Aurelia Butler

TOKYO (Reuters) – Business confidence at big Japanese manufacturers and services sector firms slid in April from the prior month, dragged down by cost-of-living pressures and shaky economic conditions in major market China, a Reuters monthly poll showed. The yen’s weakening to levels unseen since 1990 during the heyday of the asset-inflated bubble is lifting the cost of imports in a blow to household consumption, according to the Reuters Tankan survey.Moreover, while the fall currency has boosted the value of exports, volume of shipments have not benefited as much, the survey found.The Reuters Tankan sentiment index for manufacturers stood at plus 9, down from the previous month’s 10, dragged down by chemicals and food processing.The services sector index fell to plus 25 from plus 32 in the previous month, despite some gains by retailers. The survey, conducted April 3-12, found that both sectors’ sentiment indexes improving slightly over the coming three months.The monthly Reuters Tankan, which closely tracks the Bank of Japan’s quarterly tankan survey, was conducted during the time the Japanese currency hit its 34-year lows to the dollar beyond 153 yen. That has prompted repeated warnings from authorities that they stood ready to take action against speculative or destabilising currency moves. The dollar broke above 154 yen this week.”Our sales appear to be boosted due to the impact of a weak yen, but there’s no sign of recovery in terms of volume,” a manager of a chemicals maker wrote in the survey on condition of anonymity.The Reuters Tankan canvassed 497 large non-financial Japanese firms, of which 235 responded during the survey period.”Japanese firms on the whole may be riding momentum towards pay raise, but price hikes have sapped consumers’ appetite for purchasing items such as food and daily goods,” wrote a chemical firm’s manager.On top of the fragile domestic demand, external factors were also cited as a source of concern for Japanese firms.”Demand has not stabilised due to delay in China’s economic recovery and uncertainty over the outlook such as decoupling between U.S. and Chinese economies,” a manager of a paper/pulp maker wrote in the survey on condition of anonymity.The BOJ’s last tankan showed on April 1 services sector optimism hit a 33-year high in the first quarter on inbound tourism and rising profits from price hikes. But that was offset to some extent by same survey’s findings of sliding sentiment for big manufacturers for the first time in four quarters.On Monday, data showed Japan’s core machinery orders – a key gauge of capital spending – rebounded sharply in a welcome sign for domestic demand.Yet, the overall economic impulse so far this year has pointed to insufficient demand in the economy to mount a robust recovery in the near term. That’s one reason why the Bank of Japan has flagged a cautious track to further monetary tightening following its landmark decision to end negative interest rates last month.The Reuters Tankan indexes are calculated by subtracting the share of pessimistic respondents from optimistic ones. A positive figure means optimists outnumber pessimists. More

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OTTAWA (Reuters) -Canada on Tuesday revealed a new tax on wealthy individuals that will bring in billions of dollars over the next five years to help fund housing programs designed to win over a disgruntled voter base.In its annual federal budget, the Liberal government of Prime Minister Justin Trudeau also said that despite the increase in spending the budget deficit for 2023/24 would remain stable before gradually falling. The government had already outlined its housing plans in the weeks running up to the budget release with the main new element an increase in the capital gains tax. The budget also promised a flurry of measures to unlock government lands across the country for housing.”The wealthy, who tend to earn relatively more income from capital gains, disproportionately benefit compared to the middle class,” said Finance Minister Chrystia Freeland, adding the new measure would only affect 0.13% on the population.Under the new measure, people realising capital tax gains of more than C$250,000 ($180,804) will pay tax on the excess at a rate of 66.7%, up from 50% at present. Similarly, all capital gains realised by companies and trusts will be taxed at 66.7%.The additional tax will bump up government revenue by close to C$20 billion over the next five years and help shrink the government’s fiscal deficit to C$20 billion by 2028-29, or half of what it was last year, the document said.Trudeau’s minority Liberal government is being kept in power by the smaller left-leaning New Democrats, whose leader Jagmeet Singh told reporters he would study the document and possibly demand changes before deciding whether to back the government.A string of recent polls show the Liberals and New Democrats would lose badly to the official opposition Conservatives in an election due by end-October 2025, meaning it is highly unlikely Singh would bring down Trudeau now.The Conservatives are promising to slash what they call wasteful Liberal spending and eliminate the deficit.FISCAL ANCHORSSince the start of April, the government has promised close to C$42 billion primarily to tackle a housing crisis that, in part, has hurt Trudeau politically. A higher share of revenue from the expansion of taxes will also help the government in meeting its fiscal anchors, said Robert Asselin, senior vice president of policy at Business Council of Canada, who nevertheless criticized the tax on the wealthy.”Wealthy people always have a choice to invest here or somewhere,” he said, adding that the increase in the tax would chase capital away from the country at a time when it is desperately needed. Freeland said the budget would ensure the government kept to the three main fiscal anchors it laid out last November.These were to cap the fiscal deficit at C$40.1 billion ($29.13 billion) in the 2023-24 fiscal year, lower debt as a share of GDP for 2024-25 fiscal year and keep the ratio declining thereafter, and keep the deficit from exceeding 1% of GDP from 2026-27.The new tax measure comes at a time when the government’s spending shows signs of a permanent increase beyond the pandemic blip that distorted its fiscal goalposts.Its overall expenses has also increased to over 17% of GDP in 2023-24 and is projected to stay around that level from what was projected before the pandemic.”It’s a permanent shift in spending… not related to the pandemic anymore,” said Randall Bartlett, senior director of Canadian Economics with Desjardins Group.Since the economic outlook has not improved, it has to increase taxes to pay for that spending, he added.The budget says Canada will go ahead with a planned digital services tax, which Washington opposes.It also promised to introduce a framework legislation for open banking that would offer a secure way to transfer the financial data of users to approved third parties. ($1 = 1.3820 Canadian dollars) More

(Reuters) – A look at the day ahead in Asian markets.Investors in Asia hoping for some relief from surging U.S. bond yields and a rampant dollar would have been deflated by remarks on Tuesday from Federal Reserve Chair Jerome Powell, and will likely go into Wednesday’s trading with their guard up. “The recent data have clearly not given us greater confidence and instead indicate that it’s likely to take longer than expected to achieve that confidence,” Powell said in Washington, a signal to the world that inflation is not coming down towards the central bank’s 2% target as quickly as expected and so interest rates will have to stay higher for longer.’Higher for longer’ would also seem to apply to the U.S. dollar, Treasury bond yields and financial conditions indexes – a sub-optimal mix for Asian assets, which are already feeling the heat. Chinese stocks on Tuesday fell 1%, Japanese and aggregate Asia ex-Japan equity benchmarks tumbled 2%, and currencies across the continent are sliding in a move exacerbated by the yen’s spiral down towards 155.00 per dollar.As yet there has been no action from Tokyo on the yen, to the probable irritation of policymakers across Asia. The dollar’s strength will surely crop up in discussions between finance ministers and central bankers attending the IMF and World Bank Spring meetings.The IMF on Tuesday revised its U.S. growth outlook sharply higher, and said China’s stronger-than-expected first-quarter growth may prompt an upward revision to the outlook. In theory, these are positive developments for markets in Asia. And Wall Street’s resistance on Tuesday in the face of yet another spike up in Treasury yields could still inject some optimism into Asian trading on Wednesday. But that could be tempered by Middle East tensions and patchy Q1 U.S. earnings. The MSCI Asia ex-Japan index is at a two-month low, having declined 4% in the last four days. Time for a pause, or is selling momentum gathering a powerful head of steam?The same question could definitely be asked about the Japanese yen, which is printing fresh 34-year lows on a near-daily basis. The latest Japanese trade data and Reuters ‘tankan’ survey of manufacturing and non-manufacturing business sentiment will be released on Wednesday, but probably won’t move the yen much. In terms of domestic factors that could impact the yen, apart from direct intervention, investors will be looking to inflation figures and comments from Bank of Japan governor Kazuo Ueda in Washington later in the week.Perhaps the highlight in a thin Asian and Pacific economic calendar on Wednesday is New Zealand inflation.A Reuters poll shows annual inflation in the first quarter is expected to slow to 4% from 4.7% in the final three months of last year. That would be the lowest since Q2, 2021.Here are key developments that could provide more direction to markets on Wednesday:- IMF/World Bank meetings in Washington- Japan trade (March)- New Zealand inflation (Q1) (By Jamie McGeever) More

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Story:Budget highlights:LINK: COMMENTSHANNA ZAIDI, VP OF PAYMENTS STRATEGY, WEALTHSIMPLE “Canadians pay some of the highest banking fees in the world. A meaningful open banking system puts Canadians — not their bank — in control of their financial data and can make life more affordable.””All parties in the House of Commons agree: it’s time for action to lower the cost of banking for Canadians. The update in today’s Budget is welcome and we hope it is fully implemented soon so that Canadians can reap the benefits.” FERNANDO MELO, FEDERAL DIRECTOR, CANADIAN RENEWABLE ENERGY ASSOCIATION”The one (item) I’m very happy to see is the Indigenous loan guarantee. That’s going to be an absolute game-changer for Indigenous companies and communities that are trying to get involved in the renewable electricity sector. It’s a great start.”FLAVIO VOLPE, HEAD, THE AUTOMOTIVE PARTS MANUFACTURERS’ ASSOCIATION”I think this (the EV tax credits) is a new competitive offering. This is probably the best indication that we’re very competitive on some of the investments that haven’t dropped yet. And we’re gonna see electric vehicle (EV) focused investments rather than battery focused investments that will land because of tax credits.”DAVID-ALEXANDRE BRASSARD, CHIEF ECONOMIST,CPA CANADA”This is not a game-changing budget. It continues Canada on the path of increased spending and taxation, leaving longer-term challenges such as productivity and competitiveness largely unaddressed and kicking the fiscal responsibility can down the road.”JIMMY JEAN, CHIEF ECONOMIST, DESJARDINS GROUP “We see meaningful risks that fiscal anchors end up being breached … We believe that lots of the bottom-line improvement being promised hinges on assumptions we consider to be optimistic on nominal GDP and new tax receipts. Similarly, the recently promised spending on housing-related infrastructure is only partly booked.”Aswas More

CHICAGO (Reuters) -United Airlines Holdings on Tuesday forecast stronger-than-expected earnings in the current quarter, after reporting a narrower-than-expected loss in the first quarter, on robust demand for travel.United’s shares were up about 6% in after-hours trading.The airline, a prominent customer of Boeing (NYSE:BA), has been hit by the planemaker’s safety crisis. Boeing’s troubles forced it to scale down its total aircraft delivery estimates for this year by 25% to 66 jets.The Boeing situation is rippling through the industry, compelling airlines to adjust their fleet plans at a time travel demand is projected to hit record levels.”We’ve adjusted our fleet plan to better reflect the reality of what the manufacturers are able to deliver,” United CEO Scott Kirby (NYSE:KEX) said.United received just seven planes, which were all MAX aircraft, in the first quarter, sharply lower than 23 a year ago, according to the planemaker’s delivery data. It expects to receive another 29 MAX and five 787 planes from Boeing in the remainder of the year.The airline had to ground its Boeing 737 MAX 9 fleet following a January mid-air cabin panel blowout on an Alaska Airlines flight, resulting in a $200 million hit in the first quarter.The Jan. 5 incident has placed a question mark over certification of the larger variant MAX 10, which was due for deliveries this year and was to be the cornerstone of United’s fleet.United said it has converted a portion of MAX 10 aircraft orders into MAX 9 for deliveries from 2025 through 2027. It has also retained the right to convert more MAX 10 orders into MAX 8 or MAX 9 as needed.As a result, it expects to take deliveries of on average 100 narrowbody aircraft per year between 2025 and 2027. This includes 35 Airbus A321neo jets that it will secure from aircraft lessors.In the short run, a small number of jets that were previously scheduled to enter service in the June quarter would be pushed into the third quarter. The change, however, is expected to have minimal impact on its capacity plans, it said.The aircraft delays have reduced its aircraft utilization, leaving the company overstaffed. United has paused pilot hiring and offered voluntary unpaid leave to its pilots.It reported robust demand for domestic and transatlantic flights, along with a pickup in corporate travel spending. Last week, rival Delta Air Lines (NYSE:DAL) forecast the highest second-quarter revenue in its history.United expects an adjusted profit in the range of $3.75 to $4.25 a share in the June quarter, compared with analysts’ expectations of a profit $3.76 a share, according to LSEG data.Adjusted loss for the first quarter came in at 15 cents a share, narrower than Wall Street’s estimate of a loss of 57 cents per share. United reaffirmed its 2024 profit estimate of $9-$11 a share.It will discuss the results on a call with analysts and investors on Wednesday morning. More