Economy

This week’s major focus will be the monthly US employment report, which  is expected to show on Friday that the world’s largest economy added 154,000 jobs in December, while the unemployment rate is expected to hold steady at 4.2%.Labor market data has been volatile in recent months amid disruptions from strikes and hurricanes. November data showed growth of 227,000 jobs, rebounding from a tepid rise in October.Investors will be hoping that the jobs report points towards solid economic growth, but not so strong that it makes it even harder for the Fed to keep cutting rates.A rise of around 150,000 would bring 2024 job creation to 2.134 million, which would be the lowest annual total, outside of a COVID-driven loss in 2020, since 2019’s 1.988 million. The Federal Reserve projected only two more rate cuts this year at its last policy-setting meeting, a substantial reduction for the four cuts seen in September, and the week’s numerous Fed speakers are likely to sound cautious about cutting rates much further.US stock futures were marginally higher Monday, with traders reluctant to take major positions ahead of the release of widely-watched economic data in another shortened trading week. By 03:55 ET (08:55 GMT), the Dow futures contract was up 35 points, or 0.1%, S&P 500 futures climbed 17 points, or 0.3%, and Nasdaq 100 futures rose by 97 points, or 0.5%.The major averages came off a losing week, amid concerns over the extent of future interest rate cuts by the Federal Reserve after the relatively hawkish comments that accompanied last month’s reduction.The New York Stock Exchange will also be closed Thursday to mourn the death of former President Jimmy Carter.Traders will be looking for clues about the strength of the economy, and thus the likely Fed moves, with the highly-influential monthly jobs report due out Friday. Investors are also watching the Job Openings and Labor Turnover Survey on Tuesday and Wednesday’s ADP Employment Survey, ahead of the Fed meeting at the end of this month.German consumer prices for December are due later in the session, ahead of Tuesday’s flash eurozone inflation data, and are expected to show that inflationary pressures remain subdued in the euro bloc.That said, Spain has already released its numbers for December, and its above-expectations print on the back of energy prices could be replicated elsewhere.Investors are looking for the European Central Bank to ease interest rates by 100 bps in the first half of 2025, and any signs that inflation is easing further would give the ECB scope to loosen policy and support a struggling economy. But a colder winter could complicate matters, particularly with natural gas prices at elevated levels, and given the end of a decades-long deal for Russia to supply gas to Europe via Ukraine.Justin Trudeau’s time as Canada’s Prime Minister looks to be running out, after a number of reports indicated he is set to step down as leader of the country’s ruling Liberal Party after nine years in office, potentially as early as Monday.If he does resign, it would likely spur fresh calls for a quick election to put in place a stable government to deal with the new Donald Trump-led administration across the border, which has already threatened substantial trade tariffs.Recent polls suggest the Liberals will badly lose to the official opposition Conservatives in an election that must be held by late October.The Canadian dollar rose against its US counterpart, with investors welcoming the chance of an early election to clarify the outlook, although gains were muted suggesting the news had been somewhat priced in.At 03:55 ET, USD/CAD fell 0.6% to 1.4365. Crude prices edged lower Monday, weighed by a strong dollar, but losses are minor as traders await the release of key US economic data later in the week.By 03:55 ET, the US crude futures (WTI) dropped 0.4% to $73.66 a barrel, while the Brent contract fell 0.4% to $76.20 a barrel.Crude prices reported two straight weeks of gains on hopes of improving demand in China, especially as Beijing prepares to unlock more stimulus measures in the coming months.Colder weather in the US and Europe is also expected to help boost oil demand, especially for distillates.But strength in the dollar has prompted some profit-taking Monday, as the greenback stayed close to two-year highs before a string of key economic readings this week which will provide clues as to the strength of the US economy, the largest consumer of energy in the world.Traders are also watching for any supply disruptions, with the Biden administration reportedly planning to impose more sanctions on Russia over its war on Ukraine. More

These come against a backdrop of unease over the U.S. interest rate outlook and potential for policy surprises under U.S. President-elect Donald Trump, with the euro and Chinese yuan already kicking off the new year on a weak footing.Here’s what’s in store for world markets in the coming week from Rae Wee in Singapore and Alun John, Amanda Cooper, Dhara Ranasinghe and Samuel Indyk in London.1/ JOB DONEMarkets have made their peace – mostly – with the idea that inflation will rise under Trump, given his pledges on tariffs, taxes and immigration. Traders barely expect two Federal Reserve rate cuts in 2025, but still, stocks are within sight of record highs and look set for more of the same this year. What they might find harder to stomach is evidence that growth is slowing. The Jan. 10 December non-farm payrolls report is forecast to show a rise of 150,000, versus November’s 227,000 jump.A rise of 150,000 would bring 2024 job creation to 2.134 million. It’s hardly shabby, but it would be the lowest annual total, outside of a COVID-driven loss in 2020, since 2019’s 1.988 million. And if there’s anything the market needs right now, it’s proof of the resilience of the world’s largest economy. 2/ MORE CHINA GLOOMChina faces a precarious start to 2025, as authorities seek to counter Trump’s threats of tariffs in excess of 60% on imports of Chinese goods. Chinese stocks are at three-month lows, having logged the weakest New Year start since 2016 During Trump’s first administration, Beijing allowed its currency to weaken to make exports cheaper and offset trade shocks. The yuan weakened more than 12% against the dollar in just over two years.Economists expect Trump to impose tariffs of nearly 40% this time around, which could potentially slice China’s growth by up to 1 percentage point.Beijing is reported to be mulling a weaker yuan again, though the potential magnitude of the tariffs make it almost impossible to resort to the same playbook.Tariffs aside, for the week ahead, China releases December trade and inflation figures, which should provide a sense of how the world’s second-largest economy closed out 2024. 3/ INFLATION TEST Investor bets on 100 bps of European Central Bank easing in the first half of 2025 face an early test from Tuesday’s December flash euro zone inflation data. German and French inflation numbers are due Monday. Any signs that inflation is easing further would give the ECB scope to loosen policy and support a struggling economy. But analysts warn that early-bird Spain’s above-expectations print on the back of energy prices could be replicated elsewhere. Energy could be a thorn in the ECB’s side with natural gas prices at 14-month highs. It’s not going to be repeat of 2022’s surge, but prices look set to remain elevated with less gas in storage compared to recent years, and the end of a decades-long deal for Russia to supply gas to Europe via Ukraine. 4/ LAGGARD AGAIN2024 tested European equity investors, marking another year where shares lagged global peers, but some reckon relief may be around the corner. There were bright spots — banks and aerospace & defence stocks which jumped 26% and 33% respectively. Investors are looking for a broadening out this year. There are also risks: uncertainty surrounding Trump tariffs being the main one. But the STOXX 600 index is cheap, trading at a 41% discount to the U.S. S&P 500. Britain’s FTSE 100 trades at an even steeper 50% discount to the U.S. benchmark. As the region gets comparatively cheaper it creates opportunity, and some investors are betting that 2025 could be the year where Europe’s equity markets rally strongly, if the economic outlook or geopolitical backdrop brightens. 5/ WHICH WAY NEXT?The S&P 500 may have surged over 20% in 2024 and notched up a two-year jump of around 53% in the strongest back-to-back annual performance since 1998, but warning signs flickered as the year ended.Unease that the Fed could pause rate cuts if inflation stays sticky or is pushed up by Trump tariffs is hurting sentiment, and investors liquidated global equity funds at the fastest rate in 15 years in the week to Dec. 18, LSEG Lipper data shows.The coming days will show whether December’s risk off sentiment was fleeting or the start of something deeper. Trump’s policy signals and the response to his plans from trade partners will be key. Also watch U.S. Treasury yields – they jumped 40 bps in December. Another surge could be the cue for the next round of stock selling. More

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$75 per monthComplete digital access to quality FT journalism with expert analysis from industry leaders. Pay a year upfront and save 20%.What’s included Global news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts20 monthly gift articles to shareLex: FT’s flagship investment column15+ Premium newsletters by leading expertsFT Digital Edition: our digitised print edition More

$75 per monthComplete digital access to quality FT journalism with expert analysis from industry leaders. Pay a year upfront and save 20%.What’s included Global news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts20 monthly gift articles to shareLex: FT’s flagship investment column15+ Premium newsletters by leading expertsFT Digital Edition: our digitised print edition More

$75 per monthComplete digital access to quality FT journalism with expert analysis from industry leaders. Pay a year upfront and save 20%.What’s included Global news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts20 monthly gift articles to shareLex: FT’s flagship investment column15+ Premium newsletters by leading expertsFT Digital Edition: our digitised print edition More

SYDNEY (Reuters) -Insignia Financial shares shot to a three-year high on Monday after it revealed a A$2.87 billion ($1.78 billion) takeover bid from U.S.-based investment manager CC Capital Partners (WA:CPAP), eclipsing a A$2.67 billion offer from Bain Capital.The deal would give CC Capital access to Australia’s $A4.1 trillion superannuation system, which is considered one of the world’s largest private pension markets.The 178-year-old Australian money manager previously known as IOOF rejected private equity firm Bain Capital’s approach in late December, saying the offer did not provide fair value to its shareholders.Insignia shares gained 11% to A$3.93 per share in early trade, reaching their highest level since 2022, but remaining below the $A4.30 per share cash offer. Insignia said its board was considering CC Capital’s proposal to assess if it was in the best interests of its shareholders.Insignia Financial said CC Capital’s non-binding bid offered a 7.5% premium to Bain Capital’s offer and a 21.5% premium to Insignia’s last closing price of A$3.54 on Friday. CC Capital was formed almost a decade ago by Chinh Chu who was Blackstone (NYSE:BX)’s former co-head of private equity, according to the firm’s website. If successful, the deal would be the New York-based firm’s first major investment into Australia. Insignia provides superannuation, financial advice and asset management services. It had A$319.6 billion of funds under management and administration at the end of September.The transaction will give dealmakers hope that a rebound in corporate buyout activity Down Under in 2024 will be extended this year.Australian M&A activity was worth $113.4 billion in 2024, according to LSEG data, up 15% on 2023. Inbound M&A from overseas buyers leapt 23% in the year compared to one year earlier, the data showed.”Insignia’s board may demand a higher premium given the company’s significant role in Australia’s superannuation industry but whomever the buyer is will not only need to please the board and shareholders but also regulators to get a deal over the line,” said Stella Ong, market analyst at share trading platform Superhero.”With Insignia’s forward P/E still trailing behind that of AMP (OTC:AMLTF) though, this may not be the last bid we see,” she said, referring to rival Australian investment manager AMP. CC Capital’s offer requires Foreign Investment Review Board and prudential regulatory approval, Insignia said.CC Capital did not immediately respond to a request for comment. Bain Capital declined to comment.($1 = 1.6108 Australian dollars) More

SINGAPORE (Reuters) – The dollar strayed not too far from a two-year peak on Monday as traders awaited a raft of U.S. economic data releases this week, headlined by December’s nonfarm payrolls report, for further clues on the Federal Reserve’s rate outlook.Also in focus was the Chinese yuan, which on Friday weakened past the psychological level of 7.3 per dollar in the onshore market for the first time in 14 months, after the People’s Bank of China (PBOC) had aggressively defended that key threshold for most of December.The offshore yuan was last 0.04% lower at 7.3630 per dollar, ahead of the open in the onshore spot market.”The PBOC looks to have stopped defending that 7.30 level,” said Ray Attrill, head of FX strategy at National Australia Bank (OTC:NABZY) (NAB).”That just draws a lot more attention to what the PBOC does from a fixing perspective today and in the coming days, as to whether effectively they’re now allowing dollar/CNY to trade up into a higher trading range or not, because I do think that will have implications for broader Asia currencies, but also for the Aussie and kiwi.”The Australian and New Zealand dollars, often used as liquid proxies for the yuan, were hardly affected by Friday’s move lower in the Chinese currency, as they both traded roughly 0.1% higher in the early Asian session.The Aussie last bought $0.6223, while the kiwi rose 0.14% to $0.5620.TRUMP AND RATESIn the broader market, investors had their eye on Friday’s closely watched U.S. jobs report for further clarity on the health of the world’s largest economy.A slew of Fed policymakers are also due to speak this week, where they are likely to reiterate recent comments from their colleagues that the fight against taming inflation is not yet done.The dollar has continued to draw strength from expectations of fewer Fed cuts this year, with its climb to a two-year high last week pushing the euro to its weakest level in more than two years.The common currency last traded 0.13% lower at $1.0296, while the dollar index rose 0.09% to 109.06.Sterling dipped 0.03% to $1.24195. The yen fell 0.3% to 157.765 per dollar.Also providing the dollar with additional safe-haven support was uncertainty over U.S. President-elect Donald Trump’s impending inauguration on Jan. 20 and his plans for hefty import tariffs, tax cuts and immigration restrictions.”There’s still a massive amount of uncertainty as to the speed with which we’ll see policy announcements and how much the reality will match up to the rhetoric, so I think that leaves huge amounts of uncertainty in markets,” said NAB’s Attrill.”It’s just really hard to see the U.S. dollar coming to any harm… at the moment, you’ve got to be pretty brave to be betting against the continuation of dollar strength.” More