Economy

“The Fund showed itself to be collaborative in looking to find the structural solutions Argentina needs,” Milei said on social media network X.Georgieva later said the two discussed the “significant challenges ahead” for Argentina’s economy and the “decisive” policy actions needed.The country is currently facing inflation nearing 150%, a looming recession and net reserves seen at negative $10 billion. Argentina is tied up by a $44 billion loan program from the IMF that has veered off track.”The IMF is committed to support efforts to durably reduce inflation, improve public finances and raise private-sector-led growth,” Georgieva said on X. More

NEW YORK (Reuters) -U.S. stocks ended little changed in holiday-shortened trading on Friday, with low volume and conviction as investors watched the start of the seasonal shopping season for signs of consumer resiliency.The S&P 500 closed nominally higher, while the Dow eked out a modest gain. The Nasdaq was dragged slightly lower by weakness in megacap momentum stocks.All three indexes notched their fourth consecutive weekly gains.”We had mixed macroeconomic data and the post-Thanksgiving session is only half a day, so there aren’t that many participants,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York. “But we’re seeing a market that’s on the right path of a year-end rally.”Retailers around the world were attempting to attract millions of shoppers, many offering steep “Black Friday” discounts the day after the U.S. Thanksgiving holiday.”Consumers are being very frugal and while they might spend, they’re looking for bargains,” Cardillo added. “The higher cost of money is hitting consumers’ pocketbook.”A survey by NRF, a U.S. retail trade group, showed U.S. shoppers are planning to spend an average of $875 on holiday purchases this year, an annual increase of about 5%.S&P Global’s advance purchasing managers’ index (PMI) showed steady U.S. business activity in November, but private sector employment declined for the first time in almost 3-1/2 years, possibly due to the Federal Reserve’s restrictive monetary policy.Next week’s most anticipated data include the Commerce Department’s second estimate on third-quarter gross domestic product on Thursday, followed on Friday by its wide-ranging Personal Consumption Expenditures (PCE) report, which will provide further clues on the extent of the Fed’s rate-hike impact.The focus has increasingly shifted to the likely timing of the U.S. central bank’s first rate cut, which will be largely determined by the rate at which inflation cools down toward the Fed’s average 2% target.New and pending home sales, home prices, consumer prices and ISM PMI are also expected next week.The Dow Jones Industrial Average rose 117.12 points, or 0.33%, to 35,390.15, the S&P 500 gained 2.72 points, or 0.06%, at 4,559.34 and the Nasdaq Composite dropped 15.00 points, or 0.11%, to 14,250.86.Of the 11 major sectors in the S&P 500, nine ended with gains, led by healthcare. Communication services and tech closed in the red.Nvidia (NASDAQ:NVDA) dipped 1.9% after Reuters reported a delay in the launch of the company’s China-focused AI chip designed to comply with U.S. export rules until the first quarter of 2024.IRobot surged 39.1% in the wake of a report that Amazon (NASDAQ:AMZN) is set to win unconditional EU antitrust approval for its $1.4 billion acquisition of the robot vacuum maker.Vista Outdoor (NYSE:VSTO) advanced 3.9% after Czech gunmaker Colt CZ Group’s cash-and-stock merger offer worth nearly $1.7 billion.U.S.-listed shares of Chinese EV maker Xpeng (NYSE:XPEV) jumped 6.085% after Volkswagen (ETR:VOWG_p) said it will develop a new platform for entry-level electric vehicles in China.Advancing issues outnumbered decliners on the NYSE by a 2.64-to-1 ratio; on Nasdaq, a 2.29-to-1 ratio favored advancers.The S&P 500 posted 23 new 52-week highs and no new lows; the Nasdaq Composite recorded 77 new highs and 51 new lows. Volume on U.S. exchanges was 4.97 billion shares, compared with the 10.49 billion average for the full session over the last 20 trading days. More

ABUJA (Reuters) -Nigeria’s central bank will tighten its policy over the next two quarters to manage inflation, while directing banks to boost capital to support an expansion of the economy, its new governor, Olayemi Cardoso, said on Friday. Cardoso, who took over the reins in September, faces immediate pressure to curb excess liquidity in the banking system and tackle inflation, which has risen for 10 consecutive months, reaching 27.33% in October , the highest in about 18 years. Outlining his policy thrust, Cardoso told bankers that Nigeria could grow in size to $1 trillion over the next seven years and that lenders required extra capital to play in a bigger economy. Nigeria’s $240 billion economy recorded third quarter growth of 2.5% on Friday, barely changed from the previous quarter, as its loss-making dominant oil sector contracted at a much slower pace while government reforms were yet to take effect.Africa’s largest economy could grow by 3.9% in the fourth quarter, Cardoso said.Cardoso pledged to focus on rebuilding trust at the regulator, manage liquidity to curb inflation, bring down high interest rates and stabilise the exchange rate.”The Central Bank of Nigeria (CBN) is fully committed to ensuring price stability and financial system stability,” Cardoso told bankers in the commercial hub of Lagos.He added that the CBN is “taking measured and deliberate steps to send the right signals to markets.”President Bola Tinubu has embarked on Nigeria’s boldest reforms in decades by scrapping a costly but popular subsidy on petrol and a system of multiple exchange rates which had kept the currency artificially strong, curbed trade and growth.Cardoso said reforms, which have worsened hardship for the population, will contribute to a stable exchange rate and improve macroeconomic stability.The CBN had in the past raised rates by over 700 basis points since last year to fight inflation. Cardoso said month-on-month inflation had started to fall and that his team has worked on measures to ensure rates feed through to the economy. The central bank has settled overdue currency forwards for 31 banks, Cardoso said, in a bid to relieve pressure on the naira, which has been in freefall on the parallel market.The governor said he will allow market forces to determine exchange rates and play a more limited advisory role in support of the government’s economic growth agenda than under his predecessor. ($1 = 839.54 naira) More

World leaders gather in Dubai for a summit on climate change, but any agreement on how to deal with it or pay to tackle it seems a distant prospect.Here’s your week ahead in world markets from Lewis Krauskopf in New York, Kevin Buckland in Tokyo, and Naomi Rovnick, Marc Jones and Amanda Cooper in London. 1BUCK UP, IT’S DECEMBERThe dollar is heading for its weakest monthly performance for a year, with a loss so far of 2.7%. The prospect of a rapid flip to rate cuts by the Federal Reserve next year has driven investors into beaten-down Treasuries, pushing yields down by the most in a month in four years and boosting stocks, at the expense of the dollar. The timing of this combination looks tricky for the greenback.Seasonally, December is the worst month for dollar performance. Since 1973, the dollar has lost an average of 0.9% in December. But it does tend to recover those losses in January, with an average gain of 0.98%. The stats don’t favour a three-, or even a two-month, drop. There have been 16 years in which the dollar has fallen in November and December, but only four when it’s fallen in November, December and the January of the following year.2CHINA’S DRIVE FOR FIVE    Despite the massive economic headwinds from a teetering property market and tepid domestic demand, compounded by record youth unemployment, China’s top economic adviser plans to recommend a 5% growth target for a second year, Reuters exclusively reported on Nov 22.    To get there though, they say more fiscal stimulus is needed, as next year’s number won’t be flattered by the low base effect of 2021’s stringent COVID-19 lockdowns. Markets clearly expect the same, with mainland equities drifting lower as investors bide their time.    So far, support measures have largely fallen short, meaning meeting this year’s growth target will also be tight. On Thursday, China releases official manufacturing PMI data, which last month showed an unexpected contraction, killing momentum for an economic recovery.3EVEN COOLER THAN BEFORE    On the heels of an encouraging report on consumer prices, markets are hoping that another relatively tame U.S. inflation report can support the end of the Federal Reserve’s interest rate hiking campaign.    The personal consumption expenditures (PCE) price index, due on Nov 30, is expected to show no change in October from the prior month, according to a Reuters poll. The PCE index rose 0.4% in September, matching the rise in August.    Another key inflation gauge, the consumer price index (CPI), was unchanged in October, lifting equity prices, as it bolstered the view that the Fed was probably done raising interest rates.    As investors assess how much the economy may be cooling, other key economic reports due in the coming days include a consumer confidence index on Nov 28. The October reading showed a third-straight monthly decline.4GOOD COP, BAD COP?COP28 gets underway in Dubai and securing an agreement on how to tackle global warming and, crucially, how to pay for it looks as difficult as ever for the near 200 countries and institutions attending. The main goals set out by COP President – and UAE oil boss – Sultan Ahmed Al Jaber are to speed up the move away from fossil fuels; supercharge climate finance; preserve biodiversity and a fabled “loss and damage” fund to ensure the poorest and most vulnerable countries are not left to fend for themselves.With no consensus likely and pessimism around the key 1.5 degree warming target, the best that can be hoped for might be more money and focus from the big multilateral institutions like the World Bank, as well as deals on uncontroversial areas like tripling global renewable energy capacity. 5THE ECB’S BALANCING ACTEuro zone inflation data on Nov. 30 may well confirm a trend of price rises moderating. But if traders react by bringing forward bets on when the European Central Bank might cut interest rates, expect monetary policymakers to push back. After the ostensibly good news that consumer price rises slowed to 2.9% in October, ECB president Christine Lagarde warned borrowing costs would need to stay restrictive for many months ahead. On Nov. 21, ECB officials were talking down market expectations that the central bank would lower its main deposit rate from a record 4% as soon as April 2024.Policymakers remain wary of any hopes for rate cuts spilling over into increased bank lending and household spending, renewing inflationary pressures. Euro zone bond yields, stuck in a narrow range, are predicting that this tug of war between market optimism and central bank caution will continue for quite some time. More

ABUJA (Reuters) -Nigeria’s economy grew by 2.54% in the third quarter, largely steady from the 2.51% in the second quarter, data showed on Friday, as the oil sector contracted at a slower pace while the impact of government reforms aimed at boosting output were yet to take effect. Central bank Governor Olayemi Cardoso, who outlined his policies at a meeting with bankers late on Friday, said that Africa’s largest economy could grow by 3.9% in the fourth quarter as government reforms take effect.President Bola Tinubu promised during his inauguration in May to expand the economy by at least 6% a year. Cardoso said the economy could expand in size to $1 trillion over the next seven years.Tinubu has vowed to lift barriers to investment, create jobs and tackle insecurity. He has embarked on Nigeria’s boldest reforms in decades to try to boost output, which has been sluggish for about a decade. But they have yet to impact growth.”The performance of the GDP in the third quarter of 2023 was driven mainly by the services sector, which recorded a growth of 3.99% and contributed 52.7% to the aggregate GDP,” the National Bureau of Statistics (NBS) said.The NBS said the agriculture and industrial sectors, which create jobs, contributed less to GDP in the third quarter, compared with the same quarter a year ago. Nigeria’s dominant oil sector, which accounts for the bulk of government revenue and 90% of foreign-exchange reserves, contracted 0.85% in the third quarter, a rise of 12.6% from the second quarter when the sector shrank by 13.43%.Daily average oil output stood at 1.45 million barrels per day (bpd) in the three months to September, up from the 1.20 million bpd in the same period last year.Tinubu in May scrapped a costly but popular petrol subsidy and lifted currency controls, which he said was to save the country from going under. But his actions have worsened inflation currently in double-digits, fuelling anger and frustration for a population grappling with a cost of living crisis. Tinubu has been under pressure from unions to offer relief to workers.He has travelled to Asia, Europe, Middle East and the U.S. to promote investments to try to revive the economy rather than relying on borrowing. More

BUENOS AIRES (Reuters) – Argentine former central banker Luis Caputo, frontrunner to be the new economy minister, met local and international bank officials on Friday to lay out the economic plans of President-elect Javier Milei, three sources and a banking group said.The meeting at the La Rural conference center in Buenos Aires comes as Milei, who has pledged “shock therapy” for the embattled economy, races to put together his economic team. Caputo has been tipped as a front-runner for the role.In the meeting, however, Caputo declined to confirm that he would be the new economy minister, two of the sources said. Milei has not yet confirmed any appointment.However, signs that libertarian outsider Milei is leaning towards a more orthodox economic team and policies have spurred markets this week, with bonds up almost 14% and equities over 40% since he won a run-off election last Sunday.Caputo emphasized the idea of an abrupt economic adjustment, needed to tamp down inflation nearing 150%, head off a looming recession, undo an array of capital controls and rebuild net reserves seen at negative $10 billion.”Our approach is fiscal and monetary shock from day one. The roadmap is orthodox and without crazy things,” Caputo told the assembled bank representatives, according to a senior banking source who attended the meeting.Caputo, former finance minister and central bank chief during ex-president Mauricio Macri’s conservative government, is seen as a more orthodox pick for libertarian Milei’s new administration, which takes office on Dec. 10.The local ADEBA banking association confirmed the meeting.”It was a meeting in which we exchanged opinions on the challenges of the economy and the way to address them,” Javier Bolzico, president of ADEBA, told Reuters.”The meeting was very positive, Caputo emphasized fiscal balance as the basis of the model and a comprehensive and market approach to the BCRA’s remunerated liabilities. Caputo’s vision gave us peace of mind and confidence.”Milei’s team did not respond to a request for comment.Macri’s conservative PRO party backed Milei for the run-off vote and his allies are pushing to get positions in the Cabinet.Caputo did not provide details on how Milei’s government plans to address public spending nor what it aims to do with the central bank’s huge pile of Leliq short-term notes, which Milei has targeted because they expand money supply of local pesos.Caputo said Milei’s government would lift currency controls rapidly, the first source and a second banking source briefed on the meeting said, but it would not happen immediately. He added no dollarization was planned in the short-term, as fiscal and monetary stabilization were need, the first source said.”First you need a stabilization program,” Caputo said, according to the first source present in the meeting.Milei had made shutting the central bank and dollarizing the economy key planks of his campaign, but admitted these things will take time given the economic crisis. Earlier on Friday, though, he said shutting the central bank was “non-negotiable”.Caputo also told the bank representatives that addressing inflation forcefully was a top priority, though did not provide details on how the future government would tame prices.The second bank source said Caputo had discussed the need to fully attack inflation and lower the Leliq pile, though did not have details on how this would be done.”Given his knowledge of the market, he is one of those responsible for gauging the position of the banks before the new government,” a third bank source who confirmed the meeting said. More

By Ismail Shakil and Steve SchererOTTAWA (Reuters) – Canada’s annual inflation rate eased more than expected to 3.1% in October and core inflation measures edged down to their lowest levels in about two years, data showed on Tuesday, likely closing the door to further rate hikes.Analysts polled by Reuters had forecast inflation to cool to 3.2% from 3.8% in September. Month-over-month, Statistics Canada said the consumer price index was up 0.1%, matching forecasts. The Bank of Canada (BoC) targets 2% annual inflation.The deceleration in headline inflation could fortify investor bets that the BoC will start lowering its key policy rate from a 22-year high of 5.00% in the first half of 2024.The BoC’s core measures of underlying inflation edged lower, with CPI-median dropping to 3.6% and CPI-trim to 3.5%, the lowest since December 2021 and November 2021, respectively.”This is exactly the type of progress that central bank officials have been waiting to see,” said Royce Mendes, head of macro strategy at Desjardins Group. “If the door wasn’t already shut to additional rate hikes, it now should be.” The central bank has held rates steady in its last two meetings, but says it remains prepared to hike again if needed. The bank projects inflation to hover around 3.5% until mid-2024, before trickling down to its 2% target in late 2025.The Canadian dollar was trading 0.2% higher at 1.37 to the greenback, or 72.99 U.S. cents, after the data.Dragging the annual inflation rate in October was a 7.8% drop in gasoline prices, which benefited from comparison with a price surge in October 2022. Grocery prices also cooled down to its slowest pace since November 2021.Excluding volatile food and energy, prices rose 3.4% compared with a 3.2% rise in September.While goods inflation slowed to 1.6% in October, services prices accelerated to 4.6%, the largest increase since May.The BoC’s next rate decision is on Dec. 6, after the release of third-quarter GDP data, which is expected to show that the Canadian economy slipped into a shallow recession.”In conjunction with data showing slack building within the labor market and growth data suggesting the economy is in a shallow recession, today’s constructive inflation report has completely undermined the BoC’s hawkish bias,” said Simon Harvey, head of FX Analysis for Monex Europe and Canada.Later on Tuesday, Finance Minister Chrystia Freeland will deliver a mid-year fiscal update that is expected to show widening deficits and weak economic growth, and include targeted spending to boost housing supply.With a stalling economy, high interest rates and inflation still elevated, Prime Minister Justin Trudeau’s Liberal government is under pressure to fight an affordability crisis in the country without stoking inflationary pressures. More

De Guindos also noted significant progress in reducing inflation from double digits to below three percent, despite the lag in monetary policy effectiveness, which is estimated to take twelve to eighteen months to materialize. He raised concerns about the risk of undervaluation by non-banks, which could affect sectors like pensions and insurance, and pointed out that services could be vulnerable to rising labor expenses.Earlier on Wednesday, de Guindos highlighted the risks associated with inflation and economic adversities on eurozone banks. Banks have been grappling with several complications following the rapid rise in interest rates since mid-2022. Among these are fixed low-rate loans in Germany and a decrease in loan applications. Real estate price trends have taken a negative turn due to increasing interest costs affecting commercial sectors.Despite initial profit gains from higher rates, banks now face profitability headwinds such as growing funding costs, asset quality degradation, and reduced lending activities. The ECB has underscored the importance of maintaining substantial capital buffers to withstand potential downturns in real estate markets.Industry leaders like FIOP President Anna Balletbó and Josep Lluís Bonet from the Spanish Chamber have expressed their concerns regarding fiscal measures that could impair personal income during these economic challenges. De Guindos’ statements at both events reflect a broader caution within the ECB regarding current economic pressures and their implications for financial stability across the eurozone.This article was generated with the support of AI and reviewed by an editor. For more information see our T&C. More