Economy

(Reuters) – A look at the day ahead in Asian markets. Three monetary policy decisions dominate Asian markets on Wednesday, with investor sentiment and risk appetite likely to be kept in check by a selloff on Wall Street and worries over tech and the global economy the day before.The central banks of Indonesia, Thailand and the Philippines all set interest rates on Wednesday, while the latest New Zealand inflation, South Korean unemployment and Japanese machinery orders are also on deck.Oil prices are on the slide again, partly reflecting soft demand, particularly from China. Crude futures slumped nearly 5% on Tuesday, pushing U.S. crude below $70 a barrel and bringing the year-on-year decline back to 20%. Tech worries pushed U.S. shares into the red, despite upbeat earnings from financial heavyweights Goldman Sachs, Citi and Bank of America. Nvidia (NASDAQ:NVDA) and ASML (AS:ASML) shares led the global tech slump, and attention later in the week turns to Taiwan Semiconductor Manufacturing Co, the contract manufacturer that produces Nvidia’s processors.It is expected to report a 40% leap in quarterly profit on Thursday, thanks to soaring demand.On Wednesday, meanwhile, Bank Indonesia is expected to leave interest rates unchanged despite inflation falling to its lowest level since 2021, with the exchange rate at the forefront of policymakers’ thinking.Inflation is down to 1.84% and has been within BI’s target of 1.5% to 3.5% all year, but the rupiah has fallen more than 3% from a September peak. The Bank of Thailand is also expected to stay on hold and leave its one-day repo rate at 2.50% for the rest of the year. Four out of 28 economists in a Reuters poll predicted a quarter-point cut.The Philippine central bank, on the other hand, is expected to cut its overnight borrowing rate by 25 basis points to 6.00%, and again in December as policymakers strive to support economic growth as inflation remains under control.The central bank kicked off its easing cycle in August, and since then inflation has dropped below the bank’s 2%-4% target.Meanwhile, investors continue to digest the details and steer from China at the weekend about its stimulus measures, and the recent slew of data. None of that has been particularly encouraging and Chinese markets are drifting lower, although equities are still up substantially from ‘pre-stimulus’ levels. Beijing on Tuesday announced that a press conference will be held on Thursday to discuss promoting the “steady and healthy” development of the property sector. If this announcement was aimed at reassuring investors, however, it has fallen flat. Shanghai’s blue chip index is down 13% from last Tuesday’s peak, but is still up 20% from the day before Beijing first unveiled its measures to support markets, the property sector and growth.Here are key developments that could provide more direction to markets on Wednesday:- Indonesia, Thailand, Philippines rate decisions- Bank of Japan’s Seiji Adachi speaks- New Zealand inflation (Q3) More

WASHINGTON (Reuters) -World Bank President Ajay Banga on Tuesday warned that a significant widening of the Israel-Gaza war could lead to major impacts on the global economy, calling the steep loss of civilian lives in the region “unconscionable.”Speaking in a Reuters NEXT Newsmaker interview, Banga said the war has had a relatively small impact on the global economy thus far, but a significant widening of the conflict would draw in other countries that are larger contributors to global growth, including commodity exporters.”First of all, I think this unbelievable loss of life – women, children, others, civilians, is just unconscionable on all sides,” Banga said. “The economic impact of this war, on the other hand, depends a great deal on how much this spreads.””If it spreads regionally, then it becomes a completely different issue because now you start going into places that are far larger contributors to the world economy, both in terms of dollars, but also in terms of minerals and metals and oil and the like,” he said.Some Western countries are pushing for a ceasefire between Israel and Lebanon, as well as in Gaza, though the United States, Israel’s strongest ally, has expressed its continued support and is sending it an anti-missile system and troops.Israel launched the offensive against Hamas after the militant group’s Oct. 7 attack on Israel, in which 1,200 people were killed and around 250 taken hostage to Gaza, by Israeli tallies. More than 42,000 Palestinians have been killed in the offensive so far, according to Gaza’s health authorities.Israeli strikes have also killed at least 2,350 people over the last year in Lebanon and left nearly 11,000 wounded, according to the Lebanese health ministry, and more than 1.2 million people have been displaced.Banga said war damage from Israeli strikes on Gaza is now probably in the $14-20 billion range, and destruction from Israel’s bombing of southern Lebanon will add to that regional total.Banga said the World Bank had provided $300 million, six times what was normally given, to the Palestinian Authority to help it manage the crisis on the ground, but that was small compared to the “large number” it would ultimately need.He said the multilateral development bank had also assembled a group of experts from Jordan, Israel, Palestine, Europe, the U.S. and Egypt to study what short- and longer-term actions it could take if a peace agreement could be reached.”We’re going to have to figure out how to have that publicly discussed and debated and then find the resources for it,” he said, adding that the effort would require private and public resources. More

MEXICO CITY (Reuters) -Mexican officials urged safety and stability in private investment in the country on Tuesday, following a bilateral summit with business leaders in which fears about constitutional reforms dominated the agenda. Companies such as Amazon (NASDAQ:AMZN), Mexico Pacific, Royal Caribbean (NYSE:RCL) and Woodside (OTC:WOPEY) Energy are set to make significant investments in the country in the next year, Economy Ministry Marcelo Ebrard said. Close to 250 executives attended the summit, held annually but of particular importance this year in the first weeks of President Claudia Sheinbaum’s administration. “The messages from President Sheinbaum were certainty, assuredness,” Ebrard said. “Investments in Mexico are safe. We’re going to work so trade in the region keeps growing.”Last month, Mexico’s Congress passed a sweeping judicial overhaul, which will put judges up for election by popular vote, arguing it will reduce corruption. But the reform has drawn concerns from top trading partners Canada and the U.S. and risks being challenged by both countries under the trilateral USMCA trade agreement, which is up for review in 2026.”None of these reforms are a problem for investment in Mexico,” Sheinbaum said.She added that legislation which will lay out how an energy reform will be implemented – known as a “secondary law” – will also establish a framework for investment in the sector.Sheinbaum is readying her national energy plan to present it next year.TOTAL INVESTMENTSEbrard said the total investments announced on Tuesday – many of which had already been previously confirmed by the companies themselves – topped $20 billion. That figure could come up to $30 billion if more planned investments materialized, he added.Mexico Pacific, which is building a liquefied natural gas (LNG) export plant in the western coastal state of Sonora, will invest around $15 billion in the country in 2025, Ebrard said.The firm had previously said the plant’s construction would cost that.Major passenger cruise line Royal Caribbean Group, meanwhile, is set to invest $1.5 billion in what Ebrard called a hub for “touristic development.”The firm said earlier this month it will develop an excursion site for day-time stops at the port of Mahahual, in southern Quintana Roo state. Local media had then pegged the investment at closer to $600 million.Ebrard added that Amazon would invest $6 billion over the next two years to boost its network and digital capacity in Mexico. The company had previously said it would invest $5 billion in Mexico over 15 years. Woodside Energy, meanwhile, is weighing an investment of around $10.4 billion in a tie-up with state oil producer Pemex, Ebrard said.Last year, Woodside forecast its share of the capital expenditure for the Trion deepwater oil project to be $4.8 billion, with Pemex covering the other $7.2 billion. More

ROME (Reuters) -Italy’s government plans to raise 3.5 billion euros ($3.81 billion) from domestic banks and insurers, Prime Minister Giorgia Meloni said on Tuesday after her cabinet approved budget plans for the next three years.The money raised would be earmarked for the national health service and the most vulnerable, Meloni wrote on the X social media platform.Officials previously said the levy on the financial sector would derive from a change in the taxation of stock options for managers and in the rules governing banks’ tax credits stemming from past losses, known as deferred tax assets.Italy’s largest bank and insurance companies include Intesa Sanpaolo (OTC:ISNPY), UniCredit, Banco BPM, Monte dei Paschi di Siena and Generali (BIT:GASI).The Treasury said in a statement that the budget for 2025 included measures worth 30 billion euros – primarily permanent cuts to income tax and social contributions for middle- and low-income earners.Rome has said it would widen next year’s deficit to 3.3% of gross domestic product from an estimated 2.9% based on current trends, borrowing an extra 9 billion euros to fund the package.The government did not provide full funding details for its 2025 budget on Tuesday, with the Treasury citing plans to rationalise state spending as well as the levy on banks and insurers.DEFICIT TO FALL, DEBT TO RISETalk of a bank levy had swirled for weeks and weighed on lenders’ shares in the absence of clarity from the government.Economy Minister Giancarlo Giorgetti last week said a contribution from banks “shouldn’t be considered blasphemous.”Italy last year shocked markets by imposing a 40% tax on banks’ windfall profits, only to backtrack by limiting the scope of the levy and giving lenders an opt-out clause which meant that in the end it raised zero for state coffers.The new bank levy will “not frighten the markets,” Foreign Minister Antonio Tajani wrote on X.For 2025, the government also plans to hike excise duties on diesel and eliminate some tax breaks for companies related to the main corporate tax IRES, according to officials.Italy is under an EU disciplinary procedure due to a budget deficit last year of 7.2% of GDP, far above the bloc’s 3% limit and the highest in the euro zone.Last month the government pledged to lower the deficit to 2.8% of GDP in 2026, hoping this would allow Italy to exit the procedure in 2027.On the other hand, Italy’s debt, already the second highest in the euro zone, is seen gradually climbing over the next two years, reaching 137.8% of GDP in 2026 compared with last year’s 134.8%.The EU’s recently revamped fiscal rules require a steady pace of deficit and debt reduction from 2025 over four to seven years.To secure EU approval for a less ambitious seven-year budget adjustment, Italy committed to reforms in several policy areas, including making the tax system more efficient.($1 = 0.9185 euro) More

WASHINGTON (Reuters) – The U.S. Small Business Administration said on Tuesday it has exhausted funds for its disaster loan program following increased demand from Hurricane Helene, with the U.S. Congress being in recess.”Until Congress appropriates additional funds, the SBA is pausing new loan offers for its direct, low-interest, long-term loans to disaster survivors,” the SBA said in a statement.”However, SBA is encouraging individuals and small businesses to continue to apply for loans given assurances from congressional leaders that additional funding will be provided upon Congress’ return in November.”The devastating Hurricane Helene killed more than 200 people in six U.S. states, nearly half of the victims in North Carolina alone.President Joe Biden has said he believes the U.S. Congress, whose members are currently in recess, should come back into session to address disaster relief funding needs.Members of the House of Representatives and Senate are not scheduled to return to Washington until after the Nov. 5 election. More

Unlock the US Election Countdown newsletter for freeThe stories that matter on money and politics in the race for the White HouseDonald Trump has elevated his threat to impose sweeping tariffs on imported cars including from Mexico and the EU, placing increased US trade protectionism at the heart of his agenda if he wins a new White House term. Speaking at the Economic Club of Chicago on Tuesday, Trump lashed out at European car manufacturers, including Mercedes-Benz, and vowed to slap high levies on imported vehicles, arguing that it was the only way to force production to return to the US.“We’re going to put tariffs on them . . . and you know what they can do? Mercedes-Benz will start building in the United States,” Trump said, while mocking the company’s existing presence in America.“They build everything in Germany, then they assemble it here. They get away with murder,” the former president said. “They take it out of a box, we could have our child do it,” Trump added.In response to the comment, the United Auto Workers union, posted on X: “Trump is a scab.”The Republican presidential candidate’s ire was also directed at car imports from Mexico. “If I’m going to be president of this country, I’m going to put a 100, 200, 2,000 per cent tariff [on cars from Mexico],” he said. “They’re not going to sell one car into the United States,” Trump added.During his time in the White House between 2017 and 2021, Trump launched trade wars with China as well as G7 allies, and renegotiated a trade pact with Canada and Mexico.But the former president has expanded the scope and scale of his trade pledges during this year’s election campaign, promising to apply up to 20 per cent tariffs on all imported goods, 60 per cent levies on all Chinese imports, and other tariffs on countries that are moving away from using the dollar.“To me, the most beautiful word in the dictionary is tariff,” Trump said. Economists have warned that his tariff plans — in addition to other elements of his economic agenda, such as sweeping tax cuts and efforts to undermine the independence of the Federal Reserve — risk triggering a new inflationary spiral in America and increasing costs for ordinary consumers.Trump said that if he won the election he would not seek to “order” the central bank what to do in terms of monetary policy, but said the president should be allowed to speak about interest rates.He also mocked the role of the Fed chair, which is held by Jay Powell, who the former president appointed to lead the central bank early in his administration but has since criticised.“I think it’s the greatest job in government. You show up to the office once a month, and you say let’s see, flip a coin, and everybody talks about you like you’re a God,” Trump said.During his session in Chicago, which was moderated by Bloomberg News, Trump was asked if he was in favour of breaking up Google, the technology company, as the Department of Justice is considering. He responded that Google had “a lot of power” but his main complaint was that it did not show enough positive stories about him. “I called the head of Google the other day and I said: ‘I’m getting a lot of good stories lately, but you don’t find them’,” Trump said. “I think Google is rigged,” he added. But he was sceptical of a big break-up that would “destroy the company”. “What you can do without breaking it up is make sure that it’s more fair,” Trump said. Video: America divided: the women who vote for Trump | FT Film More

“I think I have the right to say I think you should go up or down a little bit. I don’t think I should be allowed to order it, but I think I have the right to put in comments as to whether or not the interest rates should go up or down,” the former president said during a Bloomberg News interview at the Chicago Economic Club.In previous comments, Trump had been more explicit that he believed presidents “should have at least (a) say” in Fed rate decisions.How Trump would deal with the U.S. central bank should he win a second four-year term as president has been a matter of keen interest in economic circles and on Wall Street following reports earlier this year that a group of his allies had drafted proposals aimed at eroding the Fed’s independence if he wins. The group’s proposals asserted that Trump should be consulted on rate decisions, and Fed banking regulation proposals should be subject to White House review.The Fed chair and the other six members of its board of governors are nominated by the president and subject to confirmation by the Senate. The presidents of the 12 regional Fed banks are chosen by their own boards of directors, subject to approval by the Fed board.But the Fed enjoys substantial operational independence to make policy decisions that wield tremendous influence over the direction of the world’s largest economy and global asset markets.Among the pegs supporting the U.S. dollar’s stature as the world’s reserve currency, for instance, is the Fed’s ability to set monetary policy on its own without political oversight. That status, in turn, is key to granting the U.S. government a nearly unchecked ability to borrow on global bond markets at relatively low interest rates despite having a $35 trillion debt load, dubbed the “exorbitant privilege.”Trump in Tuesday’s interview declined to answer directly a question about whether he would try to oust Fed Chair Jerome Powell, whom Trump first appointed to run the U.S. central bank — only to later berate Powell and threaten to remove him for raising rates.”I did because he was keeping the rates too high, and I was right,” Trump said of his threats during his time in the White House to try to remove Powell.Either Trump or his Democratic rival for the White House, Vice President Kamala Harris, will have the opportunity to appoint a new Fed chief when Powell’s term as chair expires in 2026. More