Aurelia Butler

1. Futures higher as Q2 gets underwayU.S. stock futures traded higher on Monday following a market holiday on Friday, when data showed that prices increased less than expected in February, keeping a June interest rate cut from the Federal Reserve on the table.By 04:20 ET (08:20 GMT), the Dow futures contract was 110 points, or 0.3%, higher, S&P 500 futures gained 19 points, or 0.3%, and Nasdaq 100 futures rose by 88 points, or 0.5%.Sentiment was boosted as Wall Street prepared for the second quarter to get underway after Chinese PMI data showed that manufacturing activity expanding for the first time in six months.Trading volumes will remain light with many markets closed for Easter holidays, including Australia and Hong Kong in Asia, and the United Kingdom and Germany.Investors will be looking ahead to ISM manufacturing PMI data for March later in the day amid hopes for a soft landing for the U.S. economy.2. Q2 kicks offThe U.S. stock market has had a strong start to the year, boosted by optimism over artificial intelligence related stocks and expectations the Fed will begin to cut interest rates this year.Each of the three main U.S. indexes recorded solid quarterly gains, led by a climb of over 10% for the S&P 500 for its biggest first-quarter gain since 2019.Whether that rally continues into the second quarter is largely down to the Fed. At the start of the year markets had been expecting six rate cuts from the Fed – now just three are priced in and officials have not yet signalled that inflation has come down enough to justify a rate cut.Continued strong momentum will also depend on corporate earnings which get underway in earnest the second week in April.3. Gold hits fresh record highs on rate cut betsGold prices rose to a record high on Monday, as a softer U.S. inflation reading cemented bets that the Fed would deliver its first interest rate cut of the year in June.Spot gold was up 1.1% at $2,258.88 per ounce, as of 04:20 ET (08:20 GMT), after hitting an all-time high of $2,265.73 earlier in the session. U.S. gold futures gained 1.8% to trade at $2,279.40.Traders are currently pricing in a 60% probability that the Fed would begin cutting rates in June, according to Investing.com’s Fed Rate Monitor Tool.Lower interest rates reduce the opportunity cost of holding bullion.Gold logged its biggest monthly rise in more than three years in March after a blistering rally fuelled by rate-cut bets, strong safe-haven demand and central bank buying.4. Microsoft to separate Teams and Office globally – RtrsMicrosoft (NASDAQ:MSFT) will sell its chat and video app Teams separately from its Office product globally, Reuters reported Monday, six months after it unbundled the two products in Europe in a bid to avert a possible EU antitrust fine.The European Commission has been investigating Microsoft’s tying of Office and Teams since a 2020 complaint by Salesforce-owned competing workspace messaging app Slack.”To ensure clarity for our customers, we are extending the steps we took last year to unbundle Teams from M365 and O365 in the European Economic Area and Switzerland to customers globally,” a Microsoft spokesperson said.”Doing so also addresses feedback from the European Commission by providing multinational companies more flexibility when they want to standardise their purchasing across geographies.”5. Oil prices riseOil prices ticked higher on Monday, building on recent gains as upbeat factory data out of China supported the demand outlook while concerns over tight supples also underpinned prices.By 04:20 ET (08:20 GMT), U.S. crude futures traded 0.5% higher at $83.58 a barrel following a 3.2% gain last week, while the Brent contract was up 0.3% to $87.33 per barrel after rising 2.4% last week.China’s manufacturing activity expanded for the first time in six months in March, an official factory survey showed on Sunday, supporting oil demand at the world’s largest crude importer, even as a crisis in the property sector remains a drag on the economy.Both benchmarks finished higher for a third consecutive month in March, with Brent holding above $85 a barrel since the middle of last month, as the Organization of the Petroleum Exporting Countries (OPEC) and their allies, a group known as OPEC+, pledged to extend production cuts to the end of June which could tighten crude supply during summer in the Northern Hemisphere.(Reuters contributed reporting) More

JAKARTA (Reuters) – Indonesian financial regulator Mahendra Siregar and former finance minister Chatib Basri are among the top choices Prabowo Subianto is considering for the role of finance minister, sources close to the president-elect told Reuters.Investors are closely watching Prabowo’s pick for the key role after ratings agencies warned of the cost of the programmes the president-elect had campaigned on, raising the risk of slippage in the country’s hard-won record for fiscal discipline. The former special forces commander and current defence minister will pick a professional with market credibility to head the finance ministry, said three sources, who all sought anonymity as the matter is a sensitive one.”Mr. Prabowo prefers a future finance minister with great competence and well welcomed by market,” one of the sources said.Basri and Siregar did not immediately respond to requests for comment.Basri, chairman of Indonesia’s biggest lender Bank Mandiri, was finance minister in 2013 and 2014, navigating the “taper tantrum” that spurred capital outflows from emerging markets after the U.S. Federal Reserve said it would taper its programme of quantitative easing.A close friend of Sri Mulyani Indrawati, the current finance minister, who is well regarded by the markets, Basri is also co-chair of the Group of 20’s pandemic fund that lends to countries to guard against future global health threats.Siregar, the head of the financial services regulator, is a career diplomat who held many high-ranking government jobs, from investment board chief to deputy finance minister and Indonesia’s ambassador to the United States.One of the sources said other names in the fray were central bank governor Perry Warjiyo, deputy state-owned enterprises minister Kartika Wirjoatmodjo and former finance minister Bambang Brodjonegoro.”Mr. Prabowo will scout as there’s seven months left before the inauguration,” one of the sources said, referring to the assessment among the candidates.Warjiyo and Kartika did not immediately respond to requests for comment. Bambang declined to comment. Sri Mulyani is not expected to keep her job due to differences with Prabowo over defence spending, which have increased significantly under Prabowo, two of the sources said.Last month, the election commission officially announced Prabowo’s victory in the Feb. 14 vote, but losing candidates have contested the result in the Constitutional Court.The court is set to make a decision on April 22, with the election winner due to take up the job in October. More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.The good news confronting the next UK government is that it will be hard for economic performance to get worse. The bad news is that it will also be hard to make it much better. The wise bet must be on continued slow growth. But, in a country with an ageing population, resistance to still higher taxes, a strong desire for higher public spending, already high public debt and a tightly constrained fiscal position, the political fruits of continued stagnation could be bitter. So, what might be done to escape this trap?The Mais lecture by Rachel Reeves, Labour’s shadow chancellor of the exchequer, was an attempt to answer that. It was not a bad one in the circumstances. But the circumstances are grim. In 1997, the incoming New Labour government, led by Tony Blair, enjoyed the luxury of rapid economic growth: according to IMF data, it averaged 3.4 per cent a year from 1997 to 2001, inclusive. Gordon Brown, his chancellor, had a cornucopia to distribute.Reeves, if she indeed becomes chancellor, will not. Her task would be far harder. It would also be correspondingly more important. New Labour had to avoid messing things up. Today, a new government would have to effect a transformation. As I noted in a column on Jeremy Hunt’s recent Budget, if economic growth had continued on its 1955-2008 trend, GDP per head would now be 39 per cent higher. The UK has not been the only high-income country to have fallen into stagnation. But its fall has been among the steepest.You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.The lecture starts, rightly, by recognising the priority of ending stagnation. This, Reeves argues, demands a new model of economic management guided by three imperatives: stability; “stimulating investment through partnership with business”; and reforms that will unlock productivity. Her big theme here, one on which we should agree, is that without widely-shared growth, democracy itself could be in peril.Behind her analysis lies awareness of the failures of the past and the challenges of the future: shifting geopolitics; new technologies, notably artificial intelligence; and the climate crisis. She concludes from this that “globalisation, as we once knew it, is dead”. Her response is belief in an active government. She cites Janet Yellen’s “modern supply side economics”. But her own label is the hideous neologism, “securonomics”, which “advances not the big state but the smart and strategic state”.You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.So, how might all this work? On stability, Reeves intends to maintain the mandate of the Bank of England and strengthen that of the Office for Budget Responsibility. Sensibly, she wants to focus on the full public sector balance sheet while targeting the current, rather than the overall, fiscal balance. This should reduce the tendency to slash investment whenever fiscal difficulties emerge. However she persists with the foolish rule that debt is to fall as a share of GDP, but in the fifth year of the forecast.On investment, Reeves states that “contrary to siren voices on left and right alike, commitment to growth is not measured by the size of the deficit you are willing to run.” In other words, public investment would be tightly constrained. There would also be a host of new institutions — a new British Infrastructure Council, a revived Industrial Strategy Council, a National Wealth Fund and Great British Energy. I am, I regret, confident that the Treasury would strangle them all. But she has sensible ideas for consolidation of the UK’s fragmented defined contribution pension funds.Finally, on reform, she rightly emphasises the need to deal with the country’s ossified planning system. If Labour tackles that, something important would have changed. She also emphasises the need to achieve growth across the country. It is indeed neither economically workable nor politically acceptable for growth to be limited to London and the South East. As argued also by Ed Balls and co-authors in a recent paper, “A Growth Policy to Close Britain’s Regional Divides: What Needs to be Done”, substantial decentralisation of government is needed to achieve this. Reeves also argues, controversially, that “greater in-work security, better pay, and more autonomy in the workplace have substantial economic benefits”. This looks like the most distinctively “Labour” part of the manifesto.I see no reason why her plans would make things worse. But I also see little reason why, given all the constraints, they would make them much better. Moreover, pressures to raise spending and taxes will be hard to contain. How would  Labour try to deal with this challenge?Yet the biggest question is whether more radical reforms might create better results. I will return to this quite [email protected] Follow Martin Wolf with myFT and on X More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.The definition of insanity is doing the same thing over and over again and expecting different results. It’s a pattern that seems relevant to last week’s headlines, including Chinese leader Xi Jinping’s meeting in Beijing with more than a dozen American chief executives, in an attempt to quell their worries about doing business in the country.This meeting took place when the US and UK had just imposed sanctions on hackers, whom they accuse of a long, China-sponsored effort to insert malware into the US electrical grid and defence systems. And when China has just announced new guidelines to block AMD and Intel chips in its government PCs and servers. It also comes as global worries about Chinese electric vehicle dumping are sky high. And as Beijing has gone to the World Trade Organization to challenge the Biden administration’s signature Inflation Reduction Act.On this last point, all I can think is: seriously? Is there anyone blind to the hypocrisy of China challenging tax credits that support US clean energy producers for breaking WTO rules, when its entire economic model benefits from a double standard in which everyone seems to accept its own wildly discriminatory policies? China’s economy is, after all, built on plans that lay out decades-long subsidies and protectionist ringfencing for the most strategic industries, including but not limited to clean energy, telecommunications and artificial intelligence. This massive problem hides in plain sight. The word “protectionism” tends to only come up when the US or Europe attempt to impose tariffs or subsidies to protect their own industries. This is true even when it’s for good strategic reasons such as the need to deal with climate change or create a just transition to the green economy for workers. And yet, when it comes from China, protectionism is understood to be the status quo. The rest of the world seems to simply accept that this is the starting point of China’s state capitalism; we sigh and wring our hands, all while hoping against hope that something in this picture will change.Well, here’s a newsflash — without a new approach, nothing will. The entire nature of China’s political economy goes against the free trade assumptions of the WTO, not to mention the Washington Consensus, which held that emerging nations would simply fall seamlessly in line with free market rules written by western powers. We know that this has not happened. In fact, one of the best instances of progress of late has been policymakers (mostly in the US, but some in Europe, too) beginning to take their blinkers off and look at the world as it really is.You can see this in the statement issued by US trade representative Katherine Tai last week, following Beijing’s request for WTO consultations. She pointed out the need for the US to tackle climate change while also strengthening supply chains, an issue amplified by last week’s disastrous bridge collapse at the Baltimore port. But she also noted that the People’s Republic of China “continues to use unfair, non-market policies and practices to undermine fair competition and pursue the dominance of the PRC’s manufacturers both in the PRC and in global markets.” You can sum up the takeaway here in three words: pot, kettle, black.Europeans, like so many American chief executives, have long been wilfully blind to the fact that the global trade model and the institutions that support it are not built to deal with today’s reality. But we may be at a turning point. As Tai told me last week, “Europe’s existential concerns about the effects of Chinese EV dumping have reached a fever pitch.” Meanwhile, developing countries, including many in Africa, “are asking for more policy space, because China gets it.” Translation: if China can break the rules, why can’t we? This, along with China’s new manufacturing stimulus plan, which is about to flood the world with even more cheap stuff, will only continue to expose the cracks in the current trade system. The true picture — that the WTO’s rules are often a straitjacket for everyone but China — is becoming ever clearer.  How do we get to a better place? Not at the WTO as it currently exists; it’s become a hub of technocratic wrangling and political posturing for domestic audiences. Personally, I like the idea of starting from scratch, and bringing together a core group of large deficit and surplus nations — the US, UK, Canada, Australia, China, Germany, South Korea and Taiwan among them — to acknowledge that we need new, purpose-built institutions in which to adjudicate disputes.The rules of any new system must allow for a variety of political economies. There must be an understanding that countries have a right — indeed a need — to protect their own economic and political stability at home, even as they engage in global trade. These things should not be exclusive; that’s the biggest lesson from China’s own development story.This will not be a simple process. But every day brings more evidence that the old system is broken. We’ve reached the limits of a model in which cheap capital searched for cheap labour regardless of the costs. That has brought us pharmaceutical shortages and WTO cage fights with no end, along with popular distrust in governments and business leaders who refuse to admit the obvious — we need to do something [email protected] More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Hong Kong has been hit by an accelerating decline in seaborne cargo volumes, as it loses out to rivals in mainland China and south-east Asia.Container throughput in Hong Kong fell 14 per cent last year to 14.3mn twenty-foot equivalent units (TEUs), according to figures from maritime consultancy Drewry.This was the biggest percentage drop among the world’s biggest ports last year. Hong Kong is now the 10th-largest port in the world by volume, Drewry figures show, closely followed by Malaysia’s Port Klang, where volumes rose 6.4 per cent last year.Hong Kong’s deepwater port at the heart of the Pearl River Delta has long made it a desirable trading gateway to the greater China region. Once the world’s busiest port, according to Hong Kong government data, volumes have fallen as the city’s manufacturers shift to mainland China and competition from other Chinese ports rise, analysts said.You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.Shippers have come to regard facilities in mainland China as a more attractive option than Hong Kong, to which goods manufactured in the delta region need to be trans-shipped by barge, small container ship or road.“It is always inevitable that Hong Kong would contract as a port,” said Tim Huxley, chair of Hong Kong-based shipping investment company Mandarin Shipping. “Manufacturing moved elsewhere. Whilst [Hong Kong’s port] is still a big employer, it is no longer the gateway to southern China as there are other ports in the Greater Bay Area which service the manufacturers there,” said Huxley, referring to the area around the Pearl River Delta.Maersk and Hapag-Lloyd’s agreement this year to shift cargo to Shenzhen’s Yantian port instead of Hong Kong underlines the trend, according to analysts. “The ports of Shenzhen and Guangzhou have invested in deepwater terminal facilities which facilitated an increase in mainline calls, in other words bypassing Hong Kong,” said Eleanor Hadland, Drewry’s senior analyst of ports and terminals.You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.Last year’s drop in Hong Kong throughput was due to factors including “improved capacity and capability of terminals in Guangzhou and Shenzhen”, which allow carriers to bypass the territory, Hadland added.There has been a “structural change” in shippers’ preferences to “direct shipment in China instead of vessel-to-vessel transshipment” through Hong Kong, the territory’s major port operator Hutchison Ports Holdings Trust said in its earnings report in February.“Some of the competitors in [the] Greater Bay Area continue to receive government incentives, hence able to offer attractive lower price option[s] to shipping lines,” the company added.Of the six other Chinese ports in Drewry’s top 10, five reported a rise in container throughput last year. Shenzhen remained flat with a slight 0.5 per cent drop to an annual 29.9mn TEUs.You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.Hong Kong’s port also faces increasing competition from counterparts in south-east Asia, Hadland added, as manufacturers increase production outside of China.Singapore, the world’s second-busiest port after Shanghai, has benefited “because south-east Asia, and Vietnam in particular, has picked up lots of the ‘China-plus-one’ story”, said Anoop Singh, global head of shipping research at Oil Brokerage. China still remains by far the “stronger producer across all industries”, and its production and transport infrastructure is unmatched compared with those in most south-east Asian countries, said Andrea Currone, vice-president of Asia operations at Berlin-based freight forwarder Forto.Additional reporting by Robert Wright in London More

BANGKOK (Reuters) – Thailand’s economic growth is expected at 2.8% this year before accelerating to 3.0% in 2025, the World Bank said on Monday. The growth outlook for 2024 and 2025 was reduced from 3.2% and 3.1% respectively, as forecast in December. Southeast Asia’s second-largest economy expanded 1.9% in 2023. More

“We will watch currency market developments with a strong sense of urgency, and will respond appropriately against excessive moves without ruling out any options,” Suzuki told parliament.Suzuki said various factors are driving currency moves such as the Bank of Japan’s decision to end negative interest rates, Japan’s current account balance, price moves, geopolitical risks, as well as market players’ sentiment and speculative trades.”As for the yen’s recent declines, we believe there are some speculative moves that do not reflect fundamentals when taking into account domestic and overseas economic as well as price developments,” he said.The yen touched a 34-year low against the dollar of 151.975 last week and was fetching 151.315 per dollar on Monday morning. More

SINGAPORE (Reuters) – The dollar was broadly steady on Monday as data showing easing U.S. prices bolstered bets that the Federal Reserve could cut interest rates in June, while the yen loitered near 152 per dollar keeping traders on edge on the threat of intervention.The personal consumption expenditures (PCE) price index rose 0.3% in February, the Commerce Department’s Bureau of Economic Analysis said on Friday, compared with the 0.4% rise that economists polled by Reuters had forecast.The report also showed consumer spending rising by the most in just over a year last month, underscoring the economy’s resilience. Most markets across the globe were closed on Friday. Federal Reserve Chair Jerome Powell on Friday said the latest U.S. inflation data was “along the lines of what we would like to see,” in comments that tallied with his remarks after the Fed’s policy meeting last month.Markets are now pricing in 68.5% chance of the Fed cutting rates in June versus 57% chance at the end of last week, the CME FedWatch tool showed. Traders are also pricing in 75 basis points of cuts this year. Citi strategists said the Fed remains on track to begin cutting rates in June. “If activity holds up, the Fed might deliver three rate cuts this year. But a further softening in labour markets has us expecting five rate cuts this year.” The euro was 0.06% higher at $1.07945, hovering near its more-than-one-month low of $1.0769 touched last week. Sterling was at $1.2637, up 0.12% on the day. The dollar index, which measures the U.S. currency against six rivals, eased 0.038% to 104.42 but remained close to the six-week high of 104.73 it touched last week. The spotlight in the currency market has been on the yen as its move toward levels last seen in 1990 revives the threat of intervention by Japanese authorities.The yen touched a 34-year low against the dollar of 151.975 on Wednesday and was last at 151.315 per dollar, a shade stronger, on Monday.Japan intervened in the currency market in 2022, first in September and again in October, as the yen slid toward a 32-year low of 152 to the dollar.Japan’s plans for the yen remain difficult to predict. Its fiscal year has ended, meaning the Bank of Japan does not need to worry about sudden yen movement impacting balance sheets.But news of last week’s emergency meeting of the three monetary authorities – the Ministry of Finance (MOF), BOJ and Financial Services Agency – and jawboning from officials seem to have worked to bring the yen back from 34-year lows.Finance Minister Shunichi Suzuki said on Monday he would not rule out options against excessive currency movement and would respond appropriately, reiterating his warning on rapid yen moves.Citi analysts still expect the Japanese authorities to intervene somewhere in the 152–155 per dollar zone, pointing out that the yen has weakened against the Chinese yuan as well.”We do not expect the MOF to intervene in the CNY, but a further rise in this currency pair could be one factor that encourages FX intervention by Japan,” they said in a client note on Friday.In other currencies, the Australian dollar rose 0.21% to $0.654, while the New Zealand dollar was 0.20% higher at $0.599.In cryptocurrencies, bitcoin last rose 1.83% to $70,927.00. Ether last rose 3.46% to $3,619.20. More