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The world’s largest memory chip, smartphone and TV maker estimated an operating profit of 9.1 trillion won ($6.78 billion) for the three months ended Sept. 30, versus a 10.3 trillion won LSEG SmartEstimate. That would compare with 2.43 trillion won in the same period a year earlier and 10.44 trillion won in the preceding quarter.Samsung’s share price, which has fallen more than 20% so far this year, fell 1.2% after the earnings guidance. The company has been the world’s biggest memory chipmaker for three decades but it is battling growing competition in both conventional and advanced chips.High-margin chips used in AI servers are driving a recovery in the chip market after a post-pandemic downturn last year. Still, Samsung has lagged behind SK Hynix in supplying high-bandwidth memory (HBM) chips to AI leader Nvidia (NASDAQ:NVDA).”We have caused concerns about our technical competitiveness, with some talking about the crisis facing Samsung,” Young Hyun Jun, Vice Chairman, Device Solutions Division, Samsung Electronics (KS:005930), said. “These are testing times,” he said, pledging to turn the challenge into an opportunity and focus on enhancing long-term technological competitiveness. In a further challenge, Samsung said in a statement that sales of its high-end HBM3E chips to an unidentified major customer have been delayed. It did not elaborate on the issue.Earnings declined in the company’s memory chip business as Chinese chip rivals increased supplies of “legacy” products” and some mobile customers adjusted inventories, offsetting solid demand for high bandwidth memory (HBM) and other chips used in servers, Samsung added. Demand remains lacklustre for commodity chips used in PCs and smartphones upon which Samsung relies more than rivals, analysts said. In May, Samsung abruptly replaced the chief of its semiconductor division, handing the reins to Jun in a bid to overcome a “chip crisis”. ($1 = 1,342.3700 won) More
BENGALURU (Reuters) – The Bank of Korea will cut its key interest rate by 25 basis points to 3.25% on Friday, according to a majority of economists polled by Reuters who expect that to be the only reduction this year as it attempts to balance growth and financial stability.Inflation eased rapidly to 1.6% in September from 2% in August, the lowest since early 2021 and below the Bank of Korea’s (BOK) medium-term target of 2%. Since its last meeting in August, the central bank has shifted its focus to economic growth, which unexpectedly contracted last quarter. However, the BOK is likely to proceed cautiously when cutting rates as growth in household debt and a heated property market pose risks to financial stability.All but three of 37 economists polled Oct. 1-7 forecast the central bank would cut its base rate by 25 basis points on Oct. 11, bringing rates to 3.25%. The rest said no change.If realised, the BOK will join Asian peers Bank Indonesia and the Philippine central bank which began cutting rates before the U.S. Federal Reserve started its own easing campaign with a 50 basis point cut last month. Suktae Oh, chief Korea economist at Societe Generale (OTC:SCGLY), said the Fed’s large rate cut and South Korea’s growth and inflation data supported the case for a BOK rate cut this month, but added that further cuts in the near term were unlikely.”Persistent concerns around the housing market will make it difficult for policymakers to explicitly propose an additional rate cut in the near future, in other words, this would reduce the likelihood of a back-to-back rate cut in November,” he said.Among economists who provided a forecast for year-end around 84%, or 27 of 32, said 3.25%. Five predicted one more 25 basis point rate cut. This outlook was largely unchanged from an August survey and in line with market expectations. Poll data showed the BOK will cut rates more slowly than some of its regional peers, with a total of 50 basis points of cuts next year, taking rates to 2.75% by end-2025.”We are expecting the BOK to end the year at 3.25%, followed by two more 25bp cuts in 2025 to 2.75%…and is likely to take a breather there,” said Kelvin Lam, senior economist at Pantheon Macroeconomics.”However, the BOK may speed up or slow down the pace of cuts depending on external factors, since they do not want the Korean won to fluctuate or depreciate too much.”Following the U.S. Fed’s September rate cut and expectations for two more this quarter, the Korean won has gained around 4% after touching its weakest level so far this year in mid-April.Korea’s economic growth will improve this year, averaging 2.4% from 1.4% last year, before slowing to 2.1% in 2025, poll medians showed.(Other stories from the October Reuters global economic poll) More
LONDON (Reuters) – British shoppers increased their spending moderately in annual terms last month despite industry concerns about tax rises in finance minister Rachel Reeves’ upcoming budget and a looming rise in household energy bills, a survey showed on Tuesday. The British Retail Consortium said spending in shops increased by 2.0% in annual terms in September, the strongest uptick since March when it increased by 3.5% although less of a rise than the 2.7% recorded in September 2023.Reeves took office in July following the Labour government’s landslide election win and is set to deliver her first annual budget on Oct. 30. She has warned some taxes will increase, although she has ruled out increases to the rates of income tax and National Insurance social security payments. “With energy prices having again risen, all eyes now turn to the budget and what impact that will have on household discretionary spending in the final quarter of the year,” said Linda Ellett, UK head of consumer, retail and leisure at accountants KPMG, who sponsor the data.Regulated energy tariffs rose by 10% on Oct. 1, increasing the typical annual bill to 1,717 pounds ($2,244) A separate survey from Barclays, also published on Tuesday, showed spending on its credit and debit cards rose by 1.2% year-on-year in September, the biggest increase since April after a rise of 1.0% in August.However in real terms this represented a fall as British consumer price inflation held at 2.2% in September, slightly above the Bank’s 2% target.Official retail sales data for August showed a 2.2% rise in retail sales in cash terms, and a bigger-than-expected 1.0% volume increase.Barclays said spending on discretionary items last month rose by the most since June, with entertainment jumping by 14.4% – the biggest increase since July 2023 when U.S. singer-songwriter Taylor Swift opened sales for the British leg of her concert tour. Barclays attributed last month’s jump in entertainment spending to the opening of ticket sales for concerts by British rock band Oasis, who are reuniting after a 15-year split.In contrast, spending on essential items declined by the greatest amount since April 2020, during the COVID-19 pandemic. Within that, spending on groceries fell for the first time since June. More
MEXICO CITY (Reuters) – President Claudia Sheinbaum will present her strategy for confronting Mexico’s dire security situation on Tuesday amid a backdrop of high-profile violence including the brutal murder of a local mayor on Sunday that shocked the country.Sheinbaum, inaugurated as Mexico’s first woman president less than a week ago, is expected to unveil a policy that prioritizes reestablishing law and order in the most deadly areas plagued by violence linked to drug cartels and organized crime. Her highly anticipated security plan comes as Mexico reels from the murder of Alejandro Arcos, the mayor of Chilpancingo, the capital of Mexico’s violence-plagued state of Guerrero, who was killed just six days after taking office. Photos circulated on messaging app WhatsApp and in Mexican media outlets on Sunday depicting a severed head on top of a pick-up truck, appearing to be that of Arcos. The first phase of Sheinbaum’s plan aims to reduce homicides and other serious crime in 10 areas that make up at least a quarter of homicides linked to organized crime, including the dangerous cities of Colima, Tijuana, Acapulco and Celaya, according to a member of Sheinbaum’s security cabinet who declined to be identified due to not being authorized to speak publicly on the matter. The southern state of Chiapas, a migration corridor and site of infighting between powerful cartels, will also be targeted for permanent security operations and welfare programs aimed at promoting peace, the official said. It could be a strategic opportunity for Sheinbaum to differentiate herself from her predecessor and mentor, former President Andres Manuel Lopez Obrador, who was criticized for his “hugs not bullets” strategy, which opponents say allowed criminal groups to expand and strengthen.The murder of Arcos was under investigation to find out the motive and make the “corresponding arrests,” Sheinbaum said in her regular morning news conference on Monday. She added her security plan would include better coordination with state governors and attorneys general offices. Sending the National Guard to the area was a possibility, she said. Mexico is exceptionally deadly for political candidates and officials, who are routinely targeted by organized crime. The country’s most recent elections, in which Sheinbaum won the presidency, were the bloodiest in the country’s modern history with 37 candidates assassinated leading up to the June 2 vote, several in brazen acts of public violence. These killings, and most other homicides in Mexico, rarely result in arrests and successful prosecutions. “There’s an issue with impunity in Mexico, and until that goes away, until those institutions are stronger, you’re just not going to be able to guarantee safety of candidates,” said Mike Ballard, director of intelligence at international security firm Global Guardian. Mexico’s new government will need to actively arrest and prosecute more top cartel officials if it hopes to truly stem the power of these groups, Ballard said. He pointed to the U.S. mafia and how its grip on society gradually dwindled after a series of arrests, convictions and lengthy prison sentences in the 1980s and 1990s. Mexico, however, has thus far struggled to implement a sweeping crackdown, as a lack of resources combined with corruption in the police and military derail attempts. Much of Mexican law enforcement is done at the state level, with homicide considered a state crime, and Sheinbaum plans to work with states to improve and restructure their police forces and public prosecutors’ offices, the source said. The new government’s strategy will require a major budget allocation, according to public security consultant David Saucedo, who estimated security spending would need to be at least doubled from the current 6% of gross domestic product (GDP). Sheinbaum will also need to tread lightly on the rollout of her plan, as past high-profile arrests of drug lords have led to an aftermath of extreme violence, complicating the Mexican government’s ability to launch operations without provoking a deadly backlash.For example, legendary Sinaloa trafficker and cartel leader Ismael “El Mayo” Zambada was arrested in the United States in July, triggering an ongoing conflict in the capital Culiacan between the two most powerful factions of the Sinaloa Cartel with regular violence that has killed more than 150 people. The chaos has prompted citizen protests demanding public officials do more to guarantee their safety. “Here we see that organized crime is above the government. It is controlling the government and not the government controlling crime,” said Froylan Gallegos Jimenez as he protested in Culiacan. More
NEW YORK (Reuters) -Federal Reserve Bank of St. Louis President Alberto Musalem said on Monday he supports more interest rate cuts as the economy moves forward on a healthy path, while noting that it is appropriate for the central bank to be cautious and not overdo easing monetary policy.”Further gradual reductions in the policy rate will likely be appropriate over time,” the official said at a meeting of the Money Marketeers of New York University, noting that “patience” has served the Fed well. “I will not prejudge the size or timing of future adjustments to policy.”Musalem, who took office earlier this year and who does not hold a vote on the rate-setting Federal Open Market Committee, spoke as the interest rate outlook has once again been upended. On Friday the government reported data showing unexpected and very vigorous strength in the job market, which called into question widespread concerns that the labor sector was weakening. Last month, the Fed cut its interest rate target by half a percentage point, to between 4.75% and 5%, because inflation pressures have waned considerably amid ample signs the job market was growing softer.The Fed had also penciled in half a percentage point’s worth of cuts into the close of the year. But the strength of hiring in September has now called into question how aggressive the Fed will need to be with rate cuts.Musalem noted he supported the Fed’s latest rate decision and said his outlook for monetary policy is “slightly above the median” projected by his colleagues. Fed officials see the federal funds rate around 4.4% by year end and at 3.4% by the end of 2025, based on forecasts released at the September policy meeting.Musalem argued for a cautious pace of rate cuts, even as he noted that he expects inflation to move back to 2% on a 12-month basis over the next few quarters and sees the current state of the job market as consistent with a strong economy. “Given where the economy is today, I view the costs of easing too much too soon as greater than the costs of easing too little too late,” Musalem said. “That is because sticky or higher inflation would pose a threat to the Fed’s credibility and to future employment and economic activity,” he said. The official also said the September jobs data that rattled expectations was strong, while noting “the path I penciled in” for monetary policy at the most recent Fed policy meeting is “probably still appropriate.””I believe the risks that inflation becomes stuck above 2% or rises from here have diminished,” he added.Musalem also noted financial conditions generally remain supportive of economic activity. He said he expects the expansion to continue but noted that uncertainty about the outcome of the Nov. 5 U.S. elections was causing some firms to hold back until they had more clarity.Based on feedback from his district, Musalem said “I’ve heard enough ‘survive until 2025’ comments from business people and others to believe that resolving some uncertainty about the path for interest rates or the election could provide a meaningful boost to investment and spending.” Musalem also said he saw no conflict between the Fed cutting rates and pressing forward with ongoing efforts to shrink the size of its balance sheet, a process known as quantitative tightening, or QT.Musalem brushed aside worries about turbulence at the end of the third quarter in short-term markets that some investors saw. He argued for a near-term end to QT, noting that the Fed retains firm control over its interest rate target. As of July, market participants in a survey expected a spring end to QT based on New York Fed data. More
TOKYO (Reuters) – Japan’s inflation-adjusted wages fell in August after two months of increases during the summer bonus season, while household spending also declined, data showed on Tuesday, knocking chances of the central bank raising interest rates any time soon.Real wages in the world’s fourth-largest economy fell 0.6% in August from the same month a year earlier, according to the Ministry of Health, Labour and Welfare. That came after a revised 0.3% rise in July.Separate data showed household spending declining 1.9% from the year-earlier in August, potentially raising doubts about the strength of private consumption, which accounts for more than half of Japan’s economy. The fall, however, was smaller than the market estimate for a 2.6% drop based on a Reuters poll, and on a seasonally adjusted basis, spending rose 2.0% from the previous month, marking the fastest pace of increase in a year.Real wages had turned up in June for the first time in more than two years as companies bumped up summertime bonuses, though the labour ministry had said the contribution of such special payments to the data would wane from August.Those payments rose 2.7% in August versus a revised 6.6% in July and 7.8% in June.Sustained wage growth is a prerequisite for the Bank of Japan to raise interest rates again after its first hike in 17 years in March and a follow-up increase in July. While the central bank said in its quarterly report on Monday that a rise in prices and wages was spreading across Japan, it also noted the concern of small and medium-sized enterprises regarding attendant pressure on profit.Nominal wages, or the average total cash earnings per worker per month, grew 3.0% to 296,588 yen ($1,999.11) versus August last year, compared with an on-year 3.4% rise in July.Base, or regular, pay also rose 3.0%, while overtime pay, a barometer of corporate strength, grew 2.6%.The consumer price index officials used to calculate real wages, which includes fresh food prices but excludes owners’ equivalent rent, climbed 3.5% in August, the highest rise since October last year. ($1 = 148.3600 yen) More
A short-lived conviction that the Fed would stick to a dovish path evaporated after Friday’s bet-busting payrolls number, with Treasury yields on Monday backing up above 4% and traders introducing a small chance that November might not yield a rate cut at all.The Fed rethink cooled Wall Street’s jets but prospects for the U.S. economy to skirt a recession would not need to be an impediment to Asia’s rally. It will offer mainland Chinese investors a fresh international backdrop when they return on Tuesday from the Golden Week holiday and consider last month’s market rescue with rested eyes.Beijing dispensed the most aggressive stimulus measures since the COVID-19 pandemic in a bid to revive the flagging Chinese economy, and traders and investors are now looking for signs to see if the medicine is working.Yields on the 10-year and two-year notes extended a rise to their highest since late July and mid August, respectively, as fed funds futures realigned to an 85% chance of a quarter point cut in November and a 15% chance that the Fed stands pat at its next meeting.Only a week ago, some were holding out for the Fed to repeat September’s 50 bps cut at next month’s meeting. The resilient labor market made a case for the Fed to lean hawkish and that sent the S&P 500 down almost one percent. It did not do much for the dollar, which consolidated last week’s rally, ending slightly lower against the yen and Swiss franc. Generally, along with those two safe-haven currencies, the dollar retained a bid as acute Middle East tensions threatened to spill into a wider conflict on the anniversary of the Hamas attack on Israel that sparked the war in Gaza.The dollar fell about half a percent against the yen after rallying above 149 overnight to its highest since Aug. 15.The yen weakness helped Japan’s Nikkei rally almost 2% on Monday, leading a broader rally across the region. MSCI’s broadest index of Asia-Pacific shares climbed almost 1% and its Asia index ex-Japan rose nearly half a percent.Here are key developments that could provide more direction to markets on Tuesday:- Australia consumer sentiment (Oct)- Japan Tankan manufacturing and service indexes (Oct)- Taiwan trade balance (Sept)- U.S. 3-year note auction More
