Economy

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TOKYO (Reuters) – The yen remained under pressure on Thursday as the Bank of Japan looked set to keep ultra-low interest rates steady, while the U.S. dollar paused ahead of jobs data later this week and the U.S. presidential election next week.The Japanese currency has taken a beating this month as the dollar and U.S. Treasury yields have hovered around their highest since July. The yen is down nearly 6.3% for the month, putting it on track for what would be its biggest monthly loss against the greenback since November 2016.Japan’s political shakeup has only added to the yen’s woes, heightening uncertainty about the country’s fiscal and monetary policy outlook.The BOJ is widely expected to stand pat on Thursday and signal a cautious approach, as political uncertainty and jittery markets cloud the outlook. Still, analysts are divided over the prospect of additional hikes by the year-end, putting focus on BOJ Governor Kazuo Ueda’s post-meeting briefing for clues on the pace and timing of further rate increases.The yen was down 0.11% at 153.24 versus the dollar, not far off a three-month low of 153.885 hit on Monday.”Any strengthening of the yen at present would likely result from a general weakening of the U.S. dollar if interest rates begin to align,” said Sean Teo, a sales trader at Saxo.Still, the recent decline in the yen may be making many traders cautious given that excessive weakening could grab the attention of Japanese authorities, he added.Markets will get more economic data from China ahead of the BOJ’s decision, with the country’s manufacturing PMI set for release in the Asian morning. Economists polled by Reuters expect National Statistics Bureau’s manufacturing PMI to come in at 49.9, showing that factory activity contracted in October for a sixth month.The offshore yuan last traded at 7.1269.JOBS REPORT, PRESIDENTIAL ELECTION IN FOCUS U.S. nonfarm payrolls closes out the week on Friday in the run-up to the presidential election on Tuesday.Some investors have been putting on trades betting Republican candidate Donald Trump will win, although he is still neck and neck with Vice President Kamala Harris in several polls. U.S. private payroll growth surged in October, overcoming fears of temporary disruptions from hurricanes and strikes.Meanwhile, separate data showed the U.S. economy grew at an annualised rate of 2.8% in the third quarter, slightly lower than the 3% expected by economists.”Data overnight reaffirmed the underlying strength of the U.S. economy, largely supporting what’s already built into the price rather than providing a fresh catalyst for a renewed push higher,” Westpac analysts wrote in a note.The dollar index, which measures the currency against six major rivals, was little changed at 104.09, after softening the previous day. It hit its highest since July 30 at 104.63 on Tuesday.The euro was mostly flat at $1.0859. Regional inflation data and euro zone GDP came in stronger than expected on Wednesday, leading traders to trim back bets on an outsized rate cut from the European Central Bank in December. Sterling stood at $1.2957, down 0.03% so far on the day.Elsewhere, the Australian dollar fetched $0.65726 ahead of September retail sales figures out in the Asian morning.The New Zealand dollar ticked down 0.02% to $0.5974. More

Shares fell by as much as 23.2% in Thursday’s morning trade, after hitting on Wednesday their daily lower limit with a drop of 29.9%. Korea Zinc said on Wednesday it planned to issue new stock worth about $1.8 billion, just two days after it bought back shares at a higher price, amid a battle between its co-founding families for a controlling stake. Analysts criticised the decision as a move that could undervalue the interest of shareholders. The country’s Financial Supervisory Service is scheduled to give a briefing later on Thursday on issues related to financial markets, including the takeover battle around Korea Zinc. Earlier this month, the market watchdog launched a probe into recent tender offers made by the two sides, urging them to refrain from any unfair practices. Korea Zinc shares traded down 15.1% as of 0038 GMT. More

TOKYO (Reuters) -The Bank of Japan is expected to maintain ultra-low interest rates on Thursday and signal a cautious approach to rolling back its massive monetary stimulus, as political uncertainty and jittery markets cloud the outlook.The ruling coalition’s loss of a majority in a weekend election has heightened concerns about policy paralysis, raising the hurdle for additional rate hikes, analysts say.The BOJ is likely in no rush to push up borrowing costs with inflation showing few signs of spiking and Japan’s economic recovery fragile.But sounding too dovish on the policy outlook could give speculators an excuse to sell the yen and fuel unwelcome falls in the currency.The conflicting demands on policy could keep the BOJ from issuing clear signals on the timing and pace of further rate hikes, particularly ahead of the U.S. presidential election on Nov. 5.”The domestic political turmoil is negative for economic activity and could be headwinds for the BOJ’s rate-hike plans,” said Naomi Muguruma, chief bond strategist at Mitsubishi UFJ (NYSE:MUFG) Morgan Stanley Securities.”But the BOJ may not afford to wait too long if yen falls accelerate and re-ignite upside inflationary risks,” she said.At the two-day meeting ending on Thursday, the BOJ is widely expected to keep short-term interest rates steady at 0.25%.In a quarterly report to be released after the meeting, the board is seen making no major changes to its projection that inflation will move around 2% through early 2027.Markets will instead focus on the BOJ’s view on risks as Governor Kazuo Ueda has highlighted unstable markets and U.S. recession fears as key reasons to go slow in its rate-hike path.After meeting his counterparts from major economies in Washington, Ueda offered a cautiously upbeat view on the outlook for the global economy. He is expected to hold a news conference at 3:30 p.m. (0630 GMT) on Thursday to explain the BOJ’s policy decision.”Ueda may still be cautious about the U.S. economy. But he will probably strive to convey that the BOJ’s rate-hike path is intact to avoid weakening the yen further,” said veteran BOJ watcher Mari Iwashita.The BOJ may also drop hints by modifying the report’s portion on future policy guidance. In the most recent report issued in July, the BOJ said it would continue to raise rates if economic and price conditions move in line with its forecast.The board will likely debate whether additional language on risks or triggers for policy shifts should be included in the guidance, sources have told Reuters.The BOJ ended negative rates in March and raised short-term rates to 0.25% in July on the view Japan was making progress towards sustainably achieving its 2% inflation target.Data released on Thursday showed Japan’s factory output and retail sales rose in September, suggesting the economy was on track for a moderate recovery.Ueda has repeatedly said the BOJ will keep raising rates if the economy moves in line with its forecast. But he has also said the bank was in no rush as inflation remained moderate.A slim majority of economists polled by Reuters expect it to forgo a hike this year, though most expect one by March. More

(Reuters) -Australia’s Coles saw a slowdown in comparable sales in the first quarter on Thursday due to lower shelf prices for its products, even as it beat market estimates for group sales.Supermarket duopoly Coles and larger rival Woolworths are under pressure to cut shelf prices as they face wide-ranging criticism over a cost of living crisis in Australia.The country’s second-largest grocer posted a drop of 122 basis points in comparable sales to 2.4% for the 13 weeks to Sept. 29, from 3.6% in the prior corresponding period.Coles, however, posted a 2.9% jump in first-quarter sales revenue to A$10.55 billion ($6.94 billion), higher than a Visible Alpha consensus of A$10.51 billion.Shares of the Melbourne-headquartered retailer, which operates more than 1,800 retail outlets in Australia according to their website, rose marginally by 1.4% to A$17.950.”Cost of living remains a challenge for many of our customers, and we are focused on helping them find value in our stores through weekly specials, value campaigns, Flybuys and exclusive brands,” said Coles Group (OTC:CLEGF) CEO, Leah Weckert.The supermarkets division shoppers made value of promotional discounts and giveaways for Coles, while its e-commerce division saw a jump in revenue with newer features and developments.In a note post Coles update, Jefferies said the grocer reported slightly weaker-then-expected sales, similar to Woolworths.Jefferies analysts said Coles’ commentary was “generally much more upbeat than Woolworths, with no mention of the margin pressure called out by Woolies.”The grocer, which is currently under trial by the national corporate regulator for allegedly misleading customers, separately announced an agreement to construct its third automated distribution centre in Truganina, thereby taking its capital expenditure expectations to A$1.3 billion for fiscal 2025.”This underlines confidence in the first two that we expect to deliver A$105 million of cost savings this year,” analysts at Citi wrote.Meanwhile, Woolworths posted total group sales of A$18 billion for the September quarter on Wednesday.($1 = 1.5211 Australian dollars) More

(Reuters) -Facebook owner Meta Platforms (NASDAQ:META) on Wednesday warned of “significant acceleration” in artificial intelligence-related infrastructure expenses next year, while beating analysts’ estimates for third-quarter revenue and profit.The results sent mixed signals to investors about whether digital ad sales from Meta’s core social media business would continue to cover the cost of its massive AI buildout.Shares of the Menlo Park, California-based firm were down 2.9% in after-hours trading.”Meta needs to prove that it can continue to cover its AI costs as they rise next year, and any weakness in its core ad business could make investors nervous as they continue to wait for a return on Meta’s bigger AI bets,” said Emarketer principal analyst Jasmine Enberg.Like its Big Tech peers, Meta has invested heavily in data centers to capitalize on the generative AI boom. Unlike providers of cloud services, however, it does not expect to earn money from those investments right away and therefore is more subject to scrutiny from investors around its spending.Meta CEO Mark Zuckerberg acknowledged in a conference call with analysts that more infrastructure spending “is maybe not what investors want to hear in the near term,” but said the company nonetheless would continue to invest.”I just think that the opportunities here are really big,” he said.Zuckerberg added that Meta AI, a generative AI chatbot assistant that can generate images and answer questions, now has more than 500 million monthly active users. That represents a substantial jump from the 400 million users the company said were using Meta AI as of its last disclosure in September.The world’s biggest social media company kept costs in check in the third quarter, with total expenses of $23.2 billion and capital expenditure of $9.2 billion. It projected a slightly improved expense picture for the year as well, narrowing its total expense forecast to $96 billion to $98 billion.In its press release, however, it warned of “a significant acceleration in infrastructure expense growth next year as we recognize higher growth in depreciation and operating expenses of our expanded infrastructure fleet.”Investors have been wary of Meta’s spending in recent months. Its shares sank in April after it disclosed a higher-than-expected expense forecast, knocking $200 billion off its stock-market value.That ended a run of strong quarters for Meta, which has climbed back from a share-price meltdown in 2022 by slimming its workforce, leaning in to investor excitement about AI and earlier this year issuing its first-ever dividend.The company’s shares are up around 500% from the bottom and about 67% so far this year.On Wednesday, analysts also questioned Meta about its headcount, which stood at 72,404 employees, up from 66,185 in the year-ago quarter.Chief Financial Officer Susan Li said Meta would focus on pushing parts of the company “to be more efficient,” including those continuing to add employees.Meta’s earnings come after encouraging results from digital ad bellwethers Alphabet (NASDAQ:GOOGL) and Snap, which both beat third-quarter revenue estimates on Tuesday thanks in part to rising sales of AI-assisted ads.Meta reported third-quarter profit of $6.03 per share, compared with estimates of $5.25 per share, according to data compiled by LSEG. Third-quarter revenue stood at $40.59 billion, compared with analysts’ estimates of $40.29 billion.The company also forecast between $45 billion and $48 billion in fourth-quarter revenue, compared with analysts’ estimates of $46.31 billion, according to data from LSEG.Advertising accounts for the vast majority of Meta’s revenue, meaning higher marketing spend by retailers and other businesses during the holiday season could provide a crucial boost to the company’s bottom line, analysts say.Meta’s family daily active people (DAP), a metric it uses to track unique users who open any one of its apps in a day, grew 5% in the third quarter to 3.29 billion. DAP increased 7% in the preceding June quarter, to 3.27 billion.The company is well-positioned to squeeze more revenue out of users even as user growth slows, given that its AI tools can show people more content that match their interests, Enberg said.The company’s Reality Labs division, which produces its Quest virtual reality headsets, smart glasses made with EssilorLuxottica’s Ray-Ban and upcoming augmented-reality glasses, lost $4.4 billion in the third quarter, narrower than analyst estimates of a $4.7 billion loss.In thinking about Reality Labs investments for 2025, executives were excited about the progress and strong consumer interest they had seen around the smart glasses in particular, Li said. More

The East African nation and staff of the IMF announced an agreement on the seventh review of its $3.6 billion program in June, but completion of the review at the board level and the subsequent disbursement were disrupted by deadly protests.More than 60 people were killed in the violent protests which forced President William Ruto to abandon the government’s finance bill, which contained a slew of tax hikes. “Kenya’s economy remains resilient, with growth above the regional average, inflation decelerating, and external inflows supporting the shilling and a buildup of external buffers, despite a difficult socio-economic environment,” IMF First Deputy Managing Director Gita Gopinath said in a statement on Wednesday.The IMF also called for improving governance and transparency in Kenya. “The Kenyan authorities face a difficult balancing act of boosting domestic revenues to protect critical spending in priority areas while meeting heavy debt service obligations,” the IMF said.The board review also included a component of lending to Kenya under its sustainability window, which is known as RSF.The IMF’s support is seen as crucial for Kenya to be able to navigate its current liquidity challenges, which are mainly driven by high debt interest repayments.Government officials have indicated that Kenya will seek another program with the IMF when the current one ends next April. More

(Reuters) – A look at the day ahead in Asian markets. Thursday is shaping up to be a huge day for markets in Asia as investors brace for a deluge of major corporate and economic newsflow, topped by the Bank of Japan’s policy decision and China’s official purchasing managers index surveys for October.Third-quarter GDP figures from Taiwan and Hong Kong, retail sales from Japan and Australia, and the latest earnings reports from regional giants such as Samsung (KS:005930), Panasonic (OTC:PCRFY) and Sumitomo are also on tap.U.S. bond yields were little changed on Wednesday, holding steady around levels not seen since early July, while the dollar eased back from Tuesday’s three-month high. At least that represents no additional tightening of financial conditions. But the 10-year yield snaps a run of five monthly declines, going into the last trading day of October up nearly 50 basis points in the month. The dollar is up over 3%, poised for its biggest monthly rise in more than two years.U.S. equities on Wednesday failed to give a clear steer either, with Wall Street ending slightly lower, but investors in Asia may get some impetus from third-quarter earnings from Microsoft (NASDAQ:MSFT) and Facebook parent Meta Platforms (NASDAQ:META) after the close on Wednesday.Both offered upbeat outlooks, but in after-hours trading Microsoft shares were slightly higher and Meta shares were off 3%.Shifting the focus back to Asia, attention on Thursday will be firmly fixed on Tokyo, specifically BOJ Governor Kazuo Ueda’s press conference after the central bank’s widely expected decision to leave key interest rates on hold.Investors will be paying close attention not only to Ueda’s view on the macroeconomic outlook, but also how he thinks the political gridlock in the country following Sunday’s inconclusive general election might impact the central bank.Japan’s yen remains on the weak side going into the meeting at around 153.00 per dollar, while the Nikkei 225 index is back above 39000 points and up 3.5% so far in October. That would mark its best month since February.Investors also have China’s ‘official’ PMIs for October to look forward to. It will be too early for Beijing’s blizzard of fiscal, monetary and liquidity stimulus measures to have had a direct impact, but any positive surprise will perhaps be seized upon more than usual.Economists polled by Reuters expect National Statistics Bureau’s manufacturing PMI to come in at 49.9, showing that factory activity contracted in October for a sixth month, but by the tiniest of margins and close to swinging back into growth.Chinese stocks continue to trade heavily, their weakness on Wednesday pulling broader Asian stocks down 0.8% to a one-month low. The MSCI Asia/Pacific ex-Japan equity index is down 3.5% in October, on track for its worst month since January.Here are key developments that could provide more direction to markets on Thursday:- Japan interest rate decision – China ‘official’ manufacturing, services PMIs- Taiwan GDP (Q3) More