Economy

(Reuters) – Wall Street’s main indexes were set for a higher start on Friday after a key inflation report reiterated that price pressures were moderating, cementing bets for an interest-rate cut at the Federal Reserve’s upcoming meeting in September.The Personal Consumption Expenditure index, the central bank’s preferred inflation measure, rose 2.5% in July on an annual basis compared to an estimate of 2.6%, according to economists polled by Reuters. On a monthly basis, it rose 0.2% as expected. Among rate-sensitive megacaps, Alphabet (NASDAQ:GOOGL) and Meta (NASDAQ:META) gained 0.8% and 0.6%, respectively, while Tesla (NASDAQ:TSLA) added 1.2% in premarket trading.Friday’s PCE report is the last before the Federal Reserve’s September meeting and follows Fed Chair Jerome Powell’s comments last week expressing support for an imminent policy adjustment.”Powell’s speech at Jackson Hole reiterated several times that we’re approaching our desired target. Nothing here is going to cause me to change anything,” said Andre Bakhos, managing member at Ingenium Analytics.”I would vote 25 bps because it’s been going in the direction the Fed has been targeting and the market has factored all of this in.”Odds of a 25-basis-point reduction stood at 69.5%, according to the CME Group’s (NASDAQ:CME) FedWatch Tool, while those of a 50-bps reduction are at 30.5%. Global markets are nearing the end of a tumultuous month for riskier assets, after signs of a sudden moderation in the labor market sparked fears of a quicker-than-expected slowdown in the world’s largest economy in early August. The influence of the Japanese yen carry trade worsened the rout.Risk-taking has improved since then, with the Dow at a record high and on track for monthly gains as subsequent data, including Thursday’s upward revision to economic growth, soothed investor nerves.At 08:43 a.m., Dow E-minis were up 79 points, or 0.19%, S&P 500 E-minis were up 25.25 points, or 0.45%, Nasdaq 100 E-minis were up 162.5 points, or 0.84%.The tech-focused Nasdaq and the S&P 500 closed lower in the previous session after Nvidia (NASDAQ:NVDA) failed to match investors’ sky-high expectations despite upbeat results and a broadly in-line forecast. The AI-chip bellwether was up 0.9% after a 6.4% drop in the previous session.The benchmark S&P 500 is close to an all-time high, poised for a monthly gain of 1.2%, while the Nasdaq is down 0.47% in August.Marvell (NASDAQ:MRVL) Technology forecast third-quarter results above Street estimates, sending the chipmaker’s shares up 11.2%.Dell Technologies (NYSE:DELL) advanced 4.87% after lifting its annual revenue and profit forecasts, buoyed by demand for its AI-optimized servers. Lululemon Athletica (NASDAQ:LULU) gained 3.86% after posting a beat on second-quarter profit, while Ulta Beauty (NASDAQ:ULTA) slid 6.2% after it trimmed its annual results forecasts due to slowing demand. Investors will also parse the University of Michigan’s final reading on consumer sentiment for August later in the day.Trading volumes are expected to thin ahead of the extended weekend due to the Labor Day holiday. More

NEW YORK (Reuters) – A top U.S. banking regulator has found that major lenders are in the early stages of assessing and managing the risks climate change poses to their businesses, and that significant work is needed in some areas, three people familiar with the matter said. The Office of the Comptroller of the Currency conducted a review last year including 22 large banks to see how they account for the impact of climate change on their loan books and businesses. In a letter sent in recent days to the banks’ chief executives, the OCC said it found all had completed some level of risk identification, but approaches and stages of development varied widely. The letter, the contents of which were described to Reuters by sources, has not been previously reported.It sheds more light on the shortcomings regulators have identified in many banks’ preparations to manage climate risks, which some industry experts argue puts trillions of dollars of assets in jeopardy.The OCC found that most banks were early in the process of incorporating climate risk into functions such as strategic and operational planning, internal audit and assessments of their risk appetite, the sources said. It also found that several had not started working with climate scenario analysis and that significant work was needed to implement planned governance frameworks around climate risk, the sources said.An OCC spokesperson said the agency does not comment on supervisory activities. The sources requested anonymity to talk about confidential regulatory matters.Banks and regulators around the world are grappling with how to measure and manage the consequences a warming climate and alterations to energy policy will have for the financial system. Some industry executives question, though, whether the long-term process of climate change poses a severe immediate threat to bank stability in the same way that a recession could.The OCC carried out its first review in 2023, conducting multiple meetings with banks, and published guidance on managing risks alongside the Federal Deposit Insurance Corporation and Federal Reserve. The Fed led its own exercise in which the six biggest banks were asked to simulate what extreme weather and a shift to cleaner energy could do to their assets and investments.The OCC’s letter describes a range of practice observations and does not spell out specific actions it wants the banks to take, the sources said. It said it will continue to conduct risk-based supervisory activities, the sources added. More

ISLAMABAD (Reuters) – The start of operations at a Chinese-funded airport in Pakistan’s Balochistan province has been pushed back for a security review after last week’s deadly attacks by separatist militants in the area, government and aviation sources said.More than 70 people were killed in the coordinated attacks across Balochistan, where militants seeking the resource-rich region’s secession have been targeting government forces and projects being developed as part of the $65-billion China Pakistan Economic Corridor (CPEC).Part of President Xi Jinping’s Belt and Road Initiative, the programme in Pakistan is also developing a deep-water port close to the new $200-million airport in Gwadar, a joint venture between Pakistan, Oman and China that is close to completion.It will handle domestic and international flights, according to Pakistan’s Civil Aviation Authority (CAA), and will be one of the country’s biggest airports.The initial plan was for Prime Minister Shehbaz Sharif to inaugurate the airport on Aug. 14 alongside Chinese officials, but that was called off after an ethnic Baloch rights group started a sit-in protest, the officials said. Following last week’s attacks, the deadliest in years, two officials at the CAA and two others in the Balochistan provincial government told Reuters the start of flights would be delayed as authorities review security in the region.”The Chinese already had concerns about the security situation, and the recent attacks will definitely cause more delay,” one senior provincial government official said, requesting anonymity because of the sensitivity of the matter.Asked about the delay and security concerns, China’s Foreign Ministry said: “China is willing to work with the Pakistani side to continue to do a good job in the relevant security work and ensure the safe and smooth progress of the corridor construction.”A provincial government spokesperson declined to comment and Pakistan’s information minister did not respond to a request for a comment.Although no Chinese projects were targeted in the latest militant attacks, they have been frequently attacked in the past by the insurgents, who view China as a foreign invader trying to gain control of the region’s resources.It is not clear whether Beijing has offered Pakistan direct assistance on the security management of Chinese projects.Special Chinese security teams worked closely with Pakistani security agencies to trace the insurgents behind a suicide bombing which targeted Chinese teachers in the southern city of Karachi in 2022.The Baloch Liberation Army (BLA), one of several separatist militant groups involved in the low-level insurgency for decades, claimed responsibility for last week’s attacks.Pakistan’s army said on Friday it had started intelligence based operations against the militants to respond to the assaults. More

Sanchez will travel to Beijing and Shanghai on Sept. 7-12 and meet Chinese President Xi Jinping during his trip, according to a Spanish government source. A deputy trade minister will accompany the premier.China and the European Union have been embroiled in a trade dispute after EU regulators announced provisional duties on Chinese-made electric vehicles. In retaliation, China opened anti-dumping investigations into brandy, dairy and pork products from the EU. Spain is Europe’s largest pork exporter. It supplied 22% of China’s imported pork in 2023, worth 1.2 billion euros ($1.29 billion), and stands to lose more than any of the bloc’s members from the probe. China has been canvassing the EU’s 27 member states to reject the European Commission’s proposal to adopt additional duties of up to 36.3% on Chinese-made electric vehicles when they vote on it in October. More

NEW DELHI (Reuters) -India’s economic growth slowed to 6.7% year-on-year in the April-June quarter as a decline in government spending during national elections weighed, data showed on Friday, but it remained the world’s fastest-growing major economy. The rise in gross domestic product was less than a 6.9% expansion forecast by a Reuters poll, and compared to 7.8% growth in the previous quarter.Still, it was faster than 4.7% growth in China, Asia’s biggest economy, in April-June, and India’s slowdown is expected to be temporary as economists forecast that easing inflation and a pickup in government spending will shore up growth in the coming months. Political uncertainty also weighed on investment and consumption during the April-June quarter, the official data showed. The Gross Value Added (GVA), seen by economists as a more stable measure of growth, increased by 6.8% in April-June from a year earlier, compared to 6.3% in the previous quarter. Upasna Bhardwaj, chief economist at Mumbai-based Kotak Mahindra Bank, said the GDP numbers were softer than expectations but the GVA remained firm with non-farm growth holding up. “We retain our GDP growth expectations of 6.9% in 2024/25, aided largely by rural demand and government spending while watching closely the likely fatigue in urban demand, private capex and pace of global slowdown,” she said.For the full fiscal year, India’s central bank expects the economy to grow 7.2%, slower than the 8.2% growth the previous year, dragged down by a contraction in state spending and the central bank’s tightened rules on retail loans. Government spending in real terms fell 0.2% year-on-year in April-June, compared to a 0.9% rise in the previous quarter, data showed. Prime Minister Narendra Modi has taken several steps to boost the economy since recent electoral national elections, in which his Bharatiya Janata Party (BJP) failed to win an outright majority and is having to rely on allies to run the government for the first time in a decade.Manufacturing, which makes up about 17% of India’s GDP, grew by 7% year-on-year in the April-June quarter, compared to an 8.9% expansion in the previous quarter. Agricultural output rose 2% year on year in the same period, up from 1.1% in the previous quarter. Plentiful rainfall this year is expected to enhance farm output, rural incomes and consumer demand, a trend reflected in increased sales of two-wheelers and tractors in July.JOBS CHALLENGE Despite strong growth relative to other economies, India faces challenges in job creation and more inclusive economic growth. These issues have affected real wages, household consumption among lower-income groups, and private investments. The government has stepped up spending with last month’s $576 billion annual budget, which includes billions of dollars for affordable housing and rural jobs, to stimulate economic activity. Consumer spending, which constitutes about 60% of GDP, rose 7.4% in April-June from a year earlier, compared to 4% in the previous quarter. Capital investments also rose by 7.4% compared to 6.5% in the previous quarter. Economists anticipate that easing retail inflation could lead the central bank to cut its policy rate later this year, potentially boosting household consumption and supporting private investments. More

The annualized gross domestic product on a quarter on quarter basis rose 2.1%, Statistics Canada said. But on a per capita basis, GDP continued to contract for a fifth consecutive quarter.The GDP figure is the last data set before the Bank of Canada’s monetary policy decision announcement on Sept. 4 when it is widely expected to cut its benchmark rate for the third time in a row.Financial markets now see an 80% chance of another 25 basis point cut in rates on Sept. 4, up from 77% before the data were released. They also forecast two more rate reductions this year after September.The Canadian dollar slightly extended its gains for the day, rising 0.1% to C$1.3467 to the U.S > dollar, or 74.26 U.S. cents.Analysts polled by Reuters had forecast GDP growth of 1.6% for the second quarter on an annualized basis and growth of 0.1% month over month in June.On a monthly basis, GDP growth was unchanged in June and an advance estimate for July shows yet another month of flat growth, Statscan said.Economic growth for the first quarter was revised to 1.8% from 1.7% reported earlier in May, it said. Most economic indicators have pointed to an economy that is losing momentum under the burden of high interest rates, increasing bets for a rate cut.Rising unemployment and a wave of mortgage renewals coming up next year have added more pressure on the central bank to reduce its policy rate.BoC Governor Tiff Macklem, during his monetary policy announcement in July, had hinted at shifting the bank’s focus towards boosting the economy rather than suppressing inflation, which economists said was a marked shift in messaging showing concerns around weakening economy.The BoC had forecast an annualized GDP growth of 1.5% in the second quarter and predicts GDP to clock growth of 1.2% this year.The bank has trimmed its benchmark rate twice since June to bring it down to 4.5%. The quarterly increase in the economy was led by government expenditure which expanded by 1.5% on account of higher wages, and business investment on machinery and equipment which surged by 6.5%. However, on a monthly basis, June’s stagnant economy followed 0.1% growth in May and was primarily driven by the largest contraction since December 2023 in the goods-producing industries, the statistics agency said. More

Consumer spending, which accounts for more than two-thirds of U.S. economic activity, rose 0.5% last month after advancing by an unrevised 0.3% in June, the Commerce Department reported on Friday. Economists polled by Reuters had forecast spending would accelerate by 0.5%.This implies that consumer spending maintained most of the momentum from the second quarter, when it helped to boost gross domestic product growth to a 3.0% annualized rate. The economy grew at a 1.4% pace in the January-March quarter.There have been concerns over the economy’s health following a jump in the unemployment rate to near a three-year high of 4.3% in July. The fourth straight monthly rise in the jobless rate led financial markets and some economists to put a 50-basis-point rate cut on the table when the U.S. central bank embarks on a widely anticipated policy easing in September.The slowdown in the labor market, mostly driven by a step down in hiring rather than layoffs, has caught the attention of policymakers. Fed Chair Jerome Powell last week said “the time has come for policy to adjust.”Most economists believe the Fed will resist a half-percentage-point rate reduction as the economy continues to hum along and inflation remains above the central bank’s 2% target, though price pressures continue to subside.The personal consumption expenditures (PCE) price index rose 0.2% last month after an unrevised 0.1% gain in June, the report also showed. Economists had forecast PCE inflation would rise 0.2%. In the 12 months through July, the PCE price index increased 2.5%, matching June’s gain.Excluding the volatile food and energy components, the PCE price index rose 0.2% last month, matching the increase in June. In the 12 months through July, core inflation increased 2.6% after advancing by the same rate in June. The Fed tracks the PCE price measures for monetary policy, and has maintained its policy rate in the current 5.25%-5.50% range for more than a year, having raised it by 525 basis points in 2022 and 2023. More