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Business Times
28 minutes ago
- Business
- Business Times
Asia: Most markets down as Fed holds and Trump announces fresh tariffs
[HONG KONG] Asian markets mostly fell on Thursday while the dollar held most of its gains as traders weighed a cautious Federal Reserve with strong tech earnings and Donald Trump's tariffs on key economies South Korea and India. The central bank held interest rates steady and refrained from suggesting it would cut any time soon despite as he brushed off relentless pressure from the US president, with recent data indicating inflation remains elevated. While two members of the policyboard took the rare move of dissenting and voting to cut, investors pared their bets on a reduction in September sending the dollar rallying against its peers. The bank cited a moderation in economic activity in the first half and 'solid' labour market conditions but warned 'uncertainty about the economic outlook remains elevated', while inflation too is somewhat heightened. Asked about Trump's tariff deals and whether they brought more certainty, Fed boss Jerome Powell told reporters: 'It's been a very dynamic time for these trade negotiations.' He added that 'we're still a ways away from seeing where things settle down'. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Kerry Craig of JPMorgan Asset Management said: 'With some details on baseline tariffs only just becoming clear, and many of the details of the recently agreed 'deals' still to be ironed out, the risk is that inflation rates will continue to rise in the coming months.' The latest developments on the trade front saw Trump announce a deal that sees 15 per cent tariffs on South Korean goods and a commitment from Seoul to invest US$350 billion in the United States. He also said India was to face 25 per cent tolls, coupled with an unspecified penalty over New Delhi's purchases of Russian weapons and energy. And he signed an executive order implementing an additional 40 per cent tax on Brazilian products, as Trump lambasts what he calls Brazil's 'witch hunt' against his far-right ally, former president Jair Bolsonaro on coup charges. Traders are keeping tabs on talks with other countries that are yet to sign deals with Washington ahead of Trump's self-imposed Friday deadline. After a broadly negative day on Wall Street, Asian markets struggled. Hong Kong, Shanghai, Sydney, Singapore, Seoul, Manila, Wellington and Bangkok all fell, though Tokyo, Taipei and Jakarta edged up. There was little movement in the yen after the Bank of Japan decided against hiking interest rates, while lifting economic growth and inflation costs. It also cautiously welcomed the country's trade deal with the United States. Traders had been given a healthy lead from the tech sector after titans Microsoft and Meta posted better-than-expected earnings, sending their stocks soaring in after-market trade. AFP
Business Times
an hour ago
- Automotive
- Business Times
Japan's factory output gain shows firms' resilience amid tariffs
[TOKYO] Japan's factory output unexpectedly rose in June, as manufacturers showed resilience even as US tariffs weigh on the nation's exports. Industrial production gained 1.7 per cent from the previous month, the Industry Ministry reported on Thursday (Jul 31). Output of transport equipment excluding cars, up 14.8 per cent, and electronic parts and devices drove the gains. Economists had expected a 0.8 per cent loss. Output increased 4 per cent from a year earlier, topping expectations of a 1.3 per cent gain. Output of autos, which faced tariffs totalling 27.5 per cent on shipments to the US during the period, nudged 0.1 per cent higher from the prior month. Output for steel and non-ferrous metals declined by 0.5 per cent after US President Donald Trump doubled the duty on US imports of steel and aluminium to 50 per cent in early June. 'I think production increased in some areas to respond to rush demand in anticipation of the tariff hike,' said Yuichi Kodama, economist at Meiji Yasuda Research Institute. 'The trend is difficult to grasp due to such demand, but I think production largely remained flat on a quarterly basis.' Seasonally-adjusted production advanced by 0.3 per cent in the quarter to June from the previous period, reducing the risk that the economy may have fallen into a technical recession in the period. The gains are forecast to continue after the US and Japan reached a trade agreement with terms considered more favourable to Japan than had been feared. Last week's surprise deal will cut tariffs on US imports of Japanese cars to 15 per cent and apply the same rate on other products. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Inventories fell 0.4 per cent in June, the third straight month of month-on-month declines, bringing the index down to 99.1, the lowest in just over three years. That indicates that manufacturers have room to add product in months ahead. Manufacturers estimated monthly production will rise 1.8 per cent in July and gain 0.8 per cent in August, according to Thursday's release. Separately, retail sales exceeded estimates, rising 1 per cent in June from May and increasing 2 per cent from a year ago. Persistent inflation has kept consumer spending from posting sustained gains as households, contending with higher costs for essential goods, trimmed discretionary outlays. Prime Minister Shigeru Ishiba, under pressure to do more to help households cope with inflation, has pledged cash handouts to spur consumption and undertaken steps to reduce utility costs. Ishiba's position was weakened substantially by his party's historic upper house election defeat earlier this month. He's said that he'd like to remain in office to ensure the implementation of the trade deal. The production data come hours before the Bank of Japan's (BOJ) board concludes its latest policy meeting, where authorities are widely expected to keep the benchmark interest rate unchanged. The focus will be governor Kazuo Ueda's assessment of the recent trade deal with the US. Officials see the possibility of mulling another interest rate hike this year after that agreement, sources familiar with the matter said last week. 'It will take more time for the impact of tariffs to be confirmed in hard data, so the BOJ is unlikely to raise interest rates today,' Kodama said. BLOOMBERG
Business Times
2 hours ago
- Business Times
Over 120 flights disrupted by UK tech glitch
[LONDON] Scores of flights to and from UK airports were cancelled on Wednesday due to a technical glitch, according to the air traffic control service, prompting anger from airline chiefs. The number of aircraft in London's air space was limited by the service, known as NATS, as a result of a technical issue which was quickly resolved. Airports including London's Heathrow and Gatwick and Edinburgh were affected. Heathrow is Europe's busiest air hub. There were 67 departures and 55 arrivals cancelled as of 7.30 pm (1830 GMT) while a number of flights were also diverted, according to aviation analytics firm Cirium. In 2023, NATS suffered the country's worst systems failure in almost 10 years, stranding thousands of passengers. Airline chiefs reacted angrily to the cancellations which came at the peak of the UK summer holiday travel season. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Ryanair COO Neal McMahon called for NATS's chief executive Martin Rolfe to resign over the failure. 'It is outrageous that passengers are once again being hit with delays and disruption,' said McMahon. 'It is clear that no lessons have been learnt since the August 2023 NATS system outage.' EasyJet COO David Morgan said it was 'extremely disappointing' to again see a failure 'causing disruption to our customers at this busy and important time of year for travel'. 'While our priority today is supporting our customers, we will want to understand from NATS what steps they are taking to ensure issues don't continue,' he added. A Department for Transport spokesperson said it was 'working closely' with NATS to understand the cause of the glitch and the 'implications for the resilience systems in place'. The 'technical issue' responsible for the disruption was at the service's control centre in Swanwick in south-west England, it said. It first announced problems at around 4.00 pm (1500 GMT) and in an update an hour later said systems were fully operational and that departures had resumed at all airports. AFP
Business Times
2 hours ago
- Business
- Business Times
Gold rebounds from one-month low on renewed trade uncertainty
[BENGALURU] Gold prices rebounded on Thursday (Jul 31) from a one-month low hit in the previous session, as trade uncertainty stemming from fresh US tariff announcements lifted bullion demand and investors bought on dips despite reduced expectations of a US rate cut. Spot gold was up 0.4 per cent at US$3,286.99 per ounce, as at 0041 GMT. Bullion hit its lowest level since Jun 30 in the previous session. US gold futures fell 0.5 per cent to US$3,282.10. US President Donald Trump on Wednesday issued a blitz of tariff announcements, ranging from changes to previously threatened levies on imports of copper and on goods from Brazil to ending an exemption from tariffs for small-value shipments from overseas. Trump announced a deal with South Korea involving a 15 per cent US tariff on imports from the country, while confirming ongoing negotiations with India after declaring a 25 per cent tariff on Indian goods effective on Friday. He also expressed optimism about trade talks with China, stating he expects a fair deal to be reached. Meanwhile, the US Federal Reserve held interest rates steady on Wednesday and Chair Jerome Powell's comments following the decision dampened expectations of rate cuts in September. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Gold, often considered a safe-haven asset during economic uncertainties, tends to do well in a low interest rate environment. The market awaits the US core PCE index data due later in the day, which is expected to rise 0.3 per cent month on month and 2.7 per cent year on year, as per a Reuters poll. US economic growth rebounded more than expected in the second quarter, but that measurement grossly overstated the economy's health as declining imports accounted for the bulk of the improvement and domestic demand increased at its slowest pace in 2½ years. Spot silver held steady at US$37.10 per ounce, platinum fell 0.3 per cent to US$1,308.85 and palladium rose 0.9 per cent to US$1,216.25. REUTERS
Business Times
3 hours ago
- Business
- Business Times
Australia's central bank welcomes Q2 inflation data, deputy governor says
[SYDNEY] Australia's second-quarter inflation data was very welcomed and came in as just the central bank expected, a top official said on Thursday, but added the bank remained cautious about the interest rate outlook. At the Barrenjoey Economic Forum in Sydney, Reserve Bank of Australia Deputy Governor Andrew Hauser reiterated the central bank's gradual and measured approach to lowering interest rates. 'The data yesterday were very welcome,' said Hauser. 'I know other people use words outstanding, superb and so forth. I'll say very welcome.' 'To some extent, what we are going to tell you is look we are uncertain. We are feeling our way. It's a board decision, not an individual decision.' Data showed on Wednesday that consumer prices grew at the slowest pace in over four years in the June quarter, while core inflation hit a fresh three-year low and cemented market wagers for a cut in interest rates next month. The RBA stunned markets earlier this month by holding interest rates steady at 3.85 per cent, saying the majority of the board members wanted to wait for more information that inflation was slowing as desired. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Markets are now pricing in a 95 per cent probability that the RBA will reduce rates by a quarter point on Aug 12, after the inflation data surprised on the low side and the jobless rate unexpectedly jumped to 4.3 per cent in June. Hauser said unemployment is still low, with the labour market still close to full employment. If the jobless rate rises sharply, the central bank would have to react but that was not the central case, he added. When asked about the central bank's increased tendency to surprise markets, Hauser said being unpredictable would not be a norm. 'There will be shocks from time to time... you will see a whole sequence of us hopefully doing the right thing but the unpredictable thing.' REUTERS
