Aurelia Butler

U.S. President-elect Donald Trump’s pledge to impose steep tariffs on Canada, Mexico and China has jolted markets and upended interest rate and inflation forecasts.Here’s what to look out for in the week ahead, from Kevin Buckland in Tokyo, Ira Iosebashvili in New York and Dhara Ranasinghe, Karin Strohecker and Amanda Cooper in London.1/ HOLDING ON?Traders got a taste of what the months ahead may look like. Trump’s pledge to slap tariffs on some of the United States’ major trading partners has juiced up the dollar even more.The greenback rose more than 1.5% against the Canadian and Mexican currencies, highlighting sensitivity to Trump-related headlines and uncertainty over his policies. So, November ends with the biggest monthly fall in the euro since early 2022, the steepest drop in German bond yields this year, the biggest bitcoin surge since February and one of the biggest monthly jumps in U.S. stocks this year. Now for a volatile December. Trump aside, U.S. and euro area rates are tipped to fall, Japan’s could rise. Geopolitics may bring relief (Middle East) and fear (Russia/Ukraine) as well as add political turbulence (France, Germany).2/ IMPASSETensions escalated in France over Prime Minister Michel Barnier’s proposed budget, which contains 60 billion euros in painful tax rises and spending cuts. Far-right National Rally leader, and coalition partner, Marine Le Pen has threatened to topple the government over it and speculation is rising that this could happen by Christmas. French bonds haven’t sold off too hard, but they’ve lagged the market so badly the premium France must pay to borrow over 10 years relative to Germany is back to 2012 crisis-era highs. The government will try to push through the social security budget on Monday and failure to do so would trigger a no-confidence motion.3/ TARIFF FEAR, STIMULUS FAITH Trump’s threat of new tariffs on Mexico, China and Canada hit Asian markets hard, but mainland shares have mostly shrugged off talk of a 10% levy on all Chinese imports, partly because it was lower than the 60% he campaigned on. But analysts think Beijing could produce whatever new stimulus is needed to counter the economic drag of a trade war, and several say the ultimate result will be an acceleration of China’s high-tech self-sufficiency drive. The biggest loser has been staunch U.S. ally Japan, with the Nikkei down about 1.4% since Trump’s Truth Social post, mostly led by auto stocks. Yet Honda (NYSE:HMC) is the top-ranking automaker after Tesla (NASDAQ:TSLA) on Cars.com’s “Made in America” list, with Toyota (NYSE:TM)’s Camry sedan and Highlander SUV also rating highly. Mexican factories remain a vulnerability for everyone, particularly for high-margin, top-selling pickup trucks.4/ PRICED FOR PERFECTIONAs U.S. stocks hover near record highs, investors await next Friday’s jobs report for a clearer picture of how the economy is faring ahead of the Federal Reserve’s December meeting. Robust U.S growth has helped power stocks higher all year, even as it raises concerns of an inflationary rebound that can undo the Fed’s progress in taming consumer prices.But another blowout jobs report, such as the one that shocked markets in October, could derail expectations for how much the Fed will be able to cut in the months ahead, potentially shaking an important pillar of the stocks rally.Indeed, minutes of the last policy meeting showed Fed officials aren’t unanimous on how much more rates should fall.Economists polled by Reuters expect the U.S. to have created 183,000 new jobs last month.5/ AFRICAN FIRSTSouth Africa takes over the G20 presidency on Sunday, the first African country to lead the group that represents 85% of the world’s economy, 75% of its trade and 67% of its population.President Cyril Ramaphosa wants to focus on climate change, inclusive growth, food security and artificial intelligence. But his agenda might be bumping up against the reality of trade wars and diplomatic tensions as Trump moves into the White House.South Africa is the fourth emerging market in a row to assume the chair after Indonesia, India and Brazil, and will hand the baton to the U.S. in December 2025. (This story has been corrected to say that the government will try to push through the social security budget on Monday, not that the Senate will debate the bill on Monday, in paragraph 11) More

TOKYO/LONDON (Reuters) – The yen jumped more than 1% against the U.S. dollar to a six-week high on Friday after faster-than-expected inflation in Tokyo supported bets for a Bank of Japan interest rate hike next month.The dollar dipped slightly against its peers in trading thinned by the U.S. Thanksgiving holiday.”The yen is turning into the latest momentum trade … with little friction to prevent it rising in thin holiday trade,” said Matt Simpson, senior market analyst at City Index.The dollar was down 1% to 150.03 yen , and earlier dipped to 149.53 yen for the first time since Oct. 21.The dollar index, which measures the currency against major peers, fell to a two-week low of 105.61 and was last down 0.11% at 105.95.The dollar remains on track for a 2% rise in November, fuelled by Donald Trump’s clear-cut election victory on Nov. 5, which pumped up expectations of big fiscal spending, higher tariffs and tighter borders – all regarded by economists as inflationary.Yet the U.S. currency has dropped in recent days. The yen has been the star of the week, set for gains of more than 3%, which would be its best week since July.A fall in U.S. Treasury bond yields has exacerbated the dollar’s declines, while Japan’s currency has been boosted by safe-haven flows amid Trump’s threats of broad tariffs, and by growing bets on BOJ hikes.Traders currently lay about 60% odds for a quarter-point increase on Dec. 19, and just over half of economists in a Reuters poll predicted the same.Potentially adding to the case for an increase, Tokyo’s core consumer price index (CPI), which excludes volatile fresh food costs, rose 2.2% year-on-year in November from a year earlier, up from 1.8% last month and beating forecasts for a 2.1% gain.However, Mizuho (NYSE:MFG) Securities strategist Shoki Omori expects the BOJ to keep policy settings steady next month. “Markets are overreacting to Tokyo CPI results,” he said. “Looks like algos kicked in and took this ‘headline opportunity’ to short dollar-yen,” Omori said, referring to computer-driven trading against the U.S. currency.The euro was very slightly higher at $1.056. Sterling climbed 0.1% to $1.2698, after earlier hitting a two-week high at $1.275.Nicholas Rees, FX market analyst at Monex Europe, said the rally in currencies against the dollar this week was partly technical. U.S. stocks, bonds and the dollar have risen in November, so some investors need to sell at month-end to make sure they’re not above their target allocations to U.S. assets.”We got a big run-up in the dollar this month, so portfolios have to be rebalanced,” Rees said.A reading of euro-area inflation is due at 1000 GMT (1100 CET) and could give hints on the pace of European Central Bank rate cuts, while investors are alert to France’s budget wrangling.ECB policymaker Francois Villeroy de Galhau said on Thursday that the central bank should keep its options open for a bigger rate cut next month, countering hawkish comments from peer Isabel Schnabel the previous day. The euro has tumbled about 3% in November as the dollar has rallied, putting it on course for its worst month since May of last year, though it has jumped 1.45% this week.Bitcoin climbed about 2.5% to $97,480, trying to claw its way back to the record high of $99,830 from a week ago.This month, the leading cryptocurrency is set to book a 40% jump – its best performance since February – on bets for a more favourable regulatory environment under Trump. More

Infrastructure output, which makes up 40% of India’s industrial production and tracks activity across eight sectors, grew at a revised 2.4% in September. Last month, coal production increased 7.8% year-on-year compared to a 2.6% increase in September, while output of refinery products grew 5.2%, compared with a rise of 5.8% in September.Steel production grew 4.2%, against a revised 1.6% increase a month earlier. Cement output climbed 3.3% year-on-year, compared with September’s revised 7.2% increase, and fertiliser production rose 0.4%, against a 1.9% rise in the previous month.Electricity generation was up 0.6% from a revised 0.5% rise in the previous month.However, crude oil production decreased 4.8% compared with a 3.9% fall in September. Natural gas output fell 1.2% from a 1.3% decline a month ago. More

Investors pumped a substantial $12.19 billion into global equity funds, a jump of 32% compared with about $9.24 billion worth of net acquisitions in the week before, LSEG Lipper data showed. It marked the ninth consecutive weekly inflow.On Friday, global shares were on track for their best month since May, driven by optimism about strong U.S. growth and the artificial intelligence investment boom, despite concerns over political turmoil and economic slowdown in Europe.Last week, U.S. President-elect Donald Trump’s appointment of fiscal hawk Scott Bessent as U.S. Treasury Secretary raised market expectations of controlled debt levels in his second term, leading to a drop in Treasury yields.Investors picked a significant $12.78 billion worth of U.S. equity funds, extending net purchases into a fourth successive week. However, they withdrew $1.17 billion and $267 million out of Asian and European funds, respectively.The financial sector witnessed robust demand as it drew $2.65 billion in net purchases, the fifth weekly inflow in a row. Investors also snapped up consumer discretionary, tech and industrials sector funds totaling a hefty $1.01 billion, $807 million and $778 million, respectively.Global bond funds witnessed inflows for the 49th successive week. Investors poured $8.82 billion into these funds.Corporate bond funds received a net $2.16 billion, the biggest weekly inflow in four weeks. Government bond funds and loan participation funds also witnessed notable purchases, totaling a net $1.9 billion and $1.34 billion, respectively.At the same time, investors ditched $12.87 billion worth of money market funds in a second straight week of net sales.The gold and precious metals funds gained a net $538 million, marking a 14th weekly inflow in 16 weeks.Data covering 29,635 emerging market funds indicated that equity funds were out of favour for a fifth consecutive week with about $4.3 billion in net sales. Investors also divested bond funds to the tune of 2.58 billion, logging a sixth weekly net sales. More

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