Author: Reuters

By Chris Prentice and Huw Jones

NEW YORK/LONDON (Reuters) -Global equities rose on Friday, with the S&P 500 crossing the 5,000-point milestone for the first time ever, as U.S. inflation data raised expectations of an interest rate cut this year, while closely watched U.S. Treasury yields rose.

The greenback reversed earlier gains, falling 0.06%.

Oil notched a gain for the week on worries over a broadening conflict in the Middle East after Israel rejected a ceasefire offer from Hamas.

The MSCI All Country stock index climbed 0.4% to a third straight weekly gain.

The mood in stock markets was buoyed by Wall Street, where the S&P 500 index rose above 5,000 points, helped by big gains in megacap stocks such as Nvidia.

The chipmaker climbed to a record high after Reuters reported it was building a new business unit.

“The new closing high over 5,000 bodes well over the intermediate to longer term, with a key technical level being cleared today,” Larry Tentarelli, Chief Technical Strategist with Blue Chip Daily Trend Report, in North Andover, Massachusetts.

“We believe that the combination of very strong corporate earnings, strong jobs data, strong GDP data and declining inflation are an excellent backdrop for equities going forward.”

U.S. monthly consumer prices rose less than initially estimated in December, but underlying inflation remained a bit warm, data showed on Friday. The data revision did little to alter expectations for central bank rate changes.

U.S. inflation data for January is coming next week.

The Dow Jones Industrial Average fell 54.64 points, or 0.14%, to 38,671.69, the S&P 500 gained 28.70 points, or 0.57%, to 5,026.61 and the Nasdaq Composite gained 196.95 points, or 1.25%, to 15,990.66.

The yield on benchmark U.S. 10-year notes rose 0.7 basis points to 4.177%, from 4.17% late on Thursday.

The 2-year note yield, which typically moves in step with interest rate expectations, rose 3.2 basis points to 4.4883%, from 4.456% late on Thursday.

Gold prices came under pressure from the stronger yields, with spot gold down 0.44% at $2,024.16 an ounce. U.S. gold futures settled 0.4% lower at $2038.7.

Brent crude futures settled up 0.7% at $82.19 a barrel, and U.S. crude futures finished up 0.8% at $76.84.

European shares ended slightly lower under pressure from rising yields and sliding L’Oreal shares.

The pan-European STOXX 600 index closed 0.1% lower, but still eked out a weekly advance of 0.2%.

L’Oreal dropped 7.6% after the French cosmetics company reported underwhelming fourth-quarter sales growth.

Inflation in Germany, Europe’s biggest economy, eased in January to 3.1%, adding fuel to bets on when the European Central Bank will begin easing rates.

However, euro zone bond yields hit multi-week highs after several ECB rate setters warned against easing monetary policy too early.

“Indeed, it seems pretty clear now that the ECB will be waiting for European wage data statistics at the end of April before likely cutting rates in June,” ING bank said in a note.

Japanese shares hit 34-year highs. The yen recovered after falling to a 10-week low, with traders reassessing their bets on how quickly the Bank of Japan might raise rates.

In China, mainland markets were closed and Hong Kong traded thinly and shut early, with the Hang Seng down 0.8% amid worries authorities might not deliver on promises for support.

“I am betting that (decisive action) is happening,” said Chi Lo, senior markets strategist for Asia Pacific at BNP Paribas Asset Management.

(Reporting by Huw Jones; Additional reporting by Tom Westbrook; Editing by Kirsten Donovan, Jonathan Oatis, Cynthia Osterman and David Ljunggren)

By Chris Prentice and Huw Jones

NEW YORK/LONDON (Reuters) -Global equities rose on Friday, with the S&P 500 crossing the 5,000-point milestone, as U.S. inflation data raised expectations the Federal Reserve will cut interest rates this year, while closely watched U.S. Treasury yields rose.

The greenback reversed earlier gains, falling 0.06%.

Oil notched a gain for the week on worries over a broadening conflict in the Middle East after Israel rejected a ceasefire offer from Hamas.

The MSCI All Country stock index climbed 0.4% to a third straight weekly gain.

The mood in stock markets was buoyed by Wall Street, where the S&P 500 index rose above 5,000 points for the first time ever, helped by big gains in megacap stocks such as Nvidia.

The chipmaker climbed to a record high after Reuters reported it was building a new business unit.

“A close above this closely watched level will undoubtedly create headlines and further feed fear of missing out (FOMO) emotions,” said Adam Turnquist, chief technical strategist for LPL Financial in Charlotte, North Carolina.

“Outside of a potential sentiment boost, round numbers such as 5,000 often provide a psychological area of support or resistance for the market. Researchers often refer to them as ‘cognitive shortcuts’ that create a round-number bias.”

U.S. monthly consumer prices rose less than initially estimated in December, but underlying inflation remained a bit warm, data showed on Friday. The data revision did little to alter expectations for central bank rate changes.

U.S. inflation data for January is coming next week.

The Dow Jones Industrial Average fell 54.64 points, or 0.14%, to 38,671.69, the S&P 500 gained 28.70 points, or 0.57%, to 5,026.61 and the Nasdaq Composite gained 196.95 points, or 1.25%, to 15,990.66.

The yield on benchmark U.S. 10-year notes rose 0.5 basis points to 4.175%, from 4.17% late on Thursday.

The two-year note yield, which typically moves in step with interest rate expectations, rose 2.8 basis points to 4.4841%, from 4.456% late on Thursday.

Gold prices were under pressure from the stronger yields, with spot gold down 0.41% at $2,024.90 an ounce. U.S. gold futures settled 0.4% lower at $2038.7.

Brent crude futures settled up 0.7% at $82.19 a barrel, and U.S. crude futures finished up 0.8% at $76.84.

European shares ended slightly lower under pressure from rising yields and sliding L’Oreal shares.

The pan-European STOXX 600 index closed 0.1% lower, but still eked out a weekly advance of 0.2%.

L’Oreal dropped 7.6% after the French cosmetics company reported underwhelming fourth-quarter sales growth.

Inflation in Germany, Europe’s biggest economy, eased in January to 3.1%, adding fuel to bets on when the European Central Bank will begin easing rates.

However, euro zone bond yields hit multi-week highs after several ECB rate setters warned against easing monetary policy too early.

“Indeed, it seems pretty clear now that the ECB will be waiting for European wage data statistics at the end of April before likely cutting rates in June,” ING bank said in a note to clients.

Japanese shares hit 34-year highs. The yen recovered after falling to a 10-week low, with traders reassessing their bets on how quickly the Bank of Japan might raise rates.

In China, mainland markets were closed and Hong Kong traded thinly and shut early, with the Hang Seng down 0.8% amid worries that authorities may not deliver on promises for support.

“I am betting that (decisive action) is happening,” said Chi Lo, senior markets strategist for Asia Pacific at BNP Paribas Asset Management.

(Reporting by Huw Jones; Additional reporting by Tom Westbrook; Editing by Kirsten Donovan, Jonathan Oatis and Cynthia Osterman)

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. monthly consumer prices rose less than initially thought in December, but the overall inflation revisions were mixed, and did not shift expectations on the timing of an anticipated interest rate cut from the Federal Reserve this year.

The annual revisions published by the Labor Department on Friday also showed the consumer price index increasing slightly more than previously reported in October and November.

Prices excluding the volatile food and energy components were unrevised, after rounding, from October through December. All told, the revisions did not materially alter the path of inflation, which is moderating after surging in 2022.

The revised CPI data had been eagerly awaited by financial markets and economists after Federal Reserve Governor Christopher Waller last month flagged them as among the key data pieces he would be watching as policymakers try to gauge progress in their fight against inflation.

“The revisions were much ado about nothing,” said Brian Jacobsen, chief economist at Annex Wealth Management in Menomonee Falls, Wisconsin. “This is becoming a trend where a Fed official mentions a data release once and then everyone waits with bated breath only to find out that it’s a bunch of noise.”

The consumer price index rose 0.2% in December instead of 0.3% as reported last month, the revisions of the CPI data published by the Labor Department’s Bureau of Labor Statistics (BLS) showed. But data for November was revised up to show the CPI increasing 0.2% rather than 0.1% as previously estimated.

The CPI gained 0.1% in October. Prices were previously reported to have been unchanged in October. The 3-month annualized increase in the CPI was revised up to a 1.9% rate from a 1.8% pace.

The revisions emanated from the recalculation of seasonal adjustment factors, the model used by the government to strip out seasonal fluctuations from the data. This routine procedure, which the BLS undertakes every year, covered data from January 2019 through December 2023. The year-on-year data, which is not seasonally adjusted, was unrevised.

Excluding food and energy, the CPI advanced by 0.275% in December, which was rounded up to 0.3%. That was revised down from 0.309%, rounded to 0.3%. The so-called core CPI was revised up to 0.308% in November, rounded to 0.3%.

It was previously reported to have increased 0.285% in November, rounded up to 0.3%. The 3-month increase in the core CPI inflation rate was unchanged at 3.3%.

Core goods prices fell in the first half, but not as steeply as had been previously estimated, while the increase in the cost of services was revised down for November and December. The increase in services excluding rents was revised lower in November and December.

“This should give more support to the Fed that strong growth and jobs are not causing an acceleration in inflationary pressures,” said Ellen Zentner, chief economist at Morgan Stanley in New York.

Stocks on Wall Street were trading higher. The dollar was steady versus a basket of currencies. U.S. Treasury prices fell.

UPDATED WEIGHTS

Financial markets expect the U.S. central bank will start cutting interest rates sometime in the first half of the year. Since March 2022, the Fed has raised its policy rate by 525 basis points to the current 5.25% to 5.50% range.

The 2023 data was of interest after revisions last year showed inflation a bit warmer in the second half of 2022 than previously thought. Economists saw a minor impact from the CPI revisions on the personal consumption expenditures (PCE) price indexes data for the fourth quarter, the inflation measures tracked by the U.S. central bank for its 2% inflation target.

“On the whole for October-December, the period that will be subject to revision in the next related report, we look for basically no revision to the monthly changes to the core PCE data on net, with the December change revised down by 0.02 percentage point but offsetting upward revisions to the earlier months,” said Daniel Silver, an economist at JPMorgan.

The core PCE price index gained 0.2% on the month in December and rose 2.9% year-on-year.

The BLS also updated spending weights used to calculate the CPI, effective with January’s report due next Tuesday. Housing now has a higher weighting, while transportation’s share was lowered. It will also introduce changes to the methodology used to calculate used cars and trucks prices.

According to a Reuters survey of economists, the CPI likely increased 0.2% in January. That would lower the annual increase in prices to 3.0% from 3.4% in December. The core CPI was forecast advancing 0.3%, with the year-on-year increase slowing to 3.8% from 3.9%.

“Since some Fed officials were apparently worried about a repeat of last year, the lack of any meaningful change this year, at the margin at least, supports an earlier May rate cut,” said Paul Ashworth, chief North America economist at Capital Economics in Toronto.”

(Reporting by Lucia Mutikani; Additional reporting by Chuck Mikolajczak in New York; Editing by Andrea Ricci)

By Lucia Mutikani

WASHINGTON (Reuters) -U.S. monthly consumer prices rose less than initially estimated in December, but underlying inflation remained a bit warm, a mixed picture that did not shift expectations on the timing of an anticipated interest rate cut from the Federal Reserve this year.

The annual revisions published by the Labor Department on Friday also showed the consumer price index increasing slightly more than previously reported in October and November.

The revised CPI data had been eagerly awaited by financial markets and economists after Federal Reserve Governor Christopher Waller last month flagged them as among the key data pieces he would be watching as policymakers try to gauge progress in their fight against inflation.

“The revisions were much ado about nothing,” said Brian Jacobsen, chief economist at Annex Wealth Management in Menomonee Falls, Wisconsin. “This is becoming a trend where a Fed official mentions a data release once and then everyone waits with bated breath only to find out that it’s a bunch of noise.”

The consumer price index rose 0.2% in December instead of 0.3% as reported last month, the revisions of the CPI data published by the Labor Department’s Bureau of Labor Statistics (BLS) showed. But data for November was revised up to show the CPI increasing 0.2% rather than 0.1% as previously estimated.

The CPI gained 0.1% in October. Prices were previously reported to have been unchanged in October.

The revisions emanated from the recalculation of seasonal adjustment factors, the model used by the government to strip out seasonal fluctuations from the data. This routine procedure, which the BLS undertakes every year, covered data from January 2019 through December 2023. The year-on-year data, which is not seasonally adjusted, was unrevised.

Excluding the volatile food and energy components, the CPI advanced by an unrevised 0.3% in December. The so-called core CPI also advanced by an unrevised 0.3% in November. The 3-month annualized core CPI inflation rate was unchanged at 3.3%

Aside from Waller’s comments, the 2023 data was also of interest after revisions last year showed inflation a bit warmer in the second half of 2022 than previously thought.

U.S. Treasury yields initially fell, but later rose. The dollar was little changed against a basket of currencies. Stocks on Wall Street opened higher.

“Since some Fed officials were apparently worried about a repeat of last year, the lack of any meaningful change this year, at the margin at least, supports an earlier May rate cut,” said Paul Ashworth, chief North America economist at Capital Economics in Toronto.

The CPI inflation readings for the fourth quarter will have an impact on the personal consumption expenditures (PCE) price indexes, the inflation measures tracked by the U.S. central bank for its 2% inflation target.

The core CPI increased 3.9% on a year-on-year basis in December. It is running ahead of the core PCE price index, which gained 0.2% on the month and rose 2.9% year-on-year in December.

Financial markets are anticipating that the Fed will start cutting interest rates sometime in the first half of the year. Since March 2022, the Fed has raised its policy rate by 525 basis points to the current 5.25% to 5.50% range.

(Reporting by Lucia Mutikani; Additional reporting by Chuck Mikolajczak in New York; Editing by Andrea Ricci)

By Jamie McGeever

ORLANDO, Florida (Reuters) – An engine of world growth for 20 years, the largest consumer of commodities and world’s number two economy has somehow slipped into “alternative investment” buckets for many global investors.

China’s property bust and increasingly interventionist government, along with deepening geopolitical fissures with the United States, have dramatically dimmed its allure as a destination for international capital.

China may not yet be “uninvestable”, as U.S. Commerce Secretary Gina Raimondo suggested U.S. companies believe, but many investors are recategorizing their reduced exposure – in some cases to alternative investment.

“Alts” are typically assets outside the traditional stocks, bonds and cash buckets, like hedge funds, real estate and private equity. They are often riskier but potentially more lucrative bets, and are attractive for their diversification and hedging qualities.

Crucially, they are non-correlated with traditional assets. This is where many investors see Chinese stocks and bonds now – a non-correlated, idiosyncratic play, effectively a hedge against their core bets.

That was the anecdotal evidence garnered from investors, asset managers and allocators on the sidelines of the recent “Hedge Fund Week” conferences in Miami. It is also supported by global capital flows trends.

One fund manager said he may put 5-10% of his portfolio in Chinese stocks but is fully prepared to lose it. A hedge fund manager overseeing billions of dollars of assets said he likes China’s “idiosyncrasies” and diversification qualities but noted that his investors’ money is mostly offshore, not onshore.

Alex Lennard, fund manager at Ruffer, admitted that the economic climate in China is “clearly awful” but his firm is putting money there, essentially as a hedge.

“It’s a small part of our portfolio, about 4%, but it does provide an offset to some of the other market ‘certainties’ that exist,” Lennard said.

It’s worth noting that they are relative optimists on China. The wider consensus is far gloomier.

OUTFLOWS, OUTFLOWS, OUTFLOWS

According to Morningstar Direct, U.S. equity funds’ average asset-weighted exposure to Chinese stocks in December last year was 1.38%, down from 2.17% three years earlier, while their average equal-weighted exposure is down to 3.5% from 4.13%.

U.S. emerging market funds’ allocation to China as a share of total EM exposure declined to 20.6% from 28.6% on an asset-weighted basis, and to 20% from 26% on an equal-weighted basis.

It is a similar pattern across global emerging market funds. The China portion as a share of their overall EM equity allocation has fallen to 19.5% from 27.1% on an asset-weighted basis and to 21% from 25.5% on an equal-weighted basis, according to Morningstar Data.

Demand for Chinese bonds should be stronger though, right?

China is included in the $1.2 trillion benchmark JP Morgan EMBI Global Diversified bond index, and there is now an in-built demand for Chinese bonds from the yuan’s emergence in recent years as an alternative international reserve currency.

But China’s share of the $12 trillion global FX reserves pie has slipped to a four-year low of 2.37%, and has never been higher than 2.83%, according to the International Monetary Fund.

Figures from the Institute of International Finance show outflows from Chinese debt portfolios for seven straight months and only three monthly inflows in the last two years.

Emerging market ex-China debt funds, meanwhile, have attracted inflows for the past seven months and in January drew in $47.3 billion, the most since October 2022 and one of the highest on record.

Whichever way you slice it, investors of all stripes are taking chips off the Chinese table.

BURST OPTIMISM

This is not how many thought it would pan out.

A Greenwich Associates survey of institutional money managers in 2020 showed that pension funds and endowments had 3-5% allocations to China and only 5% of North American institutions had any dedicated exposure to Chinese stocks.

Nearly a quarter of respondents said they planned to increase or significantly increase their dedicated allocation to Chinese equities in the next three to five years.

Liang Yin, investment director at Willis Towers Watson, wrote in November that year that investors should consider raising their allocation to China to around 20% over the next decade.

But Beijing’s closer alignment with Moscow, fraying relations with Washington, and a strengthening interventionist hand in business and markets at home have scared a lot of horses.

The findings of a recent survey by the Official Monetary and Financial Institutions Forum of 22 public pension and sovereign wealth funds managing $4.3 trillion in assets were startling – not one had a positive outlook for China’s economy or saw higher relative returns there.

(The opinions expressed here are those of the author, a columnist for Reuters.)

(By Jamie McGeever; Editing by Kylie MacLellan)

WASHINGTON (Reuters) – U.S. monthly consumer prices rose less than initially estimated in December, revised government data showed on Friday.

The consumer price index rose 0.2% in December instead of 0.3% as reported last month, annual revisions of the CPI data published by the Labor Department’s Bureau of Labor Statistics (BLS) showed. But data for November was revised up to show the CPI increasing 0.2% rather than 0.1% as previously estimated.

The revisions emanated from the recalculation of seasonal adjustment factors, the model used by the government to strip out seasonal fluctuations from the data. This routine procedure, which the BLS undertakes every year, covered data from January 2019 through December 2023. The year-on-year data, which is not seasonally adjusted, was unrevised.

Excluding the volatile food and energy components, the CPI advanced by an unrevised 0.3% in December.

After the revisions last year showed inflation running a bit warmer in the second half of 2022 than previously reported, the revised CPI data for 2023 have been eagerly awaited by Federal Reserve officials, including Governor Christopher Waller, as they try to gauge progress in their fight against inflation.

The CPI inflation readings for the fourth quarter will have an impact on the personal consumption expenditures (PCE) price indexes, the inflation measures tracked by the U.S. central bank for its 2% inflation target.

The core CPI increased 3.9% on a year-on-year basis in December. It is running ahead of the core PCE price index, which gained 0.2% on the month and rose 2.9% year-on-year in December.

Financial markets are anticipating that the Fed will start cutting interest rates sometime in the first half of the year. Since March 2022, the Fed has raised its policy rate by 525 basis points to the current 5.25% to 5.50% range.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

By Huw Jones

LONDON (Reuters) – Wall Street headed for further gains on Friday after scaling new heights this week as looming U.S. inflation data will help investors calibrate how much further they may need to dial back on their rate cut bets.

The greenback was firmer and headed for a fourth weekly rise on Friday, pushing the yen to a 10-week low, as traders dialled back bets on how quickly the Bank of Japan might raise interest rates and how soon the Federal Reserve will cut them, helping to send gold lower for the week.

Oil ticked lower, though remained on track for weekly gains of about 5% with the market watching events in the Middle East after Israel rejected a ceasefire offer from Hamas.

The MSCI All Country stock index was slightly firmer, up 2.5% for the year so far.

The mood in stock markets was buoyed by Wall Street, where the S&P 500 index rose above 5,000 points for the first time ever on Thursday, capping a 21% surge since October.

Investors will now focus on the U.S. Bureau of LaborStatistics’ revised inflation figures for 2023 at 1330 GMT, calculated using new seasonal adjustment factors – statistical weights that aim to reflect how prices behaved over the year more accurately. “This is something the Fed are watching, and Governor Wallerexplicitly mentioned these revisions in his speech last month,so it’ll be an important one for the timing of any rate cuts,”said Deutsche Bank strategist Jim Reid.

U.S. inflation data for January is also coming next week. Dow, S&P 500 and Nasdaq stock index futures were all firmer. In Europe, the STOXX index of 600 companies was up 0.2%

Stocks were underpinned by a rethink of last year’s narrative that the chances of a soft landing for the economy in 2024 were limited, said Eren Osman, managing director of wealth management at Arbuthnot Latham.

“The difficulty though for investors at this stage is to take outright long positions, and I think that’s the conundrum you face,” Osman said.

He has increased exposure to European stocks, where valuations look more appealing than on Wall Street after its heady run.

“But I wouldn’t be short of the Magnificent Seven right now,” he added, a reference to the big U.S. tech stocks that account for about 30% of the S&P’s value.

On the data front, inflation in Germany, Europe’s biggest economy, eased in January to 3.1%, adding fuel to bets on when the European Central Bank will begin easing rates.

However, euro zone bond yields hit multi-week highs after several ECB rate setters warned against easing monetary policy too early.

“Indeed, it seems pretty clear now that the ECB will be waiting for European wage data statistics at the end of April before likely cutting rates in June,” ING bank said in a note to clients.

JAPAN SHARES AT 34-YEAR HIGH

Japanese shares hit 34-year highs on Friday while adjustments to interest rate expectations sent the yen as low as 149.575 per dollar, its weakest since Nov. 27.

In China, mainland markets were closed and Hong Kong traded thinly and shut early, with the Hang Seng down 0.8% amid nerves authorities may not deliver on promises for support.

“I am betting that (decisive action) is happening,” said Chi Lo, senior markets strategist for Asia Pacific at BNP Paribas Asset Management.

Japan’s Nikkei, which has been receiving a gush of foreign inflows as investors flee China, rose 0.3%, aided by the yen’s retreat. [.T]

Nissan shares collapsed almost 12% for their largest fall in decades after the automaker cut its outlook on slumping China sales.

In commodities, Brent crude oil futures eased 0.2% to $81.42.

Two-year U.S. Treasury yields were slightly firmer at 4.4862%. Ten-year yields were steady at 4.1754%.

Bitcoin gained 4.4% to $47,303.

(Reporting by Huw Jones, additional reporting by Tom Westbrook; Editing by Lincoln Feast, Kirsten Donovan)

LONDON (Reuters) – Investors dumped U.S. and real estate shares and bought Chinese stocks in the week to Wednesday, a report from Bank of America citing data from EPFR said on Friday, saying the China flows were likely driven by Chinese public funds.

U.S. equities saw outflows of $15.6 billion, the most since September 2023, compared to a record $18.8 billion of inflows to China, BofA said in its weekly roundup of fund flows in and out of world markets.

Beleaguered Chinese stocks rose this week ahead of the Lunar New Year break, moving off five-year lows on a slew of signals that authorities are strengthening their resolve to support slumping markets. [.SS]

State fund Central Huijin Investment said on Tuesday it has expanded the scope of funds it is buying and will further increase purchasing, seen as a broad – if short-term – support.

Meanwhile, the U.S. S&P 500 has continued to set new records this week, even as the investors tracked in the fund flow report pulled their cash. [.N]

One market segment on which investors particularly soured was real estate funds, which saw outflows of $1.1 billion in the week – the most since May 2022 – and which BofA attributed to U.S. regional bank woes.

A sell-off in regional U.S. bank stocks triggered by New York Community Bancorp last week has brought the sector’s exposure to troubled commercial real estate into focus.

Elsewhere the report showed money market funds continued to lap up investors’ money, with the cash equivalents seeing inflows of $40.1 billion, taking assets over $6 trillion.

“Ain’t no peak in cash levels yet,” BofA said.

(Reporting by Alun John, editing by Lucy Raitano and Hugh Lawson)

By Dawn Chmielewski

(Reuters) – Walt Disney is harnessing artificial intelligence to power a new advertising tool that will help brands tailor their commercials to fit the mood of specific scenes within a movie or television series.

Dubbed “magic words,” this tool introduces a new form of contextual advertising for the Disney+ an Hulu streaming services. It uses a combination of AI and machine learning to analyze and tag scenes across its library, identifying the contents, brands, images and mood.

Brands can use these descriptive tags, known as metadata, to identify a specific scene or mood and then personalize messaging to match.

“What that means is leaving broad demos behind and buying specific audiences,” said Geoffrey Calabrese, Omnicom Media Group’s chief investment office. “These magic words are literally going to be able to connect me to the emotions of the consumer, at an audience level. And for us, that’s really a game changer.”

Omnicom is one of six global advertising companies taking part in an early beta test of this advertising product, Disney told Reuters exclusively. The company announced the new ad features last month, at the Consumer Electronics Show in Las Vegas.

Rita Ferro, Disney’s global head of ad sales, said the feature allows advertisers to maximize the impact of their messages “because it resonates with concepts that the viewers experience.”

Disney’s investment in streaming ad technology comes as advertisers are moving away from broadcast and cable TV, along with viewers. The company’s advertising revenue fell nearly 3% in its fiscal 2024 first quarter to $3.35 billion, according to LSEG, reflecting declines in traditional TV viewership. Researcher eMarketer estimated Disney+ accounted for about $790 million in revenue last year.

Disney does not report its advertising revenue.

CEO Bob Iger told investors during the company’s quarterly investor call Wednesday that the ad-supported version of the Disney+ service has attracted more than 1,000 advertisers in the first quarter, a tenfold increase from launch.

“Our revolutionary approach to technology ensures that our entire streaming portfolio will be the ultimate destination for brands in the years ahead,” Iger said in a statement to Reuters.

Half of consumers who sign up for Disney+ opt for the less-expensive version of the service, with which includes advertising, said Joe Earley, president of Disney’s direct-to-consumer business. He said the company has spent years refining ad technology that has been designed specifically for streaming. Its Hulu service launched as a free, advertising-supported service in 2008.

“Disney+ didn’t have to ramp up,” Earley said. “It hit the ground running.”

(Reporting by Dawn Chmielewski in Los Angeles; Editing by David Gregorio)

By Herbert Lash and Samuel Indyk

NEW YORK/LONDON (Reuters) – The dollar rose on Thursday after data on unemployment benefits again pointed to a resilient U.S. labor market that reinforces the Federal Reserve’s message that interest rates will not be cut in the near term.

The number of Americans filing new claims for unemployment benefits fell more than expected last week, the latest sign of labor market strength despite a recent spike in layoffs.

Initial claims for state unemployment benefits dropped 9,000 to a seasonally adjusted 218,000 for the week ended Feb. 3, the Labor Department said, less than the 220,000 forecast by economists polled by Reuters.

The initial claims data still points to a robust U.S. labor market that has kept dollar strong, said Thierry Wizman, global FX and interest rates strategist at Macquarie in New York.

“The problem here is that we continue to get positive surprises in the U.S. and we’re not getting enough positive surprises in the rest of the world, and certainly not in China,” he said.

“If the dollar is going to weaken, we’re going to need to see some attenuation of the robustness in the U.S. data and some improvement in the data in Europe and China,” he said. “When’s that going to happen? Very, very hard to say.”

Expectations for the U.S. central bank to cut rates by year end have been slashed to 117 basis points (bps) from 140 bps just before the release of last Friday’s blowout jobs report, trading in the overnight Fed funds rate show.

The likelihood of a rate cut in March slipped 2-1/2 percentage points from Wednesday to 16.5%, according to CME Group’s FedWatch Tool. The probability a week ago before the unemployment report was 36.5%.

The dollar index was last up 0.19% at 104.21, after hitting 104.43 following the initial claims report. The euro fell 0.07% to $1.0763.

Higher U.S. Treasury yields also have boosted the dollar, particularly against lower-yielding currencies, such as the yen.

The yen was down about 0.76% versus the greenback at 149.29. It slipped to 149.46 after the initial claims data, its weakest level since Nov. 27.

Bank of Japan Deputy Governor Shinichi Uchida said the central bank was unlikely to raise interest rates aggressively, even after exiting negative interest rates.

“Given that we see UST yields higher in the near term, we see USD/JPY remaining elevated,” said Colin Asher, senior economist at Mizuho.

“Any decline will likely need to wait until closer to the March BoJ meeting. We see April as the more likely timing for a BoJ move and thus a better time to look for USD/JPY to move lower.”

Sterling was down 0.15% at $1.2698.

The yuan held steady despite data that showed China’s consumer prices fell at their steepest pace in more than 14 years in January.

CPI fell 0.8% in January from a year earlier, but rose 0.3% month-on-month, data revealed. Economists polled by Reuters had forecast a 0.5% fall year-on-year and a 0.4% gain month-on-month.

The offshore Chinese yuan rose 0.05% to $7.2158 per dollar, while the onshore yuan rose 0.03% to $7.1965.

(This story has been refiled to fix Aa typo in the headline)

(Reporting by Herbert Lash; additional reporting by Samuel Indyk and Brigid Riley; Editing by Stephen Coates, Christina Fincher and Jonathan Oatis)