Aurelia Butler

Stay informed with free updatesSimply sign up to the More

(Reuters) – A look at the day ahead in Asian markets.Amid a flurry of commentary from global financial leaders at the International Monetary Fund and World Bank Spring meetings in Washington, and with many markets having undergone huge moves in recent weeks, investors are taking a bit of a time out.The relentless bond selling of late reversed on Wednesday and pushed yields lower, gold flatlined again, oil tumbled 3% for its biggest fall in over two months, and stocks wobbled.Whether it’s fatigue (gold), short-covering (bonds), worries about the impact of higher borrowing costs on growth and demand (stocks and oil), or just seeking refuge from the barrage of headlines from Washington, investors are trimming back risk.This is the backdrop to Thursday’s market open in Asia, where the calendar includes Japan’s tertiary index of industrial activity, unemployment from Australia and Hong Kong, and a speech by Bank of Japan board member Asahi Noguchi. On the equity front, the correction that appears to be developing in some quarters gathered momentum on Wednesday, despite a notable decline in bond yields and the dollar’s first daily loss in seven.Japan’s Nikkei 225 index is down 3.6% this week, on course for its biggest weekly drop since December 2022. The S&P 500 fell for a fourth day, is on track for its third weekly loss in a row, and is down 5% since its all-time high last month.The MSCI Asia ex-Japan index is down year-to-date.Exchange rates – and by extension trade competitiveness, restrictions, and tariffs – remain under close scrutiny. President Joe Biden on Wednesday called for sharply higher U.S. tariffs on Chinese metal products, duties of up to 25% on certain steel and aluminum products, in a move that will risk angering Beijing.Finance leaders from the United States, Japan and South Korea, meanwhile, agreed to “consult closely” on FX markets in their first trilateral meeting on Wednesday, nodding to concern by Tokyo and Seoul over their currencies’ recent sharp declines.The agreement in their first trilateral meeting came as receding expectations of a near-term U.S. interest rate cut pushed the yen to 34-year lows, keeping markets on alert on the chance of yen-buying intervention by Japanese authorities.”We will continue to cooperate to promote sustainable economic growth, financial stability, as well as orderly and well-functioning financial markets,” a joint statement read.While Japan may not be actively trying to export its way to prosperity, and the yen’s weakness may be justified on relative economic and interest rate fundamentals, seismic terms of trade shifts like this in Asia tend not to go unmatched.Could Asia be sliding towards a ‘beggar thy neighbor’ wave of competitive FX depreciation? The trilateral U.S.-Japanese-South Korean statement shows officials are acutely aware of the risks.Here are key developments that could provide more direction to markets on Thursday:- IMF/World Bank meetings in Washington- Australia unemployment (March)- BOJ’s Noguchi speaks (By Jamie McGeever) More

BUENOS AIRES (Reuters) – Argentina’s public universities held protests on Wednesday against sharp budget cuts by the government of President Javier Milei, turning off the lights in classrooms to draw attention to their predicament – and save money on electricity.The prestigious University of Buenos Aires (UBA) said it had experienced an 80% cut to its budget in real terms, an untenable situation.”There’s no way to keep the university functioning with this budget,” said the dean of UBA’s faculty of law, Leandro Vergara, after giving a class on the building’s steps.Milei, facing a deep fiscal deficit after years of economic mismanagement by governments on the right and left, has made slashing state spending a focus. He won election last year after regular rallies with a chainsaw, a symbol of his planned cuts.In UBA’s faculty of exact sciences students and teachers have erected a clock with a countdown that indicates the budget will be enough for 43 more days.UBA, one of Latin America’s top universities, provides undergraduate courses that are free of charge to everyone. It also runs six secondary schools and five public hospitals.It said its budget had been cut 26% in nominal terms and 80% in real terms, given inflation running near 300%. It has asked the faculties to reduce energy consumption to eke out the funds.The cuts have hit all public universities in Argentina, and there is a planned anti-government march next week.The government has defended the cuts as necessary to fix the state’s finances.”No one has to worry about their studies at the universities,” government spokesman Manuel Adorni said on Wednesday in a regular press conference. “(It will be) in the best conditions that the universities’ budgets allow.” The ministry of education did not immediately respond to a Reuters request for further comment.Nahiara Tripiana, a 22-year-old law student, said in an interview that her biggest concern was that people stop studying because they lack the resources to pay for private studies.”In the future it will bring us terrible consequences on a social, cultural level, and for academic excellence,” Tripiana said. UBA’s alumni include five Nobel Prize winners and 17 presidents.Vergara said the law faculty would try to keep classes going regardless.”Classes are going to continue in any way possible,” he said. “We will teach classes even by candlelight, but the community should know that we are not going to close the doors.” More

Shares of the Atlanta, Georgia-based company fell 6.4% in extended trading. U.S. job growth was above expectations in March and wages also increased steadily, suggesting the economy ended the first quarter on solid ground and potentially delaying anticipated Federal Reserve interest rate cuts this year.Over the last several months, expectations regarding the extent and timing of the Fed’s rate reduction have changed as investors lose faith in the policymakers’ ability to reduce borrowing costs without triggering an inflationary resurgence in the strong economy. Equifax expects second-quarter revenue between $1.41 billion and $1.43 billion, below analysts’ average estimate of $1.44 billion, as per LSEG. In a bright spot, the forecast for the year indicates an expected 11% decline in 2024 U.S. mortgage credit inquiries, compared with an over 16% year-on-year decline expected by the company in the previous quarter. Net profit came in at $1 per share in the quarter ended March 31, up from 91 cents per share last year. More

IMF Managing Director Kristalina Georgieva, World Bank President Ajay Banga and Brazilian Finance Minister Fernando Haddad issued a joint statement after a ministerial-level meeting of the Global Sovereign Debt Roundtable (GSDR) on the sidelines of the spring meetings of the IMF and World Bank.The IMF and the World Bank convened the roundtable, which brings together debtor countries, creditors, international financial institutions and the private sector to jumpstart long-stalled debt restructuring processes and build greater understanding on ways to address challenges.The joint statement outlined progress in some sovereign debt cases, including agreements reached by Zambia and Ghana, and advanced discussions in the cases of Sri Lanka and Suriname. It said the GSDR had helped forge consensus on how processes could be improved in future cases, including on comparability of treatment and on timelines toward swifter and more predictable restructuring processes, while taking into account the specific circumstances of each case.It said discussions among GSDR members underlined the need for enhanced clarity, coordination and transparency across creditor groups, and providing debtor countries with the metrics for how their private debts would be assessed.Private creditors and the debtor country should also ensure that, before they finalize and announce an agreement in principle, the deal had been vetted by IMF staff on consistency with debt targets and program parameters, and with the official bilateral creditors on comparability of treatment, it said.The report also cited progress on accelerating timelines for getting through the restructuring process, and to move from an IMF staff-level agreement (SLA) to approval by the IMF board, but said timelines were still too long.It said participants agreed to shorten the timeline to form an official creditor committee (OCC), a move that would also help communication and coordination with private creditors and accelerate their own restructuring processes.They agreed to work toward program approval within 2-3 months of SLA, and said they would hold a workshop on comparability of treatment at the end of June.They also agreed to further deepen coordination among stakeholders, including on ways to support early exchanges on debt sustainability assessments and debt relief parameters; work on the use of state-contingent debt instruments, and ways to address current liquidity concerns. More

NEW YORK (Reuters) – The Federal Reserve’s effort to contract its balance sheet will likely run into 2025 before the process ends, with the endgame dependent on the financial system’s need for liquidity, the Federal Reserve Bank of New York said in a report released on Wednesday.”Future financial and economic conditions and their impact on the demand for reserves and the balance sheet are highly uncertain,” the bank said in its annual report for the central bank’s System Open Market Account, which holds the Fed’s cash and bonds primarily to conduct monetary policy.The Fed has been shrinking its bond holdings in a process called quantitative tightening, or QT, to reverse part of its massive asset buying begun at the onset of the coronavirus pandemic in the spring of 2020.The aggressive purchases of Treasury and mortgage bonds, to stabilize markets and provide economic stimulus, led Fed holdings to more than double, topping out at $9 trillion by the summer of 2022. The QT process started later that year has brought Fed holdings down to about $7.5 trillion.With the Fed’s campaign of rate hikes almost certainly completed, Fed officials and markets have been debating when the central bank can stop QT. Fed officials are mulling a plan to significantly slow the bond runoffs of up to $95 billion per month, in a bid to extend the overall process and reduce the risk of unsettled markets. Fed officials have given no guidance about the QT stopping point, beyond saying they would like financial sector liquidity at a level that allows for normal volatility and affords the central bank firm control over its rate target. Major banks surveyed by the New York Fed ahead of the March Federal Open Market Committee meeting were eyeing a February 2025 stopping point, with Fed holdings at $6.25 trillion.The New York Fed report said that if banks seek a higher reserve level the Fed may be able to slow QT in the first half of this year, with QT stopping in early 2025 at a $6.5 trillion balance sheet. Under a lower reserves need scenario, QT could taper off in the first half of 2025 and possibly end mid-year with the balance sheet at $6 trillion, the report said. “These projections illustrate possible paths for the portfolio and reserves associated with the dynamics that will likely prevail in the coming years,” the report said.Fed officials are watching a wide range of money market indicators to understand when liquidity levels are drawing tight and so far, they are not seeing any notable signs of scarcity in the financial system. Fed officials also believe there are no hard and fast metrics that will signal tightening liquidity. As Fed officials move toward the end stages of QT they are doing so cautiously, so as not to repeat the end of the last period of QT, which saw the Fed withdraw too much cash from the financial system, spurring heavy market volatility. LOSSES TALLIEDThe New York Fed also reported on the outlook for its finances, revealing unrealized losses of $948 billion on its bond holdings last year. Net negative income that has led to a $163 billion paper loss so far, will continue through this year before the Fed expects to return to profitability next year.Losses on Fed holdings do not affect Fed actions because the central bank is not selling its holdings. Meanwhile, Fed officials have stressed repeatedly the overall losses on operations do not affect their ability to accomplish the goals laid out for the central bank by Congress. More