Aurelia Butler

TOKYO (Reuters) – Confidence among big Japanese manufacturers improved in the three months to June to reach levels unseen in two years, a closely-watched survey central bank showed, backing up on its view the economy is on track for a moderate recovery.But the mood among big service-sector firms worsened for the first time in four years, the “tankan” survey showed on Monday, suggesting that rising living costs from the weak yen were weighing on consumption.The outcome, which comes ahead of the Bank of Japan’s next policy meeting on July 30-31, complicates its decision on how soon to raise interest rates.The headline sentiment index for big manufacturers rose to +13 in June from +11 in March, slightly exceeding a median market forecast for a reading of +12, the survey showed on Monday.An index measuring big non-manufacturers’ sentiment stood at +33, matching market forecasts and down from +34 in the previous quarter.Big firms plan to raise capital expenditure by 11.1% in the current fiscal year ending in March 2025, compared with 4.0% seen in the previous tankan survey. It compared with a median market forecast for a 13.9% increase.The BOJ ended eight years of negative interest rates and other remnants of its radical monetary stimulus in March as it judged that sustained achievement of its 2% inflation target has come into sight.Many market players expect the BOJ to raise interest rates again from current near-zero levels this year, but remain divided on how soon it will come.BOJ Governor Kazuo Ueda has said the central bank will raise rates further if there is enough evidence that underlying inflation will durably meet its 2% target, as it projects.While inflation has remained above the BOJ’s target for two years, Japan’s fragile economic recovery is clouding its rate hike path.Japan’s economy shrank an annualised 1.8% in the first quarter as companies and households reduced spending. While analysts expect growth to rebound in the current quarter, the weak yen is weighing on household sentiment by pushing up the cost of imports for fuel and food. More

Dechert has more than 20 employees in its Hong Kong office, 14 of whom are lawyers, including four partners, according to its website and one of the people. Its Beijing office houses only three lawyers, as per the website. There are no other China offices listed on the global law firm’s website.Some of the impacted employees were notified earlier this month about a potential office closure, said the people, who have knowledge of the matter but declined to be identified as they are not authorised to speak to the media.The firm, which has about 1,000 lawyers globally, has since been in discussions with several employees in Hong Kong and Beijing, in particular lawyers, about a potential relocation to Singapore, said one of the people.If the move from China is finalised, Dechert’s Asia footprint will be limited to Singapore, which has 14 lawyers including six partners. It was not immediately clear what would be the effective date of closure of the offices, and whether the firm has started notifying its clients about the move. Dechert representatives in the U.S. did not respond to Reuters requests for comment.The move comes as a growing number of U.S. and other global law firms have been rethinking or reducing their presence in China amid growing pressures on foreign businesses, economic uncertainties, muted deal activities, and geopolitical tensions.New government rules on data privacy and cybersecurity were among the reasons cited by Dentons last year when the global law firm ended its combination with China’s Dacheng, an 8,000-lawyer firm.Several other large U.S. law firms have also announced closures of some of their China offices or scaled down their offerings in the world’s second-largest economy since last year. DARKENING PROSPECTS Morrison & Foerster said last week that it is winding down its Beijing office as its lease there ends later this year. It said most of its work in China is already being handled by lawyers in Shanghai, Hong Kong and elsewhere.Sidley Austin said in May that it will shutter its Shanghai office, relocate staff and consolidate its China operations in Hong Kong and Beijing by September.Dechert’s gross global revenues grew by just 0.4% to $1.294 billion last year, while profits per equity partner sank 1.2% year-on-year at the firm, according to The American Lawyer magazine.Dechert said in May last year that it was laying off 55 lawyers and 43 business professionals, equivalent to 5% of its global workforce.Many major law firms went on a hiring spree globally in 2021 and early 2022, capitalizing on a record-breaking boom in corporate deal making. However, they have leaned on job cuts to adjust to a decline in demand for legal services since last year as rising interest rates, high inflation and recession fears have soured some companies’ appetites for deals and other legal work.In Hong Kong, Dechert earlier this year axed the whole corporate offering team which had about four lawyers including one partner, as a market downturn and sluggish IPOs darken prospects, said one of the people and another person with direct knowledge. More

Insurance premiums to protect companies against cyber attacks rocketed in 2021 and 2022, as the COVID-19 pandemic drove cyber incidents.But premiums have been dropping in the past year, according to the annual Howden report. The cyber insurance market saw double-digit price reductions in 2023/24, Howden said.Added security such as multifactor authentication has helped to protect companies’ data, reducing insurance claims. “MFA is the most basic thing you can do, it’s like locking the door when you leave the house,” said Sarah Neild, head of UK cyber retail at Howden.”Cyber security is a many-layered beast,” Neild added, pointing also to greater investment in IT security, including staff training.”On the whole, clients are more robust.”Greater appetite by insurers to offer cyber insurance is also leading to price decreases, Neild said, even with attacks rising.Global ransomware attacks fell following Russia’s invasion of Ukraine in February 2022, as hackers in those countries focused on the military effort. However, recorded ransomware incidents rose 18% in the first five months of 2024 compared with a year earlier, the report said. Ransom software works by encrypting data. Typically, hackers offer a pass code to victims of an attack, enabling them to retrieve the data in return for cryptocurrency payments.Business interruption is usually the biggest cost following a cyber attack, but businesses are able to reduce those costs with better back-up systems, such as through the use of cloud providers, the report said.Most cyber insurance business is in the United States, but growth in the $15 billion global cyber insurance market is likely to be fastest in Europe in the next few years, given lower penetration levels currently, the report said.Smaller firms are less likely to buy cyber insurance, partly due to lack of awareness of cyber risk, the report added. More

(Reuters) – A look at the day ahead in Asian markets.Asian market trading on Monday kicks off the new week, quarter and second half of the year with investors’ focus locked on a data-heavy economic calendar, especially the latest snapshot of Chinese factory activity. The Caixin manufacturing purchasing managers index report for June will go a long way to showing whether the recovery in the world’s second largest economy is gathering momentum, struggling, or going into reverse. China bulls will be hoping it’s the former. Some indicators in the first half of the year pointed in that direction, but the overall picture was pretty bleak – growth is patchy, deflation risks persist, stocks and the exchange rate are under heavy pressure, and more stimulus is needed. A Reuters poll of economists expect the ‘unofficial’ manufacturing PMI index to fall back to 51.2 from 51.7 in May. That would show continued expansion in activity – anything above 50.0 indicates growth – but at a slower pace. The ‘official’ manufacturing PMI from China’s National Bureau of Statistics on Sunday came in at 49.5, unchanged from May and marking the second month in a row that manufacturing activity has declined.The wider picture is perhaps even bleaker – the services PMI sank to 50.2, a five-month low, and the construction PMI slipped to 52.3, the weakest reading since July last year. Both indicate growth, but it is clearly slowing. Manufacturing PMIs from several other countries across Asia will be released on Monday, including Japan, India, South Korea and Australia. If there are financial market ripples from the first round of voting in the French election, they may be felt first in Asia on Monday. The far-right eurosceptic National Rally party won the first round, exit polls showed, but the final result will depend on days of horsetrading before next week’s run-off.The broader macro and market backdrop to the start of the week is reasonably strong. World stocks hit a record high last week and ended the quarter up 2.4%, the sixth quarterly rise from the last seven. Asian stocks jumped 5.5% in Q2.Inflation figures from the U.S. on Friday were in line with fairly benign expectations, enough to keep the ‘soft landing’ narrative on track and maintain the prospect of two quarter-point rate cuts from the Fed this year.Could the first of these come before the November presidential election?But there are signs that the bullish momentum is losing steam, especially in Big Tech, and across markets pockets of uncertainty and volatility are appearing. In currencies, this is playing out most obviously in the Japanese yen, which slumped to a 38-year low against the dollar last week.Here are key developments that could provide more direction to markets on Monday:- Manufacturing PMIs from across Asia, including China (June)- Indonesia inflation (June)- Australia retail sales (May) More

The euro gained around 0.23% to trade around $1.0736 in early Asia-Pacific trading.European markets have been rattled since President Emmanuel Macron’s shock decision on June 9 to call a snap election.The prospect of a far-right, or leftwing win has unsettled investors, as both have pledged big spending increases, which could undermine France’s already fragile finances.COMMENTS: PETER GOVES, HEAD OF DEVELOPED MARKET DEBT SOVERIGN RESEARCH, MFS INVESTMENT MANAGEMENT, LONDON:”A hung parliament would appear to remain the base case, loosely in line with market expectations. That said, uncertainties are high and the NR looks like it will be the largest party in the new Assembly. “We would caution about drawing too firm an inference about the exact seat projection, because the high turn out has seen an eruption of three-way contests. This complicates matters. “How leaders respond and how alliances bear out will be significant for the end result. A hung parliament is far from politically ideal, but is not necessarily the most unfriendly market outcome. “As such, OAT-Bunds may take some comfort, but we struggle to see a material and sustainable snap back.”FIONA CINCOTTA, SENIOR MARKETS ANALYST, CITY INDEX, LONDON:“I think it’s a slight ‘well, there was no surprises’, so there was a sense of relief there. Le Pen had a slightly smaller margin than some of the polls had pointed to, which may have helped the euro a little bit higher on the open.”“Attention now is on July 7 to see whether the second round supports an absolute majority or not. So it does feel like we’re a little bit in limbo, but relief that it wasn’t worse.”DAVID MORRISON, SENIOR MARKET ANALYST, TRADE NATION, LONDON:“One of the things you think about is this is going to be a big protest against Macron and a big positive for RN.”“But, of course, it is going to take a little bit longer to really find out what that vote percentage of theirs is, because the polls really were very positive and getting higher and higher and Macron was getting around the 20% level and that was feeding into a lot of concern about France, Europe and the euro and a possible French version of Truss.”“We’re not going to know any more before next Sunday. How is it going to go, if those three-way polls go to two, because there is a party that stands down to push back against RN, what is that going to mean? That is all open at the moment. What we’re going to be looking at is a bit of uncertainty across all European indices and the euro going into next week.”MICHAEL BROWN, SENIOR STRATEGIST, PEPPERSTONE, LONDON:”Perhaps the result isn’t as bad as the market had feared. The exit polls… had Le Pen’s party winning between 240 to 310 seats, so the midpoint of that is just shy of a majority.””We’ve also seen a lot of rhetoric form other parties looking to perhaps pull out candidates to try and avoid the National Rally winning seats in the runoff next Sunday.””The market may be taking a little bit of solace in that. But overall, the downside risks that were there on Friday at the close remain.””The two most likely scenarios are either a majority for the RN, although the probability for that has decreased slightly… or we end up with a hung parliament and a stalemante situation which then goes into weeks if not months of neogitations to try and form a government.””It’s very much a case of wait and see where the actual results of the first round election do end up, because there are some pretty wide spreads in terms of the seat projections that have been extrapolated from the vote shares.””Volatility in the euro and French assets in particular will remain relatively high over the next few days and into next Sunday.”PHILIP SHAW, CHIEF ECONOMIST, INVESTEC, LONDON:”The overall results aren’t far away from most of the polls but obviously because of the electoral system, we really don’t have a very clear idea of what the seat distribution is going to be like.””It’s all in the balance. We may know a little bit more when we get the counts from the first round to see how many deputies have been elected in the first round and what the second-round fights are likely to be. So that might shed a little more light on the situation. But clearly, there are a number of question marks which will remain even after the result are in.””Much would – because we don’t know if they’ll get a majority yet – depend on how the process of cohabitation is between a potential National Rally government and Macron himself. The question still very much there.”CARSTEN BRZESKI, GLOBAL HEAD OF MACRO, ING, FRANKFURT: “With this result, markets are looking into another week of really high uncertainty. Probably fear, as it is still possible for RN to gain an absolute majority next week.””This is confirming what markets see as the most disruptive scenario.” “I would expect another widening of the (French-German bond) spread starting tomorrow and we might even see some minor drop in the CAC 40.” “We will have a lot coming up in the next days in terms of new polls showing what this could mean for the individual seats.””From the markets point of view, a win by the leftwing bloc would have been an even worse scenario, even though from the start it was very unlikely.” More

The budget comes ahead of more talks with the IMF for a loan of between $6 billion and $8 billion to avert a debt default by Pakistan, the slowest-growing economy in South Asia.Finance Minister Muhammad Aurangzeb said at a press conference that his government would work on securing its next IMF programme to ensure economic stability.”We are taking it forward; it is inevitable. I’m very optimistic that we’ll be able to take it through to the finish line for an Extended Fund Programme, which is going to be larger and longer in nature,” he said, according to local broadcaster Geo News.Pakistan’s parliament on Friday passed the government’s tax-heavy finance bill for the coming fiscal year. In April Pakistan completed a short-term $3 billion programme, which helped stave off sovereign default. More