Asian shares track Wall Street higher, yen weak ahead of Japan vote
Overnight, the S&P 500 and the Nasdaq again closed at record highs as U.S. data including retail sales and jobless claims beat forecasts, indicating a modest improvement in the economy that should give the Federal Reserve time to gauge the inflation impact from higher U.S. tariffs.
Streaming giant Netflix (NFLX.O), opens new tab beat Wall Street's lofty expectations for second-quarter earnings in part due to a weaker U.S. dollar. Its share price, however, fell 1.8% in after-hours trading, with analysts saying much of the growth had already been priced in.
On Friday, MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS), opens new tab rose 0.8% to its highest since late 2021, bringing the weekly gain to 1.7%.
Japan's Nikkei (.N225), opens new tab, however, slipped 0.2%, and the yen was at 148.54 per dollar, down about 0.7% this week after polls showed Prime Minister Shigeru Ishiba's coalition was in danger of losing its majority in the election on Sunday.
Data on Friday showed Japan's core inflation slowed in June due to temporary cuts in utility bills but stayed beyond the central bank's 2% target. The rising cost of living, including the soaring price of rice, is among reasons for Ishiba's declining popularity.
"If PM Ishiba decides to resign on an election loss, USDJPY could easily break above 149.7 as it would usher in an initial period of political turbulence," said Jayati Bharadwaj, head of FX strategy at TD Securities.
"JPY could reverse the recent dramatic weakness if the ruling coalition wins and is able to make swift progress on a trade deal with Trump."
Chinese blue-chips (.CSI300), opens new tab rose 0.3% while Hong Kong's Hang Seng index (.HSI), opens new tab gained 1.2%.
The Tapei-listed shares of TSMC (2330.TW), opens new tab, the world's main producer of advanced AI chips, rallied 2.2% after posting record quarterly profit on Thursday, though it said future income might be affected by U.S. tariffs.
In the foreign exchange market, U.S. the dollar was on the back foot again on Friday, having bounced 0.3% overnight against major peers on the strong economic data. For the week, it is headed for a second successive gain of 0.6%, bouncing further from a 3-1/2 year low hit over two weeks ago.
Fed Governor Christopher Waller said on Thursday he continues to believe the central bank should cut interest rates at the end of this month, though most officials who have spoken publicly have signalled no desire to move.
Fed funds futures imply next to no chance of a move on July 30, while a September rate cut is just about 62% priced in.
Treasury yields were slightly lower in Asia. Benchmark 10-year U.S. Treasury yields slipped 2 basis points to 4.445%, having moved little overnight. Two-year yields also edged 2 bps lower to 3.8981.
Oil prices were mostly steady on Friday, after gaining $1 overnight following a fourth day of drones strikes on Iraqi Kurdistan oil fields, pointing to continued risk in the region.
U.S. crude inched up 0.2% to $67.66 per barrel and Brent also rose 0.2% to $69.68 a barrel. They, however, lost about 1% for the week.
Spot gold prices were steady at $3,337 an ounce but were set for a 0.5% weekly loss.
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The Independent
an hour ago
- The Independent
Federal Reserve gives journalists a rare tour of building renovations ahead of Trump's visit
The Federal Reserve, known for its tight lips, structured formality and extraordinary power to shape the global economy, finds itself putting out the welcome mat on Thursday for President Donald Trump. Trump and his allies say a $2.5 billion renovation of the Fed headquarters and a neighboring building reflects an institution run amok — a belief they hope to verify in an afternoon tour of the construction site. The Fed allowed reporters to tour the building before the visit by Trump, who, in his real estate career, has bragged about his lavish spending on architectural accoutrements that gave a Versailles-like golden flair to his buildings. The visit is an attempt to further ratchet up pressure on Fed Chair Jerome Powell, whom the Republican president has relentlessly attacked for not cutting borrowing costs. Trump's attacks have put the Fed, a historically independent institution, under a harsh spotlight. Undermining its independence could reduce the Fed's ability to calm financial markets and stabilize the U.S. economy. 'This stubborn guy at the Fed just doesn't get it — Never did, and never will,' Trump said Wednesday on Truth Social. 'The Board should act, but they don't have the Courage to do so!' Journalists get rare tour of Fed renovation On Thursday, reporters wound through cement mixers, front loaders, and plastic pipes as they got a close-up view of the active construction site that encompasses the Fed's historic headquarters, known as the Marriner S. Eccles building, and a second building across 20th Street in Washington. Fed staff pointed out new blast-resistant windows and seismic walls that were needed to comply with modern building codes and security standards set out by the Department of Homeland Security. The Fed has to build with the highest level of security in mind, Fed staff said, including something called 'progressive collapse,' in which only parts of the building would fall if hit with explosives. Sensitivity to the president's pending visit among Fed staff was high during the tour. Reporters were ushered into a small room outside the Fed's boardroom, where 19 officials meet eight times a year to decide whether to change short-term interest rates. The room, which will have a security booth, is oval-shaped, and someone had written 'oval office' on plywood walls. The Fed staff downplayed the inscription as a joke. When reporters returned through the room later, it had been painted over. Renovations have been in the works for a while Plans for the renovation were first approved by the Fed's governing board in 2017. The project then wended its way through several local commissions for approval, at least one of which, the Commission for Fine Arts, included several Trump appointees. The commission pushed for more marble in the second of the two buildings the Fed is renovating, known as 1951 Constitution Avenue, specifically in a mostly glass extension that some of Trump's appointees derided as a 'glass box.' The National Planning Commission, another local body, pushed the Fed to add marble to a rooftop addition to the Eccles building. Fed staff also said tariffs and inflationary increases in building material costs also drove up costs. Trump in 2018 imposed a 25% duty on steel and 10% on aluminum. Steel prices are up about 60% since the plans were approved in June, while construction materials costs overall are up about 50%, according to government data. Fed staff also pointed to the complication of historic renovations — both buildings have significant preservation needs. Constructing a new building on an empty site would have been cheaper. As one example, the staff pointed reporters to where they had excavated beneath the Eccles building to add a floor of mechanical rooms, storage space, and some offices. The Fed staff acknowledged such structural additions underground are expensive, but said it was done to avoid adding HVAC equipment and other mechanics on the roof, which is historic. Costs have only continued to grow The Fed has previously attributed much of the project's cost to underground construction. It is also adding 3 underground levels of parking for its second building. Initially the central bank proposed building more above ground, but ran into Washington, D.C.'s height restrictions, forcing more underground construction. When construction began in 2022, the Fed estimated the cost at $1.9 billion, and it has since grown by about 30%. Fed staff disputed that this is a cost overrun because they never awarded a fixed price contract the developers. Instead, the general contractor (a joint venture between Balfour-Beatty and Gilbane) was awarded a fee and overhead rate. Different parts or packages of the overall project have been sent out for competitive bids and awarded. The project has about 80 such packages overall, and 20 are left to be bid on. Renovation project could be impetus to push out Powell Trump wants Powell to dramatically slash the Fed's benchmark interest rate under the belief that inflation is not a problem, but Powell wants to see how Trump's tariffs impacts the economy before making any rate cuts that could potentially cause inflation to accelerate. The renovation project has emerged as the possible justification by Trump to take the extraordinary step of firing Powell for cause, an act that some administration officials have played down given that the Fed chair's term ends in May 2026. White House budget director Russell Vought suggested in a July 10 letter to Powell that changes to the renovations in order to save money might have violated the National Capital Planning Act. More recently, Trump has said he has no plans to oust Powell, which could be illegal based on a note in a May Supreme Court ruling. The Supreme Court found that Trump had the power to remove board members of other independent agencies, but indicated that a Fed chair could only be removed for cause. Pushing Powell out also would almost certainly jilt global markets, potentially having the opposite effect that Trump wants as he pushes for lower borrowing costs. Not everyone in Trump's administration agrees with the president's contention that Powell needs to resign. 'There's nothing that tells me that he should step down right now,' said Treasury Secretary Scott Bessent, whom Trump has floated as a potential replacement for Powell, in a recent interview with Fox Business. 'He's been a good public servant.' When asked last week if the costly rebuilding could be grounds to fire Powell, Trump said, 'I think it sort of is.' 'When you spend $2.5 billion on, really, a renovation," Trump said, 'I think it's really disgraceful.' ___
BBC News
2 hours ago
- BBC News
Wetin cause tension between Thailand and Cambodia
Clash between Thailand and Commbodia military for one border wey di two kontris dey drag, don kill at least 12 pipo, Thai authority tok. Dis fight don carry di border argument, wey don dey occur for more dan 100 years between di two South Asia neighbours enta anoda level. Most of di people wey die na civilians from three of Thailand provinces according to Thai army. Di army also report say many oda pipo wunjure. But Cambodia neva tok weda dem to get casualties. On Thursday, di two sides exchange gunfire wit each side claiming say na di oda first find trouble. Di gbas gbos quickly enta anoda level as Thailand accuse Cambodia say e fire rockets, and diafore, dem fire air strikes on Cambodia military targets. Now Thailand don close dia border wit Cambodia, while Cambodia reduce dia relationship wit Thailand, wey e accuse say dem use "excess force." Di two don ask dia kontri pipo wey dey live near di border make dem pack comot. Thailand evacuate 40,000 pipo comot go safe place. "E serious no be small. We dey middle of evacuation," Sutian Phiwchan, on area pesin for di Ban Dan district for Thailand Buriram province near Cambodia border, tell BBC. Thai authorities say na 11 civilians, including one pikin wey dey eight years and anoda one wey dey 15 year, plus one military pesin. Cambodia and Thailand dey tok dia own version of wetin happun. Thailand claim say Cambodia military na dem first send drone to spy dia troop for border. Cambodia for dia own tok say Thai sojas cause fight wen dem break one agreement wen dem carry dem sef go near Khmer-Hindu temple wey dey near di border. Wetin dey cause fight? Dis gbas gbos between Cambodia and Thailand begin more dan one hundred years, wen French colonial masters divide di border for di two kontris. Tins officially enta anoda level of kasala for 2008, wen Cambodia try to register one 11 century temple wey dey for di area wey dem dey drag land, as World Heritage Site. Dis move cause serious protest for Thailand. Di two side don dey clash for years and soldiers and civilians don die for both sides. Dis lates tension begin gada momentum for May afta dem kill one Cambodia soldier for one clash. For di past two months, di two kontris impose border restriction on di oda. Cambodia stop to import tins like fruits and vegetables, plus stop importing electricity and internet service. Both kontris don also increase di number of soldiers wey dem get for di border. Thailand acting premier Phumtham Wechayachai say di kasala wey dem get wit Cambodia dey "delicate", and dem must to address am wit care and according to international law. Cambodian Prime Minister Hun Manet im kontri want make dem solve dis mata peacefully - but add say im "no get choice" but to "respond wit armed force against armed aggression". Serious exchange of fire between di two kontris bin reduce sharply. But while e dey be like say di current fight fight fit no blow up turn to fill war, di two side currently lack leaders wey get enough strength and confidence to pull back from dis confrontation.
Reuters
2 hours ago
- Reuters
Explainer: Could Trump legally fire Fed chief Powell?
July 24 (Reuters) - President Donald Trump has repeatedly mused about firing Federal Reserve Chair Jerome Powell and, ahead of a visit to the U.S. central bank's headquarters on Thursday, called him a "numbskull" for not cutting U.S. interest rates. If Trump fires Powell, he will be wading into uncharted legal territory by testing the Fed's historical independence. The Federal Reserve Act of 1913, which created the central bank, says that members of Board of Governors, including the Fed chief, can be "removed for cause by the president." But the law does not define "cause" or lay out any standard or procedures for removal. No president has ever removed a Fed board member, and the law has never been tested in court. Several federal laws shielding members of other agencies from being removed by the president without cause say that "cause" can include neglect of duty, malfeasance, and inefficiency. If Powell is fired and sues, those laws could be a guide for courts to determine if Trump had cause to remove him. In enacting those protections, Congress meant to distance the agencies from the White House. They also are intended to insulate their members from politics when they issue rulings in individual cases and craft policies with far-reaching impacts, such as the monetary policy set by the Fed. Maybe not. In several cases challenging Trump's firing of agency officials, his administration has argued that giving them any protections from removal violates his broad constitutional powers to control the executive branch. The administration could similarly claim that requiring cause to remove a Fed board member is unconstitutional, allowing Trump to fire Powell for any reason or none at all. And if Powell sued and won, the Trump administration could argue that courts lack the power to reinstate him. Government lawyers have said in some pending cases that fired officials would at most be entitled to back pay and a declaration from the court that their removal was unlawful. Several federal judges have ruled that Trump's firings of members of independent agencies were illegal and ordered officials to be reinstated. Appeals courts or the U.S. Supreme Court have paused those rulings pending appeals, including one involving a consumer product safety board that the Supreme Court paused on Wednesday. A Washington, D.C.-based appeals court is expected to rule soon on whether Trump had the power to remove Democratic members from two labor boards, likely teeing up a Supreme Court review. The fired officials in some of those cases have said that allowing them to be removed would open the door to Trump having virtually unfettered power over the entire executive branch and would threaten the Fed's independence. In a 1935 ruling involving the Federal Trade Commission, the Supreme Court said the president cannot fire top officials at multi-member agencies that act like courts or legislative bodies without cause. But the court's conservative majority in recent years has viewed that ruling as an exception to the general rule that the president gets to choose who executes federal laws. The court, however, recently signaled that the Fed may fit into that narrow exception, and that the court's rulings involving other boards and commissions may not apply. In an unsigned order, opens new tab in May allowing Trump to remove members of the labor boards, the court said the Fed "is a uniquely structured, quasi-private entity" with a singular historical tradition, distinguishing it from other agencies.
