Aurelia Butler

SYDNEY (Reuters) -Australia’s top central banker on Friday said interest rates are closer to normalisation after a successive run of outsized hikes, although he warned rates are still low, hinting a range of 2.5%-3.5% would be appropriate depending on economic cycles. Reserve Bank of Australia (RBA) Governor Philip Lowe flagged more interest rate rises are required to bring inflation back to the bank’s 2%-3% target range, but said it would be appropriate to slow the rate of increase at some point.”At some point, we will obviously not be increasing rates by 50 basis points at each meeting, and we’re getting closer to that point,” Lowe told a parliamentary economics committee. Lowe said rates should at least average 2.5% over time and cycle between 2.5% to 3.5% depending on how the economy performs.”We are closer to that now. We are at 2.35%, so we’re getting closer to the range that you think is normal but we’re probably still on the low side,” Lowe added. In just five months, the RBA has raised its key cash rate by 225 basis points to a seven-year high of 2.35% as it battles to contain a surge in inflation to the highest since 1990.Markets are wagering on further hikes to a peak around 3.85%, though investors are less sure whether the central bank will go by another outsized 50 basis points in October or cut back to quarter-point moves.Hawkish commentary from other major central banks argue for the RBA to stay aggressive, with the U.S. Federal Reserve widely expected to hike by at least 75 basis points next week.Lowe said the next board meeting will be considering whether its a 25 bp increase or a 50 bp increase, reiterating the size and timing of future rate hikes will be guided by the incoming data and the board’s assessment of the outlook for inflation and the labour market. The bank was not on a pre-set path given the uncertainties involving the global economy, inflation expectations, wage growth and household spending, according to Lowe. More

(Reuters) -FedEx Corp on Thursday withdrew the financial forecast it issued just three months ago, saying a global demand slowdown accelerated at the end of August and was on pace to worsen in the November quarter.Shares in the global delivery firm tumbled more than 16% after it also reported revenue and profit for the first-quarter ended Aug. 31 that missed Wall Street targets. S&P 500 futures fell on Thursday as FedEx (NYSE:FDX) added to worries about a slowing global economy.Altogether, a worldwide slowdown in economic activity caused shortfalls in FedEx Express revenues of $500 million and FedEx Ground revenues of $300 million in the quarter, FedEx said.FedEx said it was cutting costs including shutting some FedEx Office locations, reducing labor hours and consolidating some sorting facilities.The warning comes as consumers around the world are struggling with higher costs for necessities like food, fuel and shelter at the same time as they are shifting spending away from e-commerce back to in-person shopping, dining and travel.The World Bank earlier on Thursday said the world’s three largest economies – the United States, China, and the euro area – have been slowing sharply, and even a “moderate hit to the global economy over the next year could tip it into recession.”Some experts said FedEx should have caught wind of cooling demand much more quickly – especially after Amazon (NASDAQ:AMZN) said it over built warehouses, U.S. seaport directors signaled decelerating imports and consumer discretionary spending continued to struggle due to inflation. “They should have seen this coming a month ago,” said Satish Jindel, an industry consultant who helped start and expand the company that became FedEx Ground.FedEx overestimated demand for last year’s peak holiday shipping season, drawing complaints from its independent contractors who paid for unneeded trucks and workers. Shippers like FedEx and UPS imposed a variety of surcharges during the pandemic for issues from fuel to special handling, and those profit-boosting charges are at risk, said Jindel.CLIMATE “CHALLENGING”FedEx on Thursday said business has been hit by service challenges in Europe and macroeconomic issues in Asia. The region’s biggest economy, China, is grappling with COVID-19 lock downs and heat wave-induced power outages.The warning dragged down shares of rival delivery companies as well as retailers in extended trading. United Parcel Service (NYSE:UPS) dropped 5%, while Amazon fell 1.9%.FedEx expects to report revenue of $23.2 billion for the first quarter, missing analysts’ expectations of $23.59 billion, according to Refinitiv IBES. Adjusted earnings are expected to be $3.44 per share, well below estimates of $5.14.The company withdrew its forecast for the fiscal year.The wide gulf between FedEx’s performance and Wall Street’s expectations comes after analysts had already tempered estimates for the quarter, said Cowen analyst Helane Becker, who added that company shares have shed about 10% of their value since they issued their now-withdrawn forecast in June.And the warning will likely ramp up pressure on FedEx’s new chief executive officer, Raj Subramaniam, to close a profitability gap with UPS, after it ceded two director seats to activist investor D.E. Shaw in June.“Global volumes declined as macroeconomic trends significantly worsened later in the quarter, both internationally and in the U.S. We are swiftly addressing these headwinds, but given the speed at which conditions shifted, first quarter results are below our expectations,” Subramaniam said in a statement. More

The country’s seasonally adjusted unemployment rate for August fell to 2.5% from 2.9% in July, hitting the lowest since the data release began in June 1999, according to the Statistics Korea.The number of employed people increased by 807,000 compared with the same month a year earlier, extending annual gains to an 18th consecutive month. The pace of gains though was milder than 826,000 in July and 841,000 in June.”Employment growth is expected to slow going forward as uncertainties are increasing on worsening external conditions and weaker consumption due to high inflation and interest rate hikes,” vice finance minister Bang Ki-sun said at an economic policy meeting after the data release.The increase was driven mostly by the manufacturing sector, which added 240,000 employees, the biggest under the current categorisation that began in 2013, followed by health and social welfare services’ 123,000 and agriculture and fisheries’ 9,000.By age group, those 60 and older accounted for more than half by adding 454,000, while workers in their 50s, 30s and 20s, increased by 182,000, 98,000 and 65,000, respectively. More

(Reuters) – S&P 500 futures fell on Thursday, suggesting traders expect Wall Street to open down in its next session, after FedEx (NYSE:FDX) withdrew its financial forecast and added to worries about a slowing global economy. After trading resumed following a daily maintenance period, S&P 500 e-mini futures fell 0.6%. Nasdaq futures dropped 0.7%.FedEx tumbled 16% late in the day after the company said its fiscal first-quarter results were hit by global volume softness and it withdrew its financial forecast, saying it expected further deterioration of business conditions.That warning hit shares of other delivery companies, as well as retailers. United Parcel Service (NYSE:UPS) dropped 5.7% in extended trading, while Amazon (NASDAQ:AMZN) fell 1.8 and Target (NYSE:TGT) dipped nearly 2%. Thursday’s late-day broadside to investor sentiment comes at a sensitive time for Wall Street. During the regular trading session, the S&P 500 dropped 1.1% as a raft of economic data failed to alter the expected course of aggressive tightening by the Federal Reserve amid growing warnings of global recession.Jeffrey Gundlach, the chief executive officer of DoubleLine Capital, said he expects a recession in 2023, and that the Federal Reserve would likely be too aggressive in its interest rate hike campaign aimed at bringing decades-high inflation under control. “It looks like we’re getting to the front of a recession,” Gundlach said during an investor conference call. “The odds of 2023 are high.”Mixed economic data has many investors expecting another 75 basis-point interest rate hike from the Fed at the conclusion of next week’s monetary policy meeting.After falling about 4% so far this week, the S&P 500 remains 6% above its closing low in June, a level some investors had bet would be the lowpoint in this year’s stock market downturn. More