Economy

SINGAPORE (Reuters) – The yen hovered near a 2-1/2-month high on Wednesday ahead of a key Bank of Japan (BOJ) policy decision where the central bank is set to detail plans to taper its huge bond buying and a rate hike is on the cards.Wednesday looked set to be a busy day for markets, with China’s official purchasing managers’ index (PMI) data and Australian consumer price figures also due during the Asian session.That is followed by inflation readings in France and the wider euro zone later in the day, alongside the Federal Reserve’s policy decision, which takes centre stage. Escalating geopolitical tensions also cast a cloud over markets.With plenty of risk events to mark the month-end, currency moves were largely subdued in early Asia trade as investors were hesitant to take on fresh positions.Still, the yen eked out a slight gain to last stand 0.06% higher at 152.65 per dollar, after having jumped 0.8% in the previous session in the wake of news reports that said the BOJ is mulling raising short-term rates to around 0.25%.The Japanese currency looked set to end the month with an over 5% gain, helped by Tokyo’s bouts of intervention and the massive unwinding of short-yen carry trades in anticipation of Wednesday’s BOJ outcome.”We believe that the BOJ likely will make significant headway on its exit from unorthodox policy at the July meeting by reducing bond purchases and hiking interest rates,” said Gregor Hirt, global CIO for multi asset at Allianz (ETR:ALVG) Global Investors. “We anticipate that the BOJ will increase interest rates to around 0.25% at the upper limit.””A rate hike could help stabilize the yen’s current levels, whereas the absence of a rate hike may trigger renewed selling pressure driven by carry trades.”The yen similarly made headway against other currencies, with the euro falling 0.07% to 165.07 yen and the Australian dollar slipping 0.12% to 99.80 yen.BRACING FOR THE FEDThe euro was last 0.02% higher at $1.0817 and was eyeing a 0.95% gain for July, helped by an easing dollar.Data on Tuesday showed the euro zone’s economy grew slightly more than expected in the three months to June, but the outlook for the remainder of the year was not quite so rosy.Separate data released the same day also revealed the German economy unexpectedly contracted in the second quarter, while domestic inflation rose this month.Sterling eked out a 0.02% gain to last trade at $1.2840, and was eyeing a monthly gain of 1.5%. The dollar index was little changed at 104.46, and was on track to lose 1.3% for the month.Traders were closely watching the Fed’s policy decision later on Wednesday – likely to be the next main catalyst for broad currency moves after the BOJ – where expectations are for policymakers to lay the groundwork for a September rate cut.Markets are expecting a September start to the Fed’s easing cycle, with about 68 basis points worth of cuts priced in for the rest of the year.Expectations of imminent Fed cuts have halted the dollar’s advance, after decades-high U.S. rates bolstered the greenback’s appeal for the most part of the past two years.”We expect (the Fed) to open the door to a first interest rate cut in September. In our view, such a move today could send the wrong signal to markets and could spook investors,” said Julien Lafargue, chief market strategist at Barclays Private Bank.”On the other hand, with markets already pricing in slightly more than 25bp worth of cuts in September, the Fed may find it hard to push back against these expectations.”Elsewhere, the Aussie rose 0.05% to $0.6542 ahead of the country’s inflation figures due later on Wednesday, and was headed for a monthly loss of nearly 2%, its worst performance since January.The New Zealand dollar ticked up 0.03% to $0.5905, though was similarly on track for a more than 3% drop in July.Both Antipodean currencies have been weighed down in part by falling commodity prices and China’s bleak economic outlook, given the two are often used as liquid proxies for the yuan.Chinese leaders signalled on Tuesday that the stimulus measures needed to reach this year’s economic growth target will be directed at consumers, deviating from their usual playbook of pouring funds into infrastructure projects. More

TOKYO (Reuters) -The Bank of Japan is expected to detail plans to taper its huge bond buying on Wednesday and debate whether to raise interest rates, signalling its resolve to steadily unwind a decade of massive monetary stimulus.The decision comes as the U.S. Federal Reserve looks to cut interest rates, possibly as early as September, reversing an aggressive rate-hike cycle that drove up the dollar and caused a painful yen sell-off for Japan.At the two-day meeting ending on Wednesday, the BOJ will decide on a quantitative tightening (QT) plan that will likely halve monthly bond buying in 1-1/2 to two years’ time – a pace roughly in line with broad market forecasts.The board will also debate whether to raise the BOJ’s overnight call rate target to 0.25% from 0-0.1%, which would bring short-term interest rates to levels unseen since 2008.Several domestic media, including public broadcaster NHK and the Nikkei newspaper, reported earlier on Wednesday that the BOJ would consider raising rates, citing unidentified sources.Government representatives would not request a delay in the board’s vote for a rate hike at the meeting, the Nikkei said.The media reports pushed up the yen, which stood at 152.65 to the dollar on Wednesday. The dollar has fallen against the Japanese currency since hitting a 38-year high of 161.96 on July 3.Japan’s 2-year government bond yield jumped in early Tokyo trade on Wednesday.”A rate hike today would put an increase to 1% in sight by the end of fiscal 2025,” Naoya Hasegawa, chief bond strategist at Okasan Securities, said on the outlook for short-term rates.”It would heighten the chance of Japan making a full-fledged shift to a positive-interest rate environment.”A rate hike on Wednesday would defy dominant market expectations for the BOJ to stand pat until later this year. More than three-quarters of economists polled by Reuters on July 10-18 had expected the BOJ to keep rates steady this month.Japan’s economy is at an inflection point with inflation holding above the BOJ’s 2% target for well over two years and workers getting their biggest base pay hikes in three decades.But rising living costs have hurt consumption, pushing the economy into contraction in the first quarter and casting doubt on whether households can swallow further price increases.Data released on Wednesday showed factory output fell 3.6% in June, though manufacturers surveyed by the government expect production to increase in coming months.Separate data showed retail sales rose 3.7% in June from a year earlier, beating a median market forecast for a 3.2% gain.The BOJ ended negative rates and bond yield control in March in a landmark shift away from its radical stimulus programme.Governor Kazuo Ueda has said the BOJ will hike rates further if it becomes convinced that rising wages will prop up services prices, and keep inflation durably around its 2% target.He has also said the BOJ would aim to take short-term rates to levels that neither cool nor stimulate growth – seen by analysts as somewhere between 0.5% and 1.5% – in coming years if inflation is seen sustainably hitting 2% as it projects.With steady inflation keeping real borrowing costs low, the BOJ will likely drop signs that it is on course for a steady rate hike path through 2026.Such clues, or guidance on the future rate hike path, will likely come from Ueda’s post-meeting briefing or a quarterly outlook report due after the meeting.In the report, the BOJ will likely roughly maintain its projection made in April that inflation will stay around its 2% target in coming years, sources have told Reuters.The BOJ’s decision will come hours before that of the Fed, which is likely to hold rates steady but signal its readiness to reduce borrowing costs as soon as September.While the BOJ insists it does not use monetary policy to affect currency moves, rising concerns over a weak yen have prompted some calls from government and business leaders for the central bank to speed up its shift away from near-zero rates. More

“I think we’re likely to hear news of India engaging more directly in Ukraine. I’m grateful for that. I think India wants to play a responsible role globally,” Campbell told the Senate Foreign Relations Committee.Western countries have imposed sanctions on Moscow following its all-out invasion of Ukraine in 2022, but nations such as India and China have continued to trade with Russia.Modi met Russian President Vladimir Putin in Moscow earlier this month just as a Russian missile attack struck a hospital in Kyiv and killed 44 people across the country, drawing international condemnation.Indian media outlets have reported that Modi is likely to visit Ukraine in August, his first visit to the country since Russia’s 2022 invasion.Asked about Campbell’s comments, India’s Washington embassy referred to a news briefing in Tokyo on Monday by Indian Foreign Minister Subrahmanyam Jaishankar, at which he said more needed to be done to encourage negotiations to end the Ukraine conflict and that India was one of the few countries that was in touch with both sides.”We do believe we should be more active there,” Jaishankar said, adding that Modi met Ukrainian President Volodymyr Zelenskiy on the sidelines of the G-7 summit in Italy before his Moscow visit.”I can reasonably expect there will be more contacts between us and Ukraine and between us and Russia as well,” Jaishankar said, when asked about the possibility of Modi visiting Ukraine.U.S. Secretary of State Antony Blinken met Jaishankar in Japan on Sunday and emphasized the importance of a “just and enduring peace” for Ukraine.The State Department has raised concerns over India’s relationship with Russia, especially at a time when it has been seeking to strengthen ties with India as a potential counterweight to China.New Delhi has resisted pressure to distance itself from Moscow since the invasion, citing its longstanding ties with Russia and its economic needs.Campbell said he believed India was “probably the most important relationship for the United States to get right,” noting the huge Indian diaspora and the desire of most Indians to have a better relationship with the U.S.”The hardest things to keep in mind is that India is also a great power. It has its own beliefs, its own interests. They will never be a formal ally or partner in the United States, but it doesn’t mean that we cannot have the strongest of possible relationships as allied nations on the global stage,” he said. More

(Reuters) – Advanced Micro Devices (NASDAQ:AMD) on Tuesday increased its 2024 forecast for artificial intelligence chip sales by $500 million and said supplies would remain tight through 2025, sending shares of the Santa Clara, California-based company up 7.5% in extended trading.The AI chips designed by AMD are largely bought by cloud computing giants. Industry insiders and Wall Street view AMD’s line of AI chips as one of the few potentially viable competitors to Nvidia (NASDAQ:NVDA), which dominates the market. Shares of Nvidia rose 4.7% following the AMD report.AMD counts Meta Platforms (NASDAQ:META) as a customer, and Microsoft (NASDAQ:MSFT) launched access to a cluster of AMD chips for AI via its cloud platform earlier this year.Because of surging demand, AMD CEO Lisa Su said, the company boosted its 2024 AI chip revenue forecast to $4.5 billion from a previous target of $4 billion. The supply of such chips will remain tight through 2025, Su said during a quarterly results conference call late Tuesday.In the second quarter, AMD’s data center revenue, its biggest segment, jumped 115% to $2.8 billion, just topping estimates of $2.79 billion, according to Visible Alpha. For the first time its quarterly AI chip revenue – which is largely concentrated in the data center segment – rose above $1 billion.”We are in the picks and shovels cycle which is more about hardware infrastructure right now,” Creative Strategies CEO Ben Bajarin said, making an analogy to the California gold rush, where suppliers of mining tools profited more than some miners. “Most enterprises are spending on AI software but only to trial and pilot programs, (and have) not fully deploy them yet,” he said.Such massive spending has not yet generated substantial returns. And on Tuesday, shares of Microsoft fell 6% as growth in its cloud-computing services missed targets, indicating it may take longer for some Big Tech firms to benefit from hefty spending on AI technology.PC BUSINESS RECOVERYOverall, AMD forecast revenue of $6.7 billion, plus or minus $300 million, for the third quarter, compared with analysts’ average estimate of $6.61 billion, according to LSEG data. On an adjusted basis, the company forecast gross margin of about 53.5% for the third quarter, compared with estimates of 53.6%.Total revenue in the second quarter rose 9% to $5.8 billion, which came in above estimates of $5.72 billion.AMD, which is among the largest providers of PC chips, also benefited from a recovery in the personal computer market after its worst slump in years. Computer makers hope new AI features will revive consumer demand.”(The) PC business actually is going to do better in second half, especially, typically seasonally,” AMD finance chief Jean Hu said.In the second quarter, AMD reported revenue for PC chips of $1.5 billion, compared with estimates of $1.43 billion, according to Visible Alpha.The company had adjusted second-quarter earnings of 69 cents per share, topping analyst estimates of 68 cents a share. More

(Reuters) -Pinterest forecast current-quarter revenue below Wall Street expectations on Tuesday as the image-sharing platform faces tough competition in a stabilizing digital advertising market, sending its shares down about 12% after hours.The company, whose shares shed about $3 billion in value, competes with the likes of TikTok and Meta Platforms-owned Facebook (NASDAQ:META) and Instagram – the preferred platforms for advertisers because of their larger user base and higher engagement for targeted ads.”After results from both PINS and GOOGL, we believe that digital ad spend remains healthy but tougher comparisons are causing trends to decelerate at a faster pace than expected. Still, we think the pullback in shares provides an enhanced opportunity,” said Angelo Zino, senior equity analyst at CFRA Research.Pinterest (NYSE:PINS) has also launched ad partnerships with e-commerce giant Amazon.com (NASDAQ:AMZN) and Alphabet (NASDAQ:GOOGL)’s Google, while unveiling an automated ad campaign setup tool and Pinterest Performance+, an AI-powered tool for marketers.The company expects revenue in the range of $885 million to $900 million for the third quarter, compared with analysts’ expectations of $906.6 million, according to LSEG data.”Our revenue guidance reflects further progress against our strategic initiatives, including continued lower funnel strength and the ongoing emerging contribution from third-party demand partnerships,” CFO Julia Donnelly said on an earnings call.Revenue for the second quarter ended June 30 rose 21% to $853.7 million, higher than estimates of $847.8 million.Pinterest’s global monthly active users (MAUs) rose by 12% to 522 million in the second quarter, compared with estimates of 519.2 million. Excluding items, Pinterest posted a profit of 29 cents per share, compared with estimates of 28 cents. More

Red-hot ticket prices have forced concert-goers to curtail discretionary spending amid higher interest rates and economic uncertainty. This cautious approach has reverberated throughout the entertainment sector, particularly impacting companies like Live Nation Entertainment, which are struggling with high costs associated with organizing events and customer reluctance to shell out for high ticket prices.Meanwhile, Live Nation continues to be under tight scrutiny in the United States, where the Justice Department has filed a lawsuit seeking to break up entertainment industry giant and its Ticketmaster unit.The case could go to trial in early 2026, a judge in New York said in June.Operating expenses for the June quarter rose to $4.41 billion, up from $4.16 billion, a year earlier.Net income available to shareholders for the April-June period was $251.4 million, compared with analysts’ average estimate of $254.2 million, according to LSEG data.Revenue for the second-quarter stood at $6.02 billion in line with estimates. More

Good morning. Today we’re covering:Facial recognition at Indian airportsTemu’s unhappy suppliers The race to make the ‘super shoe’ But first, Israel has targeted a senior Hizbollah figure in an air strike on Beirut, saying the operation was retaliation against the individual responsible for a deadly rocket attack on the Israeli-occupied Golan Heights.A large explosion ripped through the Lebanese capital’s southern suburbs yesterday evening. Footage from the scene showed several floors of a residential building collapsed and large plumes of smoke rising above it. This area of Beirut is a Hizbollah stronghold.The Israeli strike targeted Fuad Shukr, who is believed to be close to Hassan Nasrallah, leader of the Iran-backed Lebanese militant group. It was not immediately clear if he was in the residential building, or whether he was killed or wounded in the attack.It comes amid mounting fears that intensifying clashes between Israel and Hizbollah could trigger a full-blown war. Here are more details. Israel-Hamas war: Far-right protesters have stormed two army bases in Israel after the military police detained nine soldiers as part of an investigation into the alleged “serious abuse” of a Palestinian prisoner at the Sde Teiman prison camp.And here’s what else I’m keeping tabs on today:Economic data: China releases its official purchasing managers’ index for July, Taiwan and Hong Kong report advance second-quarter GDP and Australia publishes second-quarter inflation data.Monetary policy: The Bank of Japan and US Federal Reserve make rate-setting announcements. Results: HSBC, Hang Seng Bank, Samsung Electronics, Meta, Boeing, Hitachi, Tata Steel, Rio Tinto and Panasonic report.Five more top stories1. India is rapidly rolling out facial recognition technology at airports, streamlining security checks amid concerns that the country is transforming into a surveillance state. The FT spoke to the chief of the digital initiative, who claimed the technology had halved queueing times and pledged transparency on passenger data. 2. Chinese President Xi Jinping has called for faster measures to boost domestic consumption amid rising concern over weaker growth. A statement from China’s leadership gave no hint of new measures to stimulate demand but focused on speedier implementation of those already announced, such as bond issuance and upgrades to industrial equipment.3. Sales of lipstick and skincare products in China fell in the second quarter at L’Oréal, weighing on the beauty group’s growth as conditions in the country remain “challenging”, the French company said.4. Microsoft’s artificial intelligence-fuelled cloud growth fell slightly short of investors’ lofty expectations in the three months to the end of June. The results sent its shares lower as investors scrutinise how AI will impact Big Tech’s earnings. 5. Bill Ackman has slashed the amount he is seeking to raise in the initial public offering of his US investment fund Pershing Square USA to $2bn. The figure is a fraction of the $25bn the billionaire hedge fund manager had initially targeted. News in-depthTemu, owned by $185bn ecommerce group PDD, wants to recruit Amazon merchants holding goods in the US and EU More

(Reuters) – A look at the day ahead in Asian markets. Asian assets have rarely been exposed to as many market-moving triggers in one day than they will be on Wednesday, with the Bank of Japan rate decision and China’s purchasing managers index reports topping a packed policy, data and corporate calendar.Investors are also bracing for second quarter GDP estimates from Taiwan and Hong Kong, inflation numbers from Australia, and earnings from corporate heavyweights including HSBC, Samsung (KS:005930), Panasonic (OTC:PCRFY), Mitzuho and Sumitomo. All that follows heavy after-the-bell selling of U.S. Big Tech on Tuesday after Microsoft (NASDAQ:MSFT) warned of slow returns on AI technology spending, and comes ahead of the Federal Reserve’s rate decision on Wednesday.With so much event risk looming – it’s month-end too – an escalation in Middle East tensions could not have come at a more sensitive time for markets. World stocks, the S&P 500, Nasdaq and U.S. Treasury yields all slid on Tuesday. The dollar on Tuesday hit a three-week high on an index basis, nudged above 155.00 yen, and was fixed at its strongest level since November against the Chinese yuan. But it ended U.S. trading on the defensive. The BOJ’s policy decision is on a knife-edge, at least according to money market pricing, which indicates a 55% likelihood the BOJ will raise rates by 10 basis points. That’s down from a 60% probability earlier this week.If the central bank stands pat and delivers a dovish message, the dollar could head back up to intervention territory around 160.00 yen. A hike and hawkish stance could bring 150.00 into view. While policymakers are expected to outline plans to taper the bank’s huge bond-buying stimulus, a rate cut is a close call. They may wait and see what the Fed does later on Wednesday, making a move in September more likely.While the Bank of Japan deliberates how it will tighten policy, the People’s Bank of China is going the other way, and PMIs from Beijing on Wednesday will give the first glimpse of how the world’s second largest economy performed in July.Expectations are being kept low – the manufacturing PMI is forecast at 49.3, according to a Reuters poll, down from June’s 49.5 and marking the third month of contraction in a row. More stimulus is needed if 2024 GDP growth is to reach Beijing’s 5% target, especially with U.S. tariffs coming down the pike. Chinese leaders on Tuesday signalled that stimulus will be directed at consumers, deviating from their usual playbook of pouring funds into infrastructure projects.Elsewhere, Australian inflation in June is expected to come in at 3.8%, up from 3.6% in May, while annual GDP growth in Taiwan is seen slowing to 4.8% in the April-June period from 6.6% in Q1.Here are key developments that could provide more direction to markets on Wednesday:- Bank of Japan policy decision – China ‘official’ PMIs (July)- Taiwan GDP (Q2) More