Aurelia Butler

(Reuters) – A look at the day ahead in Asian markets from Jamie McGeever, financial markets columnist.A clutch of top-tier Chinese economic data, second-quarter growth figures from Indonesia and the Philippines, and an Indian interest rate decision are the main events in Asia this week, with markets highly sensitive to rising global bond yields.The Nasdaq, S&P 500 and MSCI World index last week all registered their biggest weekly losses since March, and the MSCI Asia ex-Japan index’s 2.3% fall was its biggest in six weeks.Driving the deterioration in risk appetite is the surge in global bond yields, especially U.S. market-based borrowing costs as the long end of the Treasury curve came under intense selling pressure.The U.S. yield curve steepened by 20-30 basis points last week – the biggest steepening since March – and the steepening of the 2-year/30-year yield curve by 30 basis points was one of the biggest weekly moves in over a decade.Perhaps counterintuitively, from a stock market perspective at least, this is partly due to the resilience of the U.S. economy. The ‘soft landing’ or even ‘no landing’ narrative is gathering momentum, and JP Morgan on Friday became the latest Wall Street bank to remove or delay their U.S. recession call. U.S. fiscal worries are also growing, however, and the Bank of Japan’s recent ‘yield curve control’ surprise has lifted Japanese bond yields. All else equal, financial conditions are tightening, and despite a strong U.S. earnings season scorecard, stocks are feeling the squeeze.Asia’s corporate earnings season picks up this week, with Alibaba (NYSE:BABA) the standout in a trickle from China, and Sony (NYSE:SONY) and Softbank (OTC:SFTBY) among a flood of big names from Japan.Several potential market-moving data releases and events in Asia are also due, as well U.S. consumer price inflation for July. Economists polled by Reuters expect the annual rate to rise to 3.3% from 3.0%. On the economic front, the main focus will be Chinese trade, lending, producer price and consumer inflation data. Investors will be hoping for signs that deflationary pressures and weakness in import and export activity this year are finally abating. If not, the pressure on Beijing to inject substantial stimulus into the economy will only intensify. On its own, cutting banks’ reserve requirement ratios will not be enough. The Reserve Bank of India, meanwhile, is expected to keep its benchmark repo rate on hold at 6.50% on Thursday and hold it there through March 2024.Monday’s calendar in Asia is fairly light, with Indonesian Q2 GDP and Thai inflation for July the main releases. Indonesia’s economy is expected to have grown 3.72% in Q2, rebounding from a 0.92% contraction in Q1, but slow slightly on an annual basis.Here are key developments that could provide more direction to markets on Monday:- Indonesia GDP (Q2)- Thailand CPI inflation (July)- China FX reserves (July) (By Jamie McGeever; Editing by Diane Craft) More

WARSAW (Reuters) -Polish pipeline operator PERN said it had halted pumping through a section of the Druzhba pipeline, which connects Russia to Europe, after detecting a leak in central Poland on Saturday, but it expects flows to resume on Tuesday. PERN said there was no indication a third party had caused the leak, which follows a series of attacks on pipelines carrying Russian oil and gas since Moscow launched its invasion of Ukraine in 2022.”PERN services have reached the damaged section of one of the lines of the western section of the Druzhba pipeline in the commune of Chodecz,” PERN said earlier on Sunday.”It is the main line that transports crude oil from sea deliveries to the west. Repair work on the oil pipeline is currently underway. The expected time for pumping to resume is Tuesday morning.”PERN did not say what the impact would be on supply to Germany, but a spokesperson for the federal Economy Ministry in Berlin said: “We are in contact with the operators of the east German refineries. The security of supply is still fully guaranteed.”Firefighters and PERN emergency services were at the scene but there were no reports of a fire.”The part of the pipeline that was affected by the leak was cut off from the rest, so the scale of the leak is not huge, we’re talking about a rectangular area measuring 30 by 210 metres (yards),” Grzegorz Jankowski from the State Fire Services in Wloclawek told private broadcaster TVN24.PERN said the second line was operating normally and there was no health threat to local residents.It said supply to Polish refineries was not impacted and that it was in contact with German partners receiving oil through the pipeline. Germany stopped buying Russian oil in January, but German media have reported that Kazakh oil was being imported through the line.Germany’s industry association for fuels and energy did not immediately respond to requests for comment.”Other elements of PERN’s infrastructure, including (Druzhba’s) Pomeranian section, which is used to pump crude oil arriving in tankers to Poland and then further to Germany, are operating in standard mode,” PERN said in its statement.The Druzhba oil pipeline is one of the world’s largest and can carry 2 million barrels per day. The total capacity of the western section of both lines that carry oil from central Poland to Germany is 27 million tonnes of crude oil per year.Flows through the Druzhba pipeline have dropped sharply since Russia’s invasion of Ukraine and pipeline infrastructure has been hit several times since in attacks that Moscow has blamed on Ukraine. Ukraine has not acknowledged the attacks.Europe has been on high alert over the security of its energy infrastructure since major leaks were found in the Nord Stream 1 and 2 gas pipelines running from Russia to Europe under the Baltic Sea in September.The leaks were found to have been caused by unexplained explosions that ruptured both pipelines. Moscow has blamed Ukraine and the West for the blasts, which occurred as Europe was reducing its reliance on Russian energy in response to the Russian invasion of Ukraine.Ukraine and Western leaders have denied any responsibility for the attacks, calling them an act of sabotage that they are investigating.(Additional reporting Vera Eckert and Pavel Polityuk; Editing by Frances Kerry, Philippa Fletcher and Barbara Lewis) More

“Oil-free Amazon,” said a banner held by the group of 50 protesters outside a convention center where heads of state of Amazon nations will meet this week to discuss joining efforts to protect the rainforest.Petrobras has appealed against a decision by Brazil’s environmental protection agency, Ibama, to deny it permission to drill an exploratory well at the mouth of the Amazon, saying the request lacked an environmental assessment of the project. “This type of exploration today, in 2023, does not contemplate us and only puts our lives and our way of life at risk,” said one protester, Luis Barbosa.Petrobras has rights to explore a block 175 kilometers from Brazil’s northeastern coast in a deepwater area, south of where Suriname is exploring for oil and where foreign companies have discovered 11 billion barrels of recoverable oil in Guyana.Speaking here on Saturday, Environment Minister Marina Silva said Ibama would study Petrobras’ new request to install a drilling rig off the coast of Amapá to explore for oil in the area where the Amazon river waters enter the Atlantic.Ibama is not opposed to drilling at the mouth of the Amazon, in principle, and will study the technical and scientific reports impartially, Silva told a news conference.”Ibama does not make things more difficult or easier. It reaches a technical opinion that must be obeyed,” said the minister, who has opposed the plan to drill at the mouth of the Amazon.President Luiz Inacio Lula da Silva said this week his government has not decided whether to allow exploration there, and is in a “process of internal discussion.” He said in a radio interview a decision would be made soon.Lula said Guyana’s president would like Petrobras to explore for oil off-shore from his country. More

Hello and welcome to the working week.Presumably if you are reading this, you are not stuck in a traffic jam on the way to a holiday with the words “are we nearly there yet?” ringing in your ears. But it’s a question many of us following the news agenda this week will be asking given the run of inflation and gross domestic product data from the world’s two largest economies and uncertainty about when interest rates will peak.China will report July inflation figures on Wednesday, with the US following a day later. The good news is that inflation is falling all over the world, but the national picture varies greatly. China is at one extreme end, flirting with deflation. The figures for the US on Thursday will give an indication about whether the Federal Reserve’s rate-tightening cycle is close to ending.Expectations are not high for the UK’s second-quarter GDP estimate on Friday. While signalling that its battle against inflation is being won, the Bank of England last week issued forecasts showing that GDP would barely increase in 2024 and 2025.The Reserve Bank of India’s bimonthly monetary policy statement is out on Thursday, expected to announce another “hawkish hold” on rates.We’re past the halfway point of the summer earnings season, which has so far shown the US economy proving fairly resilient to the Federal Reserve’s monetary policy tightening. And while things are not quite as good for many companies as they were a year ago, they are “still pretty good”, as Rob Armstrong explains in his excellent Unhedged (premium) newsletter. Media is a theme for the run of results this week, notably Disney. Since Bob Iger returned to the not so magic kingdom as chief executive in November, even more problems have come to the surface. When the company reports results on Wednesday, investors will want to hear Iger’s plan for improving the performance of its vaunted movie studios, which have delivered several box office disappointments recently, including its latest release Haunted Mansion.They will also want to hear his thoughts for dealing with the decline of its TV assets, including sports network ESPN. Iger, who just secured an extra two years as chief executive, is expected to update on the $5.5bn cost-cutting initiative he announced shortly after his return to the company. Investors — and Hollywood — will also be listening for his thoughts on the labour strife that has brought production to a standstill.My week starts at London’s St Pancras station tomorrow morning as my wife and I, and our three teenage boys, board the first of several trains taking us across Europe to Athens. You will be able to find out how this Grand Tour/Greek Tragedy unfolds because the Financial Times’ travel editor has commissioned me to write about it when I return. In the meantime, for the next two weeks, you will be in the capable hands of my colleague David Hindley.Do please keep writing in with your comments. Email me at [email protected] or, if you are reading this from your inbox, hit reply.One more thing . . . It’s a good week for space enthusiasts. Thursday has been set aside by Virgin Galactic for its first private astronaut mission, having taken three members of the Italian Air Force and the National Research Council of Italy to the edge of space on its first launch in June. The real question is whether enough of us now care enough about touching the edge of the atmosphere to make space tourism pay?Key economic and company reportsHere is a more complete list of what to expect in terms of company reports and economic data this week.MondaySpeech: Bank of England chief economist Huw Pill responds in an online Q&A on the cost of living crisis and UK economic conditionsDan Olley becomes chief executive of Hargreaves Lansdown, succeeding Chris Hill, who steps downGermany: June industrial production figuresUK: Halifax House Price IndexResults: Clarksons H1, PageGroup H1, Saudi Aramco H1, Toshiba Q1, Tyson Foods Q3TuesdayChina: July trade balance figuresGermany: final July consumer price index (CPI) and harmonised index of consumer prices (HICP) inflation rate dataUK: BRC-KPMG Retail Sales MonitorResults: Abrdn H1, Bayer Q2, Duke Energy Q2, Eli Lilly Q2, Fox Corp Q4, Glencore H1, InterContinental Hotels Group H1, IWG H1, Lyft Q2, The New York Times Company Q2, SoftBank Q1, Take-Two Interactive Software Q1, United Parcel Service Q2WednesdayChina: July CPI and producer price index (PPI) inflation rate dataRussia: July CPI inflation rate dataResults: ABN Amro Q2, Ahold Delhaize Q2, Bellway trading update, Delivery Hero Q2 trading update, Eon H1, Flutter Entertainment H1, Generali H1, Hill & Smith H1, Hiscox H1, Honda Motor Q1, Sony Q1, TP ICAP H1, Tui Group Q3, Vestas Q2, Walt Disney Q3ThursdayVirgin Galactic launch window opens for Galactic 02, the company’s second commercial space flight, and the first to take private astronautsOpec August Oil Market ReportEU: European Central Bank Economic BulletinIndia: Reserve Bank of India bimonthly monetary policy statementUK: RICS house price balance figuresUS: July CPI inflation rate dataResults: Alibaba Q1, Allianz Q2, Deliveroo H1, Eneos Holdings Q1, HelloFresh H1, News Corp FY, Novo Nordisk Q2, Orsted H1, Persimmon H1, Petrofac H1, Rakuten H1, Ralph Lauren Q1, RWE H1, Siemens Q3, Thyssenkrupp Q3, Watches of Switzerland Q1 trading update, Zurich Insurance H1FridayFrance: final July CPI and HICP inflation rate data, plus Q2 unemployment rateRussia: preliminary Q2 GDP figuresUK: preliminary Q2 GDP figuresUS: July producer price index (PPI) inflation rate dataInternational Energy Agency August Oil Market ReportWorld eventsFinally, here is a rundown of other events and milestones this week. MondayUK: members of the Aslef rail union resume industrial action over pay at 15 train companies with another week-long overtime ban, ending on SaturdayUS: sentencing of former Minneapolis police officers Tou Thao, convicted of aiding and abetting unintentional second-degree murder and aiding and abetting second-degree manslaughter in relation to the death of George Floyd in police custody in May 2020TuesdayBrazil: president Luiz Inácio Lula da Silva will host a summit of Amazon nations, aimed at enabling his country to take the lead in regional climate politics and rein in rampant deforestationUK: Scottish students receive results for their National 5, Higher and Advanced Higher exams, broadly equivalent to the GCSEs and A-levels taken across the rest of the countryUS: Ohio voters will decide whether to raise the threshold for ballot initiatives to 60 per cent in a special election that has big implications for the future of abortion rights in the state given it is the subject a referendum this NovemberWednesday78th anniversary of the US dropping a nuclear bomb on Nagasaki, killing more than 74,000 people. Survivors and families of victims will attend a memorial service in the Japanese city. In London, the Campaign for Nuclear Disarmament will hold a peace walk to the Peace Pagoda in Battersea ParkThursdayUK: NHS England releases figures for June and July, along with quarterly waiting time statistics for A&E attendances and emergency admissions, and cancelled operationsFridayUK: English Premier League gets under way with a game between last season’s champions Manchester City and newly promoted BurnleyUK: NHS junior doctors in England begin another four-day strike in their ongoing dispute over paySaturdayRussia: Air Force DayUK: Glorious Twelfth, the opening day of the British grouse shooting seasonSundayTunisia: National Women’s Day More

The writer is visiting professor of international economic policy at Princeton University and author of ‘India is Broken: A People Betrayed, Independence to Today’While other Asian policymakers, such as those in South Korea and China, have strategically used sizeable depreciations of their currencies to bolster export competitiveness, Indian elites bemoan every infinitesimal decline in the rupee’s value as a national humiliation. A unique economic and political confluence first entrenched this bogus pride in the country’s psyche in the mid-1960s. And since the 1990s, the country’s corporate leaders and new rich have wanted to maintain a strong rupee. As a result, the country’s export-based growth has suffered, as have jobs for low-skilled workers. India is triply handicapped in exporting manufactured goods: it has a poorly educated workforce, few women in its factories and an overvalued currency. Education and female labour force participation are key to raising productivity, but take years to achieve. Today, only a much cheaper currency — about 100 rupees per dollar rather than the current 82 — can spur Indian exports. It is low-hanging fruit.In a rare sane moment in 1949, a newly independent India devalued the rupee from Rs3.3 to Rs4.8 per dollar, bringing relief to its uncompetitive economy. Indian manufacturers could earn profits even when they lowered dollar sale prices, which helped increase exports. Costlier imports slowed import growth, helping reduce the current-account deficit. But the task was never completed. With low productivity and high inflation, India could not match countries such as Japan in labour-intensive manufactured exports. The World Bank and the IMF financed India’s large current account deficit, creating the illusion that it did not need currency devaluation.When those two institutions finally threatened to stop financing that deficit, the country’s officials foolishly negotiated the rate to Rs7.5 per dollar in June 1966. This too-little-too-late devaluation did not compensate for the rise in domestic production costs. Taiwan and South Korea raced ahead, helped by currency devaluations; Indian exports languished.The perceived failure of the 1966 devaluation to spur exports forever tarnished Indian belief in an activist exchange rate policy. Rather than encouraging more aggressive nominal devaluation to offset the rise in production costs and thus achieve real depreciation, devaluation “by stealth” was always too little, too late. In the 1980s, China used aggressive exchange rate depreciation as key to its monumental export push.India’s 1991 financial crisis was another all too brief moment of sanity. Authorities devalued the rupee in July 1991 and let it float in March 1993. But new forces strengthened the currency. Software exports and remittances from workers in the Middle East had a bolstering effect. More importantly, once global money managers began funding large Indian companies, a strong rupee helped that small elite minimise the costs of repaying international creditors and investors. A strong rupee also helped aspirants to elite status shop for fast cars and handbags, often in Milan and Singapore.Reflecting the national sense of pride and elite preference, political gamesmanship conditioned policymakers to focus on stemming the currency’s decline. In 2013, prime ministerial candidate Narendra Modi bemoaned the fall in the currency, saying: “Our rupee has been admitted into the ICU.” After Modi became prime minister, hot money flowed in and the rupee appreciated briefly. But when it fell again, leaders of the opposition trolled the government by repeating Modi’s phrase: the rupee was in the ICU.Sadly, the nominal depreciation was not enough. According to the Bank for International Settlements, between 1994 and now, India’s domestic costs of export production have risen by about 60 per cent relative to competitors. As a result, the real exchange rate, which determines international competitiveness, has strengthened by 12 per cent. Vietnamese manufactured exports, following the East Asian playbook, are poised to exceed India’s manufactured exports.India’s accumulated cost-of-production disadvantage requires the rupee to drop to about Rs90 per dollar; Rs100 per dollar would provide an ideal cushion. But Indian authorities continue to avoid an activist exchange rate policy, and rely on dodgy policy tools: tax cuts and subsidies for corporate India, tariff barriers to shield inefficient producers and weaker labour protections. Such measures simply make the rich richer, while doing little for low-skilled workers. An exchange value of Rs100 per dollar would temporarily give Indian exports a much-needed boost. The time to act is now. More

Did US inflation accelerate in July?After June’s surprisingly large drop in inflation which sparked widespread relief in markets, investors are braced for a re-acceleration of price growth that could pressure the Federal Reserve to raise interest rates again in September.The Bureau of Labor Statistics on Thursday will release its latest US consumer price index report, which is expected to show that annual headline inflation was 3.3 per cent in July, according to economists surveyed by Reuters. That would mark an increase in from 3 per cent in June, and the first acceleration in the headline figure since June 2022. Core CPI, a measure which strips out the volatile food and energy sectors, is expected to be flat at 4.8 per cent, according to economists surveyed by Reuters. Core inflation has remained stubbornly high and will be central to the Fed’s discussions when it considers raising interest rates in September. Barclays analysts argue that a CPI release in line with their expectations — 3.2 per cent headline and 4.8 per cent core — would align with an increase in interest rates from the Fed in September. But July’s CPI release is just one of many data points to come before then, and a soft reading in August may ultimately outweigh July’s numbers, they said. Kate DuguidWill China fall into deflation?With Chinese growth lagging expectations, investors are paying close attention to official economic data that previously had little impact on market sentiment. On Wednesday, markets will get two such indicators in the form of consumer and producer price indices.Analysts at S&P Global Market Intelligence warned that lacklustre inflation in China could add to downward pressure on business margins. They predicted the upcoming readings would “confirm the extent to which inflation is lacking, especially for a market closely watching the disappointing recovery in mainland China”.After coming in flat last month, consumer prices in China are tipped to enter deflationary territory for the first time in nearly two and a half years, with economists polled by Bloomberg forecasting a year-on-year fall of 0.5 per cent in July. Deflation for producer prices is expected to moderate slightly to 4 per cent, compared with a year-on-year fall of 5.4 per cent in June.Xiaoqing Pi, China economist at Bank of America, said high prices from a year ago, together with falling fruit and vegetable prices, would probably help drag the headline reading on consumer inflation into negative territory. She added that core CPI, which strips out food and fuel prices, was also likely to remain muted “despite booming summer travel.” Hudson LockettDid the UK economy grow in the second quarter?Investors will pick through the UK’s second-quarter GDP figures on Friday for the latest signs of how close the Bank of England might be to the end of its interest rate rising cycle, following its decision to lift rates to 5.25 per cent this week. Economists polled by Reuters predict the economy grew at an annual rate of 0.2 per cent in the three months to June, marginally ahead of the Bank of England’s forecast for a 0.1 per cent rise.The figures come after the Bank of England increased its economic projections for this year but lowered its expectations for next year and 2025, as the impact of higher interest rates increasingly feed through. The BoE forecast the UK economy will grow by 0.5 per cent this year, up from 0.25 per cent in its May forecast. It also forecast 0.5 per cent growth next year, and 0.25 per cent in 2025, down from a previous level of 0.75 per cent for both years. “Economic activity has shown some unexpected resilience over recent quarters but the increases in bank rate that we have implemented weigh to an increasing degree on economic activity,” Andrew Bailey, BoE governor, said in a press conference after the interest rate announcement. “We have to balance the risks here. There are inflation risks on the upside, but we are also conscious that the projection for activity has weakened.”But some economists think the BoE — and markets — are too optimistic on growth.“Our expectations are for zero growth both on a monthly basis and also for the second quarter as a whole,” said Philip Shaw of Investec. Markets are currently pricing in roughly two-thirds chance of a 0.25 percentage point increase in September, and one-third probability of a pause. Mary McDougall More

The app is widely used in Iraq for messaging but also as a source of news and for sharing content. Some channels contain large amounts of personal data including the names, addresses and family ties of Iraqis. The ministry said in a statement it had asked the app to close down “platforms that leak the data of the official state institutions and the personal data of citizens… but the company did not respond and did not interact with any of these requests.””The Ministry of Communications affirms its respect for citizens’ rights to freedom of expression and communication, without prejudice to the security of the state and its institutions,” the statement said.Telegram did not immediately respond to an emailed request for comment. More