Aurelia Butler

(Reuters) – A look at the day ahead in Asian markets from Jamie McGeever.Japanese inflation figures for March and the first insights into economic activity around the world this month from flash PMI reports grab the spotlight on Friday, as investors reflect on mounting evidence of slowing U.S. economic and earnings growth.Asian stocks – ex-Japan – are set for their worst week in six, a fate likely sealed by Wall Street’s slide Thursday after figures showed an increase in U.S. jobless claims and a much steeper-than-forecast slump in a key regional U.S. manufacturing index.The Q1 U.S. earnings season took a bearish turn too as Tesla (NASDAQ:TSLA) posted its lowest quarterly gross margin in two years and AT&T (NYSE:T) and American Express (NYSE:AXP) missed market estimates for revenue and profit, respectively.Steep falls in the shares of these companies and regional banks, a major source of investor concern, dragged down the main indices.Lower bond yields failed to improve sentiment – recession fears pushed oil prices lower too – and this sense of gloom and unease is likely to set the tone at the open in Asia on Friday. Graphic: MSCI Asia ex-Japan index – weekly change – https://fingfx.thomsonreuters.com/gfx/mkt/mypmoxmlmpr/MSCIASIA.png On the economic data front in Asia, figures are expected to show that core consumer inflation in Japan held steady at 3.1% in March, highlighting persistent price strains and keeping the central bank under pressure to ditch its super-loose ‘yield curve control’ policy. Graphic: Japan core inflation – https://fingfx.thomsonreuters.com/gfx/mkt/xmpjkegwzvr/JapanCPI.jpg This is the first major economic indicator since new Bank of Japan Governor Kazuo Ueda took over earlier this month. He has insisted that the current monetary easing will remain in place for now, damping down prospects of a shift at his debut policy review on April 27-28, in which the central bank reviews its inflation and growth forecasts.Ueda’s dovish comments have certainly been welcomed overseas. Foreign investors poured nearly $12 billion into Japanese equities last week, their biggest weekly net purchases since at least January 2018.The flash purchasing managers index reports for Australia and Japan are released on Friday. Australian manufacturing and services activity contracted in March, as did Japan’s manufacturing sector.Here are three key developments that could provide more direction to markets on Friday:- Japan inflation (March)- Japan and Australia flash PMIs (April)- South Korea producer price inflation (March) (By Jamie McGeever) More

Good morning. US Treasury secretary Janet Yellen warned yesterday that any effort to decouple from China would be “disastrous” and “destabilising for the rest of the world”.In a major speech, Yellen said that Washington’s national security measures targeted at Beijing were not designed to “stifle” the Chinese economy, and called for a “constructive and fair” economic relationship between the two nations. “The US will assert ourselves when our vital interests are at stake,” the Treasury secretary said. “But we do not seek to ‘decouple’ our economy from China’s.”While Yellen called for a “healthy economic relationship” and co-operation on macroeconomics and climate change, she said the US would continue to work with allies to resist Beijing’s “unfair” economic policies. Further, she signalled that the US was preparing more measures likely to anger Beijing. Read more from Yellen’s remarks. Go deeper: In an interview with the FT, Yellen made it clear she wants to visit China. She would be the highest-ranking US official to do so since Joe Biden took office. Here’s what else is happening today:UK foreign secretary tour: James Cleverly’s four-day trip visit is focused on promoting a “free and open Indo-Pacific”. Cleverly will visit New Zealand today.Earnings: Results are expected from China XD Electric, ZTE Corp, SAP SE and Woodside Energy today. Eid: The Muslim festival marks the end of Ramadan. Financial markets are closed in several countries in the Middle East including Saudi Arabia, Egypt and Jordan.Five more top stories1. Russian paramilitary group Wagner was unsuccessful in asking China for supplies of weapons earlier this year, according to a leaked US intelligence report. Representatives from Wagner “sought munitions and equipment” from China in “early 2023”, according to the previously unreported document — a request that indicated the group had some confidence Beijing would be open to arming Moscow.2. US regional banks have largely stopped the massive outflow of deposits that threatened their stability after the collapse of Silicon Valley Bank, but their profit margins are shrinking unexpectedly quickly. Here’s what we learnt from the midsized banks that reported earnings this week.3. SpaceX’s giant Starship rocket exploded after its first launch yesterday in a setback for Elon Musk’s company and its effort to build a spacecraft capable of flying to Mars. The near-400ft-tall rocket, the most powerful ever launched, reached an altitude of nearly 40km before tumbling back towards Earth. 4. Credit Suisse investors in Singapore are in talks to sue the Swiss government over its decision to write down $17bn of Credit Suisse bonds on the grounds it violates a free trade agreement. The potential lawsuit in Singapore would open a new legal front.5. Google has plans to introduce generative artificial intelligence into its advertising business as big tech groups rush to incorporate the groundbreaking technology into their products. Read the full story.Related read: Alphabet is combining its DeepMind and Google Brain AI research units, ending a long-running internal rivalry between the two groups.How well did you keep up with the news? Take our quiz.The Big Read

© FT montage/Reuters

With India set to surpass China as the world’s most populous country, its public digital infrastructure has become a core part of Prime Minister Narendra Modi’s efforts to present India as a nascent economic superpower and alternative investment destination to its neighbour. But the “India Stack”, its novel approach to integrate private and public digital services, has sparked worries over privacy and data protection.We’re also reading and listening to . . . Digital bank run: When Silicon Valley Bank failed it was dubbed the world’s first “Twitter-fuelled bank run”. Economists have now tested whether this is true.Warring rivals: In separate interviews with the FT, Sudan’s battling generals branded each other “criminals” in remarks that suggest a bitter fight to the end.🎧Working It: After a scandal, what does it take to repair an organisation? Host Isabel Berwick explores how to turnround a toxic workplace.Chart of the day

If data is the oil of the 21st century, then Michael Bloomberg is today’s John D Rockefeller. Bloomberg, the company, has made Bloomberg, the man, vastly wealthy. Looking at Bloomberg’s $12bn annual revenue, the vast majority of profits come from “the terminal”, its clunky-but-powerful data and analytics portal. But as the finance industry continues to transform, there’s an urgent question to consider: what comes next?Take a break from the newsInvisible cake sounds like something you read about gracing the tables of Hogwarts, but it’s a real thing. The craze may have started in Japan — or it could be French. As with so many internet phenomena, it’s hard to trace. Try out this recipe for invisible apple and poppy seed cakes.Additional contributions by Gordon Smith and Tee Zhuo More

BUENOS AIRES (Reuters) – Argentina’s central bank hiked the benchmark interest rate a sharper-than-expected 300 basis points on Thursday after inflation soared past expectations in March to hit 104% on an annual basis, the monetary authority said in a statement.Reuters earlier reported, citing an official source, that the board had decided to raise the reference rate to 81% from its previous 78% level after March inflation data had clocked in at 7.7%, the highest monthly level in two decades.The hike extends a new round of tightening by Argentina’s central bank, which is fighting soaring prices and dwindling foreign currency reserves, while the peso currency has hit record lows against the dollar in parallel markets. Drought has battered exports of the country’s main cash crops soy and corn.The bank hiked the benchmark rate 300 basis points in March, the first raise since September at the end of a vicious tightening cycle through most of 2022. The bank had wanted to cut rates this year on hopes inflation would cool.Inflation, however, has gained pace again, driving poverty levels to near 40% and hurting the Peronist government of President Alberto Fernandez, which lags the conservative opposition in public opinion polls ahead of October elections. Reuters reported earlier this month that central bank board members were discussing another interest rate hike to rein in one of the world’s highest inflation rates. Analysts had estimated the hike would be 200 basis points.A central bank poll forecasts inflation will end this year at 110%, while J.P. Morgan estimates it could hit 130%.In a statement, the central bank said it would “continue to monitor the evolution of the general level of prices, the dynamics of the exchange market and the monetary aggregates for the purpose of calibrating its rate policy.” GRAPHIC: Argentina: inflation spirals (Interactive) https://www.reuters.com/graphics/ARGENTINA-ECONOMY/gdvzymgqypw/index.html More

Investing.com — Bank borrowing from the Federal Reserve’s discount window and new lending program ticked up this week, pointing to lingering liquidity constraints.In the week ended Apr. 19, banks borrowed an average of $69.93 billion each night, up from $67.6B from a week earlier, according to new Fed data released Thursday.Borrowing from the Fed’s Bank Term Funding Program, the new emergency lending program launched following the collapse of Silicon Valley Bank – climbed to $73.98B from $73.49B in the prior week.The uptick in borrowing pushed borrowings from the Fed’s emerging lending programs to $143.9B from $139.5B last week, though some economist downplayed any signal of renewed stressed in the banking system. “The small increase in loans out to banks is likely insignificant,” Jefferies said in a recent note, though cautioned that “banks are far from being out of the woods and many will struggle to operate profitably if they are funding themselves through these Fed facilities.”Still, the Fed balance sheet assets fell $21.5B in the week ended April 19, to $8.593 trillion, driven by “the mid-month maturity UST SOMA rolloffs, small declines in MBS holdings, and another step down in foreign repo,” Jefferies added.The renewed appetite to tap the central bank’s lending program comes as Federal Reserve officials continued to talk up further rate hikes despite acknowledging that tighter lending standards could help the central bank in its fight against inflation. Tighter access to credit “would work in the same direction as tighter monetary policy,” Federal Reserve Bank of Cleveland President Loretta Mester said Thursday. “So we will need to continue to assess the magnitude and duration of these effects on credit conditions to help us calibrate the appropriate path of monetary policy going forward.”About 88% of traders expect the Fed to lift rates by 0.25% on May 3, according to Investing.com’s Fed Rate Monitor Tool. That’s up from 57% in the prior week. But there are some who suggest the Fed should pause rather than hike rates to assess the impact of the rapid pace of monetary policy seen since the central bank began its tightening cycle in March last year.”It would clearly be wise for the Fed to pause now and see what happens in the marketplace, see how labor comes in and see how GDP and earnings come in to get an assessment of what’s happening to the economy,” Phillip Toews, CEO & portfolio manager of Toews Asset Management, told Investing.com’s Yasin Ebrahim in a recent interview.”At this level of rates, you’re gonna have a lot of negative effects on the economy,” Toews added. More

NEW YORK (Reuters) – A gauge of global stocks was poised for its biggest daily percentage drop in two weeks on Thursday as a sharp decline in Tesla (NASDAQ:TSLA) shares weighed while softening U.S. economic data and growing worries about the debt ceiling pushed Treasury yields lower. On Wall Street, U.S. stocks closed lower as shares of Tesla sank 9.75%, its largest one-day percentage drop since Jan. 3, after the electric vehicle maker missed gross margin forecasts and pledged further price cuts. GRAPHIC: Tesla earnings http://fingfx.thomsonreuters.com/gfx/rngs/TESLA-RESULTS/010010144FX/tesla.jpg Tesla was the biggest drag on the S&P 500 index and pulled the S&P consumer discretionary sector down 1.48% as the worst performing of the 11 major S&P sectors. Economic data showed weekly jobless claims rose last week, indicating the labor market may be starting to show signs of slowing as the lag effect of multiple interest rate hikes by the Federal Reserve takes hold. In addition, a gauge of manufacturing activity in the mid-Atlantic region plunged to its lowest level in three years in April while existing home sales fell in March and the Conference Board said its Leading Economic Index dropped 1.2% to its lowest since November 2020. GRAPHIC: Jobless claims https://www.reuters.com/graphics/USA-STOCKS/akpeqxgzlpr/joblessclaims.png “The economic data is decelerating, the jobs market, which was the last really strong pillar there, is showing some signs of softness lately. We are going headlong into earnings right now which have been better than feared perhaps but not good enough to keep this rally going,” said Jason Ware, chief investment officer at Albion Financial Group in Salt Lake City, Utah. “Everyone’s just kind of holding their breath right here after what has been a pretty strong move since mid-March.”After the data, Cleveland Federal Reserve President Loretta Mester said the central bank still has more interest rate hikes ahead of it, with the policy rate climbing over 5%. In addition, Fed Governor Michelle Bowman said the central bank is focused on bringing down inflation in order to support a growing economy and climbing incomes, while the solid labor market has made it difficult for growing businesses to find workers. Dallas Federal Reserve Bank President Lorie Logan said she is assessing whether the Fed has made enough progress in combating inflation, looking for further and sustained measures of improvement. The Dow Jones Industrial Average fell 110.39 points, or 0.33%, to 33,786.62; the S&P 500 lost 24.73 points, or 0.60%, to 4,129.79; and the Nasdaq Composite dropped 97.67 points, or 0.8%, to 12,059.56.On top of the slowing economic data and rate hike concerns, JP Morgan said it expects the debt ceiling to become an issue as soon as next month, and sees a “non-trivial risk” of default. Meanwhile, analysts at JPMorgan (NYSE:JPM) said they expected the U.S. debt ceiling to become an issue as early as next month. They also cited a “non-trivial risk” of a technical default on Treasuries, joining analysts at Goldman Sachs (NYSE:GS) and Citi in anticipating an earlier debt ceiling deadline. European shares closed lower on disappointing earnings reports, while the weakness in Tesla weighed on other automakers. The pan-European STOXX 600 index lost 0.15% and MSCI’s gauge of stocks across the globe shed 0.39%. MSCI’s index was on pace for its biggest one-day percentage decline since April 5. U.S. Treasury yields declined after the data, along with the concerns about Fed hikes dampening growth and the rising debt ceiling worries. Markets are now pricing in an 86% chance of a 25 basis points hike at the May 2-3 meeting, up from 83.3% on Wednesday, according to CME’s FedWatch Tool. Multiple Fed officials are expected to speak in closing out the week, before entering a blackout period on April 22 ahead of the May policy announcement. The yield on 10-year Treasury notes was down 6.8 basis points to 3.534%. The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was down 11.6 basis points at 4.149%, its biggest drop since April 4. In currency markets, the greenback was lower as the data raised concerns about an upcoming recession, with the dollar index down 0.147%, while the euro was up 0.07% to $1.0962.The Japanese yen strengthened 0.36% versus the greenback at 134.23 per dollar, while Sterling was last trading at $1.2437, down 0.01% on the day. Despite the dip in the dollar, oil prices were lower on concerns about a slowing economy and a rise in U.S. gasoline inventories. U.S. crude settled down 2.36% at $77.29 per barrel and Brent was at $81.10, down 2.43% on the day. More