Aurelia Butler

The central bank expects GDP to increase by 2.4% this year and 1.4% next year, up from a previous forecast of 1.3% for both years.The higher growth projection was partly due to the increase in production abroad by Danish pharmaceutical companies and the restart this month of Denmark’s Tyra gas field, which was shut for redevelopment in 2019, the central bank said.”Without these two factors, we estimate that the Danish economy will grow at a more subdued rate of 0.8% this year,” Governor Christian Kettel Thomsen said in a statement. Novo Nordisk makes in-demand weight loss and diabetes drugs under the brand names Wegovy and Ozempic and the bank said its production abroad is included in Denmark’s GDP even though many of the jobs are located outside the country. The pharmaceutical giant’s market valuation recently surpassed both Tesla (NASDAQ:TSLA) and Visa (NYSE:V), making it the world’s 12th most valuable company.Core inflation, which does not include the prices of energy and non-processed food, is expected to be 2.3% in 2024, 2.8% in 2025 and 2.0% in 2026, the central bank said. More

The Federal Reserve concludes its latest two-day policy meeting later Wednesday, and investors will be closely following events in Washington DC for clues on future interest rate policy.The U.S. central bank is widely expected to keep interest rates unchanged at today’s meeting, and thus its Chair Jerome Powell’s subsequent press conference and the bank’s new economic projections that will be in focus.Earlier in March, Powell said the Fed was “not far” from gaining the confidence it needs in falling inflation to start easing rates.However, last week’s stronger-than-expected inflation reports have led market participants to reduce their bets on rate cuts this year, with traders now pricing in around 75 basis points of easing this year. At the start of the year, traders were pricing in 150 bps of cuts.This brings the June Fed meeting firmly into the spotlight, with a Reuters poll showing last week that a strong majority of economists believe the Fed will cut its key interest rate then, although the likelihood has fallen close to 53% from a near 60% probability, according to CME’s FedWatch tool. U.S. stock futures edged marginally lower Wednesday, handing back some of the previous session’s gains ahead of the Federal Reserve’s latest policy decision.By 05:00 ET (09:00 GMT), the Dow futures contract was 10 points, or 0.1%, lower, S&P 500 futures had dipped by 7 points, or 0.1%, and Nasdaq 100 futures had fallen by 35 points or 0.2%.The main indices posted gains on Tuesday, with the blue chip Dow Jones Industrial Average leading the way, gaining 320 points, or 0.8%, its best day since Feb. 22. However, there exists some nervous anticipation ahead of the Fed policy decision, amid concerns the recent hotter-than-expected inflation readings will prompt Fed officials to take a more hawkish stance.The economic data slate is largely empty Wednesday, but there will be quarterly earnings from semiconductor Micron Technology (NASDAQ:MU) and food processing giant General Mills (NYSE:GIS) to digest.A little of Nvidia’s gold dust rubbed off on Samsung Electronics (KS:005930) on Wednesday, after the Nikkei reported that the U.S. chip designer was considering using the South Korean conglomerate’s high bandwidth memory chips in its artificial intelligence processors. Nvidia co-founder Jensen Huang said the firm was in the process of qualifying Samsung’s HBM chips for potential use in the future, the Nikkei reported, citing a press briefing.Samsung’s shares jumped over 5% to an over 2-month high, in trading on the Seoul exchange earlier Wednesday. HBM chips have become a hot topic in AI development, given that they help meet the memory-heavy, high processing speed requirements of running large language AI models.Nvidia has been one of the main beneficiaries of the AI boom, with its stock up over 80% so far this year. Nvidia announced, at its annual developer conference on Monday, its latest chip, the B200 “Blackwell”, which is seen as being 30 times speedier than its predecessor at some tasks.The Bank of England received a boost Wednesday, as data showed that British inflation cooled in February by slightly more than expected, the day before the central bank announces its latest interest rate decision.Consumer prices rose by 3.4% in annual terms in February, slowing from a 4.0% increase in January, and below the 3.5% expected.This was the lowest rate of inflation since September 2021, and offers hope that inflation, which has been persistent for some time, will finally fall back to the central bank’s 2% target in the coming months.The Bank of England is widely expected to keep interest rates at elevated levels on Thursday, but this data has resulted in slightly increased bets that the BoE will start cutting interest rates in the summer.Oil prices slipped lower Wednesday, retreating from four-month highs amid caution ahead of the latest Fed policy announcement. By 05:00 ET, the U.S. crude futures traded 0.8% lower at $82.06 a barrel, while the Brent contract dropped 0.7% to $86.72 per barrel.Both benchmarks settled late Tuesday at their highest levels since late October on persistent signs of tight supplies, but a stronger dollar has seen some profit-taking as it makes oil more expensive for investors holding other currencies.Data from the American Petroleum Institute, released on Tuesday, showed that U.S. crude inventories shrank 1.5 million barrels in the week to March 22, surprising after expectations for a small build. The reading potentially marks a second straight week of draws in U.S. inventories, and comes amid increased refinery activity. A sustained drop in gasoline inventories also pointed to improving fuel demand after a winter lull. The official inventory data, from the Energy Information Administration, is due later on Wednesday.  More

Stay informed with free updatesSimply sign up to the More

The watchdog said on Wednesday it had identified some examples where firms were not taking account of the needs of their customers, or providing the right information.Most files assessed by the FCA showed advice provided was suitable, but in some instances, the recommendations resulted in consumers losing guarantees or incurring unnecessary charges, the regulator said.”Decisions for consumers approaching retirement are complex, with the potential for risk,” said Sarah Pritchard, the FCA’s Executive Director of Markets and International.”Some firms are getting this right and making a real difference to their customers. However, others are not even getting the basics right and putting their customers’ futures at risk,” she said. More

Stay informed with free updatesSimply sign up to the More

Foreign investors accumulated a net $4.41 billion of bonds in India, South Korea, Malaysia, Indonesia and Thailand last month, marking their fourth successive month of net buying, data from regulatory authorities and bond market associations showed.Demand for Indian bonds soared with a net investment of $2.7 billion, the highest monthly figure since July 2017, buoyed by their impending inclusion in JP Morgan’s emerging market debt index.”Rupee sovereign bonds are poised for further gains on strong foreign inflows, largely frontrunning the upcoming bond index inclusion,” Radhika Rao, a senior economist at DBS Bank said in a note.”JP Morgan is due to start the inclusion by June 2024, and extend over 10 months, with 1% increments on its index weighting, till it likely reaches 10%,” she said.South Korean bonds attracted a significant $2.59 billion in February, their largest inflow in nine months, bolstered by a surge in exports, especially in the semiconductor industry, which is anticipated to drive economic growth this year.Thai, Malaysian and Indonesian bonds witnessed foreign outflows of about $532 million, $249 million and $100 million, respectively, on a net basis last month.U.S. central bankers, unlikely to cut borrowing costs this week, might reveal new economic projections that potentially indicate a more gradual approach to interest rate cuts and a later initiation of policy easing than previously forecasted.”We expect prospects of Fed easing, Asia’s improving export outlook and favourable growth-inflation mix will attract inflows into the region,” Khoon Goh, head of Asia Research at ANZ, said. More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Zambia’s President Hakainde Hichilema has urged China and the bankrupt nation’s other creditors to end the stand-off over its $13bn debt restructuring, calling the delay “an indictment” of the credibility of the global system.The southern African country has become a symbol of the failures of the G20-endorsed common framework meant to expedite solutions to debt crises in poor countries. The impasse has underlined how tensions between Beijing and Washington over a range of issues are complicating negotiations on sovereign debt restructuring.Africa’s second-biggest copper producer has been in financial limbo since last year when China, its single biggest creditor, objected to a deal Lusaka had reached with private bondholders. Beijing said the agreement was unfair compared with official debt relief.Hichilema told the Financial Times that a debt deal was already “long overdue”, and it had been given greater urgency after rains destroyed much of Zambia’s maize harvest and throttled the hydropower that generates most of the country’s electricity.Creditors’ inability to agree a timely debt relief was “an indictment” on the common framework that Zambia joined in good faith, Hichilema said, adding that the principal sticking issue was “comparability” — bilateral creditors do not want to be treated too differently from private creditors.He said that unless the weaknesses of this system were addressed, countries would “deal with each other individually . . . and where there’s failure in bilateral negotiations, where should countries go to?”Three years since Zambia defaulted on its external debt and two and a half years since Hichilema took office, the president said he would have “anticipated that by now we’d have resolved the debt restructuring”, and so had the resources to deal with the drought.“This is what I’ve called a python around our necks, our chest and our legs, and it needs to be taken out, so we can focus on growth . . . we can focus on drought mitigation,” he said. Zambia needs a debt resolution to continue a $1.3bn IMF bailout and revive financial flows back into the country.Many bondholders have privately blamed China for blowing up last year’s agreement and for a lack of clarity and transparency. Hichilema denied that Beijing was standing in the way of a deal, pointing to its recent signing of outline terms on official debt relief. Full details of the terms have not been disclosed.“If the largest creditor has signed through the global system . . . it means we have resolved with China,” he said. “China must support Zambia as the US, as France, as other countries must support Zambia to find closure with the bondholders and other private creditors.”Zambia defaulted before Hichilema took office in 2021. Zambia has been working to encourage official and private creditors to return to the negotiating table to sort out the numbers for debt relief, he added.“We expect this must be done within March, [as] the more we delay, the whole issue is beginning to negate the gains we’ve made [with Zambia’s post-default economic recovery],” he added.Even before the full effects of the drought, Zambian inflation surged back to double digits in recent months, forcing the central bank to raise interest rates. Zambia plans to import electricity to replace energy lost to the drought but is also having to impose rolling blackouts, a threat to mining production.“We did our part, now creditors — official, private — must do their part,” Hichilema said. “We encourage all the parties, many of whom have been supportive, to just walk the extra mile and close this transaction.” More

During the years of rock-bottom interest rates, there seemed very little point in using cash Isas if you were looking for a meaningful return on your savings. Over the past year or so, however, these savings vehicles have been enjoying a resurgence in popularity, as interest rates have climbed and remain elevated.Even when inflation started to bite and rates began to rise in early 2022, cash Isas were still being overlooked; instead, savers’ attention was focused on the fierce battle over rates between providers of fixed-rate bonds.Anna Bowes, founder of the Savings Champion website, says: “The gap between the top-paying bonds and equivalent Isas had increased to more than 40 per cent — far more than the tax benefit of putting money into an Isa.”In August 2021 the top one-year bond was paying 1.38 per cent before tax, 1.1 per cent if basic rate tax was deducted and 0.83 per cent after higher rate 40 per cent tax. The top Isa, on the other hand, was paying just 0.8 per cent — less even than a higher-rate taxpayer would have earned on the bond.Rising interest rates have changed that dynamic, drawing more people back into these tax-sheltered vehicles by boosting competition between providers and closing the gap between bond and Isa rates.“Today, the top one-year fixed rate bond is paying 5.28 per cent, but the top Isas pay more than 5 per cent. So anyone paying tax on their savings would earn more by putting their money into the Isa,” says Bowes.As tax-free allowances have been frozen or cut, there is much more incentive for taxpayers to make use of all their tax allowances, especially their cash Isa. That’s particularly so given the increasing numbers being drawn into taxpaying status.Research by the campaign group TaxPayers’ Alliance has found that there are now 35.5mn people paying income tax, compared with 31mn in 2010. Most of that extra 4.5mn have become taxpayers over the past three years through recent tax threshold freezes.“The plethora of stealth taxes, including the ongoing freeze to our personal allowances, means 2.5mn have become taxpayers since these taxes came into force in 2021 — and more than a million people have been dragged into the higher rate tax bracket,” Bowes observes.Particularly significant for savers has been the freezing of the personal savings allowance (PSA), which has remained unchanged since its introduction in April 2016, providing £1,000 of tax-free interest for basic-rate taxpayers and £500 for higher-rate ones.At that time, the top-paying easy access account was paying 1.45 per cent, meaning a saver would need capital worth £69,000 to receive more than £1,000 of gross interest.Today, the top easy access account pays 5.11 per cent, so a deposit of just £19,570 — less than the £20,000 annual Isa allowance — will earn more than £1,000 and breach the PSA. For someone paying higher rate tax and therefore with only £500 of PSA, savings of less than £10,000 will push them into taxable territory.During the era of low interest rates and bullish stock markets, it made sense to use the Isa allowance to shelter equities in preference to cash because they were likely to grow so much more over the longer term. That arguably still holds true. Nonetheless, says Justin Modray, founder of Candid Financial Advice, cash tax shelters are much more valuable than they were.“If you don’t plan to use your full Isa allowance investing via a shares Isa, then moving savings into a cash Isa makes sense,” he comments. “Even though you may already enjoy tax-free savings via the PSA, accumulating savings within an Isa could prove valuable over time.”The stealth effect on cash savings income continues: neither the stagnant PSA nor the cash Isa allowance of up to £20,000 was touched in the recent Budget. Instead, a planned British Isa allowance of up to £5,000 for investments in British companies is set to provide a boost for equity investors.However, there are some broader changes to the annual tax-free savings subscription that will take effect from the start of the new tax year and are worth knowing about. In particular, from April it will be possible to invest in multiple Isas in a single tax year.For cash savers keen on fixed-term Isa accounts this is a good thing, says Bowes. “If you had funded a fixed-term Isa (which usually have limited funding periods) with less than the full allowance, and then wanted to top up at a later date, you would usually have needed to open another Isa to do so, which in the majority of cases is not allowed.” The new rules will make that possible.For savers looking for a home for their money before April, the biggest questions are likely to be about timescale: how long before rates start to fall again? How long should I tie my money up for? Of course, that depends to some extent on what you want to do with it, and when. But for spare cash these are valid questions.Unusually, longer term rates are lower than shorter term rates at the moment, and fixed-rate deals — usually the more generous payers — are paying less than variable. Bowes says: “This is a clear indication that the markets are expecting base rate cuts and therefore more cuts to the best savings rates, so it might be a good idea to tie at least some of your cash up for the longer term if you don’t need it.”Modray agrees: “If you can tie up cash and want certainty, a fixed rate can still be a sensible option,” he suggests.Current cash Isa best buys include the Virgin Money Defined Access cash E-Isa Issue 25 paying 5.06 per cent, and the Moneybox Cash Isa paying 5.11 per cent. Savers are limited to three annual withdrawals a year for both products. Meanwhile, Aldermore pays 4.5 per cent fixed for three years. More