Economy

SYDNEY (Reuters) – Asian share markets got off to a wary start on Monday ahead of a week brimming with economic news that should underline the relative outperformance of the United States and support the dollar’s ongoing bull run.The star of the U.S. line up is the December payrolls report on Friday, where analysts expect a rise of 150,000 with unemployment holding at 4.2%. These will be previewed by data on ADP hiring, job openings and weekly jobless claims, along with surveys on manufacturing, services and consumer sentiment.Anything upbeat would support the case for fewer rate cuts from the Federal Reserve, and markets have already scaled back expectations to just 40 basis points for 2025.Minutes of the Fed’s last meeting due Wednesday will offer colour on their dot plot predictions, while there will be plenty of live comment with at least seven top policy makers speaking including influential Fed Governor Christopher Waller.Inflation figures from the EU and Germany this week will refine the outlook for more rate cuts from the European Central Bank, while China’s consumer prices on Thursday is expected to support the case for further stimulus there.With so much event risk ahead, investors were understandably cautious and MSCI’s broadest index of Asia-Pacific shares outside Japan edged up 0.1%.Japan’s Nikkei returned from holiday still in a laid-back mood and nudged up 0.1%. South Korean stocks added 0.3%, though the fate of President Yoon Suk Yeol seems no clearer.THE FORTUNATE FEWFutures for the S&P 500 and Nasdaq were a fraction firmer in early trade. Analysts at Goldman Sachs noted the S&P 500 boasted a total return of 25% in 2024, the second year of gains above 20% and the last time that happened was 1998/99. The rally was narrow, with almost half the rise coming from just five stocks, yet Goldman expects another 11% increase this year driven by a similar rise in earnings. Reports for the latest earnings season start to flow on Jan. 15.The U.S. bond market has not been so fortunate and 10-year yields inched higher to 4.631%, very close to last week’s eight-month top of 4.641%.Investor appetite will be sorely tested this week by the sale of $119 billion in new three-, 10- and 3-year Treasuries.The steady climb in yields kept the dollar index up at 108.950, having risen almost 0.9% last week to a top of 109.540.The euro was hanging on at $1.0298, uncomfortably close to last week’s 26-month trough of $1.0225. It now faces resistance around $1,0340, as trend-following funds continue to hunger for the psychological $1.000 level.The dollar had broadened its advance last week to sweep over sterling as well, driving it to an eight-month low of $1.2349. The pound was last looking none too steady at $1.2420.The risk of Japanese intervention kept the dollar restrained at 157.63 yen, just short of last month’s high of 158.09. The strength of the dollar was a hurdle for gold, keeping the metal at $2,641 an ounce. [GOL/]Oil has found support from colder weather in Europe and the United States, with a winter storm bringing snow, ice and freezing temperatures to a broad swath of the U.S. on Sunday. [O/R]Brent rose 19 cents to $76.70 a barrel, while U.S. crude added 27 cents to $74.23 per barrel. More

LONDON (Reuters) – British companies are the gloomiest since former Prime Minister Liz Truss’ September 2022 “mini-budget”, following unexpectedly large tax increases in the new Labour government’s Oct. 30 budget, a business survey showed.The British Chambers of Commerce, who conduct the largest private-sector survey of British firms, said businesses were the least happy about taxation since they started asking about this in 2017, while confidence about sales over the next 12 months was the lowest since late 2022.”The worrying reverberations of the Budget are clear to see in our survey data. Businesses confidence has slumped in a pressure cooker of rising costs and taxes,” BCC Director General Shevaun Haviland said.Finance minister Rachel Reeves announced 40 billion pounds ($50 billion) of tax rises on Oct. 30, the most of any budget since 1993. The bulk of this will come through higher social security charges paid by employers.While the Bank of England estimates that higher public spending will temporarily boost growth next year, a big question for policymakers is whether the tax rises lead mostly to lower employment, higher prices or reduced profits or investment.The BCC said 55% of firms planned to raise prices, up from 39% the quarter before, while 24% intended to cut investment, up from 18% previously. It plans to release survey data on recruitment intentions on Jan. 14.The downbeat mood echoes that in other surveys of businesses from S&P Global, the Institute of Directors and the Confederation of British Industry.Britain’s economy grew solidly in the first half of 2024 as it recovered from a shallow recession in late 2023, before stagnating in the third quarter of last year.The Bank of England has forecast zero growth for the fourth quarter of 2024 and an expansion of 1.5% in 2025.The BCC survey of 4,800 businesses, mostly with fewer than 250 staff, took place from Nov. 11 to Dec. 9.($1 = 0.8057 pounds) More

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(Reuters) – A look at the day ahead in Asian markets. The first full trading week of 2025 kicks off in Asia on Monday with the sharp slide in China’s currency and bond yields, an increasingly tense and fluid political situation in South Korea and a blocked U.S.-Japanese corporate merger all vying for investors’ attention.A raft of purchasing managers index reports is also on deck, offering investors the first glimpse into how many of Asia’s biggest economies, including China’s, closed out 2024.The global market backdrop looks relatively bright after Friday’s rebound on Wall Street, and equity and bond market volatility seems well-contained. But emerging market currencies and assets are on the defensive, thanks to elevated U.S. Treasury yields and a soaring dollar. The greenback softened a bit on Friday, but it hit a fresh two-year high the day before and has rallied almost 10% in the last three months.Much of the dollar’s appeal comes from the surge in long-dated U.S. Treasury yields since the Fed began cutting interest rates in September. The central bank’s 100 basis points of easing has been met with a rise of 100 bps in the 10-year yield, a remarkable turn of events that has bamboozled most investors – and likely policymakers too.The picture in China could not be more different. As investors position for a year of policy easing and liquidity provision from Beijing, the yuan and bond yields are coming under heavy downward pressure.Attention is focusing on the short end of the Chinese curve, with the two-year yield on the brink of breaking below 1.00%. It is already the lowest on record, having tumbled 50 bps in the last two months and 100 bps since last March. The psychological 1.00% barrier could break on Monday.In this context, Chinese inflation data later this week will take on even greater significance, and a Reuters poll suggests annual consumer inflation in December held steady at 0.2%. Although China’s economic surprises index has been rising in recent weeks, markets will be highly sensitive to added deflationary pressures.The spot yuan on Friday slid to a four-month low, breaking through the 7.30 per dollar level that the People’s Bank of China had appeared to be defending. A move through 7.35 per dollar would signal a fresh 17-year low.Selling pressure on the yuan looks pretty strong, as evidenced by the spread between the spot dollar/yuan rate and the central bank’s daily fixing. It is now the widest since last July, hovering around its widest levels on record.Are authorities in Beijing getting nervous? The central bank on Friday warned fund managers against slamming bond yields even lower, amid worries that a bubble in bonds might undercut Beijing’s efforts to revive growth and manage the yuan.Here are key developments that could provide more direction to markets on Monday:- China, Japan, India, Australia services PMIs (December)- Thailand inflation (December)- Vietnam GDP (Q4) More

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VIENNA (Reuters) -The leadership of Austria’s ruling conservatives held a crisis meeting on Sunday to pick a successor to Chancellor Karl Nehammer, who announced his resignation on Saturday as attempts to form a coalition government without the far right fell apart.More than two hours after the meeting began, several Austrian media reported that People’s Party (OVP) Secretary-General Christian Stocker, 64, would take over as party leader in an interim capacity. There was no immediate comment from the party.The surprise collapse of three- and then two-party talks aimed at cobbling together a centrist coalition that could serve as a bulwark against the far-right Freedom Party (FPO) after the FPO came first in September’s parliamentary election leaves President Alexander Van der Bellen with few options.A snap election with support for the eurosceptic, Russia-friendly FPO still growing or an about-face in which Van der Bellen tasks FPO leader Herbert Kickl with forming a government are now the most likely options, with only limited scope for alternatives or playing for time.”It is not an easy situation,” Markus Wallner, the governor of Vorarlberg, the westernmost of Austria’s nine provinces, told reporters before the OVP leadership meeting at the chancellor’s office on Sunday morning.”I believe we must do everything we can now to avoid sliding towards a national crisis.”Wallner said he opposed a snap election since that would delay the arrival of a new government by months. OVP governors are part of the leadership.Van der Bellen is due to address the nation later on Sunday.Nehammer insisted during and after the election campaign that his party would not govern with Kickl because he was too much of a conspiracy theorist and posed a security risk while at the same time saying much of Kickl’s party was trustworthy.Nehammer’s successor will most likely be more open to a coalition with the FPO, which is formally allied with Hungarian Prime Minister Viktor Orban’s Fidesz party.GROWING SUPPORT FOR FPOThe FPO won September’s election with around 29% of the vote, and opinion polls suggest its support has only grown since then, extending its lead over the OVP and Social Democrats to more than 10 percentage points while their support has shrunk.The OVP and FPO overlap on various issues, particularly taking a tough line on immigration, to the point that the FPO has accused the OVP of stealing its ideas.The two governed together from late 2017 until 2019, when a video-sting scandal involving the then-leader of the FPO prompted their coalition’s collapse. At the state level, they govern together in five of nine states, including in OVP moderate Wallner’s Vorarlberg.The national dynamic is now different because if they were to form an alliance the OVP would for the first time be junior partner to the FPO, making the position of OVP leader difficult and undesirable to many.After initial media reports that household names like former party leader Sebastian Kurz, who led the last coalition with the FPO and has since been convicted of perjury, could become OVP leader, Austrian media reported overnight that they were no longer in the running.That left lesser-known figures such as new Chamber of Commerce Secretary-General Wolfgang Hattmannsdorfer, 45.Meanwhile, the FPO hammered home its message.”Austria needs a Chancellor Kickl now,” it said on X. More

WASHINGTON (Reuters) – The top U.S. ethics official charged with preventing government workers’ conflicts of interest is about to take the hotseat in Washington, as President-elect Donald Trump’s new Cabinet and other appointees declare their financial assets and prepare for their new jobs. “We are in touch with the transition team and working with them,” said David Huitema recently when he sat down with Reuters for his first official interview since being sworn in for the job on Dec. 16. The inauguration will be Jan. 20. Ethics experts say the director of the Office of Government Ethics, or OGE, is in the spotlight during any presidential transition, but Huitema faces special challenges ahead of Trump’s second term, evaluating a myriad of business ties for Trump, his family and advisers.Experts pointed to the short, rocky tenure of Walter Shaub, the last person to hold the job when Trump entered the White House, and noted that several of Trump’s latest nominees have expressed disdain for the agencies they will run. After nine years as ethics chief at the U.S. State Department, Huitema will spearhead the OGE’s standard task of helping scrutinize dozens of new Senate-vetted nominees and thousands of political appointees for potential financial and personal conflicts. If he does his job well, chances are good Huitema could be fired fairly promptly, Shaub warned in an open letter last month. Huitema told Reuters he has faith in the intentions of most new entrants to government.He shared his views on ethics education and maintaining the public trust, but declined to answer specific questions about the incoming administration. The ethics office only deals with potential government employees, he noted. That means it will not vet outside advisers like billionaires Elon Musk and Vivek Ramaswamy, who Trump has asked to recommend cuts in government spending. Q: What does the OGE do, exactly? A: “The ultimate goal is to ensure that federal employees are making decisions based on national interest and policy priorities of the administration rather than any personal interest especially financial interest. … The OGE itself is a small agency of just about 75 employees, but we work with a team of about 4,000 ethics officials interspersed, who engage more directly with federal employees.” One important immediate task, he said, will be “with nominee financial disclosure, helping ensure that nominees for Senate confirmed positions meet their requirements for complete disclosure of their financial interests and arrangements. “Q. How does the financial disclosure process work with presidential nominees? A: Normally, he said, nominees for top jobs fill out reports early to help the office “identify potential conflicts or steps the nominee might have to take if they are confirmed so all that information is available to the Senate and to the officials so they know what they are getting themselves into.” Q. What sort of deadlines are there? When do people have to make these disclosures? A. He said nominees should submit a report “within five days of their nomination. … Our goal is to help these incoming officials, help the Senate and do so as efficiently as possible.” He noted that “any member of the public can request a copy” of any financial disclosure report filed with the OGE. “The idea is the public, too, can help play a role in monitoring for conflicts of interest.”Q. What is the enforcement mechanism if there are conflicts of interest? A: “It’s not so much if a conflict comes up on the form itself, but whether ultimately any federal employees is engaged with work that then conflicts with their financial interest.”The conflict of interest law is a criminal law, so the ultimate recourse is prosecution by the Department of Justice. Our role is to actually help advise employees to avoid that situation … “We will work with the agency ethics officials if we learn of a potential conflict of interest problem to make sure that gets addressed, ultimately we work with the Department of Justice as well if necessary.” Q: As the State Department ethics head, what lessons did you learn? A: “Most employees, career and appointed, want to follow the law and want to act with integrity and they appreciate the help of ethics officials …”Q: In your Congressional testimony, you said you think the OGE can help in the “struggle against the growing cynicism and distrust that can undermine our democratic self government.” Can you explain? A. “We want to make sure employees … don’t act based on personal interests, especially financial interests and personal motivations. … “In practice the federal ethics rules may be more limited in their actual scope than people appreciate, so people’s assumptions that there’s a specific issue with compliance with federal ethics laws may not be well grounded. Q. What are some examples of interests that are not substantial enough to raise red flags?A. “The financial conflict of interest laws are … pretty exact in terms of their scope. Either you have enough stock to pose a conflict or you don’t.” Q. Can ethics be taught? For people coming from the business side, interactions are often based around “How can I use this to advantage me or my company,” on purpose. A. “I hope so because there are lot of ethics training requirements,” he said, laughing. He agreed officials coming from the private sector are used to “networking and ‘What can you do to benefit someone so they can in turn benefit you’… It is a challenge to make sure those officials and new employees understand that the expectations within government are a little bit different. …”Q. What happens if the DOJ does not take ethics laws seriously? Where does that leave you? A. “Criminal prosecution is one extreme, but there is enforcement at the agency level in terms of discipline.” Q. The president can grant a waiver exempting someone from conflict of interest laws, correct? Is that something the OGE can push back on, or advise against? A. “The president in some cases and agency heads or officials … can grant exemptions” but must consult with the OGE. He said exemptions can be granted when “the potential conflict of interest isn’t viewed as that significant. Ultimately OGE needs to know when a waiver is issued. They can be made public.” More

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