Aurelia Butler

BENGALURU (Reuters) – The Bank of Korea (BOK) will keep its policy rate on hold at a 15-year high of 3.50% on Thursday, but was expected to cut the rate next quarter – around the same time as a likely start of policy easing by the U.S. Federal Reserve, a Reuters poll found.With inflation cooling to an 11-month low of 2.4% in June, but remaining above the central bank’s 2% target, and with the Korean won weakening by more than 6% against the U.S. dollar this year, the BOK has little room to adopt a dovish stance.All 40 economists in the July 3-8 Reuters poll expected the BOK to leave the base rate unchanged at 3.50% on July 11.”We saw the June CPI growth drop to 2.4%, but I believe July numbers will be edging up. If the BOK decides to cut ahead of the Fed, the Korean won will weaken further and that will put some pressure on inflation later,” said Stephen Lee, chief economist at Meritz Securities.”The most comfortable choice the BOK can make is to see inflation stabilising below 2.5% for about two consecutive months and see the Fed cutting their interest rate before going for their first cut in October.”Median forecasts showed interest rates will remain unchanged through next quarter before a 25 basis-point cut to 3.25% in the final three months of the year. In a May survey, the consensus view predicted a 50 basis-point cut.Among economists who provided an outlook until end-2024, 24 forecast it at 3.25%, 15 said 3.00%, with Pantheon Macroeconomics being the only participant predicting the base rate to remain steady at 3.50%.”We still believe that the BOK’s first rate cut will come in October, as household debt has reaccelerated in recent months and upside risks to inflation remain high,” noted Min Joo Kang, senior economist at ING.”Inflation will likely pick up again in July as the fuel tax cut reduces and some local public services fees are set to rise. However, if July inflation turns out to be lower than expected, then the probability of a cut in August will increase.”South Korea’s household debt is among the highest globally, making prolonged high interest rates painful and potentially leading to an economic downturn.But economists in the poll expected South Korea’s economic growth to improve this year, averaging 2.5% in 2024 and 2.2% in 2025, up from 1.4% last year. Those expectations were in line with BOK estimates.Inflation was forecast to average 2.6% and 2.1% this year and next respectively.(For other stories from the Reuters global economic poll:) More

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(Reuters) – British consumer spending contracted in June, hurt by bad weather, according to surveys on Tuesday that added to recent signs of the country’s tepid economic growth that the new Labour government has promised to boost.Barclays said spending on its credit and debit cards fell by 0.6% in annual terms in June – the first drop since February 2021. It linked the fall to cool weather at the start of month.”Once again, our data demonstrates the undeniable impact that unseasonable weather can have on consumer spending,” Karen Johnson, Head of Retail at Barclays, said.”The sluggish demand at the start of June even caused some fashion brands to adjust their sales schedules, although I was pleased to see that the situation has since improved with the arrival of sunnier days.”Similarly, the British Retail Consortium cited chilly weather as it reported a 0.2% drop in sales values in June compared with a year earlier, after a 0.7% rise in May.The readings chimed with other signs of slowing growth, including business surveys, after the economy rebounded in the first quarter from a recession in the second half of 2023.Improving economic growth is the top priority of new Prime Minister Keir Starmer whose Labour Party swept to a landslide victory in parliamentary elections on July 4.Barclays said spending at supermarkets fell for the first time in two years last month but there were reasons for optimism.”While June’s data suggests a weak month, the view looking ahead to the second half of the year, as we see it, is one of falling interest rates, growing real incomes, and increasing confidence among consumers to spend and businesses to invest,” said Barclays’ chief UK economist Jack Meaning.Accountants KPMG, sponsor of the BRC’s retail sales survey, said the economic environment was improving but said many retailers were still struggling. Retail sales volumes, excluding petrol, remain slightly below their pre-pandemic level, according to official data. More

The U.S. Securities and Exchange Commission in 2022 issued the proposal which it said would help such funds, in which investors can redeem their shares on a daily basis, better prepare for market stresses like those at the start of the coronavirus pandemic.According to a regulatory agenda released Monday, rather than moving ahead with a vote to finalize the rule proposal, SEC staff now expect to recommend that the agency’s five-member commission issue a new one.The Investment Company Institute, which objected to the proposal, welcomed the move, saying in a statement that the proposal was unworkable and would have jeopardized millions of Americans’ investments.The SEC proposal would have set new standards for analyzing how readily fund investments can be sold for cash and limited how much a fund could invest in securities that take more than seven days to settle after a trade.The proposal would also have required open-end funds to apply “swing pricing” to shift the costs of hasty redemptions to investors who sell rather than hitting those who remain.Last year, the SEC scrapped plans to require similar swing pricing in money market funds, marking an important victory for asset managers such as BlackRock (NYSE:BLK), Vanguard and Fidelity.An agency spokesperson did not directly respond to detailed questions on Monday but referred a reporter to a speech SEC Chair Gary Gensler had made in May.Gensler said at the time he had asked SEC staff to consult with banking regulators on how best to mitigate “gaps” between the regulations governing open-end funds and those for so-called collective investment funds. He said the latter held an estimated $7 trillion but lacked SEC oversight and certain key investor protections. More

(Reuters) – A look at the day ahead in Asian markets.The global markets spotlight moves from Paris to Capitol Hill on Tuesday as Federal Reserve Chair Jerome Powell testifies before the U.S. Congress and a busy week of events revs up.Politics were front and center on Monday as investors digested the surprise election in France that saw the leftist New Popular Front alliance unexpectedly coming first. French stocks gave up early gains to drop 0.6% as investors mulled chances of a hung parliament, while the pan-European STOXX 600 index ended little changed. The euro waffled against the dollar, at one point touching a multi-week high against the greenback before moving lower.U.S. politics were also a hot topic, with President Joe Biden under pressure to drop out of the presidential race after his shaky debate performance. Biden refused to abandon his reelection campaign on Monday, but investors were preparing to game out scenarios if another Democratic candidate emerges.Despite the political turmoil, the benchmark U.S. S&P 500 stock index and MSCI’s all-country index both logged record highs on Monday. Japan’s Nikkei hit a record intraday high on Monday before closing down 0.3%.Meanwhile, mainland China and Hong Kong stocks ended lower on Monday, with the blue-chip CSI300 index dropping 0.85% for its fifth-straight session of losses. Powell stands as the next test for assets. The Fed chief is set to deliver his semi-annual monetary policy testimony before the banking committee of the U.S. Senate. He will also be grilled by the other chamber of Congress the next day, appearing before a House of Representatives panel.Investors have been solidifying their view for the Fed to start rate cuts in September, with roughly 75% odds of a cut at that meeting, according to Fed Funds futures pricing.   Will Powell give any hints? In Portugal last week, the Fed chair said the central bank still needs more data to ensure inflation has moderated sufficiently. Thursday’s consumer price index report will provide the next evidence on the path of inflation.Here are key developments that could provide more direction to markets on Tuesday:- Taiwan import/export (June)- Australia business confidence (June)- Fed Chair Powell testifies at Senate committee More

NEW YORK (Reuters) -The 2021 collapse of Sung Kook “Bill” Hwang’s Archegos Capital Management was driven by “lies and manipulation,” a federal prosecutor told a Manhattan jury on Monday at his criminal trial over the $36 billion private investment fund’s failure.Jurors heard closing arguments from the prosecution and defense in Manhattan federal court in the trial of Hwang and Patrick Halligan, his Archegos deputy and co-defendant. The jury is expected to begin deliberations on Tuesday.The trial centers on the implosion of Hwang’s family office Archegos – a spectacular collapse that left global banks nursing $10 billion in losses and, according to prosecutors, caused more than $100 billion in shareholder losses at companies in its portfolio.Hwang’s attorney Barry Berke told jurors Archegos collapsed due to a series of unexpected events in March 2021, and said prosecutors have criminalized aggressive but legal trading methods. Had the banks not lost money, Berke said, “we would never be here, Mr. Hwang would never be charged with a crime.”Assistant U.S. Attorney Andrew Thomas told jurors that Hwang manipulated stocks and worked with Halligan to lie to the banks with which they traded. “By 2021, the defendants’ lies and manipulation had ensnared nearly a dozen stocks and half of Wall Street in a $100 billion fraud, a fraud that came crashing down in a matter of days,” Thomas said.Testimony in the trial, which began in May, showed that Hwang directed Archegos employees to lie to banks and trade in ways intended to drive up the price of stocks he had bet on, Thomas said. Hwang “behaved as though the rules didn’t apply to him,” Thomas added. In fact, Thomas said, the two defendants “made fraud their business.”Prosecutors have accused Hwang of secretly amassing outsized stakes in multiple companies without actually holding their stock. Hwang lied to banks about the size of Archegos’ derivative positions to borrow billions of dollars that he and his deputies then used to inflate the underlying stocks, according to prosecutors. Hwang, 60, pleaded not guilty to one count of racketeering conspiracy and 10 counts of fraud and market manipulation. His lawyers have said the case is the “most aggressive open market manipulation case ever” brought by prosecutors. Halligan, 47, pleaded not guilty to fraud and racketeering conspiracy. If convicted, they face maximum sentences of 20 years in prison on each charge, though any sentence would likely be much lower and would be imposed by the judge based on a range of factors.Archegos head trader William Tomita and Chief Risk Officer Scott Becker testified after pleading guilty to related charges and agreeing to cooperate with prosecutors.Berke told jurors on Monday that Becker testified to lying but not at Hwang’s direction, and that Tomita had told prosecutors what they wanted to hear.Timothy Haggerty, Halligan’s attorney, said in his closing argument that the case against his client relies on Becker’s testimony, and that Becker lied on the witness stand.According to the U.S. Attorney’s Office for the Southern District of New York, which brought the case, Hwang’s positions eclipsed those of the companies’ largest investors, driving up stock prices. At its peak, prosecutors said Archegos had $36 billion in assets and $160 billion of exposure to equities.When stock prices fell in March 2021, the banks demanded additional deposits, which Archegos could not make. The banks then sold the stocks backing Hwang’s swaps, wiping out $100 million in value for shareholders and $40 billion at the banks, including $5.5 billion for Credit Suisse, now part of UBS, and $2.9 billion for Nomura Holdings (NYSE:NMR). More

NEW YORK (Reuters) – A decline of 10% in the benchmark S&P 500 stock index before the U.S. presidential election in November is “highly likely,” Morgan Stanley Chief Investment Officer Mike Wilson said in an interview on Monday with Bloomberg TV. Among the reasons for a decline are uncertainty over how swiftly the Federal Reserve will bring interest rates down from nearly two-decade highs and falling pricing power on the part of companies, increasing the likelihood of disappointing earnings results, he said. “The average company has not had good earnings results,” he said, adding that a nearly 17% gain in the S&P 500 for the year to date has been powered by a small number of companies. At the same time, price to earnings multiples have been rising. “Valuations to me look very unexciting,” he said.Wilson maintained a bearish outlook for the majority of this year, one of few prominent forecasters to do so. In late May, he lifted his base-case 12-month forecast for the S&P500, an estimate of what the fair value of the index will be in a year, to 5,400 points. At the time, that was only 2% above its level but 20% higher than his previous forecast of 4,500. The S&P 500 closed Monday at 5,572, some 3% above Wilson’s 12-month target price. More