The highs and lows of the ‘Trump trade’
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in EconomyJust as president-elect Donald Trump was being voted in on a platform of higher tariffs for China, US businesses were striking deals thousands of miles away at Shanghai’s biggest trade fair.Dynamite, a family-run pet food business with 12 stores in Idaho, signed $1mn in orders from Chinese company Pawberry — part of a stream of agricultural deals between the two countries this week that have so far amounted to $711mn.“Every so often you meet someone in business you just click with — we understand each other,” said Joshua Zamzow, chief executive Dynamite, of his business partner at Pawberry. “He understands his market, and he’s taking the products that fit for the China market and just blowing them up . . . sales have begun to explode.”But for businesses large and small, as election results flowed in from Georgia to Pennsylvania, it soon became clear that the wider relationship between America and China was entering a new era of uncertainty. Trump campaigned on a platform of higher tariffs — 60 per cent on Chinese goods — after a first term in which he launched a trade war that is still raging.Daniel Benefield, left, from Rad Beverage International said he hoped his bourbon products would fly ‘under the radar’ More
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in EconomyTOKYO (Reuters) -Japanese household spending fell in September for the second straight month, government data showed on Friday, as higher prices choked consumers’ appetite in a discouraging sign for the central bank’s plans to hike rates further.Consumer spending fell 1.1% from the year earlier, against the median market forecast for a 2.1% decline. On a seasonally adjusted, month-on-month basis, it fell 1.3%, versus an estimated 0.7% drop. Consumption and wage trends are among key factors the Bank of Japan (BOJ) is watching to gauge the strength of Japan’s economy and decide how soon to raise interest rates.September’s pay data released on Thursday showed inflation-adjusted wages falling for the second straight month despite nominal salary making gains and consumer inflation cooling.The yen’s renewed softening with the election of Donald Trump as the next U.S. president could also hit consumption through higher import prices, although the BOJ could in turn be pressured to raise rates if the yen’s fall accelerates.Japan will release preliminary July-September gross domestic product (GDP) data next Friday. The economy likely slowed sharply on sluggish consumption and capital spending, according to a Reuters poll. To view the data on the website of the Ministry of Internal Affairs and Communications, click here: http://www.stat.go.jp/english/data/kakei/index.html More
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in EconomySINGAPORE (Reuters) – The dollar took a breather on Friday, on track to cap off a wild week with a slight gain as markets weighed the impact of Donald Trump’s impending return to the White House and what that would mean for the U.S. economy and its rate outlook.Beijing concludes its five-day meeting of the Standing Committee of the National People’s Congress (NPC) later in the day, which investors will be closely watching for more details of China’s stimulus measures that could in turn lift the yuan and Antipodean currencies.The dollar further unwound some of its sharp gains from earlier in the week as traders closed out profitable bets on a Trump presidency after his election victory.That helped lift sterling back toward the $1.30 mark, while the yen similarly got some respite and hovered closer to the 153 per dollar level.The euro fell 0.07% to $1.0795 and was headed for a 0.35% weekly fall, weighed down by a resurgent dollar and amid a political crisis in Germany, where the already awkward coalition led by Chancellor Olaf Scholz collapsed late on Wednesday.The Federal Reserve on Thursday cut interest rates by 25 basis points as expected, but flagged a cautious and patient approach to subsequent easing.”(The) meeting doesn’t change the view that the Fed is still on the path to lower rates and another rate cut in December is likely unless the inflation and labour market data surprises materially to the upside,” said Kerry Craig, global market strategist at J.P. Morgan Asset Management.”For 2025, however, the picture will be complicated by potential for trade and tax policies to add to the inflation outlook.”The U.S. central bank’s rate trajectory has been clouded by Trump’s election victory as his plans for hefty tariffs are seen as stoking inflation.Traders have since reacted to the outcome of the election results by trimming bets on Fed cuts next year.”If the incoming Trump administration does indeed levy significant tariffs or adopt other inflationary policies, then we believe the Fed funds rate may bottom out next year closer to 4% than to 3%,” said Wells Fargo (NYSE:WFC) chief economist Jay Bryson.Sterling last traded $1.2983, recovering from its fall to a roughly three-month low earlier in the week.The pound had rallied 0.8% on Thursday after the Bank of England cut interest rates but said it expected UK inflation and growth to pick up more quickly than it had previously anticipated.The yen eased 0.14% to 153.15 per dollar.Against a basket of currencies, the dollar ticked up 0.03% to 104.44, on track to gain just above 0.1% for the week. It had rallied a sharp 1.53% on Wednesday as “Trump trades” picked up strongly.FURTHER SUPPORTFriday’s main event revolves around the outcome of China’s NPC Standing Committee meeting, with anticipation of further support from Beijing having cushioned some of the impact from a second Trump presidency on Chinese assets over the past few days.The President-elect has threatened to impose 60% tariffs on U.S. imports of Chinese goods.The yuan was last a touch lower at 7.1532 per dollar in the offshore market, while the Australian dollar, often used as a liquid proxy for its Chinese counterpart, dipped 0.13% to $0.6673.The New Zealand dollar was little changed at $0.6022.”I think it’s very likely that we will see significantly more fiscal and monetary stimulus from Beijing, which could offset some of the trade headwinds,” said David Chao, global market strategist for Asia Pacific ex-Japan at Invesco.”All eyes are on what may emerge from China’s policy toolkit after the conclusion of the NPC standing committee meeting.”Data on Thursday showed China’s exports grew at the fastest pace in over two years in October as factories rushed inventory to major markets in anticipation of further tariffs from the U.S. and the European Union, as the threat of a two-front trade war loomed large. More
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in EconomyThe Recruitment and Employment Confederation/KPMG said its gauge of starting pay for permanent roles slowed to 52.5 in October from 52.8 in September for its weakest level since February 2021 during the coronavirus pandemic. REC’s permanent placements index fell to 44.1 from 44.9 in September and the rate of contraction was the steepest since March. The survey said firms held off hiring amid uncertainty in the lead-up to the new Labour government’s budget.”There is little in the pay data in today’s report that suggests the Bank of England should step away from further cuts to interest rates, which will also boost business confidence,” REC chief executive Neil Carberry said. The BoE, which is watching pay growth closely as it tries to gauge how much inflation pressure remains in the economy, reduced borrowing costs by a quarter-point to 4.75% from 5% on Thursday. It said further cuts were likely to be gradual.REC said vacancies fell for the 12th month in a row, suggesting less demand for staff, and the number of available candidates for jobs rose for the 20th successive month – with businesses reporting the sharpest pace of increase in temporary staff availability in nearly four years. Jon Holt, group chief executive at KPMG, said measures announced by finance minister Rachel Reeves in last week’s budget could push firms to slow their hiring further.Reeves on Oct. 30 unveiled 40 billion pounds ($51.94 billion) in tax rises, much of it through higher social security contributions paid by businesses alongside an increase in the minimum wage for most adults, changes that are likely to hurt hiring and pay growth.”With many of the tax rises announced in last week’s budget impacting businesses, the expectation from some chief executives is that this could further dampen hiring as companies grapple with absorbing any extra costs,” Holt said.($1 = 0.7701 pounds) More
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in EconomyHONG KONG (Reuters) – The Hong Kong Monetary Authority (HKMA) on Friday cut its base rate charged via the overnight discount window by 25 basis points to 5.0%, tracking a move by the U.S. Federal Reserve.Hong Kong’s monetary policy moves in lock-step with the United States as the city’s currency is pegged to the greenback in a tight range of 7.75-7.85 per dollar. More
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in EconomyMinister Choi Sang-mok said the government’s 24-hour monitoring system, which had been run to monitor the Middle East situation, would be expanded to cover financial and foreign exchange markets.Choi made the comments at a meeting with top economic and financial policymakers to review the implications of the U.S. Federal Reserve’s policy meeting outcome. More
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