Economy

Manufacturers surveyed by the Ministry of Economy, Trade and Industry expect seasonally adjusted output to increase 2.0% in September and expand 6.1% in October.Separate data showed Japanese retail sales rose 2.8% in August from a year earlier, above the median market forecast for a 2.3% rise. More

(Reuters) – A look at the day ahead in Asian markets.Investors in Asia go into the last trading day of the quarter still riding high on the double dose of stimulus administered earlier in the month by the U.S. Federal Reserve and now by China. In the latest move, the People’s Bank of China on Sunday said it would tell banks to lower mortgage rates for existing home loans by Oct. 31. It is expected to cut existing mortgage rates by about 50 basis points on average.This follows the slew of monetary, fiscal and liquidity support measures announced last week – China’s biggest stimulus package since the pandemic – that triggered the most explosive stock market rally in years. Japanese markets could be in for a rocky ride on Monday, however, as investors react to the news that former defence minister Shigeru Ishiba will be the country’s new prime minister. Ishiba has been a vocal critic of the Bank of Japan’s past aggressive monetary easing, but said on Sunday that policy must remain accommodative as a broader trend, to underpin a fragile economic recovery. The yen surged nearly 2% on Friday, and Nikkei futures are pointing to a sharp fall at the open on Monday.The upside for markets on Monday may also be capped by investors closing their books for the quarter, and ahead of China’s Golden Week holiday that starts on Tuesday.Monday’s calendar is loaded with major economic indicators, chief among them being China’s official and unofficial purchasing managers index data. Also on deck are retail sales, industrial production and housing starts figures from Japan, GDP from Taiwan, and South Korean retail sales and industrial production. China’s markets could get a reminder of cold economic reality, with the National Bureau of Statistics PMIs expected to show that factory activity contracted for the fifth consecutive month in September. Figures on Friday showed that industrial profits slumped 17.8% in August, the biggest decline this year. Citi’s Chinese economic surprises index is hovering around its lowest level in over a year, in contrast to the U.S. surprises index, which is also in negative territory but still the highest in over a year.It will take time for Beijing’s stimulus to filter through to hard activity data, so investors may have to continue putting up with some sobering numbers in the coming weeks and months.But the wave of optimism washing over markets is undeniable. Shanghai’s blue chip equity index rose nearly 16% last week and the broader Shanghai composite jumped nearly 13%, both the biggest weekly gains since November 2008.Hong Kong’s benchmark Hang Seng index delivered its biggest weekly rise since 1998, and fifth largest in the last half century. Mainland Chinese property stocks, meanwhile, leapt 16%.Here are key developments that could provide more direction to Asian markets on Monday:- China official and unofficial PMIs (September)- Taiwan GDP (Q2, final)- Japan retail sales, industrial production (August) More

This article is an on-site version of our The Week Ahead newsletter. Subscribers can sign up here to get the newsletter delivered every Sunday. Explore all of our newsletters hereHello and welcome to the working week.In this year of elections, there is also (inevitably) a changing of the guard. On Tuesday, Claudia Sheinbaum becomes Mexico’s first female president. There are many challenges ahead for her, as my colleagues have noted.That same day Nato gets a new secretary-general as former Dutch prime minister Mark Rutte replaces Jens Stoltenberg. He faces many challenges as the FT’s editorial board outlines.The Conservative party conference is under way and it’s fair to say it is less of a draw than previous years, except for its leadership contest. Will one of the contenders perform a David Cameron? The goal for the four remaining candidates is to still be on the ballot when it is whittled down to two on October 9 and the contest is put to a vote among party members.There are still significant elections to be had, most obviously the US presidential contest, and Tuesday will see the vice-presidential candidates duke it out on the CBS News channel. For more insight into the Republican candidate JD Vance, read Ed Luce’s recent column. Meanwhile, Inside Politics writer Stephen Bush explains why Democratic candidate Tim Walz fits the mould of many previous vice-presidential candidates, including that of Donald Trump in 2016.On the corporate front, the week brings a thin but steady flow of results, notably Tesco, Nike, Greggs and JD Wetherspoon. Shares in Tesco are up by a third in the past year to their highest level since late 2013. The British supermarket chain is capitalising on the woes of rivals Wm Morrison and Asda, which are struggling under the debt burdens heaped on to them by their private equity owners. Tesco has picked up a precious half-point of market share over the past year, according to Kantar Worldpanel.Greggs is also riding high, helped by July’s very strong first-half results, which showed a 14 per cent increase in total sales, a 16 per cent advance in underlying pre-tax profit and a 19 per cent rise in the dividend. This is a trading update but investors will be keen to hear more about its app, which has been a strong driver of that growth, an initiative to increase evening opening hours and the ongoing store rollout programme.JD Wetherspoon’s shares are broadly flat over the year, even though the pub group, with an estate of about 800 sites, is expected to report record sales for the year to July 2024. The issue is therefore profit, and in particular the impact of increased wages, utility bills and interest costs on the company’s £670mn net debt position.The economic data run this week is limited, but will include US employment figures, German inflation figures, the final UK Q2 GDP estimate and PMI comparisons between G7 nations and China, before the latter begins its National Day public holiday. More details on all of this below.One more thing . . . Runners will this Saturday celebrate the 20th anniversary of the first Parkrun, which took place in Bushy park in the affluent London suburb of Teddington. Parkrun is now looking at more than 2,300 events taking place around the world with more than 9mn registered parkrunners. I’ve never been drawn to the concept of spending one of my day’s off doing one of the sports I least enjoy in a public space, but I found a more positive take on the volunteer-led phenomenon in the FT archives from markets columnist Katie Martin.Talking of archive material, to celebrate the 30th anniversary of the iconic Lunch with the FT series, my colleagues have created a free, pop-up newsletter, providing you with a favourite lunch every Sunday through to November 17, with fresh insights from the interviewer. Sign up here.What are your priorities this week and what are you most looking forward to in the next month? Email me at jonathan.moules@ft.com or, if you are reading this from your inbox, hit reply. Key economic and company reportsHere is a more complete list of what to expect in terms of company reports and economic data this week.MondayEuropean Central Bank President Christine Lagarde attends the quarterly monetary dialogue with the European parliament Committee on Economic and Monetary Affairs, giving her views on economic and monetary developments and discussing economic and financial developmentsWitan Investment Trust holds a first general shareholder meeting to vote on the proposed recommended winding-up of the company and combination with Alliance Trust. A second shareholders’ meeting is scheduled for October 9China: Caixin September manufacturing and services purchasing managers’ index (PMI) dataGermany: September consumer price index (CPI) and harmonised index of Consumer Prices (HICP) inflation rate dataJapan: August preliminary industrial production figures,UK: revised estimate of Q2 GDP. Also, Nationwide September House Price Index.Results: 3i Infrastructure pre-close update, Alliance Pharma HY, Carnival Q3, Playtech HYTuesdayBank of England chief economist Huw Pill speaks at the CBI Economic Growth BoardNationwide’s acquisition of Virgin Money UK is expected to become effective after the deal was approved by shareholders at the building society’s annual meeting in JulyDarktrace acquisition by Thoma Bravo is expected to become effective, after shareholders approved the deal at a general meeting in JuneCanada, Eurozone, France, Germany, India, Italy, Japan, UK, US: S&P Global/HCOB/HSBC September manufacturing PMI dataChina National Day. Financial markets closedEU: preliminary September eurozone HICP inflation figuresMexico: Inauguration Day. Financial markets closedUS: fiscal year beginsResults: Greggs trading update, James Halstead FY, McCormick Q3, Nike Q1, PayChex Q1WednesdayChina: National Day Golden Week continues. Financial markets closedIndia: Mahatma Gandhi’s birthday. Financial markets closedIsrael: Rosh Hashana Eve, Jewish New Year Eve. Financial markets closedRussia: final Q2 GDP estimateResults: ConAgra Brands Q1, JD Sports HY, Lamb Weston Q1, Saga HY, Topps Tiles full-year trading statementThursdayCanada, Eurozone, France, Germany, Italy, Japan, UK, US: S&P Global/HCOB September services PMI dataChina: National Day Golden Week continues. Financial markets closedGermany: National Unity Day, marking the anniversary of reunification in 1990Israel: Rosh Hashana, the Jewish New Year. Financial markets closedUK: Zoopla September House Price IndexResults: Constellation Brands Q2, Tesco HY, SSE notification of close, SSP Q4 trading updateFridayEurozone, France, Germany, Italy, UK: S&P Global/HCOB September construction PMI dataIndia: HSBC September services PMI dataUS: September employment figuresResults: JD Wetherspoon FY, Yaskawa Electric Q2World eventsFinally, here is a rundown of other events and milestones this week. MondayUN General Assembly debate concludes in New YorkFrance: trial begins for French party leader Marine Le Pen, her father and predecessor Jean-Marie Le Pen and 25 others for alleged misappropriation of EU funds to pay the assistants of MEPs who were in fact working for their party, Rassemblement National, between 2009 and 2017. Marine Le Pen denies the allegations. The damage allegedly amounts to €6.8mnUK: annual election of the Lord Mayor of the City of London, an ancient title which now involves promoting British financial and business services globallyTuesdayBelgium: Nato ceremony to mark the transition to its new secretary-general, former Dutch prime minister Mark RutteCanada: government imposes 100 per cent surtax on all Chinese-made EVs, including electric and certain hybrid passenger automobiles, trucks, buses and delivery vansFrance: strikes and protests expected across France, backed by trade union CGT, over President Emmanuel Macron’s refusal to appoint Nouveau Front Populaire candidate Lucie Castets as prime ministerMexico: Claudia Sheinbaum assumes office as the country’s first female presidentUS: 100th birthday of former president Jimmy Carter. Also, televised debate between Republican vice-presidential nominee, senator JD Vance, and Democratic vice presidential nominee, Minnesota governor Tim WalzWednesdayAnnular solar eclipse, this year appearing almost entirely over the Pacific Ocean, but also visible from Easter Island and a small portion of Argentina and ChileThursdayRosh Hashana, aka Jewish New Year, with customs including the sounding of the shofar and eating symbolic foods such as apples dipped in honeyBrazil: G20 environment and climate ministers meeting begins in RioUAE: 2024 ICC Women’s T20 World Cup cricket tournament opens, featuring 10 teams including Bangladesh, Australia, England, New Zealand and IndiaUK: the main flu and Covid-19 vaccination campaign commences in EnglandFridayFrance: Francophonie Summit, a biennial meeting of heads of state and government from French-speaking nations, begins in Villers-CotteretsSaturdayUK: Claire Hanna is ratified as the new leader of Northern Ireland’s Social Democratic and Labour party at its annual conference. She was the only candidate to have declared an interest and replaces Colum Eastwood, who announced his resignation in AugustUK: 20th anniversary of the first Parkrun, the free 5km running event organised by volunteersUS: Republican presidential nominee Donald Trump holds a campaign rally at Butler Farm Show, Pennsylvania, the site of the July 13 assassination attemptSundayAustralian Daylight Saving Time beginsIsrael: Anniversary of Yom Kippur warLaos: Asean Summit and related meetings beginTunisia: presidential electionRecommended newsletters for youInside Politics — What you need to know in UK politics. Sign up hereUS Election countdown — Money and politics in the race for the White House. Sign up here More

SYDNEY (Reuters) – Australia slightly revised down its forecasts for resource and energy export earnings on Monday as lower prices across a broad range of commodities and a stronger currency continued to pressure a key source of government revenue.Australia now expects commodity export earnings to fall about 10% to A$372 billion ($256 billion) for the year ended 30 June 2025, down from a forecast of A$380 billion made in June, according to the official resources and energy quarterly. Revenues hit A$415 billion last year.The decline is set to continue into 2026, albeit at a slower pace, hitting A$354 billion.Commodity prices are down because of slower economic growth in the developed world, a consequence of higher interest rates, and weakness in China, a major source of demand for steel and other commodities, the report said.Australia’s largest export iron ore has been particularly hard hit by the slowdown in the Chinese property sector and prices are down about a third this year. The country forecasts iron ore export revenue to fall to A$99 billion in the year ended 30 June 2026 from A$138 billion last year.Prices were lower across much of the basket of resources covered by the report, including metals important to the renewable energy transition like nickel and lithium.Lower prices driven by a surge of supply from Indonesia have forced some Australian nickel mines to shut.($1 = 1.4550 Australian dollars) More

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The debate about Japan’s lost decades has been raging for years, analysts at Macquarie said, in a note dated Sept. 24, but what cannot be debated is that Japan had never truly recovered, and only recently it finally started to exhibit tentative signs of life. The bank maintains that challenges facing China are broadly comparable to Japan’s lost decades – both economies encountered a prolonged period of structurally high saving rates without consistent policies to consume such savings.  Hence, the only answer in both cases was an excessive reliance on investment and exports, and these led to overcapacities, disinflation, and declining return on investments. As disinflation intensified and returns dropped, households and corporates scaled back expenditures, expecting lower prices while demanding greater wealth and savings cushion. China’s closed capital account and non-convertible currency offers greater policy room, but the underlying disease and symptoms are likely to be the same, and the longer these persist, the more imbedded and intractable they will become.  As Japan in the 1990s, China seems reluctant to seriously address these issues, the bank added. The 20bps rate cut, lower RRR and other modest measures are unlikely to achieve much: the problem is not the cost or supply of money but rather lack of demand for money. Macquarie suggests the Chinese authorities look for a massive reduction in real estate risk, with direct state support equaling at least 5% of GDP. Additionally, they should transfer a significant portion of local and SOE debt to central government books, placing local governments on a viable revenue footing, while also raising and equalizing China-wide universal basic income. “Alas, today, these policies are viewed as too radical. Timidity and procrastination is still the order of the day,” the bank said. “Until far deeper paradigm policy shifts, we believe that China’s equities will continue to yield irregular sharp trading opportunities but no consistent returns.” More

The sector has faced challenges since early 2022, as the Federal Reserve’s interest rate hikes in response to inflationary pressures led to a sharp decline in transactions, higher capitalization rates, and falling property valuations. However, with the Fed’s recent shift in monetary policy, there is hope for recovery on the horizon.Wells Fargo economists argue that the Federal Reserve’s decision to cut the federal funds rate by 50 basis points in September 2024 could be a pivotal moment for the CRE market. This easing of monetary policy is expected to continue with additional rate cuts through the summer of 2025, which would mark the end of the most severe CRE downturn since the 2008 Global Financial Crisis. While lower interest rates are not a cure-all for the sector’s woes, they are seen as laying the groundwork for a more favorable environment for CRE investment and lending.The immediate impact of these rate cuts is already being felt in the form of stabilizing property valuations. As per the note, the National Council of Real Estate Investment Fiduciaries Property Index, which tracks property valuations, showed a decline of 5.5% year-over-year in the second quarter of 2024. This is a marked improvement from the steeper declines seen earlier in the downturn. However, some property types, such as industrial and retail, are seeing more resilience, while others, particularly Central Business District office properties, continue to struggle.The easing of interest rates also appears to be reducing upward pressure on cap rates, which were either unchanged or slightly lower across different property sectors in the second quarter of 2024. Lower rates help reduce financing costs, making it easier for investors to justify higher valuations and for borrowers to service debt. Additionally, expectations of an economic soft landing have encouraged capital to flow back into the market. Wells Fargo highlights that transaction volumes, although still depressed compared to pre-pandemic levels, are beginning to recover as capital starts moving off the sidelines.Nevertheless, challenges persist, particularly in the office sector, where vacancy rates remain elevated, and rents have not yet recovered. The office sector’s struggles are compounded by a looming “debt maturity wall” — nearly $1.9 trillion in CRE debt is set to mature by the end of 2026, much of which is tied to office properties. While some lenders have been willing to extend maturities to avoid distress, the sector remains vulnerable to further declines.Wells Fargo also points out that, although the worst may be over for many CRE sectors, the road to full recovery will not be without obstacles. The key risk remains limited price discovery due to depressed transaction volumes, which still trail behind 2019 levels. This means that while valuations appear to be stabilizing, the true market value of many properties remains uncertain. Furthermore, the ongoing construction boom, particularly in the industrial and multifamily sectors, could lead to temporary oversupply, putting upward pressure on vacancy rates and downward pressure on rents.Wells Fargo’s analysts expect that the continued easing of monetary policy will bolster CRE fundamentals by reducing borrowing costs and stimulating economic growth. This, in turn, should lead to stronger demand for most property types, especially those linked to consumer spending, such as retail and industrial properties. However, the office market, with its structural challenges, may take longer to stabilize and could see more distress in the years ahead. More