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☆ Goldman Sachs cuts BoE terminal rate view to 5.5%
▼ + stars: | 2023-09-18 | by ( ) www.reuters.com time to read: +1 min

A general view of the Bank of England (BoE) building, the BoE confirmed to raise interest rates to 1.75%, in London, Britain, August 4, 2022. REUTERS/Maja Smiejkowska//File Photo Acquire Licensing RightsSept 18 (Reuters) - Goldman Sachs lowered its forecast for the Bank of England's (BoE) terminal rate by 25 basis points to 5.5%, after predicting that the central bank would hold interest rates steady at its November meeting against an earlier forecast of a hike. The BoE raised its key interest rate by a quarter of a percentage point to a 15-year peak of 5.25% in early August, its fourteenth back-to-back increase, and warned that borrowing costs were likely to stay elevated for some time. Economists led by Sven Jari Stehn said in a note dated Friday that they still expect the BoE to hike rates by 25 bps at its September Monetary Policy Committee (MPC) meeting next week. Reporting by Aniruddha Ghosh in BengaluruOur Standards: The Thomson Reuters Trust Principles.

Persons: BoE, Maja Smiejkowska, Goldman Sachs, Sven Jari Stehn, Aniruddha Ghosh Organizations: Bank of England, REUTERS, Bank of England's, MPC, Thomson Locations: London, Britain, Bengaluru

☆ J.P.Morgan, ANZ raise 2023 China GDP forecast
▼ + stars: | 2023-09-15 | by ( ) www.reuters.com time to read: +2 min

People stand at a shopping mall near the CCTV headquarters and China Zun skyscraper, in Beijing's central business district (CBD), China September 7, 2023. REUTERS/Tingshu Wang/File Photo Acquire Licensing RightsBEIJING, Sept 15 (Reuters) - J.P.Morgan and ANZ on Friday raised their 2023 economic growth forecast for China, after August economic numbers offered some signs of stabilization in the world's second-largest economy. Both raised their GDP forecast by 20 basis points each to 5% and 5.1% respectively, with JPM saying notable recovery in retail sales and rise in service activity were the biggest surprises. Zhu said additional fiscal and housing policy relaxation like subsidy for product-specific consumption support, relaxation of home buying restrictions, sales restrictions and price controls in tier-1 and 2 cities may follow in the near term. Goldman Sachs kept its third-quarter GDP growth forecast unchanged at 4.9% but said China's economy is still in a tug of war between persistent growth headwinds and increasing policy support.

Persons: Tingshu Wang, Zhu, JPM, Goldman Sachs, Aniruddha Ghosh, Liz Lee, Gao Liangping, Kim Coghill, Varun Organizations: REUTERS, Rights, ANZ, Thomson Locations: China, Beijing's, Rights BEIJING, Bengaluru, Beijing

RTX said on Monday it would have to pull 600 to 700 of its Pratt & Whitney Geared Turbofan (GTF) engines from Airbus A320neo jets for quality inspections over the next three years. The engine issue was first disclosed in July, but RTX made the extent of the problem clearer on Monday. The announcement caused waves up and down the industry, from component manufacturers like Japan's Kawasaki Heavy Industries to airline carriers like Germany's Lufthansa that rely on the popular Airbus jets. In July, RTX said microscopic contaminants were found in a powdered metal used in high-pressure turbine discs that are part of the GTF engine's core. RTX is one of two manufacturers of engines for the popular narrowbody Airbus A320neo, the other being CFM International, a joint venture between GE (GE.N) and Safran (SAF.PA).

Persons: Benoit Tessier, RTX, Guillaume Faury, Ken Herbert, Japan's IHI, Safran, Valerie Insinna, Rajesh Kumar Singh, Abhijith, Aniruddha Ghosh, Mehr Bedi, David Gaffen, Arun Koyyur Organizations: Raytheon Technologies Corporation, International Paris Air, Le, REUTERS, Aerospace, Airbus, Pratt & Whitney, Washington D.C, Japan's Kawasaki Heavy Industries, Lufthansa, Raytheon, United Technologies, Capital, AIRLINES, HIT Aerospace, London, Melrose Industries, Kawasaki Heavy Industries, Aero, Air New Zealand, Singapore Airlines, Wizz, Airbus A320neo, CFM International, GE, Thomson Locations: Le Bourget, Paris, France, Washington, RTX, New Delhi, Bengaluru

Morgan Stanley analyst Erik W Woodring said Apple's share losses were "overdone" as he does not believe the curbs will lead to something broader. He added the worst case scenario was a 4% revenue hit and a 3% earning impact for the company. Analysts said U.S. sanctions on Huawei, in place since May 2019, hit the company's supply chain, helping Apple increase iPhone shipments to China and grab market share. J.P.Morgan said China's restrictions will make it tougher for Apple to continue to gain market share in China. BofA estimated a $0.11 to $0.34 earnings per share hit to Apple if Huawei was able to gain market share from the iPhone maker.

Persons: Thomas Peter, Morgan Stanley, Erik W Woodring, Woodring, HWT.UL, J.P.Morgan, Aniruddha Ghosh, Krishna Chandra Organizations: Apple, REUTERS, Wall Street, Beijing, BofA Global Research, Huawei Technologies, Huawei, Thomson Locations: Beijing, China, Bengaluru

[1/2] The logo for Goldman Sachs is seen on the trading floor at the New York Stock Exchange (NYSE) in New York City, New York, U.S., November 17, 2021. REUTERS/Andrew Kelly/File Photo Acquire Licensing RightsSept 7 (Reuters) - Goldman Sachs (GS.N) and Morgan Stanley (MS.N) are poised for stronger results next year compared to other large-cap U.S. banks as dealmaking on Wall Street picks up and asset management businesses gain momentum, HSBC said on Thursday. The brokerage said that Goldman Sachs and Morgan Stanley should post high single-digit to low double-digit revenue growth in 2024 and sizable earnings growth in 2024 and 2025 after being weighted from a decade-long low in investment banking. Lead analyst Saul Martinez believes a "bifurcation" is emerging in revenue forecast between traditional and capital markets-focused banks and picks Goldman Sachs as the brokerage's preferred name in its coverage. "We see deal activity picking up: even in a sluggish economic growth environment, greater visibility regarding the direction of economic growth, interest rates, and inflation should trigger more equity and debt issuance and M&A activity," Martinez said.

Persons: Goldman Sachs, Andrew Kelly, Morgan Stanley, Saul Martinez, Martinez, JPMorgan Chase, Wells, Aniruddha Ghosh, Maju Samuel Organizations: New York Stock Exchange, REUTERS, Wall, HSBC, Federal Reserve, Bank of America, JPMorgan, of America, Thomson Locations: New York City , New York, U.S, Bengaluru

☆ Goldman Sachs cuts chances of US recession in next one year to 15%
▼ + stars: | 2023-09-05 | by ( ) www.reuters.com time to read: +1 min

REUTERS/Andrew Kelly/File Photo Acquire Licensing RightsSept 5 (Reuters) - Goldman Sachs on Tuesday lowered its probability that a U.S recession would start in the next 12 months to 15% from an earlier 20% forecast. The continued positive inflation and labor market data led to the cut, Goldman Sachs Chief Economist Jan Hatzius wrote in a note. It also noted the drag from monetary policy tightening will continue to diminish before "vanishing entirely" by early 2024. Goldman added that it expected "very gradual" cuts of 25 basis points per quarter starting in second quarter of 2024. Reporting by Aniruddha Ghosh and Roshan Abraham in Bengaluru; Editing by Rashmi AichOur Standards: The Thomson Reuters Trust Principles.

Persons: Andrew Kelly, Goldman Sachs, Goldman, Jan Hatzius, Jerome Powell's, Aniruddha Ghosh, Roshan Abraham, Rashmi Organizations: REUTERS, Federal Reserve, GS, Thomson Locations: Manhattan , New York City, U.S, Bengaluru

☆ JP Morgan lifts UK's 2023 economic growth forecast
▼ + stars: | 2023-08-11 | by ( ) www.reuters.com time to read: +1 min

Customers shop at a fruit and vegetable stall at Portobello Road in London, Britain, March 31, 2023. REUTERS/Toby Melville/File PhotoAug 11 (Reuters) - J.P.Morgan on Friday raised its forecast for the UK's annual economic growth after official data showed a surprise increase for the second quarter and bolstered bets of more interest rate hikes. The brokerage now sees the economy growing 0.6% in 2023, up from 0.5% expected earlier. Data on Friday showed growth of 0.2% in the second quarter, against the consensus for a flat reading in a Reuters poll of economists. The Wall Street bank still expects the country to face a mild recession in the second half of 2024.

Persons: Toby Melville, Allan Monks, Aniruddha Ghosh, Devika Organizations: REUTERS, Thomson Locations: London, Britain, Bengaluru

☆ Wall Street banks cut China's growth forecast after dull second quarter
▼ + stars: | 2023-07-17 | by ( Aniruddha Ghosh | Roshan Abraham | ) www.reuters.com time to read: +2 min

(Reuters) -J.P.Morgan, Morgan Stanley and Citigroup trimmed China’s growth forecast for 2023 after the country’s economy grew at a weaker pace in the second quarter, with its post-COVID momentum unravelling rapidly. “Market scepticism on China’s growth outlook is on the rise,” said Morgan Stanley economists led by Robin Xing. JPM cut China’s Gross Domestic Product (GDP) forecast to 5% from 5.5%. Citi, meanwhile, expects a 20 bps cut in the policy rate and 25 bps in the reserve requirement ratio (RRR) by the end of the third quarter. Goldman Sachs, however, maintained its 2023 full-year GDP growth forecast at 5.4%, even as they cut their current-quarter growth forecast to 5.5% on a quarter-on-quarter basis from 6.5% previously.

Persons: Morgan Stanley, ”, Robin Xing, China’s, JPM, “, Xiangrong Yu, ” Morgan Stanley, Goldman Sachs, Lisheng Wang Organizations: Reuters, Citigroup, Citi Locations: China, Beijing

Goldman Sachs on Monday cut Tesla to "hold" equivalent rating, joining Morgan Stanley and Barclays, which downgraded the stock last week. The brokerages, however, raised their price targets to reflect the momentum in Tesla shares, which have soared 71% since late April and more than doubled this year. The EV maker's shares were last down 1.2% in morning trading on Monday. Tesla's market capitalization of $813.29 billion far outstrips that of Japan's Toyota (7203.T), which is the next biggest global car company by market value. However, the brokerages reiterated that they saw strong growth ahead with Tesla remaining a global EV leader.

Persons: Goldman Sachs, Tesla, Morgan, Japan's, Goldman, Mark Delaney, Morgan Stanley, Jefferies, Aniruddha Ghosh, Susan Mathew, Anil D'Silva Organizations: Tesla Inc, EV, Morgan Stanley, Barclays, EV maker's, Japan's Toyota, Intelligence, Ford, General Motors, Truist Securities, Tesla, Thomson Locations: China, Bengaluru

☆ UBS expects ECB to deliver another 25 bp rate hike in July before taking pause
▼ + stars: | 2023-05-05 | by ( ) www.reuters.com time to read: 1 min

May 5 (Reuters) - UBS economists said the European Central Bank (ECB) was likely to hike interest rate by another 25 basis points (bps) in July, lifting the benchmark for borrowing costs to 3.75%, before taking a pause for this rate increase cycle. The brokerage said in a note on Thursday that inflation will likely slowly improve over the summer. The ECB on Thursday raised its benchmark rates by 25 bps - the smallest increase in its rate-hike cycle that started last summer — to 3.25%. Reporting by Aniruddha Ghosh in Bengaluru; Editing by Rashmi AichOur Standards: The Thomson Reuters Trust Principles.

☆ Asia likely to grow 5% faster than developed economies by year-end - Morgan Stanley
▼ + stars: | 2023-04-12 | by ( ) www.reuters.com time to read: +1 min

April 12 (Reuters) - Asia's economic growth could outpace developed countries' by 5% by end-2023 driven by China's easing of COVID-19 curbs, strong domestic demand and interest rates staying in less-restrictive territory, said Morgan Stanley economists. The recent banking stress in the U.S. and Europe strengthens the case for Asia's outperformance, MS Asia economists, led by Chetan Ahya, said in a note dated Tuesday. "Lending standards will tighten in the U.S. and Europe, and, in turn, weigh on domestic demand," wrote Ahya. A 5% higher growth than developed markets would be the strongest since 2017, MS notes. Additionally, China's reopening distributes benefits to the rest of the region, while Asia's other three large economies – Japan, India and Indonesia – all have economy-specific factors driving domestic demand, MS said.

The index of top European banks (.SX7P) was down 1% in early trading, with German banking giants Deutsche Bank (DBKGn.DE) and Commerzbank (CBKG.DE) both falling 0.8%. The rescue of Credit Suisse, which followed the collapses of California-based Silicon Valley Bank (SVB) (SIVB.O) and New York-based Signature Bank (SBNY.O) ignited broader concerns about investors' exposure to a fragile banking sector. The decision to prioritise shareholders over Additional Tier 1 (AT1) bondholders rattled the $275 billion AT1 bond market and some Credit Suisse AT1 bondholders are seeking legal advice. "The AT1 instruments issued by Credit Suisse contractually provide that they will be completely written down in a 'viability event', in particular if extraordinary government support is granted," FINMA said. However, some watchers think the banking system is more vulnerable to rumour and rapid moves in an era of widespread social media use, posing a challenge for regulators trying to tamp down instability.

☆ Citigroup downgrades European Banks, sees STOXX 600 little changed by year-end
▼ + stars: | 2023-03-23 | by ( ) www.reuters.com time to read: +1 min

The Wall Street brokerage cut its rating on European banks (.SX7P) to "neutral" from overweight" in a note dated Wednesday, saying the likely continued monetary policy tightening adds to worries stemming from the turmoil in the global banking sector. They, instead, prefer technology stocks (.SX8P) and upgraded the sector to "overweight", citing healthy cash balances and several growth drivers. Citigroup trimmed its 2023 year-end forecast for the pan-European STOXX 600 (.STOXX) index by more than 5% to 445 points, which represents a 0.4% downside from current levels. Citi also cut its forecast for UK's FTSE 100 index (.FTSE) by 5%, now expecting the blue-chip index to end the year at 7,600 points, less than 1% higher from current levels. The STOXX has risen 5.24% so far this year, while the FTSE 100 has gained 1.54%.

☆ India's TCS, Infosys have highest exposure to U.S. regional banks - J.P.Morgan
▼ + stars: | 2023-03-17 | by ( ) www.reuters.com time to read: +2 min

[1/2] The Infosys logo is seen at the SIBOS banking and financial conference in Toronto, Ontario, Canada October 19, 2017. REUTERS/Chris HelgrenMarch 17 (Reuters) - Top Indian information technology firms Tata Consultancy Services (TCS.NS) and Infosys (INFY.NS) have the highest exposure to regional banks in the United States that are gripped by a financial turmoil, analysts at J.P.Morgan said on Friday. All three companies might need to set aside provisions in the fourth quarter due to their exposure to SVB, J.P. Morgan said in a note. Indian IT firms draw the bulk of their revenue from the banking, financial services and insurance (BFSI) sector. Within BFSI, their exposure to the U.S. banks is on average 62% and Europe 23%, J.P. Morgan said.

☆ Wall Street analysts see direct economic growth hit from SVB fallout
▼ + stars: | 2023-03-16 | by ( ) www.reuters.com time to read: 1 min

March 16 (Reuters) - The crisis in small and mid-sized banks in the United States after the swift downfall of SVB Financial Group (SIVB.O) could further slow down the struggling economy and raises the probability of a recession this year, according to Wall Street analysts. J.P.Morgan said the slower loan growth at mid-size banks could trim a half to one percentage point off the level of GDP over the next year or more. Goldman Sachs raised its probability of the U.S. economy entering a recession in the next 12 months by 10 percentage points to 35%, citing the stress on the small banks. Reporting by Aniruddha Ghosh in Bengaluru; Editing by Dhanya Ann ThoppilOur Standards: The Thomson Reuters Trust Principles.

☆ Jefferies sees softer impact of Credit Suisse crisis on India
▼ + stars: | 2023-03-16 | by ( ) www.reuters.com time to read: +2 min

March 16 (Reuters) - India's banking sector will likely have a softer impact from the troubles at Credit Suisse (CSGN.S), given the Swiss lender's relatively small presence in the country, equity analysts at Jefferies said on Thursday. Credit Suisse has a 1.5% share among foreign banks' assets in India and a 'small' 0.1% share of overall banking assets in the country, Jefferies estimated. It has only 1 branch in India and total assets of over 200 billion rupees ($2.42 billion), it said. "Given the relevance of Credit Suisse to India's banking sector, we see softer adjustments in assessment of counter-party risks, especially in the derivative market," analysts Prakhar Sharma and Vinayak Agarwal said in a note. This may also lead to institutional deposits moving more towards larger or quality banks, Jefferies said.

☆ Citigroup expects ECB to take deposit rate to 4% by July this year
▼ + stars: | 2023-03-07 | by ( ) www.reuters.com time to read: 1 min

March 7 (Reuters) - Citigroup expects the European Central Bank to hike rates by 50 basis points each in March and May to push its policy rates to about 4% by July. Economists led by Arnaud Marès said this course of action by the ECB will more likely result in overtightening of rates to tame record high inflation. Reporting by Aniruddha Ghosh in Bengaluru; Editing by Subhranshu SahuOur Standards: The Thomson Reuters Trust Principles.

☆ Citigroup expects 'less hard' landing for global economy this year
▼ + stars: | 2023-02-22 | by ( ) www.reuters.com time to read: +1 min

Feb 22 (Reuters) - Citigroup economists on Wednesday raised their global growth forecast slightly and see a "less hard" landing but still expect the world's economy to grow at the slowest pace in 40 years. The Wall Street brokerage now sees global growth slowing this year to about 2.2%, 0.25% higher than their previous estimate due to improving macroeconomic trends, it said in a note by economists led by Nathan Sheets. "By our reckoning, global headline inflation is still running somewhere in the 6-7% range, well above central bank targets," Sheets said. But after more macroeconomic data pointed to sticky inflation, central banks including the Fed signalled more rate hikes. "It appears that 2023 will be the year when the effects of that hiking cycle more fully play through," Citigroup added.

Meanwhile, money markets are currently pricing in a terminal rate of 5.3% by July. BofA Global Research also expects a 25bps hike in the Fed's June meeting, pushing the terminal rate up to a 5.25%-5.5% range. It had earlier pencilled in two rate hikes of 25 bps each in the March and May meetings. "Resurgent inflation and solid employment gains mean the risks to this (only two interest rate hikes) outlook are too one-sided for our liking," BofA wrote in a client note. Before the recent U.S. data, J.P. Morgan had forecast the terminal rate at 5.1% by the end of June.

☆ ChatGPT, other AI models to disrupt Indian IT firms - JPM
▼ + stars: | 2023-02-10 | by ( ) www.reuters.com time to read: +1 min

Feb 10 (Reuters) - Generative AI models such as ChatGPT will slow down market share gains and deflate pricing for Indian IT companies in the short term, analysts at J.P.Morgan said on Friday. As generative AI is implemented more broadly, consulting firms like Accenture and Deloitte and will gain market share over Indian IT firms like Infosys Ltd (INFY.NS) and Wipro Ltd (WIPR.NS) in the near term, analysts at the brokerage said in a note to clients. Generative AI can be a "deflation driver" in the near term on legacy services as they compete on pricing, necessitate staff retraining and drive loss of competitiveness, they added. Since then, other large tech companies like Alphabet Inc (GOOGL.O) and China's Baidu Inc (9888.HK) have rushed to announce their own in-house developments of generative AI. JPM said that among Indian IT companies, Infosys and Tata Consultancy Services (TCS.NS) might retrain staff faster than smaller peers due to their better graduate hiring and training infrastructure.

☆ J.P.Morgan hikes China's 2023 economic growth estimate
▼ + stars: | 2022-12-15 | by ( ) www.reuters.com time to read: 1 min

☆ J.P.Morgan raises China's 2023 growth forecast
▼ + stars: | 2022-12-15 | by ( ) www.reuters.com time to read: +1 min

Dec 15 (Reuters) - Analysts at J.P.Morgan on Thursday raised their 2023 growth forecast for China's gross domestic product by 30 basis points to 4.3% as the world's second largest economy reopens from tight COVID restrictions. The brokerage also cut its 2022 economic growth outlook for the country to 2.8% from 2.9% previously. Last month, Goldman Sachs hiked its estimate for China's economic growth to 4.5% for next year, citing the exit from zero-COVID policy. In the near term, China is likely to face disinflation pressure when domestic demand remains soft before the economy picks up pace, JPM said. Reporting by Aniruddha Ghosh in Bengaluru; Editing by Nivedita Bhattacharjee and Dhanya Ann ThoppilOur Standards: The Thomson Reuters Trust Principles.

☆ Piper Sandler cuts estimates for Apple's Dec quarter as China worries mount
▼ + stars: | 2022-12-01 | by ( ) www.reuters.com time to read: +1 min

Dec 1 (Reuters) - Analysts at Piper Sandler on Thursday cut their revenue and iPhone sales estimates for Apple Inc's (AAPL.O) December quarter, as Beijing's strict lockdowns crimp production at the world's biggest iPhone factory in Zhengzhou, China. The brokerage now expects $119 billon in revenue for the current quarter from an earlier projection of $127.3 billion, with iPhone unit sales of about 74 million against 83 million previously expected. "More than 50% of assembled iPhones come from Foxconn's (2317.TW) Zhengzhou plant. Production woes for Apple were heightened by a rare example of large-scale labour unrest in China, where Foxconn workers clashed with security personnel in Zhengzhou. Apple might prioritize iPhone 14 Pro production over other models, the brokerage said, given the higher average selling price for the product.

☆ J.P.Morgan sees global bond yields dipping in 2023
▼ + stars: | 2022-11-25 | by ( ) www.reuters.com time to read: +1 min

Nov 25 (Reuters) - Global bond yields will likely fall slightly in 2023 as the balance between demand and supply will improve by $1 trillion, strategists at J.P. Morgan said in a note. There will be a $700 billion contraction in global bond demand next year compared to 2022, while bond supply will likely drop by $1.6 trillion, J.P. Morgan strategists, led by Nikolaos Panigirtzoglou, estimated in the note issued on Thursday. "Based on the historical relationship between annual changes in excess supply and the Global Aggregate bond index yield, a $1 trillion improvement in the demand/supply balance would imply downward pressure on Global Aggregate yields of around 40 basis points," the Wall Street bank said. J.P. Morgan said that while major central banks trimming their balance sheets in 2022 was the single largest contributor to deterioration in bond demand, sell-offs by commercial banks and retail investors were also much higher than estimates. This year was one of the worst for bonds in history.

☆ Fed's quantitative tightening could end in mid-2023, says UBS
▼ + stars: | 2022-10-20 | by ( ) www.reuters.com time to read: +1 min

Oct 20 (Reuters) - The U.S. Federal Reserve will materially alter or fully stop shrinking its massive $8.9 trillion balance sheet by mid-2023, more than a year earlier than market expectations, according to Swiss lender UBS. The plans for balance sheet runoff will face several complications through 2023, leading the Fed to sharply slow or fully stop balance sheet reduction sometime around June 2023, economists at UBS led by Jonathan Pingle wrote in a note dated Oct 19. "Starting last month, the monthly caps that limit the maximum pace of decline of the Fed's balance sheet increased," UBS said. Register now for FREE unlimited access to Reuters.com Register"This ratchet higher accelerated the reduction in the size of the Fed's balance sheet and will shrink reserves in the banking system at significantly faster pace." The move to accelerate quantitative tightening (QT) is meant to further drain pandemic-era stimulus from the financial system and increase borrowing rates for long-dated assets to weaken inflation.

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