FILE PHOTO: A Sydney businessman walks into the light outside the Reserve Bank of Australia (RBA), February 3, 2015. REUTERS/Jason Reed/File Photo
June 18, 2019
SYDNEY (Reuters) – Australia’s central bank believes it will likely have to cut interest rates further from the current record low of 1.25% in order to push down unemployment and revive growth in wages and inflation.
Minutes of the Reserve Bank of Australia’s (RBA) June policy meeting showed its Board decided cutting rates by a quarter point at that meeting would help speed up the economy, but would not be enough on its own.
“Given the amount of spare capacity in the labor market and the economy more broadly, members agreed that it was more likely than not that a further easing in monetary policy would be appropriate in the period ahead,” the minutes showed.
Financial markets have already priced in another rate cut to 1% by August and a further move to 0.75% by early next year.
The Board also noted that lower rate were not the only policy option available to assist with unemployment, echoing calls by RBA Governor Philip Lowe for government action on infrastructure spending and economic reform.
So far, the newly re-elected government of Prime Minister Scott Morrison has downplayed the need for fiscal stimulus and stuck to plans for returning the budget to surplus in 2019/20.
The Liberal National Coalition won re-election in mid-May, beating the favored Labor Party.
Tuesday’s minutes showed the Board judged lower rates would support the economy by pushing down the value of the Australian dollar. The currency has duly fallen to five-month lows since the RBA’s June 4 meeting.
Lower rates would also reduce debt repayments by households, so freeing up extra cash, while lowering borrowing costs for business, the minutes showed.
The Board acknowledged that cutting rates crimped returns for savers, but felt the overall impact would be to support economic growth.
Members also saw little risk that easing policy would lead to a risky rise in household borrowing or to an unexpectedly strong pick up in inflation.
Indeed, the Board judged that the factors suppressing inflation and wage growth would last for some time given the extent of spare capacity in the labor market.
FILE PHOTO: A pumpjack is seen at sunset outside Scheibenhard, near Strasbourg, France, October 6, 2017. REUTERS/Christian Hartmann
June 18, 2019
TOKYO (Reuters) – Oil prices steadied on Tuesday, caught between rising tensions in the Middle East and signs that economic growth is being hit by trade tensions between the United States and China.
Brent crude futures were up 4 cents at $60.98 a barrel by 0055 GMT. They fell 1.7% in the previous session on concerns about slowing global growth.
U.S. West Texas Intermediate (WTI) crude futures were 1 cent lower at $51.92. They dropped 1.1% on Monday.
The New York Federal Reserve said on Monday its gauge of business growth in New York state posted a record fall this month to its weakest level in more than 2-1/2 years, suggesting an abrupt contraction in regional activity.
U.S. business sentiment has sagged as tensions over trade have escalated between China and the United States and on signs of softness in the labor market.
“The market is in a rut and desperately in need of some robust economic data to get it out of this funk,” said Stephen Innes, managing partner at Vanguard Markets in Bangkok.
Oil prices have fallen around 20% since 2019 highs reached in April, in part due to concerns about the U.S.-China trade war and disappointing economic data.
U.S. President Donald Trump and China’s President Xi Jinping could meet at the G20 summit in Japan later this month. Trump has said he would meet Xi at the summit, although China has not confirmed the meeting.
Putting further pressure on oil, the U.S. energy department said on Monday that shale oil output is expected to reach a record in July.
But tensions in the Middle East are likely to keep prices supported, analysts said.
Acting U.S. Defense Secretary Patrick Shanahan announced on Monday the deployment of about 1,000 more troops to the Middle East for what he said were defensive purposes, citing concerns about a threat from Iran.
Fears of a confrontation between Iran and the United States have mounted since last Thursday when two oil tankers were attacked, which Washington has blamed on Tehran.
(Reporting by Aaron Sheldrick; editing by Richard Pullin)
Pound coins are seen in the photo illustration taken in Manchester, Britain September 6, 2017. REUTERS/Phil Noble/Illustration
June 18, 2019
By Hideyuki Sano
TOKYO (Reuters) – The British pound on Tuesday languished near this year’s low on rising worries Boris Johnson, the front-runner to replace UK Prime Minister Theresa May, could put Britain on a path towards a dreaded no-deal Brexit.
The Australian dollar is also at its lowest levels since the flash crash of early January, hit by growing expectations of another rate cut by the country’s central bank and by the specter of a further slowdown in China – Australia’s largest export market.
The yen and the euro were steadier, with investors holding out for trading clues from policy-setting meetings by the U.S. Federal Reserve and the Bank of Japan as well as a conference organized by the European Central Bank, all scheduled this week.
“While major currencies were little moved now, when you look at market moves over the past week or so, many commodity currencies and emerging market currencies are weak, reflecting broad risk-off sentiment,” said Masashi Hashimoto, senior analyst at MUFG Bank.
The U.S-China trade frictions and rising geopolitical tensions in the Strait of Hormuz after recent attacks on tankers are all undermining risk sentiment, he said.
Worries about Brexit hit the British pound, which tumbled to a 5-1/2-month low of $1.2532 on Monday and last traded at $1.2539.
Sterling also fell to its weakest level since January against the euro, which climbed to 89.50 pence, compared to a two-year low of 84.56 touched just over a month ago.
Former foreign minister Boris Johnson got a boost on Monday in his campaign to succeed May as one of his former rivals and EU supporter Matt Hancock backed him.
That rattled markets as Johnson, the face of the official campaign to leave the European Union in the 2016 referendum, has promised to lead the United Kingdom out of the EU with or without a deal.
The pound could be in for a rough ride in coming days, with a raft of potentially market-moving events ahead, including consumer inflation and retail sales data, due on Wednesday and Thursday respectively, and the Bank of England’s policy announcement on Thursday.
The risk-sensitive Australian dollar drooped at $0.6855, just above its 5-1/2-month low of $0.6849 hit overnight, as trade tensions between the United States and China have shown few sign of abating.
Markets are pricing in about 50% chance of another rate cut next month by the Reserve Bank of Australia, which delivered its first easing in almost three years just two weeks ago.
The euro hardly budged at $1.1220 while the dollar was little moved at 108.53 yen.
The dollar was slightly undermined by the New York Fed’s business index showing a record fall this month to its weakest level in more than 2-1/2 years.
The Fed’s two-day policy meeting starting later on Tuesday is the next major focus after markets have priced in more than two 25 basis-point rate cuts by year-end.
That marks a sharp contrast to the Fed’s official forecast in March, which showed policymakers deemed the next move would be a hike.
“As markets are now pricing in rate cuts in the second half of this year, the question is how the Fed will respond to such an outlook,” said Shinichiro Kadota, senior strategist at Barclays.
(Editing by Shri Navaratnam)
A man looks on in front of an electronic board showing stock information at a brokerage house in Nanjing, Jiangsu province, China February 13, 2019. REUTERS/Stringer
June 18, 2019
By Shinichi Saoshiro
TOKYO (Reuters) – Investor caution ahead of the Federal Reserve’s interest rate meeting capped Asian stocks on Tuesday, while crude oil prices retreated as global growth worries overshadowed supply concerns stemming from recent Middle East tensions.
MSCI’s broadest index of Asia-Pacific shares outside Japan inched up 0.05%.
Australian stocks added 0.1% while Japan’s Nikkei dipped 0.05%.
The Fed, facing fresh demands by U.S. President Donald Trump to cut interest rates, begins a two-day meeting later on Tuesday. The central bank is expected to leave borrowing costs unchanged this time but possibly lay the groundwork for a rate cut later this year.
Fresh hopes for looser U.S. monetary policy have been a tonic for risk assets markets, which were buffeted last month by an escalation in the trade conflict between Washington and Beijing. The S&P 500 has gained 5% this month after sliding in May on trade war fears.
Focus is now on how close the Fed could be to cutting interest rates amid the raging U.S.-China trade war, signs of the economy losing steam and pressure by President Trump to ease policy.
“The FOMC (Federal Open Market Committee) meeting is the week’s biggest event so there will be a degree of caution prevailing in the markets,” said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui DS Asset Management.
“Expectations for a rate cut in July have increased significantly, so the markets could experience disappointment if the Fed does not send strong signals of impending easing.”
U.S. Treasury yields dipped on Monday after the New York Fed’s “Empire” gauge of business growth in the state showed a fall this month to its weakest in more than 2-1/2-years, fanning rate cut expectations.
The dollar index against a basket of six major currencies stood little changed at 97.507 after pulling back from a two-week high on the decline in Treasury yields.
The pound traded at $1.2542 after retreating overnight to a six-month low of $1.2532 on Monday on concerns that arch-Brexiteer Boris Johnson will replace Theresa May as prime minister. [GBP/]
The euro was a shade higher at $1.1224 after spending the previous day confined to a narrow range.
U.S. crude oil futures shed 0.08% to $51.89 per barrel after retreating 1.1% the previous day.
Oil prices had slipped on Monday as weak Chinese economic data released at the end of last week led to fears of lower global demand for the commodity. [O/R]
Concerns over weakening demand overshadowed tensions in the Middle East, which remained high following last week’s attacks on two oil tankers in the Gulf of Oman.
(This version of the story corrects typographical error in paragraph 5)
(Editing by Sam Holmes)
FILE PHOTO: Italian Deputy Prime Minister Matteo Salvini attends a joint news conference following a cabinet meeting in Rome, Italy, June 11, 2019 REUTERS/Remo Casilli
June 18, 2019
By Crispian Balmer
ROME (Reuters) – Italy is the United States’ most reliable ally in Europe, Deputy Prime Minister Matteo Salvini said on Monday, keen to present himself as a strong, trustworthy statesman during a flying visit to Washington.
Fresh from his triumph in last month’s European parliamentary election, when his League party came top of the polls in Italy, Salvini went to Washington to burnish his credentials as a dynamic EU leader with a glowing future.
“At a time when European Union institutions are fragile and changing significantly, Italy wants to be the first, most solid, valid, credible and coherent partner for the United States,” he said on his Facebook page.
Salvini held talks with U.S. Secretary of State Mike Pompeo and Vice President Mike Pence and visited Washington landmarks, sending home a flurry of Facebook videos and tweets to chronicle the brief trip.
Salvini, who also serves as interior minister in the government, has no direct say in foreign policy, which is overseen by Italian Prime Minister Giuseppe Conte and Foreign Minister Enzo Moavero — neither of whom have direct political affiliation with any group.
As head of Italy’s biggest party, Salvini seemed eager to reposition Italian diplomacy during his trip, however, saying he shared a “common vision” with Washington on China, Iran, Venezuela, Libya and the Middle East.
Italy has often adopted cautious lines in key diplomatic areas, seeking to serve as a bridge between various worlds.
Earlier this year, Rome angered the United States when it refused to recognise Venezuela’s opposition leader Juan Guaido as interim president — a position imposed on the Italian government by the League’s coalition ally, the 5-Star Movement.
Italy further incurred Washington’s displeasure in March when it became the first major Western power to endorse China’s ambitious “Belt and Road” infrastructure project in an effort to boost its own vital export market.
However, in a news conference posted on his Facebook page, Salvini said the government was considering banning China’s Huawei Technologies Co. Ltd from bidding for infrastructure projects in Italy following warnings from the United States that it could endanger national security in the West.
“When you raise the issue of national security and also have a shared vision and shared values with the United States, then you reach a time when business deals have to stop,” he said.
Salvini was one of the first prominent EU politicians to throw his weight behind Donald Trump in 2016 as he campaigned to become U.S. president and attended one of his election rallies.
He left Washington on Monday singing the praises of the president’s economic policy.
The next Italian budget “will have to be Trumpian” he said, referring to tax cuts introduced by the U.S. administration.
Salvini has pledged to introduce a flat tax in 2020, but the European Union executive has warned that heavily indebted Italy cannot afford such budget largesse and has threatened Rome with disciplinary action unless it gets its accounts in order.
“We will try to convince the EU with numbers and by being polite. But we will cut taxes regardless and they are just going to have to get used to the idea,” he said.
(Reporting by Crispian Balmer; Editing by Sonya Hepinstall)
FILE PHOTO: A flag flies from the Department of Justice in Washington, U.S., March 24, 2019. REUTERS/Joshua Roberts/File Photo
June 17, 2019
WASHINGTON (Reuters) – The U.S. Justice Department said on Monday it had settled antitrust charges with CBS Corp, Cox Enterprises Inc, E.W. Scripps Co, Fox Corp and Tegna Inc, which were accused of sharing competitively sensitive information.
“All five companies are alleged to have engaged in unlawful information sharing among their owned broadcast television stations,” the department said in a statement.
(Reporting by Eric Beech; Editing by Mohammad Zargham)
FILE PHOTO: Containers are seen at an industrial port in the Keihin Industrial Zone in Kawasaki, Japan September 12, 2018. REUTERS/Kim Kyung-Hoon
June 17, 2019
By Daniel Leussink
TOKYO – Japanese manufacturers’ business confidence dropped to a more than 2-1/2-year low in June, a Reuters poll showed on Tuesday, re-igniting fears the economy could be hit by slowing external demand in the face of a global slowdown and trade risks.
The monthly poll, which tracks the Bank of Japan’s (BOJ) tankan quarterly survey, found the service-sector mood slipping for the first time in four months, suggesting business confidence has fallen ahead of a planned nationwide sales tax increase in October.
Both manufacturers’ and non-manufacturers’ sentiment are expected to remain below last month’s levels over the coming three months, boding ill for the central bank’s closely-watched tankan survey due next in July.
Subdued business confidence – on top of weakness in exports and household spending – has clouded the outlook for the world’s third-largest economy, though analysts widely expect the BOJ to keep policy steady at this week’s rate review.
In a Reuters poll of 505 large- and mid-sized companies, in which 263 firms responded on condition of anonymity, exporters voiced concerns about China’s economic slowdown and its trade war with the United States.
“Our clients are making cautious decisions in capital spending, as the international situation is unstable because of U.S.-China trade tensions and the UK’s departure from the EU,” a manager of a machinery maker wrote in the survey.
The Reuters Tankan sentiment index for manufacturers stood at 6 in June, down six points from May, weighed down by electricity, transport equipment machinery and steel companies, the June 4-13 survey showed.
The index hit the lowest reading since September 2016, falling for the first time in two months.
It is expected to rebound to 11 in September.
In the first quarter, Japan’s economy managed a second straight quarter of growth after a third-quarter contraction, thanks to stronger capital spending, but analysts expect global trade tensions to remain a drag on growth.
The service-sector index dropped five points to 22 in June from 27 in the previous month, weighed by retailers, potentially setting off alarm bells for consumption, which makes up about 60% of the economy.
The index is seen falling further to 21 in September.
Fragile domestic demand could be a source of concern for policymakers who are taking steps to ensure the planned sales tax increase to 10% from the current 8% will go ahead in October, as the 2014 tax hike depressed consumer sentiment.
The BOJ’s last quarterly tankan showed the business mood hit a two-year low in the March quarter, underlining the impact rising trade tensions and weakening overseas demand were having on Japan’s export-reliant economy.
The Reuters Tankan indexes are calculated by subtracting the percentage of pessimistic respondents from optimistic ones. A positive figure means optimists outnumber pessimists.
(Editing by Jacqueline Wong)
FILE PHOTO: Shoppers ride escalators at the Beverly Center mall in Los Angeles, California November 8, 2013. Picture taken November 8. REUTERS/David McNew
June 17, 2019
By Jason Lange, Chris Prentice and David Lawder
WASHINGTON/NEW YORK (Reuters) – This year’s holiday season could be tighter for many Americans if the U.S. government imposes tariffs on another $300 billion worth of Chinese imports – because that will include tech products, game consoles, toys, cribs, ornaments and Santa hats.
The tariffs would add 25% to the import cost of these and many other consumer items just as retail outlets throughout the world’s largest economy begin to gear up for the peak end-of-year shopping season.
Consumers have been largely shielded until now from the direct impact of the trade war between China and the United States as the administration of President Donald Trump has focused previous rounds of tariffs on imports sold to manufacturers rather consumers.
But Trump is escalating the trade war and preparing to extend tariffs to nearly all Chinese imports after talks for a deal broke down in May. The U.S. government is pushing for wide-ranging economic and trade reforms from Beijing.
Trump said he would decide whether to trigger the next round of tariffs after talks with Chinese President Xi Jinping at the G20 summit in Japan later this month.
In preparation for the new round, the U.S. Trade Representative’s Office (USTR) on Monday began seven days of hearings for testimony from retailers, manufacturers and others impacted. Thousands of business filed comments to the USTR ahead of the hearings.
Toys, phones and televisions are all on the tariff list and represent some of the most valuable categories of products that Americans buy from China, according to a Reuters analysis of data from the U.S. Census Bureau.
The new tariffs would hit cellphones whose import bill from China totaled $43 billion in 2018 – more than 80% of total cellphone imports.
They would also cover a broad set of toys, including scooters and doll carriages, whose imports totaled $11.9 billion last year. China supplied about 85% of America’s total imports of those toys.
Further pain for parents could come in the form of proposed levies on more than $5 billion worth of video game consoles. Chinese imports amounted to 98% of total U.S. imports of those consoles last year.
And U.S. imports from China of targeted Christmas products – including ornaments, nativity scenes and Christmas tree lights – totaled at least $2.3 billion last year.
An executive from a family-owned, Christmas goods supplier in upstate New York said the company has looked “long and far” to find another supplier for many typical holiday products.
“However, trying to find other countries to manufacture everything else, from Santa hats, to stockings, to glass ornaments, has been a struggle and we have been unable to do so,” Nathan Gordon of Gordon Companies Inc in Cheektowaga said in public comments posted on June 12.
HE’S MAKING A LIST
Some products previously spared by the Trump administration to avoid hitting consumers’ pockets are now on the list. That includes an array of safety and play equipment for children – including high chairs, play pens, and swings.
The proposed tariffs would hit at least $800 million of these goods.
Smart watches, smart speakers and Bluetooth audio are also included. The Consumer Technology Association estimates that 2018 imports in this category from China were up to $17.9 billion.
Retailers Walmart Inc, Target Corp, and more than 600 other companies urged Trump in a letter last week to resolve the trade dispute with China, saying tariffs hurt American businesses and consumers.
Worry over potential cost increases for Americans from tariffs has raised concern about inflation, though across the economy, prices rises remain below the U.S. Federal Reserve target of 2%.
Trump has said that China pays the tariffs, but U.S. importers actually foot the bill and either pass them on to consumers or suppliers.
(Reporting by Jason Lange and David Lawder in Washington and Chris Prentice in New York; Editing by Simon Webb and Rosalba O’Brien)
FILE PHOTO: Senator Marco Rubio questions witnesses before the Senate Intelligence Committee hearing about “worldwide threats” on Capitol Hill in Washington, U.S., January 29, 2019. REUTERS/Joshua Roberts/File Photo
June 17, 2019
WASHINGTON (Reuters) – U.S. Senator Marco Rubio filed legislation on Monday that would prevent Huawei Technologies Co Ltd from seeking damages in U.S. patent courts, after the Chinese firm demanded that Verizon Communications Inc pay $1 billion to license the rights to patented technology.
Under the amendment – seen by Reuters – companies on certain U.S. government watch lists, which would include Huawei, would not be allowed to seek relief under U.S. law with respect to U.S. patents, including bringing legal action over patent infringement.
On June 12, a person briefed on the matter said Huawei had told Verizon that it should pay licensing fees for more than 230 of the Chinese telecoms equipment maker’s patents and in aggregate is seeking more than $1 billion.
It appeared to be a new strategy in Huawei’s ongoing battle with the U.S. government. National security experts worry that “back doors” in routers, switches and other Huawei equipment could allow China to spy on U.S. communications. Huawei has denied that it would help China spy.
Rubio, one of the Republican party’s leading foreign policy voices, filed the measure as an amendment to the annual National Defense Authorization Act, or NDAA, a massive bill setting policy for spending by the Department of Defense.
While the measure is several steps from becoming law, lawmakers have successfully used the NDAA in past years to crack down on the Chinese firm.
(Reporting by Patricia Zengerle; Editing by Leslie Adler)
FILE PHOTO: The MoneyGram logo is seen on a kiosk in New York, U.S. January 3, 2018. REUTERS/Shannon Stapleton
June 17, 2019
(Reuters) – Blockchain firm Ripple has bought $30 million worth of shares and warrants in MoneyGram International Inc, the two companies said on Monday, as they partner to use Ripple’s product for cross-border payment and foreign exchange settlement.
Ripple bought MoneyGram’s stock at $4.10 per share, representing a premium of about 183% to its Monday closing price. The partnership will initially be for two years, MoneyGram said.
Shares of MoneyGram surged about 77% to $2.56 after the closing bell.
Ripple may also buy additional common stock or warrants for up to $20 million at a minimum price of $4.10 per share, MoneyGram said.
The partnership will focus on Ripple’s xRapid, a platform for cross-border payments that uses XRP, a virtual currency powered by blockchain to send and receive currencies.
“Through Ripple’s xRapid product, we will have the ability to instantly settle funds from U.S. dollars to destination currencies on a 24/7 basis, which has the potential to revolutionize our operations and dramatically streamline our global liquidity management,” MoneyGram Chief Executive Officer Alex Holmes said in a statement.
(Reporting by Soundarya J in Bengaluru; Editing by Maju Samuel)