Aurelia Butler

(Reuters) – A look at the day ahead in Asian markets from Jamie McGeever, financial markets columnist.Asian markets on Monday kick off what looks like a pretty light week for regional economic, policy and corporate drivers, with all eyes on how investors react to the extraordinary events in Russia over the weekend.It is unclear what the immediate impact of Russian mercenaries’ advance on Moscow, retreat and apparent deal with President Vladimir Putin will be on risk appetite and demand for traditional ‘safe haven’ assets like gold, Treasuries, the Japanese yen or the U.S. dollar.These assets would likely have attracted strong investor demand first thing on Monday morning had the Wagner group’s march on Moscow continued. The apparent truce, however, makes that less certain, although the situation remains fluid and huge uncertainty surrounding Putin’s grip on power remains. U.S. Secretary of State Antony Blinken suggested the turmoil in Russia might not be over and could take months to play out, while China’s foreign ministry said on Sunday that Beijing supports Russia in maintaining its national stability. U.S.-Sino relations were already rock bottom so differences over the crisis in Russia will come as no surprise, but could serve as a reminder of the geopolitical risks that hang over global markets.Investors may be inclined to hunker down for the time being given the broader ‘risk off’ sentiment that descended on markets on Friday. Stock markets around the world finally succumbed to a heavy bout of profit-taking, with worries over inflation – especially core price pressure – and ‘higher for longer’ interest rates triggering the biggest weekly selloff in many major indices since the U.S. banking shock in March.The S&P 500, Nasdaq, MSCI World Index, China’s major indices and Japan’s Nikkei 225 index all posted their biggest losses since March last week. Having hit a series of fresh 33-year highs, the Nikkei last week broke a 10-week winning streak, its best run since 2012/2013. The MSCI Asia ex-Japan index, a broad measure of Asian stocks, slumped 4.2%, its worst week since September. The U.S. yield curve inversion is now within a few basis points of the multi-decade lows reached in March, and the dollar regained a foothold last week – all else equal, neither development is particularly positive for emerging markets.The yen will be worth watching – it hit a seven-month low around 144.00 per dollar on Friday, so could be poised for a sizeable rebound if there is a broad safe-haven flow, even though U.S.-Japanese rate differentials are stacked against it.The Asian economic and policy calendar this week is light, with most of the potential for market-moving news coming later in the week – Japanese and Australian retail sales on Thursday, and Japanese unemployment and Chinese purchasing managers index data on Friday.Here are key developments that could provide more direction to markets on Monday:- Singapore industrial production (May)- Taiwan industrial production- Germany Ifo index (June) (By Jamie McGeever; Editing by Diane Craft) More

Hello and welcome to the working week.Investors will have a close eye on the fallout from the aborted uprising in Russia over the weekend, with many expecting a move into havens such as US government bonds and the dollar when markets open.In the US Joe Biden will launch the Investing in America roadshow with a big infrastructure funding announcement at the White House.This will kick off a three-week tour of the country, where the US president will be joined by vice-president Kamala Harris and senior cabinet members to trumpet the administration’s achievements and plans to replace creaking infrastructure, boost manufacturing capacity and nurture clean energy technology development. China’s premier Li Qiang will deliver the keynote speech at the 14th Summer Davos gathering in Tianjin, while Emmanuel Macron will make a three-day state visit to Germany, the first such trip by a French president in 23 years. The visit comes as tensions between the two countries simmer on issues ranging from energy policy to China.Banking will be in the spotlight again in the US when the Federal Reserve publishes the results of its annual stress tests, the first since a string of bank failures in the spring.“Dieselgate” comes to a head, with former Audi boss Rupert Stadler due to be sentenced by a German court after his confession that he suspected emissions cheating before the scandal was uncovered. A separate case will open in Germany’s highest civil court to decide whether VW, Audi and Mercedes-Benz must compensate buyers of vehicles whose emission cleaning system works only at certain temperatures.The week ends with the start of this year’s Tour de France. With impeccable timing comes the film The Last Rider, which profiles Greg LeMond, a winner from a more innocent age of the Tour, and it is worth a watch, according to the FT film reviewer Leslie Felperin. Whatever exercise you are planning, enjoy your week.What do you think? Email me at [email protected] or, if you have received this note in your inbox, hit reply.Economic dataThere is a run of US data this week, starting with the Conference Board’s consumer confidence data and culminating with the final first-quarter GDP figures. Elsewhere, there are inflation figures from Canada, Italy and France, and consumer confidence data from Germany.CompaniesRetail is a theme for this week’s earnings, but the outlook from two of the big players has been mixed. Primark owner Associated British Foods warned in April that sales growth would slow due to cost of living pressures hitting consumer spending, while H&M this month said it was optimistic about sales. The British discounter B&M, which has traded well through the economic downturn, updates on trading in its latest quarter on Thursday. More details about these and the other companies reporting below.The end of the month also brings a rush of chief executive exits, for very different reasons. Starling Bank founder Anne Boden steps down as chief executive, having said she wanted to remove any potential conflict of interest from her being a significant shareholder in the fintech.Unilever will be led by outsider Hein Schumacher after Alan Jope, who retires on Friday, was the subject of investor discontent over the consumer group’s performance during his tenure. Meanwhile, Caroline Silver becomes Barratt Developments chair, succeeding John Allan who agreed to step down to prevent allegations of misconduct during his time as CBI president becoming disruptive to the company.Key economic and company reportsHere is a more complete list of what to expect in terms of company reports and economic data this week.MondayThe Federal Court of Justice in Karlsruhe, Germany’s highest civil court, decides compensation claims against Volkswagen, Audi and Mercedes-Benz. Germany: June Ifo Business Climate indexResults: Associated British Foods trading update, Carnival Q2TuesdaySentencing in the “Dieselgate” trial of former Audi boss Rupert Stadler.European Central Bank Forum on Central Banking, where ECB president Christine Lagarde, Bank of England governor Andrew Bailey, Federal Reserve chair Jay Powell and Bank of Japan governor Kazuo Ueda share a panel debate.Dame Elan Closs Stephens becomes acting chair at the BBC.Canada: May consumer price index (CPI) inflation rate dataGermany: monthly retail sales dataUK: British Retail Consortium shop price indexUS: Conference Board consumer confidence figures plus new home salesVirgin Galactic due to launch Galactic 01, its first commercial space flight.Results: Accsys Technologies FY, Petrofac trading update, Prosus FY, PZ Cussons Q4 trading update, Telecom Plus FY, Walgreens Boots Alliance Q3, Wise FYWednesdayBank of England Monetary Policy Committee member Silvana Tenreyro speaks at the Society of Professional Economists event in London.Egypt, India, Jordan, Kuwait, Saudi Arabia, Turkey, UAE: financial markets closed for Eid al-Adha.France: June consumer confidence figuresGermany: June GfK consumer climate surveyItaly: CPI inflation rate figuresManchester United, the English football club at the centre of a bidding war, holds its annual general meeting in Rochester, New YorkUK: Bank of England quarterly bulletinUS Federal Reserve publishes annual stress test resultsResults: General Mills Q4, Micron Technology Q3ThursdayFederal Reserve chair Jay Powell speaks at Bank of Spain Conference on Financial Stability in MadridGermany: June flash harmonised index of consumer prices (HICP) and CPI inflation rate dataUS: Q1 GDP and Q1 PCE price indexResults: B&M European Value Retail Q1 trading statement, De La Rue FY, H&M H1, McCormick & Co Q2, Moonpig FY, Nike Q4, Rite Aid Q1, Serco trading statementFridayCaroline Silver becomes Barratt Developments chairKeith Barr steps down as InterContinental Hotels Group chief executive, to be succeeded by Elie MaaloufAnne Boden steps down as Starling Bank chief executive, replaced on an interim basis by John MountainAlan Jope’s last day as Unilever chief executive. He will be succeeded by Hein Schumacher tomorrowEU: June flash HICP inflation rate figuresFrance: June flash HICP, CPI and producer price index (PPI) inflation rate dataGermany: June unemployment rate figuresJapan: May unemployment rateUK: final Q1 GDP figuresUS: May PCE price indexResults: Constellation Brands Q1World eventsFinally, here is a rundown of other events and milestones this week. MondayQS World University Rankings publishedCanada: the country’s financial capital Toronto holds a mayoral election with dozens of people running to replace John Tory, who resigned earlier this yearGermany: Decision expected on how to raise the country’s minimum wageUK: opposition Labour party leader Keir Starmer speaks at the New Statesman ‘Politics Live’ conference in London. Across town, defence secretary Ben Wallace speaks at a conference organised by defence and security think-tank RusiUS: President Joe Biden begins Investing in America tour of the country to tout his administration’s achievementsTuesdayChina: Premier Li Qiang due to address the opening ceremony of the World Economic Forum’s 14th Annual Meeting of the New Champions in TianjinUK: former health secretary Matt Hancock due to answer questions and give evidence to the UK’s Covid-19 Inquiry. Also, the British Medical Association’s strike ballot of consultant doctors in England closesUS: arraignment of Walt Nauta, aide to former president Donald Trump, on numerous charges, including conspiracy to obstruct justice, withholding a document or record and corruptly concealing a document or recordWednesdayEU: European Council meeting of EU heads of state and government, chaired by the EC president Charles MichelUK: parliamentary committee questions Democratic Unionist party leader Jeffrey Donaldson about the effectiveness of the institutions formed under the Good Friday AgreementThursdayNetherlands: the annual Tall Ships Races, an event to encourage international friendship and training for young people in the art of sailing, sets sailUS: president Joe Biden travels to New York. Across town, Republican presidential candidate and Florida governor Ron DeSantis attends a private campaign fundraiser hosted by Wall Street executivesFridayUK: energy regulator Ofgem’s latest gas and electricity price cap update comes into effectSaturdayCanada DayEU: Spain assumes the revolving six-month presidency of the economic bloc110th Tour de France cycling race begins with a 182km medium-mountain stage beginning and ending in Bilbao, SpainSundayEmmanuel Macron begins a three-day state visit to GermanyUK: 24-hour strike by members of the Aslef union at the rail company Avanti West Coast in a dispute over changes to sick pay More

Analysts at major international banks have downgraded economic growth forecasts for 2023 after May data showed demand weakened in China and abroad, raising the case for more stimulus.”It is better to introduce measures sooner (rather) than later,” said Ning Jizhe, deputy head of the economic committee of the Chinese People’s Political Consultative Conference (CPPCC) and a former vice head of the National Development and Reform Commission (NDRC).China’s economy faces heavy downward pressure and its recovery is unstable and imbalanced, said Ning, who is also a former head of the National Bureau of Statistics. The strength of macroeconomic measures “ought not be small” to prevent “an economic spiral contraction” in a global slowdown, said Ning.China’s cabinet this month met to discuss measures to boost economic growth, pledging to roll out policies in a timely manner and to take more forceful actions in response to changes in the economic situation.The nation’s benchmark loan prime rates (LPR) were cut on Tuesday in the first such reductions in 10 months while the five-year LPR was reduced by a smaller than expected 10 basis points.China’s central bank is likely to cut lending rates further, but a reluctance to borrow among private companies and households means that continued policy easing could hurt banks that are already battling margin pressures, analysts said. More

ISLAMABAD (Reuters) – Pakistan’s parliament on Sunday approved the government’s 2023-24 budget which was revised to meet International Monetary Fund conditions in a last ditch effort to secure the release of more bailout funds.The IMF in mid-June expressed dissatisfaction with the country’s initial budget, saying it was a missed opportunity to broaden the tax base in a more progressive way. The revised budget was approved a day after Finance Minister Ishaq Dar introduced new taxes and expenditure cuts.”The (finance) bill is passed,” House Speaker Raja Pervaiz Ashraf said in a live TV broadcast on Sunday. With currency reserves barely enough to cover one month’s imports, Pakistan is facing an acute balance of payment crisis, which analysts say could spiral into a debt default if the IMF funds do not come through.There are five days to go before the $6.5 billion Extended Fund Facility (EFF) agreed in 2019 expires on June 30. The IMF has to review whether to release some of the $2.5 billion still pending to Pakistan before then. The tranche has been stalled since November. Dar also announced on Saturday a number of other changes, including raising a petroleum levy and lifting of all restrictions on imports, which has been one of the major concerns of the IMF as part of its fiscal tightening measures for the South Asian economy.The budget revision came after Prime Minister Shehbaz Sharif met IMF Managing Director Kristalina Georgieva on the sidelines of a global financing summit in Paris last week, followed by a marathon three-days of virtual talks between the two sides.Under the $6.5 billion EFF’s ninth review, negotiated earlier this year, Pakistan has desperately been trying to secure the IMF funds, which are crucial to unlock other bilateral and multilateral financing for the debt-ridden country.($1 = 286.0000 Pakistani rupees) More

Rishi Sunak has warned that high public sector pay rises would be “giving with one hand” and “taking away with the other” by fuelling higher inflation, in a sign the government may override the recommendations of independent pay review bodies.The UK prime minister spoke out in the wake of reports in The Times newspaper that millions of workers faced having recommended pay rises of 6 per cent blocked by ministers over concerns they would fuel inflation.Sunak’s intervention on Sunday came days after official data showed that headline inflation was higher than expected in May, remaining stuck at 8.7 per cent, while core inflation had risen to a 30-year high of 7.1 per cent. The prime minister insisted “there isn’t an alternative to stamping out inflation” in an interview on the BBC’s Sunday with Laura Kuenssberg programme.While he acknowledged it was the Bank of England’s prerogative to preside over interest rates, he said it was his responsibility to “manage the government’s borrowing responsibly” in order to curb price rises. On Thursday the Bank of England raised interest rates more than expected by 0.5 percentage points in an effort to cut inflation, prompting fears that mortgage holders could face higher rates as their fixed deals come to an end. Sunak urged struggling Britons to hold their “nerve” with interest rate rises, which Liberal Democrat leader Sir Ed Davey branded “patronising advice”.The prime minister went on to say that public sector pay was a “good example” of an area where the government was at risk of “borrowing too much money”. “There is no point in me doing something that sounds popular and nice today — for example on public sector pay. I would be giving with one hand and we would just be taking with the other through higher inflation.”According to The Times, the independent pay review bodies have recommended a 6.5 per cent pay rise for teachers in 2023-24, and a rise of at least 6 per cent for police officers, prison officers and junior doctors, at an estimated cost of more than £5bn.Any move by ministers to override the recommendations would be controversial after the government last year defended offering below-inflation public sector pay rises by insisting it had followed the pay review bodies’ advice. It would also risk escalating industrial action, including in a series of sectors — such as education and the health service — where workers are already on strike.Jon Richards, assistant general secretary of trade union Unison, accused the government of having “spent months hiding behind the NHS pay review body” in the last pay round. He added: “For the prime minister to be pondering blocking the other pay review bodies now is utterly farcical.”Economists said that raising public sector pay by a large amount would add to the amount of money circulating in the economy and could intensify inflationary pressure. But they added that the government had the power to offset any of these effects with higher taxes. Jonathan Portes, professor of economics at King’s College London, said that when there are problems of recruitment in the public sector “politicians should listen” to proposals such as “higher wages for NHS/teachers etc balanced with taxes on high-income workers and capital gains”. His remarks came after John Glen, chief secretary to the Treasury, said that ministers were aware of “the implications for inflation” when deciding whether workers should get pay rises.He said the work of the independent pay review bodies was “a very significant part of resolving the pay issues”, but stressed it was not the only factor.He told Sky News that he was “very aware of the massive contribution that teachers, nurses and public sector workers make and we’ve got to get the right outcomes that are fair to them, but also aren’t inflationary”.A Treasury official told the Financial Times: “We haven’t received [the recommendations] all back, we need to look at them in the round as a public spending commitment. They need to be fair and affordable.”A government decision on public sector pay in 2023/24 is expected in July before parliament rises for the summer recess.Rachel Reeves, Labour’s shadow chancellor, said on Saturday that Labour would negotiate a “fair and affordable” deal with workers, but she failed to rule out blocking public sector pay rises. More

The Bank of Thailand raised its main interest rate six times since August to 2% to tame inflation and policymakers have pledged a gradual return to normal levels consistent with long-term economic growth prospects.However, the rate is still “low and probably the lowest” in Southeast Asia, which will help future investment, the central bank’s Mathee Supapongse told a business seminar.”There won’t be any fast and aggressive rate hikes like in other countries.”The central bank has said that a gradual tightening strategy will help to ensure continued recovery in Southeast Asia’s second-largest economy, driven by tourism and private consumption.It has forecast economic growth of 3.6% this year and 3.8% in 2024. The economy expanded 2.6% last year.The central bank’s next review of monetary policy is on Aug. 2, with some economists expecting a further interest rate hike while others have forecast a pause owing to falling inflation.While inflation is trending down there is a need to monitor demand-side pressures and increases in costs pass through as tourism gathers strength, Mathee said.The policies of the winning parties in May’s national election would also add to inflation, he said.Move Forward and Pheu Thai have agreed to form a ruling coalition and both parties have promised big wage increases among other pledges. More