Aurelia Butler

(Reuters) – A look at the day ahead in Asian markets from Jamie McGeever, financial markets columnist.The contrasting market fortunes between the U.S. and China are well known to investors, but deepening gloom surrounding China’s property sector and a surprisingly blunt view of the economy from Beijing suggests the chasm will widen further still.While Chinese markets could sour Asian sentiment on Tuesday, local investors have two other potential market-moving events on the slate – an interest rate decision from Indonesia and second quarter gross domestic product (GDP) data from South Korea.Chinese stocks on Monday ended lower for a sixth day after the country’s top leaders said the economy is facing “new difficulties and challenges”, “risks and hidden dangers in key areas” and “a grim and complex external environment.” The recovery will be tortuous, they said, and skeptical investors will need convincing that pledges to step up policy support and stimulus will be enough. Meanwhile, real estate stocks and bonds slumped to eight-month lows on Monday as fears grow that a cash crunch is looming over two of China’s biggest developers, Country Garden and Dalian Wanda.Monday’s meeting of the Politburo, a top decision-making body of the Communist Party and chaired by President Xi Jinping, was held a few days earlier than most China watchers had expected. That in itself is telling. Wall Street’s start to the week, on the other hand, was much more positive. The Dow stretched its longest winning streak since 2017 to 10 days, the tech-led rally is broadening out across the market, and investors are upbeat about this week’s earnings reports. Morgan Stanley (NYSE:MS)’s Mike Wilson, probably the most prominent equity bear this year and whose call for a lower S&P 500 was based on poor earnings, said on Monday: “We were wrong”.In Asia on Tuesday, Bank Indonesia (BI) will hold its seven-day reverse repurchase rate at 5.75% and keep it there for the rest of the year, according to a Reuters poll of economists, as inflation is set to remain within BI’s 2-4% target range.If BI does stay on hold, policymakers’ focus will switch to the exchange rate – further tightening from the Fed and other central banks could put the rupiah under heavy selling pressure. It is up about 3.5% against the dollar this year, recovering from a bruising 8.5% slide last year. BI won’t want the rupiah to strengthen too much because exports will suffer, but won’t want potential inflation-boosting weakness either.South Korea’s growth, meanwhile, likely slowed a bit last quarter as high interest rates hurt private domestic consumption and weak demand from top trade partner China weighed on exports, according to a Reuters poll. On a year-on-year basis, GDP was expected to have expanded 0.8% in the April-June period, down slightly from 0.9% in January-March. On a quarterly basis, however, Asia’s fourth largest economy is expected to have expanded 0.5%, up from 0.3% growth in the first quarter.Here are key developments that could provide more direction to markets on Tuesday:- Indonesia interest rate decision- South Korea GDP (Q2)- Hong Kong trade (June) (By Jamie McGeever) More

S&P projects new light vehicle sales to reach 1.33 million units in July, up 18% year-over-year. It also upgraded the 2023 U.S. light vehicle sales forecast to 15.4 million units, from 15.1 million estimated earlier. Top global automakers have reported a rise in second-quarter new vehicle sales on improving supply and strong demand, signaling that rising interest rates are yet to have a meaningful impact on purchases.”New light vehicle sales will continue to progress in July, reflecting the current trend of sustained demand levels to the fleet sector while retail sales continue to climb,” said Chris Hopson, principal analyst at S&P Global Mobility. In the second half of the year, however, high inflation could lead to affordability issues while production advances build up inventory quicker than anticipated, S&P said. More

WASHINGTON (Reuters) – The U.S. Internal Revenue Service (IRS) said on Monday it was ending its policy of unannounced visits to taxpayers by agency revenue officers, reversing a decades-long practise to “reduce public confusion and enhance overall safety measures for taxpayers and employees.””Effective immediately, unannounced visits will end except in a few unique circumstances and will be replaced with mailed letters to schedule meetings,” the IRS said in a statement.IRS Commissioner Danny Werfel announced the change as part of a larger effort to reform IRS operations after the passage last year of U.S. spending legislation called the Inflation Reduction Act and the creation of a new IRS strategic operating plan in April.”Changing this long-standing procedure will increase confidence in our tax administration work,” Werfel said, calling the change a “common-sense step.”The National Treasury Employees Union (NTEU) supported the policy change and said the step will help protect IRS officers whose job had become risky due to what it described as “false, inflammatory rhetoric about the agency and its workforce.”Werfel also noted the security concerns around these unannounced visits and said they created “extra anxiety” for taxpayers. “We have the tools we need to successfully collect revenue without adding stress with unannounced visits,” Werfel said, noting that funding under the Inflation Reduction Act will add more staffing for compliance work. In place of the unannounced visits, revenue officers will instead make contact with taxpayers through an appointment letter, and schedule a follow-up meeting, according to the new policy.The IRS noted there will still be extremely limited situations where unannounced visits will occur like in service of summonses and subpoenas; and also sensitive enforcement activities involving seizure of assets.Such situations number less than a few hundred each year – a small fraction compared to the tens of thousands of unannounced visits that typically occurred annually under the old policy, the IRS said. More