Aurelia Butler

TOKYO (Reuters) – The dollar traded near the lowest in more than a year against the euro and sterling on Thursday as a dovish Federal Reserve and fresh signs of weakness in the U.S. job market backed the case for interest rate cuts.The dollar sagged below the closely watched 145 yen mark as U.S. Treasury yields slid, ahead of weekly jobless claims data later in the day and a hotly anticipated speech by Fed Chair Jerome Powell at the central bank’s annual Jackson Hole symposium on Friday.The dollar index, which measures the currency against the euro, sterling, yen and three other major peers, was little changed at 101.14 as of 0015 GMT. It dipped to 100.92 overnight for the first time this year.The euro was flat at $1.1154 after pushing as high as $1.1130 on Wednesday for the first time since July of last year.Sterling was steady at $1.3092 after climbing to $1.31195 in the previous session, also a level last seen in July of 2023.Fed officials last month were strongly leaning toward an interest rate cut at their September policy meeting and several of them would have even been willing to reduce borrowing costs immediately, according to the minutes of the July 30-31 gathering released on Wednesday.Meanwhile, employers added far fewer jobs than originally reported in the year through March, according to a Labor Department report released the same day.Traders now price in a 38% probability of a 50 basis point (bp) cut at the Fed’s Sept. 17-18 meeting – up from 33% a day earlier – and a 62% chance of a 25 bp reduction, according to the CME Group’s (NASDAQ:CME) FedWatch Tool.Powell gives the keynote speech in Jackson Hole on Friday, and markets are hungry for any hints on the likely size of a cut next month, and whether borrowing costs are likely to be lowered at each subsequent policy meeting.”We favour a 25 bp cut because the U.S. economy is still in good shape – 50 bp cuts are usually reserved for situations where the economic outlook is under threat,” said Kristina Clifton, a senior economist and currency strategist at Commonwealth Bank of Australia (OTC:CMWAY).The dollar slipped 0.11% to 145.09 yen after earlier sliding as low as 144.86 yen.Traders are hoping for more clarity on the path for Japanese monetary policy after conflicting signals from Bank of Japan Governor Kazuo Ueda and influential Deputy Governor Shinichi Uchida in recent weeks.Ueda will testify on Friday in a special session of parliament that will scrutinise the BOJ’s decision to unexpectedly raise rates at the end of last month.Australia’s dollar ticked up 0.09% to $0.6750, keeping close to Wednesday’s five-week high of $0.6761. More

China’s property sector, a key driver of the economy, has been in turmoil since 2021, with housing sales plummeting 6.5% in 2023 from the previous year and 35.9% from its 2021 peak, following a regulatory crackdown on high leverage among developers that sparked a liquidity crisis.The slowdown in the property market has led to decreased real-estate project deliveries, which in turn has resulted in lower recognised revenues for developers like Kaisa.At the same time, many developers are struggling with unsold inventory, delayed projects, and declining property values, implying a need to recognise higher impairment losses on property projects.Earlier this month, peers including Agile Group, Redsun Properties and Sunac China all flagged bigger or similar losses for the half year.Kaisa expects a net loss of 8.8 billion yuan to 9.8 billion yuan ($1.23 billion-$1.37 billion) for the half year ended June 30. It had reported a net loss of 6.6 billion yuan for the year-earlier period. ($1 = 7.1344 Chinese yuan) More

HONG KONG/BEIJING (Reuters) – Mary Meng is so busy and stressed working for a Chinese tech company in Shanghai that she can’t imagine having a second child.”The work pressure is such that you don’t even have any time to spend with your child,” said the 37-year-old mother of a primary school-aged boy. “How can I think about taking care of two children? I have no idea.”That resonates with urban residents anywhere. But given the pace of population decline and ageing in China, the impact of the fast-paced, expensive city life on birth rates should be treated with more urgency by Beijing, demographers say.China is rapidly running out of mothers. The number of women of reproductive age, defined by the United Nations as 15-to-49, is set to drop by more than two-thirds to under 100 million by the end of the century.At a twice-a-decade top political gathering last month, China announced plans to build a “birth-friendly society” – pledging to implement measures long-called for by population experts, such as lowering childcare and education costs.But, to the despair of the same experts, Beijing also vowed to encourage more people into urban areas.This policy aims to increase housing demand to prop up the crisis-hit property sector, and revive flagging economic growth through productivity gains and stronger consumption. Urban residents typically produce and buy higher value-added goods and services than their rural counterparts.But the fresh urbanisation push overlooks basic demographic theory. In the cities, people have fewer children due to high housing costs, limited space, expensive education, and because they spend most of their day at work.Couple infertility rates in China have also risen from 2% in the 1980s to 18%, versus around 15% globally – with doctors blaming the rise on factors such as stress related to urban jobs and industrial pollution. Fertility rates in China’s rural areas are slightly higher at 1.54 versus the national average of 1.3 in 2020, according to the latest breakdown from China’s top economic planner, while Shanghai’s fertility rate in 2023 was 0.6 versus 1.1 nationally. Authorities are “foolishly” driving young people “to the most birth-unfriendly big cities, which will lead to a continued decline in fertility and exacerbate the ageing crisis,” said Yi Fuxian, a demographer at the University of Wisconsin-Madison. “The suppression of fertility rates by population density is a biological law.” This phenomenon has been most evident in east Asia. Japan, South Korea and Taiwan urbanised and industrialised at a faster pace than most other economies post-World War Two. They also have the lowest fertility rates globally.While China’s birth rates are also very low after decades of a strict one-child policy, not all is lost. At 65%, its urbanisation rate is lower than the 80-90% rates in Japan or South Korea – and this could give it room for manoeuvre, demographers say. Improving rural living standards by providing better public services or liberalising land rights would have a more sustainable impact on economic growth than continuing urbanisation as they could improve birth rates, they say.”The population size is always a multiplier” in the economy, said Samir KC, professor at the Asian Demographic Research Institute at Shanghai University.’JUST SURVIVAL’To have a stable population, countries need fertility rates of 2.1. That means that for every woman like Meng, who only raises one child, another would need to have three.Poppy Yu, 21, who works at film production company in Beijing six or seven days a week, wants none.”I don’t have the money or energy,” Yu said.China’s “birth-friendly society” vision entails bringing down costs of parenting and education, lengthening parental leave, upgrading maternity and paediatric care and boosting child subsidies and tax deductions.Many countries offer such incentives. But those with successful birth policies – such as France or Sweden – stand out through greater gender equality, stronger labour rights and robust social welfare.Reducing childcare costs does not work on its own “and instead promotes a certain set of family values that demand that women take domestic responsibilities,” said Yun Zhou, demographer at the University of Michigan.Meng believes no policy would work until Chinese people start hoping again for a better life, financially.”Now everyone thinks there is no prospect at all,” she said. “No matter how hard you work, it is just survival.”($1 = 7.1469 Chinese yuan renminbi) More

(Reuters) -Zoom Video Communications raised its annual revenue forecast on Wednesday, driven by strong demand for its AI-powered collaboration tools deployed in hybrid work models, and said Kelly Steckelberg would step down as its CFO.Shares of the video-conferencing provider were trading 3% higher after the bell.Zoom (NASDAQ:ZM) has been doubling down on efforts to integrate artificial intelligence into its products and expand its range of services and leverage the growing trend of hybrid work.Zoom Contact Center, the company’s AI-powered, omnichannel platform that provides businesses personalized responses for their customers, secured several high-profile clients, including its largest single-order deal to date in the second quarter.Zoom said large accounts, with customers contributing more than $100,000 in trailing 12-month revenue, increased 7.1%. Online average monthly churn also reached its lowest ever rate.This suggests that Zoom is “doing more than simply holding its ground. They’re reinforcing their foundation and making sure they’re prepared for the long haul,” said Jeremy Goldman, senior director of briefings at Emarketer.”The company needs to continue innovating and expanding its product offerings … Zoom’s challenge will be to sustain this momentum by proving they’re more than just a one-hit pandemic wonder and by continuing to deliver the kind of growth that can keep investors excited about its long-term prospects,” Goldman said.Zoom said it has begun a search for Steckelberg’s successor. Her last day of work with the company will be the day after it announces earnings for the quarter ending Oct. 31.Steckelberg has been Zoom’s CFO since 2017 and led the company through its successful IPO in 2019.The company expects fiscal 2025 revenue to be between $4.63 billion and $4.64 billion, compared with the $4.61 billion and $4.62 billion forecast earlier.Its second-quarter revenue of $1.16 billion beat LSEG estimates of $1.15 billion.The company earned $1.39 per share on an adjusted basis, also topping analysts’ estimate of $1.21. More

The company said revenue from the AI and speech technology services that its Nuance unit offers would now come under its productivity business – home to the Office suite of apps – instead of the intelligent cloud division. The rejig will allow Microsoft (NASDAQ:MSFT) to align the reporting structure with how its businesses are managed, it said. As a result, the company restated revenue growth at its divisions for the last fiscal year and revised its forecast for July-September quarter. Big tech companies, including Microsoft and Google (NASDAQ:GOOGL), are facing investor pressure to show that the billions of dollars they have been investing in AI infrastructure would pay off. Microsoft is one of the few big companies that break out AI contributions in their quarterly earnings, as most firms are yet to see a big boost from AI investments.The Windows maker reported last month AI provided a bigger boost to Azure in the June quarter, even as overall business slowed. Microsoft expects Azure’s growth to accelerate in the second half of fiscal 2025.The company expects intelligent cloud revenue to be between $23.80 billion and $24.10 billion in the first quarter, compared with its prior expectations of $28.6 billion and $28.9 billion.Quarterly revenue at its personal computing segment is expected between $12.25 billion and $12.65 billion, compared with its earlier view of $14.9 billion and $15.3 billion, after the company moved some units from the business to the productivity division.Productivity and business processes revenue is expected to be between $27.75 billion and $28.05 billion, compared with $20.3 billion and $20.6 billion previously. More

This article is an on-site version of our FirstFT newsletter. Subscribers can sign up to our Asia, Europe/Africa or Americas edition to get the newsletter delivered every weekday morning. Explore all of our newsletters hereGood morning. Today we’re covering: Beijing’s retaliation against Brussels’ EV tariffs Vietnam’s incentives for foreign investorsMushroom’s sculptural, surreal and slightly creepy beautyBut we start with a scoop: PwC China has told clients it expects Chinese authorities to hit it with a six-month business ban that will start as early as September, as part of punishment over its audit of collapsed property developer Evergrande.The action against PwC comes after China’s securities regulator in March said Evergrande had inflated its mainland revenues by almost $80bn in the two years before the developer defaulted on its debts in 2021, despite PwC’s China unit giving the accounts a clean bill of health.The business ban, which could come with a large fine, would be the toughest ever action by Chinese regulators against a Big Four firm as Beijing steps up scrutiny over the role played by auditors in financial scandals.Here’s how the ban and fine would disrupt operations at the firm.Thanks for reading FirstFT. Do you have any questions about PwC China or Beijing’s crisis-hit property sector? Email us at [email protected] or hit “reply” and remember to include your name and where you’re writing from. We’ll answer as many as possible in a special weekend edition of the newsletter.Here’s what else I’m keeping tabs on today:Interest rate announcements: South Korea and Turkey are expected to hold interest rates steady when they meet today. Jackson Hole Economic Symposium: US policymakers will gather for their annual meeting in Wyoming amid growing concerns about the health of the world’s largest economy. Results: Corporate earnings are expected from Australia’s Sonic Healthcare, Taiwan’s Fubon Financial Holding Co., and China’s Ping An Insurance Group, among others. Five more top stories1. China has launched an anti-dumping investigation into imported European dairy products in the latest escalation of its trade dispute with the EU. The move is Beijing’s strongest retaliation yet against Brussels’ tariffs on Chinese electric vehicle imports.2. Five bodies have been found by divers searching the wreckage of Mike Lynch’s superyacht Bayesian, which sank off the coast of Sicily. Four bodies were pulled from the sunken yacht on Wednesday, a fifth body was found but not yet removed while a sixth person remains missing. After two days of struggling to find a way through debris, divers gained access to Bayesian’s cabins with an underwater drone. 3. Sephora is cutting back its workforce in China as one of LVMH’s biggest revenue generators struggles to gain traction in the tough mainland beauty market. The cuts represent less than 3 per cent of Sephora’s China-based workforce, but they point to pressure in the country’s highly competitive and price-sensitive beauty market.4. Walmart sold its entire stake in Chinese ecommerce giant JD.com for $3.6bn, as the world’s largest retailer focuses on expanding its own brands in the country. The US retailer disclosed in a filing to the US Securities and Exchange Commission that it had completely disposed of its nearly 10 per cent holding in the ecommerce company. Ryan McMorrow has the full story here.5. Federal Reserve officials last month signalled their readiness to start cutting interest rates at their September meeting in the face of slowing job growth and easing inflation. Read more from the minutes of their July meeting.The Big Read© FT montage/Grammar Productions/Alexandre BertrandChina has a large footprint in Africa thanks to its $1tn Belt and Road Initiative, which offers to finance and build infrastructure in mostly poorer countries and gives it an advantage in the race for control of critical minerals. But a $10bn US-backed railway illustrates Washington’s desire to compete with Beijing in Africa. We’re also reading . . . Chart of the dayWestern investors have piled back into gold as they position for US interest rate cuts this year, helping to drive prices to record highs this week. Prices reached $2,531 per troy ounce in trading yesterday, taking gold’s gains for the year to more than a fifth, boosted by purchases by institutional investors and bullish hedge fund bets.Take a break from the news Have you ever thought out growing mushrooms for their aesthetic appeal? These pink oyster mushrooms might make you consider it. Additional contributions from Tee Zhuo and Melody Abike Adebisi More

(Reuters) – A look at the day ahead in Asian markets.The Bank of Korea’s interest rate decision and guidance take center stage in Asia on Thursday, as investors digest revised U.S. jobs data and Fed minutes on Wednesday that fanned hopes that the looming U.S. rate-cutting cycle will be a bold one.The calendar in Asia also includes purchasing managers index data from Japan, Australia and India, inflation from Malaysia and some company earnings from China and Hong Kong, namely Baidu (NASDAQ:BIDU)’s second quarter results. China’s largest search engine provider is expected to see a decline in revenue for the first time since the fourth quarter of 2022 as ad sales drop. Investors will look for comments on ad market trends and updates on its key AI offering Ernie Bot.The broader trading and investment picture, however, will be dominated by the latest shift in the U.S. rate outlook, as attention turns toward Fed Chair Jerome Powell’s Jackson Hole speech on Friday. Lower Treasury yields and a falling dollar should help ease financial conditions for emerging markets and encourage risk-taking in Asia on Thursday, providing the slump in yields isn’t reflecting heightened fears of recession.That doesn’t appear to be the case – Wall Street rose on Wednesday and the S&P 500 is now less than 1% from its all-time peak – although the fall in Treasury yields will bear close attention. The dollar hit another low for the year against a basket of G10 currencies on Wednesday and the MSCI index of emerging market currencies hugged its record high. China’s yuan was fixed at a one-month high on Wednesday, while the Japanese yen touched a two-week high through 145.00 per dollar.The dollar is suffering across the board from falling U.S. yields.After the Bank of Thailand, Bank Indonesia and People’s Bank of China all kept their benchmark lending rates unchanged this week, the spotlight falls on the Bank of Korea on Thursday.On Wednesday the Thai central bank struck a neutral tone in its statement, while Bank Indonesia Governor Perry Warjiyo said supporting the rupiah helps bring down the cost of imports, especially food prices. The BOK is also expected to stand pat on rates and leave its benchmark rate at 3.50% where it has been since January last year. Analysts expect the BOK to wait for the Fed to begin cutting rates before easing policy in the fourth quarter.With inflation rising 2.6% in July from an 11-month low of 2.4% in June, moving further away from the central bank’s 2% target, the BOK may need to see prices stabilizing before it starts to ease policy.    Here are key developments that could provide more direction to Asian markets on Thursday:- South Korea interest rate decision- Japan, Australia, India manufacturing & services PMIs (August)- Malaysia inflation (July) More

Investing.com – The “vast majority” of Federal Reserve policymakers signaled that it may be appropriate to begin cutting rates next month should the recent progress on inflation continue. 
“The vast majority observed that, if the data continued to come in about as expected, it would likely be appropriate to ease policy at the next meeting.,” the of Fed’s July meeting showed on Wednesday.
About 63% of traders expect the Fed to deliver a rate cut next month, according to Investing.com’s  
The central bank’s monetary policy has been in data dependent mode since it delivered its tenth rate hike in May last year. 
The decision to keep rates in the current rage for more than year, however, has seen monetary policy move into more restrictive policy as the pace of inflation continued to slow. 
A “few participants” backed this view, according to minutes, and noted that “ongoing disinflation, with no change in the nominal target range for the policy rate, by itself results in a tightening in monetary policy.”
Deflation set to continue 
Recent economic data, however, including a string of more convincing inflation data that point to ongoing deflation has given members more confidence that inflation is on a path toward the 2% goal. 
The most recent core consumption personal expenditure, or CPE, the central bank’s preferred inflation gauge, came it at 2.6% in the 12 months through June, unchanged from the prior month, though well below the peak of 5.4% seen in February 2022. 
“Almost all participants observed that the factors that had contributed to recent disinflation would likely continue to put downward pressure on inflation in coming months,” the Fed minutes showed.
The data-dependent approach will likely remain a priority for the Fed even as it moves toward a rate cuts. Most fed members “emphasized” the need to outline that Fed policy decisions would be “conditional evolution of the economy rather than being on a preset path.”
Fed now keeping a closer eye on labor market as payroll gains possibly ‘overstated’
The progress on inflation has shifted the Fed’s focus, however, to the labor market, where a mixed string of recent data have sparked investor jitters. 
“Participants agreed that these and other indicators of labor market conditions merited close monitoring,” according to the minutes. 
The July nonfarm payrolls increased by only 114,000, missing economist expectations for 179,000, while the unemployment unexpectedly tick up to 4.3% from 4.1%. 
The uptick in unemployment rate sparked worries about the state of the U.S. economy, leading to a major selloff in risk assets and calls for aggressive Federal Reserve rate cuts at upcoming meetings. Since then, however, a string of data including weekly jobless claims have helped to calm investor worries, tempering bets on a jumbo-sized Fed cuts. 
Fed members downplayed the the weaker payrolls data, the minutes showed, as  “many participants noted that reported payroll gains might be overstated.”
“Several” members, the minutes added, believe that the breakeven rate employment growth, or the number of payrolls gains needed to keep the unemployment rate constant in a flat labor force participation rate may be lower.  
On Wednesday data supported this notion that payrolls gains may have been overstated after Bureau of Labor Statistics significantly revised down the number of jobs created in the 12 months through March. 
The Bureau of Labor Statistics revised down March 2024’s employment gains by 818,000 positions earlier in the session, as part of the agency’s annual benchmark review of payroll data.
While the minutes were “bit stale” given economic and market developments since the decision, Evercore ISI said Wednesday that they were “a bit less hawkish-stale than we feared they might be, and confirm the debate was already swinging firmly in favor of cuts.” More