Aurelia Butler

(Reuters) – A look at the day ahead in Asian markets from Jamie McGeever, financial markets columnist.Asian markets are set to open higher on Tuesday as investors look through developments in the Middle East and rising geopolitical tensions, and take heart from an otherwise more benign U.S. economic and corporate backdrop.Wall Street’s performance on Monday – the three main indexes rose between 0.9% and 1.2% – will probably set the tone for Asia, where there are no major market-moving economic indicators scheduled for release.That will change on Wednesday with a raft of Chinese data, including third quarter GDP. Perhaps the most important event in Asia on Tuesday will be the release of the minutes of the Reserve Bank of Australia’s policy meeting this month.The Aussie dollar is languishing near a one-year low against the U.S. dollar, but snapped a three-day losing streak and rose 0.8% on Monday.The greenback’s broad decline on Monday should also help lift risk appetite across Asia on Tuesday, and Wall Street’s rally will give investors food for thought too.There are signs the positive correlation between U.S. stocks and bonds might be weakening, but some context is required – it has been positive since early August, and only a couple of weeks ago was as strong as it has ever been.A simple rolling 30-day correlation between the S&P 500 and the ICE BofA U.S. Treasury bond index dipped to 0.88 on Monday, still an extremely high level but the lowest this month and down from 0.94 last week.Monday’s equity rally and bond selloff suggest the correlation will weaken further. Could stocks – and global risk appetite, by extension – be gaining a momentum of their own regardless of what the bond market does?It’s a bold call. Or perhaps not, if you buy this scenario: the Fed is done raising rates, economic data points to a ‘soft landing’, the worst of the earnings slowdown is behind us and the 2024 outlook is indicating double-digit earnings growth.Or does Wall Street’s resilience conduct investment flows into the U.S. between now and the end of the year, and away from other regions like Asia and emerging markets?The situation in the Middle East, meanwhile, doesn’t appear to be weighing too heavily on global risk appetite – implied stock market volatility, gold, the dollar, Treasuries and oil all fell on Monday.Wall Street’s main indexes and the benchmark MSCI indexes for world, Asian and emerging stocks are all higher since the Oct. 7 Hamas attack on Israel.That said, investors in Asia should keep a close eye on the dollar, which is still trading up near 150.00 yen and over 7.30 yuan.Here are key developments that could provide more direction to markets on Tuesday:- Australia central bank October meeting minutes- Fed’s Williams, Bowman and Barkin all speak- Russian President Putin visits Chinese President Xi in Beijing (By Jamie McGeever; Editing by Josie Kao) More

However, the Nigerian economy is currently facing difficulties with a stubborn 26% inflation rate and a depreciating local currency, which has plunged to 1045 per dollar on the black market. These issues persist even after the implementation of President Tinubu’s exchange reforms and the CBN’s lifting of an eight-year foreign exchange embargo.In response to these challenges, the IMF has suggested several measures. These include strengthening monetary policy through a hike in the Monetary Policy Rate, addressing excess naira liquidity, and potentially seeking IMF financing. The possibility of a loan for currency stabilization was also discussed during the meeting in Marrakech.The CBN, under the guidance of Governor Cardoso, has forward contract commitments valued at $6.8 billion, according to JP Morgan. This commitment represents a significant financial obligation for Nigeria’s central bank amidst its ongoing efforts to stabilize the country’s economy.The IMF’s backing of Nigeria’s currency reforms and recommendations for additional measures underscore the international community’s interest in supporting the West African nation as it navigates its current economic challenges.This article was generated with the support of AI and reviewed by an editor. For more information see our T&C. More

NEW YORK (Reuters) – Federal Reserve Bank of Philadelphia President Patrick Harker said on Monday the central bank should not create new pressures in the economy by increasing the cost of borrowing. “We should not at this point be thinking about any increases” in the Fed’s rate target, Harker told a bankers’ group after a speech in which he had again reiterated his belief the Fed is done raising rates in an environment where inflation pressures are ebbing. More

MARRAKECH, Morocco (Reuters) -Global finance leaders’ paralysis in coming to grips with the fallout from the Hamas attack and Israel’s response last week exposed deep geopolitical divisions hampering the International Monetary Fund and World Bank, even as they advanced new funding plans aimed at easing more-frequent economic shocks.Hamas launched its unprecedented attack on Israel on Oct. 7, just as top finance officials arrived in Morocco for the IMF and World Bank annual meetings, upending the gathering’s carefully crafted script calling for new resources and steps to revive flagging global growth.IMF Managing Director Kristalina Georgieva did not mention the new conflict at opening events. Later, as Israel’s retaliatory strikes mounted, she struggled to address it, describing it as a human tragedy but a vague source of economic uncertainty. In private conversations at the meetings, the Israel-Gaza conflict’s implications were front and center, from a new refugee crisis to trade impacts and the threat of fighting in Lebanon and the West Bank, participants from finance groups to non-profits told Reuters.”In the face of a major global shock like this that’s human created, that’s not a climate shock, these institutions are impotent to do anything about it, which is why they’re not even talking about it,” said Rachel Nadelman, a senior research fellow at American University’s Accountability Research Center, who attended civil society and official events at the meetings.The inability to respond extended to chair’s statements issued by the IMF and World Bank steering committees, once again unable to issue joint communiques amid deepening geopolitical tensions, most recently over Russia’s invasion of Ukraine, but also disputes between the United States and China.The Group of 20 major economies did reach consensus on an official communique but omitted any mention of the Israel-Hamas war. A G20 official said that body has been riven for two years by the Ukraine war, with a communique only possible after a meeting of U.S. President Joe Biden and China’s Xi Jinping.”The Israeli-Palestinian conflict is even more controversial – almost impossible to reach consensus,” the official said.A senior U.S. Treasury official said the human tragedy was in the foreground at the moment, not the economic consequences, and Russia’s war remained the primary driver of geopolitical instability in the global arena. “First and foremost this is a human tragedy,” the official said.ACCOMPLISHMENTS OVERSHADOWEDWorld Bank President Ajay Banga acknowledged on Sunday that the Israel-Gaza conflict, along with the Ukraine war and fighting in Africa, were “casting long shadows” over the meeting’s accomplishments and adding to economic challenges.”Without peace, it’s hard for people to get stability, growth, look after their children, get jobs,” he said.Senior World Bank Group officials were more pointed in a statement to staff, saying they were “shocked and appalled by the unprecedented escalation of violence in Israel and Gaza.””We condemn terrorism in all forms, including the abhorrent targeting of innocent civilians and kidnapping,” the leaders of the World Bank, the International Finance Corp and the Multilateral Investment Guarantee Agency, said in an internal statement seen by Reuters.The World Bank’s governing body approved a new vision statement “to create a world free of poverty on a livable planet” to incorporate its new mission to fight climate change, pandemics and fragile states, along with new steps to expand lending.The IMF’s steering committee agreed to boost quota funding by year-end, leaving the door open to doing so without adjusting its shareholding structure to give China more votes, while a $3 billion fundraising goal for its poor-country trust fund was met.But conflicts remain the biggest challenge to the global economy, said Josh Lipsky, a former IMF official who directs the Atlantic Council’s GeoEconomics Center.”If these institutions are going to be legitimate and fit-for-purpose for the coming decade, they’re going to have to respond to geopolitical crises in close to real time,” he told Reuters.”Geopolitical shocks are economic shocks now and economic shocks are geopolitical shocks – and they’re trying to detach the two.” More

WASHINGTON (Reuters) – Democratic U.S. Senate Majority Leader Chuck Schumer said on Monday the Senate will seek within days to pass a resolution supporting Israel, approve additional funds for Israel and confirm a new U.S. ambassador to the Jewish State.Schumer spoke as the Senate opened after he led a small group of Democratic and Republican senators on a weekend visit to Israel, in the wake of a shock Oct. 7 attack by Hamas fighters that left 1,300 Israelis dead.”In the coming days, I will be working with the administration on putting together an emergency supplemental (spending bill) that will give Israel the tools it needs to defend itself,” Schumer said.”That means military assistance, intelligence assistance, diplomatic assistance and humanitarian assistance to care for innocent civilians. We want to move this package quickly. The Senate must go first. I know that the House is in disarray, but we cannot wait for them,” he said.Schumer said he thought Senate passage of a strong pro-Israel legislation might encourage the House of Representatives to act, despite its leadership impasse.Support for Israel has historically been bipartisan in the U.S. Congress. Israel currently receives $3.8 billion in military assistance per year, under a 10-year aid package passed in 2016.The Republican-majority House has been without a Speaker since Kevin McCarthy was ousted on Oct. 3. That has held up any legislative action, from debating further aid to Ukraine as it battles a Russian invasion to a statement of support for ally Israel in its war with Hamas.The Senate Foreign Relations Committee scheduled a confirmation hearing for former Treasury Secretary Jack Lew, President Joe Biden’s nominee to be the next ambassador to Israel, on Wednesday.Schumer called Lew “capable and strong” and urged the committee to approve Lew as soon as possible, so the full Senate can confirm him “in all due haste.”Secretary of State Antony Blinken, Director of National Intelligence Avril Haines, Secretary of Defense Lloyd Austin and Chairman of the Joint Chiefs of Staff General C.Q. Brown will hold a classified briefing on the Middle East conflict for the full Senate on Wednesday. More

This article is an on-site version of our Disrupted Times newsletter. Sign up here to get the newsletter sent straight to your inbox three times a weekToday’s top storiesA US-led effort to allow humanitarian aid into the Gaza Strip and provide an exit from the bombarded territory for foreign nationals faltered, despite international warnings of the mounting human toll from the Israel-Hamas war. Full coverage here.Donald Tusk has secured a potential path to power in Poland, according to election exit polls that give the former European Council president the upper hand over his rightwing rivals. Investors welcomed the prospect, pushing up Polish stocks and the zlotyBioNTech has written down about €900mn on its Covid-19 vaccines because of lower than expected demand for the shots it developed with partner Pfizer. Other vaccine makers have also suffered as investors become concerned over demand and how the companies plan to spend their pandemic windfalls. For up-to-the-minute news updates, visit our live blogGood evening.“Maybe the most dangerous time the world has seen in decades”.Whether you agree with JPMorgan boss Jamie Dimon or not, fears of a wider conflict in the Middle East have added to concerns for a global economy already rocked by war in Europe and still feeling the aftershocks of Covid-19.Finance ministers and officials voiced their concerns as they finished off a round of meetings with the IMF and World Bank in Morocco last week, including fears that higher energy prices would revive inflation (the IMF says a 10 per cent rise in oil prices would raise global inflation by about 0.4 percentage points). Higher costs of imported energy and higher borrowing costs also spell trouble for the euro.“Debt levels are at record levels and at the same time we are in this higher-for-longer interest [rate] environment. There is a lot . . . that could go wrong” said Gita Gopinath, deputy head of the IMF. Globalisation has slowed as economic nationalism has grown, most notably in spats between the US and China, while the latter’s property crisis could yet worsen. And that’s not to mention the greatest threat of all: the potential catastrophic impact of climate change, especially on developing countries that are already struggling with expensive debt.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 FT editorial board says the global economy has rarely seemed so turbulent since the 1970s, highlighting how the tragic return of conflict to the Middle East only underscores the pattern of rising geopolitical risk.Volatility is also back in financial markets. Bond markets were already in turmoil before last weekend’s events but analysts say if rising oil prices start feeding through, expectations of fresh action from policymakers could bring a renewed rout. Trading in options tied to the Vix volatility index — dubbed Wall Street’s “fear gauge” — was already on course to hit a record volume this year, as cautious investors looked to protect themselves from the risk of a sudden stock market reversal.  A new source of risk comes from artificial intelligence, according to Gary Gensler, chair of the US Securities and Exchange Commission, who tells the FT that without intervention from regulators it was “nearly unavoidable” that AI would trigger a financial crisis within a decade.The FT also notes that the World Uncertainty Index, which tracks how often the word “uncertain” crops up in analysts’ reports, has been trending upwards for years, jumping significantly since 2021.This environment of uncertainty makes policymaking even more fraught than usual. Central bankers’ interventions are based on historical data but with so many things in flux, the chance of errors increases, and the effectiveness of monetary policy, which operates with a lag, is dimmed, the FT says. Attempts to make sense of geopolitical events only introduce more human error into markets, it concludes. “Active strategies, shorter time horizons, less focus on models, and policy errors all risk creating a vicious cycle of instability. The world of higher-for-longer volatility may be hard to shake off.”Or, as European Central Bank president Christine Lagarde opined at one of the final panels in Morocco: “There are all these balls in the air. We are not exactly sure where they are going to land.”Need to know: UK and Europe economyEx-Tory adviser Iain Anderson is devising a plan for a UK business “partnership” with a future Labour government. Italy announced €24bn in tax cuts and public sector pay rises next year to spur consumption and support weakening growth, despite market concerns over the country’s finances. France is ready to accelerate public spending cuts and structural reforms as it seeks to return to “sound public finances” said finance minister Bruno Le Maire, as rising bond yields pile pressure on governments to bear down on their deficits. Spanish central bank chief Pablo Hernández de Cos said higher borrowing costs from the recent bond market rout supported a pause in the European Central Bank’s programme of interest rate rises. A spat between Germany and France over nuclear power threatens the EU’s transition away from fossil fuels. A Big Read explains.Airlines hit out over a Dutch plan to phase out EU fossil fuel subsidies before there are affordable greener alternatives. Need to know: Global economyAustan Goolsbee, a top official at the Federal Reserve, told the Financial Times it was “undeniable” that the slowdown in US inflation was a trend, rather than a blip, but cautioned against tying forthcoming monetary policy decisions to a narrow set of data. The centre-right Daniel Noboa won Ecuador’s presidential election, beating leftist rival Luisa González in a run-off vote. Noboa campaigned on a market-friendly platform of youth employment and promoting foreign investment.Patricia Bullrich, the mainstream conservative candidate in Argentina’s presidential election told the FT she wanted to rethink her nation’s relationship with China, scrap entry into the Brics bloc and probe billions of dollars of recent state loans.Need to know: businessOnline sales of Japanese-made cosmetics in China have been hit by a boycott on beauty brands that shoppers fear could be contaminated by radioactive water released from the stricken Fukushima nuclear plant.“Corporate Britain is dying” writes chief economics commentator Martin Wolf. The reason? Pension and insurance companies have dumped UK equities, reducing the ability of companies to raise capital and expand.Analysts warned that the predicted extraordinary growth for drugs such as Novo Nordisk’s Wegovy and Ozempic, which is prescribed for diabetes but commonly used for weight loss, could hit sales of packaged food and drinks as patients reduce their calorie intake. With a portfolio of toys, movies and theme parks and booming revenues, brick behemoth Lego has big ambitions. Read more here.UK mining group Cornish Tin has been granted rights by King Charles to explore for gold and silver in the latest boost for Cornwall’s ambitions to revive its mining heritage. The World of WorkThe number of over-65s working is rising as older people take an active role in the world: is it time we stopped talking about retirement? How about “third life”? The plight of Mind Gym, the corporate training business, highlights a key problem in the $370bn global market for corporate leadership and development courses, the Lex column says: It is very hard to see what, if anything, much of this training accomplishes.  Some good newsThe Royal Zoological Society of Scotland has an encouraging update on the first release of wildcats into Britain through its Saving Wildcats campaign. Nineteen were introduced in the Cairngorms National Park throughout the summer and have been tracked daily using GPS-radio collars.Nineteen wildcats introduced in the Cairngorms during the summer are tracked daily More

QUITO (Reuters) – Business heir Daniel Noboa will have 17 months to revive Ecuador’s battered economy and tackle rising crime after winning the country’s presidential election on Sunday. The thirty five-year-old Noboa vowed in his victory speech to rebuild the South American country, whose economy has struggled since the coronavirus pandemic, motivating many thousands of Ecuadoreans to migrate.Markets were expected to receive news of Noboa’s victory with more enthusiasm than they would have a win by his rival, leftist Luisa Gonzalez, but analysts have said investors’ longer-term reaction could be swayed by Noboa’s cabinet picks, which are expected next week.Noboa has pledged to attract foreign investors and create jobs for young people, but has also said he will balance meeting foreign debt obligations with the needs of the population.Ecuador has repeatedly turned to multilateral funding since the pandemic.Noboa has said he will tackle sharply rising crime with a new intelligence unit, tactical weapons for security forces, prison ships to house the country’s most dangerous convicts and a beefed up presence at ports and airports, hot spots for drug smuggling.Increased violence, which the outgoing government blames on drug gangs, reached a crescendo during the campaign with the murder of anti-corruption candidate Fernando Villavicencio, who was shot to death in August as he left a Quito campaign event.Noboa won more than 52% of the vote to Gonzalez’s 48%, with nearly all ballot boxes counted.Noboa’s victory fulfills a long-held family ambition – he grew up accompanying his banana baron father Alvaro during the latter’s multiple failed attempts to become president.Noboa resigned from the family firm to run for the national legislature in 2021, where he served until outgoing President Guillermo Lasso dissolved the chamber and called the election to avoid impeachment on charges he disregarded warnings of embezzlement at a state company. He has denied the charges.He will be delighted to see Noboa at the presidential palace on Tuesday, Lasso said on social media late on Sunday.”We should begin the transition process from now so you can get to know in-depth the economic, social and security situation in Ecuador,” Lasso said.Noboa’s campaign said in a statement he would spend Monday meeting with advisors and future lawmakers belonging to his National Democratic Action party, before seeing Lasso on Tuesday.Noboa’s truncated term will last from December this year until May 2025.Noboa, Ecuador’s youngest president in recent history, would be able to run again in the regularly-scheduled 2025 contest.Noboa made a special point to woo young people, with some supporters touting his victory as a fresh start for the country’s politics. More

Wilson and other strategists said a majority of investors believed in a potential rally if current levels hold in the short run, despite lingering concerns around higher interest rates and slowing economic growth.”Many are still leaning more long than they would like, to reduce the probability of missing out in a year in which narrow megacap strength has driven benchmarks,” they said, even as the confidence level may have waned a bit in the past week. Morgan Stanley maintains its 3,900 year-end price target for the S&P 500 and believes the best way to position is a barbell of defensive growth stocks that have stable earnings, and late-cycle cyclical stocks such as energy. Wilson, one of the most bearish voices of Wall Street, said the positive sentiment in the market was contingent on current stock prices holding in the short term.”If it does not, we could see positioning quickly shift to locking in profits and/or relative performance into year end,” said Wilson, Morgan Stanley’s chief U.S. equity strategist.The S&P 500 has rallied about 13% this year, boosted by the AI euphoria and expectations that the U.S. central bank will not raise interest rates further, but recent economic data and Fedspeak have turned the sentiment in the last one month.Stocks came under selling pressure last week as investors rushed to Treasuries after a surprise attack by militant group Hamas against Israel, but S&P 500 still managed to eke out some gains. “The fact that stocks rallied early in the week emboldened the view that equity markets could withstand another exogenous shock,” Wilson said. More