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FILE PHOTO: World Bank Group President David Malpass and IMF Managing Director Christine Lagarde at the IMF and World Bank’s 2019 Annual Spring Meetings, in Washington, U.S. April 13, 2019. REUTERS/James Lawler Duggan
April 26, 2019
By David Lawder
WASHINGTON (Reuters) – Nearly 40 world leaders and scores of finance officials, including International Monetary Fund Managing Director Christine Lagarde, are gathered in Beijing for China’s second Belt and Road infrastructure summit, but the World Bank’s new president isn’t among them.
David Malpass, fresh from a senior Trump administration post at the U.S. Treasury Department, is instead making his first foreign trip as the World Bank’s leader to sub-Saharan Africa to highlight his vision for the bank’s poverty reduction and development agenda.
A World Bank spokesman said Malpass will be traveling this weekend to Madagascar, Ethiopia and Mozambique before flying to Egypt and a debt conference in Paris. Malpass has said that Africa is a key priority for the bank due to its high concentration of the world’s poorest people.
World Bank Chief Executive Officer Kristalina Georgieva, who had been acting president during the leadership selection process, is representing the institution at the summit and had accepted China’s invitation before Malpass started at the bank on April 9, the bank spokesman said.
Former World Bank President Jim Yong Kim attended China’s first Belt and Road summit two years ago.
Leaders of two of the countries on Malpass’ trip, Ethiopia and Mozambique, are among a number of African leaders also attending this year’s summit.
Malpass, who was the Treasury’s undersecretary for international affairs, is a longtime critic of China’s Belt and Road lending practices and had worked to raise alarms about them with G7 and G20 countries in that role.
“In lending, China often fails to adhere to international standards in areas such as anti-corruption, export credits, and finding coordinated and sustainable solutions to payment difficulties, such as those sought in the Paris Club,” Malpass told a U.S. House Financial Services subcommittee in December.
His absence coincides with a significant downgrade of the Belt and Road summit by the United States as the Trump administration tries to negotiate a deal to resolve longstanding trade and intellectual property disputes with China — talks in which Malpass frequently participated.
No high-level U.S. officials are attending, a State Department spokesman said, citing similar concerns about Belt and Road debt.
Malpass said at the IMF and World Bank spring meetings this month that meeting the development lender’s goals of ending extreme poverty by 2030 calls for a focus on Africa.
“By 2030, nearly 9 in 10 extremely poor people will be Africans, and half of the world’s poor will be living in fragile and conflict-affected settings,” he told a news conference at the meetings. “This calls for urgent action, by countries themselves, and by the global community.”
He told reporters on his first day on the job that he wanted to “evolve” the bank’s relationship with China to one where Beijing is a bigger contributor of capital and cooperates more closely with the bank on development issues and poverty reduction.
But Treasury Secretary Steven Mnuchin, Malpass’ former boss, on the same day told lawmakers that the World Bank under Malpass’ leadership and a new U.S. development agency “can be a serious competitor to (China’s) Belt and Road.”
(Reporting by David Lawder; editing by Jason Neely)
Source: OANN
FILE PHOTO: The logo of Dow Jones Industrial Average stock market index listed company Goldman Sachs (GS) is seen on the clothing of a trader working at the Goldman Sachs stall on the floor of the New York Stock Exchange, United States April 16, 2012. REUTERS/Brendan McDermid/File Photo
April 26, 2019
LONDON (Reuters) – The protracted process of Britain’s exit from the European Union has caused side-effects on the domestic economy to intensify, Goldman Sachs said on Friday, pointing to dwindling company investment.
Capital expenditure by businesses has been particularly subdued, the bank said, and strong employment figures mask a misallocation of UK company resources to labor rather than capital which will ultimately hurt productivity.
Since the referendum, firms have hired workers rather than invest in capital, Goldman Sachs economists said.
“The misallocation of resources looks to have deepened.”
An increasingly tight labor market – with unemployment at its lowest since early 1975 and pay growing at its joint fastest pace in over a decade – could thus be a sign of strain rather than resilience.
“The balance between weaker demand for workers and a shorter supply of workers bears the hallmarks of a Brexit-induced labor market shock,” the economists said.
Low investment combined with a tight labor market are likely to “accentuate the chronic underperformance of UK productivity,” they added.
Goldman Sachs maintained its view that Britain is likely to leave the EU with a modified version of the current withdrawal agreement, but said that until Brexit is resolved it is hard to see a strong rebound in growth.
Next year could see a pick-up in activity as uncertainty fades, the bank added, but “the persistence of the structural headwinds facing the UK economy is likely to take longer to address.”
(Reporting by Helen Reid; Editing by Thyagaraju Adinarayan)
Source: OANN
Chinese President Xi Jinping speaks at the opening ceremony for the second Belt and Road Forum in Beijing, China April 26, 2019. REUTERS/Florence Lo
April 26, 2019
By Brenda Goh and Yilei Sun
BEIJING (Reuters) – China’s Belt and Road initiative must be green and sustainable, President Xi Jinping said at the opening of a summit on his grand plan on Friday, adding that the massive infrastructure and trade plan should result in “high quality” growth for everyone.
Xi’s plan to rebuild the old Silk Road to connect China with Asia, Europe and beyond with huge spending on infrastructure, has become mired in controversy as some partner nations have bemoaned the high cost of projects.
China has repeatedly said it is not seeking to trap anyone with debt and only has good intentions, and has been looking to use this week’s summit in Beijing to recalibrate the policy and address those concerns.
Xi said in a keynote speech to the summit that environmental protection must underpin the scheme “to protect the common home we live in”.
“We must adhere to the concept of openness, greenness, and cleanliness,” he said.
“Operate in the sun and fight corruption together with zero tolerance,” Xi added.
“Building high-quality, sustainable, risk-resistant, reasonably priced, and inclusive infrastructure will help countries to fully utilize their resource endowments.”
Western governments have tended to view it as a means to spread Chinese influence abroad, saddling poor countries with unsustainable debt.
While most of the Belt and Road projects are continuing as planned, some have been caught up by changes in government in countries such as Malaysia and the Maldives.
Those that have been shelved for financial reasons include a power plant in Pakistan and an airport in Sierra Leone, and Beijing has in recent months had to rebuff critics by saying that not one country has been burdened with so-called “debt traps”.
Since 2017, the finance ministries of 28 countries have called on governments, financial institutions and companies from Belt and Road countries to work together to build a long-term, stable and sustainable financing system to manage risks, China’s finance ministry said in a report released on Thursday.
Debt sustainability has to be taken into account when mobilizing funds, the finance ministry said in the report, which outlined a framework for use in analyzing debt sustainability of low-income Belt and Road nations and managing debt risks.
The framework is based on the IMF/World Bank Debt Sustainability Framework for Low Income Countries while penciling in local conditions and development of partner nations, according to the report.
CHINESE PROMISES
The Belt and Road initiative will also open up development opportunities for China just as China itself is further opening up its markets to the world, Xi said.
“In accordance with the need for further opening up, (we’ll) improve laws and regulations, regulate government behavior at all levels in administrative licensing, market supervision and other areas, and clean up and abolish unreasonable regulations, subsidies and practices that impede fair competition and distort the market,” he said.
Xi promised to significantly shorten the negative list for foreign investments, and allow foreign companies to take a majority stake or set up wholly-owned companies in more sectors.
Tariffs will be lower and non-tariff barriers will be eliminated, Xi added.
China also aims to import more services and goods, and is willing to import competitive agricultural products and services to achieve trade balance.
“China will strengthen macroeconomic policy coordination with major economies in the world and strive to create positive spillover effects to promote a strong, sustainable, balanced and inclusive growth for the world economy,” said Xi.
VISITING LEADERS
Visiting leaders include Russia’s Vladimir Putin, as well as Prime Minister Imran Khan of Pakistan, a close China ally and among the biggest recipients of Belt and Road investment, and Prime Minister Giuseppe Conte of Italy, which recently became the first G7 country to sign on to the initiative.
The United States, which has not joined the Belt and Road, is expected to send only lower-level officials, and nobody from Washington, citing concerns over opaque financing practices, poor governance, and disregard for internationally accepted norms.
“The United States is not sending high level officials from Washington to the Belt and Road Forum,” a spokesman for the U.S. Embassy in Beijing said.
“We continue to have serious concerns that China’s infrastructure diplomacy activities ignore or weaken international standards and best practices related to development, labor protections, and environmental protection.”
(Reporting by Brenda Goh and Yilei Sun; Additional reporting by Tony Munroe, Stella Qiu, Ryan Woo, Cate Cadell and Tom Daly; Writing by Ben Blanchard; Editing by Simon Cameron-Moore)
Source: OANN
FILE PHOTO: An aerial photo looking north shows shipping containers at the Port of Seattle and the Elliott Bay waterfront in Seattle, Washington, U.S. March 21, 2019. REUTERS/Lindsey Wasson
April 26, 2019
By Lucia Mutikani
WASHINGTON (Reuters) – The U.S. economy likely maintained a moderate pace of growth in the first quarter, which could further dispel earlier fears of a recession even though activity was driven by temporary factors.
The Commerce Department’s gross domestic product (GDP) report to be published on Friday at 8:30 a.m. EDT (1230 GMT) is expected to sketch a picture of an economy growing close to potential, mostly reflecting the impact of an ebbing boost from a giant fiscal stimulus and past interest rate increases.
Gross domestic product probably increased at a 2.0 percent annualized rate in the first quarter as a burst in exports, strong inventory stockpiling and government investment in public construction projects offset slowdowns in consumer and business spending, according to a Reuters survey of economists.
With global growth still sluggish, the surge in exports is likely to reverse and the inventory build will probably need to be worked off, which could curtail production at factories. That could restrain growth in the second quarter.
The economy grew at a 2.2 percent pace in the October-December period. Growth has stepped down from a peak 4.2 percent pace in the second quarter of 2018, when the White House’s $1.5 trillion tax cut package jolted consumer spending.
Economists estimate the speed at which the economy can grow over a long period without igniting inflation at between 1.7 and 2.0 percent. The economy will mark 10 years of expansion in July, the longest on record.
“The economy remains solid, but we anticipate a slowing in the pace of growth in the medium term as the tailwinds from fiscal stimulus fade and the headwinds of tighter monetary policy take hold,” said Sam Bullard, a senior economist at Wells Fargo Securities in Charlotte, North Carolina.
The economy stumbled at the turn of the year, with a batch of weak economic reports suggesting first-quarter GDP growth as low as a 0.2 percent rate. The soft data stream stoked fears of a recession that were also exacerbated by a brief inversion of the U.S. Treasury yield curve.
Some of the weak data, especially retail sales, were blamed on a 35-day partial shutdown of the federal government, which hurt confidence and delayed processing of tax refunds. Since the shutdown ended on Jan. 25, economic data have mostly perked up, leading to a sharp upgrading of first-quarter GDP estimates.
“Slower, but moderate economic growth is continuing and we might see some slight acceleration as we head into second quarter,” said Sung Won Sohn, an economics professor at Loyola Marymount University in Los Angeles.
WEAK DOMESTIC DEMAND
The improvement in the economy’s fortunes has been mirrored by strong corporate profits for the quarter.
Some economists caution that growth could surprise on the downside because of a seasonal quirk. The so-called residual seasonality has tended to understate economic growth in the first quarter. Though the government said last year it had addressed the methodology problem, economists believe residual seasonality has not been entirely eliminated from the data.
A surge in exports and weak imports are expected to have sharply narrowed the trade deficit in the first quarter. Trade is believed to have added more than one percentage point to GDP after being neutral in the fourth quarter.
Trade tensions between the United States and China have caused wild swings in the trade deficit, with exporters and importers trying to stay ahead of the tariff fight between the two economic giants.
The trade standoff has also had an impact on inventories, which are expected to have increased in the first quarter at their strongest pace since 2015. Part of the inventory build is related to weak demand, especially in the automotive sector.
Inventories are expected to have contributed a full percentage point to first-quarter GDP after adding one-tenth of a percentage point in the October-December period.
Excluding trade and inventories, the economy is expected to have expanded at a roughly 1.6 percent rate in the first quarter. Economists said Federal Reserve officials were likely to focus on this growth measure.
The Fed recently suspended its three-year monetary policy tightening campaign, dropping forecasts for any interest rate hikes this year. The U.S. central bank increased borrowing costs four times in 2018.
“The composition of the data will not look favorably on domestic economic activity, nor provide a positive forward look at current quarter activity,” said Joe Brusuelas, chief economist at RSM in New York. “Policymakers will likely look past this growth report when formulating rate policy.”
Growth in consumer spending, which accounts for more than two-thirds of U.S. economic activity, is expected to have slowed significantly from the fourth quarter’s 2.5 percent rate. Economists said the government shutdown was the main factor behind the anticipated deceleration in spending.
A moderation is also expected in businesses spending on equipment because of the delayed impact of sharp drops in oil prices toward the end of 2018 and fading depreciation provisions in the 2018 tax bill. Supply chain disruptions caused by Washington’s trade war with Beijing were also seen crimping business investment.
(Reporting by Lucia Mutikani; Editing by Andrea Ricci)
Source: OANN
FILE PHOTO: A HNA Group logo is seen on the building of HNA Plaza in Beijing, China February 9, 2018. REUTERS/Jason Lee
April 26, 2019
By Jennifer Hughes and Julie Zhu
HONG KONG (Reuters) – Shareholders summoned by Hong Kong Airlines this month for a meeting were greeted with some shocking news: the airline needed at least HK$2 billion in fresh funds or it would lose its operating license.
The carrier had lost HK$3 billion ($382.54 million) in 2018, they were told, and an infusion was crucial, according to people present.
Dialed in, but silent for the hour-long meeting on April 1, were executives for Hainan-based HNA Group,, which holds 29 percent of the airline’s shares.
Investors were blunt about HNA’s role in the company’s troubles, according to people at the meeting – including accusations that it was siphoning off cash, which the conglomerate denies.
“There’s no point raising fresh capital if we cannot solve the problem of (a) major shareholder pumping out HKA’s assets,” said Zhong Guosong, who holds 27 percent of the shares and is vying for chairmanship of the company.
Another shareholder echoed his views: “This is Hong Kong, not Hainan.”
In the last week, drama from the call has spilled into the open as HNA and a rival group battled for control of Hong Kong Airlines’ chairmanship. The airline declined to comment on shareholders’ activities and said its operations “remain normal.”
The infighting illustrates the convoluted nature of HNA’s holdings around the world, which range from real estate to banks and are often divided among opaque, related entities.
On paper, HNA gave up control of Hong Kong Airlines two years ago just as it began selling off assets collected in a $50 billion worldwide acquisition spree.
But the carrier has close ties with several HNA affiliates.
“HNA’s shareholding structure and how they structure investments has always been very complicated, and the HKA case isn’t any different,” said David Yu, adjunct professor of finance at New York University, Shanghai. “The issue now is that there is some distress at the parent group, and this is obviously having implications on the underlying companies, including HKA.”
HNA TANGLE
Since Beijing in 2017 began cracking down on Chinese conglomerates’ rapid debt-fuelled global expansions, HNA has sold about $26 billion in assets, according to Dealogic data and Reuters calculations.
Disposals include control of the Radisson hotel group; a quarter stake in Hilton Hotels; prime property in New York, Sydney, Shanghai, San Francisco and Hong Kong; regional Chinese airlines; a stake in aircraft lessor Avolon; and half of its stake in Deutsche Bank.
But the prices HNA has sought and the complex structures, loans and other business links that bind its holdings have made unwinding its investments difficult.
HNA’s wider Hong Kong interests are a case in point. This week, HNA-controlled CWT International said lenders had seized assets, including U.S. property and its Singapore-based commodity trading and logistics unit, because it failed to repay a HK$1.4 billion ($178 million) loan.
HNA said that it was monitoring the situation, but that it was a matter for CWT and its creditors. Yet HNA units own 51 percent of CWT’s shares, and each of CWT’s executive directors has ties to other HNA businesses. CWT’s co-chairman, Mung Kin Keung, is a shareholder in Hong Kong Airlines.
HNA’s involvement with the airline is just as complicated. The conglomerate took control of CR Airways in 2006 and renamed it Hong Kong Airlines. In July 2017 it cut its stake, according to filings, by selling 34 percent to Chinese private equity group Frontier Investment Partners.
According to Hong Kong Airlines’ 2017 accounts, seen by Reuters, the airline held shares in four unlisted HNA affiliates, worth $367 million at the end of 2017, and had loaned $300 million to two other HNA firms.
That year, the airline’s trade receivables – money owed to it but not collected – jumped 50 percent even as revenue rose only 11 percent. Of those payments due, the amount HNA companies owed the airline more than doubled to HK$1.3 billion, or 73 percent of receivables.
Zhong is closely linked with HNA as well, having been a director of the airline for almost four years until August 2018. Since 2017, he has also been chairman of Hong Kong Express, Hong Kong Airlines’ low-cost sister, which HNA recently agreed to sell to Cathay Pacific for HK$4.93 billion.
Cathay’s announcement of the deal contained a warning that an HK Express shareholder planned to contest it. That shareholder is Zhong, according to two sources with direct knowledge of the issue. They declined to be identified because they were not authorized to speak to the media.
In a further sign that the relationship between Zhong and HNA had soured, court papers show that HNA in December sued the company through which Zhong holds his 27 percent stake in the airline, seeking repayment of a HK$854 million debt from 2010.
A representative for Zhong did not provide comment.
CONTROL DISPUTES
Since the April 1 meeting, Frontier has aligned itself with Zhong, working to appoint him chairman of the airline as part of efforts to seize control and investigate its financial ties with HNA.
Late last week they won an injunction that blocked directors and executives from removing or destroying the airline’s documents.
That followed a week in which both Zhong and airline executive Hou Wei – still listed on its website as chairman – claimed control and fought over who had access to the company’s headquarters.
Adding to the confusion, a group called Grand City Investment Capital Limited this week said it owned the Frontier stake after a transfer dated April 11.
A spokesman for Grand City declined to discuss his company’s ownership. Frontier disputes Grand City’s claim to the stake.
Frontier and Zhong have also accused HNA of “embezzlement of HKA assets and serious financial misappropriation by HNA Group parties” – accusations that HNA has denied.
They and other shareholders are still demanding access to the airline’s 2018 accounts and details of how it lost so much money before they address its HK$2 billion capital shortfall.
Amid the court orders and competing statements uncertainty remains over who is in charge – although both sides have gone to lengths to ensure the airline keeps operating normally.
“There are so many moving parts that corporate control is under dispute because the changes are happening too rapidly for the company to organize coherently,” said Andrew Collier, managing director of Orient Capital Research, which focuses on China. He described HNA as “a poster child for overexpansion of China’s worst conglomerates.”
He added: “Because there is always a lack of transparency at HNA, this makes it twice as hard to figure out what the nature of the dispute is.”
(Reporting by Jennifer Hughes, Julie Zhu, Kane Wu and Alun John; Additional reporting by Shellin Li and Jamie Freed; Editing by Gerry Doyle)
Source: OANN
FILE PHOTO: Bank of Canada Governor Stephen Poloz speaks during a news conference in Ottawa, Ontario, Canada, January 9, 2019. REUTERS/Chris Wattie
April 26, 2019
OTTAWA (Reuters) – The Bank of Canada could start hiking rates again “sometime down the road,” although such a move will depend on whether upcoming economic data backs up its assessment that a current slowdown is only a temporary detour, the central bank’s head said on Thursday.
The Bank of Canada has raised interest rates five times since July 2017, although it has stayed on the sidelines in recent decisions as global trade concerns, the slumping oil sector and a weaker housing sector have weighed on the Canadian economy.
The bank again held rates steady on Wednesday but took a more dovish stance than in recent releases, removing wording around the need for “future hikes,” while lowering its growth forecasts for 2019.
But in a televised interview with Maclean’s magazine on Thursday, Governor Stephen Poloz said the central bank believed the slowdown would be temporary, lasting “a couple of quarters,” and implied the worst was already over.
“What we have to do then is wait and see if the data proves to us that we were right about that,” he said. “Assuming we are, then sometime down the road we’ll be able to say: ‘OK, now it’s time to start normalizing again,’ but that remains to be seen.”
He repeated that any move would be data-dependent.
The Bank of Canada estimates its neutral range is between 2.25 and 3.25 percent. The overnight interest rate is currently at 1.75 percent.
Poloz also said there was nothing to signal that Canada was on the verge of recession, but when asked if U.S. President Donald Trump’s protectionist trade policies could provoke a new global recession, he said: “Certainly.”
“When you think about the gains in income and living standards that have been created by trade liberalization in a postwar period, to erase even a portion of those would be to risk causing a recession globally,” Poloz said.
(Reporting by Julie Gordon and David Ljunggren in Ottawa; Editing by Peter Cooney)
Source: OANN
FILE PHOTO: Employees of Toyota Motor Corp. work on the assembly line of Mirai fuel cell vehicle (FCV) at the company’s Motomachi plant in Toyota, Aichi prefecture, Japan May 17, 2018. REUTERS/Issei Kato
April 26, 2019
By Stanley White
TOKYO (Reuters) – Japan’s factory output fell in March for the first time in two months and inventories rose at the fastest pace in a year as the U.S.-Sino trade war dents the country’s manufacturing sector.
Separate data showed retail sales picked up in March and labor demand remains the strongest in decades, but these positive figures are unlikely to ease policymakers’ concerns about a slowdown in global trade flows.
Factory output fell 0.9 percent in March, data by the Ministry of Economy, Trade and Industry (METI) showed, more than a median estimate for a 0.1 percent decline in a Reuters poll of economists. That followed a 0.7 percent increase in February.
The mounting pressure on Japan’s economy from weak external demand has hurt exports and threatens corporate profits, which could weigh on capital expenditure and make it more difficult to keep growth on track, analysts say.
Industrial output fell in March due to a 3.4 percent decline in car output and a 6.7 percent decline in the production of machines used to make semiconductors and flat-panel displays, the data showed.
In another source of concern, inventories rose 1.6 percent in March, the fastest increase in a year, due to higher inventories of metals, plastics, and heavy equipment.
The rise in inventories suggests makers of these goods could curb output in the future.
Manufacturers surveyed by the ministry expect production to rise 2.7 percent in April and 3.6 percent in May, but METI changed its assessment of output to say it is weakening recently.
Retail sales – a key gauge of private consumption that makes up about 60 percent of the economy – rose 1.0 percent in March from a year earlier, more than a 0.8 percent annual gain expected by economists.
Friday’s batch of data comes a day after the Bank of Japan said it would keep interest rates low for at least another year, in a move to dispel uncertainty over its commitment to support the economy and drive inflation.
Japan’s policymakers are nervously monitoring developments overseas but have few policy options if weakness in the global economy continues to damage the country’s outlook, some economists say.
The Sino-U.S. trade war has also had a negative effect on domestic growth, as a slowing Chinese economy curbed demand for mobile phone parts and chip-making equipment from Japan.
Uncertainty over Britain’s exit from the European Union and jittery global financial markets have added to a growing list of worries for policymakers.
Additional data released on Friday showed Japan’s jobless rate edged up to 2.5 percent in March from 2.3 percent previously, and job availability held steady at 1.63 per applicant, hovering at a 44-year high.
Tokyo’s core consumer price index (CPI), which includes oil products but excludes fresh food prices, rose an annual 1.3 percent in April from a year earlier, more than the median estimate for a 1.1 percent annual increase.
(Editing by Jacqueline Wong)
Source: OANN
FILE PHOTO: An investor looks at an electronic board showing stock information at a brokerage house in Shanghai, China July 6, 2018. REUTERS/Aly Song
April 26, 2019
By Wayne Cole
SYDNEY (Reuters) – Asian shares got off to a subdued start on Friday, while the dollar held near two-year highs against the euro on speculation that data later in the day will show the U.S. economy outperforming the rest of the developed world.
The euro was off 1 percent for the week at $1.1133 as euro zone economic figures continued to disappoint.
Against a basket of currencies, the dollar was 0.8 percent firmer for the week so far at 98.128 having touched its highest since May 2017.
The yen proved an outlier by gaining as speculators cut short positions ahead of holidays which will see most Japanese markets shut for six whole trading days.
The exceptionally long break has investors concerned there could be another “flash crash” like the one in early January that drove the yen massively higher in a matter of minutes.
The dollar was down at 111.51 yen, after shedding 0.5 percent overnight, but was buoyed elsewhere by solid data on U.S. capital goods orders.
The rise in the yen and some mixed Japanese economic data nudged the Nikkei down 0.7 percent. MSCI’s broadest index of Asia-Pacific shares outside Japan eased 0.1 percent.
The mood might lighten later on Thursday should data on U.S. gross domestic product (GDP) prove as upbeat as some now expect.
A string of solid numbers has led analysts to revise up their forecasts for growth and the latest median polled by Reuters is for an annualized 2.0 percent.
The closely-watched estimate of GDP from the Atlanta Federal Reserve is projecting an outcome of 2.7 percent, a huge turnaround from a few weeks ago when it was down at 0.5 percent.
Yet the rebound has not been mirrored in inflation which remains subdued across much of the developed world, prompting a host of central banks to turn dovish.
Just this week central banks in Sweden and Canada have backed off plans to tighten, while the Bank of Japan tried to dispel doubts about its accommodative stance by pledging to keep rates at super-low levels for at least one more year.
European Central Bank Vice-President Luis de Guindos on Thursday opened the door to more money-printing if needed to boost inflation in the euro zone.
Rate cuts look much likelier in Australia and New Zealand after recent disappointingly weak inflation reports.
The Federal Reserve holds a policy meeting next week and is expected to reaffirm its patient stance. A Reuters poll of analysts out Thursday found most believed the Fed was done with tightening altogether.
MIXED EARNINGS
Wall Street had ended Thursday mixed after a raft of earnings reports. The Dow fell 0.51 percent, while the S&P 500 lost 0.04 percent and the Nasdaq added 0.21 percent.
Amazon.com Inc shares firmed after the market closed as the company reported a first-quarter profit that topped estimates.
Shares of Facebook Inc and Microsoft Corp both jumped after they reported better-than-expected results. Intel Corp fell sharply after the chip maker forecast current-quarter revenue below estimates.
In commodity markets, spot gold was idling at $1,278.26 per ounce.
Brent crude ran into profit-taking after hitting $75 per barrel on Thursday for the first time in nearly six months following the suspension of some Russian crude exports to Europe.
Brent crude futures lost 20 cents to $74.15 a barrel, while U.S. crude was last down 24 cents at $64.97 a barrel.
(Editing by Kim Coghill)
Source: OANN
FILE PHOTO: One hundred dollar notes are seen in this photo illustration at a bank in Seoul January 9, 2013. REUTERS/Lee Jae-Won
April 26, 2019
By Shinichi Saoshiro
TOKYO (Reuters) – The dollar hovered near a two-year high against its peers on Friday, supported by strong U.S. capital goods orders and awaiting first-quarter GDP data which could further reinforce the greenback’s bullish standing.
The dollar index versus a basket of six major currencies stood at 98.128 after advancing to 98.322 on Thursday, its highest since May 2017.
Data on Thursday showed new orders for U.S.-made capital goods increased by the most in eight months in March. That follows other recent U.S. data that show strength in retail sales and exports which have eased concerns of the world’s biggest economy sharply slowing.
The markets are watching first-quarter U.S. gross domestic product data due later on Friday (1230 GMT) for signs of whether the United States remains stronger than other leading economies.
According to a Reuters survey of economists, GDP probably increased at a 2.0 percent annualized rate in the quarter. The economy grew at a 2.2 percent pace in the October-December period.
“We expect the GDP data to underline steady economic recovery. Differences in economic fundamentals is a key driver for currencies now that the Fed – and more recently the Swedish and Japanese central banks – have adopted a dovish stance,” said Shin Kadota, senior strategist at Barclays in Tokyo.
Sweden’s central bank said on Thursday that recent weak inflationary pressures meant an interest rate hike would come slightly later than it had planned, sending the Swedish crown to a 17-year low.
In a move to dispel any doubt over its commitment to ultra-loose policies, the Bank of Japan on Thursday put a time frame on its forward guidance for the first time by telling investors that it would keep interest rates at super-low levels for at least one more year.
The euro was a touch higher at $1.1139 but within reach of $1.1117, its lowest level since June 2017 plumbed on Thursday.
The single currency has shed nearly 1 percent against the dollar this week, weighed by worries about the health of the euro zone economy.
The dollar was down 0.1 percent at 111.52 yen after shedding 0.5 percent overnight.
The Australian dollar was steady at $0.7018 after ending Thursday little changed.
The Aussie has lost roughly 2 percent this week, during which it sank to a near four-month trough as soft domestic inflation data boosted the prospect of a rate cut by the Reserve Bank of Australia.
(Reporting by Shinichi Saoshiro; Editing by Kim Coghill)
Source: OANN
FILE PHOTO: Shipping containers are seen at a port in Shanghai, China July 10, 2018. REUTERS/Aly Song
April 26, 2019
By Shrutee Sarkar
BENGALURU (Reuters) – Major central banks are done tightening policy, according to a majority of economists polled by Reuters, with the growth outlook wilting across developed and emerging economies along with scant prospects for a surge in inflation.
While that is largely reflected in bond markets, with major sovereign bond yields falling this year, global equities have rallied, and the S&P 500 index is near record highs after its best start this year in more than three decades.
One striking conclusion from the latest surveys of over 500 economists from around the world, covering more than 40 economies, was not just a toning down of the economic outlook, but a clear shift away from long-held optimistic views.
Although economists who answered an additional question were split on whether a deeper global economic downturn was more likely than a synchronized rebound, this year’s growth outlook was downgraded or left unchanged for 38 of the countries polled.
“The recent weakness of global growth will persist for much longer than is commonly assumed. A dovish turn by central banks and stimulus in China will not be enough to boost world GDP growth from its current slow pace,” noted Jennifer McKeown, head of global economics at Capital Economics.
“Disappointing economic performance will leave inflation very low and cause monetary policy to be loosened almost across the board. But we do not see this prompting any meaningful recovery until 2021.”
Global growth was forecast to average 3.4 percent this year, the lowest since polling began for 2019 almost two years ago. The most optimistic prediction was also more modest than at the start of the year.
The 2020 forecast held at 3.4 percent, the joint lowest since Reuters began polling on it.
However, the 2019 consensus was a touch higher than the International Monetary Fund’s latest view of 3.3 percent.
The risk of an escalation of the U.S.-China trade war and prospects of Britain exiting the European Union without a deal – two of the more prominent threats that initially drove the current slowdown – have eased.
Yet most major central banks have been hinting at a move away from hiking rates, and nearly 60 percent of more than 200 economists who answered a separate question said they were confident the global tightening cycle was over.
On Thursday, the Bank of Japan dispelled any doubt about its commitment to ultra-loose policies and Sweden’s central bank said a forecast interest rate hike would come slightly later than it had planned.
The U.S. Federal Reserve is done raising rates until at least the end of next year, with about a third of economists polled predicting at least one rate cut by then.
With euro zone economic growth and inflation prospects dimming, the European Central Bank may have missed its opportunity to raise rates before the next downturn.
“The ECB blames the euro zone weakness on a slowdown in China and concerns about the trade war. The Fed, meanwhile, pointed the finger to Europe and China as the main drags on U.S. growth. But with everyone looking across the border for a scapegoat, someone must inevitably be watching the wrong space,” noted Elwin de Groot, head of macro strategy at Rabobank.
“One could speculate that the central banks are pointing the finger just because they have little confidence that their actions are effective.”
Growth forecasts for developed economies – including Germany, France, Italy, Spain, Britain, Japan, Australia, the United States and Canada – for this year and next weakened.
It was not very different for emerging market economies, despite efforts from policymakers to boost sluggish growth.
Economic growth in major economies from Asia to Africa to Latin America was predicted to lose more momentum.
Although India is still expected to be the fastest-growing major economy, growth predictions were lowered compared with the previous poll.
“Looser fiscal and monetary policy should help to cushion the impact of weaker export demand on growth in emerging Asia. Nevertheless, regional growth this year is still likely to slow to its weakest rate in a decade,” added Capital Economics’ McKeown.
(Analysis and additional reporting by Indradip Ghosh in Bengaluru; Polling and reporting by the Reuters Polls team in Bengaluru and bureaus in Shanghai, Tokyo, London, Milan, Paris, Oslo, Istanbul, Johannesburg, Toronto, Brasilia, Mexico City, Lima, Buenos Aires, Bogota, Caracas and Santiago; Editing by Ross Finley and Hugh Lawson)
Source: OANN
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