federal reserve – Aisa Net http://aisa-net.com/ Sat, 19 Feb 2022 07:28:43 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://aisa-net.com/wp-content/uploads/2021/05/aisa-net-icon-150x150.png federal reserve – Aisa Net http://aisa-net.com/ 32 32 G-20 finance chiefs pledge to monitor geopolitical risks and act on inflation https://aisa-net.com/g-20-finance-chiefs-pledge-to-monitor-geopolitical-risks-and-act-on-inflation/ Sat, 19 Feb 2022 06:16:05 +0000 https://aisa-net.com/g-20-finance-chiefs-pledge-to-monitor-geopolitical-risks-and-act-on-inflation/

Finance chiefs from the Group of 20 advanced and emerging economies agreed on Friday to keep an eye on geopolitical risks amid growing concern over a possible Russian invasion of Ukraine, while pledging to take the necessary steps to contain inflationary pressures as oil and food prices rise.

In a statement released after their two-day meeting held in Jakarta in a hybrid in-person and virtual format, G-20 members said they “will continue to monitor key global risks, including geopolitical tensions emerging, and macroeconomic risks and financial vulnerabilities”, without directly mentioning the Ukrainian crisis.

Indonesian President Joko Widodo delivers a video speech during a Group of 20 finance chiefs meeting on February 17, 2022. (Photo courtesy of National Committee for Indonesia’s G20 Presidency) (Kyodo)

The statement was adopted late Friday evening after a delay apparently due to disagreements over language outlining geopolitical risks in reference to the situation in Ukraine.

Concerns are growing over the likelihood of a Russian invasion in the Eastern European country amid a massive buildup of Russian troops on the Ukrainian border.

“To formulate the words (in the statement), it took time, because at the same time, in the meeting room, there were countries which are involved in the geopolitical tension”, said the Indonesian Minister of Finance, Sri Mulyani Indrawati, at a press conference after the meeting. Russia is a member of the G-20.

While participants “did not discuss” the Ukrainian issue, the minister called for efforts to “manage” geopolitical risks to prevent them from undermining economic recovery.

The G-20’s decision not to mention the Ukraine issue contrasts sharply with a recent statement by G-7 finance ministers warning Russia of economic sanctions that would have “massive and immediate” consequences if it invaded Ukraine.

While Moscow has said it has no intention of invading Ukraine and has withdrawn some of its troops, the United States has dismissed such a claim. On Thursday, US President Joe Biden said he saw a “very high” risk of a Russian invasion in the “coming days”.

In the statement, G-20 members pledged to use “all available policy tools to address the impacts of the pandemic” as the spread of the highly transmissible Omicron variant of the coronavirus could cloud the global economic outlook.

G-20 members said they were determined to implement well-calibrated exit policies as economies recover from the coronavirus pandemic.

“Central banks will act as necessary to achieve price stability in accordance with their respective mandates, while remaining committed to clearly communicating their policy positions,” the G-20 ministers said.

They also agreed to intensify their efforts on debt restructuring assistance programs for low-income and vulnerable countries in order to strengthen their financial resilience.

Bank Indonesia Governor Perry Warjiyo told reporters that it was “very important that the global economic recovery can return to long-term economic growth, including overcoming the scarring effect of the pandemic.”

The spread of the Omicron variant continued to raise concerns about the threat to the global economy, already reeling from supply disruptions caused by the pandemic.

According to the International Monetary Fund, the world economy is expected to grow 4.4% this year, weaker than the 5.9% expansion estimated for 2021, with the United States and China the largest and second respectively. largest economy in the world, weighed down by supply disruptions linked to the pandemic and inflation.

Against a backdrop of rising inflation, the US Federal Reserve signaled an interest rate hike as early as March. A rise in rates was observed by financial markets and economies due to the possible impact on developing and emerging economies.

Masato Kanda, Japan’s Vice Finance Minister for International Affairs, attended the Jakarta meeting on behalf of Finance Minister Shunichi Suzuki, while Bank of Japan Governor Haruhiko Kuroda participated online.

The G-20 includes Argentina, Australia, Brazil, Great Britain, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, United States and Europe. Union.

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Sensex, Nifty end a bit lower; Cement UltraTech, M&M, Infy, RIL weight https://aisa-net.com/sensex-nifty-end-a-bit-lower-cement-ultratech-mm-infy-ril-weight/ Fri, 18 Feb 2022 10:50:16 +0000 https://aisa-net.com/sensex-nifty-end-a-bit-lower-cement-ultratech-mm-infy-ril-weight/

India’s stock market continued its lackluster trading for the third straight session as it struggled for firm direction amid the absence of any major developments on the domestic or global front. Additionally, mixed signals from global peers also weighed on the market, with lingering concerns over Ukraine-Russia tensions and fears of aggressive US Federal Reserve policy triggering a sell-off in stocks. world. The Ukrainian crisis prompted investors to go into risk aversion mode and focus on safe havens.

Extending the slide for the third session, the BSE Sensex closed 59 points, or 0.1%, down at 57,833, and the NSE Nifty was down 23 points, or 1.16%, at 17,276.

In a similar trend, the broader markets also finished lower. The S&P BSE Midcap and Smallcap indices fell 0.8% each.

The overall market breadth on BSE was negative, with 2,272 shares falling out of a total of 3,706 shares traded. Only 1,288 stocks advanced and 146 remained unchanged.

Excluding capital goods and banking, all sectors end in red

On the sector front, all indices closed in negative territory, with the exception of capital goods and banks. The BSE real estate index was the biggest loser with a loss of 1.23%, led by Sobha, Godrej Industries, Indiabulls Real Estate, Sunteck Realty and DLF.

The BSE oil and gas index also saw a strong increase in sales and ended down 1.14%. The main losers in the oil and gas sector were ONGC, Adani Total Gas, Petronet LNG, HPCL and Reliance Industries.

Top winners and losers

Both the BSE Barometer and benchmark Sensex closed slightly lower with 13 of the top 30 stocks closing higher. The top Sensex pack winner was mortgage lender Housing Development Finance Corporation Ltd. (HDFC), which ended up 1.25%.

Other notable gainers are Larsen & Toubro, Axis Bank, State Bank of India and Kotak Mahindra Bank, which rose 0.7%.

On the losing side, UltraTech Cement topped the charts with a 2.03% decline. Other underperformers include Mahindra & Mahindra, Infosys, Reliance Industries and Bajaj Finance, which fell in the range of 0.7% to 1.4%.

Shares in the news

Ambuja cements: Shares of the company ended down 5.9% after reporting a weak operational performance for the December quarter due to higher fuel prices and flat achievements. Profit after tax decreased by 36.2% year-on-year to ₹317.4 crore, mainly due to lower operating margins and an exceptional charge of ₹65.7 crore due to restructuring.

GR infraprojects: The share of construction and engineering companies closed down 2.3%, after falling 4% to an all-time low of ₹1,485.80 on BSE. The share price has fallen 22% so far this February after announcing disappointing results for the December quarter (Q3FY22).

TCPL packaging: Shares of TCPL Packaging rose 20% to a 52-week high of ₹727 with a good outlook. The company reported a 20% year-on-year (YoY) rise in cash profit to ₹34.8 crore for the December quarter (Q3FY22), while revenue rose 12.9% year-on-year to 274 ₹ crores.

Venky’s (India): Shares of the poultry processing company closed down 2.2% following reports of bird flu in Thane, Maharashtra.

Veritas India: The stock price fell 2% as investors weighed the disappointed December quarter results. Net profit fell 40% year-on-year to ₹17.8 crore in the third quarter of the current financial year from ₹29.5 crore in the same period a year ago.

Global stocks mixed on Ukraine woes

Stocks in the Asia-Pacific region and the European market were trading mixed today amid looming fears of a Russian invasion of Ukraine. US President Joe Biden has warned that Moscow may be on the verge of invading Ukraine as it has failed to withdraw its troops from the border. Russia has amassed 45,000 troops in Belarus, near the Ukrainian border.

Australia’s ASX 200 index ended down 1%, Japan’s Nikkei 225 index fell 0.4% and Singapore’s Straits Times index lost 0.35%.

The Hang Seng index in Hong Kong was the region’s worst performer with a loss of 1.88%, while Taiwan Weighted fell 0.2%.

On the other hand, mainland China stocks were among the best performers in the regional market, with the Shenzhen component and the Shanghai composite up 0.27% and 0.66%, respectively. South Korea’s KOSPI finished a little higher, Indonesia’s Jakarta Composite jumped 0.84% ​​and Thailand’s SET Composite finished slightly higher.

In the European market, stocks opened on a mixed note, after a negative finish on Wall Street overnight. Investors were awaiting the outcome of US Federal Reserve policy as the central bank begins its two-day meeting tonight. The German DAX is down slightly early in the trade, while the French CAC index and the UK FTSE 100 index are trading a bit higher.

In day-to-day trade, all three major U.S. indexes closed lower amid concerns over political tensions between Russia and Ukraine. The Nasdaq Composite Index was the worst performer with a 2.9% loss as growth-oriented tech stocks were hammered by fears of a rate hike. The S&P 500 fell more than 2% and the Dow Jones lost 1.8%.

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Asian stocks mixed, US futures plunge as traders weigh Fed minutes, geopolitical concerns; Oil Slumps: Market Recap https://aisa-net.com/asian-stocks-mixed-us-futures-plunge-as-traders-weigh-fed-minutes-geopolitical-concerns-oil-slumps-market-recap/ Thu, 17 Feb 2022 02:47:09 +0000 https://aisa-net.com/asian-stocks-mixed-us-futures-plunge-as-traders-weigh-fed-minutes-geopolitical-concerns-oil-slumps-market-recap/

Japan’s Topix index fell 0.6%, South Korea’s Kospi index rose 1.2% and Hong Kong’s Hang Seng index rose 0.2%. While S&P 500 and Nasdaq 100 futures fell 0.2%.

U.S. stock futures fell and Asian stocks were mixed on Thursday as traders weighed geopolitical concerns and the likely trajectory of Federal Reserve interest rate hikes.

Shares slid in Japan, surged in South Korea and fluctuated in Hong Kong, where reports suggest authorities are preparing mass testing to combat Covid. US contracts fell after the S&P 500 managed a small gain on Wednesday.

Treasuries have climbed, the dollar has held steady, and gold has recently seen a rally. Traders were digesting the United States’ rejection of Russian claims of a troop withdrawal from the Ukrainian border. The Kremlin has repeatedly denied any invasion plans.

Oil slipped amid signs that an Iranian nuclear deal is drawing closer, which could pave the way for a resumption of official exports from the Persian Gulf producer. In recent times, crude has also been plagued by supply issues related to the buildup of Russian troops.

The Fed’s latest minutes showed officials had concluded they would start raising rates soon and were on high alert that lingering inflation would warrant faster tightening. There were few new details on the balance sheet liquidation plans.

Here are some key events this week:

  • G-20 finance ministers and central bank governors meet from Thursday to February 18
  • Cleveland Fed President Loretta Mester and St. Louis Fed President James Bullard speak Thursday
  • US Monetary Policy Forum: Speakers including Fed officials Charles Evans, Christopher Waller and Lael Brainard, Friday

Some of the major movements in the markets:

Shares

  • S&P 500 futures fell 0.2% at 10:55 a.m. in Tokyo. The S&P 500 rose 0.1%
  • Nasdaq 100 futures lost 0.2%. The Nasdaq 100 fell 0.1%
  • Japan’s Topix index fell 0.6%
  • Australia’s S&P/ASX 200 index rose 0.6%
  • South Korea’s Kospi index rose 1.2%
  • Hong Kong’s Hang Seng index rose 0.2%
  • China’s Shanghai Composite Index fell 0.1%

Currencies

  • The Japanese yen was at 115.48 to the dollar
  • The offshore yuan was at 6.3315 to the dollar
  • The Bloomberg Dollar Spot Index remained stable
  • The euro was at $1.1381

Obligations

  • The yield on 10-year Treasury bills was 2.03%
  • Australia’s 10-year yield was at 2.24%

Merchandise

  • West Texas Intermediate crude fell 2.3% to $91.54 a barrel
  • Gold was at $1,869.04 an ounce

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Analysis: the Japanese yen becomes a financing currency again, but with more risks https://aisa-net.com/analysis-the-japanese-yen-becomes-a-financing-currency-again-but-with-more-risks/ Tue, 15 Feb 2022 09:45:00 +0000 https://aisa-net.com/analysis-the-japanese-yen-becomes-a-financing-currency-again-but-with-more-risks/

HONG KONG, Feb 15 (Reuters) – As the Bank of Japan asserts its position as a lone dove among its peers, the yen is regaining its status as the world’s most popular funding currency.

The trade is risky, however, as the yen could once again become a safe haven if tensions over Ukraine escalate or an aggressive Federal Reserve triggers a sell-off in markets.

The conventional role of the yen as a cheap currency that investors could borrow and use to fund “carry” trades in higher-yielding markets has been diluted somewhat during the coronavirus pandemic, as other central banks also cut their rates to zero.

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But it once again became the preferred funding currency this week after the BOJ announced a special bond-buying operation to remind markets of its commitment to keeping yields low for longer.

This stance is at odds with the Fed and European central banks which have become decidedly hawkish about inflation.

“If you’re an investor in London or Hong Kong and you’re thinking about what currency to fund a transaction with, you’re basically left with one central bank…at least for now,” Ben said. Shatil. , a Tokyo-based FX strategist at JPMorgan.

“And it’s an environment that has generally favored the yen as a funding currency for carry trades.”

Some things haven’t changed for the yen. Japan has one of the weakest currencies among the Group of Seven countries, sub-zero short-term rates and a base of domestic investors desperate for yield overseas.

Yet, Ukraine factor aside, shorting the yen has become a riskier transaction.

The prospect of higher energy prices and imported inflation could force the BOJ to raise rates. An associated risk is that the Fed goes too fast and too far with its tightening policy, causing a global sell-off in the markets which generates flows towards the safe-haven yen.

In a typical carry trade, investors borrow the low yielding yen or Swiss franc to invest in higher yielding assets elsewhere. The stability of the funding currency is essential to keep the cost of the transaction low.

In a deflation-ridden Japan, short-term yen deposit rates have been close to zero for decades, and negative since 2016, when the BOJ adopted its yield curve control policy.

An example of a typical carry trade would be to borrow yen to invest in Brazilian money markets. This trade has returned 10.7% annualized so far this year.

Paul Mackel, global head of FX at HSBC, says investors can return to the yen as the funding currency of choice, but it’s risky.

“A carry trade will never be very smooth, it’s always about picking up pennies in front of the steamroller, but that steamroller may be a little closer given those uncertainties associated with political risk,” Mackel said.

IF THE YEN APPRECIATES

As the United States warns of an acceleration in the build-up of Russian forces on the Ukrainian border, the yen rose.

After testing its more than four-year low at 116.33 on the dollar last week, it strengthened strongly to 115.33. This type of rapid appreciation erodes carry trades, most of which involve shorting the funding currency.

“The safe-haven properties of the yen can accelerate very quickly,” Mackel said.

There are also fears that Japanese policymakers will worry about the economic impact of a weak yen, especially as the country imports most of its energy and oil prices have hit seven-year highs.

Inflation has edged closer to the BOJ’s 2% policy target, raising the odds that the BOJ will loosen its grip on yields and that rising yields will torpedo yen-funded trades.

The BOJ leaves the markets guessing. While he offered to buy an unlimited number of bonds this week to underscore his determination to contain domestic borrowing costs, he made it clear that such offers would only be made sporadically. Read more

For now, investors are buying into the dovish view.

The BOJ’s offer to buy bonds, “in the near term will likely quiet what was a pretty loud chorus of people saying the BOJ would give in on yield curve control,” JPMorgan’s Shatil said.

This “creates a track for a bit of yen weakness, which would be helpful in the context of these carry trades.”

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Editing by Vidya Ranganathan and Jacqueline Wong

Our standards: The Thomson Reuters Trust Principles.

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GLOBAL MARKETS – Asian stocks fall as US jobs stunner hammers bonds https://aisa-net.com/global-markets-asian-stocks-fall-as-us-jobs-stunner-hammers-bonds/ Mon, 07 Feb 2022 02:00:01 +0000 https://aisa-net.com/global-markets-asian-stocks-fall-as-us-jobs-stunner-hammers-bonds/

* Asian stock exchanges: https://tmsnrt.rs/2zpUAr4

* Nikkei Slips, Wall St Futures Flat; China is jumping

* Bonds deteriorated after U.S. jobs stun, CPI looms

* The euro keeps its gain after the hawkish turn of the ECB

By Wayne Cole

SYDNEY, Feb 7 (Reuters) – Asian stock markets generally eased on Monday after incredibly strong U.S. jobs data eased worries about the global economy but also raised the risk of a aggressive tightening by the Federal Reserve.

Geopolitics also remained a concern as the White House warned that Russia could invade Ukraine any day and French President Emmanuel Macron prepared for a trip to Moscow.

The cautious mood saw the broadest MSCI index of Asia-Pacific stocks outside of Japan plunge 0.1% in early trade. Japan’s Nikkei fell 0.9% and South Korea’s 0.8%.

Chinese markets came back from the Lunar New Year break with a rebound, with the blue chip CSI300 and the Shanghai Composite both up around 2% in morning trading, catching up on last week’s gains on the global stocks. The Hang Seng, who returned from the break on Friday, was flat.

S&P 500 and Nasdaq futures both fell slightly, after last week’s market turmoil saw Amazon.com Inc gain nearly $200 billion while Facebook owner Meta Platforms Inc , lost as much.

BofA analyst Savita Subramanian noted that the company’s forecast for 2022 had weakened significantly, with most stocks falling following earnings reports.

“Comments suggest worsening labor shortages and supply chain issues, with more headwind expected in the first quarter than in the fourth,” Subramanian said in a note. Since wages are the main cost component for companies, the pressure on margins was to continue.

January’s payrolls report showed annual growth in average hourly wages fell from 4.9% to 5.7%, while payrolls in previous months were revised up by 709,000 to change radically the hiring trend.

“The report not only indicated that the payroll was far higher than anyone could have imagined, but there was exceptional strength in earnings, which must add to growing concern among Fed officials about the pressure to the upside on inflation,” said Kevin Cummins, chief U.S. economist at NatWest Markets. .

Consumer price figures for January are due on Thursday and could well show core inflation accelerating at the fastest pace since 1982 to 5.9%.

As a result, the markets decided to price-fix with a one-in-three chance that the Fed could hike 50 basis points in March and the real rate outlook hitting 1.5% by the end of the year.

That sent two-year yields up 15 basis points for the week, the biggest rise since late 2019, and they last stood at 1.327%.

In currency markets, the euro continued to enjoy the glow of a newly hawkish European Central Bank as markets brought forward the likely timing of a first rate hike and propelled bond yields sharply higher.

Klaas Knot, president of the Dutch central bank and member of the ECB’s governing council, said on Sunday that he expects a rise in the fourth quarter of this year.

The single currency was in sight at $1.1456, having surged 2.7% last week in its best performance since early 2020. Technically, a break of resistance around $1.1482 would open the way for 1, $1600 and up.

The dollar fared better against the Japanese yen as the market still sees little chance of the Bank of Japan tightening this year. It was flat at 115.27 yen, while the euro was up at 132.06 yen after climbing 2.7% last week.

The euro’s wild swing left the US dollar index down at 95.436, after losing 1.8% last week.

Gold was a bit firmer at $1,808 an ounce, but is struggling to weather higher bond yields.

Oil prices rose near seven-year highs amid supply concerns due to freezing weather in the United States and ongoing political unrest among the world’s major producers.

Brent added another 32 cents to $92.97 a barrel, while U.S. crude rose 42 cents to $91.89.

(Additional reporting by Tom Westbrook. Editing by Sam Holmes and Lincoln Feast.)

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IMF lowers global economic growth forecast for 2022 to 4.4% on weaker outlook for US and China https://aisa-net.com/imf-lowers-global-economic-growth-forecast-for-2022-to-4-4-on-weaker-outlook-for-us-and-china/ Tue, 25 Jan 2022 14:00:00 +0000 https://aisa-net.com/imf-lowers-global-economic-growth-forecast-for-2022-to-4-4-on-weaker-outlook-for-us-and-china/

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The International Monetary Fund has cut its global economic growth forecast for 2022 as the Covid-19 pandemic enters its third year, citing weaker prospects for the United States and China as well as persistent inflation.

The global economy will expand 4.4% this year, down from an estimate of 4.9% in October, the Washington-based IMF said in its World Economic Outlook on Tuesday. The fund forecast growth of 3.8% for 2023, up from the previous projection, but the cumulative expansion for the two years will still be 0.3 percentage points lower than the previous forecast.

The United States, the world’s largest economy, saw its forecast reduced on the outlook for President Joe Biden’s spending program and China, the second-largest, on housing challenges.

The global economy grew 5.9% last year, according to the IMF, the strongest in four decades of detailed data. This followed a 3.1% contraction in 2020 that was the worst peacetime decline in broader numbers since the Great Depression.

Central banks that have cut interest rates to mitigate the economic decline caused by the pandemic are facing pressure to tighten policy to deal with soaring consumer prices, threatening to dampen the rebound in growth. Governments also have less fiscal space to meet health needs and support their economies after racking up record debt.

‘Be ready’

“The past two years reaffirm that this crisis and the ongoing recovery is unlike any other,” wrote Gita Gopinath, who became the fund’s second head this month after three years as chief economist, in a blog accompanying the report.

“Policymakers need to vigilantly monitor a wide range of incoming economic data, prepare for contingencies, and be ready to communicate and execute near-term policy changes,” Gopinath said. “In parallel, bold and effective international cooperation should ensure that this year is the year the world escapes the grip of the pandemic.”

While the IMF sees the omicron variant weighing on growth in the first quarter, it expects the negative impact to fade from the second quarter, assuming the global surge in infections subsides and the virus does not transform into new variants that require more restrictions on mobility.

Supply chain disruptions are spurring more widespread inflation than expected, the IMF said, with an annual rate projected to average 3.9% in advanced economies this year, down from a previous estimate of 2.3%, and 5.9% in emerging and developing countries.

The IMF expects the faster pace of cost-of-living increases to gradually ease later this year, assuming price expectations remain firmly anchored as maritime bottlenecks ease and major economies react with interest rate increases.

Advanced economies raising interest rates can create risks to financial stability and capital flows, currencies and fiscal positions of emerging and developing economies after debt levels rise, the IMF said. . International cooperation will be needed to preserve nations’ access to liquidity and facilitate orderly debt restructuring if necessary, the fund said.

IMF projections:

  • The fund cut its US growth forecast by 1.2 percentage points to 4%. The revision reflects the removal of positive impact assumptions from President Joe Biden’s Build Back Better social spending plan, which has stalled in Congress; early withdrawal of Federal Reserve support; and persistent supply chain bottlenecks

  • He cut China’s growth forecast by 0.8 points to 4.8%, citing disruptions caused by the pandemic, the nation’s zero-tolerance policy for Covid-19 and disruptions in the housing sector.

  • The IMF lowered its growth forecasts for Brazil and Mexico by 1.2 percentage points to 0.3% and 2.8%, respectively, as the fight against inflation already prompted a tightening of monetary policy which will weigh on domestic demand

  • India to grow fastest among major economies at 9% from 8.5%, due to improved credit growth

Projections assume that poor health outcomes from Covid-19 recede to low levels in most countries by the end of this year, vaccination rates improve and treatments become more available. Risks are on the downside, with new variants threatening to prolong the pandemic.

Ending the pandemic depends on ending vaccine inequity, the IMF has said. The share of the population fully immunized is about 70% for high-income countries, but less than 4% for low-income countries. Eighty-six countries, representing 27% of the world’s population, failed to reach the 40% immunization level at the end of last year that the IMF says is needed to stem the pandemic.

The world also suffers from deep inequality in Covid-19 testing, with testing rates around 80 times higher in high-income countries than in low-income countries.

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US stocks reverse heavy losses as buyers step in https://aisa-net.com/us-stocks-reverse-heavy-losses-as-buyers-step-in/ Mon, 24 Jan 2022 21:44:29 +0000 https://aisa-net.com/us-stocks-reverse-heavy-losses-as-buyers-step-in/

Shares on Wall Street ended higher on Monday after investors took advantage of a sharp decline early in the session to snap up discounted stocks.

The S&P 500 index stock gained 0.3%, reversing a midday decline of up to 4%. At its lows, the blue-chip U.S. benchmark was more than 10% below an all-time high this month, known as the correction.

The changes throughout the trading day were intense, with volatility gauges reaching the highest levels since October 2020, ahead of the US election and the results of the effectiveness of vaccines developed by Pfizer and Moderna to prevent the spread of coronavirus.

Between its highs and lows, the S&P 500 rose 4.4 percentage points on the day. An intraday move of this magnitude has not been recorded since March 2020, when the coronavirus pandemic sent financial markets plummeting.

US stock markets have been rocked this month as the Federal Reserve is expected to quickly reverse the stimulus measures that have propelled stock markets for the past two years.

But as with previous selloffs, investors stepped in late Monday to buy the dip.

Nonetheless, 137 of the S&P 500 stocks are down more than 20% from recent highs, including top companies such as Moderna, Twitter, Netflix and Salesforce. The S&P 500 suffered its biggest loss since March 2020 last week.

“In this type of environment, you would expect the more speculative names to be the most affected, and that is what is happening,” said David Kelly, chief market strategist for JPMorgan Asset Management.

Kelly pointed to a hawkish pivot from the Fed, as well as concerns about the effect the Omicron variant of the coronavirus has had on economic activity and rising geopolitical tensions as Russia stations troops on the Ukrainian border.

“Everyone realized that this market had come a long way, given the continued uncertainty, and needed to undergo a correction,” he added.

Line chart of intraday price swing in the S&P 500 (%) showing US stocks swinging dramatically on Monday

Shares of major US technology groups have been among the hardest hit on Wall Street. The tech-heavy Nasdaq Composite index briefly fell 4.9% before rebounding to end the day in the green.

The trading brought the Nasdaq a hair’s breadth away from a so-called bear market – when all-time high losses topped 20%. Already, 69% of the more than 3,600 stocks in the index are down by that much or more.

Investors sought the relative safety of US government debt amid the selloff earlier in the day. An auction of two-year U.S. Treasuries drew its strongest demand since April 2020, with the yield rating dropping 0.05 percentage points to 0.95%.

Investors are “grimmed” by the Fed’s policy shift at its rate-setting meeting this week as the central bank seeks to rein in soaring inflation, said Gargi Chaudhuri, chief strategy officer. iShares Americas investment in BlackRock. They also focus on how quickly the Fed will start shrinking the size of its balance sheet by nearly $9 billion, which has already trickled down to financial markets.

“The idea that we are going to have policy normalization at the same time as we have balance sheet runoff will obviously be bad for financial conditions, and therefore bad for equity markets,” she said.

Goldman Sachs said over the weekend that it expected the Fed to signal that it would begin raising interest rates in March from historic lows near zero. The bank also warned customers of a “risk that the Federal Open Market Committee may want to take tightening action at every meeting until [the inflation] the image is changing” and that it could raise fares more than four times this year.

Futures markets have predicted that the world’s most influential central bank will raise its benchmark interest rate to more than 1% by December.

While higher interest rates increase borrowing costs for all businesses, they also make projected corporate earnings worth less in investor valuation models, with an amplified effect for tech companies. and other growth companies whose peak profits aren’t expected for years.

Tech shares had soared during the pandemic era due to a widely held view that social restrictions had accelerated the advancement of social trends such as online shopping, remote working and gaming. .

But speculative tech stocks had reached “valuations [that] don’t make sense in any investment environment,” Morgan Stanley strategist Michael Wilson said in a note to clients, and weren’t falling “just because the Fed is pivoting.”

In Europe, the Stoxx Europe 600 regional equity index fell 3.8% to its lowest level since October. Its tech sub-index fell 5.8%, its biggest daily decline since October 2020 and bringing its loss so far in January to more than 13%.

South Korea’s tech-heavy Kospi index fell 1.5% and Hong Kong’s Hang Seng Tech index fell 2.8%.

The Vix, Wall Street’s so-called fear gauge that measures expected volatility on the blue chip S&P 500 stock index, hit 38.94 points – its highest since October 2020.

Additional reporting by Jennifer Creery in Hong Kong and Leo Lewis in Tokyo

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China’s wild markets raise the stakes for traders buying into the rally https://aisa-net.com/chinas-wild-markets-raise-the-stakes-for-traders-buying-into-the-rally/ Sat, 22 Jan 2022 01:08:27 +0000 https://aisa-net.com/chinas-wild-markets-raise-the-stakes-for-traders-buying-into-the-rally/

(Bloomberg) — The battle between fear and greed is wreaking havoc on Chinese financial markets.

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With China bulls finally getting some vindication as the country’s stocks and bonds rally, the past week shows that investors need to be prepared for wild swings. Take Country Garden Holdings Co., the nation’s largest developer. On Monday, its 2024 bond plunged 10 cents on the dollar to trade as a stressed asset, only to jump a record 14 cents two days later. The Hang Seng index of Chinese companies fell for five straight days before rallying the most since July on Thursday.

After last year saw one of the worst relative performances in recent Chinese market history, the country’s ultra-low valuations stand out. While the People’s Bank of China stepped up monetary easing last week and pledged to do more, its dovish tone sets it apart from tighter policies in most major economies. Signs that the Communist Party may withdraw its campaign against the real estate sector add to the bullish trend as traders seek alternatives to pricey global tech stocks.

“We’re starting to see more and more policy adjustments aimed at, what we’re seeing, damage limitation,” said Citigroup Inc. strategists led by Dirk Willer. The “recovery in real estate bonds is mainly a short cover, but nevertheless a welcome one”.

Many investors, analysts and strategists are betting their reputation on a 2022 rally in Chinese markets. Since late last year, Societe Generale SA, Goldman Sachs Group Inc., BlackRock Inc., UBS Group AG and HSBC Holdings Plc have all been overweight domestic equities. In December, JPMorgan Chase & Co.’s Marko Kolanovic recommended betting on China this year, predicting that the MSCI China index would rise nearly 40%.

SocGen strategists say Chinese stocks make up 20% of their global equity exposure in a multi-asset portfolio.

On the credit front, firms such as Allianz Global Investors, Axa Investment Managers and Oaktree Capital Group have said in recent months that they are looking to increase their holdings of battered real estate debt. Jason Brown, a former head of Goldman’s special situations group, last month raised an initial $245 million for his Arkkan Capital to invest in distressed Chinese mortgages and bonds.

Such optimism has been tested many times. The Hang Seng China gauge fell to a nearly six-year low earlier this month and the yield on Chinese junk dollar bonds jumped above 20% as risks to the economy grew.

“A lot of people in the market were too optimistic and called for a strong rebound too soon,” said Hao Hong, chief strategist and head of research at Bocom International.

From now on, bullish bets prove to be more fruitful. The Hang Seng Index closed its fifth week of gains – the longest winning streak in two years. Real estate bonds rose amid speculation, authorities will take steps to ease the industry’s liquidity crunch. A local media report said Friday that banks had accelerated mortgage approvals in some major cities. Regulators could ease restrictions on developers’ access to funds from pre-sold homes, according to reports earlier in the week.

Successful funding deals by two of China’s biggest developers have also helped ease fears that stronger companies are under financial strain. Country Garden raised $500 million by selling convertible bonds, according to a filing released Friday. Greentown China Holdings Ltd., the seventh largest developer by contract sales, this week sold a $400 million bond in the largest offshore deal by a developer since September.

Even though stocks ended the week higher in Hong Kong, measures of expected swings rose as derivatives traders bought protection. The city’s VIX equivalent climbed 11%, the most in two months. The record rally in Chinese property bonds lost momentum on Thursday as investors debated whether looser rules on the use of blocked funds would provide enough short-term liquidity.

Reasons for caution remain. Many weaker developers with looming maturities are still locked out of the dollar bond market, and worries about hidden debt risks are keeping traders on edge. China Aoyuan Group Ltd. just became the eighth known developer to default on its dollar debt since October. The Chinese crackdown on the tech industry shows no signs of letting up, with Beijing vowing to limit their influence and stamp out corruption linked to the “chaotic” expansion of capital.

Nor is there any real playbook for what happens to the markets when the PBOC diverges so far from the Federal Reserve on policy. China’s central bank has rarely cut interest rates during US tightening cycles – according to one economist, the last time was in 1999, when China was effectively closed to most international investors.

“There is a clear need to introduce more measures to anticipate systemic risks, and we expect further policy adjustments in the coming weeks,” DBS Group currency and credit strategists wrote in a note. recent. “Volatility remains the theme.”

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Asian stocks mixed after China reports slower growth https://aisa-net.com/asian-stocks-mixed-after-china-reports-slower-growth/ Mon, 17 Jan 2022 06:49:49 +0000 https://aisa-net.com/asian-stocks-mixed-after-china-reports-slower-growth/

BANGKOK (AP) — Stocks were mixed in Asia on Monday after China reported its economy grew at an annual rate of 8.1% in 2021, though growth slowed to half that level in the last quarter. .

Tokyo, Shanghai and Sydney rose, while Hong Kong and Seoul fell.

The weakness of the Chinese economy towards the end of 2021 prompts suggestions that Beijing should intervene to support growth with interest rate cuts or by injecting money into the economy through spending on public works. .

Shortly before the release of growth data, China’s central bank announced a cut in average lending rates to commercial banks to the lowest level since 2020.

“Economic momentum remains weak amid repeated virus outbreaks and a struggling real estate sector,” Julian Evans-Pritchard of Capital Economics said in a commentary. He expects Chinese policymakers to maintain relatively tight limits on loans and control credit growth.

“The bottom line is that policy easing is likely to cushion the economic downturn rather than cause a rebound,” he said.

Slowdown in activity in China, the largest economy in the region, can hamper growth across the region. Lockdowns and other precautions imposed to combat coronavirus outbreaks can also exacerbate shortages of key parts and components, adding to shipping and supply chain challenges.

The Shanghai Composite Index gained 0.6% to 3,542.74, while Hong Kong’s Hang Seng fell 0.7% to 24,2207.75.

The South Korean Kospi fell 1.1% to 2,890.10 after North Korea fired two suspected ballistic missiles into the sea on Monday morning in its fourth weapons launch this month, the South Korean military said, in an apparent bid to demonstrate military might amid stalled diplomacy with states States and pandemic border closures.

In Tokyo, the Nikkei 225 rose 0.7% to 28,333.52 as the government announced machinery orders rose in November as private investment and manufacturing activity improved during a lull in coronavirus outbreaks. coronavirus. Orders from shipbuilders jumped 170%.

Australia’s S&P/ASX 200 climbed 0.3% to 7,417.30.

On Friday, the S&P 500 gained 0.1%, closing at 4,662.85. It surged in the closing minutes of trading after falling around 1% earlier in the day. The tech-heavy Nasdaq posted a 0.6% gain, closing at 14,893.75. The Dow Jones Industrial Average fell 0.6% to 35,911.81.

Small company stocks also rebounded from an early plunge. The Russell 2000 Index rose 0.1% to 2,162.46.

A rally in tech stocks, along with gains in energy and other sectors, helped offset declines in banks and elsewhere in the market at a time when investors were mostly focused on a mix of reports on corporate profits and discouraging retail sales data.

The mixed end capped a choppy week of trading on Wall Street that deepened the market’s slide in January. The benchmark S&P 500, which climbed 26.9% in 2021, is now about 2.8% below the all-time high it hit on Jan. 3.

The Commerce Department announced Friday that retail sales fell 1.9% in December after Americans cut spending in the face of product shortages, rising prices, and the appearance of the omicron variant.

It was the latest in a series of economic reports this week that have raised concerns about inflation and its impact on businesses and consumer spending.

Rising prices encourage companies to passing more costs on to consumers. Consumers cut spending in department stores, restaurants and online due to rising prices and supply shortages.

Concerns about the persistent rise in inflation are also prompting Federal Reserve reduce its bond purchases and consider raising interest rates sooner and more often than Wall Street expected less than a year ago.

The 10-year Treasury yield remained stable at 1.79%.

The price of U.S. crude oil rose 46 cents to $84.28 a barrel in electronic trading on the New York Mercantile Exchange. On Friday, it rose 2.1%, helping to lift energy stocks.

Brent crude added 26 cents to $86.32 a barrel.

The US dollar fell from 114.18 yen to 114.49 Japanese yen. The euro remained unchanged at $1.1417.

___

AP Business Writer Joe McDonald in Beijing contributed.

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S. Korean won best day in more than a month on rate hike hopes https://aisa-net.com/s-korean-won-best-day-in-more-than-a-month-on-rate-hike-hopes/ Tue, 11 Jan 2022 07:23:00 +0000 https://aisa-net.com/s-korean-won-best-day-in-more-than-a-month-on-rate-hike-hopes/
  • Thai stocks, baht gain after central bank assurance
  • Singapore stocks gain the most, driven by Singtel’s rise

Jan. 11 (Reuters) – The South Korean won dominated the gains of Asian currencies on Tuesday, as bullish economic data raised prospects for higher interest rates, while telecoms stocks held down shares of Singapore on track for fourth consecutive session of increases.

The Indian rupee, Malaysian ringgit and Singaporean dollar strengthened between 0.2% and 0.3%, as the US dollar stagnated a day ahead of crucial inflation data that could provide more clarity on normalization Federal Reserve policy.

The won strengthened 0.4% to 1,194.70 per dollar, posting its best session since December 1, as strong partial trade data for January adds to the case for a tightening of the dollar. monetary policy of the Bank of Korea (BoK) at its meeting on Friday.

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Maybank analysts said the won was aided by the drop in COVID-19 cases and easing concerns over geopolitical tensions fueled by a North Korean hypersonic missile test, along with a warning from the Minister of Finance that currency movements were monitored.

“The focus is on the BoK’s monetary policy meeting as we seek a 25 basis point hike,” analysts said in a note, noting that stubbornly high inflation should prompt the central bank to continue. its tightening cycle, having already raised rates twice.

The Philippine peso strengthened 0.1%, recovering from earlier losses boosted by data showing the country’s imports continued to outpace exports in November, bringing its trade deficit to $ 4.71 billion.

Increasing fuel needs could lead to a worsening of the Philippines’ trade deficit and hurt the peso, said Nicholas Mapa, senior economist for the Philippines at ING.

Meanwhile, shares of Bangkok (.SETI) and the baht rose 0.4% and 0.3%, respectively, as the Bank of Thailand assured the Omicron coronavirus variant outbreak could be managed. in the first half of 2022, with the economy expected to return to its pre-pandemic levels in 2023. more

Among stocks, Chinese stocks (.SSEC) fell 0.7% amid concerns over national COVID-19 outbreaks, while most other markets posted moderate gains.

Leading the gains, Singaporean stocks (.STI) added 0.4%, driven by a 4% jump in Singapore Telecommunications (Singtel) (STEL.SI) on reports claiming the company was considering divesting its assets of Australian fiber worth billions of dollars. Singtel, however, said there was no assurance that a deal would be made.

STRONG POINTS

** Rupiah trades flat and shares of major Indonesian coal miners rise after coal export ban is lifted; Jakarta benchmark (.JSKE) is trading down 0.3%

** Indonesian 10-year benchmark yields up 0.2 basis points to 6.465%

** In the Philippines, the main losers in the index are: AC Energy Corp (ACEN.PS), down 5.1%, and Converge Information & Communications Technology Solutions Inc (CNVRG.PS), down 4, 7%

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Reporting by Anushka Trivedi and Archishma Iyer in Bengaluru; Editing by Subhranshu Sahu

Our Standards: Thomson Reuters Trust Principles.

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