Economy

Shares fell by as much as 23.2% in Thursday’s morning trade, after hitting on Wednesday their daily lower limit with a drop of 29.9%. Korea Zinc said on Wednesday it planned to issue new stock worth about $1.8 billion, just two days after it bought back shares at a higher price, amid a battle between its co-founding families for a controlling stake. Analysts criticised the decision as a move that could undervalue the interest of shareholders. The country’s Financial Supervisory Service is scheduled to give a briefing later on Thursday on issues related to financial markets, including the takeover battle around Korea Zinc. Earlier this month, the market watchdog launched a probe into recent tender offers made by the two sides, urging them to refrain from any unfair practices. Korea Zinc shares traded down 15.1% as of 0038 GMT. More

TOKYO (Reuters) -The Bank of Japan is expected to maintain ultra-low interest rates on Thursday and signal a cautious approach to rolling back its massive monetary stimulus, as political uncertainty and jittery markets cloud the outlook.The ruling coalition’s loss of a majority in a weekend election has heightened concerns about policy paralysis, raising the hurdle for additional rate hikes, analysts say.The BOJ is likely in no rush to push up borrowing costs with inflation showing few signs of spiking and Japan’s economic recovery fragile.But sounding too dovish on the policy outlook could give speculators an excuse to sell the yen and fuel unwelcome falls in the currency.The conflicting demands on policy could keep the BOJ from issuing clear signals on the timing and pace of further rate hikes, particularly ahead of the U.S. presidential election on Nov. 5.”The domestic political turmoil is negative for economic activity and could be headwinds for the BOJ’s rate-hike plans,” said Naomi Muguruma, chief bond strategist at Mitsubishi UFJ (NYSE:MUFG) Morgan Stanley Securities.”But the BOJ may not afford to wait too long if yen falls accelerate and re-ignite upside inflationary risks,” she said.At the two-day meeting ending on Thursday, the BOJ is widely expected to keep short-term interest rates steady at 0.25%.In a quarterly report to be released after the meeting, the board is seen making no major changes to its projection that inflation will move around 2% through early 2027.Markets will instead focus on the BOJ’s view on risks as Governor Kazuo Ueda has highlighted unstable markets and U.S. recession fears as key reasons to go slow in its rate-hike path.After meeting his counterparts from major economies in Washington, Ueda offered a cautiously upbeat view on the outlook for the global economy. He is expected to hold a news conference at 3:30 p.m. (0630 GMT) on Thursday to explain the BOJ’s policy decision.”Ueda may still be cautious about the U.S. economy. But he will probably strive to convey that the BOJ’s rate-hike path is intact to avoid weakening the yen further,” said veteran BOJ watcher Mari Iwashita.The BOJ may also drop hints by modifying the report’s portion on future policy guidance. In the most recent report issued in July, the BOJ said it would continue to raise rates if economic and price conditions move in line with its forecast.The board will likely debate whether additional language on risks or triggers for policy shifts should be included in the guidance, sources have told Reuters.The BOJ ended negative rates in March and raised short-term rates to 0.25% in July on the view Japan was making progress towards sustainably achieving its 2% inflation target.Data released on Thursday showed Japan’s factory output and retail sales rose in September, suggesting the economy was on track for a moderate recovery.Ueda has repeatedly said the BOJ will keep raising rates if the economy moves in line with its forecast. But he has also said the bank was in no rush as inflation remained moderate.A slim majority of economists polled by Reuters expect it to forgo a hike this year, though most expect one by March. More

(Reuters) -Australia’s Coles saw a slowdown in comparable sales in the first quarter on Thursday due to lower shelf prices for its products, even as it beat market estimates for group sales.Supermarket duopoly Coles and larger rival Woolworths are under pressure to cut shelf prices as they face wide-ranging criticism over a cost of living crisis in Australia.The country’s second-largest grocer posted a drop of 122 basis points in comparable sales to 2.4% for the 13 weeks to Sept. 29, from 3.6% in the prior corresponding period.Coles, however, posted a 2.9% jump in first-quarter sales revenue to A$10.55 billion ($6.94 billion), higher than a Visible Alpha consensus of A$10.51 billion.Shares of the Melbourne-headquartered retailer, which operates more than 1,800 retail outlets in Australia according to their website, rose marginally by 1.4% to A$17.950.”Cost of living remains a challenge for many of our customers, and we are focused on helping them find value in our stores through weekly specials, value campaigns, Flybuys and exclusive brands,” said Coles Group (OTC:CLEGF) CEO, Leah Weckert.The supermarkets division shoppers made value of promotional discounts and giveaways for Coles, while its e-commerce division saw a jump in revenue with newer features and developments.In a note post Coles update, Jefferies said the grocer reported slightly weaker-then-expected sales, similar to Woolworths.Jefferies analysts said Coles’ commentary was “generally much more upbeat than Woolworths, with no mention of the margin pressure called out by Woolies.”The grocer, which is currently under trial by the national corporate regulator for allegedly misleading customers, separately announced an agreement to construct its third automated distribution centre in Truganina, thereby taking its capital expenditure expectations to A$1.3 billion for fiscal 2025.”This underlines confidence in the first two that we expect to deliver A$105 million of cost savings this year,” analysts at Citi wrote.Meanwhile, Woolworths posted total group sales of A$18 billion for the September quarter on Wednesday.($1 = 1.5211 Australian dollars) More

(Reuters) -Facebook owner Meta Platforms (NASDAQ:META) on Wednesday warned of “significant acceleration” in artificial intelligence-related infrastructure expenses next year, while beating analysts’ estimates for third-quarter revenue and profit.The results sent mixed signals to investors about whether digital ad sales from Meta’s core social media business would continue to cover the cost of its massive AI buildout.Shares of the Menlo Park, California-based firm were down 2.9% in after-hours trading.”Meta needs to prove that it can continue to cover its AI costs as they rise next year, and any weakness in its core ad business could make investors nervous as they continue to wait for a return on Meta’s bigger AI bets,” said Emarketer principal analyst Jasmine Enberg.Like its Big Tech peers, Meta has invested heavily in data centers to capitalize on the generative AI boom. Unlike providers of cloud services, however, it does not expect to earn money from those investments right away and therefore is more subject to scrutiny from investors around its spending.Meta CEO Mark Zuckerberg acknowledged in a conference call with analysts that more infrastructure spending “is maybe not what investors want to hear in the near term,” but said the company nonetheless would continue to invest.”I just think that the opportunities here are really big,” he said.Zuckerberg added that Meta AI, a generative AI chatbot assistant that can generate images and answer questions, now has more than 500 million monthly active users. That represents a substantial jump from the 400 million users the company said were using Meta AI as of its last disclosure in September.The world’s biggest social media company kept costs in check in the third quarter, with total expenses of $23.2 billion and capital expenditure of $9.2 billion. It projected a slightly improved expense picture for the year as well, narrowing its total expense forecast to $96 billion to $98 billion.In its press release, however, it warned of “a significant acceleration in infrastructure expense growth next year as we recognize higher growth in depreciation and operating expenses of our expanded infrastructure fleet.”Investors have been wary of Meta’s spending in recent months. Its shares sank in April after it disclosed a higher-than-expected expense forecast, knocking $200 billion off its stock-market value.That ended a run of strong quarters for Meta, which has climbed back from a share-price meltdown in 2022 by slimming its workforce, leaning in to investor excitement about AI and earlier this year issuing its first-ever dividend.The company’s shares are up around 500% from the bottom and about 67% so far this year.On Wednesday, analysts also questioned Meta about its headcount, which stood at 72,404 employees, up from 66,185 in the year-ago quarter.Chief Financial Officer Susan Li said Meta would focus on pushing parts of the company “to be more efficient,” including those continuing to add employees.Meta’s earnings come after encouraging results from digital ad bellwethers Alphabet (NASDAQ:GOOGL) and Snap, which both beat third-quarter revenue estimates on Tuesday thanks in part to rising sales of AI-assisted ads.Meta reported third-quarter profit of $6.03 per share, compared with estimates of $5.25 per share, according to data compiled by LSEG. Third-quarter revenue stood at $40.59 billion, compared with analysts’ estimates of $40.29 billion.The company also forecast between $45 billion and $48 billion in fourth-quarter revenue, compared with analysts’ estimates of $46.31 billion, according to data from LSEG.Advertising accounts for the vast majority of Meta’s revenue, meaning higher marketing spend by retailers and other businesses during the holiday season could provide a crucial boost to the company’s bottom line, analysts say.Meta’s family daily active people (DAP), a metric it uses to track unique users who open any one of its apps in a day, grew 5% in the third quarter to 3.29 billion. DAP increased 7% in the preceding June quarter, to 3.27 billion.The company is well-positioned to squeeze more revenue out of users even as user growth slows, given that its AI tools can show people more content that match their interests, Enberg said.The company’s Reality Labs division, which produces its Quest virtual reality headsets, smart glasses made with EssilorLuxottica’s Ray-Ban and upcoming augmented-reality glasses, lost $4.4 billion in the third quarter, narrower than analyst estimates of a $4.7 billion loss.In thinking about Reality Labs investments for 2025, executives were excited about the progress and strong consumer interest they had seen around the smart glasses in particular, Li said. More

The East African nation and staff of the IMF announced an agreement on the seventh review of its $3.6 billion program in June, but completion of the review at the board level and the subsequent disbursement were disrupted by deadly protests.More than 60 people were killed in the violent protests which forced President William Ruto to abandon the government’s finance bill, which contained a slew of tax hikes. “Kenya’s economy remains resilient, with growth above the regional average, inflation decelerating, and external inflows supporting the shilling and a buildup of external buffers, despite a difficult socio-economic environment,” IMF First Deputy Managing Director Gita Gopinath said in a statement on Wednesday.The IMF also called for improving governance and transparency in Kenya. “The Kenyan authorities face a difficult balancing act of boosting domestic revenues to protect critical spending in priority areas while meeting heavy debt service obligations,” the IMF said.The board review also included a component of lending to Kenya under its sustainability window, which is known as RSF.The IMF’s support is seen as crucial for Kenya to be able to navigate its current liquidity challenges, which are mainly driven by high debt interest repayments.Government officials have indicated that Kenya will seek another program with the IMF when the current one ends next April. More

(Reuters) – A look at the day ahead in Asian markets. Thursday is shaping up to be a huge day for markets in Asia as investors brace for a deluge of major corporate and economic newsflow, topped by the Bank of Japan’s policy decision and China’s official purchasing managers index surveys for October.Third-quarter GDP figures from Taiwan and Hong Kong, retail sales from Japan and Australia, and the latest earnings reports from regional giants such as Samsung (KS:005930), Panasonic (OTC:PCRFY) and Sumitomo are also on tap.U.S. bond yields were little changed on Wednesday, holding steady around levels not seen since early July, while the dollar eased back from Tuesday’s three-month high. At least that represents no additional tightening of financial conditions. But the 10-year yield snaps a run of five monthly declines, going into the last trading day of October up nearly 50 basis points in the month. The dollar is up over 3%, poised for its biggest monthly rise in more than two years.U.S. equities on Wednesday failed to give a clear steer either, with Wall Street ending slightly lower, but investors in Asia may get some impetus from third-quarter earnings from Microsoft (NASDAQ:MSFT) and Facebook parent Meta Platforms (NASDAQ:META) after the close on Wednesday.Both offered upbeat outlooks, but in after-hours trading Microsoft shares were slightly higher and Meta shares were off 3%.Shifting the focus back to Asia, attention on Thursday will be firmly fixed on Tokyo, specifically BOJ Governor Kazuo Ueda’s press conference after the central bank’s widely expected decision to leave key interest rates on hold.Investors will be paying close attention not only to Ueda’s view on the macroeconomic outlook, but also how he thinks the political gridlock in the country following Sunday’s inconclusive general election might impact the central bank.Japan’s yen remains on the weak side going into the meeting at around 153.00 per dollar, while the Nikkei 225 index is back above 39000 points and up 3.5% so far in October. That would mark its best month since February.Investors also have China’s ‘official’ PMIs for October to look forward to. It will be too early for Beijing’s blizzard of fiscal, monetary and liquidity stimulus measures to have had a direct impact, but any positive surprise will perhaps be seized upon more than usual.Economists polled by Reuters expect National Statistics Bureau’s manufacturing PMI to come in at 49.9, showing that factory activity contracted in October for a sixth month, but by the tiniest of margins and close to swinging back into growth.Chinese stocks continue to trade heavily, their weakness on Wednesday pulling broader Asian stocks down 0.8% to a one-month low. The MSCI Asia/Pacific ex-Japan equity index is down 3.5% in October, on track for its worst month since January.Here are key developments that could provide more direction to markets on Thursday:- Japan interest rate decision – China ‘official’ manufacturing, services PMIs- Taiwan GDP (Q3) More

Adjusted earnings from MetLife’s group benefits business — which offers dental, disability, vision, accident, health and life insurance — slid 27% to $373 million from a year earlier.MetLife said the weakness in the unit was primarily due to the impact of its annual actuarial assumption review coupled with weaker non-medical health underwriting.Insurers use actuarial assumptions when calculating the life expectancy projection of a person seeking life insurance. Actuarial assumption is an estimate of an uncertain event for the purpose of calculating insurance premiums.Meanwhile, adjusted net investment income rose 8% to $5.3 billion in the quarter, driven by higher interest rates.Risk-averse insurers’ investment portfolio tends to be heavily weighted toward bonds, which return better yields in a high interest rate environment.Adjusted earnings available to common shareholders fell to $1.38 billion, or $1.95 per share, in the three months ended Sept. 30, from $1.49 billion, or $1.97 per share, a year earlier.MetLife shares have risen 26% so far this year, compared with a 22% gain in the benchmark S&P 500 index. More

NEW YORK (Reuters) -The U.S. Treasury Department said on Wednesday it does not anticipate increasing auction sizes for notes and bonds for at least the next several quarters, in line with market expectations, as it announced a $125 billion refunding from November 2024 to January 2025.The department will refund about $116.4 billion of privately held Treasury notes and bonds maturing on Nov. 15 to raise new cash of $8.6 billion from private investors.The Treasury will sell $58 billion in U.S. three-year notes, $42 billion in 10-year notes, and $25 billion in 30-year bonds next week. These were the same auction sizes for the same securities announced at the July refunding.”The refunding was pretty much close to our expectations. There could have been a small tweak to the guidance because ‘at least for the next several quarters’ is quite open to interpretation,” said Angelo Manolatos, a macro strategist at Wells Fargo Securities.”To us, we think that the Treasury is well-funded to meet its borrowing needs and current auction sizes are sufficient until November 2025, a time when we think the Treasury can increase them.”The U.S. Treasury said on Monday it plans to borrow $546 billion in the fourth quarter, $19 billion less than the July estimate, and another $823 billion in the first quarter of 2025. It assumes an end-December cash balance of $700 billion and an end-March cash balance of $850 billion.Treasury Assistant Secretary for Financial Markets Joshua Frost, in a briefing following the refunding statement, said the borrowing plans for the quarter assume that Congress approves a “timely” increase or suspension in the debt ceiling. The current extension, approved in June 2023, expires on Dec. 31.Members of the Treasury Borrowing Advisory Committee (TBAC), who met with the U.S. Treasury before the refunding announcement, expressed concern about the borrowings for 2025 and 2026. Minutes of the meeting showed that primary dealer estimates for the next two fiscal years were marginally higher than the previous forecasts.The Treasury said on Wednesday it believes current auction sizes leave it “well-positioned” to address potential changes to the fiscal outlook and to the pace and duration of future redemptions in the Federal Reserve System Open Market Account (SOMA).The account is managed by the U.S. central bank and contains assets acquired through operations in the open market.The Treasury said it intends to address potential changes to the fiscal outlook in borrowing needs over the next quarter through changes in regular bill auction sizes and cash management bills.TIPS AUCTION SIZES TO INCREASEAuction sizes will moderately increase for Treasury Inflation-Protected Securities, the Treasury said.”Given the intermediate- to long-term borrowing outlook and the structural balance of supply and demand for TIPS, Treasury believes it would be prudent to continue with incremental increases to TIPS auction sizes in order to maintain a stable share of TIPS as a percentage of total marketable debt outstanding.”The Treasury plans to maintain the November 10-year TIPS reopening auction size at $17 billion, increase the December five-year TIPS reopening auction size by $1 billion to $22 billion, and raise the January 10-year TIPS new issue auction size by $1 billion to $20 billion.This was the overwhelming recommendation of primary dealers, the TBAC minutes showed. While demand for TIPS, especially from retail investors, had weakened as inflation has cooled, almost all dealers felt the market could absorb additional supply, the minutes added.As for Treasury bills, the plan is to maintain the offering sizes through November. But in late-November, the Treasury anticipates issuing one or two cash management bills to address cash needs at that time.Given estimates for receipts associated with the mid-month corporate tax date, the Treasury expects to moderately reduce short-dated bill auction sizes during the month of December. But in January it anticipates lifting bill auction sizes based on expected fiscal outflows.The Treasury also gave an update on buybacks, saying it plans to conduct weekly liquidity support buybacks of up to $4 billion per operation in nominal coupon securities. In longer-maturity debt, Treasury will undertake two operations, each up to $2 billion, over the refunding quarter.The department further said it expects to buy up to $30 billion in off-the-run or older securities across the curve for liquidity support over the course of the upcoming quarter, and up to $22.5 billion in the one-month to two-year debt for cash management purposes. More