Economy

SYDNEY (Reuters) – Asian share markets made cautious gains on Monday on hopes a key reading on U.S. inflation will show some cooling, while the U.S. dollar was restrained by the risk of higher European interest rates and Japanese intervention.Holidays in China and South Korea made for slow trading, while traders were unsure about what implications Ukraine’s surprising success against Russian forces might have.MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.2%, having bounced modestly from a two-year low hit last week. Japan’s Nikkei added another 0.9%, after rallying 2% last week.Wall Street looked to extend Friday’s bounce and S&P 500 futures edged up 0.1%, while Nasdaq futures gained 0.2%.Bulls are hoping Tuesday’s reading on U.S. consumer prices will hint at a peak for inflation as falling petrol prices are seen pulling down the headline index by 0.1%. The core is forecast to rise 0.3%, though some analysts see a chance of a softer report.”Arguably, with the economy having contracted through the first half, and household discretionary spending capacity under significant pressure, we are due a modest downside surprise,” said economists at Westpac.”As such, we forecast +0.2% for core and -0.2% for headline,” they added. “If achieved though, it should not be assumed that October and beyond will see repeats, with volatility likely to persist.”A soft number might revive speculation the Federal Reserve will only hike by 50 basis points this month, though it would likely have to be very weak to have a real impact given how stridently hawkish policy makers have been recently.The market currently implies an 88% chance the Fed will hike by 75 basis points.BofA global economist Ethan Harris fears that by focusing on actual inflation to determining when to stop, central banks may go too far. The bank has lifted its target for the federal funds rate to a range of 4.0-4.25%, with a 75bp hike in September and smaller rises thereafter.”For investors, this means more pressure on interest rates, more weakness in risk assets and further upside for the super-strong dollar,” said Harris.”In our view, these trends only turn when markets price the full fury of central bank hikes and we are not quite there yet.” DOLLAR NOT DONE YETFor now, the dollar has run into some profit taking from a market that is very long of the currency after a month of sustained gains. So rapidly has the dollar risen on the yen that Japanese authorities are becoming increasingly vocal in protesting their currency’s decline, sparking speculation of intervention and putting pressure on the Bank of Japan to moderate its policy of yield curve control.Japan’s government must take steps as needed to counter excessive declines in the yen, a senior government official said on Sunday, after it hit its weakest level against the dollar in 24 years. That was enough to see the dollar hold at 142.67 yen and off last week’s top of 144.99. The dollar index stood at 108.820, having reached as high as 110.790 last week.The euro inched up to $1.0067, and away from its recent trough of $0.9865.It was helped in part by a Reuters report that European Central Bank policymakers see a growing risk that they will have to raise their key interest rate to 2% or more to curb record-high inflation despite a likely recession.Analysts at ANZ noted the dollar over the past month was up roughly 9% against the euro and the Chinese yuan, 12% against the British pound and 19% against the yen.”The rampant USD is causing strain in developing countries, which are finding imports priced in USD more expensive,” they said in a note.”With Fed speakers using every opportunity to hammer home a hawkish message and quantitative tightening looming, the USD is not about to dramatically turn.” The ascent of the dollar combined with high bond yields has been a drag for gold, which was hovering at $1,718 an ounce after hitting a low of $1,690 last week. [GOL/]Oil prices have also been trending lower amid concerns about a global economic slowdown, though cuts to supply did prompt a 4% bounce on Friday. [O/R]Early Monday, Brent was down 36 cents at $92.48, while U.S. crude eased 45 cents to $86.34 per barrel. More

The onerous crew quarantine rules had made rostering difficult and were a major impediment to the airline returning to more normal operations.Cathay’s passenger capacity was at just 12.4% of pre-pandemic levels in the month of July, although its cargo capacity was at 51% in part because cargo crews were no longer required to quarantine.Before the passenger crew rules were lifted, Cathay forecast it would reach 25% of pre-pandemic capacity by the end of the year.Cathay said it would continue to add back flights as quickly as feasible, but it would take time to rebuild capacity as it involves a substantial amount of crew training and reactivating stored aircraft.”This, combined with other operational complexities, means that capacity can only be increased gradually over a period of several months,” the airline said in a statement on Saturday that did not provide updated capacity guidance.Cathay has said it plans to hire an additional 4,000 staff to fill operational needs over the next 18 to 24 months as travel rebounds, having cut more than 6,000 jobs during the pandemic.Pilot attrition has been higher than normal because of the onerous quarantine requirements, combined with permanent pay cuts of as much as 58%.The Hong Kong government said on Friday that crew members would still need to remain isolated in their hotel rooms when on layovers outside the city. More

Good morning. King Charles III will embark on a tour of the United Kingdom this week, in a public show of commitment to the architecture of the UK as it comes under increasing strain. The new King will address both houses of parliament in London today before embarking on a programme of visits to Scotland, Northern Ireland and Wales. This will begin in Edinburgh, where the body of the late Queen Elizabeth II arrived yesterday after a six-hour procession from her Scottish summer retreat of Balmoral witnessed by large crowds along the route. Liz Truss, the new British prime minister, will accompany King Charles at church services during his tour under the terms of long-planned official arrangements. Some constitutional experts warned that her presence risked politicising events designed to cement the King’s pointed promise to serve his subjects “wherever you may live in the United Kingdom”. Pro-independence analysts questioned the wisdom of allowing Truss to add a political dimension to the King’s first UK tour. “It’s a strategic mistake for Charles III early on because royalty is meant to be apolitical,” said Gerry Hassan, professor of social change at Glasgow Caledonian University and author of Scotland Rising: The Case for Independence, due to be published later this month.After leading a procession that will take his mother’s coffin up Edinburgh’s Royal Mile to St Giles’ Cathedral today, King Charles will meet Nicola Sturgeon, Scotland’s first minister, and join a session of the Scottish parliament involving a motion of condolence.The King will visit Northern Ireland tomorrow, and will travel to Wales on Friday.Queen Elizabeth II met countless people during her 70 year reign. Did she ever come to your workplace or community? Please share your story via a short form. — SophiaFive more stories in the news1. Ukraine’s Reznikov warns on Russian counter-attack The country’s defence minister has said that, while Kyiv’s lightening offensive had gone far “better than expected”, forces need to secure the vast territory — more than 3,000 square kilometres — that they have recaptured since the beginning of September.2. China makes more than $30bn in emergency loans Data show that Beijing is emerging as a formidable competitor of the western-led IMF, doling out billions of dollars in secretive loans to countries at risk of financial crises in recent years such as Pakistan, Sri Lanka and Argentina.3. EY China opts out of firm’s radical break-up plan A day after EY’s global chiefs approved a plan to break up the group’s audit and consulting businesses in a move that will reshape the global accounting industry, EY’s greater China practice that stretched from Hong Kong to Mongolia has confirmed it will not take part in the split.4. Scientists discover how air pollution causes lung cancer In a development that could help medical experts prevent and treat tumours, an international team of scientists has made a breakthrough in identifying how air pollution causes lung cancer in people who have never smoked.5. India’s most valuable start-up under scrutiny Edtech giant Byju has repeatedly failed to publish its accounts as funding and revenues dry up for the once-booming educational technology sector. The online tutoring company is valued at $22bn, but hasn’t received at least $250mn from two of its investors. The company points to the complexities of its $1.1bn in acquisitions during the 2021 financial year for the nearly 18-month delay.The day aheadEuropean Central Bank conference The ECB’s seventh annual research conference begins today, featuring presentations by leading economists.Economic reports India releases its August consumer price index and July industrial production figures; the UK releases its GDP estimate and trade figures for July.Corporate earnings Oracle will release its Q1 earnings today.Covid-19 vaccines in the EU The European Court of Auditors will publish a special report today on the procurement of Covid-19 vaccines in the EUWhat else we’re reading Elizabeth II: an appreciation by Simon Schama The UK’s longest-serving monarch was so much more than a head of state. She was quintessential Britain, writes the historian and broadcaster. From the archive: In February of this year, as the Queen marked her platinum jubilee, the FT charted the strategy and influence of her wardrobe — and the legacy she would leave for her successor.Further reading: The FT examines the changes that shaped the UK during the Queen’s 70-year reign in 10 charts.Inside the royal finances Elizabeth II was one of the world’s wealthiest individuals, but she had limited ability to profit from or sell many of the assets over which she presided. “The Queen’s fortune” is in fact a number of highly regulated areas, most of which now pass to her successor.After Elizabeth II’s death, what happens next? The Queen’s death has raised a host of questions about the mourning process. Read the FT’s short guide on the funeral, the mourning period, and what King Charles is up to this week.King Charles III, a life-long apprentice, steps into the spotlight Never in British history has a monarch had so long to prepare for the role. But the new king, who has previously revealed so much of his opinions and emotional life, may no longer be as outspoken on the subjects he has previously championed.Further reading: In his own words, King Charles III shares his views on the environment, architecture, and waiting to be king.

© Joe Cummings

FashionAs we enter a new season and reassess our wardrobe needs, personal stylist Anna Berkeley advises which clothes are worth the investment.

Models wear MaxMara classic coats backstage at the brand’s show in Milan © Getty Images More

Asian markets should open the week on an upbeat note following the strong end to last week across global stocks, but with a heightened sense of caution ahead of Tuesday’s U.S. inflation data.The consumer price inflation report for August will be critical to the Fed’s interest rate decision later this month and, therefore, the tone and direction for world markets. Recent soundings from Fed officials suggest rates will continue to rise steeply. Bond and rates markets are taking this to heart – the two-year Treasury yield on Friday rose to a 15-year high of 3.575% and implied U.S. interest rates nudged 4%.Equities, however, have shown some resilience. The MSCI world index rose 1.7% on Friday, its best day in a month, and closed the week up 2.6%, its first weekly rise in four. The Nasdaq jumped 4% last week.Temporary relief from the rising interest rate storm?The Asian economic data calendar on Monday is light – Indian inflation is the only major release – but investors will have Chinese industrial output, retail sales, unemployment, FDI and unemployment figures to digest over the coming week. None of these will capture the recent lockdowns, but could still be useful measure of how fragile China’s economy was even before they came into effect. “While the Chinese economy has bottomed after the policy-induced contraction in 2Q22, Covid restrictions and an imploding housing market have sapped momentum,” Morgan Stanley (NYSE:MS) analysts wrote on Sunday. They are forecasting GDP growth this year of just 2.8%.Investors will also be on FX intervention alert from Beijing or Tokyo if the yuan and yen continue sliding to new lows. Japanese authorities, in particular, have warned that they are ready to defend support the yen, which slumped to a 24-year low against the dollar last week.Key developments that should provide more direction to markets on Monday: India inflation (August)India industrial output (July) UK growth, manufacturing, trade, industrial, services output (July) More

Brussels is set to ban products made using forced labour, a move that could further increase strains in its trade relations with China in the light of allegations about forced labour in the province of Xinjiang.Shoes, clothes and commodities such as timber, fish and cocoa are among the products most likely to be affected, according to those with knowledge of the plans.The US in June enacted a blanket ban on all imports from China’s Xinjiang province, where there have been allegations of widespread human rights violations — including torture, arbitrary detention and forced labour — against Muslim Uyghur and other minorities. The EU ban will instead focus on all products made from forced labour — including those made within the bloc — to avoid breaching World Trade Organization rules on non-discrimination. The Green/European Free Alliance bloc in the European Parliament has backed a US-style ban. Henrike Hahn, a German Green MEP and member of the parliament’s China delegation, said: “We are not like-minded friends of the totalitarian regime in China. We demand a ban on imports of products from Chinese forced labour and on products from Chinese companies in general produced with forced labour.”The European Commission, the executive body of the EU, is expected to announce its plans this week. “Forced labour constitutes a serious violation of a person’s human dignity and fundamental human rights,” said a confidential draft paper seen by the Financial Times, adding that it was the EU’s “priority” to eradicate it.The paper, which does not cite individual countries that could be targeted by the ban, added that the EU did not have time for a “fully fledged” impact assessment because of the urgency of the issue.The ban, which is likely to become law by next year at the earliest, will apply to products where forced labour has been used at any stage of their production, harvest or extraction and to all products, of any type, including their components, the paper said. “All economic operators, economic sectors, stages of production or steps of value chains should fall under the scope,” it added.The EU will use the International Labour Organization’s definition of forced labour. The UN body estimates that 25mn people worldwide suffer forced labour conditions. It is releasing fresh estimates on Monday.The 27 EU member states will be responsible for detection and enforcement and must respond to complaints by non-government organisations, companies and others. They will have to conduct an investigation and can request co-operation from the country producing the goods.Officials accept it could be hard to find proof, especially if countries do not co-operate. But if there is a good likelihood of forced labour being used, member states will be able to seize products and ban imports. An official said the EU has lowered “the burden of proof” to help enforce the ban.According to the paper, enforcement will concentrate on large companies, including manufacturers, producers and suppliers of goods, following concerns that small companies have less leverage to put pressure on suppliers and “fewer resources to conduct in-depth due diligence” on those companies.Regulators also want to boost co-operation with countries outside the EU to make sure products using forced labour do not end up in the bloc, the draft said. Earlier this month, the UN High Commissioner for Human Rights said the Chinese government had committed “serious human rights violations” in its treatment of Uyghurs and other Muslim ethnic minorities in Xinjiang.China has denied it is abusing human rights in Xinjiang, one of the world’s largest producers of cotton and a key supplier of materials for solar panels. More

The head of the world’s biggest producer of fibre optic cable said the EU needs a “much more resilient and self-sufficient” supply chain to tackle a tight market as the rollout of 5G and rapid growth in data centres drives soaring demand for the crucial material.“You don’t really have a robust supply chain here in Europe,” said Wendell Weeks, chief executive of Corning, in an interview with the Financial Times. “The global supply chain is not what we thought it was and manufacturers like us need to take on the responsibility of producing closer to our customers.”On Thursday, the US-based company opened one of the biggest fibre plants in the world in Poland, which aims to meet 30 per cent of demand in Europe over the coming year. Optical fibre is made of glass as thin as a human hair. Once produced, the fibre is often sent to cable manufacturers who wrap it in a plastic coating and protective tubing for use in telecoms networks.European cable manufacturers currently import more than half of their fibre from Asia and North America.Demand for the material has surged over the past three years driven by the rollout of 5G infrastructure, which requires around 100 times more fibre than existing networks. Meanwhile, tech companies such as Amazon, Google and Microsoft have pumped billions into expanding their data centre estates, including laying huge international fibre networks under the ocean.Europe and North America still lag behind Asia in terms of the scale of fibre rollout. Only a third of households in Europe currently have a fibre connection, compared with more than 90 per cent in China.“It’s not so much that the price is a significant issue for our customers. The issue primarily is supply,” Weeks said.

Wendell Weeks said the EU needs a ‘much more resilient and self-sufficient’ supply chain to tackle a tight market for optical fibre. © Anna Moneymaker/Getty Images

However, an executive at Prysmian Group, currently Europe’s largest fibre producer, contested the view that there was a significant shortage in the continent, arguing there was only a temporary tightness in the market caused in large part by higher input costs. “The fibre supply chain is tight but I don’t see any shortage,” said Philippe Vanhille, executive vice-president of telecoms at the Italian group. Vanhille added that Europe was viewed as a “paradise for business”, with the UK, Germany and Italy currently seen as particularly attractive markets to sell to because they had lagged behind European peers in updating their network infrastructure and were now massively accelerating their fibre rollout.The price of fibre has decreased precipitously over the past decade. However, it has increased again in Europe this year, driven in part by shortages of some crucial components, including helium, octamethyl and silicon metals.According to industry data provider Cru Group, prices in Europe have risen to €6.5 per fibre/km from record lows of €3 in January 2021. “Prices in Europe continue to be supported by tight availability and elevated production costs,” they wrote in a note. Fibre accounts for between 5 and 20 per cent of the cost of building a terrestrial network. More

OTTAWA (Reuters) – More than a year after the Great Resignation took hold in the United States, Canada is grappling with its own greyer version: The Great Retirement.Canada’s labor force grew in August, but it fell the previous two months and remains smaller than before the summer as tens of thousands of people simply stopped working. Much of this can be chalked up to more Canadians than ever retiring, said Statistics Canada.It is not just the 65-and-over crowd packing up their offices and hanging up their tool belts. A record number of Canadians aged 55-64 are now reporting they retired in the last 12 months, Statscan data shows. (Graphic: https://tmsnrt.rs/3RVXvNM) Graphic: Canadians are retiring in droves – https://graphics.reuters.com/CANADA-ECONOMY/EMPLOYMENT/lgpdwdxkovo/chart.png That is hastening a mass exodus of Canada’s most highly skilled workers, leaving businesses scrambling, helping push wages sharply higher and threatening to further drag down the country’s sagging productivity, economists say. “We knew from a long time ago that this wave was coming, that we would get into this moment,” said Jimmy Jean, chief economist at Desjardins Group. “And it’s only going to intensify in the coming years.””The risk you have, and in some sectors you’re already seeing it, is that people are leaving without there being enough younger workers to take over. So there’s a loss of human capital and knowledge.”During the pandemic, retirements fell as many Canadians decided to stay in their jobs longer. With restrictions now lifted, many are rushing to make up for lost time, choosing to travel and spend more time with family.Their departures are shrinking the labor force, which could weigh on economic growth at a time when the central bank is aggressively hiking interest rates to counter spiking inflation, fanning fears that the economy will fall into recession.Canada – which has ramped up immigration to help drive economic growth – has the largest working-age population, as a percentage of the overall population, in the G7, but at the same time its labor force has never been older, according to Statscan. One in five workers in Canada is 55 or older. (Graphic: https://tmsnrt.rs/3RTcMyJ) Graphic: Canada’s labor force is rapidly aging – https://graphics.reuters.com/CANADA-ECONOMY/EMPLOYMENT2/xmvjoajkypr/chart.png There were 307,000 Canadians in August who had left their job in order to retire at some point in the last year, up 31.8% from one year earlier and 12.5% higher than in August 2019, before the onset of the pandemic, Statscan said. Adding to the problem, more than 620,000 Canadians entered the 65+ age category during the pandemic, a 9.7% increase in that population group. Despite three straight months of job losses, job vacancies and postings remain well above pre-pandemic levels.NURSES AND TRUCKERSThe retirement problem is particularly dire in skilled fields like trades and nursing. Since May, Canada has lost 34,400 jobs in healthcare even as a record number of nurses reported working overtime hours. Those were not jobs being cut, but rather people retiring, said Cathryn Hoy, president of the Ontario Nurses’ Association.    “It’s a huge problem right now, because we’ve had so many that have retired unexpectedly,” she said, citing the pandemic, working conditions and a wage dispute with Canada’s largest province. The transportation industry is also grappling with a severe worker shortage, both because of the pandemic-driven frenzy for more goods and as the workforce ages.”More and more drivers are aging and therefore retiring or contemplating different lifestyle,” said Tony Reeder, owner of Trans-Canada College, a career college that trains transport truck drivers. At the same time, demand is booming from trucking companies, many of which take on student drivers for on-the-job training courses and then hire them outright as soon as they are fully licensed, said Reeder.”Without trucks and people to drive trucks … goods will sit at ports and in warehouses as opposed to getting to the destination where they can be consumed,” he said. More

Strikes have periodically paralysed the rail service in recent weeks and a further stoppage had been planned for this week.Sunday’s deal comes amid surging inflation in the Netherlands and the wider European Union, and is significantly higher than average wage settlements in the country so far this year.State owned NS Railways said pay would rise retroactively from July by 5%, or a minimum of 185 euros ($186) a month, with an additional 3.45% in January. It called the deal good news for passengers and rail workers. Trade union FNV Spoor said the average combined increase would be 9.25%.Unions said they also secured agreement on a minimum wage of 14 euros per hour and two additional payments of 1,000 euros ($1,000) per worker. The company had 38,600 staff as of 2020.The average pay increase negotiated so far in 2022 in collective labour agreements for roughly 2.5 million Dutch workers is 3.2%, according to data from employers association AWVN. Policymakers in Europe have expressed concerns that if inflation stays high for too long, businesses will start to adjust their pay settlements, setting off a hard-to-break wage-price spiral.Dutch inflation hit 12% in August, Statistics Netherlands said on Tuesday, driven largely by a 151% year-on-year leap in gas and electricity prices.($1 = 0.9961 euros) More