Aurelia Butler

TOKYO (Reuters) -Japan will revoke Russia’s most-favoured nation trade status as part of further sanctions against Moscow following the invasion of Ukraine, Prime Minister Fumio Kishida said on Wednesday.Tokyo will also ramp up sanctions by expanding the scope of asset freezes against Russian elites and banning imports of certain products from the country, Kishida said.”Russia’s invasion of Ukraine is a historic atrocity,” Kishida told a news conference. “We’re taking necessary steps including sanctions to apply further pressure on Russia.”The moves are in line with an announcement on Friday by the United States and its allies to escalate their economic pressure on Russia, which amount to a fourth set of sanctions against the country over the Feb. 24 invasion.Russia calls its action in Ukraine a “special operation” to disarm and “denazify” its neighbour.Japan will also coordinate with other Group of Seven nations to prevent Russia from tapping loans from the International Monetary Fund and other global lenders, Kishida said.He did not clarify which goods will see tariffs raised from the revocation of the most-favoured status.But the Mainichi newspaper reported the move would lead to higher tariffs for certain seafood products such as sea urchins and crab imported from Russia. In 2021, Russia accounted for 81% of sea urchins and 47.6% of crab imported by Japan, according to government data.Japan has already slapped sanctions on Russia-bound exports of chips and high-tech equipment, as well as on dozens of Russian and Belarusian officials, business executives and banks by freezing their assets. More

(Reuters) – Emerging Asian bonds excluding China continued to see foreign inflows for a 21st straight month in February, but analysts are turning pessimistic about the outlook due to concerns over higher U.S. interest rates, soaring inflation and growing global fallout from the war in Ukraine. Overseas investors purchased a combined net total of $6.01 billion in South Korean, Thai, Indian, Indonesian, and Malaysian bonds last month, compared with net buying of $6.37 billion in January, data from regulatory authorities and bond market associations showed.Monthly foreign investment flows: Asian bonds https://fingfx.thomsonreuters.com/gfx/mkt/akvezxwlepr/Monthly%20foreign%20investment%20flows%20Asian%20bonds.jpgSouth Korean bonds received foreign purchases of $3.29 billion last month, while Thai bonds drew $1.73 billion, their fifth consecutive monthly inflows.Malaysian and Indonesian bonds also received foreign capital worth $750 million and $651 million, respectively.On the other hand, Indian bonds suffered outflows of $421 million after an inflow of $698 million in the previous month.”Considering that the Russia-Ukraine conflict occurred in the second half of February, whole-month bond flow figures may not reflect the full impact on foreign demand for Asia bonds,” said Duncan Tan, a strategist at DBS Bank.”In the near term, with geopolitical risks and Fed lift-off expected to weigh on Asia bonds, foreign bond inflows are likely to be weak.”The U.S. 10-year Treasury yield rose to the highest levels in two-and-a-half years ahead of an expected Federal Reserve decision later on Wednesday to raise U.S. interest rates for the first time in three years.Despite uncertainties over the broader impact of the Ukraine crisis, analysts expect the Fed be aggressive this year to stem surging prices, with annual inflation in February rising at the fastest pace in 40 years.”Geopolitical tensions, tighter U.S. liquidity and high energy prices will all weigh on portfolio flows into Asia,” Khoon Goh, head of Asia research at ANZ, adding that he expects outflows from emerging Asian equities and bonds in the near term. Foreign investors’ holdings in Asian bonds https://fingfx.thomsonreuters.com/gfx/mkt/byvrjewaxve/Foreign%20investors’%20holdings%20in%20Asian%20bonds.jpg More

Side pockets would allow a fund to separate suspended assets that are difficult to sell or value, from other core investments.”The FCA has begun discussions with stakeholders about options to allow UK authorised retail funds to make exceptional use of ‘side pockets’ given the significant practical challenges in disposing of Russian and Belarusian assets in the context of suspensions and extensive global sanctions,” the Financial Conduct Authority said in a statement. More

FRANKFURT/MADRID (Reuters) – European Union regulators have told some banks to scrutinise transactions by all Russian and Belarusian clients, including EU residents, to ensure that they are not used to circumvent Western sanctions against Moscow, three sources told Reuters.The instructions from European Central Bank (ECB) supervisors mean tens of thousands of Russians and Belarusians resident in the EU face intense surveillance by their banks, which are on alert for big payments and deposits as well as new credit applications, the sources familiar with the matter said.While EU sanctions against Moscow exempt people holding temporary or permanent EU residence permits, they place some restrictions on access by Russian nationals to banking services, including preventing banks from accepting deposits above 100,000 euros ($110,000) from Russian nationals or entities. The ECB move brings even EU residents under heightened scrutiny and would make it harder for them to operate bank accounts, with one of the sources saying some were already facing restrictions in Spain. This follows Moscow’s invasion of Ukraine, which the Kremlin describes as a special operation to demilitarise and “deNazify” the country.The ECB is checking that banks which it supervises “have in place the necessary arrangements to adhere to the sanctions”, including with regards to transactions and relationships with clients, but it has not issued any guideline beyond the EU’s rules, a spokesperson for the Frankfurt-based central bank said.Some ECB Joint Supervisory Teams, which include staff from the central bank and national authorities, have told banks to tighten control of EU residents too if they come from Russia or Belarus, the three sources, from banks and watchdogs, said.While it is not the ECB’s role to police sanctions, the supervisors are concerned that banks in the bloc could incur hefty fines if their clients channel money on behalf of sanctioned individuals, two of the sources said.     Supervisors informed the affected banks between the end of February and early March and gave them a week to comply, two of the sources said, adding an audit of responses is planned. It was not immediately clear when this would be completed.”At first, the measures were focused on those of Russian nationality, whether they were residents or non-residents, and later it was extended to Belarusians,” one of the sources said.Most Russians living in the EU are resident in Germany, where Eurostat says there are more than 230,000, followed by Spain, with more than 81,000. Other popular places are France, Italy, Latvia, Czech Republic, Austria and Finland. Belarusians living in the EU are chiefly in Germany, Lithuania and Italy, the Eurostat data shows.’EXISTING RISKS’    In one instance, a Spanish bank has put around 8,000 Russian clients who are not on the EU sanctions list and are residing in Spain under surveillance, one of the sources said. All new lending to Russians who do not have Spanish residency has been halted and at least one bank will not allow non-resident Russians to open new accounts, they added.Italian banks, too, were monitoring all accounts above 100,000 euros held by Russian clients even if they were living in the EU and were not on the sanctions list, a fourth source familiar with the situation said.    Asked if lenders were intensifying scrutiny of Russian clients, the Bank of Spain told Reuters that both supervisors and banks were “carrying out the necessary controls to assess the situation and the possible existing risks”.           The Bank of Italy declined to comment.While the banks affected do not have to stop transfers, the first three sources said they must make additional checks to establish the source of the money, its destination and purpose.Supervisors also told banks they should take extra care with loan applications from Russians or Belarusians, they added.     However, one of the sources said there is nothing to stop banks from granting credit to a well-established Russian customer who is not subject to sanctions.    More

Investing.com — The Federal Reserve is set to raise interest rates for the first time in over three years – but how many more hikes will the central bank guide for this year? Retail sales data for February are due. China’s government and central bank promise support to the economy and to financial markets, triggering the biggest one-day rally in Chinese stocks in years. U.S. stocks are set to build on Tuesday’s gains as oil remains under pressure, relieving some of the fears about stagflation. And the Russian Federation is expected to miss payments on its international debt for the first time.  Here’s what you need to know in financial markets on Wednesday, 16th March. 1. Fed set to start rate hike cycle; February retail sales dueThe Federal Reserve is set to raise interest rates for the first time since 2018 when it winds up its regular policy meeting at 2 PM ET (1800 GMT).Consensus expectations are for a 25 basis point increase in the fed funds target range, taking it to 0.25%-0.5%.  A bigger hike of 50 basis points hasn’t been entirely ruled out but would go against the guidance given by Chairman Jerome Powell at his recent Congressional testimony. Wall Street analysts suggest the Fed will raise rates by some 150-175 basis points in all this year, as well as starting the run-off of the massive bond portfolio it has accumulated over the last two years.A minority argues that such dramatic tightening won’t be necessary, due to the economic slowdown to be expected from the impact of war in Ukraine and higher energy prices. February’s retail sales data, due at 8:30 AM ET, may throw some light on how much the U.S. consumer has been affected so far by such factors.2. Team China charges to the rescue China’s stock markets roared to their biggest one-day gain in years after coordinated statements from the central bank and the government promising support both to the economy in general and – in a rare move – to financial markets in particular.Chinese stocks had slumped in recent days on a combination of fears over Covid-related lockdowns, regulatory campaigns against tech companies, and the threat of delisting from U.S. exchanges. The property sector continues to suffer from a much-needed deleveraging process, meanwhile.The statements from the government promised a measured approach to domestic regulation and said progress was being made in talks with the U.S. 3. Stocks set to open higher as oil slides againU.S. stock markets are set to open higher later, with early trading set to be dominated by the retail sales numbers and later developments completely dependent on the Fed.By 6:15 AM ET, Dow Jones futures were up 330 points, or 1.0%, while S&P 500 futures were up 1.2% and Nasdaq 100 futures were up 1.8%. All three indices had risen sharply on Tuesday as the slump in oil prices assuaged one of the market’s biggest fears.Stocks likely to be in focus later include Lennar (NYSE:LEN), which reports earnings on the same day as the National Association of Home Builders releases its monthly report on the housing market. Chinese ADRs, meanwhile, look set for the mother of all bounces. 4. Ukrainian peace talks continue as Russia prepares to miss payment on foreign debtUkrainian and Russian officials continued to strike a more positive tone in their comments regarding the possibility of a ceasefire and a diplomatic solution to the war, although the difficult choreography of such comments ensures that there are always conflicting statements to be found.In an interview with the Russian media company RBC, Foreign Minister Sergey Lavrov echoed comments from a top advisor to Ukrainian President Volodymyr Zelensky that there are areas of progress and opportunities for compromise (Zelensky repeated his admission that NATO membership for Ukraine is impossible in the foreseeable future on Tuesday). Lavrov said a neutrality model akin to that of Austria and Sweden after World War 2 is on the table.However, in comments late on Tuesday, President Vladimir Putin had said Ukraine was “not serious” in wanting a ceasefire, and officials announced a counteroffensive had started in several areas. Zelensky is due to make a virtual address to Congress today and is likely to repeat his determination to carry on the conflict.Elsewhere, the Russian government is likely to miss interest payments on its international debt later, given that it has signalled its intention to make payments only in rubles. In contrast to its 1998 default, this would be a default of choice, rather than the result of an inability to pay.5. Oil slides as IEA slashes demand outlook, Iran signals closing in on nuclear dealCrude oil prices edged down in volatile trading, extending Tuesday’s slump on fears for the trajectory of Chinese demand as Iran announced the release of two Western citizens in a move that appeared to be a prelude to lifting the sanctions related to its nuclear program.The International Energy Agency earlier revised down its estimate of global oil demand this year by 1 million barrels a day due to the impact of the war in Ukraine and the Western sanctions that have accompanied it. It argued, however, that 3 million b/d of supply in Russia could be shut in from April as a result of the sanctions.Elsewhere, the U.S. government will release its weekly oil inventories data, after a shocking 3.75 million build in crude stocks reported by the American Petroleum Institute suggested that record-high gasoline prices had finally had an effect on U.S. demand.By 6:25 AM ET, U.S. crude futures were down 1.5% at $95.39 a barrel, while Brent crude futures were down 0.9% at $99.00 a barrel. More