Aurelia Butler

Facing a tough election next year, the centre-left Labor government said the economy had slowed under the weight of high interest rates and elevated inflation, but insisted public spending would help ensure a soft landing.Recent data for the third quarter showed that without public investment in infrastructure and rebates on electricity costs, the economy would have been in recession.In its Mid-Year Economic and Fiscal Outlook (MYEFO), the government still had to trim its forecast for economic growth in the current fiscal year to end June 2025 to 1.75%, down from 2.0% in its main Budget last May.Wage growth was also marked down to 3.0% in a blow to government claims it would deliver faster pay gains than the Liberal National opposition.The economic slowdown was enough for the Reserve Bank of Australia (RBA) last week to open the door to policy easing, having held interest rates at 4.35% for all of this year.Treasurer Jim Chalmers on Wednesday suggested more cost of living relief could be on the way, on top of the tax cuts, electricity rebates, cheaper medicines and other policies the government has already delivered to date. “From budget to budget, if we can afford to do more and there is a case to do more to help people with the cost of living, of course then we will consider that,” Chalmers said in a press briefing. All this government spending meant its budget was back in deficit after two years of rare surpluses, though the shortfall this year was not as large as first feared.The Treasury projected a deficit of A$26.9 billion ($17.04 billion) for the current 2024/25 year. That compared with a forecast of A$28.3 billion in its main Budget last May.From there, the red ink only gets worse due to A$25 billion in extra payments. The projected deficit for the three years to 2027/28 is now A$117 billion, or A$23 billion more than expected in May.”The slippage in subsequent years is largely because of urgent, unavoidable or automatic increases in spending in areas like pensions, Medicare and medicines,” Treasury said in a statement.Expected tax revenues from companies have also been downgraded as subdued demand in China weighs on prices for some of Australia’s main commodity exports, notably iron ore. It retained the long-term iron ore price assumption at $60 per tonne by the third quarter 2025, compared with $104 per tonne currently. The government’s net debt was now seen expanding to A$1.16 trillion by 2027/28, from an expected A$940 billion this year. At 36.7% of gross domestic product, net debt would still be low by international standards.Estimated overseas migration has been revised up to 340,000 for the 2024/25, from 260,000, as the government struggled to bring migration to more sustainable levels. ($1 = 1.5783 Australian dollars) More

TOKYO (Reuters) – The U.S. dollar held steady against the yen and other major rivals on Wednesday as investors waited to see whether the Federal Reserve will deliver a hawkish cut before the Bank of Japan and other central banks meet this week.The Fed is widely expected to deliver a 25-basis-point interest rate cut at the end of its two-day policy meeting on Wednesday, with markets pricing in a 97% probability, according to the CME’s FedWatch tool.Focus will fall on policymakers’ new economic projections for the upcoming year released alongside the decision, namely how much further Fed officials think they will reduce rates in 2025.Given the string of robust inflation and activity data, the Fed may signal a slower pace going ahead, revising projections to indicate three cuts in 2025 instead of the current four, Tony Sycamore, market analyst at IG, wrote in a note to clients.”If the median dot were to show just two cuts, this may be considered more hawkish, (although) it would align with current pricing in the rates market,” he said.Data on Tuesday showed a resilient U.S. economy after retail sales beat expectations by jumping 0.7% in November, backed by an uptick in motor vehicle and online purchases.Investors are also weighing the possible impact of promised tariffs and tax cuts by the incoming Trump administration on the Fed’s outlook. The U.S. dollar index, which measures the greenback against six rivals, was little changed, down 0.04% at 106.89 after hitting its highest since Nov. 26 at 107.18 on Monday.Against the yen, the dollar was up 0.12% at 153.65, having given up some of its recent gains in the previous session as U.S. Treasury yields dipped ahead of the Fed’s decision. [US/]Markets have significantly reduced bets the Bank of Japan (BOJ) will raise rates on Thursday in favour of a January hike following a slew of media reports indicating the bank may take a cautious stance.Japan’s exports rose for a second straight month in November, data showed on Wednesday.The Bank of England is also expected to hold rates steady on Thursday. Investors further reined in bets on cuts next year after data on Tuesday showed British wage growth picked up more than expected. Sterling was nearly flat at $1.27095 ahead of CPI figures for November scheduled for release later in the day.The euro sat at $1.0502, up 0.09%.Among other central banks meeting this week, Sweden’s Riksbank is seen cutting rates by as much as half a point, while the Norges Bank will likely leave rates unchanged.The Swedish crown held at 10.9469. The Norwegian krone hovered around 11.1793 against the greenback.Elsewhere, the offshore yuan traded at 7.2885 per dollar, not far from a 13-month low touched against the dollar on Tuesday amid dour expectations for Chinese economic growth.The Australian dollar, which tends to act as a liquid proxy for the yuan, dipped 0.17% to $0.6326 against the greenback, its lowest since November 2023.The kiwi fetched $0.57565, up 0.04%.In cryptocurrencies, Bitcoin fell 0.54% to $105,836.57 after hitting a high of $108,379.28 in the previous session. More

Kioxia, a major manufacturer of memory chips, raised 120 billion yen after pricing its IPO in the middle of the indicative range at 1,455 yen per share. On Wednesday, it rose as high as 1,504 yen before trading at 1,485. Kioxia, formerly known as Toshiba (OTC:TOSYY) Memory, was bought for 2 trillion yen in 2018 by a Bain-led consortium from Toshiba after a long and contentious battle. Toshiba put the business up for sale after plunging into crisis due to cost overruns at its nuclear business.The road to the IPO has been an arduous one for Kioxia, whose name is a combination of the Japanese word kioku meaning “memory” and the Greek word axia meaning “value.”The deal by the Bain consortium to acquire Kioxia, seen as a prized asset at the time, was a landmark intervention by private equity in Japan. Uncertainty has continued since the sale, with Bain postponing IPO plans two years later amid uncertainty in the global chip market stemming from U.S-China tensions.An effort to merge Kioxia with partner Western Digital (NASDAQ:WDC), which had initially objected to the sale to the consortium, stalled due to objections from the Japanese company’s investor SK Hynix. Bain Capital scrapped plans for an IPO of Kioxia in October after investors pushed the buyout firm to almost halve the 1.5 trillion yen valuation it was seeking, Reuters has reported.($1 = 153.6800 yen) More

WASHINGTON (Reuters) -Top Republicans and Democrats in the U.S. Congress unveiled a stopgap measure on Tuesday to keep federal agencies funded through March 14, which would avert a partial government shutdown that would otherwise begin on Saturday.The measure would likely keep the roughly $6.2 trillion federal budget running at its current level, funding programs ranging from the military, air traffic controllers and federal regulators for areas ranging from drug safety to securities markets.It also includes $100.4 billion in new emergency funding to help states including North Carolina and Florida recover from devastating hurricanes, as well as western wildfires and other recent disasters.That money would include $29 billion for the Federal Emergency Management Agency’s disaster relief fund; $21 billion for aid to farmers hit by flooding and other losses; and $10 billion in economic assistance for them, according to House of Representatives Republican leadership aides.State and local communities would receive $12 billion in block grants and $8 billion would be earmarked for the Transportation Department’s highway and road disaster relief.Nearly $5.7 billion in new funding would go to the Pentagon’s Virginia-class submarine building by General Dynamics Corp (NYSE:GD) and Huntington Ingalls (NYSE:HII) Industries.Should lawmakers fail to act in time, federal agencies would enter a partial shutdown beginning on Saturday.House Speaker Mike Johnson leads a narrow and restive 219-211 Republican majority and has repeatedly over the past year had to rely on Democratic support to pass major legislation.Party hardliners signaled on Tuesday that they were unhappy with the bill, meaning that Johnson will once again need to reach across the aisle to pass it.”One of the things we know very clearly is that House Democrats will be needed to pass government funding,” No. 3 House Democrat Pete Aguilar said at a Tuesday press conference.RISING DEBTThe stopgap measure is needed because Congress failed to pass its one-dozen annual appropriations bills in time for the current fiscal year, which began on Oct. 1. The government’s “mandatory” programs, which include Social Security and Medicare retirement and healthcare benefits and represent about two-thirds of the budget, renew automatically.That has contributed to the rising federal debt, which exceeds $36 trillion. Congress will have to address that again early next year, when a 2023 deal to extend the nation’s “debt ceiling” expires. Failure could shock bond markets with potentially severe economic consequences.Democrats had pushed for a longer bill funding the government through the end of its current fiscal year ending Sept. 30, but Republicans wanted to wait for final agreement until after President-elect Donald Trump is sworn in on Jan. 20 and their party takes its majorities in both the Senate and House of Representatives.Trump and congressional Republicans campaigned all year on a promise of significantly cutting the number of federal workers and proposing deep cuts to many of the government’s programs.He has created an advisory committee called the Department of Government Efficiency, headed by Tesla (NASDAQ:TSLA) founder Elon Musk, the world’s richest person, and former presidential candidate and entrepreneur Vivek Ramaswamy. Neither has any government experience.Now that the temporary funding bill has been unveiled, rank-and-file members of Congress will review its details. It was unclear when the first votes on the bill, by the House, would occur. Once passed there, the Senate would aim to vote by a midnight Friday deadline, and then send it to Democratic President Joe Biden to sign into law.Riding along in this spending bill is a one-year extension of federal farm programs, including commodity subsidies and food and nutrition benefits for low-income people. Without such an extension, prices for milk, cheese and other dairy products would skyrocket after Dec. 31. More

(Reuters) -Australia’s Insignia Financial has rejected Bain Capital’s A$2.67 billion ($1.69 billion) takeover bid, saying the offer does not provide fair value to its shareholders, creating a barrier for the buyout giant’s Asia expansion plans. Bain had earlier in the month offered A$4 apiece for the 178-year-old money manager, reigniting a strong sense of investor appetite for Australia-listed wealth managers that have seen their asset bases grow strongly. Insignia’s shares are currently trading 0.3% lower at A$3.59, well below Bain’s per share bid, after having slipped 2.8% during the session. Insignia turned down the Boston-based investment firm’s offer on Wednesday, saying it “does not adequately represent fair value for shareholders.””The ball is now in Bain’s court to either up the bid and give a reason to say yes or they can walk away,” said Henry Jennings, senior market analyst at marcustoday newsletter. “I would say that somewhere above A$4.20 per share would be enough to get them talking.”Bain has also been active in Japan, making improved offers for Fuji Soft amid a bidding war with KKR. Bain completed the final close of its fifth pan-Asian private equity fund at $7.1 billion in November last year. It also struck a deal to acquire Australian aged care operator Estia for A$838 million in August. KKR’s A$2.2 billion deal with Australia’s Perpetual also hangs in the balance after a tax bill blowout. The Australian wealth management sector has recently seen some mergers and acquisition activity. Regal Partners had made an offer for Platinum Asset Management in September, but the buyout talks failed.Insignia rejected Bain’s bid as it moves ahead with a strategy to restore confidence among shareholders, having already faced resistance from activist investor Tanarra Capital.”We regard the Bain proposal as highly opportunistic. We want the Insignia management team to remain focused on the business improvement plan they are in the early stages of delivering,” Tanarra said on Tuesday. ($1 = 1.5785 Australian dollars) More

The proposal will now head to President Luiz Inacio Lula da Silva for his signature.The bill sets rules needed to consolidate five existing taxes into a single consumption levy, also known as a value-added tax (VAT), with separate federal and regional rates. It also provide details on a new tax on products considered harmful to human health or the environment, such as cigarettes and alcoholic beverages. Lawmakers in the lower house added sweetened beverages back to the list after the senators removed it.Lawmaker Reginaldo Lopes, bill rapporteur in the lower house, said the changes approved by the house will set the overall consumption tax rate at 26.5%.The eagerly anticipated tax reform was approved by lawmakers last year and is a central pillar of Lula’s plans to boost productivity and economic growth in Latin America’s largest economy. Previous governments have attempted and failed to implement a tax reform of their own. Lula’s government has also sent to lawmakers a separate bill, which still requires Senate approval, regulating how the VAT would be managed at the state level. More

TOKYO (Reuters) – Japan’s exports rose for a second straight month in November, data showed on Wednesday, indicating strong global demand that businesses worry could be undermined by protectionist U.S. trade policies.The solid data, released just a day before the Bank of Japan’s policy decision, supports the central bank’s plans to gradually raise interest rates from near-zero levels. Total (EPA:TTEF) exports rose 3.8% year-on-year in November, more than a median market forecast for a 2.8% increase and following a 3.1% rise in October.Exports to China, Japan’s biggest trading partner, rose 4.1% in November from a year earlier, while those to the United States were down 8%, the data showed.Imports dropped 3.8% in November from a year earlier, compared with market forecasts for a 1% increase.As a result, Japan ran a trade deficit of 117.6 billion yen ($766.17 million) in November, compared with the forecast of a deficit of 688.9 billion yen.The outlook for exports is increasingly uncertain.Nearly three-quarters of Japanese companies expect Donald Trump’s next term as U.S. president to have a negative impact on their business environment, a Reuters survey showed.BOJ Governor Kazuo Ueda has said the bank will keep raising rates if the economy and prices move in line with projections.However, sources have told Reuters the central bank is leaning toward keeping interest rates steady this week as policymakers prefer to spend more time scrutinising overseas risks.($1 = 153.4900 yen) More

Human resources data firm Brightmine said the median pay award held at 4% for a fifth month running, down from 6% over 2023 as a whole.The survey added to signs of stubbornly high pay pressures in Britain’s economy. Official data on Tuesday showed an increase in the pace of earnings growth – something the Bank of England is likely to note on Thursday when it announces its December interest rate decision.All economists polled by Reuters think the BoE will keep rates on hold this week. The central bank has said the outlook for inflation will hinge in part on how companies respond to finance minister Rachel Reeves’ Oct. 30 budget.She increased the social security contributions paid by employers in order to finance more spending on investment and public services. The increase kicks in from April next year – just as the minimum wage is due to rise by nearly 7%.Brightmine – which previously forecast a median pay award of 3% for 2025, down from 4.5% for 2024 – said nearly 40% of the employers it surveyed expected to reduce salary budgets in response to the budget.”While it’s great to see pay awards are still being offered across all industries, there’s no doubt that businesses next year are facing a tough landscape and will have to make some difficult decisions,” said Sheila Attwood, Brightmine senior content manager. The latest data was based on 22 pay awards between Sept. 1 and Nov. 30, covering around 227,000 employees. More