Economy

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LONDON/SINGAPORE (Reuters) -Japanese stocks hit a 34-year high on Wednesday while global equities, the dollar and bonds held steady ahead of U.S. inflation data on Thursday.Bitcoin stabilised after spiking when an unauthorised post from the U.S. Securities and Exchange Commission’s X account said it had approved bitcoin exchange-traded funds.Japan’s Nikkei – which had its best year in a decade in 2023 – climbed 2% to break above 34,000 for the first time since 1990. Exporters led the charge, helped by a softening yen after data showed Japanese real wages shrank for a 20th month in November.Futures for the U.S. S&P 500 were flat after the index dipped 0.15% on Tuesday, as investors also waited for big U.S. banks to kick off earnings season on Friday. Nasdaq 100 futures were 0.16% higher.”Japan is really interesting,” said Duncan MacInnes, an investment director at British firm Ruffer. “The problems have been corporate governance, which is definitely improving, (and) it has tended to be a very cyclical market, so it gets hit especially hard when the market turns down.”The pan-European Stoxx 600 index was last down 0.2%, while Britain’s FTSE 100 was 0.32% lower and Germany’s DAX index was unchanged.U.S. and European markets surged at the end of 2023 as inflation cooled quicker than expected and central banks struck a softer tone, encouraging investors to bet on big rate cuts this year.The optimism about falling borrowing costs has waned slightly in January and the S&P 500 is down around 0.3% so far after rallying 24% last year.The index which tracks the U.S. dollar was very slightly lower. The U.S. currency has risen around 2% since hitting a five-month low in late December.Bitcoin was last down 1.2% at $45,558 after spiking as high as $47,897 on the false reports of ETF approvals. The SEC said it had not yet approved a spot bitcoin ETF and that someone had accessed its X social media account without authorisation.INFLATION IN FOCUSThe crucial event for markets this week is U.S. consumer price index inflation data. Economists polled by Reuters see year-on-year inflation at 3.2% in December, up from 3.1% in December. But they think core inflation likely fell to 3.8%, its lowest since mid-2021, from 4%.Interest rate futures are pricing around 140 basis points of U.S. rate cuts this year. The probability of a move in March has been pared somewhat to a still-high 68%.Benchmark 10-year Treasury yields were last down 2 basis points in European trading on Wednesday at 3.999%. They move inversely to prices and have risen this year after plunging in November and December.”Market pricing… has gotten a little bit ahead of itself,” Jeff Klingelhofer, co-head of investments and managing director at Thornburg Investment Management, said on Wednesday.”If you look at history – five (25 bp) cuts is very consistent with a recession, but markets aren’t pricing in a recession.”Geopolitical tensions were also on the radar as disruptions in the Red Sea and a production outage in Libya raised oil prices, and an election looms in Taiwan.Brent crude oil futures rose 1.9% on Tuesday and were up 0.18% to $77.73 a barrel early on Wednesday. [O/R]The euro was up 0.14% at $1.095, while the dollar was 0.4% higher against the yen. More

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BlackRock (NYSE:BLK), VanEck, Ark Investments/21Shares and Bitwise, among others, said in filings with the U.S. Securities and Exchange Commission (SEC) that they expect to significantly undercut the average market rate for ETFs.Their rates were well below the average rate analysts had anticipated as well as the range that some issuers had indicated. Analysts and academics noted that since all the ETFs would likely deliver the same return, their fees will be an important tool in attracting inflows of new assets.A spot crypto ETF would track the market price of the underlying crypto asset, giving investors exposure to the token without having to buy the currency. The SEC is expected to announce its decision on spot bitcoin ETF applications as early as this week. It had previously denied all such applications, citing potential for fraud. Here are the fees disclosed by the companies: Company Trust/ETF Fees Notes name disclosed BlackRock 0.25% Co says fees will iShares be 0.12% for the Bitcoin first $5 bln in Trust assets for 12 months Grayscale 1.5% Investments Grayscale Bitcoin Trust Fidelity 0.39% Wise Origin Bitcoin Trust Ark Invest and 0.21% Will waive all fees 21Shares ARK for six months or 21Shares first $1 bln in Bitcoin assets ETF VanEck 0.25% VanEck Bitcoin Trust WisdomTree 0.50% WisdomTre e Bitcoin Trust Valkyrie Digital 0.80% Co says it may Assets Valkyrie temporarily waive Bitcoin all or a portion of Fund the fee “at its discretion for stated periods of time” but that it doesn’t intend to do that “presently” Invesco and 0.59% Will waive on first Galaxy Digital Invesco $5 bln in assets Galaxy for six months Bitcoin ETF Franklin 0.29% Templeton Franklin Templeton Digital Holdings Trust Bitwise Asset 0.20% Co says it will Management Bitwise waive fees on the Bitcoin first $1 bln in ETF assets Hashdex 0.94%* Fees on current Hashdex product; Co has Bitcoin filed to convert Futures bitcoin futures ETF ETF into a spot bitcoin ETF Source: Regulatory filings with the U.S. SEC More

The attacks, targeting a route that accounts for about 15% of the world’s shipping traffic, have pushed several shipping companies to reroute their vessels.Below are companies’ responses to the disturbances (in alphabetical order):AB FOODSThe Primark-owner is monitoring the situation, but its supply chains are capable of some adjustment, a spokesperson said, adding that so far it saw no need to be concerned.BP (NYSE:BP) The oil major on Dec. 18 said it had temporarily paused all transits through the Red Sea.DANONEThe French food group said in December that most of its shipments had been diverted, increasing transit times. Should the situation last beyond 2-3 months, Danone will activate mitigation plans, including using alternate routes via sea or road wherever possible, a spokesperson said. DHL The German logistic company, which does not operate ships but uses them to transport containers, on Jan. 8 advised its customers to take a close look at how they manage inventories.ELECTROLUXThe Swedish home appliance maker has set up a task force to find alternative routes or identify priority deliveries to try to avoid disruptions. It sees a limited impact on deliveries for now.EQUINORThe Norwegian oil and gas firm on Dec. 18 said it had rerouted vessels that had been heading towards the Red Sea.ESSITYThe maker of brands such as Libresse and TENA said it was staying in contact with impacted suppliers to ensure continued flow of goods, but added the impact on its business was limited due to the low number of supplies moving via the Suez Canal.EUROPRISThe Norwegian retailer, which imports 35-40% of goods sold from Asia via sea freight, on Jan. 5 said it had not considered other shipping options as this would increase costs. It said longer shipping times were within its safety margin and no significant challenges were expected.GEELY Geely, China’s second-largest automaker by sales, said on Dec. 22 its EV sales would likely be impacted by a delay in deliveries, as most shipping firms it uses to export EVs to Europe sail around the Cape of Good Hope.IKEAThe Swedish ready-to-assemble furniture retailer on Dec. 19 said the situation would result in delays and may cause availability constraints for certain products. “We are evaluating other supply options to secure the availability of our products,” it said.KONEThe Finnish elevator maker said the situation may in some cases delay shipments by 2-3 weeks, but most of its customer deliveries should stay on schedule. Kone said it had prepared for the disruptions by seeking alternative delivery methods and routes.LIDLLidl unit Tailwind Shipping Lines, which transports non-food goods for the discount supermarket chain and goods for third-party customers, said it was sailing around Africa for now.MOSAIC The U.S. fertilizer company said on Dec. 18 it had rerouted a couple of U.S.-bound shipments around Africa.NEXT The British clothing retailer’s CEO on Jan. 4 said sales growth would likely be moderated if disruptions continued through 2024. He said Next, which sources the majority of its products from Asia, could mitigate this through earlier ordering or using some air freight.SAINSBURY’SBritain’s second largest grocer said on Jan. 10 it was in regular contact with the UK government about the Red Sea disruptions.”We’re making sure that we plan the sequencing of product from Asia Pacific so that we get products in the right order,” CEO Simon Roberts said, noting that long term contracts with shippers “mitigate any cost impact as far as possible”.TSMC,The world’s top contract chipmaker said on Dec. 19 it did not anticipate a significant impact on its operations.VOLKSWAGEN The German carmaker on Dec. 20 said rerouting of shipments would result in around two weeks longer journeys, but it had not seen any problems so far.VOLVO CARThe Swedish automaker said it was affected by the disruptions and was investigating their potential impact, but saw no impact on its ability to reach global wholesale and production targets.WHIRLPOOLThe appliances maker said in December it was closely monitoring logistics issues in the region to help mitigate risks as they arise, adding there was no impact to its business so far.YARAThe Norwegian fertilizer maker told Reuters it was only mildly impacted for now, though the Red Sea is an important supply route for the company. More

The world’s largest contract chipmaker, whose customers include Apple (NASDAQ:AAPL) and Nvidia (NASDAQ:NVDA), has benefited from a boom in artificial intelligence applications that has helped it weather the tapering off of pandemic-led demand. Revenue in the final three months of last year came in at T$625.5 billion ($20.10 billion), according to Reuters calculations, compared with $19.93 billion in the year-ago period.That beat Taiwan Semiconductor Manufacturing Co’s (TSMC) previous prediction for fourth-quarter revenue being in a range of between $18.8-19.6 billion, and also beat an LSEG SmartEstimate of T$617.1 billion drawn from 21 analysts.SmartEstimates give greater weighting to forecasts from analysts who are more consistently accurate.For December alone, TSMC reported that revenue fell 8.4% year-on-year to T$176.3 billion, which was down 14.4% compared with the previous month.TSMC, Asia’s most valuable publicly listed company with a market capitalisation of $491 billion, did not provide any details or forward guidance in its brief revenue statement.It is due to report fourth-quarter earnings on Jan. 18, where it will also update its outlook for the current quarter and the year.TSMC’s Taipei-listed shares closed down 0.3% on Wednesday ahead of the release of the sales data. The broader market ended down 0.4%.The shares surged 32% in 2023, compared with a 27% gain for the broader market. ($1 = 31.1220 Taiwan dollars) More

PARIS (Reuters) – French President Emmanuel Macron and his new Prime Minister Gabriel Attal worked on Wednesday to pull together a cabinet, a day after Macron appointed the 34-year-old media-savvy loyalist to breathe new life into his second term.Attal has promised to be bold and fast to help the middle class weather the rising cost of living, signalling a desire by Macron to move beyond divisive reforms and improve his centrist party’s chances in European Parliament elections in June.Little has leaked on the formation of the new cabinet, though Gerald Darmanin told French media he was confident he would stay on as interior minister. He is in charge, among other issues, of security for this summer’s Paris Olympics.Attal and Darmanin were scheduled to visit a town in the Paris region later on Wednesday, French media said.Finance Minister Bruno Le Maire, who has been in his job for seven years – rare stability in that role by French standards – also seemed keen to stay on and unveiled his plans at the ministry for the whole year in a speech on Monday.A source in regular contact with both Le Maire and Macron said he expected the former to remain in the post. “For the president, it’s a guarantee there will be no hiccups.”PRESIDENTIAL RACEAttal’s office told Reuters Emmanuel Moulin, a close ally of Macron’s powerful chief of staff Alexis Kohler, would become the prime minister’s chief of staff, in a sign the president may keep a close eye on his premier, as he has for predecessors.The reshuffle is likely to intensify the race in Macron’s camp to succeed him in the next presidential election in 2027, with former prime minister Edouard Philippe, Darmanin and Le Maire all seen as potential candidates – alongside fast-rising Attal.French commentators said Attal’s ambitious and more senior cabinet colleagues could give him a hard time. But the surprise choice suggests the president was keen to promote a “Macron generation” of thirtysomethings, a palace official said. It was unclear when the new government team would be appointed, with Senate president Gerard Larcher telling TF1 TV that Attal told him it could be done around the end of the week.Widespread public discontent over surging living costs and last year’s contested pension reform have seriously hit Macron’s ratings, and his chances in the EU ballot, where his party trails badly behind Marine Le Pen’s far-right.Attal has polled as one of France’s most popular politicians in recent months. A Macron loyalist, he became a household name as government spokesperson during the COVID pandemic and earned a reputation as a smooth communicator. More

BERLIN (Reuters) -The outlook for Germany’s construction sector is grim for 2024, according to two prominent research institutes on Wednesday, a further bad sign for the nation’s struggling property industry as it suffers its worst crisis in decades.German construction spending is set to fall in 2024 for the first time since the financial crisis, according to a study by the DIW economic institute.A separate survey by the Ifo economic institute showed sentiment in residential construction at an all-time low.For years, the property sector in Germany and elsewhere in Europe boomed as interest rates were low and demand was strong. But a rapid rise in rates and costs put an end to the upsurge, pushing some developers into insolvency as bank financing dried up and deals froze.”The slump in the construction industry is taking longer than expected,” said Laura Pagenhardt, an author of the DIW study.Construction volume will shrink by 3.5% in 2024 to 546 billion euros ($597.38 billion) before recovering slightly with a 0.5% increase in 2025, DIW said. The last time that German construction spending declined was in 2009.The Ifo survey showed sentiment in residential construction dropped to -56.8 points in December, worse than -54.4 points in November. It was the lowest level since Ifo began tracking the index in 1991.”The prospects for 2024 are bleak,” said Klaus Wohlrabe, head of surveys at Ifo. Germany has been falling short of its efforts to build 400,000 apartments a year, and the industry has been calling on German Chancellor Olaf Scholz to stem the property crisis. Tim-Oliver Mueller, head of the German Construction Industry Federation, kept up the pressure on Wednesday.”Berlin, we have a problem. We are not talking about abstract things, but about affordable housing, which is urgently needed,” he said.($1 = 0.9140 euros)(writing by Tom Sims and Miranda Murray; editing by Rachel More, Michael Perry and Christina Fincher) More