Wall Street dips after worldwide slide; gold nears record

NEW YORK (AP) — Wall Street is slipping on Friday after tensions ramped higher between the world’s two largest economies, though the market pared its losses as the morning progressed.

The S&P 500 was 0.4% lower in midday trading, which would wipe out the last of its gains for the week. The Dow Jones Industrial Average was down 118 points, or 0.4%, at 26,534, as of 11:30 a.m. Eastern time, and the Nasdaq composite was down 0.5%. Each of the indexes had been down more sharply in the morning, with the Nasdaq off by as much as 2.3%.

Stocks also sank across Asian and European markets, and all the uncertainty helped gold top $1,900 per ounce, close to its record high. Treasury yields were holding relatively steady, but they remain close to their lowest levels since April.

The coronavirus pandemic remains the most dominant force in markets, with its potential to destroy lives and economies. But other risks are also bubbling up, headlined by Friday’s worsening relations between the United States and China.

Investors are also concerned about a recent uptick in layoffs as spiking coronavirus counts across the Sun Belt lead more businesses to shut down. Extra benefits for those out-of-work Americans from the federal government are set to expire soon, and worries are rising about whether Congress can reach a deal on more aid for the economy. Nearly half of Americans whose families experienced a layoff during the pandemic believe those jobs are lost forever, according to a poll from The Associated Press-NORC Center for Public Affairs Research.

Despite all those challenges, the S&P 500 remains only about 5% below its record set in February, after roaring back from an earlier, nearly 34% plummet. This week’s stall for the S&P 500 follows three straight weekly gains driven by hopes that the economy was regaining its footing. Underlying it all is massive aid for the economy promised by the Federal Reserve, including record-low interest rates.

“The Fed is the big story behind this market, that and the liquidity it’s provided,” said Teresa Jacobsen, managing director at UBS Private Wealth Management. “It gives a great deal of support for upside in the market. But, there are momentary blips when we pause and give a little back.”

On Friday, the blip came after China’s Foreign Ministry ordered the closure of the U.S. consulate in the western city of Chengdu. It echoes a similar move earlier this week by the United States to close the Chinese consulate in Houston.

Such moves have investors on edge because of how viciously markets swung in prior years when President Donald Trump was pressing his trade war with China, before they agreed to a temporary truce early this year.

“Alongside the eviction of the Houston Chinese Consulate, the risk of the U.S.-China conflict escalating into a ‘Cold War’ is worrying,” said Hayaki Narita of Mizuho Bank.

A speech Thursday by U.S. Secretary of State Mike Pompeo saying that “securing our freedom from the Chinese Communist Party is the mission of our time” adds to the rhetoric certain to incense Beijing, making it still more difficult for either side to back down, he said.

Technology stocks have also been in the spotlight, after a sharp slide for them on Thursday helped drag the S&P 500 to its worst loss in nearly four weeks.

Microsoft, Apple, Amazon and other giants have cruised through much of the pandemic on expectations that they can keep growing despite all the challenges for the economy. But critics say enthusiasm for them was overdone, with prices too high even after accounting for the huge profits that they can produce

Apple slipped 0.6%, Microsoft dropped 0.2%, and tech stocks as a group accounted for roughly half of the S&P 500’s loss. Earlier in the morning, Apple had been down 4%, and tech stocks were responsible for two thirds of the S&P 500′s drop.

Intel sank 15.3% after it delayed the release of its new 7 nanometer chip, and it was the biggest weight on the market Friday morning.

Earlier in the day, stocks in Shanghai sank 3.9%, while the Hang Seng in Hong Kong lost 2.2%. Elsewhere in Asia, South Korea’s Kospi fell 0.7%.

In Europe, France’s CAC 40 fell 1.5%, and Germany’s DAX lost 1.9%. The FTSE 100 in London dropped 1.3%.

The yield on the 10-year Treasury held steady at 0.58%. It tends to move with investors’ expectations for the economy and inflation.

Gold rose 0.5% to $1,900.30 per ounce, crossing above that threshold for the first time in nearly nine years. Benchmark U.S. crude slipped 14 cents to $40.93 per barrel. Brent crude, the international standard, lost 10 cents to $43.21 per barrel.

AP Business Writer Elaine Kurtenbach contributed.

The Associated Press

Wall Street hits the brakes after strong, weekslong rally

Wall Street hit the brakes Tuesday, a day after its remarkable, weekslong rally brought the S&P 500 back to positive for the year and the Nasdaq to a record high.

The S&P 500 was down 0.9% in midday trading, after earlier being down as much as 1.2%. The Dow Jones Industrial Average was down 283 points, or 1%, to 27,281, and the Nasdaq composite was up 0.1%.

Skeptics have been saying for weeks that Wall Street’s huge rally, which reached 44.5% between late March and Monday, may have been overdone. The economy has given glimmers of hope that the recession could end relatively quickly as governments lift their lockdown orders, but the stock market has been soaring much more quickly than the economy and corporate profits are expected to.

“We’re seeing a little bit of a pause and a little bit of a reversal,” said Bill Northey, senior investment director at U.S. Bank Wealth Management. “Some of that is an appropriate reconciliation with the pace for the restart.”

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In another sign of increased caution, the yield on the 10-year Treasury yield fell to 0.81% from 0.88% late Monday. It tends to move with investors’ expectations of the economy and inflation, though it’s still well above the 0.64% level where it started last week.

European stock markets were also lower. Germany’s DAX lost 1.4% after the country reported that its exports fell by a quarter in April. France’s CAC 40 slid 1.5%, and the FTSE 100 in London dropped 2.1%.

Asian markets were mixed. Japan’s Nikkei 225 slipped 0.4% after the government reported that wages fell in April as the country widened precautions to fight the coronavirus pandemic, which caused some businesses to close or limit their operations. But the Hang Seng in Hong Kong rose 1.1% and South Korea’s Kospi added 0.2%.

Wall Street has been generally rising since late March, at first on relief following emergency rescues by the Federal Reserve and Congress. More recently, investors have begun piling into companies that would benefit most from a reopening economy that’s growing again.

Banks, airlines, energy companies and others whose profits need the economy to get closer to normal have been leading the way in recent weeks. They got a big boost on Friday when the government said that employers surprisingly added jobs to their payrolls last month, a sign that the economy could pull out of the recession that began in February relatively quickly.

But such companies went into reverse on Tuesday. American Airlines and Alaska Air Group both fell more than 9% for some of the sharpest losses in the S&P 500, a day after they were near the top of the leaderboard.

Stocks in the energy, financial and industrial sectors fell more than the rest of the market, also mirroring their performance from a day before. Technology and communication services companies rose.

Smaller stocks also pulled back following a furious run. The Russell 2000 index of small-cap stocks fell 2.1%, after a 10.2% rally in a little more than a week.

Skeptics of the rally have been saying that many risks still lurk ahead on the long road to a full recovery. Chief among them is the possibility of a second wave of coronavirus infections, which could lead states across the country and nations around the world to tighten up on lockdown measures that could again choke the economy. Plus, one month of improving jobs data does not necessarily mean a trend.

The next big milestone for markets is coming Wednesday, when the Federal Reserve announces its decision on monetary policy following a two-day meeting. The Fed’s promise of immense, unprecedented amounts of aid helped stocks begin their rally, and investors want to see what their reaction will be to the recent upturn in jobs numbers.

___

AP Business Writer Yuri Kageyama contributed.

The Associated Press

US service sectors slows in March

WASHINGTON (AP) — Growth in the U.S. service sector slowed in March with a much bigger decline expected in coming months from all the shutdowns and job layoffs that have occurred because of efforts to contain the coronavirus.

The Institute for Supply Management said Friday that its service-sector index slowed to 52.5 in March from a reading of 57.3 in February.

Any reading above 50 indicates the service sector, where most Americans work, is expanding. But with record layoffs over the past two weeks, economists believe services will fall into a contraction in April.

The March report said service industries were already showing signs of the impact of the virus. Reports from the health care sector found significant shortages of personal protective equipment, test swabs and other basic medical supplies.

“Extreme sourcing measures are required to procure necessary supplies for basic operations,” the ISM report said, quoting respondents to its survey.

Anthony Nieves, chair of the survey committee for the ISM services report, said one factor that kept the index from sliding further in March was strength being seen in the government and health care parts of the index.

ISM reported on Wednesday that its manufacturing index did fall into contractionary territory in March with a reading of 49.1. Private economists said they were looking for the services index to slide into contraction territory probably with the April report.

“Conditions in both non-manufacturing and manufacturing are expected to weaken over coming months in response to virus-related shutdowns, supply chain disruptions as well as weak demand,” said Rubeela Farooqi, chief U.S. economist for High Frequency Economics.

Associated Press

Asian shares track Wall Street losses on weak US factory data

BANGKOK – Asian shares are lower after U.S. stocks posted their worst loss in five weeks on Wednesday after a surprisingly limp report on the nation’s manufacturing that stirred worries about the economic outlook.

Japan’s Nikkei 225 index shed 0.6% to 21,758.02 while the Hang Seng in Hong Kong lost 0.4% to 25,980.37. Sydney’s S&P ASX 200 gave up 1.3% to 6,658.20.

The Kospi in South Korea sank 1.4%, to 2,044.01 after North Korea fired a ballistic missile toward the sea Wednesday, South Korea’s military said, in a display of its expanding military capabilities hours after saying it would resume nuclear diplomacy with the United States this weekend.

The report showed that manufacturing weakened in September for the second straight month as President Donald Trump’s trade war with China dragged on confidence and factory activity. It dashed economists’ expectations that August’s contraction had been an aberration, and stocks and bond yields immediately reversed course to drop sharply lower following the report.

The S&P 500 slumped 1.2% to 2,940.25 for its sharpest loss since August. The Dow Jones Industrial Average fell 1.3% to 26,573.04, and the Nasdaq composite dropped 1.1% to 7,908.68.

Small-company stocks fell more than the rest of the market. The Russell 2000 index lost 2%, to 1,493.43.


In the bond market, the yield on the 10-year Treasury dropped to 1.66% from 1.74% before the report’s release, which is a big move. Three stocks fell for every one that rose on the New York Stock Exchange, and gold climbed as investors sought safer ground.

Economists had been expecting growth to resume in September, and they had forecast a reading of 50.4, according to FactSet.

Manufacturers say global trade remains the most significant issue, and all the uncertainty caused by the trade war is hurting exporters in particular. Businesses are unsure what the rules of international trade will be, and it’s causing CEOs to pull back on their spending plans. In a separate report, the World Trade Organization said global trade growth will slow to its weakest pace this year since 2009.

“The disappointing data is only fanning long-standing fears of slowing global growth,” said Alec Young, managing director of Global Markets Research at FTSE Russell.

Manufacturing is a relatively small part of the economy, but investors worry about whether it will spill into other areas. That puts an even bigger spotlight on Friday’s jobs report, which economists expect to show an acceleration in hiring.


Household spending has been a pillar for the economy, particularly when manufacturing and business spending are under threat, and a strong job market helps households keep spending. But uncertainty is looming even there.

A report last week showed that consumer spending rose less than economists expected in August. Two reports on consumer confidence last week gave a mixed picture, with one falling below expectations and the other rising above.

Last month’s jobs report was also surprisingly weak, but that may have been a one-off, some analysts say.

“The month of August over the last 10 years has been the wonkiest jobs report of the year,” said Philip Orlando, chief equity market strategist at Federated Investors. It often falls below expectations, only for the numbers to be revised higher in subsequent months, he said.

“There’s no question the data has been softer, slower, weaker, pick your adjective for today versus a year ago,” Orlando said about the broad economy. “But I do think we’re going to get through this.”

The Fed and other central banks around the world have been aggressive in keeping rates low to shield against the effects of the trade war and slowing global economic growth. The Fed lowered short-term rates twice this summer, down to a range of 1.75% to 2%, the first cuts since the financial crisis was toppling economies around the world in 2008.

Benchmark crude oil rebounded, gaining 56 cents to $54.18 per barrel in electronic trading on the New York Mercantile Exchange. It fell 45 cents to $53.62 a barrel on Tuesday. Brent crude oil, the international standard, picked up 41 cents to $59.30 per barrel.

The dollar rose to 107.87 Japanese yen from 107.73 yen on Tuesday. The euro strengthened to $1.0937 from $1.0934. /gsg

source: business.inquirer.net

Indonesia launches online fintech monitoring platform

JAKARTA — The Financial Services Authority (OJK) of Indonesia has launched the Electronic Gateway for Digital Finance Information Systems (Gesit), which is said to be a more efficient way to monitor the development of financial technology (fintech) amid the industry’s rapid growth in the country.

“This platform is in the early stages. Further developments are on their way,” OJK deputy chairman Nurhaida said in Jakarta on Tuesday.

Gesit is an online registration system for fintech startups wanting to grow its business through the OJK Infinity, an innovation hub, business incubator and education center for fintech established last year.

Through the newly launched platform, fintech industry stakeholders could also get access to the latest news on fintech issues and make consultation appointments with the OJK Infinity team.


The OJK Infinity has received 121 new fintech registrations, of which 48 fintech startups have been verified and ready to start their businesses.

The authority is preparing several policies to spur Indonesia’s fintech development, OJK chairman Wimboh Santoso said.


“We will launch them before year-end,” he added, without elaborating on the proposed policies further.

The OJK is also assessing possible partnerships with other Southeast Asian countries to realize such a vision, Wimboh said.

The OJK, which is responsible for regulating peer-to-peer fintech lending, has issued operational licenses to 127 fintech firms as of July. In the month alone, fintech lending transaction value stood at Rp 49.7 trillion (US$3.5 billion), an increase from Rp 44.8 trillion recorded in the previous month, its data shows.

source: technology.inquirer.net

In escalating trade war, US consumers may see higher prices

WASHINGTON  — The United States and China on Sunday put in place their latest tariff increases on each other’s goods, potentially raising prices Americans pay for some clothes, shoes, sporting goods and other consumer items before the holiday shopping season.

President Donald Trump said U.S.-China trade talks were still on for September. “We’ll see what happens,” he told reporters as he returned to the White House from the Camp David presidential retreat. “But we can’t allow China to rip us off anymore as a country.”

The 15% U.S. taxes apply to about $112 billion of Chinese imports. All told, more than two-thirds of the consumer goods the United States imports from China now face higher taxes. The administration had largely avoided hitting consumer items in its earlier rounds of tariff increases.

But with prices of many retail goods now likely to rise, the Trump administration’s move threatens the U.S. economy’s main driver: consumer spending. As businesses pull back on investment spending and exports slow in the face of weak global growth, American shoppers have been a key bright spot for the economy.

“We have got a great economy,” said Sen. Pat Toomey, R-Pa. “But I do think that the uncertainty caused by volatile tariff situation and this developing trade war could jeopardize that strength, and that growth, and that is, I think, that’s a legitimate concern,” he told ABC’s “This Week.”


As a result of Trump’s higher tariffs, many U.S. companies have warned that they will be forced to pass on to their customers the higher prices they will pay on Chinese imports. Some businesses, though, may decide in the end to absorb the higher costs rather than raise prices for their customers.

In China, authorities began charging higher duties on American imports at midday Sunday, according to employees who answered the phone at customs offices in Beijing and the southern port of Guangzhou. They declined to give their names.

Tariffs of 10% and 5% apply to items ranging from frozen sweet corn and pork liver to marble and bicycle tires, the government announced earlier.

After Sunday’s move, 87% of textiles and clothing the United States buys from China and 52% of shoes will be subject to import taxes.

On Dec. 15, the Trump administration is scheduled to impose a second round of 15% tariffs — this time on roughly $160 billion of imports. If those duties take effect, virtually all goods imported from China will be covered.

The Chinese government has released a list of American imports targeted for penalties on Dec. 15 if the U.S. tariff hikes take effect. In total, Beijing says Sunday’s penalties and the planned December increases will apply to $75 billion of American goods.

Washington and Beijing are locked in a war over U.S. complaints that China steals U.S. trade secrets and unfairly subsidizes its own companies in its drive to develop global competitors in such high-tech industries as artificial intelligence and electric cars.

“I give the president credit for challenging China on some of its really egregious behavior” on intellectual property and technology transfers, for example, Toomey said. He said he hopes that’s what Trump’s focus is, “not just the fact that Chinese clothing and shoes are popular among consumers. That’s not the problem.”

If China changes its behavior “in a meaningful way in that area … then we will have ended up in a better place. That’s what I’m hoping for. But let’s be honest. In the meantime, we’re doing damage. It’s a double-edged sword,” he said.

To try to force Beijing to reform its trade practices, the Trump administration has imposed import taxes on billions of dollars’ worth of Chinese imports, and China has retaliated with tariffs on U.S. exports.

“It’s a good thing taking on China. Unfortunately, he’s done it the wrong way,” said AFL-CIO President Richard Trumka said on “Fox News Sunday.”

“To take on China there has to be a multilateral approach. One country can’t take on China to try to dry up its overcapacity because they just send it through to you in other ways,” he said.

Trump has insisted that China itself pays the tariffs. But in fact, economic research has concluded that the costs of the duties fall on U.S. businesses and consumers. Trump had indirectly acknowledged the tariffs’ impact by delaying some of the duties until Dec. 15, after holiday goods are already on store shelves.

A study by J.P. Morgan found that Trump’s tariffs will cost the average U.S. household $1,000 a year. That study was done before Trump raised the Sept. 1 and Dec. 15 tariffs to 15% from 10%.

The president has also announced that existing 25% tariffs on a separate group of $250 billion of Chinese imports will increase to 30% on Oct. 1.


That cost could weaken an already slowing U.S. economy. Though consumer spending grew last quarter at its fastest pace in five years, the overall economy expanded at just a modest 2% annual rate, down from a 3.1% rate in the first three months of the year.

The economy is widely expected to slow further in the months ahead as income growth slows, businesses delay expansions and higher prices from tariffs depress consumer spending. Companies have already reduced investment spending, and exports have dropped against a backdrop of slower global growth.

Americans have already turned more pessimistic. The University of Michigan’s consumer sentiment index, released Friday, fell by the most since December 2012.

“The data indicate that the erosion of consumer confidence due to tariff policies is now well underway,” said Richard Curtin, who oversees the index.

Some retailers may eat the cost of the tariffs. Target confirmed to The Associated Press that it warned suppliers that it won’t accept cost increases arising from the China tariffs. But many smaller retailers won’t have the bargaining power to make such demands and will pass the costs to customers.

Philip Levy, chief economist at the San Francisco freight company Flexport who was an adviser in President George W. Bush administration, said it’s hard to say for sure when the latest tariffs may hit U.S. customers in the form of higher prices.

But, he added, “If you had to pick a time to do it, this is the worst possible time” because it’s when the bulk of holiday goods are brought into the country.

source: business.inquirer.net

Asian shares tumble as US-China trade war renews uncertainty

TOKYO – Asian shares tumbled Monday after the latest escalation in the U.S.-China trade war renewed uncertainties about global economies, as well as questions over what President Donald Trump might say next.

Japan’s benchmark Nikkei 225 started plummeting as soon as trading began and stood at 20,234.87 in the morning session, down 2.3%.

Australia’s S&P/ASX 200 slipped 1.5% to 6,427.20. South Korea’s Kospi lost 1.7% to 1,916.14.

Hong Kong’s Hang Seng dropped 3.3% to 25,309.37, while the Shanghai Composite was down 1.2% at 2,862.87.


Stephen Innes, managing partner at Valour Markets in Singapore, compared the difficulty of assessing the volatile market situation to reading tea leaves.

“Nobody understands where the president is coming from,” he said, adding that the best thing Trump can do for market stability is to “keep quiet.”


“The problem that we’re faced right now is that we are making a lot of assumptions ahead of the economic realities.”

The market is now dominated by fears of a portending U.S. recession, although the American economy is actually holding up, and much of the U.S. economy is made up of consumption, Innes said. If interest rates come down, he added, consumer spending is likely to go up, working as a buffer for the economy.

“What the market’s really waiting for is for them to drop interest rates,” Innes said. “Right now, we are still sitting on that uncertainty.”

The Dow Jones Industrial Average plunged more than 600 points Friday after the latest escalation in the trade war between the U.S. and China rattled investors. The broad sell-off sent the S&P 500 to its fourth straight weekly loss.

The tumbling began after Trump responded angrily on Twitter following China’s announcement of new tariffs on $75 billion in U.S. goods. In one of his tweets he “hereby ordered” U.S. companies with operations in China to consider moving them to other countries — including the U.S.


Trump also said he’d respond directly to the tariffs — and after the market closed he delivered, announcing that the U.S. would increase existing tariffs on $250 billion in Chinese goods to 30% from 25%, and that new tariffs on another $300 billion of imports would be 15% instead of 10%. Those announcements are likely to influence stock markets in Asia when trading opens there Monday.

The ongoing trade dispute between Washington and Beijing, and especially its unpredictability, is certain to have damaging effects on Asia. The unpredictability affects the real decisions central banks make on fiscal policy and companies make on their strategies and investments, setting off ripples of uncertainty.

Zhu Huani of Mizuho Bank in Singapore said what he called Trump’s “tariff tantrum” was setting off “the sense that tariffs could continue to rise,” with the “the unpredictability of timing and extent of these trade actions risk accentuating the paralysis of business decisions and big-ticket business spending.”

The S&P 500 fell 75.84 points, or 2.6%, to 2,847.11. The index is now down 4.5% for the month. It’s still up 13.6% for the year. The Dow lost 623.34 points, or 2.4%, to 25,628.90. The average briefly dropped 745 points. The Dow has had five declines of 2% or more this year, with three of them coming this month. The Nasdaq gave up 239.62 points, or 3%, to 7,751.77. The Russell 2000 index of smaller company stocks skidded 46.52 points, or 3.1%, to 1,459.49.

Trump also said Friday morning that he was “ordering” UPS, Federal Express and Amazon to block any deliveries from China of the powerful opioid drug fentanyl. The stocks of all three companies fell as traders tried to assess the possible implications.

The price of benchmark crude fell 71 cents to $53.46 a barrel. It sank $1.18, or 2.1% to settle at $54.17 a barrel Friday, as traders worried that the latest escalation in the trade battle could sap global demand for energy. Brent crude oil, the international standard, fell 63 cents to $58.71 a barrel.

The dollar fell to 105.24 Japanese yen from 106.65 yen Friday. The euro strengthened to $1.1145 from $1.1057. /gsg

source: business.inquirer.net

Recession coming? Trump insists U.S. economy ‘very strong’

WASHINGTON — The “fundamentals” of the U.S. economy are solid, the White House asserted, invoking an ill-fated political declaration of a decade ago amid mounting concern that a recession could imperil President Donald Trump’s reelection.

Exhibiting no such concern, senior adviser Kellyanne Conway declared to reporters on Monday, “The fact is, the fundamentals of our economy are very strong.”


It’s a phrase with a history.

Republican John McCain was accused of being out of touch when he made a similar declaration during the 2008 presidential campaign just hours before investment bank Lehman Brothers filed for bankruptcy, setting off a stock market crash and global financial decline.

A case can be made for the White House position. The U.S. job market is setting records for low unemployment, and the economy has continued uninterrupted growth since Trump took office. But growth is slowing, stock markets have swung wildly in recent weeks on recession fears, and indicators in the housing and manufacturing sectors have given economists pause.

A new survey Monday showed a big majority of economists expecting a downturn to hit by 2021 at the latest, according to a report from the National Association of Business Economics.


Trump begs to disagree.

“We’re doing tremendously well. Our consumers are rich. I gave a tremendous tax cut and they’re loaded up with money,” Trump said on Sunday. “I don’t think we’re having a recession.”

Still, the Republican president took to Twitter on Monday to urge the Federal Reserve to stimulate the economy by cutting interest rates and returning to “quantitative easing” of its monetary policy, an indication of deep anxiety beneath his administration’s bravado. And he backtracked last week on taking the next step in escalating in his trade war with China, concerned that new tariffs on consumer goods could hamper the critical holiday shopping season.

White House aides and campaign advisers have been monitoring the recent turbulence in the financial markets and troubling indicators at home and around the world with concern for Trump’s 2020 chances.

Any administration has to walk a fine line between reflecting the realities of the global financial situation and adopting its historical role as a cheerleader for the American economy. For Trump, striking that balance may be even more difficult than for most.

For decades, economic performance has proven to be a critical component of presidential job approval, and no American leader so much as Trump has tied his political fortunes to it. The celebrity businessman was elected in 2016 promising to reduce unemployment — a task at which he has succeeded — and to bring about historic GDP growth, where he has had less success.

The situation today isn’t nearly as dire as in September 2008, when the U.S. and the world were heading into the Great Recession. There are no waves of home foreclosures, no spike in layoffs, no market meltdowns and no government rescues to save powerful banks and financial companies in order to contain the damage. What does exist is a heightened sense of risk about the economy’s path amid slowing global growth and the volatility caused by the trade dispute between the United States and China.

There are other reasons as well for the administration’s rosy pronouncements, said Tony Fratto, a former Treasury Department spokesman in the Bush administration during the onset of the financial crisis. He said he sympathized with the Trump administration for having to choose between answering “honestly or responsibly” or otherwise about the state of the economy, noting that any hint of concern “could be self-fulfilling.”

“So much of the story of the economy is how people feel about it,” said Lanhee Chen, a Hoover Institution fellow and former economic adviser to 2012 GOP nominee Mitt Romney. “And that’s an inherently a difficult thing to measure.”

Highlighting a disconnect between the nation’s broad economic indicators and the “personal economies” of voters in swing states is a priority for Democratic candidates and outside groups heading into 2020.

Trump’s advisers acknowledge there are few tools at his disposal to avert a slowdown or recession if one materializes: Internal concerns over a ballooning federal deficit, in part due to the president’s 2017 tax law, are stifling talk of stimulus spending, and skepticism abounds over the chances of passing anything through a polarized Congress ahead of the election. But that hasn’t stopped the White House from exploring ways to make the political cost less painful.

Seeking to get ahead of a potential slowdown, Trump has been casting blame on the Federal Reserve, China and now Democrats, claiming political foes are “trying to ‘will’ the Economy to be bad for purposes of the 2020 Election.”

If the Federal Reserve would reduce rates and loosen its grip on the money supply “over a fairly short period of time,” he tweeted, “our Economy would be even better, and the World Economy would be greatly and quickly enhanced – good for everyone!”

Those actions he’s talking about are the sort a central bank would traditionally take to deal with or try to stave off a slowdown or full-blown recession.

Strong fundamentals? A lot depends on which ones the administration highlights or ignores in public comments.

Conway and other Trump aides have accurately described the rising retail sales and the solid labor market with its 3.7% unemployment rate as sources of strength.

Yet factory output and home sales are declining, while business investment has been restricted because of uncertainties from Trump ratcheting up the China trade tension.

Even if the economy avoids a recession, economists still expect growth to weaken.

Federal Reserve officials estimate that the gross domestic product will slow to roughly 2% this year, down from 2.5% last year. During his presidential campaign, Trump had boasted he would achieve long-term growth of 4 percent, 5 percent or more.

source: usa.inquirer.net

Fear on Wall Street of an Economic Slowdown

U.S. stocks fell broadly in midday trading Wednesday as central banks around the world cut interest rates and increased fears that global growth is being crimped by the U.S.-China trade war.

Every major U.S. index fell and put stocks back on a course for losses after briefly breaking a six-day losing streak on Tuesday. The losses eased as the day progressed, though investors remained in a defensive mode and headed for relatively safe holdings.

Bond prices spiked again, sending the yield on the 10-year Treasury down to 1.64% from 1.74% late Tuesday, a large move.

Yields are at their lowest level in nearly three years. That benchmark yield has retreated from its recent high of 3.23% last November as expectations of economic growth have steadily faded.


“The Treasury market is trading much higher this morning as investors continue to seek a safer haven, completely unsure as to what may happen next,” Kevin Giddis, head of fixed income capital markets at Raymond James wrote in a report.

Banks sustained some of the worst losses. Lower bond yields mean lower interest rates on mortgages and other kinds of loans, which mean lower profits for banks. JPMorgan Chase fell 3.1% and Bank of America fell 3.3%.

The dimming expectations for global growth also send the price of crude oil sharply lower. Benchmark U.S. crude plunged 4.5% at $51.20 a barrel. That helped pull energy sector stocks lower. Occidental Petroleum gave up 3.3%.

Big technology stocks, longtime investor favorites, also posted hefty losses. IBM lost 1.8%.

Safe-play stocks, including consumer staples and utilities, held up far better than the rest of the market.

The S&P 500 index fell 0.5% as of 11:12 a.m. Eastern time. The Dow Jones Industrial Average fell 238 points, or 0.9%, to 25,790. It was down as much as 589 earlier.

The Nasdaq fell 0.1%

China on Monday allowed its currency, the yuan, to weaken against the U.S. dollar in response to U.S. threats to add more tariffs to Chinese goods.

China stabilized the yuan on Tuesday and that helped lift U.S. stocks a day after they endured their worst day of the year. The volatile trading has already put a dent in the major indexes yearly gains. The S&P 500 is down 3.8% for August.

Central banks in New Zealand, India, and Thailand cut key interest rates on Wednesday and investors around the world fear that the escalating trade war between the U.S. and China will severely damage global growth.

After the surprise interest-rate cuts, bond yields sank around the world as investors scrambled for safety. They also poured into gold, which jumped to its highest price in more than six years.

“There is almost a paranoia amongst central bankers to avoid any potential financial hiccups that might hurt the real economy and cause a slowdown,” Jefferies strategist Sean Darby wrote in a report.

U.S. stocks have been on a wild ride since Jan. 22, 2018, when Trump first imposed tariffs on solar products and washing machines to help U.S. manufacturers, but they’re virtually back to where they started.

The S&P 500 closed at 2,832.97 that day and has since been down as much as 17% and up as much as 7%, with moves often driven by waxing and waning worries about the trade war. On Wednesday morning, the S&P 500 sat at 2,862.45, up 1% from that early 2018 starting point.

Since Trump tweeted in March 2018 that “trade wars are good, and easy to win” after raising tariffs on steel and aluminum, the S&P 500 is up 6.3%, though that gain has nearly halved in the last couple weeks as worries about the trade war have surged.

A key gauge of fear in the marketplace surged 6.2%. The VIX index, which measures how much traders are paying to protect themselves from swings in the S&P 500, was still below where it was at the start of the year when recession fears were surging, but it’s close to its highest level of the year.

European and Asian indexes were mixed.

Disney fell 5.1% after disappointing investors with a sharp third-quarter profit plunge that fell far short of Wall Street forecasts.

The entertainment company said underperformance from its Fox movie and TV studio helped weigh down the fiscal third-quarter financial results. It bought Fox’s entertainment business in March for $71 billion.

Match Group shares jumped 25.2% after the operator of Tinder, OkCupid and other dating sights beat Wall Street’s second-quarter earnings forecasts. The company reported a surge in Tinder subscribers and raised its revenue forecast for the year.

Drugstore operator CVS Health rose 6% after swinging to a second-quarter profit and handily beating Wall Street forecasts. The company attributed part of the gains to health insurer Aetna, which it bought for $69 billion in November.

source: usa.inquirer.net

Gold market demand quiet despite recent strong gains in Vietnam

HANOI — Gold futures for the first time in six years broke the US$1,450 an ounce last week, gaining 1.75 percent last Friday and a total 13.6 percent since May 28.

The strong growth of gold futures is attributed to previous speculations of a Fed rate cut – which was realized on May 31, worries about the global economy outlook, and increasing political, geographical and economic tensions.

Those developments, especially the Fed rate cut, sent US bond yield rates down and weakened the US dollar, which are the key factors making gold more expensive.

In addition, more tensions around the globe have pushed investors away from risky assets like stocks and towards safety in gold. Meanwhile, the possibility of a global economic slowdown increases after China reported its Q2 economic growth of 6.2 percent is the lowest in 30 years and central banks have delivered gloomier economic growth forecasts.

Those negative factors are forecast to boost gold prices to $2,000 an ounce at the end of the year as they may make investors more pessimistic and avoid purchasing risky assets.

The increases of gold futures on global markets also raises the prices of Vietnamese gold products to around VNĐ40 million per tael, equal to VND30 million ($1,290) an ounce


Since May 28, prices of gold products have gained about 10 percent at Phu Nhuan Jewellery JSC (PNJ) to VND39.92 million for a tael, equal to VNĐ29.94 million an ounce.


Though prices have reached new levels, market demand is quiet, proving Việt Nam’s success with its anti-gold policy.

According to Phan Dung Khanh, director of investment consultancy department at Maybank Kim Eng Securities Co Ltd, the domestic gold market may not heat up like it did eight years ago.

Some factors that may benefit the domestic gold market include the stability of foreign exchange rates between the Vietnamese dong and foreign currencies, a zero per cent US dollar savings yield rate and tightened policies regarding the number of eligible gold businesses, he told Dau Tu (Investment) newspaper.

According to banking expert Can Van Luc, the domestic gold market was quite quiet in the first six months of the year though gold prices gained 10 per cent globally and 6.3 per cent in the domestic market.

In the past, buyers rushed to gold shops immediately when they heard gold prices were up only 2-3 per cent, he said.

The gold market had been controlled well and the stability of the foreign exchange rates had increased the economy’s creditability to people, making them less interested in buying gold, Luc said.

The domestic gold market had remained stable, economist Nguyen Minh Phong said, as there was not much difference between buying and selling rates as well as between global and domestic gold prices.

The daily trading was stable, plus, the central bank did not have to make public announcements to stabilize the market – which had been done before whenever the market turned volatile, Phong said.

In addition, rushing into gold at the moment may not be a smart decision, especially after the Fed cut lending rates, business insiders said.

Buying gold is somewhat risky in the short term while there are also other attractive options for investors such as securities, real estate and corporate bonds, they said.

Gold should be a long-term investment for institutional investors and any individuals buying in gold must stay updated about prices to lock in profits at the right moment, they said.

source: business.inquirer.net

Shanghai leads gains in Asia as China-US talks resume

SINGAPORE — Mainland Chinese markets led Asian indexes higher on Friday, as the U.S. and China kicked off a fresh round of trade talks in Beijing.

The Shanghai Composite index advanced 2.9 percent to 3,081.11 and Hong Kong’s Hang Seng jumped 1 percent to 29,055.99.

South Korea’s Kospi gained 0.6 percent to 2,140.67.

Japan’s benchmark Nikkei 225 rose 0.8 percent to 21,205.81.

The country’s retail sales fell slightly in February from a month earlier, preliminary data showed.

But industrial production rose 1.4 percent after a 3.4 percent decline in January.

The unemployment rate beat market expectations, falling to 2.3 percent in February from 2.5 percent in the previous month.

Australia’s S&P/ASX 200 edged 0.1 percent higher to 6,180.70.

Shares rose in Taiwan and most of Southeast Asia.


U.S. negotiators, led by Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin, attended a working dinner Thursday night with Chinese Vice Premier Liu He, who is expected to travel to Washington next week.

The three of them posed for a photo at a government guesthouse before negotiations resumed on Friday but did not talk to reporters.

On Wall Street, traders shrugged off a discouraging announcement by the Commerce Department. It said U.S. economic growth had slowed sharply in the last three months of 2018 to an annual rate of just 2.2 percent, due to weakness in consumer spending, business investment, government spending and housing.

Most indexes finished higher, as bond yields rose and financial, technology and industrial stocks climbed.

The broad S&P 500 index was 0.4 percent higher at 2,815.44.

The Dow Jones Industrial Average also gained 0.4 percent to 25,717.46.

The Nasdaq composite rose 0.3 percent to 7,669.17 and the Russell 2000 index of smaller company stocks picked up 0.8 percent to 1,535.10.

ENERGY: Benchmark U.S. crude added 31 cents to $59.61 per barrel in electronic trading on the New York Mercantile Exchange. It lost 11 cents to settle at $59.30 per barrel on Thursday. Brent crude, used to price international oils, edged up 30 cents to $67.40 per barrel. The contract shed 14 cents to $67.10 per barrel in London.

CURRENCIES: The dollar strengthened to 110.68 yen from 110.63 yen. The euro rose to $1.1231 from $1.1221. /gsg

source: business.inquirer.net

Trump economic agenda likely checked by Democratic election gains

WASHINGTON, United States – Against the backdrop of a strong economy, Republicans avoided blowout losses in the key US midterm vote but President Trump’s economic agenda will be sharply curtailed by Democratic gains.

With a divided Congress starting next year, and the 2020 race for the White House now underway, the polarization in Washington means major economic legislation is highly unlikely, analysts said following Tuesday’s nationwide elections.

However, Republicans almost certainly would have faced steeper losses if not for the low unemployment, rising wages and strong economic growth now prevailing, boosted by recent Republican-driven tax cuts as well as a bipartisan stimulus package in this year’s budget.

Despite the prospect of partisan deadlock in the new Congress, Wall Street rallied Wednesday as investors put the elections’ uncertainty behind them.

Analysts said the divided Congress meant there were few threats to profits from new legislation.

“I think the Democrats would certainly be a line of defense against any further tax cuts,” said Nancy Vanden Houten, senior economist at Oxford Economics.

“I think we may see gridlock on major things but some chance for agreement on a modest infrastructure package,” she told AFP.

Republican leaders had been bracing for a backlash against Trump, with the potential losses in the House of Representatives well beyond the 23 seats Democrats needed to seize control.

Some races were still too close to call early Wednesday but even with Democrats winning nearly 30 seats, the result clearly fell far short of Republicans’ worst fears of losing 40 or more.


Avoiding talk of the economy
The solid US economy likely stemmed the Republican losses.

“The economy is what’s keeping Republicans competitive despite Trump. It’s a very weird situation,” Gary Jacobson, emeritus professor of political science at the University of California San Diego, told AFP late Tuesday.


Republicans were caught in the crossfire between Trump’s unpopularity and the economy’s strength, he said.

“Normally a president with an economy like the one we have now would be 10, maybe even 20 points higher,” Jacobson said. “It’s clear that if the economy hadn’t been that good there would have been a real blow out.”

Republicans largely avoided campaigning on the 2017 tax cuts, which were passed without a single Democratic vote and which many voters saw as a giveaway to the wealthy and major corporations.

Even Trump focused on other issues, including stoking immigration fears to motivate his base in the campaign’s dying days.

“We can talk about the economy but the fact is we know how well we’re doing with the economy,” Trump said over the weekend at a Florida rally. “I want to solve problems.”

Midterm elections typically do not hinge on economic concerns and a CNN exit poll showed the economy ranked third among the most important issues for voters nationwide, behind health care and immigration but ahead of gun policy.

Democratic candidates highlighted on health care, seeking to capitalize on the many unpopular and unsuccessful Republican efforts to repeal the 2010 legislation providing access to affordable health care and protecting those with pre-existing medical conditions.

“The economy is too good to have to say anything about it in defense. That’s why it was health care, health care, health care,” John Aldrich, professor of political science at Duke University, told AFP.

But as the impact of last year’s tax cuts fade and Trump’s aggressive tariff policies bite harder, while the Federal Reserve is raising interest rates, the US economy is expected to slow next year.

And Trump — who said Democrats would “take a wrecking ball to our economy” — now has two ready-made scapegoats to blame for any slowdown: the Democratic-controlled House, and Fed Chairman Jerome Powell, who he has repeatedly attacked for raising rates.

Vanden Houten of Oxford Economics said she was not forecasting a recession by the time Trump faces reelection in 2020 but the odds were rising.

“The economy is definitely going to be more vulnerable about a year from now,” she said.

“I think by the time the presidential campaign is in full swing, it’s certainly going to be a fading expansion.”

Meanwhile, Trump’s newly renegotiated North American free trade deal — the US-Mexico-Canada Agreement — is likely to come up for a vote in 2019 but Democrats are unlikely to block it. /cbb

source: newsinfo.inquirer.net

Lost generation? 2008 global financial crisis still weighs on Millennials

Marco Saavedra had just graduated from college in 2011 three years after the global financial crisis erupted and just as the Occupy Wall Street movement was picking up steam.

Like many in his generation, Saavedra faced slim pickings for jobs after college, a fate that has left millennials with a wealth gap that economists fear they won’t ever recover.

It has also left them more skeptical about government, worried about the future and more activist.


Saavedra, 28, who is undocumented, joined the Occupy chapter in Ohio, and now works at his family’s restaurant in the Bronx in New York City, where he is active in immigrant rights campaigns.

Laura Banks, 31, never had any interest in demonstrating, but also has bad memories from her early 20s of going to job fairs where there were almost no jobs. Friends lost jobs and her father, an attorney, had trouble finding clients.

“We felt very cornered. We feel like we’re behind,” said Banks, who now works as a project manager for Express Scripts in St. Louis.

She married last year but has doubts about having kids, in part due to fear of another financial crash.

‘Lost generation’?

Saavedra and Banks are part of the millennial generation, which includes people born between 1980 and 1996, now the biggest cohort in the United States, a status that makes marketers salivate.

But the group also is burdened by high student debt loads, that with the scarcity of jobs during the Great Recession has resulted in lengthy post-collegiate sojourns in their parents’ homes and lingering doubts about the future.

The group is at risk of becoming a “lost generation,” the Federal Reserve Bank of St. Louis warned in a report in May that tracked how the cohort’s wealth accumulation lagged historical norms for people in their 20s and 30s.


Although it spared no generation, the 2008 financial meltdown was more calamitous for young adults because there was no way to recoup the debt they took on for education, cars and credit cards.

“Because none of these types of debt finance assets that have appreciated rapidly during the last few years — such as stocks and real estate — they received no leveraged wealth boost like that enjoyed by the older cohorts,” the report said.

Crushing student debt was among the rallying cries of Occupy Wall Street, a movement led largely by young adults who blamed the crisis on corporate greed and a rigged system that benefited the “one percent” at the expense of everyone else.

The group gained its greatest visibility during the almost-two month occupation of Zuccotti Park in lower Manhattan before police evicted activists and removed tents in November 2011.

Although much more low profile today, Occupy Wall Street still has a presence on Twitter, where it touts progressive environmental policies, criticizes gentrification and lambasts President Donald Trump over immigration and other issues.

Iffy on capitalism? 

But the movement and the crisis have had long-lasting impacts on the millennials’ outlook.

An April 2016 poll released by Harvard University Kennedy School’s Institute of Politics showed that just 41 percent of 18 to 29-year olds supported capitalism, higher than the 33 percent that supported socialism, but a low enough number to turn heads.

John Della Volpe, director of polling at the Kennedy School, said millennials remember how the crisis harmed their parents and others who played by the rules.


Della Volpe senses broad support among young adults for “compassionate capitalism” to address glaring problems including gross inequality and a compromised campaign finance systems.

“I think they have a different definition of the American dream, which is less around economics and more around flexibility and happiness,” he said.

Major political parties have largely failed to ignite millennial interest, with two exceptions, Barack Obama’s successful 2008 campaign and the 2016 campaign of Bernie Sanders, the white-haired Socialist who gave Hillary Clinton an unexpectedly tough battle for the Democratic nomination.

Support for Trump is somewhat lower among millennials compared to the broader US population, but some of the same trends hold, Della Volpe said. For example, Trump polls best among white millennials without a college degree, mirroring the broader US trend.

Democratic socialists scored an unexpected victory in New York in late June, when 28-year-old Alexandria Ocasio-Cortez, a Sanders supporter, unseated 10-term Democratic Rep. Joseph Crowley, in the Bronx in New York City.

Ocasio-Cortez told The Daily Show’s Trevor Noah that she favored greater taxes on the wealthy and livable wages for workers as part of a “moral and ethical economy.”

“Us as millennials, we came of age during a time when 9/11 happened in middle school, the financial crisis happened in college,” she said. “We have never really known or grown up in a time of economic prosperity.”

Saavedra helped organize an event for Ocasio-Cortez at his parent’s restaurant in the South Bronx, La Morada, which is not far from her congressional district.

The restaurant is staffed with undocumented workers and proclaims its solidarity with its immigrant-rich neighborhood with a “Resiste” (“Resist!”) sign on the exterior.

The family was able to rent the space in 2009 due to vacancies amid the crisis — one positive from that period, Saavedra said.

While he may never be able to vote, he plans to remain politically active.

“If there’s anything that my organizing has taught me it’s that there’s a lot of other ways to petition and to march and to rally that make political change, even if it’s not in a tangible vote.”

Fears for the future 

Banks, meanwhile, have low expectations for government, especially after the 2016 presidential campaign between Trump and Clinton, which she called “the most toxic, hateful thing I’ve ever seen.”

And she took away lessons from the crisis on personal finance. She was shocked when she and her husband received approval for a mortgage of four times the amount they wanted, but they rejected the sum.

“When the housing market crashed, what I saw was a lot of Americans living beyond their means and a lot of banks acting irresponsibly,” Banks said.

“I’m really scared to have kids,” she added. “I’m afraid the market will collapse again in the next couple of years.”   /vvp

source: business.inquirer.net

Asian stocks recover after news of US-China trade talk

Asia stocks opened sharply lower on Thursday, joining a global sell-off on concerns over Turkey’s financial crisis but later pared losses on news that China and the US would hold trade talks.

Equities across the region suffered steep losses at the opening bell, with Tokyo and Shanghai off by more than one percent, dragged down by a weak session on Wall Street as traders fretted over possible contagion from Turkey’s currency crisis.

Japan’s main Nikkei 225 index shed 1.20 percent in early trade and China’s benchmark Shanghai Composite was off by 1.17 percent after another day of volatile trading driven by Turkey.


On Wednesday, Ankara hiked tariffs on imports of several US goods in retaliation for American sanctions, the latest step in a tit-for-tat spat between the two NATO allies that shows little sign of easing.

The crisis has sent the Turkish currency into free-fall and sparked concerns that European banks and other emerging markets exposed to the unit could also suffer.

A bearish mood saw European markets close down nearly two percent and the broad US S&P 500 market off by nearly one percent.

However, the lira managed to claw back some ground after losing just under a quarter of its value on Friday and Monday, a loss that had prompted fears of a fully-fledged economic crisis in the critical emerging economy.

And equities in Asia staged a fightback after news hit the wires of upcoming talks between the US and China, currently embroiled in a trade spat that economists warn could harm the global economy.

China’s Vice Commerce Minister Wang Shouwen, the deputy representative on international trade negotiations, will meet with a senior US treasury official, David Malpass, at the invitation of the United States, the ministry in Beijing said in a statement.

Traders saw a glimmer of hope of a detente in the ongoing trade battle that has seen the two sides hit each other with reciprocal tariffs on goods worth $34 billion, with much more threatened.

The two countries plan to launch a new round of tariffs on $16 billion worth of goods from each country on August 23.



“It is hard to tell how the talks will go but it’s a positive signal that the two countries are looking for some compromise plan,” said Makoto Sengoku, market analyst at Tokai Tokyo Research Institute.

“If they were determined to fight it out, they wouldn’t meet,” he told AFP.

A few hours into the trading session, the Nikkei was back in positive territory while markets in China and Hong Kong had almost erased all of their losses.

Key figures around 0300 GMT 

Dollar/Turkish lira: STABLE at 5.98 lira

Euro/dollar: UP at $1.1381 from $1.1349

Pound/dollar: UP at $1.2720 from $1.2700

Dollar/yen: UP at 110.86 from 110.73 yen

Tokyo – Nikkei 225: UP 0.01 percent at 22,206.66

Hong Kong – Hang Seng: DOWN 0.1 percent at 27,290.26

Shanghai – Composite: DOWN 0.2 percent at 2,716.31

Oil – Brent Crude: UP 45 cents at $71.21 per barrel

Oil – West Texas Intermediate: UP 14 cents at $65.15 per barrel

New York – Dow Jones: DOWN 0.5 percent at 25,162.41 (close)

London – FTSE 100: DOWN 1.5 percent at 7,497.87 (close)

/vvp

source: business.inquirer.net

Trade tensions torpedo oil, US sanctions hammer Russian rouble

SYDNEY — Asian shares were subdued on Thursday after a new round of tit-for-tat tariffs in the US-Sino trade conflict torpedoed oil prices, while the Russian rouble tumbled as the US slapped fresh sanctions on the country.

MSCI's broadest index of Asia-Pacific shares outside Japan barely budged as caution dominated. Japan's Nikkei slipped 0.5 percent, not helped by a shock slump in core machinery orders.

Early Thursday, China's state broadcaster said China must counteract US tariffs and Beijing had the confidence to protect its own interests as well as the means to do so.

China had already announced additional tariffs of 25 percent on $16 billion worth of US imports from fuel to autos. The tariffs will apply to billions of dollars in U.S. gasoline, diesel and other oil products, though not crude.

Analysts at ANZ noted there were also reports President Xi Jinping had asked China's major oil companies to increase domestic output to safeguard the country's energy security.

The oil market took the news hard with selling escalating as major technical levels broke.

US crude was last down 12 cents at $66.82 per barrel, having shed 3.2 percent on Wednesday, while Brent was off 2 cents at $72.26.

On Wall Street, trade-sensitive industrial companies were the biggest drag on the Dow, with declines led by Boeing and Caterpillar Inc.

The Dow fell 0.18 percent, while the S&P 500 lost 0.03 percent and the Nasdaq added 0.06 percent.

More sanctions

In currency markets, the Russian rouble sank after Washington said it would impose fresh sanctions because it had determined that Moscow had used a nerve agent against a former Russian agent and his daughter in Britain.

There were also reports of a new US Senate bill that would impose widespread sanctions on Russia for election meddling.

The rouble duly slid to its lowest since late 2016, with the dollar buying 65.50 roubles having jumped 3.4 percent overnight.

The pound skidded to its lowest against the dollar and euro in almost a year as fears grew Britain might leave the EU without a deal on trade with Brussels.

Traders reported a significant increase in investors hedging against a 'no-deal' Brexit, an event which could send sterling into free fall and hurt the economy by raising trade barriers with the UK's biggest export market.

Sterling was last trading at $1.2877, having dropped 0.4 percent overnight.

The Japanese yen seemed to be catching a bid as a traditional safe haven, with the dollar easing to 110.81 yen after stretching as high as 111.44 on Wednesday.

The euro was relatively steady at $1.1611, while the dollar index was a shade firmer at 95.098.

The New Zealand dollar shed 0.9 percent to a two-year trough at $0.6682 after the country's central bank took a dovish turn, pledging to keep rates at record lows well into 2020.

The Reserve Bank of New Zealand (RBNZ) said rates were likely to be on hold for longer and cut its forecasts for economic growth this year and next. —Reuters

Asian markets rally, yuan edges up after US gains

Asian markets rose on Monday after a healthy lead from Wall Street as positive US jobs data trumped fresh trade war threats, while the yuan extended a recovery after the Chinese central bank moved to support the unit.

Hong Kong led gains as the week got off to an upbeat start, with dealers tracking their New York and European counterparts following recent painful losses.

Data on Friday showed that while the US economy saw a slowdown in jobs creation in July, the pace of hiring remained strong over the past three months.


The report also showed wage growth remained tepid, helping temper worries about an overheating economy.

The result provided some much-needed cheer to markets, which managed to brush off a warning from Beijing that it would impose new tariffs on $60 billion worth of US goods if Washington pushes ahead with levies on $200 billion of Chinese imports.


Despite reports that unofficial talks have been held between the two sides, trade tensions continue to rise with a top White House advisor calling China a bad bet and saying its economy — the world’s second biggest — was struggling.

Still, equity traders were in a buying mood Monday. Hong Kong piled on more than one percent while Shanghai added 0.2 percent and Tokyo went into the break 0.5 percent higher.

Sydney rose 0.7 percent, Singapore jumped more than one percent and Taipei was 0.3 percent stronger. Jakarta climbed 0.7 percent despite an earthquake that rattled the island of Lombok, killing dozens of people.

– Pound struggles –
Support also came from the People’s Bank of China decision late Friday to unveil measures making it harder to bet against the yuan, which has suffered steep losses the past two months.

The currency, which is around lows not seen for more than a year, bounced back soon after the announcement and it extended the gains Monday.

The bank’s measure was similar to a move when the currency went into freefall following a devaluation three years ago that rattled global markets.

However, analysts were lukewarm on the move with some saying it indicated Chinese leaders were growing increasingly worried about the unit’s depreciation.

“The yuan kept falling when China did this last time in 2015, so I don’t think the PBoC’s move will significantly change the market tone,” Hao Hong, chief strategist at Bocom International Holdings, told Bloomberg News.

“No matter what happened over the weekend, the weakness in Chinese stocks may continue. The trade war is nowhere near its end and China’s economy is slowing down, so why would the trend reverse?”

In another forex trading, the pound was fighting to recover from Friday’s sell-off that came after Bank of England boss Mark Carney warned the chances of leaving the EU without a proper deal was “uncomfortably high” and “highly undesirable”.

While he said such a situation was still “unlikely” compared with other outcomes, the comments come as leaders on both sides are struggling to reach a compromise with just months to go before Britain is due to formally exit.

The remarks sent sterling tumbling, with an interest rate hike last week unable to provide any support.

Key figures at 0300 GMT

Tokyo – Nikkei 225: UP 0.5 percent at 22,626.56 (break)

Hong Kong – Hang Seng: UP 1.2 percent at 28,008.62

Shanghai – Composite: UP 0.2 percent at 2,745.04

Euro/dollar: DOWN at $1.1563 from $1.1567 at 2100 GMT on Friday

Pound/dollar: DOWN at $1.2996 from $1.3005

Dollar/yen: DOWN at 111.20 yen from 111.25 yen

Oil – West Texas Intermediate: UP 18 cents at $68.67

Oil – Brent Crude: UP 15 cents at $73.36 per barrel

New York – Dow Jones: UP 0.6 percent to 25,462.58 (close)

London – FTSE 100: UP 1.1 percent at 7,659.10 (close)

source: business.inquirer.net

Financials weigh on Wall Street as tariff worries return

U.S. stocks fell on Thursday, weighed down by financials, as worries of a trade war between the United States and China were heightened after President Donald Trump proposed 25 percent tariffs on $200 billion worth of Chinese imports.

U.S. Trade Representative Robert Lighthizer said Trump directed the increase from a previously proposed 10 percent duty because China has refused to meet Washington's demands and has imposed retaliatory tariffs on U.S. goods.

Beijing responded to the new threat saying it was ready to escalate the trade war.

Financials fell 0.6 percent, as JP Morgan and Bank of America dropped 0.6 percent each.

The Federal Reserve kept interest rates unchanged on Wednesday, but characterized the economy as strong, keeping the central bank on track to increase borrowing costs in September.

"Markets are substantially weaker as investors are spooked out by the latest development in the trade battle," said Andre Bakhos, managing director at New Vines Capital LLC in Bernardsville, New Jersey.

"Economic strength is evident and the jobs market is strong, but the trade war is creating turbulence for investors and trading is expected to be choppy, volatile and could easily change direction."

The technology sector dropped 0.18 percent. Microsoft fell 0.6 percent, the biggest drag on the sector.

The so-called FAANG group of stocks — Facebook, Apple , Amazon.com, Netflix and Google-parent Alphabet — dropped between 0.4 percent and 0.8 percent.

Chipmakers, whose major clients include Chinese companies, also declined, with Micron, Nvidia, AMD and Intel down between 0.5 percent and 1.2 percent.

Shares of trade-sensitive companies such as Caterpillar , Boeing and 3M fell more than 1 percent and weighed on the bluechip Dow Jones Industrial Average.

At 9:54 a.m. ET the Dow Jones Industrial Average was down 131.61 points, or 0.52 percent, at 25,202.21, the S&P 500 was down 9.43 points, or 0.34 percent, at 2,803.93 and the Nasdaq Composite was down 13.06 points, or 0.17 percent, at 7,694.22.

Eight of the 11 major S&P sectors were lower.

Tesla jumped 10 percent after the electric car maker convinced investors that it was able to produce positive cash flow and turn a profit.

DowDuPont's 2.8 percent drop, was the biggest drag on the S&P 500, after the chemical producer reported quarterly results.

Shares of TripAdvisor and Cognizant slipped 14.7 percent and 5 percent respectively, after their earnings failed to impress investors.

Declining issues outnumbered advancers for a 1.49-to-1 ratio on the NYSE and a 1.52-to-1 ratio on the Nasdaq.

The S&P index recorded five new 52-week highs and four new lows, while the Nasdaq recorded 43 new highs and 50 new lows. — Reuters

China minister says trade war with US would be ‘disaster’

BEIJING — China said Sunday that it will not initiate a trade war with the United States, but vowed to defend its national interests in the face of growing American protectionism.

“There are no winners in a trade war, and it would bring disaster to our two countries as well as the rest of the world,” Minister of Commerce Zhong Shan said at a briefing on the sidelines of China’s annual parliamentary session.

“China does not wish to fight a trade war, nor will China initiate a trade war, but we can handle any challenge and will resolutely defend the interests of our country and our people,” he said.

It was Beijing’s latest statement on “problems in Sino-US economic trade and cooperation,” alluding to President Donald Trump’s plan to impose heavy tariffs on imported steel and aluminum.

The US leader said Thursday that he was slapping tariffs of 25 percent on imported steel and 10 percent on aluminum, temporarily exempting big steel producers Canada and Mexico.

Chinese leaders have threatened in the past to retaliate against raised trade barriers, but have yet to take direct action following Trump’s announcement.

Citing Chinese researchers, Zhong said the US has been overstating its trade deficit with China by about 20 percent every year. He gave no details on how this figure was reached, but the US and Chinese governments generally report widely differing trade figures because Beijing counts only the first port to which goods go instead of their final destination.

The US reported a $375 billion deficit with China last year, so a 20 percent reduction would still be among the largest trade gaps that the US has with any country.

Zhong blamed the trade imbalance in part on controls over US high-tech exports to China, repeating a Chinese claim that Washington could narrow its trade deficit if it allowed China to buy more “dual use” technology such as supercomputers and advanced materials with military applications.

US officials have said such sales would make up only a few percent of the deficit while possibly threatening American national security.

The Trump administration earlier approved higher tariffs on Chinese-made washing machines, solar modules and some other goods, prompting Beijing to accuse Washington of disrupting global trade regulation by taking action under US law instead of through the World Trade Organization.

Liu He, Chinese President Xi Jinping’s top economic adviser, visited Washington earlier this month in an attempt to smooth strained ties.

Zhong said China would continue to “relax market access” to China and said China would also attach greater importance to intellectual property right, another point of tension with the US.

China absorbed $136.3 billion in foreign investment last year. The country has long been among the top global destinations for investment, but foreign enthusiasm is cooling. Surveys by business groups show companies are shifting emphasis to other Asian economies seen as more profitable or less restrictive.

“We have noticed that some foreign-funded businesses have complained about China’s investment environment,” Zhong said. “The fact that they have complaints indicates that they are still paying attention to China’s development and have confidence in China’s market.”

The commerce minister reiterated Premier Li Keqiang’s promise on Monday to liberalize the manufacturing industry and expand the opening up of sectors such as medical care, education and new energy vehicles. Specific details were not given, but Zhong pledged to give equal treatment to domestic and foreign businesses alike while continuing to curb “irrational overseas investment” from within China.

source: business.inquirer.net

Most Asian markets rise as 2018 rally extends

The equity rally that has kicked off 2018 continued on Friday, with Asian markets picking up the baton from another set of records on Wall Street.

Dealers are now turning their attention to the release later in the day of key US jobs data, which is expected to show the world’s top economy continuing to improve.

A forecast-smashing reading Thursday on private take-ups boosted optimism, which had already been bolstered by US tax cuts, healthy corporate profits and strong manufacturing figures from around the world.

Global markets powered ahead in 2017 as economies showed long-running improvements after years of faltering.

Greg McKenna, chief market strategist at AxiTrader, said in a note that data from the manufacturing and services sectors “suggests economic strength across the globe remains robust”.

He noted that an index of world factory activity was at its highest level in seven years.

On Wall Street, the Dow ended above 25,000 for the first time, leading records across Wall Street.

In Tokyo, the Nikkei ended up 0.9 percent at a 26-year high following its more than three percent jump Thursday, while Sydney added 0.7 percent.

Seoul rose 1.3 percent, with dealers buoyed by news that North Korea had accepted the South’s offer of talks next week, further easing geopolitical tensions in the region.

Hong Kong gained 0.3 percent to chalk up a ninth-straight gain, while Shanghai closed 0.2 percent higher but Singapore eased 0.2 percent.

Pause in oil?

While oil prices inched down in Asia, they remain elevated after recent rises to around three-year highs thanks to Middle East tensions, while the US sees stockpiles fall as it is hit by a severe cold snap.

The latest gains have given impetus to petroleum-linked firms, sending them rallying this week. In Hong Kong, Sinopec was up more than one percent while CNOOC and PetroChina were also higher. Woodside Petroleum in Sydney was up along with Santos, though Tokyo-listed Inpex eased.

However, Ric Spooner, a Sydney-based analyst at CMC Markets, told Bloomberg News: “There’s been a one-way, very steep and uninterrupted rally off the last minor low in mid-December near $56, so it won’t be surprising to see a pause here.”

On forex markets, the dollar rose slightly against the euro, but the single currency remains buoyant with the eurozone continuing to improve, which raises the chances of a reduction in the region’s massive stimulus programme, bringing monetary policy in line with the Federal Reserve.

McKenna added: “It’s again the story of a weaker US dollar as the fact its data is solid and improving is lost on traders focused on expectations that the EU strength will drive the European Central Bank to chase the Fed, and that synchronised global growth will, in fact, drag most central banks along the tightening path.”

In early European trade, London was flat, Paris rose 0.3 percent and Frankfurt added 0.4 percent.

source: business.inquirer.net

Fears over bitcoin use in terror financing

The global bitcoin craze has attracted almost everyone, from mom-and-pop traders to giant investment banks.


Promoters of bitcoin and other cryptocurrencies tout them as being safe and secure, and without oversight from financial regulators.

But there is some concern that these very advantages could be exploited by terrorists to transfer funds from one place to another.

Financial intelligence experts from the region say this is already happening, with several suspicious financial transactions detected recently.

Some of these experts gathered in Malaysia last month for the Third Counter-Terrorism Financing Summit. The security experts from 35 countries unanimously agreed that the first step to disrupting militant operations is by cutting off their funds.

A new alliance between Australia and South-east Asia has also been formed to directly target and disrupt the funding lifeline of terrorist groups by denying them access to the international financial system and other sources of funds.Sources told The Straits Times that the high degree of anonymity offered by digital currencies makes them a possible preferred avenue for militants in South-east Asia.

“The number might not be big but we know it’s picking up. Their ultimate goal is to make sure that these funds get where they’re supposed to be,” said one source.

“Small or big, it can help move any terrorism planning to the next level – launching attacks.”

While the surge in the value of bitcoins and similar cryptocurrencies has garnered widespread media attention, security experts say the terrorists use digital currency not to make money, but for ease of moving funds between borders without the regular banking scrutiny.

For operational reasons, officials declined to reveal the locations and frequency of such transactions. But the identity of some of these financial movements on the Web has been determined, said a second source.

“Special equipment and database are already in place to help analyse these patterns. Identity is key to uncovering terrorism activities. We can monitor and trace the origin of the fund but to know who’s behind it is very tricky,” he said.

“We have all these equipment in place, but it’s still very hard to ‘crawl’ in the dark Web market,” the source added.

Malaysian criminologist P. Sundramoorthy said the consequences of militants or sympathisers switching to the use of cryptocurrency would be devastating as terror groups could be expected to execute attacks after receiving the funds.

“Given that cryptocurrency offers a high degree of anonymity and is popular and user-friendly, measures to control it must be put in place as soon as possible. They will always find a way to exploit such channels. We can’t eliminate the use but we need to limit it.”

Still, some experts say the issue might have been played up.

In a recent study by the Royal United Services Institute (Rusi), the British intelligence think-tank suggested that there is little link between cryptocurrency and terrorism. It said the claims that bitcoin is funding terrorism are greatly exaggerated.

Mr David Carlisle, an independent consultant with Rusi, said in a March 2 commentary: “Treating cryptocurrencies as an exceptional threat creates the misleading impression that more conventional financial products are not already equally, or more, vulnerable to terrorist exploitation.”

A regional security source acknowledged that most militants are indeed still channelling funds via conventional banking and money remittance services.

Still, it has been noticed that digitial currency has also been used as a means of transfer.

“We still see most of them funding their operations by taking personal loans, selling their belongings and so on. But to say the possibility of these militants turning to the dark Web is little or unlikely, that’s dangerous as we’re already seeing suspicious movements which we believe are terrorism fundings,” he said. “They will always try to find new ways to exploit technology to materialise their sick agenda.”

The danger of terrorist financing can be gleaned by the capture of Marawi in the southern Philippines by militants that ended in October after a five-month siege.

The Associated Press reported last month that Philippine military chief Eduardo Ano said at least US$1.5 million (S$2 million) was sent by terrorist group Islamic State in Iraq and Syria to finance militants planning the Marawi attack.

As Malaysia begins to impose controls over the growing use of digital currencies, Bank Negara Malaysia (BNM), its central bank, has required that conversions of cryptocurrencies into cash must be reported under the strict transactions under anti-money laundering laws.

Deputy Home Minister Nur Jazlan Mohamed said: “BNM has announced measures that would regulate the use of cryptocurrencies in Malaysia, especially the conversion of cryptocurrencies into cash and other equivalents. This measure will help the police and other enforcement agencies to manage terrorism financing.”

source: business.inquirer.net