Economy

SYDNEY (Reuters) – A bruised dollar took respite on Monday after suffering its worst weekly drop of the year, as traders waited on economic data and policy decisions before selling it down any further.Chinese growth data and loan-rate settings are due later in the session, ahead of U.S. retail sales and British inflation later in the week and a slew of central bank meetings next week.The euro, which jumped 2.4% last week to a 16-month high, held just below that peak at $1.1228. The yen, also up 2.4% last week, held at 138.69 per dollar.The dollar’s slide began with yen buying, as investors unwound yen-funded positions in emerging markets, but extended sharply after softer-than-expected U.S. inflation data leant support to wagers that U.S. interest rates will soon peak.Hikes are expected from the Federal Reserve and European Central Bank next week, but beyond that market pricing implies the Fed will likely stop, before cuts next year, while in Europe another hike probably beckons.”The FX market is front running possible normalisation of Fed policy in 2024,” said Chris Weston, head of research at broker Pepperstone in Melbourne.”The question then is whether the dollar sell-off has gone too far and we are at risk of mean reversion early this week.”The U.S. dollar index dropped 2.2% last week, its sharpest one-week fall since November, and was steady at 99.956 early in the Asia session on Monday.The Australian dollar has come back from last week’s top of $0.6895 to trade at $0.6830 on Monday and likewise at $0.6364 the New Zealand dollar was below Friday’s five-month peak of $0.6412.The Antipodeans could face pressure if Chinese data disappoints. Elsewhere the dollar moves have been so large that a short-term breather may be in order.Sharp (OTC:SHCAY) gains in the yen have slowed as traders weigh whether the ultra-dovish Bank of Japan is really likely to make any shifts at its policy meeting next week, given rhetoric suggests they are in no hurry. The Swedish and Norwegian crowns made gains of more than 5% on the dollar last week. At $1.3089 sterling was parked just below last week’s 15-month peak.”The dollar may remain on the backfoot as the market re-positions itself for a less hawkish Fed,” said Rabobank’s head of FX strategy, Jane Foley.”That said, the outlook for the latter few months of the year is less clear cut,” she said.”By then other major central banks including the ECB will also likely have reached their peak policy rates … interest rate dynamics may therefore swing back in favour of the dollar.” More

LONDON (Reuters) – Finance executives at top British firms have turned more cautious in the face of high inflation and rising interest rates and they expect a slowdown in hiring and pay growth, a survey showed on Monday. A quarterly survey by Deloitte found the difference between chief financial officers who were more optimistic about their businesses’ prospects and those who were less optimistic stood at -10 percentage points, a sharp change from +25 three months earlier.”The burst of business optimism seen in the spring has faded under the weight of inflation and rising interest rates,” Deloitte’s chief economist, Ian Stewart, said. “Corporates have responded with an increasing focus on cost reduction and cash control.”The survey showed early signs of cooling in the labour market with CFOs signalling a further easing in recruitment difficulties and a slowdown in wage growth.The Bank of England has said the pace of wage growth is too high and it is monitoring the labour market closely as it considers whether to raise borrowing costs for the 14th time in a row on Aug. 3 in an attempt to combat high inflation.Tight monetary policy was seen by the CFOs as the main threat to their business, overtaking concerns around geopolitics and energy prices that have dominated for the past two years.The survey of 69 CFOs – 13 of them from FTSE 100 firms and 21 from FTSE 250 companies – was conducted between June 15 and June 27.Separately on Monday, the Confederation of British Industry said Britain’s economy could get a boost of as much as 57 billion pounds ($75 billion), or 2.4% of GDP, by 2030 if the country capitalises on green growth opportunities.The CBI called on the government to deliver a clear and stable policy environment and offer incentives for investment, among other measures.”With a pivotal general election fast approaching, all parties should be on red alert for green growth and put it at the very heart of their manifestos,” CBI Director-General Rain Newton-Smith said.($1 = 0.7625 pounds) More

Property website Rightmove (OTC:RTMVY) said average asking prices of homes coming onto the market declined by 0.2% last month, compared with the 0% norm for this time of the year. Tim Bannister, director of property science at Rightmove, said stubborn inflation and further mortgage rate rises contributed to the fall in prices and number of agreed sales.Britain’s housing market has been hit by rapid increases in interest rates, which financial markets expect to rise to 6.25% by the end of this year from 5% now, adding to pressure on homeowners and buyers. “The interest-rate brakes being applied more strongly to slow the economy are now beginning to bite in the housing market,” Bannister said.House prices have also shown the impact from higher rates, with mortgage lenders Nationwide and Halifax both reporting falls in annual prices in June as buyer demand softened.The Bank of England, which has raised interest rates at its last 13 meetings, is tasked with brining persistent inflation, running at 8.7% in May, back to its 2% target. The central bank increased its Bank Rate by more than expected to 5% in June, pushing up the cost of mortgage borrowing. Average two-year fixed mortgage rates reached a 15-year high last week. Righmove’s monthly survey showed buyer demand remained resilient this month, up 3% compared to the pre-COVID market of 2019. “There remains a large volume of motivated buyers who can factor rate rises into their budgets and are continuing to enquire about homes for sale, which is keeping the market functioning,” Bannister said. More

Good morning. Microsoft has moved a step closer to sealing its contentious $75bn purchase of Activision Blizzard with the announcement that arch-rival Sony has signed a licence for the games company’s most popular title, Call of Duty, after the deal is completed.The agreement signalled a truce between the two gaming giants after a bruising 18-month battle that had seen the Japanese company become the biggest opponent to the acquisition. It follows regulatory breakthroughs for Microsoft on both sides of the Atlantic last week that have left it on brink of clinching victory for a deal that is expected to reshape the gaming industry.The pact appeared to resolve Sony’s biggest complaint about the acquisition, which it has said would hurt competition by giving Microsoft the power to make Call of Duty exclusive to its own Xbox game console and other services. The weekend agreement followed the failure late on Friday of a last-ditch legal attempt by US regulators to prevent the deal from closing.Phil Spencer, head of Microsoft’s Xbox gaming division, said on Twitter that the companies had signed “a binding agreement to keep Call of Duty on PlayStation following the acquisition”. Sony later confirmed the new licence, though both sides refused to give further details.Here’s what else I’m keeping tabs on today: China GDP: The world’s second-largest economy publishes its second-quarter gross domestic product growth data. Economists will be closely watching for clues about the underlying health of China’s economy as it struggles to recover from strict Covid controls last year.John Kerry in Beijing: The US climate envoy is visiting China to restart stalled negotiations over global warming between the world’s two largest polluters. Dyson lawsuit: London’s High Court will hear forced-labour claims against Dyson by 23 migrant workers and the estate of one deceased employee at the vacuum cleaner manufacturer’s Johor factory in Malaysia.Japan: Financial markets are closed for Marine Day.Five more top stories1. Top Biden administration officials have dimmed hopes of an immediate easing of tariffs against China. US Treasury secretary Janet Yellen said she was eager to work more closely with Beijing on areas of “mutual concern”, but that it is “premature” to relax trade restrictions. National security adviser Jake Sullivan called China’s move to impose export controls on two metals critical to semiconductors “self-defeating.”2. Moscow has taken control of the Russian subsidiaries of Danone and of Carlsberg’s Baltika Breweries, according to a decree signed into law by President Vladimir Putin. The move marks the first time that Russia has seized the subsidiaries of western businesses since it took over Finland’s Fortum and Germany’s Uniper in April. Read more on the Russian confiscations. iPhone ban: Russian authorities have banned thousands of state officials from using iPhones and other Apple products as a crackdown against the American tech company intensifies over espionage concerns.3. Exclusive: Czech billionaire Daniel Křetínský is poised to win the battle for control of Casino after a trio of investors led by billionaire Xavier Niel dropped out of the running to bail out the heavily-indebted French food retailer. Křetínský told the FT that he had submitted a revised offer to Casino as part of the company’s voluntary debt restructuring negotiation with creditors. Here’s what Křetínský’s new offer would mean for Casino. 4. “Rats” is how Hong Kong leader John Lee has taken to referring to a group of eight pro-democracy activists with a combined bounty of $1mn on their heads. Meanwhile, Lee is also the jovial face of a “Hello Hong Kong” government campaign drawing international visitors. Here’s why Lee’s hard line stance could hinder attempts to restore confidence in Hong Kong’s financial hub status. 5. UBS executives have chosen EY for one of the world’s most lucrative banking audit contracts after deciding to retain the Big Four firm following its takeover of Credit Suisse. The size of the contract means EY will have to call in staff from other countries to work on the audit, two people said. Read the full story. News in-depth

Global companies are racing to decouple China data in response to the country’s increasingly stringent data and anti-espionage laws, as relations between Washington and Beijing deteriorate. Here’s what “concerned” multinationals are doing to hive off their systems. We’re also reading . . . Wimbledon: Young Spanish tennis star Carlos Alcaraz defeated Novak Djokovic in an epic five-set battle to win his first Wimbledon men’s title.Hollywood strike: Writers and actors are picketing together in the industry’s biggest strike in 60 years as they protest against reduced pay in the streaming era and the threat of AI. Adam Posen: The economist warns about the flaws of the Inflation Reduction Act and viewing industrial competition as a zero-sum game. Read the full interview. Anti-social social media: Apps such as Mark Zuckerberg’s Threads are a stage for brands and celebrities, not a network for friends to connect, writes Elaine Moore. Chart of the dayTurkey has tripled petrol taxes as the government tries to raise money to recoup the cost of huge giveaways ahead of May’s election and fund reconstruction costing up to $100bn after February’s devastating earthquake. The increase pushed up petrol prices at the pump by about 20 per cent, data from state oil company Turkish Petroleum showed. Take a break from the newsEveryone complains about tourists. But following the pandemic, international travel is reviving unexpectedly fast and complaints about overcrowding and cultural insensitivity are getting louder. Now some destinations are trying to repel tourists.

Visitors to the Louvre in Paris crowd in front of the Mona Lisa in May 2022 © Magali Cohen/Hans Lucas

Additional contributions by Tee Zhuo and Gordon Smith More

(Reuters) – A look at the day ahead in Asian markets from Jamie McGeever, financial markets columnist.The macro and market week in Asia starts with a bang on Monday, with a raft of top-tier economic indicators from China culminating in second-quarter GDP growth data.Just how weak has the world’s second largest economy been recently, and will that be enough to dampen the growing optimism that the U.S. economy is heading for a ‘soft landing’?A raft of Chinese economic indicators for June – investment, retail sales, industrial production and unemployment – will be released on Monday, as well as the second-quarter GDP report.A Reuters poll of economists suggests growth slowed significantly. The consensus view of 0.5% expansion over the first quarter is much lower than the 2.2% quarter-on-quarter growth in the January-March period, which captured the initial bounce after lockdown restrictions were lifted.Year-on-year growth is expected to come in at a more impressive 7.3%, but that is inflated by base effects from the low level of growth in the same period last year.Any optimism there was early this year has evaporated. Activity has slowed, the economy is sliding towards deflation, and investors have shunned China’s stocks, bond and currency. China’s economic surprises index last week hit a one year-low.Later in the week China’s central bank sets its key one- and five-year lending rates. A sub-consensus Q2 GDP print on Monday could tilt expectations toward further easing. Looking beyond China, inflation data from Japan and New Zealand on Friday and Wednesday, respectively, and unemployment figures from Australia on Thursday will be the most important points on the regional calendar for investors this week.These come amid a renewed wave of bullish sentiment across local and world markets, in large part stemming from surprisingly tame U.S. inflation data. The dollar and U.S. bond yields have slumped, stocks and risk appetite have taken off.According to Goldman Sachs (NYSE:GS)’s financial conditions indexes, global financial conditions are the loosest since April last year, and emerging market financial conditions are now the loosest since February last year.Little wonder the MSCI World stock index jumped 3.4% last week, its best week since March, and the MSCI Asia ex-Japan index rallied 5.6%, its best week since November and finally showing signs of catching up after underperforming all year.The early stages of the second-quarter U.S. earnings season have also helped sustain the positive mood. Bank of America (NYSE:BAC), Morgan Stanley (NYSE:MS), Goldman Sachs, Tesla (NASDAQ:TSLA) and Netflix (NASDAQ:NFLX) are among the big names reporting in a busier reporting schedule this week. Here are key developments that could provide more direction to markets on Monday:- China GDP (Q2)- China investment, retail sales, industrial production, unemployment (June)- Indonesia trade (June) (By Jamie McGeever; Editing by) More

The decree said that foreign-owned stakes in Danone Russia and Baltika Breweries were being put under the “temporary management” of government property agency Rosimushchestvo.It comes after the Russian subsidiaries of Germany’s Uniper and Finland’s Fortum were taken under state control in April.The Kremlin warned at the time it could seize more Western assets on what it said was a temporary basis in retaliation for foreign moves against Russian companies abroad after Moscow sent thousands of its troops into Ukraine last year.Carlsberg said in a statement late on Sunday it had “not received any official information from the Russian authorities regarding the presidential decree or the consequences for Baltika Breweries”.It added that the prospects for full disposal of its business in Russia were now highly uncertain. Carlsberg said in June it had signed an agreement to sell its Russian business, subject to regulatory approvals.Danone said in a statement that it was investigating the issue, adding that the Kremlin’s decision would have no impact on its financial guidance for 2023. The French company said last October it was seeking a buyer for its dairy food business in Russia, in a deal that could lead to a write-off of up to 1 billion euros ($1.12 billion).($1 = 1.1227 euros) More

Hello and welcome to the working week.From the struggling property market to lacklustre trade and industrial profits, several economic indicators for the Chinese economy are flashing red. But that will not be immediately obvious when the world’s second-largest economy publishes its second-quarter gross domestic product growth data on MondayThe headline figure should still look deceptively strong because of a low base effect, with some banks forecasting 7 per cent growth. But the underlying momentum is slowing, warn economists, raising concerns about the health of the country’s post-Covid recovery.In Europe, polls suggest Spaniards are about to change the country’s political path when they vote next Sunday, ejecting Socialist prime minister Pedro Sánchez and installing a conservative government set to overhaul a €3bn windfall tax reviled by banks and energy companies. The big question is whether the opposition People’s party, led by Alberto Nuñez Feijóo, can secure an absolute majority or whether it will need the votes of the hard-right Vox party to take office. If so, Feijóo will come under pressure to take more radical positions on areas from climate change and immigration to gender rights.The focus of UK politics will be three by-elections in previously safe Conservative seats on Thursday, including Boris Johnson’s former London constituency of Uxbridge and South Ruislip. The Tories are in danger of losing the lot, fuelling fears that Rishi Sunak’s party will lose in a landslide at the general election, due in the next 18 months.On Wednesday, eyes will be on UK inflation, which is expected to have slowed to 8.2 per cent in June, down from 8.7 per cent in May, according to economists polled by Reuters. More optimistically, the Bank of England is forecasting a decline to 7.9 per cent.Thursday will be an important moment for Hafize Gaye Erkan, Turkey’s new central bank chief, when she announces the country’s next interest rate move. It could be one of the bank’s biggest-ever pivots. Erkan’s predecessor cut rates from 19 per cent to 8.5 per cent in two years, sparking an acute inflation crisis and placing Turkey’s currency under intense pressure. It will require a huge increase in rates to restore economic order, according to economists and investors.Tesla is the earnings call to watch because it is one of a handful of US tech businesses — alongside Amazon, Alphabet, Apple, Meta, Microsoft and Nvidia — that have kept American stock markets rising in recent weeks. Read more about that in the Unhedged newsletter. Tesla’s stock is up 54 per cent since it last reported results three months ago. Big price cuts have helped the electric-vehicle manufacturer gain market share and investors want to see what effect this has had on the gross profit margin.What is your priority for the week ahead? Email me at [email protected] or, if you are reading this from your inbox, hit reply.One more thing . . . The Women’s World Cup football kicks off in Australia and New Zealand on Thursday. Could this be another breakthrough moment for gender equality in the sport? Crucial economic and company reportsHere is a more complete list of what to expect in terms of company reports and economic data this week.MondayForced-labour claims brought before London’s High Court against Dyson by 23 migrant workers and the estate of one deceased employee at the vacuum cleaner manufacturer’s Johor factory in Malaysia.China: Q2 GDP and June retail sales figuresJapan: Marine Day. Financial markets closed.UK: Rightmove July house price indexResults: DFS Furniture trading update, Oxford Nanopore H1 trading updateTuesdayCanada: June consumer price index (CPI) inflation rate figuresUK: Kantar grocery market share figures and price inflationUS: June retail sales and industrial production figuresResults: Arbuthnot H1, Bank of America Q2, BNY Mellon Q2, Charles Schwab Q2, Lockheed Martin Q2, Morgan Stanley Q2, Novartis H1, Ocado H1, PNC Financial Services Q2, Prologis Q2, Rio Tinto Q2 operations review, Swedbank Q2, Wise Q1 trading updateWednesdayUK: June CPI, retail price index (RPI) and producer price index (PPI) inflation rate figures. Also, Office for National Statistics UK house price index.EU: June harmonised index of consumer prices (HICP) inflation rate data.Results: Baker Hughes Q2, Goldman Sachs Q2, Hargreaves Lansdown Q4 management statement, IBM Q2, Netflix Q2, Northern Trust Q2, Severn Trent Q1 trading statement, Tesla Q2ThursdayGeneral Meeting of Kingspan shareholders to vote on the proposed delisting of the company’s shares from the London Stock Exchange.China: loan prime rate decisionFrance: June consumer confidence dataTurkey: interest rate decisionResults: 3i Group Q1 performance update, AJ Bell Q3 trading update, Alcoa Q2, American Airlines Q2, Anglo American Q2 production report, ASML Q2, Babcock FY, Capital One Q2, Dassault Aviation H1, Dunelm Q4 trading update, easyJet Q3 trading update, Getlink H1, Halliburton Q2, Howden Joinery H1, International Distributions Services Q1 trading update and AGM, Johnson & Johnson Q2, Kenvue Q2, Kier Group trading statement, Manpower Q2, Marsh & McLennan Q2, Nasdaq Q2, Philip Morris International Q2, Premier Foods Q1 trading update and AGM, Publicis H1, SAP Q2, SSE Q1 trading statement, Travelers Q2, United Airlines Q2, Vistry Group trading updateFridayJapan: June CPI inflation rate dataRussia: interest rate decisionUK: public sector net borrowing. Plus, official retail sales figures and GfK consumer confidence survey.Results: ABB Q2, American Express Q2, Close Brothers trading update, Comerica Q2, Danske Bank Q2, FirstGroup trading statement and AGM, Glencore H1 production report, Interpublic Q2, Nokia H1, Norsk Hydro Q2, Schlumberger Q2, Skanska Q2, Thales Group H1World eventsFinally, here is a rundown of other events and milestones this week. MondayUN Security Council briefing on Ukraine, with British foreign secretary James Cleverly expected to chair the meeting.UK: Post Office Horizon IT Inquiry chair Sir Wyn Williams to submit an interim report to parliament, setting out recommendations on the three schemes designed to compensate sub-postmasters affected by the Horizon affair.TuesdayThe Islamic new year begins this evening.India: G20 meeting of finance ministers and central bank governors in Gujarat concludes.WednesdaySouth Korea: The Boryeong Mud Festival, one of the country’s largest summer gatherings, begins in Boryeong, a town about 200km south of Seoul.UK: Treasury committee takes evidence from Financial Conduct Authority chair Ashley Alder and chief executive Nikhil Rathi, following concerns about the City regulator’s supervision of Odey Asset Management and its founder Crispin Odey and on the FCA’s wider work on non-financial misconduct.ThursdayAustralia/New Zealand: Fifa Women’s World Cup kicks off with games in Sydney and Auckland. The competition concludes on August 20 with the final in Sydney.UK: three by-elections in former prime minister Boris Johnson’s seat of Uxbridge and South Ruislip, in Somerton and Frome, and in Selby and Ainsty. Separately, the Conservative party is expected to name its candidate for next year’s London mayoral election.UK: 20,000 rail workers across 14 train operating companies are set to strike as part of an ongoing national pay dispute, repeating the walkout on Saturday. Senior doctors in England begin a 48-hour strike over pay.US: Comic-con International comic book festival begins in San Diego, US.FridayBelgium National Day, marking the date in 1831 when Leopold of Saxe-Coburg-Saalfeld took the oath as first king of the Belgians.SaturdayUK: 10th birthday of Prince George, eldest child of the Prince and Princess of Wales and second in line to the British throne following his father Prince William.SundayCambodia: parliamentary electionsFrance: 110th Tour de France cycling race continues with the 21st and final stage, a 115.5km flat route ride from Saint-Quentin-en-Yvelines to the Champs-Élysées in Paris.Spain: general electionUK: the RMT union launches what it describes as a “week of action” on London Underground in a dispute over pensions, job cuts and working conditions. More