Aurelia Butler

(Reuters) – A look at the day ahead in Asian markets from Jamie McGeever, financial markets columnist.No doubt about it, Wednesday was one of the gloomiest days in a long time for stock markets around the world, as Fitch’s surprise move to strip the U.S. of its AAA credit rating gave investors the ideal cover to take profit and cut risk exposure.But will the downgrade have any lasting market impact? It is questionable, to say the least, and Asia could recover ground on Thursday if key purchasing managers index reports show service sector activity across the region held up well in July.Services PMI data from Australia, Japan, India and China are due on Thursday, with China’s unofficial Caixin report coming under the closest scrutiny. It is expected to show the seventh straight month of growth, but at a slower pace from June. China’s economic indicators have undershot consensus for months, and by a significant margin too. Could that be about to turn? Investors will be hoping for a positive surprise after Wednesday’s heavy selling. The MSCI Asia ex-Japan index had its worst day since June last year and the MSCI World index had its biggest fall since December, while the Nasdaq and S&P 500 posted their biggest declines since February and April, respectively.Fitch’s decision late on Tuesday came as a surprise and certainly contributed to the slump in stocks. But its effect on the dollar and U.S. bonds – two areas where souring U.S. credit-worthiness should hit the hardest – was negligible.Two- and 10-year Treasury yields moved a few basis points and the dollar rose. The dollar has now appreciated 10 of the last 12 trading days – bad news for hedge funds holding the largest short dollar position in two-and-a-half years. G10 FX volatility crept to a two-month high on Wednesday but it’s worth remembering that in early June, vol slumped to its lowest since March last year. The U.S. yield curve has been steepening for more than a week, led by selling at the long end. That trend accelerated on Wednesday after the Treasury laid out plans to increase the size of debt auctions in the coming quarters. Japanese stocks on Wednesday suffered their worst day of the year, knocked down by the triple whammy of the BOJ’s step last week toward policy normalization, rising long U.S. bond yields, and a stronger dollar.But again, the bigger picture is less alarming. The yen ended the day little changed, and dollar/yen volatility is comfortably lower than it was before Friday’s BOJ move.Here are key developments that could provide more direction to markets on Thursday:- China, Japan, India, Australia services PMI(July)- Australia trade balance (June)- Bank of England rate decision (By Jamie McGeever; Editing by Marguerita Choy) More

WASHINGTON (Reuters) -The World Bank on Wednesday said it was “alarmed” by efforts to overthrow the democratically elected government in Niger, and had suspended disbursements in the African country until further notice, except for private-sector partnerships.Niger has one of the largest World Bank portfolios in Africa, amounting to $4.5 billion covering the country’s priority sectors, and it has also received $600 million in direct budget support from the bank between 2022 and 2023.”The World Bank believes that peace, stability, and rule of law are fundamental for creating a world free of poverty on a livable planet. We are alarmed by efforts to overthrow the democratically elected government in Niger,” it said in a statement.”As a result, the World Bank has paused disbursements for all operations until further notice other than private sector partnerships which will continue with caution.”The World Bank said it would continue monitoring the situation.”We are driven by the ambition to improve the quality of life and opportunities for the people of Niger,” it added.Niger’s regional and international partners are scrambling to respond to a military coup that political analysts say could have grave consequences for democratic progress and the fight against an insurgency by jihadist militants in West Africa.A military junta overthrew Niger’s democratically elected President Mohamed Bazoum and his government on July 26 in the seventh military takeover in less than three years in West and Central Africa.West African regional bloc ECOWAS sent a delegation to Niger on Wednesday to negotiate with the military officers who seized power, hoping to find a diplomatic solution before they have to decide whether to intervene.The Bank’s private sector arm, IFC, has mobilized close to $50 million of investments in Niger in the last three years with projects worth $75 million under consideration for this year. The Multilateral Investment Guarantee Agency, the World Bank’s political risk arm, has supported one project in Niger’s financial technology sector valued at $2.25 million, and has been developing a pipeline of projects in the renewable energy and telecom sectors. More

UK ministers are set to announce a further delay to post-Brexit border controls on animal and plant products coming from the EU, amid fears that extra bureaucracy on imported goods will fuel inflation.The decision to delay the new import regime at Britain’s ports, which had been due to start in October, is also intended to give companies and port operators yet more time to implement the arrangements.The news comes ahead of a meeting of the Bank of England’s monetary policy committee on Thursday, which is wrestling with persistently high inflation.There have been repeated delays to the introduction of a post-Brexit border control regime for goods entering the UK from the EU. British exports to the EU are already subject to full checks.Ministers announced as recently as April that a new “border target operating model” would start to be rolled out from October 31 with a full regime in place by October 2024. But government insiders have told the Financial Times that while final details of the border plan would be published “very soon”, its implementation on the ground would be pushed back.“The driving force behind this is the need to bear down on inflation, that’s why there will be a delay,” said one government insider briefed on the plan. “There will be additional costs at the border.”A new timetable has not yet been signed off by ministers, but the start of the new regime is expected to slip into next year.

Others said businesses had to be given sufficient time to adapt to the new rules. “The effort that business has made won’t be put to waste,” said one government official. “This will happen, but there will be a delay.”A government spokesperson confirmed ministers were carefully considering feedback from “stakeholders” to ensure they had enough time to prepare, but added: “The Border Target Operating Model will be published shortly.” Health certification on imports of “medium-risk” products were due to start in October, with physical checks beginning in January 2024 and safety and security declarations for EU imports introduced from October 2024. Asked if the government remained committed to that timeline, the spokesperson said the new system — which was simpler than the one originally proposed last year — would “be introduced progressively”.Chancellor Jeremy Hunt and Rishi Sunak, the prime minister, have prioritised tackling inflation and been willing to take on Brexiter orthodoxy — such as “taking control” of borders and diverging from EU rules — to cut business costs.On Tuesday the government dropped plans for a post-Brexit UK rival to the EU’s “CE” product-quality mark, after businesses warned that ministers were tying up companies in red tape.Sunak told broadcaster LBC on Wednesday that inflation was not falling as fast as he would like, but claimed it would be “completely transformative” for the public when it returned to lower levels; food prices have risen especially fast.In a briefing document for industry last April, the government insisted — in bold text — that it was its “firm intention” to press ahead with the first phase of border controls in October this year after four separate delays. It was originally supposed to have started in July 2021.The food industry warned last June that plans to charge a flat-rate inspection fee of up to £43 on each consignment of food coming from the EU would drive up food prices, with the government estimating total additional costs of EU controls at £420mn a year.Under the proposed controls that were due to be introduced on October 31, EU exporters of food products to the UK would have required “export health certificates” costing several hundred euros each and requiring a physical sign-off by a veterinary surgeon.Shane Brennan, the head of the Cold Chain Federation lobby group, said any decision to delay the introduction of October requirements was the “right thing to do” given inflationary pressures and the lack of awareness in the EU about the incoming controls.A survey of Cold Chain Federation members last July found that 40 per cent of their EU-based clients and suppliers were unaware of the incoming requirements.The British Chambers of Commerce also said delaying the October controls was “sensible” given current inflation rates, but warned that any plan to introduce new paperwork and physical checks at the border simultaneously next year would require the necessary port infrastructure to be ready.Nick von Westenholz, director of trade at the National Farmers Union, acknowledged that the government needed to protect consumers from price rises, but said that yet another delay would exasperate many farmers, who face barriers for their exports which are not being reciprocated on imports from the EU.“We need proportionate, light-touch checks in place that can both keep costs for importers to a minimum while properly managing biosecurity risks,” he said. “Government must quickly set out a clear and concrete timetable for the new import regime, so we have a level playing field for UK growers and producers.” More

Today’s top storiesUS prosecutors charged Donald Trump in connection with his attempts to overturn the results of the 2020 election, the second federal indictment against the former president in as many months. FT commentator Gideon Rachman says Trump’s trials will be crucial to the future of democracy in America. Trump’s legal team said the push for a speedy trial was “absurd”.Fitch Ratings unexpectedly stripped the US of its triple A sovereign debt rating, citing a mounting government debt burden and the debt ceiling stand-off that brought the country close to a default two months ago. New survey data showed manufacturing activity shrank for the ninth consecutive month in July.China unveiled new restrictions on children’s device usage and web content, posing a fresh challenge to tech groups already tightly policed by the state.For up-to-the-minute news updates, visit our live blogGood evening.This morning’s Russian attacks on port facilities and a grain silo in Ukraine have heightened concerns about food security, particularly in the global south, and threaten to halt the recent easing in food prices in Europe.The strikes caused wheat, maize and soyabean oil prices to jump, further fuelling increases started by Moscow’s scrapping of a UN-brokered deal which since last August had allowed Ukrainian grain to be exported across the Black Sea. Russia has been increasing bomb and missile attacks on Ukraine’s ports since withdrawing from the accord. It has warned that it would attack civilian merchant ships in what western officials say is an attempt to cripple the country’s agricultural industry and disrupt global food markets.Ukraine, along with Russia, is one of the world’s biggest exporters of grain, a point emphasised by Kyiv as it attempts to rally further support from the west. Andriy Yermak, Ukrainian president Volodymyr Zelenskyy’s chief of staff, has said the attacks are “an attempt to destroy the ability to supply food to the countries of the global south”.The effects are likely to be felt in richer countries too. The British Retail Consortium said the end of the grain deal and the targeting of facilities were “dark clouds on the horizon” that threatened to end the recent moderation in food prices. The trade body said yesterday that food price inflation had slowed for a third consecutive month, with the annual rate easing from 14.6 per cent in June to 13.4 per cent in July, the lowest since December 2022, concurring with data from research group Kantar and recent updates from retailers such as Ocado and Sainsbury’s. The UK competition watchdog may also have helped by warning supermarkets against profiteering.Another driver of food prices flagged by the BRC is rice export restrictions from India. Its government banned exports of several varieties after intense public anger over high prices. The move, announced in the same week as Russia began targeting Ukrainian grain, has sent shocks around the globe: India is the world’s largest rice exporter, and many countries depend on it for shipments.If all that were not enough, extreme weather brought on by the El Niño phenomenon threatens serious economic damage across South America, a region dependent on agricultural exports. Effects range from damaging crop yields to causing fish to migrate away from what are normally some of the world’s most productive fisheries.“Countries are already dealing with back-breaking food inflation, particularly poor countries,” said Arif Husain, chief economist at the UN World Food Programme. “When you’re especially dependent on food imports and your debt burden is severe, your currency is depreciating and interest rates are rising . . . if you’re a poor country who imports your food or fertiliser, you’re in trouble.”Need to know: UK and Europe economyThe UK ditched plans to introduce a native version of the EU’s CE product mark. The “indefinite” postponement was widely welcomed by industry and came after more than two years of intense lobbying to abandon the proposals.Nationwide reported the biggest annual drop in UK house prices since 2009, bringing the average cost of a home in July to £260,828, 3.8 per cent lower than last year. NatWest, Halifax and Virgin Money yesterday became the latest UK lenders to cut mortgage rates. Builder Taylor Wimpey said buyers were taking on longer-term mortgages.Eurozone unemployment hit an all-time low of 6.4 per cent but economists pointed to falling job vacancies in Germany and France as a sign that the bloc’s labour market might start to weaken due to an expected economic downturn later this year.The FT revealed that the Ukraine war and the green transition have kept EU state aid at near record levels. Brussels has approved support for business of €733bn since March 2022, an amount surpassed in recent years only by subsidies approved during the pandemic, with Germany accounting for almost half of the total.Italian prime minister Giorgia Meloni is under pressure after new data showed the country’s post-pandemic recovery was much weaker than expected. The economy shrank by 0.3 per cent in the second quarter, while the eurozone as a whole grew 0.3 per cent.Need to know: Global economyChina’s metals and mining investments overseas are set to hit a record this year as the country races to secure resources to keep its position as the world’s biggest producer of electric vehicles, batteries, solar panels and wind turbines. In the first half of the year the total has already topped $10bn. A new Big Read explains the decoupling from China of South Korea, which is more connected with Beijing than almost any other country. Another Big Read tells the story of the militarisation of Mexico’s economy. The army and navy are now managing airports, customs, ports, train lines and potentially a passenger airline, with hotels and nature reserves to follow.Latin America is ahead of much of the rest of the world when it comes to combating inflation. The region’s central banks have acted fast when costs soared, drawing on hard-fought battles in the 1980s and 1990s. Pressure is increasing on businesses in Iran to compel female workers to wear the hijab. The issue became a central theme in recent protests, prompting the return of patrols from the morality police to contain the anti-hijab trend.Need to know: businessThe number of companies listing on European stock exchanges has slumped to the lowest level since the global financial crisis, highlighting the dire state of the region’s market for initial public offerings and the attraction of going public in the US. Facebook owner Meta is set to launch artificial intelligence-powered chatbots with different personalities as it tries to boost engagement with its social media platforms. One might speak like Abraham Lincoln while another might advise on travel options in the style of a surfer.In the concluding episode of the Tech Tonic podcast series, FT specialists discuss what the future of social media will look like.China’s manufacturers are suffering from slowing global demand and a tentative post-Covid recovery. This tale of three factories — spanning footwear and electronics — illustrates how manufacturers are experiencing a slowdown in the world’s second-biggest economy. Asia editor Robin Harding says Beijing has ample scope to transfer cash to households, boost consumption and get the economy moving.

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Uber recorded its first operating profit after stacking up $31.5bn in losses in an ambitious global expansion. The ride-hailing company has proved to be more resilient to economic uncertainty compared with rivals such as Lyft.HSBC announced a $2bn share buyback after rising interest rates helped the bank to bumper quarterly profits of $8.8bn.A shortage of air traffic controllers on both sides of the Atlantic could hit airlines’ post-lockdown recovery. The problem has been compounded by the closure of a fifth of Europe’s skies because of the war in Ukraine.The World of WorkHow should CEOs approach retirement? A small but growing network of specialist coaches are stepping in to help executives figure out what to do once the pension kicks in. Why do we love to hate middle managers? Listen to the Working It podcast. Some good newsThe first randomised trial of AI-supported mammography screening showed the process is safe and almost halved the workload of radiologists. More