Economy

Standard DigitalStandard & FT Weekend Printwasnow $29 per 3 monthsThe new FT Digital Edition: today’s FT, cover to cover on any device. This subscription does not include access to ft.com or the FT App.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 editionWeekday Print EditionFT WeekendFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysisFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysisGlobal news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts10 monthly gift articles to shareGlobal 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 editionEverything in PrintWeekday Print EditionFT WeekendFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysisPlusEverything in Premium DigitalEverything in Standard DigitalGlobal news & analysisExpert opinionSpecial featuresFirstFT newsletterVideos & PodcastsFT App on Android & iOSFT Edit app10 gift articles per monthExclusive FT analysisPremium newslettersFT Digital Edition10 additional gift articles per monthMake and share highlightsFT WorkspaceMarkets data widgetSubscription ManagerWorkflow integrationsOccasional readers go freeVolume discountFT Weekend Print deliveryPlusEverything in Standard DigitalFT Weekend Print deliveryPlusEverything in Premium Digital More

Standard DigitalStandard & FT Weekend Printwasnow $29 per 3 monthsThe new FT Digital Edition: today’s FT, cover to cover on any device. This subscription does not include access to ft.com or the FT App.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 editionWeekday Print EditionFT WeekendFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysisFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysisGlobal news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts10 monthly gift articles to shareGlobal 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 editionEverything in PrintWeekday Print EditionFT WeekendFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysisPlusEverything in Premium DigitalEverything in Standard DigitalGlobal news & analysisExpert opinionSpecial featuresFirstFT newsletterVideos & PodcastsFT App on Android & iOSFT Edit app10 gift articles per monthExclusive FT analysisPremium newslettersFT Digital Edition10 additional gift articles per monthMake and share highlightsFT WorkspaceMarkets data widgetSubscription ManagerWorkflow integrationsOccasional readers go freeVolume discountFT Weekend Print deliveryPlusEverything in Standard DigitalFT Weekend Print deliveryPlusEverything in Premium Digital More

Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldAt the time of writing, vice-president Kamala Harris has won almost four percentage points less of the popular vote than President Joe Biden did in 2020, the steepest drop in Democratic support since 1980. What’s more, not only did Donald Trump retake the White House, the Republicans won a majority in the Senate and are likely to retain control of the House of Representatives.Such a crushing defeat in this week’s US election is bound to elicit months if not years of soul-searching from Democrats. Did Biden hold on for too long? Should party officials have opted for a contested convention instead of parachuting Harris into the race? Has the party’s socially progressive turn alienated some Hispanic and Black men?The problem is, it’s entirely possible both that the answer to all three of those questions is “yes”, and that taking action to address them would not have produced a fundamentally different outcome. Just as the answer to “would Britain’s Conservatives have fared better in an autumn election in a lower inflation environment?” is “maybe”, but the response to “would it have resulted in a materially different outcome?” is “no”.The reason I make these assertions is that the economic and geopolitical conditions of the past year or two have created arguably the most hostile environment in history for incumbent parties and politicians across the developed world.From America’s Democrats to Britain’s Tories, Emmanuel’s Macron’s Ensemble coalition to Japan’s Liberal Democrats, even to Narendra Modi’s erstwhile dominant BJP, governing parties and leaders have undergone an unprecedented series of reversals this year. The incumbents in every single one of the 10 major countries that have been tracked by the ParlGov global research project and held national elections in 2024 were given a kicking by voters. This is the first time this has ever happened in almost 120 years of records.Some content could not load. Check your internet connection or browser settings.Ultimately voters don’t distinguish between unpleasant things that their leaders and governments have direct control over, and those that are international phenomena resulting from supply-side disruptions caused by a global pandemic or the warmongering of an ageing autocrat halfway across the world.Voters don’t like high prices, so they punished the Democrats for being in charge when inflation hit. The cost of living was also the top issue in Britain’s July general election and has been front of mind in dozens of other countries for most of the last two years.That different politicians, different parties, different policies and different rhetoric deployed in different countries have all met similar fortunes suggests that a large part of Tuesday’s American result was locked in regardless of the messenger or the message. The wide variety of places and people who swung towards Trump also suggests an outcome that was more inevitable than contingent.But it’s not just about inflation. An update of economist Arthur Okun’s “misery index” — the sum of the inflation and unemployment rates — for this era might swap out joblessness and replace it with immigration. On this basis, the past couple of years in the US, UK and dozens of other countries have been characterised by more economic and societal upheaval than they have seen in generations.Some content could not load. Check your internet connection or browser settings.Of course, in the case of immigration, the distinction between unstoppable global forces and issues amenable to policy is a little fuzzier than with inflation. The rise of immigration around the world, both in numbers and salience, hints at a common global element, but clearly governments are not powerless here.Biden, Harris and the Democrats are not blameless for Tuesday’s decisive defeat. Clearly there are lessons to be learnt. But it’s possible there is just no set of policies or personas that can overcome the current global anti-incumbent wave.john.burn-murdoch@ft.com, @jburnmurdoch More

Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldWith Donald Trump headed back to the White House, we’re about to stress-test the question: just how dependent is the world trading system on the US?The distortive threat that the tariffs from his first term posed to the production networks that had been built up since the end of the cold war are obvious, but the impact of what he is contemplating now will go way beyond his previous actions.High tariffs on Chinese imports (and duties on steel and aluminium from other trading partners) in Trump’s first term as president caused disruption to bilateral trade. But it’s now well-established that companies responded to the China tariffs by routing goods into the US via so-called “connector countries” such as Vietnam and Mexico. Governments including Mexico, Canada and Australia also managed to negotiate deals to ameliorate the impact of the steel and aluminium duties. The US’s trade deficit with China shrank: its overall deficit did not.This time round, Trump has been threatening not just 60 per cent tariffs on China but blanket 10 or 20 per cent duties on all trading partners. His aim is to cut the US’s overall trade deficit, which he regards as intrinsically bad for the country in profit-and-loss terms. This is intuitively appealing but economically illiterate.Trying to use tariffs to close an overall deficit is far more damaging than to manage a bilateral relationship or, as the Biden administration has done, selectively to protect key industries such as electric vehicles. For all his protectionist instincts and actions, Joe Biden was a relatively good president for world trade. His fiscal stimulus — together with the low-interest rate policy of the Federal Reserve — helped demand and hence cross-border trade recover from the Covid shock. A bit of macroeconomic demand can outweigh quite a lot of microeconomic inefficiency.Using trade tools to achieve macroeconomic objectives such as reducing a current account deficit rarely works. Exchange rates can adjust by appreciating to offset the effect of the tariff. The fact that the dollar rose on Wednesday on the news of Trump’s re-election could reflect a variety of things, but the likelihood of tariffs being imposed is certainly one of them.The Peterson Institute think-tank in September modelled the impact of Trump’s across-the-board tariffs, and found that the exchange-rate effect tended to outweigh the tariff effect on trade flows. Its projections show a slight narrowing in the overall deficit over the next four years, but then a widening as the real exchange rate appreciates.It’s quite possible to imagine an enraged President Trump demanding higher and higher tariffs as the medicine fails to work and the deficit remains. Crushing domestic demand and plunging the US into recession will certainly reduce net imports, but at a terrible cost. He will, as was once said of an invading Roman army destroying everything in its way, make a desolation and call it peace. Trump may also resort to trying somehow to force the dollar lower, worsening the inflationary impact of the tariffs and requiring the Federal Reserve — assuming it’s still an independent central bank by then — to raise interest rates. From the point of view of the global economy and trade, a determined attempt to prevent the US being a globally important source of net import demand would come at a particularly bad time. China, with the travails of its domestic property market hampering Beijing’s attempts to switch its growth model to one dependent on domestic demand, is veering towards the old export-driven model that characterised the 1990s and 2000s.Brad Setser, a former US Treasury and US trade representative official now at the Council on Foreign Relations think-tank, argues that, properly measured, China is showing a sustained shift towards a larger trade surplus. US import growth, Setser says, is currently driving growth in global trade. China is frequently referred to as the engine of global economic growth, but the supply engine can’t run without the fuel of demand. As long as China and similar economies are running surpluses and the US (plus some smaller economies such as the UK) equivalent deficits, it is hard for real decoupling to occur. Now, having China as a chronic surplus country that saves too much and the US as one that saves too little is few people’s idea of an optimal world economy. Setser calls it “unhealthy globalisation” — it keeps the world economy and trade going but not in a balanced way. Still, it’s better than a crunching global recession.The world can live with China-specific tariffs of the kind Trump imposed during his first term. It can survive with the US abrogating its former role as a leader of global rule-setting in trade. (Biden’s enthusiasm for the WTO barely exceeded Trump’s.) It can live with the inefficiencies of walling off favoured industries from global competition. But it cannot live with all the big economies simultaneously making their primary goal of economic policy a determined drive to increase exports and cut imports without incurring serious damage.alan.beattie@ft.com More

Your browser does not support playing this file but you can still More

TOKYO (Reuters) – The dollar hovered off a four-month high on Thursday as the market continued to digest Republican Donald Trump’s win in the U.S. presidential election, while investors eyed several central bank decisions that will be topped off by the Federal Reserve.The Fed is expected to cut interest rates by 25 basis points later in the day, and the market focus will be on any clues that the U.S. central bank could skip a cut in December. Last week’s October jobs report came in weaker than expected, raising questions over the degree of softness in the labour market, though this data was clouded by the impact of recent hurricanes and labour strikes.The Fed’s decision comes on the back of the U.S. presidential election, with a victory by Trump fuelling questions about whether the bank may proceed to reduce rates at a slower and shallower pace.While the former president’s comeback to the White House received a “market-pumping” reaction, there were “mixed feelings when you dig a little deeper into the moves,” said senior market analyst Matt Simpson at City Index.U.S. equities at record highs and a weaker yen appeared to be an “endorsement for Trump,” but a stronger dollar and higher U.S. Treasury yields indicated markets were pricing in a less dovish Fed going forward, he said.Trump’s policies on restricting illegal immigration, enacting new tariffs, lowering taxes and deregulation may boost growth and inflation and crimp the Fed’s ability to cut rates.A full sweep by Republicans would allow the party to make larger legislative changes and in turn likely provoke larger currency moves, although control of the House of Representatives remains in question.Following the election, markets now see about a 70% chance the Fed will also cut rates next month, down from 77% on Tuesday, according to the CME Group’s Fed Watch Tool.U.S. Treasuries fell sharply on Wednesday, propelling yields to multi-month highs.[US/]The dollar index, which measures the greenback against six major peers, edged down 0.05% to 105.06 after surging to its highest since July 3 at 105.44 in the previous session.Anything less than a “dovish cut” from the Fed on Thursday could see traders trim back bets for a December cut and the dollar and yields rising higher, Simpson added.The yen was up 0.22% at 154.30 per dollar, after touching 154.7 on Wednesday, its lowest against the greenback since July 30.The euro (EUR=EBS) steadied at $1.0731, having tumbled as low as $1.068275 for the first time since July 27 on Wednesday, while sterling remained on the back foot, fetching 1.2885.Ahead of the Fed, the Bank of England is likely to cut interest rates the second time since 2020 but the big question for investors is whether it sends a signal about its subsequent moves after the government’s inflation-raising budget.The Riksbank is seen easing by 50 basis points, and the Norges Bank is set to stay on hold.Elsewhere, the Aussie was mostly flat at $0.6568, consolidating after falling to a three-month trough of $0.6513 on Wednesday.The kiwi traded at $0.5944, up 0.08%.Bitcoin hovered off Wednesday’s record high of $76,499.99, down about 0.66% at $75,490. Trump has also expressed favourable views on cryptocurrencies. More

Trump, a Republican who has promised to implement stiff tariffs, recaptured the White House with a sweeping victory over Democrat Kamala Harris in Tuesday’s election. “We respect the choice of the American people and congratulate Mr. Trump on his election as president,” a Chinese foreign ministry spokesperson said in a statement late on Wednesday. State-run newspaper China Daily said in an editorial on Wednesday that Trump’s second presidency could mark a “new beginning in China-U.S. relations if the chance that has been offered is not wasted.”The next U.S. administration can strengthen dialogue and communication with China to handle differences “which range from the Taiwan question to trade and to the South China Sea,” it said.U.S. policies and “misconceptions” towards China have posed significant challenges for relations, China Daily said.”A pragmatic approach to bilateral relations is essential in navigating the complexities of global challenges.”The proper handling of China-U.S. relations, which the newspaper called the world’s most important bilateral relationship, “not only serves the common interests of both countries but also will inject greater certainty and stability into the world.” More

(Reuters) – A look at the day ahead in Asian markets. Investors in Asia wake up on Thursday to a global market landscape redrawn by Donald Trump’s resounding U.S. election victory that has propelled Wall Street to new highs and sparked a huge surge in the dollar and U.S. bond yields.Any appetite for ‘risk on’ trades in sympathy with the U.S. equity rally will be largely offset, perhaps completely snuffed out, by tighter financial conditions from the rise in Treasury yields and the dollar. Emerging market currencies fell across the board in Wednesday’s global session – Mexico’s peso slumped as much as 3% before recovering – and Asian exchange rates could come under heavy selling pressure on Thursday too. Depending on the speed and extent of the selloff, some central banks may feel forced to intervene. The central banks of India and Indonesia, for example, have intervened in the FX market already this year to support their weak currencies. At one point earlier on Wednesday the U.S. dollar was up nearly 2% on an index basis, which would have been its biggest one-day rise since June 24, 2016 – the day after the Brexit referendum, which sank sterling. The dollar gave back some gains and Treasuries clawed back some of their heavy losses late on Wednesday, as the huge spike in yields attracted strong demand at an auction of 30-year bonds.Will investors in Asia on Thursday stick with the so-called ‘Trump trades’ – bets linked to higher federal spending, deficits and inflation, and greater deregulation – or will they exert restraint, and await more attractive levels to re-enter?Among the biggest moves of Wednesday’s session was bitcoin’s rise of almost 10% to a record high of $75,459 as investors bet on the Trump administration implementing policies that will help cement cryptocurrencies’ place in the financial ecosystem.As if the U.S. election tumult wasn’t enough, the Federal Reserve announces its interest rate decision on Thursday after a two-day meeting. This could provide investors with the cover to reduce risk exposure and trade more defensively on Thursday.Perhaps fittingly, the first full day of market trading in Asia following Trump’s victory sees the release of Chinese trade and foreign exchange reserves data. China has been the main target of Trump’s fiery rhetoric about global trade and how the US has suffered from unfair practices practiced by Beijing. He has said imports from China will be subject to tariffs of 60%, perhaps even higher.Official figures on Thursday are expected to show that export growth accelerated in October to an annual rate of 5.2%, boosted by steep discounts, while imports likely shrank 1.5%, according to a Reuters poll.Thursday’s calendar also includes the latest Australian trade figures, GDP data from the Philippines, and second-quarter earnings from Japan’s Nissan (OTC:NSANY).Here are key developments that could provide more direction to markets on Thursday:- Further reaction to U.S. presidential election – China trade (October)- Philippines GDP (Q3) More