Aurelia Butler

SINGAPORE (Reuters) – A surging yen steadied on Monday as Japan’s incoming prime minister signalled monetary policy should remain accommodative, while the dollar slipped on commodity currencies underpinned by investor expectations of a turnaround in China’s economy.Japan’s yen had leapt on Friday when Shigeru Ishiba, a former defence minister and erstwhile critic of aggressively easy policy won the leadership of the ruling Liberal Democratic Party, which controls parliament and will vote him into office.The yen slipped about 0.4% to 142.75 per dollar after jumping 1.8% on Friday. Ishiba told public broadcaster NHK that from the government’s standpoint, policy must remain accommodative as a trend given current economic conditions.Analysts said that was enough to pause the sharp rise in the yen following his victory and that the likelihood of a snap election in the coming months – something Ishiba hinted at on Sunday – could weigh on the yen at least over the short term.”An election basically takes the Bank of Japan out of the equation until December…a marginal yen negative,” said Ray Attrill, National Australia Bank (OTC:NABZY)’s head of foreign exchange strategy.Elsewhere the euro was stable at $1.1172 and sterling traded at $1.3381 with markets looking to U.S. jobs data on Friday as the next major data point that could guide the pace of U.S. interest rate cuts.European inflation data on Tuesday and Chinese data due later on Monday are also keenly awaited. The Australian and New Zealand dollars traded near the 2024 highs they struck on Friday as rate cuts and expectations of fiscal support in China raised hopes of an improvement in the slowing economy.The Australian dollar rose 0.3% to $0.6920, after climbing to a 20-month high of $0.6937 on Friday. The New Zealand dollar was up 0.3% at $0.6360 after hitting its highest since December on Friday.Last week the U.S. Federal Reserve’s favoured inflation measure showed inflation running at a pretty benign 2.2% for the 12 months to August, sending U.S. yields and the dollar lower.”The trend over next year or so is for the dollar to go down,” said Commonwealth Bank of Australia (OTC:CMWAY) strategist Joe Capurso.”Inflation is under control. Interest rates are going down and that’s good for the global economic outlook, good for risk taking and good for commodity currencies like the Aussie.”Beijing’s raft of stimulus measures drove a rally in China’s yuan last week, even as interest rates were lowered, as investors piled into Chinese stocks which notched their best week in a decade. The yuan broke the psychological 7-per-dollar mark in offshore trade on Friday and was last at 6.9761 ahead of the onshore open. More

Boric said the budget would focus on increasing safety for Chilean citizens, with a budget for justice and security $1.5 billion higher than this year’s, helping put more police on the streets, raise pay for officers and invest more in prisons.”Guaranteeing your right to security is the first priority for my government,” Boric said on national television, adding that with this proposal the budget for security would be up 15% in three years.The South American government would also look to limit migration, he said. Boric has hardened his tone on illegal migration in recent months, saying he will expel migrants who have not attended the official biometric registration process.Boric had raised concerns this week at the United Nations General Assembly over the crisis in Venezuela, which has seen a quarter of its population emigrate in 10 years, and said his country was not in a condition to receive more migrants.The 2025 budget, Boric added, will also help boost pensions, the health sector, education and culture. Resources for Chilean immunization programs would be up 42%, he said.The proposal also includes resources to digitize 240 sector permit processes, which Boric said should speed up investment.Earlier this month, Chile’s central bank said it expects inflation to close this year at 4.5% before slowing to 3.6% next year, while trimming its economic growth forecast to between 2.25% and 2.75% from a prior forecast of up to 3%.Boric said the government is targeting growth of 2.6%.The government is set to present the bill to Congress on Monday and lawmakers will have 60 days before deciding whether to approve it. Congress recently approved new tax legislation that should bring an additional $1.2 billion to state coffers. More

SYDNEY (Reuters) – Asia share markets were mostly firmer on Monday as China announced more stimulus measures, though the Nikkei dived on concerns Japan’s new prime minister favoured normalising interest rates.Continued Israeli strikes across Lebanon added geopolitical uncertainty to the mix, though oil prices were still weighed down by the risk of increased supply. [O/R]The week is packed with major U.S. economic data including a payrolls report that could decide whether the Federal Reserve delivers another outsized rate cut in November.The Nikkei led the early action with a dive of 4.0% as investors anxiously waited for more direction from new Prime Minister Shigeru Ishiba, who has been critical of the Bank of Japan’s easy policies in the past.However, he sounded more conciliatory over the weekend saying monetary policy “must remain accommodative” given the state of the economy.That helped the dollar bounce 0.5% to 142.85 yen, after sliding 1.8% on Friday from a 146.49 top. [USD/] “Ishiba has endorsed the BoJ’s intention to normalise monetary policy, albeit leaving it uncertain as to the pace and timing,” said HSBC economist Jun Takazawa.”If additional stimulus measures are realised, this would also likely buttress the recovering trend in spending, thereby strengthening the BoJ’s conviction to raise interest rates at a gradual pace,” he added. “All in all, we continue to see a constructive outlook for Japan.”Over in China, the central bank said it would tell banks to lower mortgage rates for existing home loans by the end of October, likely by 50 basis points on average.That follows a barrage of monetary, fiscal and liquidity support measures announced last week in Beijing’s biggest stimulus package since the pandemic.”We believe deflation risks are now being taken more seriously,” said Christian Keller, head of economic research at Barclays. “At the same time, the Politburo suggests a consensus has likely been reached in Beijing that fiscal stimulus and central government leverage are necessary to arrest the downturn.””This is an important shift in a market that was looking for more than just the bare minimum.”WALL ST ON A ROLLThe blue-chip CSI300 and Shanghai Composite indexes gained roughly 16% and 13%, respectively, last week. Hong Kong’s Hang Seng index jumped 13%.On Monday, MSCI’s broadest index of Asia-Pacific shares outside Japan firmed 0.2%, having surged 6.1% last week to a seven-month high.Wall Street also had a rousing week helped by a benign reading on core U.S. inflation on Friday that left the door open to another half-point rate cut from the Fed.Futures imply around a 53% chance the Fed will ease by 50 basis points on Nov. 7, though the presidential election two days earlier remains a major unknown.A host of Fed speakers will have their say this week, led by Chair Jerome Powell later on Monday. Also due are data on job openings and private hiring, along with ISM surveys on manufacturing and services.S&P 500 futures were up 0.1% on Monday, while Nasdaq futures added 0.2%. The S&P 500 index is up 20% year-to-date and on track for its strongest January-September performance since 1997.In currency markets, the dollar index was flat at 100.41 after easing 0.3% last week. The euro stood at $1.1169 , having bounced on Friday in the wake of the benign U.S. inflation report. [USD/] The euro zone releases its inflation figures this week, along with producer prices and unemployment. German inflation and retail sales are due later on Monday, while European Central Bank President Christine Lagarde speaks to parliament.A softer dollar combined with lower bond yields to help gold reach record highs at $2,685 an ounce. It was last at $2,664 an ounce, and on track for its best quarter since 2016. [GOL/]Oil prices were erratic as concerns about possible increased supply from Saudi Arabia countered tensions in the Middle East. [O/R]Brent fell 1 cent to $71.86 a barrel, while U.S. crude rose 3 cents to $68.21 per barrel. More

Commercial banks should, in batches, reduce interest rates on existing mortgages to no less than 30 basis points (bps) below the Loan Prime Rate (LPR), the central bank’s benchmark rate for mortgages, according to a statement released by the People’s Bank of China (PBOC). It is expected to cut existing mortgage rates by about 50 bps on average.Across China, a slew of policies including reductions in down-payment ratios and mortgage rates have been introduced this year to support China’s crisis-hit property market.But the stimulus measures have struggled to boost sales or increase liquidity in a market shunned by buyers that has remained a big drag on broader economic growth.Adding to such efforts, Guangzhou city announced on Sunday the lifting of all restrictions on home purchases, while Shanghai and Shenzhen said they would ease restrictions on housing purchases by non-local buyers and lower the minimum downpayment ratio for first homebuyers to no less than 15%. Reuters reported on Friday that Shanghai and Shenzhen were planning to lift key remaining restrictions to attract potential buyers.The announcements on Sunday come after China unveiled on Tuesday its biggest stimulus since the COVID pandemic to pull the economy out of its deflationary funk.’URGENT ADJUSTMENTS’ TO BOOST SALESProperty-related figures released earlier this month showed new home prices fell at the fastest pace in more than nine years in August and property sales slumped 18.0% in the first eight months of the year.The mortgage rate reduction set out by the central bank aims to ease homeowners’ mortgage burden, seeking to boost the property market and weak domestic consumption demand. “As market-oriented reforms on interest rates continue to deepen, and the supply and demand relationship in the real estate market undergoes major changes, the current mortgage rate pricing mechanism has exposed some shortcomings,” the PBOC said in its statement.”With the public showing strong responses (to the situation), the mechanism needs urgent adjustments and optimisation,” the PBOC added. China’s biggest four state-owned banks, including Industrial and Commercial Bank of China Ltd and China Construction Bank (OTC:CICHF) Corp, said they would actively respond to the policy and were promoting the orderly adjustment of existing mortgage interest rates.Most local governments, except for some megacities including Beijing and Shanghai, have already scrapped floors on mortgage rates. Previous mortgage rate reductions primarily benefited new homebuyers, leaving existing homeowners with higher-rate loans. This has resulted in a rush by households to pay off existing mortgages early, further constraining households’ spending and consumption.The outstanding value of individual mortgages stood at 37.79 billion yuan ($5.39 billion) at the end of June, down 2.1% year-on-year, according to official data.The PBOC also announced on Sunday that it would extend supportive measures of developers’ real estate development loans and trust loans to the end of 2026, to better fulfil developers’ financing demand.($1 = 7.0110 Chinese yuan renminbi) More

Manufacturers surveyed by the Ministry of Economy, Trade and Industry expect seasonally adjusted output to increase 2.0% in September and expand 6.1% in October.Separate data showed Japanese retail sales rose 2.8% in August from a year earlier, above the median market forecast for a 2.3% rise. More

(Reuters) – A look at the day ahead in Asian markets.Investors in Asia go into the last trading day of the quarter still riding high on the double dose of stimulus administered earlier in the month by the U.S. Federal Reserve and now by China. In the latest move, the People’s Bank of China on Sunday said it would tell banks to lower mortgage rates for existing home loans by Oct. 31. It is expected to cut existing mortgage rates by about 50 basis points on average.This follows the slew of monetary, fiscal and liquidity support measures announced last week – China’s biggest stimulus package since the pandemic – that triggered the most explosive stock market rally in years. Japanese markets could be in for a rocky ride on Monday, however, as investors react to the news that former defence minister Shigeru Ishiba will be the country’s new prime minister. Ishiba has been a vocal critic of the Bank of Japan’s past aggressive monetary easing, but said on Sunday that policy must remain accommodative as a broader trend, to underpin a fragile economic recovery. The yen surged nearly 2% on Friday, and Nikkei futures are pointing to a sharp fall at the open on Monday.The upside for markets on Monday may also be capped by investors closing their books for the quarter, and ahead of China’s Golden Week holiday that starts on Tuesday.Monday’s calendar is loaded with major economic indicators, chief among them being China’s official and unofficial purchasing managers index data. Also on deck are retail sales, industrial production and housing starts figures from Japan, GDP from Taiwan, and South Korean retail sales and industrial production. China’s markets could get a reminder of cold economic reality, with the National Bureau of Statistics PMIs expected to show that factory activity contracted for the fifth consecutive month in September. Figures on Friday showed that industrial profits slumped 17.8% in August, the biggest decline this year. Citi’s Chinese economic surprises index is hovering around its lowest level in over a year, in contrast to the U.S. surprises index, which is also in negative territory but still the highest in over a year.It will take time for Beijing’s stimulus to filter through to hard activity data, so investors may have to continue putting up with some sobering numbers in the coming weeks and months.But the wave of optimism washing over markets is undeniable. Shanghai’s blue chip equity index rose nearly 16% last week and the broader Shanghai composite jumped nearly 13%, both the biggest weekly gains since November 2008.Hong Kong’s benchmark Hang Seng index delivered its biggest weekly rise since 1998, and fifth largest in the last half century. Mainland Chinese property stocks, meanwhile, leapt 16%.Here are key developments that could provide more direction to Asian markets on Monday:- China official and unofficial PMIs (September)- Taiwan GDP (Q2, final)- Japan retail sales, industrial production (August) More