Aurelia Butler

TOKYO (Reuters) – Japanese corporate spending on plant and equipment rose 8.1% year-on-year in the third quarter, Ministry of Finance data showed on Monday, signalling that solid domestic demand was underpinning the country’s fragile economic recovery.The solid expenditure data, which will be used to calculate revised gross domestic product figures due on Dec. 9, could support the case for the central bank to raise interest rates further.Preliminary data last month showed Japan’s economy expanded by an annualised 0.9% in the third quarter, slowing from the previous three months. The third-quarter capital spending figures compared with the previous quarter’s 7.4% gain. It grew 1.7% on a seasonally adjusted quarterly basis.Monday’s capex data also showed corporate sales rose 2.6% in the third quarter from a year earlier, while recurring profits decreased 3.3%.Capital expenditure is one of the key gauges of domestic demand-led economic growth.Business spending remained generally solid in recent years due to strong appetite for investment in information technology. However, an unstable political situation at home and further weakness in China’s economy could lead Japanese firms to postpone capital investment decisions, economists said.Moreover, U.S. President-elect Donald Trump has pledged tariffs on the nation’s three largest trading partners – Canada, Mexico and China, potentially affecting global supply chains in a wide range of industries. More

The plans, which have not been previously reported, will make autonomous-driving developer Momenta the first Chinese supplier picked by Mercedes to be a primary provider of a key technology and selling point for its products, as intense competition and technological innovation in China force Western automakers to rethink their supply-chain strategies.  The German premium automaker has since 2017 had an investment in Momenta but the two companies have yet to publicly announce jointly developed products.In the years since, the Chinese firm has emerged as one of China’s leading suppliers of advanced driving assisted system (ADAS) features similar to Tesla (NASDAQ:TSLA)’s full self driving that can navigate urban traffic with human drivers’ supervision. Mercedes intends to make a fresh $75-million investment in Momenta and may invest more as a cornerstone investor in Momenta’s initial public offering scheduled in the first quarter of 2025, the sources said. It has chosen Momenta as its ADAS supplier in four models to be launched in China from 2025 to 2027 and is discussing internally whether to use Momenta software in more Chinese models beyond 2027, one of the people said.  It is also working with Momenta on preliminary plans to use the Chinese supplier’s technology in Mercedes models outside China, two of the people said.Mercedes and Momenta declined to comment.  Mercedes has also been exploring ADAS options with U.S. artificial-intelligence chipmaker Nvidia (NASDAQ:NVDA) as part of a partnership announced in 2020, when they said they would develop Mercedes-Benz (OTC:MBGAF) vehicles with upgradable automated-driving functions. However, the firms have yet to unveil any products. BEHIND IN CHINAMercedes is playing catch-up in China on both electric vehicles and smart-driving software, which is led by Tesla, Nio (NYSE:NIO) and Xiaomi (OTC:XIACF). Only 3% of Mercedes’ 443,764 cars sold in China this year were EVs, according to the China Association of Automobile Manufacturers, fewer than one-tenth of Nio’s sales.Automakers in China are locked in an autonomous-driving race, with BYD (SZ:002594) hiring thousands of engineers to ramp up its in-house development of such software. Nio, Xpeng (NYSE:XPEV) and Xiaomi are developing their own ADAS chips that could achieve better smart-driving performance with their EVs. The trend has also helped Chinese ADAS suppliers Momenta, Huawei and DeepRoute.ai quickly amass automaker clients and embed several vehicle models within their systems.  Momenta’s clients include BYD, SAIC and Audi in China. Momenta’s largest automaker investor is China’s SAIC while other backers include General Motors (NYSE:GM) and Toyota (NYSE:TM).  More

(Reuters) – A look at the day ahead in Asian markets. The global market spotlight on Monday looks set to zoom in on the dollar, especially its performance against emerging market currencies, after U.S. President-elect Donald Trump’s weekend warning against the so-called ‘BRICS’ nations.In a social media post on Saturday, Trump demanded that the ‘BRICS’ countries – Brazil, Russia, India, China and South Africa – commit to not creating a new currency or supporting another currency that would replace the U.S. dollar, or face 100% tariffs.This comes after Trump had already injected additional volatility into world currency markets last week by proposing big tariffs against China, Mexico, and Canada – countries the US has some of its largest trade deficits with. The dollar’s path on Monday will be fascinating to observe. It snapped an eight-week winning streak last week with its steepest weekly fall since mid-August, as U.S. rate cut expectations cooled and Treasury yields fell.But much of the dollar’s downward momentum last week was down to its weakness against the euro and yen. It has been much firmer against other G10 currencies – not least the Canadian dollar – and especially emerging and Asian currencies.Sentiment toward emerging markets as the final month of the year begins is still mostly downbeat. Outflows from EM bond funds remain heavy, and according to analysts at Barclays (LON:BARC) EM hard-currency bond funds last week registered their second-largest outflow so far this year.But there are more encouraging signs from China that the raft of stimulus and support measures from Beijing in recent months may be beginning to bear fruit. A private survey on Sunday showed that new home prices in China rose at a year-on-year rate of 2.40% in November versus 2.08% in October. And on Saturday, China’s official purchasing managers index data showed that factory activity expanded modestly for a second straight month in November, and at its fastest pace in seven months. Is there light at the end of the tunnel for China’s domestic economy? With Trump ramping up the trade threats ahead of his inauguration next month, policymakers in Beijing and China bulls will certainly be hoping so.Asia’s economic calendar on Monday sees the release of a raft of manufacturing PMI reports, including China’s ‘unofficial’ Caixin manufacturing PMI data for November. Will that reinforce the modestly encouraging signals from the ‘official’ figures over the weekend? Economists polled by Reuters expect a reading of 50.5, up from 50.3 in October, which would mark the fastest pace of expansion since June. Other regional highlights on Monday include the latest Australian retail sales data and inflation figures from Indonesia. According to a Reuters poll, consumer prices rose at an annual rate of 1.50% in November, cooling from 1.71% the previous month. That would be the lowest rate of annual inflation since June 2021.Here are key developments that could provide more direction to markets on Monday:- China Caixin manufacturing PMI (November)- Australia retail sales (November)- Indonesia inflation (November) More

BEIJING (Reuters) -China’s factory activity expanded modestly for a second straight month in November, an official survey showed, adding to a string of recent data suggesting a blitz of stimulus is finally trickling through the world’s second-largest economy just as Donald Trump ramps up his trade threats.The National Bureau of Statistics purchasing managers’ index (PMI) on Saturday rose to 50.3 – a seven-month high – from 50.1 in October, above the 50-mark separating growth from contraction and beating a median forecast of 50.2 in a Reuters poll.The mood in China’s manufacturing sector has been depressed for months due to tumbling producer prices and dwindling orders, but two months of positive PMI readings suggest the stimulus announcements are improving sentiment on factory floors.That said, fresh headwinds from additional U.S. tariffs could threaten China’s industrial sector next year and pour cold water over any early optimism in the Asian giant’s manufacturing sector.While there have been some signs that Chinese policymakers’ latest moves may be lending support to the ailing property market, which has weighed heavily on domestic demand, officials are now in a race to limit the economy’s vulnerabilities ahead of a second Trump presidency.President-elect Trump said on Monday he would impose a 10% tariff on Chinese goods so that Beijing does more to stop the trafficking of Chinese-made chemicals used in the production of fentanyl.He also threatened tariffs in excess of 60% on Chinese goods while he was on the campaign trail, hikes that pose a major growth risk for the world’s top exporter of goods.China’s exports surged more than expected in October, which analysts attributed to factories rushing out shipments to major markets in anticipation of further tariffs from the U.S. and the European Union.”The economy stabilized recently as fiscal and monetary policies eased after the Politburo meeting on September 26. But the outlook for 2025 remains unclear,” said Zhang Zhiwei, president and chief economist at Pinpoint Asset Management. “The trade war is looming and it will delay investment decisions by the corporates. The investors expect fiscal stimulus but the size and composition of spending are uncertain,” said Zhang. The central economic working conference in December may shed some light on the policy outlook, he added.The PMI report showed total new orders expanded for the first time in seven months in November, while new export orders contracted for the seventh consecutive month. INSUFFICIENT DEMAND”The PMI index continued to rise in November, indicating more obvious signs of recovery at the bottom of the economy. The effect of policies in boosting business confidence is becoming stronger,” said Zhang Liqun, an analyst at the China Logistics Information Center.However, “insufficient demand is still a major constraint on enterprise production activities,” said Zhang. “It is necessary especially to strengthen the effective driving of government public investment on enterprise orders.”The non-manufacturing PMI, which includes construction and services, fell to 50.0 this month, after it rose to 50.2 in October. Activity in the services sector expanded modestly for a second month in a row. Earlier this month, China unveiled a 10 trillion yuan ($1.38 trillion) debt package to ease municipal financing strains. That followed China’s central bank in September introducing its biggest stimulus since the pandemic to pull the economy back towards the governments growth target of around 5%.Chinese policy advisers are recommending that Beijing should maintain that same growth target next year and introduce even more stimulus to bolster domestic demand.There are early signs that the economy is turning a corner.Retail sales, a gauge of consumption, grew the most since February last month, and a slump in property sales narrowed, possibly indicating that the beleaguered sector was limping back to life.But industrial output last month slowed slightly from September’s pace and industrial profits, a lagging indicator, continued to fall, pointing to how difficult it is for firms to remain profitable in the current economic climate in China.The private sector Caixin factory survey will be released on Monday and analysts expect its reading to edge up to 50.5. China’s official November composite PMI, which includes both manufacturing and services activity, remained at 50.8 in November. More

BENGALURU (Reuters) – New Zealand home prices are forecast to rise around 5% in the next two years as lower interest rates boost demand again following a 19% correction in the market following the pandemic, according to a Reuters poll of housing experts.These same analysts said average rent increases will outpace consumer inflation, continuing to squeeze the budgets of prospective homeowners saving up for a deposit in a market where house prices doubled in just seven years to a peak in late 2021. A sharp economic slowdown and rising unemployment hit household incomes, but some optimism has returned following 125 basis points of interest rate cuts so far from the Reserve Bank of New Zealand (RBNZ), with more likely next year.Average home prices were forecast to rise 5.1% in both 2025 and 2026 after an expected 0.3% fall this year, according to the median forecast from a Nov. 12-28 survey of 10 property market analysts.The latest Reuters poll results compare to RBNZ forecasts for around 4% and nearly 7% house price growth in 2025 and 2026, respectively. House prices surged 40% during the pandemic as buyers scrambled to find properties with more living space.”For now, the housing market’s animal spirits appear to be sleeping, but anecdotes suggest buyer interest has picked up meaningfully since the RBNZ started cutting…which is perhaps a signal that there might be a ‘buy the dip’ mentality forming,” said Sharon Zollner, chief economist at ANZ.New Zealand’s economy slipped into a technical recession late last year but lower interest rates are expected to help the economy rebound next year.Slowing wage growth, however, may leave many aspiring first-time buyers with no choice but to continue renting. The average home price in New Zealand is around seven times the average household income and 10 times in Auckland, its largest city.”With falls in borrowing costs, the housing market will be more accessible for first home buyers. However, high house prices and the required level of deposits will still be a hurdle for purchasers,” said Satish Ranchhod, a senior economist at Westpac.Urban home rents were expected to rise 3.5%, according to the median estimate from a smaller sample of forecasters, outpacing expected 2.0% consumer price inflation over the next two years from a separate Reuters poll.Asked what will happen to affordability for first-time home buyers over the coming year, experts were nearly split, with four saying it would improve and three saying it would worsen.Those who said it would improve noted the market would still benefit those who already own a home or have built significant equity, a recurring theme across Reuters polls of other housing markets.(Other stories from the Q4 global Reuters housing poll) More

$1 for 4 weeksThen $75 per month. Complete digital access to quality FT journalism. Cancel anytime during your trial.What’s included Global news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts20 monthly gift articles to shareLex: FT’s flagship investment column15+ Premium newsletters by leading expertsFT Digital Edition: our digitised print edition More

Swiss authorities are weighing up how to overhaul banking rules in a bid to prevent a repeat of the 2023 collapse of Credit Suisse, which led to its takeover by its old rival UBS.In an interview broadcast on Sunday, Keller-Sutter said UBS was now a very large bank in relation to the size of the Swiss economy, creating a “special situation”.”And so the appropriate protective and preventative measures must be taken; that means liquidity, that means equity capital,” she told national broadcaster SRF (NS:SRFL).She acknowledged UBS already faced certain stricter capital requirements, including under Basel III rules effective from January that not all countries are implementing identically.In April, Keller-Sutter said estimates that UBS would have to hold another $15 billion to $25 billion in capital under her government’s proposals were “plausible”.Asked in the interview whether the $25 billion figure was still valid, Keller-Sutter said she could not say. In the end, what counted was the whole package of measures, she noted.”This must be looked at in a proportionate, targeted way,” she said, arguing Switzerland must find a compromise between having a competitive financial sector and protecting taxpayers.Addressing an upcoming parliamentary report into how authorities handled the Credit Suisse crisis, Keller-Sutter stressed that the main blame lay with the bank’s management.Asked about the risk of incoming U.S. President Donald Trump imposing hefty trade tariffs on other countries, Keller-Sutter said it was too early to speculate.”But of course if such tariffs did come about, it would be poison for world trade,” she said. More