By Karin Strohecker and Vincent Flasseur

LONDON (Reuters) – Central banks across major developed and emerging economies took a breather in August with the pace and scale of interest rate hikes shifting another gear lower as diverging growth outlooks and inflation risks muddied the outlook ahead.

August – often a more quiet month for monetary policy decisions – saw only four of the central banks overseeing the 10 most heavily traded currencies hold rate setting meetings. Two of them – Norway and United Kingdom – delivered a total of 50 basis points of rate hikes in the lowest such tally since January. Australia and New Zealand kept their benchmarks unchanged, Reuters data showed.

The moves compare to three hikes across six meetings in July, and takes the total 2023 year-to-date tally for G10 central banks to a total of 1,075 bps across 33 hikes.

But the outlook ahead was murky, with surprisingly resilient U.S. data contrasting with disappointing numbers from China and much of Europe and markets searching for clues when major central banks could embark on easing rates.

“This downbeat growth story does have an upbeat consequence; inflationary pressure should ease further,” said ING’s global head of macroeconomics Carsten Brzeski. He added that while this was likely not enough to bring inflation back to target for many central banks, it should be low enough to see the peak in policy rate hikes.

“Central bankers would be crazy to call an end to those hikes officially; they don’t want to add to speculation about when the first cuts might come,” Brzeski said.

Across developing economies, more evidence emerged that the turn of the rate cycle was well established in some regions. Brazil’s central bank kicked off its rate-cutting cycle with a more aggressive-than-expected 50 basis point rate cut. Latin America’s biggest economy followed in the footsteps of Chile in July and smaller peers Costa Rica and Uruguay in recent months.

China was the second country out of the 18 central banks in the Reuters sample of developing economies to lower interest rates in August, of which 12 held rate setting meetings.

However, other developing nations were far from being able to cut rates, instead finding themselves battling currency weakness and stubbornly high inflation that forced policy makers into raising rather than cutting rates.

Turkey delivered a super-sized 750 bps rate rise in August while Russia lifted its benchmark by 350 bps and Thailand added 25 bps.

The year-to-date tally for emerging markets stands at 2,850 bps of tightening across 27 hikes – well below the pace and scale seen the 2022, where central banks in developing economies delivered 7,425 bps across 92 rate increases.

On the easing side, emerging markets banks delivered 220 bps of cuts since the start of the year across five reductions, the data showed.

With major central banks expected to maintain restrictive policy through 2024, room for manoeuvre for many developing economies might be limited, analysts predicted.

“Major central banks will maintain a restrictive policy stance through 2024,” said Madhavi Bokil, senior vice president strategy and research at Moody’s.

“Significant easing by emerging market central banks is unlikely with advanced economy central banks still battling elevated inflation, and uncertainty around the U.S. interest rate outlook.”

(Reporting by Karin Strohecker and Vincent Flasseur; Editing by Tomasz Janowski)

By Anna Tong and Rich McKay

BLACK ROCK CITY, Nevada (Reuters) -Thousands of Burning Man attendees readied to make their “exodus” on Monday as the counter-culture arts festival in the Nevada desert ends in a sea of drying mud instead of a party around its flaming effigy namesake.

Rain over the weekend turned the once hard-packed ground to pudding. One person died at the event in the Black Rock Desert, authorities said on Sunday, providing few details. An investigation is underway.

Organizers posted online that they expected to formally allow vehicles to leave at noon Monday local time, but some attendees told Reuters that a steady stream of vehicles have left since predawn, many struggling through the slop.

The exit is via an unpaved five-mile (8-km) dirt road out to the nearest highway. Photos shared on online sites showed hefty recreational vehicles sunk up to the tire rims in mud, with some using boards under the wheels to help get traction.

The festival site is located about 15 miles from the nearest town and 110 miles north of Reno.

Organizers asked people who could, to delay leaving until Tuesday morning to reduce the traffic.

For days, some 70,000 people were ordered to stay put and conserve food and water as officials closed the roads and exits, ordering all vehicles to stay put.

But the National Weather Service forecasters said on Monday that the rain was over.

“Yep, the rain cleared out of there,” said Marc Chenard, a forecaster with the weather service’s Weather Prediction Center in College Park, Maryland. “It’ll be sunny today with temperatures in the 70s (Fahrenheit).”

The weather service said the general area received between three-quarters of an inch to 1.5 inches (1.9-3.8 cm) of rain since late Friday.

Some of the festivalgoers ignored the order to stay put over the weekend and attempted to walk or drive out to the highway.

Others partied on in the rain.

Videos posted to social media showed costumed revelers – including a few children – sliding through the sticky mess, most of them covered from head to toe in wet earth.

“When you get pushed to extremes, that’s when the most fun happens,” said Brian Fraoli, 45, a veteran “burner” who works in finance in New York.

Fraoli said he had tried to drag his luggage through the mud and escape, but gave up and decided to relax and enjoy the experience. “Overall it was an amazing week and next time we will be more prepared,” he said.

Every year Burning Man brings tens of thousands of people to the Nevada desert to dance, make art and enjoy being part of a self-sufficient, temporary community of like-minded spirits. This year’s version opened on Aug. 27 and was scheduled to run through Monday.

It originated in 1986 as a small gathering on a San Francisco beach and is now attended by celebrities and social media influencers. A regular ticket costs $575.

The festival typically has a penultimate night send-off with the burning of a giant wooden effigy of a man, along with a fireworks show. That has not taken place this year, although organizers said it may still happen on Monday evening.

(Reporting by Anna Tong at Black Rock City and Rich McKay in Atlanta; Editing by Rosalba O’Brien)

MADRID (Reuters) -At least three people died and three were missing as record rainfall caused heavy flooding in central Spain, shutting roads, subway lines and high-speed train connections, authorities said on Monday.

Helicopters were sent to rescue people who had sought refuge on the roofs of their homes in the Toledo area some 50 km (31 miles) southwest of Madrid, emergency services said.

The sudden downpour on Sunday and early Monday transformed streets into rivers of mud that swept away cars and trash bins in Madrid, Castile-La Mancha, Catalonia and Valencia regions. Hail also fell in many areas.

Three people died in the countryside around the central city of Toledo, where the weather service AEMET registered record rainfall of 90 litres per square metre on Sunday.

One of the victims was a young man who was trapped in a lift that filled up with water, while another was inside a vehicle when it got flooded, police said.

The third person who died was a 50-year-old man who had been reported as missing. His body was found in the afternoon floating in a river near his home in the town of Camarena.

“It just kept raining and we were a little scared, but we were indoors so we were safe,” said Isabella Stewart, a U.S. missionary living in Toledo as she was taking a bus.

Another Toledo resident, Ruben Gonzalez, said: “I live four blocks away and it was very strong. Everything is flooded. This is crazy.”

Later on Monday, AEMET said the cut-off low phenomenon – also known as weatherman’s woe – that had caused the downpour was starting to move away from the country.

In the Madrid region, emergency services tackled almost 1,200 incidents overnight and firefighters and police were searching for one man in the rural area of Aldea del Fresno, southwest of Madrid, the emergency services said.

The man went missing with his son when their car was dragged into the Alberche River after an avalanche caused by a sudden spate.

“The minor was rescued after he had climbed up a tree,” the Madrid emergency service said.

Rescuers were also looking for a woman who disappeared under similar circumstances near Toledo and for an 84-year-old man who was dragged away by streams of water and mud in Villamanta, west of Madrid.

Several roads in the Madrid region were closed as half a dozen bridges were torn down by water overflowing the riverbanks.

The defence ministry said it had deployed army engineers to build a so-called Bailey bridge – a type of portable truss bridge – in Aldea del Fresno to connect the banks after the original bridge was swept away.

Several subway lines were closed in central Madrid early on Monday, though the service was re-established in most of the city during the morning, subway operator Metro de Madrid said in a statement.

Some high-speed connections between Madrid and the southern region of Andalusia have resumed, but trains were operating at lower-than-normal speeds.

(Reporting by Inti Landauro, Emma Pinedo and David Latona; Editing by Andrei Khalip, Angus MacSwan and Christina Fincher)

MUNICH (Reuters) – Stellantis-owned carmaker Opel will be able to offer an electric vehicle at a price of about 25,000 euros ($26,967) without incentives from around 2026, the brand’s CEO said on Monday.

“With purely electric platforms from Stellantis, we will be able to offer prices that will allow us to touch a far wider audience,” Florian Huettl told reporters.

($1 = 0.9270 euros)

(Reporting by Gilles Guillaume; Writing by GV De Clercq; Editing by David Goodman)

(Reuters) – London Stock Exchange Group is looking into using blockchain to build what it described on Monday as “an end-to-end digital market ecosystem to raise and transfer capital across asset classes”.

Murray Roos, head of capital markets at LSEG, earlier told the Financial Times that the London-based exchange had been examining the potential for a blockchain-powered trading venue for around a year and had reached an “inflection point”.

Blockchain, best known as the technology underpinning cryptocurrencies such as bitcoin and other crypto assets, is a digital ledger which records and verifies transactions.

LSEG’s move comes as a number of mainstream financial institutions are talking about the potential for blockchain to streamline the process of issuing and trading financial assets.

“LSEG is exploring plans to build an end-to-end digital market ecosystem that will allow for the raising and transfer of capital in a more seamless, cost efficient way across asset classes,” the company told Reuters in an email.

Roos earlier told the FT in an interview that LSEG is definitely not building anything around cryptoassets, but is instead looking to use the technology to improve the efficiency of buying, selling and holding traditional assets.

“The idea is to use digital technology to make a process that is slicker, smoother, cheaper and more transparent . . . and to have it regulated,” he was quoted as saying by the newspaper.

LSEG is considering a separate legal entity for the digital markets business, the FT said, adding that it hoped to have this running within a year, subject to regulatory approvals.

The company is already in talks with regulators, multiple jurisdictions, as well as the British government and Treasury, the report added.

Thomson Reuters, parent of Reuters News, holds a minority stake in LSEG, which pays Reuters for news.

(This story has been refiled to remove hyperlink in paragraph 4)

(Reporting by Akanksha Khushi in Bengaluru; Additonal reporting by Radhika Anilkumar; Editing by Savio D’Souza, Rashmi Aich and Alexander Smith)

By Amanda Cooper

LONDON (Reuters) – Global shares rose on Monday, lifted by a growing expectations that the Federal Reserve will not raise interest rates again, and by hopes that China’s steady drip feed of policy stimulus might stabilise the economy.

A holiday in the United States kept a lid on activity ahead of key readings on U.S. services and Chinese trade and inflation later this week.

More policy action is also expected from Beijing, including relaxing restrictions on home buying.

There was relief that embattled property developer Country Garden won approval from its creditors to extend payments for an onshore private bond.

“Taken alongside other measures announced in prior weeks, it does appear that momentum is building for policy changes in China that could put a floor under sentiment and lift consumption,” Lazard chief market strategist Ron Temple said.

“I continue to worry that there is not a sufficient sense of urgency among Chinese policy makers, but moves like those taken this week, combined with stabilization/improvement in PMI data could signal an upcoming turn in investor psychology,” he said.

The MSCI All-World index, which last week staged its strongest weekly rally since mid-July, was up 0.2%, while the dollar was around 0.16% lower on the day.

“Perhaps there’s some carryover from last week – I’m still surprised at the lack of uplift from the jobs report – or the prospect of a stimulus-induced boost to China’s economy,” OANDA strategist Craig Erlam said.

“Or maybe there’s nothing much at all behind the small gains in Europe and we’re just getting back into the swing of post-summer break trading,” he said.

Investor sentiment in the tech sector will be tested this week by the initial public offering for chip giant Arm Holdings, which is aiming for a price in the range of $47 to $51, valuing the company between $50 billion and $54 billion.

S&P 500 futures and Nasdaq futures rose between 0.2%-0.3%, while European stocks neared one-month highs. The STOXX 600 was up 0.3%, led by gains in tech stocks, such as Dutch semiconductor manufacturer ASML and drugmaker Novo Nordisk, which last week briefly overtook French luxury group LVMH as Europe’s most valuable company.

PAYROLLS BOOST

Stocks rose on Friday after August’s U.S. payrolls report firmed expectations for an end to rate hikes.

While the headline jobs number topped forecasts, downward revisions to the previous two months and a dip in wage growth pointed to a loosening in the labour market.

The jobless rate also jumped as more people went looking for work, leaving the vacancies to unemployed ratio at its lowest since September, 2021.

Futures now imply a 93% chance of rates staying unchanged this month and a 67% probability that the entire tightening cycle is over.

At least seven Fed officials are due to speak this week ahead of the next policy meeting on Sept. 19-20.

The head of the European Central Bank, Christine Lagarde, on Monday said it was critical for policymakers to keep inflation expectations firmly anchored. The market is now leaning against a hike at its September meeting after a run of soft data.

The relative outperformance of the U.S. economy underpinned the dollar at 146.33 yen, not far from its recent 10-month peak of 147.37. The euro rose 0.3% to $1.0803, still within sight of its recent low at $1.0765.

In commodities, oil traded near seven-month highs on tightening supply as Saudi Arabia was widely expected to extend voluntary oil production cuts into October.

Brent crude futures rose 0.2% to $88.75 a barrel, as did U.S. futures, reaching $85.73.

(Additional reporting by Wayne Cole in Sydney; Editing by Shri Navaratnam, Muralikumar Anantharaman, Simon Cameron-Moore, Sonia Cheema and Ed Osmond)

By Joice Alves

LONDON (Reuters) – The safe-haven dollar fell on Monday as risk sentiment improved on hopes China’s policy stimulus might stabilise the economy, while U.S. jobs data boosted bets the Federal Reserve could be at the end of its rate hike cycle.

With U.S. markets closed on Monday, liquidity is likely to be thin and traders hesitant to place large bets.

The dollar, against a basket of currencies, inched 0.15% lower to 104.08, but remained close to the two-month peak of 104.44 it touched on Aug. 25. The index gained 1.7% in August, snapping a two-month losing streak.

China stepped up measures to boost the country’s faltering economy, with Beijing planning further action including relaxing home-purchase restrictions.

The China-sensitive euro was up 0.25% at $1.0799, just off a 10-week low touched last week against the dollar. The single currency has weakened almost 12% this summer.

The Australian dollar and the New Zealand dollar also got a lift from those measures. [AUD/]

“The U.S. dollar is softening against most other G10 currencies today as risk appetite improves on the back of China support measures,” said Jane Foley, head of FX strategy at Rabobank.

In the meantime, data on Friday showed U.S. job growth picked up in August, but the unemployment rate jumped to 3.8%, while wage gains moderated.

A string of economic data highlighting moderating inflation as well as an easing labour market have added to the impression the U.S. economy is cooling without slowing sharply, reinforcing hopes that the economy is set for a soft landing.

Markets are pricing in a 93% chance of the Fed holding steady on rates this month, and over a 60% probability of no more hikes this year, the CME FedWatch tool showed.

The euro was untouched by European Central Bank President Christine Lagarde saying on Monday that central banks must pin inflation expectations at their targets at a time when changes in labour and energy markets as well as geopolitical turmoil are causing price swings.

Last week, ECB board member Isabel Schnabel said that euro zone growth is weaker than predicted just a few months ago but this does not automatically void the need for more rate hikes, especially as investors are undoing some of the ECB’s past work.

“The euro could have derived a little boost from expectations that, on balance, the ECB will maintain a hawkish bias in part to prevent market rates falling too soon. Schnabel’s comments provided an insight into this,” Foley added.

POLICY FOCUS

British finance minister Jeremy Hunt said at the weekend that inflation was on track to halve by the end of 2023, vowing to focus on the goal as he laid out his priorities ahead of the reopening of parliament after the summer break.

Sterling was up 0.34% at $1.2633 after revised British data published on Friday showed the economy recovered faster from the pandemic than previously thought.

Elsewhere, the Australian dollar added 0.2% to $0.6462 ahead of the Reserve Bank of Australia policy meeting on Tuesday when it is expected to stand pat. A Reuters poll showed that all but two of 36 economists said the RBA would hold its official cash rate at 4.10% on Sept. 5.

The Canadian dollar slipped 0.07% to 1.359 per dollar ahead of the Bank of Canada’s policy meeting this week, with the central bank expected to hold rates.

Looking ahead, investor focus will be on a number of Fed officials due to speak this week for clues on what the U.S. central bank will do at its next policy meeting on Sept. 19-20.

(Reporting by Joice Alves in London, additional reporting by Ankur Banerjee in Singapore; Editing by Sharon Singleton and Christina Fincher)

(This Sept. 3 story has been refiled to add dropped words ‘more than’ in paragraph 6)

MUNICH (Reuters) – The variable costs for producing electric vehicles will remain higher compared to combustion engine models for the foreseeable future, the chief executive of Mercedes-Benz said on Sunday, adding this would continue to fuel intense competition.

Ola Kaellenius’s comments come as Mercedes-Benz disclosed more details about its newest electric vehicle architecture, the CLA compact electric sedan, which will launch next year and target 30% to 35% more driving range.

“The variable costs for an electric car are higher. It will remain that way for the foreseeable future,” Kaellenius told journalists at the IAA car show in Munich, adding higher costs could not be passed on to customers on a like for like basis.

Variable costs weighing on the price tag of EV production include raw materials for batteries, software development, and electricity prices.

Kaellenius said this was the reason why the group was working to optimise fixed costs and resource allocation to reach the same profitability with electric cars as it could with combustion engines.

The new CLA is targeting power use of 12 kilowatt hours per 100 kilometres, and more than 750 km of driving range, which compares to the 17 to 18 kWh per 100 km in a EQA 350 compact SUV model Mercedes offers today.

Asked how much the new CLA class reduced costs from the previous generation, Mercedes-Benz Chief Technology Officer Markus Schaefer said they were moving towards a significant cost reduction for batteries.

Batteries for the CLA will be produced by key supplier CATL and ACC, in which Mercedes owns a third.

The CLA, which will go into production next year and come onto the market from 2025, is an attempt to reduce complexity in model development which has increased significantly in recent years, said Schaefer.

Mercedes-Benz will offer hybrid and all-electric versions, while no diesel versions are planned.

(Reporting by Christina Amann and Victoria Waldersee; Writing by Christoph Steitz; Editing by Frances Kerry)

By David Randall

NEW YORK (Reuters) – Signs of rising consumer stress are prompting some fund managers to grow more conservative in their outlooks, even as the broad stock market continues to rally.

While unemployment remains near historic lows, the Federal Reserve’s inflation-fighting interest rate hikes are starting to weigh on households.

Consumer confidence fell more than expected in August, while delinquency rates among credit cards issued by smaller banks are the highest on record, according to data from the Apollo Group.

Department store Nordstrom said last week that delinquencies on its store cards are now higher than pre-pandemic levels. Rival Macy’s said it expects late payments to reduce credit-card revenues by 41% from the previous quarter.

Payments on approximately $1.1 trillion of federal student loans will resume in October, potentially setting consumers up for a “payment shock” of $500 or more each month, according to a study by TransUnion.

“The U.S. consumer is on thin ice coming into the final stretch of 2023,” said Emily Roland, co-chief investment strategist at John Hancock Investment Management. She is more bullish on bonds and defensive sectors like healthcare ahead of the fourth-quarter holiday shopping season.

The U.S. economy added 187,000 non-farm jobs in August, slightly above expectations, while the unemployment rate rose to 3.8%, the Bureau of Labor Statistics said Friday. The government significantly lowered its previously reported estimates for job growth for June and July.

Further declines in the labor market will likely act as a double-edged sword for investors, relieving some inflation pressures while weighing on consumer spending.

Overall consumer spending rose slightly more than expected in August, while the savings rate fell to its lowest since November 2022, the Commerce Department said on Thursday.

Consumers will “very soon” exhaust their excess savings built up during the pandemic, said Jake Jolly, senior investment strategist at BNY Mellon Investment Management, who is underweight equities and expects that the U.S. economy is on the path toward a recession.

“It does beg the question of how long consumer spending can surprise to the upside,” he said, adding that bonds continue to look more appealing, given a rise in yields that has pushed the 10-year Treasury yield above 4%.

Overall, consumer spending growth will fall from 2.3% in 2023 to 0.9% in 2024, said Gregory Daco, chief economist at accounting giant Ernst & Young, due to higher interest charges, fewer available savings and student loan payments. He said the economy will post below-trend growth for several quarters.

Investors will receive an updated view of consumer credit usage and a reading of the ISM services sector, which accounts for two-thirds of the economy, next week.

Betting against the consumer spending has so far been a losing wager. The US economy continues to grow at what the Atlanta Fed’s GDPNow estimates is an annualized 5.9% rate in the third quarter.

Interest rates are likely to fall over the fourth quarter of the year and into 2024 as inflation fears ebb, providing some cushion for consumers, said Jason Draho, head of asset allocation Americas at UBS Global Wealth Management, who expects investors to buy into any dips in consumer stocks.

“The US consumer, and therefore the economy, should remain fairly resilient well into 2024,” he said.

The consumer discretionary sector, which includes stocks like Amazon.com, Royal Caribbean Cruises and Chipotle Mexican Grill, is up nearly 34% for the year to date, nearly double the gain of the S&P 500 index as a whole.

Yet the sector has lagged lately, gaining less than 1% since July 1 while the S&P 500 is up nearly 2% over the same time.

Even if consumer spending does fall significantly, the strong rally in the sector will likely wane as the tech-driven broader market slows over the fourth quarter, said Sandy Villere, a portfolio manager at Villere & Co.

As a result, Villere is building up his positions in defensive sectors such as healthcare that have not lagged.

“We think it’s premature to move away from the consumer now, but we can see a recession hitting in the first quarter as the Fed’s rate hikes start to kick in,” he said.

(This story has been corrected to say BNY Mellon Investment Management, not BNY Mellon, in paragraph 10)

(Reporting by David Randall; editing by Megan Davies and Andy Sullivan)

By Echo Wang

NEW YORK (Reuters) -Customers of Arm Holdings Ltd including Apple Inc, Nvidia Corp, Alphabet Inc and Advanced Micro Devices Inc have agreed to invest in the chip designer’s initial public offering, according to people familiar with the matter.

Intel Corp, Samsung Electronics Co Ltd, Cadence Design Systems Inc and Synopsys Inc have also agreed to participate as investors in the offering, the sources added. The talks are ongoing and some other potential investors are also in discussions to invest in the IPO, the sources added.

SoftBank Group Corp, which owns Britain-based Arm, is targeting a valuation between $50 billion and $55 billion, Reuters reported earlier on Friday. Arm’s clients have agreed to invest in that valuation range, the sources said.

While it is possible that demand for Arm’s shares will lead to a higher valuation by the time the IPO prices, the move represents a climb-down from the $64 billion valuation at which SoftBank acquired the 25% stake in the company it did not already own from its $100 billion Vision Fund last month.

Apple, Nvidia and the other strategic investors have agreed to invest between $25 million and $100 million each in the blockbuster IPO, the sources said. Arm and SoftBank have set aside 10% of the shares to be sold in the IPO for its clients, Reuters has previously reported.

Amazon.com Inc, which had previously held talks to invest in the IPO, has decided not to participate, one of the sources said, requesting anonymity as the discussions are confidential.

A scramble among Arm’s clients, comprising the world’s biggest technology companies, to snap up shares in the IPO is testing the semiconductor designer’s adherence to not picking sides in the chip industry.

The interest is fueled by a desire by companies to expand their commercial relationship with Arm and make sure rivals do not gain an edge, Reuters has previously reported.

While an investment in the IPO would not come with a seat on Arm’s board or ability to dictate strategy, it could strengthen ties with each participating company and make it harder for a competitor to acquire Arm later.

Arm and SoftBank did not immediately respond to requests for comment.

AMD, Intel, Synopsys and Nvidia declined to comment. Alphabet, Amazon, Apple, Samsung and Cadence did not immediately respond to requests for comment. The Wall Street Journal reported on Arm’s valuation target earlier on Friday.

(Reporting by Echo Wang in New York; Editing by Anirban Sen and Rosalba O’Brien)