companies, including outspoken T-Mobile Chief Executive John Legere, testified during the trial that Sprint’s business was deteriorating and would not survive if it did not merge with T-Mobile.

The two companies are expected to start talks on renegotiating the terms of their $26.5 billion merger in the next few days, two sources said.

T-Mobile parent Deutsche Telekom is keen to cut the price of the deal, arguing that Sprint’s fortunes have deteriorated since they inked their agreement, the sources added.

However, Sprint, in which Japan’s Softbank Group has a major stake, is expected to argue that T-Mobile needs Sprint in order to grow its cashflow and to boost its capacity using its spectrum, according to the sources.

There is no certainty that there will be a renegotiated deal, the sources cautioned.

The Court did not immediately respond to a request for comment. Sprint and T-Mobile both declined to comment.

One merger opponent, Gigi Sohn, a former telecoms regulator now at Georgetown Law, tweeted her displeasure with reports of the decision. “If #antitrust law doesn’t even block a 4-3 merger like this, we need to start from scratch,” she tweeted, referring to the market shrinking to three from four competitors. “I’ll have more to say tomorrow after I read the judge’s decision (through my tears).”

While a group of states decided to fight the deal in court, the federal government approved it with conditions, a decision which remain in effect.

The U.S. Justice Department approved the deal in July after the carriers agreed to sell some assets to satellite provider Dish Network Corp, which would create its own cellular network to ensure that there would still be four competitors in the market. The Federal Communications Commission signed off on the deal in October. Dish shares rose 2% after hours.

The states maintained that Dish was ill-equipped to become a competitive fourth wireless carrier.

The Wall Street Journal earlier reported that the court was expected to approve the deal on Tuesday.

Reporting by Diane Bartz in Washington and Greg Roumeliotis in New York, David Shepardson in DC and Arundhati Sarkar in Bengaluru; Editing by Shailesh Kuber, Uttaresh.V and Lincoln Feast.

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Wall St. reaches new highs as China moves to limit coronavirus impact

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(Reuters) – U.S. stocks gained for a fourth straight session on Thursday and Wall Street’s main indexes hit record highs as concerns eased over the economic fallout from the coronavirus outbreak in China.

China said it would halve additional tariffs levied against some U.S. goods, seen by analysts as a move to boost confidence after the fast-spreading coronavirus disrupted businesses and sparked broad market volatility.

“The one primary thing that everyone has been listening to and watching and seeing how it moves the market has been the coronavirus,” said Jonathan Corpina, senior managing partner for Meridian Equity Partners in New York. “The headlines have been somewhat neutral lately, and that has been acceptable for the markets.”

Adding to the optimism for stocks were data showing that the number of Americans filing for unemployment benefits dropped to a nine-month low last week, with investors casting an eye toward Friday’s monthly U.S. employment report.

The Dow Jones Industrial Average .DJI rose 88.92 points, or 0.3%, to 29,379.77, the S&P 500 .SPX gained 11.09 points, or 0.33%, to 3,345.78 and the Nasdaq Composite .IXIC added 63.47 points, or 0.67%, to 9,572.15.

Among S&P 500 sectors, communication services .SPLRCL and technology .SPLRCT led the way, while energy .SPNY fell the most.

Even with optimism about containing the broad economic damage from the coronavirus, the impact of the health emergency in China continued to show up in corporate reports. Chipmaker Qualcomm Inc (QCOM.O) flagged a potential threat to the mobile phone industry from the outbreak. Its shares fell 0.3%.

Investors were also digesting the acquittal on Wednesday of U.S. President Donald Trump on impeachment charges.

“The outcome was fairly well telegraphed and I think widely believed, but it ends the chapter for now and I think that is a modest positive for investor sentiment,” said James Ragan, director of wealth management research at D.A. Davidson in Seattle.

With the fourth-quarter corporate reporting season more than halfway completed, S&P 500 companies are expected to have increased earnings by 2.1% for the period, according to IBES data from Refinitiv.

In earnings news, Becton Dickinson and Co (BDX.N) shares slid 11.8%, contributing the biggest drag on the S&P 500, after the medical technology company cut its 2020 forecast.

Kellogg (K.N) shares slumped 8.5% after the breakfast cereal maker forecast full-year earnings that widely missed market expectations.

Twitter shares (TWTR.N) soared 15.0% after the social media company reported $1 billion in quarterly revenue for the first time.

Philip Morris International shares (PM.N) rose 2.7% after the tobacco company released results.

Traders work on the floor of the New York Stock Exchange shortly after the opening bell in New York, U.S., February 6, 2020. REUTERS/Lucas Jackson

Advancing issues outnumbered declining ones on the NYSE by a 1.07-to-1 ratio; on Nasdaq, a 1.11-to-1 ratio favored decliners.

The S&P 500 posted 62 new 52-week highs and no new lows; the Nasdaq Composite recorded 122 new highs and 41 new lows.

About 7.3 billion shares changed hands in U.S. exchanges, below the 7.7 billion daily average over the last 20 sessions.

Reporting by Lewis Krauskopf; Additional reporting by Medha Singh in Bengaluru; Editing by Leslie Adler and Alistair Bell

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Trump touts stock market’s record run, but who benefits?

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(Reuters) – Donald Trump loves to trumpet the hot U.S. stock market as a key achievement of his presidency, and he was in full self-congratulatory mode on that front during Tuesday night’s State of the Union address.

U.S. President Donald Trump delivers his State of the Union address to a joint session of the U.S. Congress in the House Chamber of the U.S. Capitol in Washington, U.S. February 4, 2020. REUTERS/Leah Millis/POOL

“All of those millions of people with 401(k)s and pensions are doing far better than they have ever done before with increases of 60, 70, 80, 90 and 100 percent and even more,” Trump said in his address to a joint session of Congress.

While pensions and retirement funds were lifted by the rise in stock markets, the president has avoided talking about one key point about who really benefits when the market rallies: Most of the gains go to the small portion of Americans who are already rich.

That’s because 84% of stocks owned by U.S. households are held by the wealthiest 10% of Americans, according to an analysis of 2016 Federal Reserve data by Edward Wolff, an economics professor at New York University. So when the stock market has a blockbuster year – such as the nearly 30% rise in the S&P 500 benchmark index in 2019 – the payoff primarily goes to people who are already rich.

“For most Americans, a stock price increase is pretty immaterial to their well-being,” said Wolff, who published a paper about wealth inequality in the National Bureau of Economic Research in 2017.

Roughly half of Americans own some stocks through a brokerage account or a pension or retirement fund. But for most people, the exposure is too small for market gains to be life-changing or leave them feeling much better about their finances, Wolff said. “They’ll see a small increase in their wealth, but it’s not going to be anything to write home about,” he said.

Graphic: The stock boom’s unequal gains png, here

What’s more, nearly 90% of families who own stock do so through a tax-deferred retirement account, meaning they can’t access the money until they reach retirement age, unless they pay a penalty, Wolff said.

So who owns most of the stock market? The majority of corporate equities and mutual fund shares are held by investors who are white, college educated and above the age of 54, according to an analysis from the Center for Household Financial Stability at the Federal Reserve Bank of St. Louis.

The typical middle-class family gets the bulk of its wealth from the housing market. Households in the middle three quintiles of wealth held 61.9% of their assets in their principal residence in 2016, according to Wolff’s analysis. That compares to households in the top 1%, who held 7.6% of their wealth in their homes.

Because most consumers accumulate the majority of their wealth through their homes, a rise in property values can provide a more substantial boost to household wealth than a stock market rally, said William Emmons, lead economist at the St. Louis Fed’s Center for Household Financial Stability.

Still, the recent revival in the housing market, spurred in part by the Federal Reserve’s interest rate cuts, is not helping all Americans equally. Rising property values benefit homeowners but make it harder for aspiring home buyers to break into the market, said Eugene Steuerle, co-founder of the Tax Policy Center, a joint venture between the Urban Institute and the Brookings Institution.

And some people who bought homes immediately before the recession hit may still be trying to recover their losses, Steuerle said. Their wealth may have been wiped out by foreclosure, meaning they then struggled to qualify for a new mortgage during the recovery, he said.

That’s in sharp contrast to well-off investors, whose overall wealth surged after the crisis thanks to strong returns on stocks, property and other investments. Some 72% of wealth accumulated between the third quarter of 2009 and the third quarter of 2019 went to the richest 10% of households, according to an analysis by Oxford Economics. Over that same time period, the poorest 50% of households reaped only 2% of wealth gains.

“There are a lot of families that have not yet recovered from the financial crisis,” Emmons said.

Some more evidence that the recent stock market boom is not making everyone feel richer: There has been little evidence of the “wealth effect,” which says that people tend to spend more when stock markets are up, said Lydia Boussour, a senior economist for Oxford Economics.

Since the recession, people have mostly continued to increase their savings even as the stock market rose. “Consumers are a lot more cautious,” she said.

Reporting by Jonnelle Marte; Editing by Dan Burns and Leslie Adler

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Greenback bounces after end-2019 selloff, yuan shrugs off coverage easing

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(Reuters) – The greenback snapped a six-day dropping streak so as to add 0.25% on Thursday, the primary buying and selling day of 2020, pushing the euro off five-month highs whereas the offshore yuan shrugged off reserve ratio cuts that might add $115 billion value of liquidity.

FILE PHOTO: U.S. 100 greenback notes are seen on this image illustration taken in Seoul February 7, 2011. REUTERS/Lee Jae-Gained/

Buying and selling might stay skinny till Tuesday, when most European international locations open after Monday’s Epiphany vacation however market gamers will likely be relieved the greenback navigated the vacation interval with out experiencing the cash market squeezes many had feared.

The greenback index slumped 0.4% on New Yr Eve as massive banks took solely a small portion of the $150 billion supplied by the U.S. Federal Reserve’s in a single day repo operation and borrowing prices fell to the bottom stage since March 2018.

(Graphic: The Fed dives into the repo market png click on, right here)

Whereas wariness stays that there might be a repeat of final January’s “flash crash”, when large stop-loss promoting swept via holiday-thinned markets, analysts mentioned the Fed’s liquidity injections had lowered the danger.

“There’s nothing basic…on the finish of final 12 months the greenback offered off fairly sharply so we’re seeing an easing in among the greenback promoting stress,” mentioned Lee Hardman, senior FX strategist at MUFG.

“The liquidity squeeze didn’t materialise in order that’s contributing to stability in broader monetary markets…However the greenback story has been turning detrimental in current months, partly due to motion taken by the Fed to ease greenback liquidity,” Hardman mentioned, referring to the U.S. central financial institution’s steadiness sheet growth re-launched in October.

Having ended December nearly 2% decrease in opposition to a basket of currencies, the greenback inched as much as 96.65 whereas in opposition to the euro it was at $1.119, knocking the only forex from its highest stage since early August of $1.1249.

The dollar index ended 2019 nearly flat.

The Chinese language yuan closed at 6.9631 to the greenback, its strongest shut since Aug. 2, and in addition firmed offshore after small downward strikes triggered by Wednesday’s transfer to chop the amount of money that banks should maintain, releasing $115 billion value of funds to assist the economic system.

The transfer had been broadly anticipated following Premier Li Keqiang’s pledge final month to unleash extra stimulus.

(Graphic: China lending fee and RRR click on, right here)

Traders at the moment are ready for the U.S. ISM manufacturing survey due on Friday. Throughout a lot of Asia and Europe, closing buying managers indexes painted a barely brighter image, with French, German and euro zone readings a contact higher than advance PMIs.

However additionally they confirmed an 11th straight month of contracting euro zone exercise.

The euro slipped 0.2%, having strengthened 1.8% in opposition to the greenback final month. Nevertheless, euro zone bond yields prolonged their rise and inflation expectations rose to the very best since July.

“Increased bond yields are more likely to hold the euro’s micro-rally going, wildfires will hold a lid on Aussie greenback, and PMIs and oil are supporting Norwegian, Swedish and Canadian currencies,” Societe Generale informed purchasers.

The Swedish crown briefly firmed 0.3% in opposition to the euro after PMIs rose in December following three months of declines, though they nonetheless languished in contraction territory.

The Norwegian crown inched to 3-1/2 month highs after firmer PMIs, additionally benefiting from firmer crude costs.

The Australian greenback slipped 0.3%.

U.S. President Donald Trump mentioned on Tuesday that Section 1 of a commerce take care of China could be signed on Jan. 15 on the White Home. Markets are ready for additional particulars

Reporting by Sujata Rao; Modifying by Frances Kerry, Kirsten Donovan

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On the spot View: U.S. September payrolls decrease than anticipated, jobless fee drops

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(Reuters) – U.S. job progress elevated reasonably in September, with the unemployment fee dropping to close a 50-year low of three.5%, which might assuage monetary market issues that the slowing economic system was on the point of a recession amid lingering commerce tensions.

KEY POINTS:

* Sept nonfarm payrolls +136,000 (consensus +145,000) vs Aug +168,000 (prev +130,000), July +166,000 (prev +159,000)

* Sept labor pressure participation fee 63.2 pct vs Aug 63.2 pct (prev 63.2 pct)

* Sept jobless fee 3.5 pct (consensus 3.7 pct) vs Aug 3.7 pct (prev 3.7 pct)

* Common hourly earnings all non-public employees unchanged (cons +0.Three pct) vs Aug +0.four pct (prev +0.four pct)

* Sept U-6 underemployment fee 6.9 pct vs Aug 7.2 pct (prev 7.2 pct)

* Sept non-public sector jobs +114,000 (cons +133,000), vs Aug +122,000 (prev +96,000)

* Authorities jobs +22,000 vs Aug +46,000 (prev +34,000)

MARKET REACTION:

STOCKS: S&P e-mini futures ESv1 flip barely larger and have been final up 0.18%, pointing to flat to barely larger open

BONDS: Treasury yields rose barely; 2- 12 months US2YT=RR at 1.4237% and 10-year US10YT=RR at 1.5477%

FOREX: The greenback index .DXY reversed slight losses and was about 0.05% larger

COMMENTS:

SHAWN SNYDER, HEAD OF INVESTMENT STRATEGY, CITI PERSONAL WEALTH MANAGEMENT, NEW YORK  

“Anytime you see the unemployment fee fall Wall Avenue goes to suppose it’s good.”

“Traders are on excessive alert for indicators of a recession … It doesn’t affirm the story. Optimistic payroll shouldn’t be in line with a recession.”

“It’s type of a goldilocks report. It’s not sturdy sufficient to maneuver the Federal reserve away from chopping charges on the finish of October however it’s not weak sufficient to make you involved concerning the labor market or the patron.”

SHAUN OSBORNE, CHIEF FX STRATEGIST, SCOTIABANK, TORONTO:

    “The quantity got here simply shy of expectations, however provided that market expectations have shifted after the ADP and ISM numbers, individuals have been bracing for one thing worse than this. So that is within the ballpark of what’s acceptable. Wage progress is a bit gentle, however unemployment dropped. In a broad sense, this was not that dangerous. It most likely provides the greenback a little bit of respiratory room after a little bit of a tough experience the final three or 4 days.”

JOSEPH SROKA, CHIEF INVESTMENT OFFICER, NOVAPOINT, ATLANTA

“The quantity got here up mild relative to consensus, however not too dangerous on the non-public information. However the fruits of the weak ISM information and the payrolls report is rising the percentages in traders mindset that the Fed has extra incentive to think about one other rate of interest discount on the subsequent assembly.”

“The economic system has been going by a low degree of deceleration during the last couple of months and whenever you take them in mixture some is trade-related and a few is time-related, which means you possibly can’t develop infinitely. The Fed’s been proactive on adjusting rates of interest earlier than we noticed the info like this month’s ISM. So possibly the problem that some modest fee adjustment from the Fed is sufficient to preserve the economic system from a deeper decline and lengthen growth, albeit at a slower tempo.”

SAMEER SAMANA, SENIOR GLOBAL MARKET STRATEGIST, WELLS FARGO INVESTMENT INSTITUTE, ST. LOUIS

“Headline job progress, non-public payrolls, and manufacturing payrolls, and wage progress all got here in weaker than anticipated and suggests some softening within the labor market.

  “This information most likely reinforces the case that the U.S. is now starting to really feel the results of the continuing international slowdown and doubtless strengthens the case for extra fee cuts, if the Fed chooses to go down that path.”

TOM PORCELLI, CHIEF U.S. ECONOMIST, RBC CAPITAL MARKETS, NEW YORK

“If individuals have been genuinely on the sting of the dialog about whether or not or not we’re slipping into recession or not, that is the sort of quantity that ought to pressure them to take a step again from that view. I by no means essentially thought that individuals must be holding that view, however I’m merely highlighting a market actuality. I believe that there was, from the market perspective, an actual threat that we have been slipping into recession. This isn’t a recessionary sort of quantity. This was a superbly sound report in most methods, not in each method. The one factor that I don’t like is that common hourly earnings have been flat. However however, the unemployment fee improved once more, we’re 3.5% on the unemployment report. This isn’t a dynamic that occurs with nice regularity in the USA, traditionally talking. The labor backdrop is definitely in actually fine condition, regardless of quite a lot of the noise that we proceed to listen to about these fears. This report throws quite a lot of chilly water on that.”

“I believe the Fed is locked stepping into October, virtually no end result was going to alter that. Whether or not the quantity was worse than anticipated and even fairly a bit higher than anticipated, I believe the Fed was going to go. The doves on the committee are clearly in management as a result of they’re the voters proper now.

KATHY JONES, CHIEF FIXED INCOME STRATEGIST, SCHWAB CENTER FOR FINANCIAL RESEARCH, NEW YORK

“I believe that the general image confirms the mild slowdown within the economic system that’s already priced into the bond market. However the lack of wage achieve, I believe, is a little bit of a shock. You’ll suppose that given the low degree of the unemployment fee, wages can be ticking up, however truly common hourly earnings have been down a bit. That may very well be a fluke, however they did peak in February…That raises quite a lot of questions – what’s the composition of jobs which can be being added? Is it that we’re pulling in quite a lot of people who’ve been on the margins and subsequently are extra low-wage jobs being added?”

“All in all, it’s not most likely a giant mover for the bond market, however it does go away the probability of a Fed fee minimize on the desk – maybe in October, maybe they’ll determine upon it in December and get extra information.”

“It’s fairly in line with what we noticed with the PMIs, the ISMs… The ISM was fairly gentle. The drop within the manufacturing payrolls was a affirmation of softness in there. We noticed a little bit of a drop in mining as properly, which isn’t stunning. Building, gentle. Total a gentle report, however that was anticipated.”

JOHN VELIS, GLOBAL MACRO STRATEGIST, BNY MELLON, NEW YORK

“Going into it and contemplating what we noticed with the 2 ISM surveys, it might have been so much worse. It’s most likely good for the market and never as dire as many individuals anticipated. It doesn’t imply that the economic system and the roles market are falling off a cliff. Then again, it’s not sturdy sufficient that it’s going to take out this extra Fed easing that has been priced into the curve the previous few days.”

DOUG DUNCAN, CHIEF ECONOMIST, FANNIE MAE, WASHINGTON

“The revisions being up is a optimistic as a result of sometimes when the employment market is slowing the revisions of prior months are down, and that has been the case for about 5 months. So, the truth that the revisions are up this time recommend that there’s not a precipitous slowing in unemployment. The truth that wage charges are holding is nice information, it’s help for the patron.

“There’s not a warning of a major slowdown within the economic system from these information. Our view is that with a purpose to keep the extent of unemployment steady we have to add someplace between 100,000 and 120,000 jobs a month, so this definitely matches that. It doesn’t recommend a major slowing in exercise at this level.

“I’d be stunned if there was a major response (from the market) in both course. What it does do is spotlight the variations of opinion on the Fed board about whether or not the economic system is slowing precipitously or not and also you had a number of dissents from the final fee minimize, that doesn’t assist make clear for them whether or not their disagreements are merited or not.”

JJ KINAHAN, CHIEF MARKET STRATEGIST, TD AMERITRADE, CHICAGO

“There’s a lot to love, particularly given the revisions that occurred. Retail shedding as many roles because it did once more, I don’t suppose it’s a huge shock. We proceed to see that pattern, everyone seems to be making an attempt to determine it out, so to talk, and once more the world they misplaced them in being primarily in clothes.

“Manufacturing could also be somewhat bit regarding, down 2,000 jobs not an enormous factor total. It’s a must to bear in mind this didn’t embrace the GM strike due to timing. In order that one will present up within the subsequent report, however it’s nice that we received a 45,000 revision larger between July and August and that is among the issues individuals actually favored about this. The 2 areas which have been unbelievable being healthcare and enterprise to enterprise providers are simply stud sectors. Each single month these two sectors present up and we simply proceed to see that. The opposite factor that was vital was transportation and warehousing, so once more, areas that take items from one place to a different, up 16,000 jobs. Most of this was an actual optimistic for the economic system regardless of a few of the different numbers we’re seeing.

“We’ve had such a string of dangerous information, that something that exhibits the economic system is doing higher than maybe individuals have been speaking about is properly acquired. I don’t suppose it clarifies the image any which method (for the Fed). It’s another piece of grey thrown into the image.”

Americas Economics and Markets Desk; +1-646 223-6300

Our Requirements:The Thomson Reuters Belief Rules.

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Trump considers delisting Chinese language companies from U.S. markets: sources

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WASHINGTON (Reuters) – President Donald Trump’s administration is contemplating delisting Chinese language firms from U.S. inventory exchanges, three sources briefed on the matter stated on Friday, in what can be a radical escalation of U.S.-China commerce tensions.

The transfer can be a part of a broader effort to restrict U.S. funding in Chinese language firms, two of the sources stated. One stated it was motivated by the Trump administration’s rising safety considerations in regards to the firms’ actions.

Main U.S. inventory indexes slipped on the information, which got here days earlier than China celebrates the 70th anniversary of the start of the Individuals’s Republic on Oct. 1, when the world’s No. 2 financial system will shut down for per week of festivities.

Shares of Hangzhou, Zhejiang-based Alibaba (BABA.N) ended down 5.15%. JD.com (JD.O) fell 5.95% and Baidu Inc (BIDU.O) declined 3.67%. The iShares China Massive-Cap ETF (FXI.P) shed 1.15%.

Shares of New York Inventory Alternate-owner Intercontinental Alternate Inc (ICE.N) ended down 1.88% and shares of Nasdaq Inc (NDAQ.O) declined 1.70%.

It was not instantly clear how any delisting would work.

In June, U.S. lawmakers from each events launched a invoice to drive Chinese language firms listed on American inventory exchanges to undergo regulatory oversight, together with offering entry to audits, or face delisting.

Chinese language authorities have lengthy been reluctant to let abroad regulators examine native accounting companies – together with member companies of the Massive 4 worldwide accounting networks – citing nationwide safety considerations.

“Beijing ought to not be allowed to defend U.S.-listed Chinese language firms from complying with American legal guidelines and laws for monetary transparency and accountability,” Republican Senator Marco Rubio stated on the time.

One of many sources briefed on the matter stated the concept of delisting was the newest salvo on this longstanding dispute.

“It is a very excessive precedence for the administration. Chinese language firms not complying with the PCAOB (Public Firm Accounting Oversight Board) course of poses dangers to U.S. traders,” the supply stated.

Any plan is topic to approval by Trump, who has given the inexperienced mild to the dialogue, Bloomberg reported right here citing an individual near the deliberations.

Officers are additionally analyzing how the USA might put limits on Chinese language firms included in inventory indexes managed by U.S. companies, the company cited three sources as saying.

No resolution or motion is imminent, two sources conversant in the discussions advised Reuters.

As of February, 156 Chinese language firms have been listed on the NASDAQ and New York Inventory Exchanges, in line with U.S. authorities information, together with no less than 11 state-owned companies. (bit.ly/2nUXQaD)

NYSE declined to touch upon Friday, whereas Nasdaq, MSCI, S&P and FTSE Russell didn’t instantly reply to requests for remark.

FILE PHOTO: Merchants work on the ground on the New York Inventory Alternate (NYSE) in New York, U.S., September 9, 2019. REUTERS/Brendan McDermid

China’s yuan foreign money, traded in offshore markets CNH=, fell in opposition to the greenback after the information to commerce close to its weakest in opposition to the buck in about three weeks.

PLOY?

Commerce talks between the USA and China are anticipated to be held Oct. 10-11 after months of tit-for-tat strikes by each side which have weakened international development and pushed rollercoaster strikes in markets.

Whereas the concept of delisting could possibly be a maneuver forward of these talks, the principle purpose was to counteract the civilian-military fusion of Chinese language know-how companies, the Made in China 2025 industrial improvement program concentrating on key industries for domination and a rising surveillance state in Xinjiang, one of many sources stated.

The supply stated there are longstanding considerations about U.S. capital enabling these actions, particularly because the strains blur between state-owned and personal firms in China.

“It’s all very disruptive, it simply provides to uncertainty and it’s a giant unfavorable for enterprise funding,” stated Scott Brown, chief economist at funding financial institution Raymond James. He famous, nevertheless, that each side have used aggressive strikes up to now forward of talks.

“You by no means know if it’s a ploy to get some leverage,” he stated.

Trump on Tuesday criticized Beijing’s commerce practices in a speech on the United Nations, however the subsequent day stoked hopes that the almost 15-month standoff could possibly be nearing an finish.

“They need to make a deal very badly … It might occur prior to you assume,” he advised reporters in New York on Wednesday.

FILE PHOTO: U.S. President Donald Trump arrives for a photograph alternative with sheriffs from throughout the nation on the South Garden of the White Home in Washington, U.S., September 26, 2019. REUTERS/Erin Scott

China says it can’t enable its firms to undergo oversight by PCOAB due to guidelines prohibiting the storage, processing or switch of any materials thought of to be state secrets and techniques or nationwide safety issues.

U.S. hedge fund supervisor Kyle Bass, a distinguished critic of China, stated on Friday that Chinese language firms ought to should play by U.S. guidelines in the event that they need to promote to U.S. traders.

“The U.S. ought to require any securities offered within the US to stick to US Securities Legal guidelines. Loopy huh?” Bass wrote on Twitter.

Reporting by Alexandra Alper, Patricia Zengerle, Chris Sanders and Andrea Shalal in Washington and Shubham Kalia, Supantha Mukherjee and Ambar Warwick in Bengaluru; Writing by Sonya Hepinstall; Enhancing by Arun Koyyur, Patrick Graham and Daniel Wallis

Our Requirements:The Thomson Reuters Belief Rules.

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SoftBank turns towards WeWork’s dad or mum CEO Neumann: sources

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(Reuters) – Japan’s SoftBank Group Corp (9984.T), the largest investor in WeWork proprietor The We Firm, is exploring methods to exchange Adam Neumann as chief government of the U.S. office-sharing start-up, 4 folks aware of the matter mentioned on Sunday.

FILE PHOTO: Adam Neumann, CEO of WeWork, speaks to visitors throughout the TechCrunch Disrupt occasion in Manhattan, in New York Metropolis, NY, U.S. Might 15, 2017. REUTERS/Eduardo Munoz -/File Photograph

The uncommon showdown between SoftBank and considered one of its largest investments comes after We Firm postponed its preliminary public providing (IPO) final week, following pushback from perspective traders, not simply over its widening losses, but additionally over Neumann’s unusually agency grip on the corporate.

This was a blow for SoftBank, which hoped for We Firm’s IPO to bolster its income because it seeks to woo traders for its second $108 billion Imaginative and prescient Fund. It invested in We Firm at a $47 billion valuation in January, but inventory market investor skepticism led to the startup contemplating a possible valuation within the IPO earlier this month of as little as $10 billion, Reuters reported.

Administrators on We Firm’s seven-member board which are aligned with SoftBank are deliberating learn how to exchange Neumann as CEO, the sources mentioned. Benchmark Capital, one other huge investor in We Firm, would additionally like Neumann to step apart, one of many sources mentioned.

No problem to Neumann has but been tabled, the sources mentioned. A We Firm board assembly to debate Neumann’s future might be held as early as this week, one other of the sources mentioned.

One possibility that SoftBank is contemplating is asking Neumann to develop into interim CEO whereas a headhunting agency is employed to search out an exterior alternative, the primary supply mentioned.

The sources requested to not be recognized as a result of the matter is confidential. We Firm and SoftBank declined to remark, whereas Neumann and Benchmark Capital couldn’t be instantly reached for remark. The Wall Avenue Journal first reported on SoftBank exploring methods to exchange Neumann as CEO.

As co-founder of the We Firm, Neumann holds particular voting shares that allow him to dismiss dissident board administrators and shoot down any problem to his authority. Nonetheless, SoftBank may select to not again We Firm’s IPO or present it with extra funding. It has already funded the cash-burning start-up to the tune of $10 billion, and was discussing committing one other $1 billion to the IPO.

We Firm mentioned final week it’s aiming to develop into a publicly traded firm by the tip of the 12 months.

In an indication of the deteriorating relations between SoftBank and WeWork, Neumann didn’t take part in a gathering of executives of corporations backed by SoftBank that occurred in Pasadena, California, final week and was organized by SoftBank CEO Masayoshi Son, based on two folks aware of the matter.

Reporting by Anirban Sen in Bengaluru and Joshua Franklin in New York; Extra reporting by Greg Roumeliotis in new York and Rishika Chatterjee in Bengaluru; Modifying by Sonya Hepinstall and Daniel Wallis

Our Requirements:The Thomson Reuters Belief Ideas.

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Wall Avenue falls as vitality drags; focus shifts to Fed assembly

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(Reuters) – U.S. shares edged decrease on Tuesday as a drop in oil costs weighed on the vitality sector, whereas buyers stayed away from making huge bets forward of the Federal Reserve’s two-day coverage assembly, the place it’s extensively anticipated to chop rates of interest.

Merchants work on the ground on the New York Inventory Alternate (NYSE) in New York, U.S., September 9, 2019. REUTERS/Brendan McDermid

The vitality index .SPNY fell 1.59% and was the most important drag on the benchmark S&P 500 index .SPX after sources instructed Reuters that Saudi Arabia was near restoring 70% of the oil manufacturing misplaced after weekend assaults on its greatest refinery.

The sector recorded its finest one-day surge since January on Monday.

The U.S. central financial institution concludes its coverage assembly on Wednesday, with merchants at present anticipating a 65.8% likelihood of 1 / 4 proportion level reduce from the Fed this week, down from 88.8% on Friday, in response to CME’s FedWatch.

Fee-sensitive financial institution index .SPXBK was down 1% in anticipation of a discount in borrowing prices.

“It’s simply typical buying and selling on the vigil of a Fed assembly,” stated Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

“We haven’t seen any panic from what occurred over the weekend. I believe (the Fed) will keep on with 1 / 4 of a proportion level reduce even after the Saudi assault.”

For the reason that final rate of interest reduce in July, U.S. financial information has proven blended indicators concerning the home economic system. Whereas robust retail gross sales and wage progress have bolstered shopper confidence, a protracted U.S.-China commerce conflict has weighed on manufacturing and enterprise sentiment.

Newest information confirmed U.S. manufacturing output elevated greater than anticipated in August, rebounding from a drop in July.

At 10:04 a.m. ET, the Dow Jones Industrial Common .DJI was down 58.03 factors, or 0.21%, at 27,018.79, the S&P 500 .SPX was down 1.03 factors, or 0.03%, at 2,996.93. The Nasdaq Composite .IXIC was down 3.29 factors, or 0.04%, at 8,150.26.

Amongst shares, Residence Depot Inc (HD.N) dropped 1.6% after Guggenheim downgraded the house enchancment chain’s shares to “impartial” from “purchase”.

Corning Inc (GLW.N) tumbled 7.8% after the Gorilla glass maker reduce its current-quarter show quantity forecast.

Kraft Heinz Co (KHC.O) slipped 3.7% after the packaged meals maker’s second-largest investor, 3G Capital, bought over 25 million shares in open market at a reduction.

Deputy-level commerce talks between the USA and China are set to renew on Thursday, however any settlement between the 2 sides is anticipated to be a superficial repair at this stage.

Tariff concessions from each nations final week helped the benchmark S&P 500 come inside 1% of its all-time excessive touched in July.

Declining points outnumbered advancers for a 1.59-to-1 ratio on the NYSE and a 1.77-to-1 ratio on the Nasdaq. The S&P index recorded six new 52-week highs and one new low, whereas the Nasdaq recorded 24 new highs and 10 new lows.

Reporting by Medha Singh and Shreyashi Sanyal in Bengaluru; Enhancing by Anil D’Silva

Our Requirements:The Thomson Reuters Belief Rules.

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