Aurelia Butler

Shares of the company were down 3.6% at $146.50 in premarket trading. The industrial equipment manufacturer expects its full-year adjusted profit per share to range between $8.85 and $9.00, where the mid-point of $8.92 fell short of analysts’ estimates of $8.98 per share, according to Refinitiv IBES data.The company, however, expects demand seasonality and backlog shipment timing to drive sequential and comparable operating margin improvement in the second half.Excluding one-off items, it posted a smaller-than-expected profit of $2.05 per share for the second quarter, compared with analysts’ average estimate of $2.2 per share. Its revenue fell 3% to $2.10 billion from a year earlier, missing analysts’ estimates of $2.20 billion.Dover, which operates brands such as TWG and Vehicle Service Group (VSG), manufactures consumable supplies, aftermarket parts, software and digital solutions. More

The IMF also cited “accommodative policies” as underpinning growth, as Japan maintains ultra-loose monetary policy and big fiscal spending to cushion the blow from rising living costs.Japan’s 2023 growth projection is roughly around the average 1.5% expansion estimated by the IMF for advanced economies.Growth in the world’s third-largest economy is expected to slow to 1.0% in 2024 as the effect of past stimulus measures dissipate, the IMF said in its World Economic Outlook report.The IMF’s projections come ahead of the Bank of Japan’s closely-watched policy meeting that concludes on Friday, when it will issue fresh quarterly projections and debate how much progress the economy is making in sustainably hitting its 2% inflation target. More

MILAN (Reuters) – Italian bank UniCredit is set to report sharply higher revenue on Wednesday from a year ago as it continues to benefit from higher interest rates – but its exposure to Russia is drawing increased regulatory scrutiny.The European Central Bank (ECB), which has long urged euro zone lenders to quit Russia, is concerned about UniCredit’s ongoing presence, but it has not considered any action so far, a source close to the matter said. The ECB declined to comment.UniCredit has so far shunned a retreat from Russia, where it runs a top 15 lender. An exit requires presidential approval due to restrictions on asset disposals Moscow introduced after it invaded Ukraine.The ECB’s Chief Supervisor Andrea Enria last month reiterated the regulator’s “concerns about the disappointingly slow progress” made by banks with a local presence in disentangling themselves from Russia.Banks have been asked to adopt an exit roadmap and speed up efforts, reporting regularly to management bodies and supervisors on the execution of those plans and any hurdles or delays, he said in a letter to European Union parliamentarians.Any risks related to Russia are factored into the assessment process that leads supervisors to set bank-specific capital requirements for the year, Enria said in his June letter.Last month’s aborted mutiny in Russia has refocused investor attention to geopolitical risks facing the country, to which UniCredit had a 5 billion euro ($5.5 billion) maximum gross exposure at the end of March, down from 7.4 billion euros a year earlier.It will present updated figures on Wednesday.UniCredit last year set aside 900 million euros to cover potential Russia-related losses. At end-March, it had nearly halved its customer loans from a year earlier to 5.6 billion euros, cutting cross-border loans by 65% over the same period.After unsuccessfully seeking a non-Russian buyer for its local business, this year it reinstated Russia into its earnings after presenting them pro-forma without it for several quarters.Chief Executive Andrea Orcel, who last year considered boosting the Russian footprint by bidding for another local bank shortly before the war erupted, has said effectively giving away its Russian business, as Societe Generale (OTC:SCGLY) has, would be morally wrong and not in shareholders’ best interest. Analysts expect UniCredit to post an 18% annual rise in quarterly revenue, with net profit down slightly from a year ago to 1.86 billion euros, according to the consensus gathered by the bank, due in part to the cost of voluntary staff departures.($1 = 0.9053 euros) More

LONDON (Reuters) – The International Monetary Fund confirmed its latest forecast for British economic growth this year, saying cheaper energy, better relations with the European Union and calmer financial markets had improved the outlook since the start of 2023.Britain’s gross domestic product is expected to grow 0.4% this year and 1.0% in 2024, in line with IMF staff forecasts made in May as part of an annual assessment of the country.However, Tuesday’s outlook is an upward revision from the last time the IMF updated its global growth forecasts in April, when it predicted Britain’s economy would shrink 0.3% this year.The IMF said the revision arose from stronger household consumption and business investment as a result of “falling energy prices, lower post-Brexit uncertainty, and a resilient financial sector as the March global banking stress dissipates”.Prime Minister Rishi Sunak has struck a less combative tone with the EU than his predecessors Liz Truss and Boris Johnson. The IMF praised an agreement in February on customs rules for Northern Ireland, a part of the United Kingdom which has an open border with Ireland, an EU member state.Relative to the April forecasts, the IMF’s upward revision for Britain is the largest for any major advanced economy. However, in outright terms only Germany’s GDP – which is predicted to contract by 0.3% – is forecast to fare worse.The IMF forecasts the United States economy to expand by 1.8% this year, while France is predicted to grow by 0.8%.The IMF’s outlook is also rosier than that of a Reuters poll of economists published on Tuesday. They expect British GDP growth of just 0.2% this year, rising to 0.7% in 2024.Higher interest rates and falling domestic and foreign demand led to the weakest growth in six months for British companies in July, according to a business survey on Monday. More

WASHINGTON (Reuters) – The International Monetary Fund on Tuesday raised its 2023 global growth estimates slightly given resilient economic activity in the first quarter, but warned that persistent challenges were dampening the medium-term outlook.The IMF in its latest World Economic Outlook said inflation was coming down and acute stress in the banking sector had receded, but the balance of risks facing the global economy remained tilted to the downside and credit was tight.The global lender said it now projected global real GDP growth of 3.0% in 2023, up 0.2 percentage point from its April forecast, but left its outlook for 2024 unchanged, also at 3.0%.The 2023-2024 growth forecast remains weak by historical standards, well below the annual average of 3.8% seen in 2000-2019, largely due to weaker manufacturing in advanced economies, and it could stay at that level for years.”We’re on track, but we’re not out of the woods,” IMF chief economist Pierre-Olivier Gourinchas told Reuters in an interview, noting that the upgrade was driven largely by first-quarter results. “What we are seeing when we look five years out is actually close to 3.0%, maybe a little bit above 3.0%. This is a significant slowdown compared to what we had pre-COVID.”This was also related to the aging of the global population, especially in countries like China, Germany and Japan, he said. New technologies could boost productivity in coming years, but that in turn could be disruptive to labor markets.The outlook is “broadly stable” in emerging market and developing economies for 2023-2024, with growth of 4.0% expected in 2023 and 4.1% in 2024, the IMF said. But it noted that credit availability is tight and there was a risk that debt distress could spread to a wider group of economies.The world is in a better place now, the IMF said, noting the World Health Organization’s decision to end the global health emergency surrounding COVID-19, and with shipping costs and delivery times now back to pre-pandemic levels.”But forces that hindered growth in 2022 persist,” the IMF said, citing still-high inflation that was eroding household buying power, higher interest rates that have raised the cost of borrowing and tighter access to credit as a result of the banking strains that emerged in March.”International trade and indicators of demand and production in manufacturing all point to further weakness,” the IMF said, noting that excess savings built up during the pandemic are declining in advanced economies, especially in the United States, implying “a slimmer buffer to protect against shocks.”While immediate concerns about the health of the banking sector – which were more acute in April – had subsided, financial sector turbulence could resume as markets adjust to further tightening by central banks, it said.The impact of higher interest rates was especially evident in poorer countries, driving debt costs higher and limiting room for priority investments. As a result, output losses compared with pre-pandemic forecasts remain large, especially for the world’s poorest nations, the IMF said.LOWER INFLATIONThe IMF forecast that global headline inflation would fall to 6.8% in 2023 from 8.7% in 2022, dropping to 5.2% in 2024, but core inflation would decline more gradually, reaching 6.0% in 2023 from 6.5% in 2022 and easing to 4.7% in 2024.Gourinchas told Reuters it could take until the end of 2024 or early 2025 until inflation came down to central bankers’ targets and the current cycle of monetary tightening would end.The IMF warned that inflation could rise if the war in Ukraine intensified, citing concern about Russia’s withdrawal from the Black Sea grain initiative, or if more extreme temperature increases caused by the El Nino weather pattern pushed up commodity prices. That in turn could trigger further rate hikes.The IMF said world trade growth is declining and will reach just 2.0% in 2023 before rising to 3.7% in 2024, but both growth rates are well below the 5.2% clocked in 2022.The IMF raised its outlook for the United States, the world’s largest economy, forecasting growth of 1.8% in 2023 versus 1.6% in April as labor markets remained strong.It left its forecast for growth in China, the world’s second-largest economy, unchanged at 5.2% in 2023 and 4.5% in 2024. But it warned that China’s recovery was underperforming, and a deeper contraction in the real estate sector remained a risk.The fund cut its outlook for Germany, now forecast to contract 0.3% in 2023 versus a 0.1% contraction in April, but sharply upgraded its forecast for the UK, now expected to grow 0.4% versus a 0.3% contraction forecast in April.Euro zone countries are expected to grow 0.9% in 2023 and 1.5% in 2024, both up 0.1 percentage point from April.Japan’s growth was also revised upward by 0.1 percentage point to 1.4% in 2023, but the IMF left its outlook for 2024 unchanged at 1.0%.INTEREST RATES STILL RISINGThe rise in central bank policy rates to fight inflation continues to weigh on economic activity, the IMF said, adding that the U.S. Federal Reserve and the Bank of England were expected to raise rates by more than assumed in April, before cutting rates next year.It said central banks should remain focused on fighting inflation, strengthening financial supervision and risk monitoring. If further strains appeared, countries should provide liquidity quickly, it said.The fund also advised countries to build fiscal buffers to gird for further shocks and ensure support for the most vulnerable. “We have to be very vigilant on the health of the financial sector … because we could have something that basically seizes up very quickly,” Gourinchas said. “There is always a risk that if financial conditions tighten, that can have a disproportionate effect on emerging market and developing economies.”The IMF said unfavorable inflation data could trigger a sudden rise in market expectations regarding interest rates, which could further tighten financial conditions, putting stress on banks and nonbank institutions – especially those exposed to commercial real estate.”Contagion effects are possible, and a flight to safety, with an attendant appreciation of reserve currencies, would trigger negative ripple effects for global trade and growth,” the IMF said.Fragmentation of the global economy given the war in Ukraine and other geopolitical tensions remained another key risk, especially for developing economies, Gourinchas said. This could lead to more restrictions on trade, especially in strategic goods such as critical minerals, cross-border movements of capital, technology and workers, and international payments. More

Chinese stocks staged their biggest one day rally since November after a call by China’s leaders for strong “countercyclical” measures to support the world’s second-largest economy, despite what economists said was a lack of detail in Beijing’s plans.President Xi Jinping’s 24-member politburo, the Communist party’s leading decision-making body, flagged the highly indebted property sector and local governments, as well as lagging domestic demand, at its quarterly meeting on the economy on Monday.Property stocks in particular soared on Tuesday. But while the overall message was supportive, economists said it provided few details and no sign of the kind of “big bang” stimulus China has implemented in the past. China’s post-Covid recovery lost steam in the second quarter, with growth missing analysts’ expectations. “It’s a statement of intent providing code words for potentially looser policy settings, but it’s not clear how much muscle will be put behind the stimulus measures,” said Frederic Neumann, chief Asia economist at HSBC.Xi drops slogan against property speculation Politburo statement: “The government must adapt to the new situation in which the dynamic of supply and demand in the property market is changing significantly . . .  The meeting also urged expanding the supply of government-subsidised housing and renovation of urban villages.”At the last politburo meeting on the economy in April, which followed more robust first-quarter growth, the readout included the stock Xi Jinping phrase: “Houses are for living in, not for speculation”. This policy and the government’s desire to curb leverage in the economy are one reason for the deep slowdown in the real estate sector in recent years as banks reduce lending to the industry.

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But at Monday’s politburo meeting, the phrase was replaced with more supportive language, acknowledging that “the relationship between supply and demand” in the sector is changing and policies should be “optimised” in a “timely manner”. It said “city-specific” measures should be implemented to better meet “residents’ essential housing demand” and urged the expansion of government-subsidised housing. This might signal a relaxation of restrictions on home purchases in “Tier-1” cities such as Beijing and Shanghai that were originally imposed to limit speculation. Such a move would “release pent-up demand and stabilise market expectations”, Morgan Stanley economist Robin Xing said in an analyst note. Tackle local government debt Politburo statement: “The meeting also urged . . . defusing local government debt risks with a package of plans.”The politburo hinted at structural reforms to fix local government debt through “a package of debt resolution plans”. Local government’s colossal debts — including those of local government finance vehicles — are estimated by Goldman Sachs at about Rmb94tn ($13.1tn), and are seen as a constraint on growth. The guidance, which provided few details, indicates that despite the economic slowdown Beijing remains keen to stick with the policy of debt reduction outlined in the last meeting in April.

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“It means that local debt resolution has entered a critical period,” said Zhong Zhengsheng, chief economist of Ping An Securities. The government was unlikely to offer massive debt swaps as it did in 2015, Zhong said, as this would only increase leverage. It might instead tackle the problem province by province, he said. “We expect state and policy banks to take on a more active role in resolving these debt risks at the local government level,” said Louise Loo, lead economist at Oxford Economics. Make employment a high priorityPolitburo statement: “It is necessary to increase the protection of people’s livelihood . . . and raise the issue of stabilising employment to a strategic height.”With youth unemployment in China hitting 21.3 per cent in June — the highest since the data series began in 2018, the politburo underlined the need to tackle employment.

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The politburo did not say what it planned to do to reduce unemployment, which economists attributed to a shortage of suitable jobs for this year’s record number of graduates and the damage to the services sector from the pandemic. But in a move that could help create jobs, Beijing pledged to “optimise” the environment for private enterprises and spur foreign investment. “We see this as a part of the government’s efforts to restore private confidence and revive animal spirits, a key to sustaining productivity growth amid secular challenges from demographics, debt and de-risking,” Morgan Stanley said. Get people spending againPolitburo statement: “The meeting also . . . called for precise and effective control of macroeconomic measures, including proactive fiscal and prudent monetary policies.”The party leaders indicated that monetary and fiscal policy would remain supportive but provided no figures and few details. The government has already eased policy interest rates, cut its bank reserve requirement ratio to introduce more liquidity into the system, and provided some tax breaks to businesses.

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Economists forecast small rate cuts before the end of the year and another RRR cut by 25 to 50 basis points. “Broadly the language around monetary policy is similar in the July statement compared to April,” said Oxford Economics’ Loo. “So we do not expect major loosening in this area.”The government is also expected to roll out subsidies for consumers to buy more cars, electronics and home appliances, helping the industry to clear inventories built up last year and step up manufacturing. Keeping recovery on track without much stimulus Politburo statement: “The meeting called for carrying out macroeconomic regulation with precision and force, stepping up countercyclical measures, and making more policy options available.”Overall, economists believe that the government wants to ensure it meets its growth target of 5 per cent for 2023, without racking up another huge wave of debt-fuelled stimulus in the process. In recent weeks, the government has announced at least four separate plans aimed at everything from attracting more private capital to boosting electric vehicle ownership and the purchase of consumer goods, according to a note by Carlos Casanova, senior economist at UBP. The measures should “result in a broadening of the economic recovery”, he said.

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This year’s growth has been flattered by the negative impact of Covid lockdowns on activity in 2022. The tricky part might be ensuring a reasonable level of growth into 2024, when the economy will not benefit from a low base effect, economists say. Already economists are looking towards the third plenum of the 20th party congress, a key meeting later this year for more details of the government’s medium-term plans, economists say. “The third plenum in the fall should be an opportunity to think about the structural issues,” said HSBC’s Neumann. More