Economy

Data from the Australian Bureau of Statistics on Wednesday showed its monthly consumer price index rose at an annual pace of 2.1% in October, unchanged from September and below market forecasts of 2.3%. From the month earlier, it fell 0.3%. The trimmed mean – a closely watched measure of core inflation – rose to an annual 3.5% from 3.2% in September, taking it further above the Reserve Bank of Australia’s 2% to 3% target band and making it a hurdle to cuts in interest rates.The report for October – the first month of the quarter – does not contain price updates on a range of services that are more of concern to the central bank, thus it is likely to have limited bearing on monetary policy. The bank has said monthly reports tend to be volatile.Markets have not fully priced in a cut in rates until May next year, with a move in December at just a 14% probability.The Australian dollar was little changed at $0.6474 after the data, while three-year bond futures held earlier gains, up two ticks at 96.02.The central bank has kept interest rates steady for a year now, judging that the cash rate of 4.35% – up from a record-low 0.1% during the pandemic – is restrictive enough to bring inflation to its target band while preserving employment gains.The RBA has said it would need to observe more than one good quarterly inflation outcome – a reason why markets are only pricing in a 27% chance of a cut in February after the release of the fourth-quarter CPI report.Again, electricity subsidies from the federal and state governments lowered prices by 12% in the month, while rents also fell 0.3% from September thanks to government relief.When volatile items and holiday travel were excluded, the annual CPI fell to 2.7% from September’s 3.0%. More

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While the country has benefited from a technology product upcycle and resilient demand from the global south, consumer and investor confidence remains subdued, exacerbated by a struggling property market.BofA analysts, in a research note, revised their forecast for China’s GDP growth to 4.5% in 2025, down from 4.8% in 2024. While the Chinese government continues to target a 5% growth rate for the final year of its 14th Five-Year Plan, achieving this goal will hinge on both the effectiveness of domestic stimulus measures and the external pressures posed by escalating trade tensions, particularly with the U.S..China’s policymakers have signaled a pivot toward more aggressive fiscal and monetary easing. Since late September, a series of modest stimulus measures have been rolled out, including increased fiscal expenditure and efforts to stabilize the property market. Analysts believe these steps reflect a shift in policy orientation, with top leadership prioritizing economic stabilization over structural reforms.In its base case, BofA anticipates that the U.S. will increase tariffs on Chinese goods in 2025, raising rates from 20% to 30% in the second quarter and up to 40% by the end of the year. Should these tariffs materialize, China is expected to counter with a range of policy responses, including widening the fiscal deficit to 3.5% of GDP, increased bank capital injections, and further interest rate cuts. Additionally, the People’s Bank of China (PBoC) may deploy its targeted lending tools to support the property sector, which remains a key drag on overall growth.In a more pessimistic scenario, where the U.S. imposes blanket tariffs of 60% on all Chinese exports starting in early 2025, BofA forecasts China’s GDP growth could fall to as low as 3.9%. Such a drastic tariff hike would lead to a sharp contraction in Chinese exports, particularly to the U.S., and would exacerbate the already challenging trade environment. The U.S. may also target a broader range of global trading partners, further dampening global trade.While Chinese authorities are likely to ramp up fiscal expansion and monetary easing in response to such a shock, BofA analysts caution that these measures may not fully offset the negative impact of the tariffs. The risk of deeper disruptions in trade, manufacturing, and domestic demand could further limit growth prospects.Despite the downside risks from escalating trade tensions, there are some factors that could support a more resilient Chinese economy in 2025. Upside risks include stronger-than-expected fiscal measures aimed at subsidizing consumption, as well as a rebound in external demand, particularly from emerging markets. On the flip side, downside risks remain, especially if China’s trading partners tighten restrictions on Chinese exports or if policy measures fall short of expectations.As China approaches the final year of its current economic plan, policymakers are likely to continue prioritizing stabilization measures, but the external environment—especially U.S. trade policy—will be a key determinant of the economy’s path forward. The next few months will be crucial in determining whether China’s recovery can gather momentum or whether it faces another year of subdued growth. More

Shares of the company, which surged about 33% so far this year, fell 1% in extended trading.”While we continue to be pleased with our year-to-date results, the external environment remains uncertain,” Chief Financial Officer Cathy Smith said in prepared remarks.At the end of the third quarter, inventory grew 6%, outpacing sales growth of 5%. The increase was partly due to slower sales in seasonal categories like boots, sweaters and outerwear in certain regions, said the company’s President Pete Nordstrom (NYSE:JWN), adding that they have curated sweaters and luxury fragrances for holidays.The slowing sales trends seen by Nordstrom in late October could indicate “that the holiday outlook is not great,” said Morningstar analyst David Swartz.However, the company beat third-quarter revenue and profit estimates on the back of popular brands including On Running, Hoka and Vuori.Nordstrom’s addition of sought-after brands, along with its focus on digital growth and expanding stores of its off-price brand Rack, has boosted sales ahead of a potentially mixed holiday season.The company expects annual comparable sales growth of 1% to 2%, from prior forecast of flat to a 2% rise.It bucked the trend on tepid spending at department stores by luring in shoppers for categories including women’s apparel, shoes and men’s apparel, while peers such as Macy’s (NYSE:M) and Kohl’s (NYSE:KSS) struggled with patchy demand.Its total revenue of $3.46 billion in the quarter ended Nov. 2, topped analysts’ estimates of $3.35 billion, according to data compiled by LSEG.Benefits from strong full-price sales and improvements in variable costs across the business helped expand quarterly gross profit by 60 basis points to 35.6%. Adjusted profit of 33 cents per share beat analysts’ estimates of 21 cents. More

MEXICO CITY (Reuters) -Financial analysts on Tuesday reacted to a threat from U.S. President-elect Donald Trump to impose 25% tariffs on top trade partners Mexico and Canada when he takes office for a second term in January in a move that could trigger a trade war.Mexico is the country’s top trade partner as of September, representing 15.8% of total trade, followed by Canada at 13.9%. Trump also threatened “an additional 10% tariff, above any additional tariffs” on imports from China, the third-largest trade partner at 11.9%.CAPITAL ECONOMICS”We suspect investors may be under-appreciating the impact from Trump’s policies on Mexico,” said Giulia Bellicoso, a markets economist. “We suspect Trump’s tariffs will take a toll on Mexican equities by denting optimism about nearshoring and limiting investment into the country.””We expect Trump to start another trade war,” she added.CIBANCO”We believe Trump’s announcement is a tactic to negotiate with these three countries, his main trade partners, from a position of strength, taking into account that imposing tariffs would also be negative for the U.S. economy,” CIBanco said in a note.”As such the final result of the tariff threat could be less severe once negotiations with the respective parties conclude.”BANCO BASE”The U.S.-Mexico-Canada Agreement (USMCA) will be reviewed in July 2026, which is expected to raise risk aversion especially in Mexico, as both U.S. and Canadian officials have mentioned that they would be better off with bilateral agreements,” Banco BASE said.It added that the tariff threat “raises the likelihood that Trump’s second term will be more radical, which represents a risk for Mexico’s export sector.””Trump’s threat implies that he could sacrifice the U.S. economy in the short term in order to curb the immigration and drug crises,” the group’s director of economic analysis, Gabriela Siller, added on X.ALLIANCEBERNSTEIN”As in previous instances of tariff threats, the exchange rate will play its role as a shock absorber reflecting the risks stemming from a persistent change in the commercial relationship,” said Armando Armenta, a senior economist at the asset manager.”However, trade linkages among USMCA members run deep, and a cooperation agreement on the control of illegal drug trafficking, labor migration, border protection and goods trade could quickly reverse the move.”MOODY’S ANALYTICS”The Mexican economy will be one of the most exposed to negative effects from the economic policies of U.S. President Trump,” said Moody’s (NYSE:MCO) Analytics, predicting lower growth particularly in the next two years as investment, remittances and the finance sector could all be shaken by the volatility.It said it was cutting its forecast for Mexico’s Gross Domestic Product (GDP) growth next year to 0.6% from a prior expectation of around 1%, and that it now predicts growth of around 1.6% in 2026 compared to a prior estimate of 2.5%.BANORTEEconomists at Mexican bank Banorte warned about “caution among investors as increased trade and political tensions between the U.S. and other countries loom on the horizon.”VECTOR ANALISIS Trump’s tariff threats against Mexico, Canada and China “could violate free-trade agreements and affect the three economies,” Vector Analisis said in a post to social media. More