G20 nations warn of Brexit risk to global growth

CHENGDU, China — Britain’s vote to leave the European Union heightens risks for the world economy, finance chiefs from the G20 group of leading countries said Sunday at a meeting in China.

The outcome of last month’s referendum “adds to the uncertainty in the global economy,” the meeting’s host, Chinese finance minister Lou Jiwei, said after it concluded.

But he added that EU member countries were “well positioned to proactively address the potential economic and financial consequences stemming from the UK referendum.”

The issue has come to the forefront of the G20’s concerns at the meeting in Chengdu, the last before the grouping’s annual summit, to be held in the Chinese city of Hangzhou in September.

Ahead of the meeting the International Monetary Fund (IMF) downgraded its forecast for global growth this year, and officials in Chengdu said protracted talks between the EU and Britain over the departure could heighten risks.

“It won’t mean that they’ll get there in a week or a month. It’s a process that could take longer,” a senior US Treasury official told journalists on Saturday.

“The thing that would be very disruptive to confidence is if this becomes a highly confrontational process,” he said.

Britain’s new finance minister Philip Hammond on Saturday met his German counterpart Wolfgang Schaeuble and tweeted: “We agree we need a deal that works for the people of Britain & Germany.”

At a family photo on Sunday, Hammond was seated in the front row, but spent most of the event conversing only with one of his neighbors, World Bank president Jim Yong Kim.

‘More negative outcomes’

The IMF has expressed alarm over Britain’s looming departure from the EU.

“‘Brexit’ marks the materialization of an important downside risk to global growth,” IMF staff said in a report ahead of the meeting.

The IMF recently lowered its forecasts for global growth this year and next by 0.1 percentage point, to 3.1 percent and 3.4 percent respectively.

“But with ‘Brexit’ still very much unfolding, more negative outcomes are a distinct possibility,” the report said.

Other challenges threaten: a slowdown in the Chinese economy, as well as terrorist attacks and the failed coup in Turkey — which have rattled financial markets.

China’s economy, the world’s second largest, is caught in a fundamental transition to making domestic consumption the key driver instead of massive public spending and cheap exports.

Turkey’s Deputy Prime Minister Mehmet Simsek, who attended the meeting, said on Twitter that the attempted putsch against President Recep Tayyip Erdogan would not merit mention in the final communique.

At an earlier meeting in Chinese commercial hub Shanghai in February, the G20 finance chiefs agreed to use “all policy tools” including monetary easing, fiscal spending and structural change to boost growth.

The IMF has called on some countries, notably Germany and the United States, to boost spending on infrastructure, which has been opposed by Berlin.

“The world economy is beleaguered with many serious problems,” China’s Lou said on Saturday.

“We should make monetary policy more forward-looking and transparent, enhance the effectiveness of fiscal policy… so as to support stronger recovery of the world economy.”/rga

source: business.inquirer.net

IMF makes 126.3 mln euros available for Cyprus after review

WASHINGTON - The International Monetary Fund is making about 126.3 million euros available for disbursement to Cyprus after completing its review of the island's economic adjustment program, the Fund said in a statement on Friday.

The IMF, which said it still has one more review to complete, said Friday's move brings the total disbursements under the program to about 1 billion euros. — Reuters

Nasdaq tops dotcom high on buoyant data, Greece hopes

The Nasdaq Composite index surpassed the 15-year all-time high it set during the peak of the dotcom bubble as more data on Thursday showed the U.S. economy was gathering steam.

The index hit 5,143.31, topping the previous high of 5,132.52 it touched on March 10, 2000. The S&P and Dow were at their highest levels in about a month.

Brian Fenske, head of sales trading at ITG in New York, said the Nasdaq was on firmer footing and there were no similarities between its rally in 2000 and the surge in recent months.

"The current rally is more durable. It is incredibly tough to go public in this market. We just didn't have this kind of scrutiny back in 2000," said Fenske.

U.S. stocks briefly extended their rally on an unconfirmed report in German daily, Die Zeit, that Greece's aid will be extended until year-end but the IMF would not take part in the financing for the "time being".

Greek Finance Minister Yanis Varoufakis presented new proposals to counterparts in the euro zone meeting in Luxembourg, a Greek government official said.

The Fed said on Wednesday that the U.S. economy was likely strong enough to withstand an interest rate increase later this year but cut its economic growth forecasts for 2015.

Even though a majority of Fed officials continue to see higher rates by the end of 2015, they expect rates to rise slightly less by the end of 2016 and 2017 than they did in their March forecasts.

U.S. consumer prices in May recorded their largest increase in more than two years as gasoline prices surged, while factory activity in the U.S. mid-Atlantic region expanded in June at a faster pace than expected.

Other data showed the labor market tightened as first-time applications for unemployment benefits declined to a near 15-year low last week.

At 13:31 p.m. ET (1731 GMT) the Dow Jones industrial average was up 188.94 points, or 1.05 percent, at 18,124.68, the S&P 500 was up 19.16 points, or 0.91 percent, at 2,119.6 and the Nasdaq Composite was up 63.62 points, or 1.26 percent, at 5,128.50.

All the 10 major S&P 500 sectors were higher with the health index leading with a 1.4 percent rise.

Microsoft's 1.4 percent rise lifted the Nasdaq and the S&P 500, while 3M's 1.9 percent gain was the biggest boost to the Dow. All 30 Dow components were in the black.

Fitbit shares ran up as much as 60 percent to $31.90 in their debut, valuing the maker of popular wearable fitness-tracking devices at $6.5 billion.

Oracle shares fell as much as 8.7 percent to $40.97 - a nearly six-month low - a day after the company forecast a quarterly profit below analysts' estimates.

Advancing issues outnumbered decliners on the NYSE by 2,228 to 775. On the Nasdaq, 1,978 issues rose and 761 fell.

The S&P 500 index showed 40 new 52-week highs and two new lows, while the Nasdaq recorded 144 new highs and 25 new lows.  — Reuters