Economy

SINGAPORE/GDANSK (Reuters) -The dollar fell on Friday, on track to log its worst week in more than a year, after U.S. President Donald Trump suggested a potentially softer stance on tariffs against China which added to uncertainties around U.S. trade policies.The yen pared initial gains against the dollar after the Bank of Japan hiked rates on Friday and revised up its inflation forecasts, but offered few clues on the timing and pace of future rate hikes.Investors have sold the dollar in the wake of Trump’s inauguration after his widely expected tariff announcements did not immediately materialise, unlike his threats during his campaign.In an interview with Fox News that aired on Thursday evening, Trump said he would rather not have to use tariffs over China and that he thought he could reach a trade deal with the world’s second-largest economy.”This seems to feed into the growing sense that Trump is underdelivering on protectionism compared to pre-inauguration remarks, and that ultimately some of those tariff threats may not materialise as long as some concessions are made on trade,” said Francesco Pesole, currency strategist at ING.The Chinese yuan got a lift on the back of Trump’s remarks, with the onshore unit rising to its strongest level in eight weeks at 7.2370 per dollar.The U.S. president also said on Thursday that he wants the Federal Reserve to cut interest rates. Trump’s remarks came just days before the Fed’s first policy meeting to be held during his administration, with very broad expectations officials will leave rates unchanged.The dollar index, which measures the greenback against a basket of currencies, was on track for its biggest weekly fall since November 2023, set to lose more than 1.6% on the week. The index hit a one-month trough of 107.27 on Friday, and was last down 0.5% at 107.6.The euro, meanwhile, was up 0.65%, having touched its highest since Dec. 17 at $1.0515. The single currency was headed for a roughly 2% weekly gain.Data showed on Friday that euro zone business began the new year with a modest return to growth, as stable services activity in January was complemented by an easing of the long-running downturn in manufacturing.Sterling advanced 0.5% to $1.2417 and was similarly poised for a rise of 2% for the week, snapping three straight weeks of losses.BOJ HIKESThe Bank of Japan raised rates by 25 basis points at the conclusion of its two-day policy meeting, in a move that had been well telegraphed by policymakers prior to the outcome.The yen rose to 154.845 per dollar following the policy decision, but pared gains after Governor Kazuo Ueda’s press conference, where he said that a rise in underlying inflation was “moderate” and the central bank was not “seriously behind the curve”, suggesting no rush to tighten policy again.The yen was last unchanged at 156 per dollar.”There’s more than just the Japanese economy and wages that determine when the next BOJ rate hike can come, and the global uncertainties from Fed’s slowing rate cuts and the risk of tariffs in the new Trump administration remain out of Ueda’s control,” said Charu Chanana, chief investment strategist at Saxo. Earlier on Friday, data showed Japan’s core consumer prices rose 3.0% in December from a year earlier to mark the fastest annual pace in 16 months.In cryptocurrencies, bitcoin was last 2.2% higher at $105,435.Trump on Thursday ordered the creation of a cryptocurrency working group tasked with proposing new digital asset regulations and exploring the creation of a national cryptocurrency stockpile, making good on his promise to quickly overhaul U.S. crypto policy. More

Trump said he would “promote the development and growth of lawful and legitimate dollar-backed stablecoins worldwide” as part of a broader crypto strategy that he sketched out in an executive order issued on Thursday.Cipollone said this would help lure even more customers away from banks and strengthen the case for the ECB to launch its own digital currency in response. “I guess the key word here (in Trump’s executive order) is worldwide,” Cipollone told a conference in Frankfurt. “This solution, you all know, further disintermediates banks as they lose fees, they lose clients…That’s why we need a digital euro.”Stablecoins work similarly to money market funds in that they offer exposure to short-term interest rates in an official currency – nearly always the U.S. dollar.A digital euro, by contrast, would essentially be an online wallet guaranteed by the ECB but operated by companies such as banks.It would allow people, even those who don’t have a bank account, to make payments. Holdings would likely be capped at a few thousand euros and not remunerated.Banks have expressed concerns that a digital euro would empty their coffers as customers transfer some of their cash to the safety of an ECB-guaranteed wallet.The euro zone’s central bank is currently experimenting with how a digital euro would work in practice. But it will only make a final decision on whether to launch it once European lawmakers approve legislation on the matter.Trump’s executive order also prohibited the Federal Reserve from issuing its own central bank digital currency (CBDC).Nigeria, Jamaica and the Bahamas have already launched digital currencies and a further 44 countries, including Russia, China, Australia and Brazil are running pilots, according to the Atlantic Council think tank. More

LONDON (Reuters) – Foreign investors are flocking to Turkey’s local debt markets, saying they are impressed by interest rate cuts and easing inflation and are hoping that a regional transformation could further boost their bets on the economy. Turkey’s central bank cut rates by another 250 basis points on Thursday to 45%, continuing an easing cycle it began just last month after an aggressive drive to end years of soaring prices and a tumbling currency. More than a year and a half after President Tayyip Erdogan’s re-election and pivot back to more orthodox economic and monetary policies, Turkey is back to being a mainstay of emerging market investors. “Turkey is one of the bigger success stories, one of the positive dynamics in our space that we like,” said Nick Eisinger, co-head of Emerging Markets with Vanguard. “The reform story and the macro story is very positive and still has runway to go.”Local bonds sucked in $1.24 billion of foreign investor cash in the week to Jan 17, the biggest such inflows in two months, bringing the 2025 tally so far to as high as $1.9 billion, central bank data show. Foreigners hold more than 10% of government debt, levels last seen in 2019. While that is a sharp increase from around 1% in 2022, it is still less than half of the 25% prior to August 2018, when the lira crisis started.Emerging from that crisis has been painful.Turkey for years opted for unorthodox fiscal and monetary policies that fuelled red-hot growth. It claimed the top spot for economic growth among larger emerging markets since the onset of the COVID-19 crisis, according to Oxford Economics. But those exposed to local bonds paid a hefty price: with inflation topping 85% in 2022 and touching 75% last year, and a lira tumbling to a series of record lows, a big chunk of investments were wiped out.DISINFLATIONThe more favourable recent backdrop has also seen Amundi, Europe’s largest asset manager, venture into domestic bonds.”We like Turkey from a local currency perspective,” said Yerlan Syzdykov, global head of emerging markets & co-head of emerging markets fixed income at Amundi. Easing inflation – which was lower than expected at 44.38% annually in December – coinciding with a fragile balance of payments situation that gave Turkey little wiggle room to allow the lira to slide further, was favourable to investors for now, said Syzdykov. “The pace of the disinflation should continue being higher than the pace of devaluation – so that’s the bet that we have as well.” A Reuters poll shows the central bank is expected to forge ahead with cuts that leave its key rate at 30% at year-end, when the bank itself expects inflation to slow to about 21%. While the government may be less inclined to push for high growth for now, recent regional developments – including the ousting of Syrian leader Bashar al-Assad and the Israel-Hamas ceasefire in Gaza – could add to Turkey’s growth momentum, analysts said. “Everything that’s happened in the Middle East is probably quite positive for Turkey,” said Magda Branet, head of emerging markets and Asian fixed income with AXA. “Turkey will probably be an actor in the reconstruction of the region and in the reconstruction of Ukraine… So on the growth outlook and the fiscal outlook there’s definitely some positive news.”Turkey still has to prove its orthodox pivot will last before it lures back so-called crossover investors: the major developed-market investors who also dabble in emerging markets. Often managing big pots of money, they have in recent months sought exposure to emerging economies, especially investment-grade rated sovereigns in the Gulf or Latin America.”From their perspective, it’s too risky to go into Turkey because of these factors… on the geopolitical side, but also because of the fragility of the institutional space,” said Amundi’s Syzdykov. More

Some of the most high-profile names that are likely to headline this year’s IPO market resurgence include Swedish payments firm Klarna, fintech giant Chime, AI-focused chip firm Cerebras and medical supplies provider Medline. The performance of recent listings is often viewed as a key measure of investor sentiment, and their success typically motivates other companies to proceed with their offerings. Venture Global LNG is the first major listing of the year and is set to test investor appetite for energy IPOs after Trump pledged support for the industry. Here is an overview of how some of the biggest IPOs of recent years have performed: ARM HOLDINGS: The chip designer raised $4.87 billion in its offering in September 2023, valuing it at $54.5 billion. It had sought a valuation of as much as $52 billion. The company’s shares rose 10% at the open on debut day. The stock has gained nearly 200% since. INSTACART:The San Francisco-based company, which is incorporated as Maplebear Inc, was priced at the top end of the marketed range in its IPO. It raised $660 million at a nearly $9.9 billion valuation in September 2023. It had hiked its proposed price range and targeted a valuation of up to $10 billion. The grocery delivery app’s stock popped 40% at the open and is currently trading 8.2% higher. VIKING HOLDINGS: The cruise operator’s IPO raised $1.54 billion in April last year, valuing it at $10.35 billion. It had sought a valuation of as much as $10.8 billion in the offering. Viking’s shares opened 9% above their offer price and have surged 86% since. STANDARDAERO: The aircraft maintenance services provider notched a valuation of roughly $8 billion after pricing its offering above range to raise $1.44 billion in October last year. It had initially targeted a valuation of up to $7.69 billion. The Carlyle-backed company’s shares began trading 29% above the offer price. The stock has fallen 13.22% since. LINEAGE: The cold storage real estate investment trust raised $4.45 billion in its listing in July 2024, at a valuation of more than $18 billion. It had aimed for a valuation as high as $19.16 billion. The company’s stock gained 5% in its Nasdaq debut at the open. The stock has since fallen 25.6%. REDDIT:The social media giant fetched $748 million in its IPO in March last year, which valued it at $6.4 billion — the top end of the target range at which it had advertised.Its stock opened 38% above the offer price, and has since jumped over four-fold.BIRKENSTOCK:The 250-year-old German sandal maker raised $1.48 billion and was valued at $9.3 billion in its IPO in October 2023, slightly lower than its target of $10 billion.Its shares debuted 11% below their IPO price and have risen 43% since.ZEEKR:The Chinese EV maker’s shares have dipped about 3% since opening 24% above their IPO price on their NYSE debut. It raised $441 million in the share sale in May last year, at a valuation of $5.5 billion, the top end of its targeted range.KENVUE:The consumer health unit of Johnson & Johnson (NYSE:JNJ) fetched $3.8 billion in the IPO in May 2023, and was valued at $48 billion after its shares opened 16% above the offer price. The company had initially aimed for a $43 billion price tag. Since the debut, its shares have lost nearly 19%.WAYSTAR:The healthcare payments firm raised $968 million in its IPO in June last year, valuing it at $3.7 billion. It was initially seeking a valuation of up to $3.8 billion. Its shares have soared 80% since the debut. They had opened 2% below their IPO price. ** Note: Stock performance since debut is calculated on the basis of the opening trade ** Sources: Filings, LSEG, Reuters’ reports More

(Reuters) -U.S. stock index futures were muted on Friday, with Wall Street’s main indexes on track for their second-straight week of gains, while uncertainty about President Donald Trump’s trade policies also prevailed.Tariffs are high on investors’ minds after Trump referred to the policies multiple times at separate events this week but did little to lay out entire details of the surcharges he plans to impose on trade partners of the United States.The president has said tariffs on Mexico, Canada, China and the European Union could be announced on Feb. 1, but analysts say major plans could be announced on April 1 – the date by when federal agencies are expected to complete reviews of a range of trade issues.Investors are concerned that tariffs could spark a global trade war, add to inflation pressures and slow the pace of interest rate cuts by the Federal Reserve. The central bank is expected to leave interest rates unchanged next week at its first policy meeting of the year.”The scope and severity of possible tariff outcomes remain uncertain. Our base case, to which we assign a 50% probability, is for the U.S. effective tariff rate on China to rise to 30%, and for China to retaliate,” said Mark Haefele, chief investment officer, global wealth management at UBS.”We also expect efforts to limit transshipments, protect U.S. technology interests, and impose tariffs on some EU exports.”At 7:22 a.m. ET, Dow E-minis were down 98 points, or 0.22%, S&P 500 E-minis were down 4.5 points, or 0.07%, and Nasdaq 100 E-minis were down 5.75 points, or 0.03%.Later in the day, markets will assess a preliminary private survey on manufacturing and services activity for January and the University of Michigan’s final estimate on consumer sentiment.In premarket trading, Boeing (NYSE:BA) lost 1.6% after warning that it expects a fourth-quarter loss of about $4 billion to close a rocky year for the planemaker. The company is expected to report quarterly results on Tuesday.Investors were also taking a pause after the benchmark S&P 500 closed Thursday’s session at a record high for the second time in over a month after Trump called for taxes, oil prices and interest rates to be lowered at the World Economic Forum in Davos, Switzerland. On a weekly basis, Wall Street’s main indexes are set for their second straight week of advances, with the blue-chip Dow on track for its biggest weekly jump since October 2022, aided by Trump’s artificial intelligence investment plans, signs of cooling inflation and robust earnings from big banks in the previous week.Among others, Texas Instruments (NASDAQ:TXN) dropped 3.7% after forecasting first-quarter profit below analysts’ estimates. American Express (NYSE:AXP) reported a 12% jump in fourth-quarter profit. Shares, however, fell 2.6%. Verizon Communications (NYSE:VZ) dipped 0.3% after forecasting annual free cash flow and adjusted profit below estimates.The following week will see quarterly reports from megacaps such as Microsoft (NASDAQ:MSFT), Meta (NASDAQ:META), Apple (NASDAQ:AAPL) and Tesla (NASDAQ:TSLA). U.S.-listed shares of Chinese companies such as JD (NASDAQ:JD).Com rose 3.1%, Xpeng (NYSE:XPEV) added 3% and Alibaba (NYSE:BABA) climbed 1.1% after Trump suggested in an interview that tariffs against China could be avoided. More

WASHINGTON (Reuters) – At their last meeting in December, U.S. Federal Reserve officials were worried about inflation getting stuck above their 2% target and had watched job gains seesaw in what seemed an emerging decline.When they meet on Jan. 28-29, the mood around the most recent economic data at least will have shifted back towards more faith that inflation will continue to fall and a further easing of concern about the state of the job market. The usual caveat among economists – “all things equal” – may prove especially important given the uncertainty about how the edicts of the new Trump administration may influence import prices, the size of the labor force, and the regulatory landscape.Measures of policy uncertainty have spiked since Donald Trump’s election win in November. But the data since December remains helpful to the bulk of Fed officials who feel the job market and the economy overall are in healthy shape, with inflation expected to ebb further in coming months.After cutting its benchmark rate a full percentage point in the final three meetings of 2024, the Fed is expected to pause and leave it unchanged in January in the 4.25%-to-4.50% range as policymakers assess how much longer “tight” monetary policy is needed and how much they would need to cut to reach a “neutral” rate of interest.INFLATION SEEMS SET TO IMPROVEThe latest Consumer Price Index report showed inflation rising slightly in December but was driven by volatile energy prices, something the Fed tries to factor out in its analysis of underlying price trends. The core rate of inflation, excluding food and energy, fell slightly. More significantly for the Fed, CPI and other components of the separate Personal Consumption Expenditures price index suggest it rose at a roughly 2% annual rate through December and has been near the Fed’s target on a three-to-six month basis.Moreover, Fed officials feel the data are primed to turn in their favor this year. Since inflation was unexpectedly hot at the start of 2024, as those strong months fall from the annual calculations so-called “base effects” will help anchor inflation lower, all else equal.JOB GAINS STILL HOLDING UP”Downside risks to the labor market do appear to have diminished,” Fed Chair Jerome Powell said after the December meeting. While the job market was still cooling, he said, it remained “solid,” a situation the Fed hoped to maintain. Data since then has held up, with the economy adding an estimated quarter of a million jobs in December and the unemployment rate falling to 4.1% – another reason officials feel comfortable pausing rate cuts at least for now. More

A strong holiday season against the backdrop of a falling rate environment helped AmEx sustain spending volumes.AmEx, which mostly caters to wealthy consumers, has been able to better navigate economic uncertainty compared to some of its peers, as higher-earning individuals are less sensitive to inflation and elevated borrowing costs.Shares of the company dipped 0.3% before the bell.Billed business, a measure of spending on AmEx cards, rose 8% to $408.4 billion from last year in the fourth quarter.The company’s profit rose to $2.17 billion, or $3.04 per share, in the three months ended Dec. 31, from $1.93 billion, or $2.62 per share, a year earlier.”We exited the year with increased momentum, with billings growth accelerating to 8 percent in the fourth quarter, driven by stronger spending from our consumer and commercial customers during the holiday season,” CEO Stephen Squeri said.New York-based AmEx’s revenue rose 9% to $17.18 billion.Meanwhile, AmEx’s provisions for credit losses, fell to $1.3 billion in the quarter, compared with $1.4 billion a year earlier.A resilient economy and a string of rate cuts by the Federal Reserve have eased concerns around credit quality. AmEx’s affluent consumers have also allowed the company to scale back loan loss provisions compared with peers that serve a broad spectrum of customers.AmEx expects 2025 earnings per share to be between $15 and $15.50, compared with analysts’ estimates of $15.23, according to estimates compiled by LSEG. The company also forecast 2025 revenue growth between 8% and 10%, compared with Street expectations of 8.1%. More

TOKYO (Reuters) -The Bank of Japan is expected to raise interest rates on Friday to their highest levels since the 2008 global financial crisis, as a broad stocks rally worldwide calms policymakers’ fears U.S. President Donald Trump’s tariff threats could upend markets.With traders almost fully pricing in the chance of a rate hike, attention now shifts to any clues from BOJ Governor Kazuo Ueda in his post-meeting briefing on the pace and timing of further increases.At the two-day meeting concluding on Friday, the BOJ is widely expected to raise its short-term policy rate from 0.25% to 0.5% – a level Japan has not seen in 17 years.The move would underscore the central bank’s resolve to steadily push up interest rates to around 1% – a level analysts see as neither cooling nor overheating Japan’s economy.”Market hasn’t shown much negative reaction to Trump’s comments, so the BOJ will probably proceed with a rate hike,” said Naomi Muguruma, chief bond strategist at Mitsubishi UFJ (NYSE:MUFG) Morgan Stanley (NYSE:MS) Securities.A hike by the BOJ would be the first since July last year when the move, coupled with weak U.S. jobs data, shocked traders and triggered a rout in global markets in early August.Keen to avoid a recurrence, the BOJ has prepared markets with strong signals by Ueda and his deputy last week that a rate hike was on the cards. The remarks caused the yen to rebound as markets priced in a roughly 90% chance of a rate increase.In a quarterly outlook report due after the meeting, the board is expected to raise its price forecasts on growing prospects that broadening wage gains will keep Japan on track to sustainably hit the bank’s 2% inflation target.As inflation has exceeded the BOJ’s target for nearly three years and the weak yen has kept import costs elevated, Ueda is likely to stress that more rate hikes are forthcoming.Japan’s core consumer inflation accelerated to the fastest annual pace in 16 months in December, data showed on Friday, in a sign rising fuel and food prices continue to push up living costs for households.Many analysts already expect the central bank to hike rates again later this year, barring a Trump-induced market shock that hits global growth and Japan’s fragile economic recovery.”After hiking to 0.5%, the BOJ will probably raise rates at a pace of roughly twice a year. As such, the next rate hike could happen in September,” said Mari Iwashita, executive economist at Daiwa Securities.”Much will depend on how U.S. growth and inflation plays out, how that will affect the Federal Reserve’s policy and moves in the dollar/yen,” she said.The domestic political calendar may also affect the BOJ’s rate-hike timing with an upper house election slated for July, when Prime Minister Shigeru Ishiba’s minority coalition could struggle to garner votes, some analysts say.After taking the helm in April 2023, Ueda dismantled his predecessor’s radical stimulus programme in March last year, and pushed up short-term interest rates to 0.25% in July.BOJ policymakers have repeatedly said the bank will keep raising rates, if Japan makes progress in achieving a cycle in which rising inflation boosts wages and lifts consumption – thereby allowing firms to continue passing on higher costs. More