pamchaser

(Reuters) -European shares edged higher on Monday after a strong week driven by aggressive bets on interest rate cuts, while drugs-to-pesticides group Bayer posted its worst day ever weighing on the healthcare sector and Germany’s benchmark index.

The pan-European STOXX 600 inched 0.1% higher after jumping nearly 3% last week.

As investors started pricing in 100-basis-point rate cuts for 2024 with the first one seen as soon as April, European Central Bank officials shunned market optimism, flagging still-high inflation and a somewhat resilient economy.

European shares inch up after robust week; Bayer tanks

(Reuters) – Financial markets are ramping up expectations for interest rate cuts from the European Central Bank, betting it will be the first major central bank to ease policy to buffer a euro zone economy facing recession in contrast to a robust United States.

Last week money market traders anticipated that the ECB, U.S. Federal Reserve and the Bank of England (BoE) would all start easing monetary policy in the second half of 2024 as inflation eases and recent interest rate hikes slow economic growth.

Yet that changed after data on Tuesday showed euro zone inflation dropped more than expected to its lowest in over two years in October, while the economy shrank during the third quarter, raising the risk of a year-end recession.

With investors confident that big central banks are likely done raising rates, focus has switched to when rate cuts will start.

Traders now price in over an 80% chance of a 25 basis-points (bps) ECB cut by April, which had been fully priced for July last week.

https://www.globalbankingandfinance.com/analysis-traders-bet-ecb-will-be-first-big-central-bank-to-cut-rates/

NEW YORK (Reuters) -The dollar eased against a basket of currencies on Friday, pulled-down by month-end rebalancing flows, but was on track to finish the week higher as fresh data reinforced the view the U.S. economy remains on a firm footing.

U.S. consumer spending increased more than expected in September, keeping it on a higher growth path heading into the fourth quarter, while monthly inflation was elevated, data on Friday showed.

The dollar index, which measures the currency’s strength against a basket of six rivals, was 0.1% lower at 106.47, with analysts attributing some of the weakness to month-end flows where investors buy and sell currencies to rebalance their portfolios toward the end of the month. The index was up 0.3% for the week.

“This time of the month there are month end flows that tend to predominate at certain points,” Bipan Rai, North America head of FX strategy at CIBC Capital Markets, said.

Dollar edges down as month-end flows weigh

Analysis-Swiss franc shines as investors scramble for safe assets

LONDON/ZURICH (Reuters) – The potential for the Israel-Hamas conflict to worsen and poor corporate earnings have sent investors scrambling for safety with few havens left, as high-for-longer U.S. rate expectations batter government bonds and the yen.

Enter the Swiss franc, a longstanding safe haven asset that just hit its highest level against the euro since 2015, standing tall as its traditional rivals lose appeal.

Disappointing financial updates from the likes of European food giant Nestle and U.S. bank Morgan Stanley have added to investors’ risk-off mood. Global shares are down 1.6% this week, while Wall Street stocks lost 2% in two sessions.

Wall Street rallies, Treasury yields rise as high profile earnings loom

NEW YORK (Reuters) – Wall Street rebounded from Friday’s selloff and benchmark Treasury yields rose as investors embarked upon the first full week of third quarter corporate results while keeping a close eye on the Israel-Hamas war.

All three major U.S. indexes started the session with solid gains in a broad rally that favored economically sensitive sectors such as transports, consumer discretionary and materials.

Israeli forces continued their bombardment of Gaza after efforts to arrange a cease fire stalled as the conflict entered its tenth day.

“There’s some optimism among investors about earnings season and as they watch the situation in the Middle East,” said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut. “There’s feeling that we got through the weekend and we’re beginning earnings season and we’ll see where it takes us.”

A spate of big bank earnings reports on Friday marked the unofficial beginning third quarter earnings season, and the coming week promises to turn up the heat, with Bank of America , Goldman Sachs Group, Netflix, Tesla and a host of heavy-hitting industrials on deck.

Economic data was also sparse on Monday, with the New York Fed’s Empire State index posting a shallower than expected decline. Retail sales, industrial production, housing starts and existing home sales fill out the week’s roster.

BERLIN (Reuters) – Investor morale in the euro zone fell less than expected at the start of October, with Germany’s economic weakness continuing to drag on the region but expectations rising slightly, a survey showed on Monday.

Sentix’s index for the euro zone declined to -21.9 points in October from -21.5 in September, better than the -22.8 estimated in a Reuters poll of analysts.

“In the euro zone, and especially in Germany, the economic situation remains weak and the recessionary tendencies persist,” said Sentix Managing Director Manfred Huebner.

“At least there is a slight ray of hope in the form of rising expectations. However, it would be premature to declare a turnaround”.

The subindex for future expectations in the euro zone rose to -16.8 points, from -21.0 in the previous month, recording its highest level since April.

“At best, it means a decrease in the negative momentum,” said Huebner. “A negative expected value means that investors’ assessment of the economy in six months is weaker than their assessment of the current situation.”

The current situation index declined to -27.0 points, its lowest level since November 2022, from -22.0.

https://www.globalbankingandfinance.com/drop-in-euro-zone-investor-mood-slows-in-october-survey/

MENLO PARK, California (Reuters) -Meta Platforms used public Facebook and Instagram posts to train parts of its new Meta AI virtual assistant, but excluded private posts shared only with family and friends in an effort to respect consumers’ privacy, the company’s top policy executive told Reuters in an interview.

Meta also did not use private chats on its messaging services as training data for the model and took steps to filter private details from public datasets used for training, said Meta President of Global Affairs Nick Clegg, speaking on the sidelines of the company’s annual Connect conference this week.

“We’ve tried to exclude datasets that have a heavy preponderance of personal information,” Clegg said, adding that the “vast majority” of the data used by Meta for training was publicly available.

He cited LinkedIn as an example of a website whose content Meta deliberately chose not to use because of privacy concerns.

Meta’s new AI assistant trained on public Facebook and Instagram posts

LISBON (Reuters) — Portuguese oil company Galp said on Monday it had teamed up with Japan’s Mitsui to invest 400 million euros ($426 million) in an industrial-scale plant to produce biodiesel and biojet fuel from waste at its Sines refinery.

The companies will create a joint venture for the project, which will be 75% controlled by Galp, it said in a statement.

Galp also said it had made a final decision to invest 250 million euros on its own in a 100 mega-watt (MW) electrolyser unit to produce green hydrogen to power the refinery.

It said that both plants would start operating in 2025.

The Hydrogenated Vegetable Oil (HVO) plant will have a production capacity of 270,000 metric tons per year.

Portugal’s Galp to invest $426 million in biofuels with Japan’s Mitsui

NEW YORK (Reuters) -The U.S. dollar held steady against a basket of currencies on Monday, hovering near a six-month high as traders looked ahead to interest rate decisions this week from the Federal Reserve, the Bank of England and the Bank of Japan.

Currency moves were largely muted on Monday as investors were hesitant to make big directional wagers ahead of the week’s slew of central bank interest rate decisions.

“The plethora of event risk and central bank meetings coming up is keeping a lid on volatility, and with traders really not wanting to chase moves or take on significant risk before the FOMC, BoE, BoJ, etc.,” Michael Brown, market analyst at Trader X, said.

The U.S. dollar index – which measures the currency against six major counterparts – was about flat at 105.25, not far from the six-month high of 105.43 touched on Thursday. The index rose for its ninth straight week last week, its longest winning streak in nearly a decade.

Resilient U.S. growth has fueled a rebound in the dollar in recent weeks though the rally will likely be tested by a gauntlet of data and Wednesday’s Federal Reserve interest rate decision.

Dollar steady as week of key central bank decisions kicks off

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