Archive for Economics & Fundamentals – Page 57

23 Aug

The Bank of Japan is set to raise rates further. The Fed gov will speak at the annual symposium in Jackson Hole today

By JustMarkets 

On Thursday, stocks in the US ended the session down. The Dow Jones Index (US30) was down 0.43%, while the S&P 500 Index (US500) fell by 0.88%. The NASDAQ Technology Index (US100) closed negative at 1.67% yesterday. The rise in bond yields on Thursday was negative for stocks. Hawkish comments from Kansas City Fed President Schmid pushed bond yields higher when he said he wanted to see more economic data before supporting any decision to cut interest rates, as demand could rise again if the Fed is not careful. On the other hand, Boston Fed President Colleen said she expects the Fed to begin easing interest rates soon and that a “gradual, methodical pace” of rate cuts would likely be appropriate. Also, Philadelphia Fed President Harker said that he is agreeable to an interest rate cut in September if data align with expectations and that a “slow, methodical approach to lowering rates is the right way to go.”

The US weekly initial jobless claims rose by 4,000 to 232,000, matching expectations. S&P’s US manufacturing PMI fell by 1.6 to 48.0, weaker than expectations of 49.5 and the lowest report in 8 months. US existing home sales for July rose by 1.3% m/m to 3.95 million, slightly stronger than expectations of 3.94 million. Today, markets await Fed Chair Powell’s opening comments at the Fed’s annual symposium in Jackson Hole, Wyoming, for new insights on the Fed’s future policy path. Powell is expected to indicate a willingness to cut rates in September but will not specify the exact timing or size of the cut. Markets rate the odds of a 25 bps rate cut at the September 17-18 FOMC meeting at 100% and a 50 bps rate cut at 25%.

Bitcoin has held its recent rise to above $60,000, hitting its highest levels in three weeks. However, recent data showed that bitcoin inventories held by miners reached the highest level in two years. An increase in bitcoin inventories held by miners has historically been associated with falling prices, suggesting that miners may be preparing to sell large amounts of bitcoin.

Equity markets in Europe mostly went up yesterday. Germany’s DAX (DE40) rose by 0.24%, France’s CAC 40 (FR40) closed down 0.01%, Spain’s IBEX 35 (ES35) added 0.37%, and the UK’s FTSE 100 (UK100) closed upv0.05%. The S&P Eurozone Manufacturing PMI for August from S&P fell by 0.2 to 45.6, weaker than expected. However, the Eurozone Composite PMI for August unexpectedly rose by 1.0 to 51.2, stronger than expectations for a decline to 50.1. The ECB reported that Eurozone wage growth fell to 3.6% y/y in Q2 from 4.7% y/y in Q1. The eurozone consumer confidence index unexpectedly fell by 0.4 to 13.4 in August, weaker than expectations of an increase to 12.6.

The ECB’s July 17-18 policy meeting summary states that “the September meeting was an appropriate time to reassess the level of monetary policy tightening, as new economic data and a new set of staff forecasts will emerge.” Swaps discount the odds of a 25 bps ECB rate cut at the September 12 meeting at 97%.

Asian markets were mostly up yesterday. Japan’s Nikkei 225 (JP225) rose by 0.68% yesterday, China’s FTSE China A50 (CHA50) added 0.35%, Hong Kong’s Hang Seng (HK50) gained 1.44% over yesterday and Australia’s ASX 200 (AU200) was positive 0.21%.

The Bank of Japan (BoJ) reiterated its commitment to raise interest rates if inflation steadily reaches its 2% target but realizes that markets at home and abroad remain volatile, BoJ Governor Kazuo Ueda told parliament on Friday. He added that the central bank continues to monitor market volatility following its decision to raise borrowing costs in July. Ueda emphasized that the BoJ’s stance on adjusting the degree of monetary policy easing has not changed.

Singapore’s annual inflation rate in July 2024 was 2.4%, unchanged from the previous month, the lowest since August 2021, and below market forecasts of 2.5%. The annualized core inflation rate fell to 2.5% from 2.9% in the previous month, the lowest since February 2022, and fell short of forecasts of 2.9%.

S&P 500 (US500) 5,570.64 −50.21 (−0.89%)

Dow Jones (US30) 40,712.78 −177.71 (−0.43%)

DAX (DE40) 18,493.39 +44.44 (+0.24%)

FTSE 100 (UK100) 8,288.00 +4.57 (+0.06%)

USD Index 101.52 +0.48 (+0.47%)

Important events today:
  • – New Zealand Retail Sales (q/q) at 01:45 (GMT+3);
  • – Japan National Core CPI (m/m) at 02:30 (GMT+3);
  • – Singapore Consumer Price Index (m/m) at 08:00 (GMT+3);
  • – Jackson Hole Symposium at 15:00 (GMT+3);
  • – Canada Retail Sales (m/m) at 15:30 (GMT+3);
  • – US Fed Chair Powell Speaks at 17:00 (GMT+3);
  • – US New Home Sales (m/m) at 17:00 (GMT+3);
  • – UK BoE Gov Bailey Speaks at 22:00 (GMT+3).

By JustMarkets

 

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

Economics & Fundamentals Financial News
23 Aug

Banana apocalypse, part 2 – a genomicist explains the tricky genetics of the fungus devastating bananas worldwide

By Li-Jun Ma, UMass Amherst 

Did you know that the bananas you eat today are not the same type as the ones people were eating a few generations ago? The banana you might have had with your breakfast today is a variety called the Cavendish banana, while the one that was in grocery stores up to the 1950s was a variety called Gros Michel, which was wiped out by a disease called Fusarium wilt of banana, or FWB.

FWB of Gros Michel was caused by Fusarium oxysporum race 1, a fungal pathogen that affects bananas. This fungal infection kills a plant by occupying its vascular system, blocking water and mineral transportation.

Plant biologists developed the Fusarium-resistant Cavendish variety to replace the Gros Michel. Yet, over the past few decades, a resurgence of FWB caused by a different strain of the same fungus called tropical race 4, or TR4, is once again threatening global banana production.

How did Fusarium oxysporum gain the ability to overcome resistance and infect so many different plants?

The two-part genome of F. oxysporum

I am a genomicist who has spent the past decade studying the genetic evolution of Fusarium oxysporum. As a species complex, F. oxysporum can cause wilt and root rot diseases in over 120 plant species. Certain strains can also infect people.

In 2010, my lab discovered that each F. oxysporum genome can be divided into two parts: a core genome shared among all strains that codes for essential housekeeping functions, and an accessory genome varying from strain to strain that codes for specialized functions like the ability to infect a specific plant host.

Each species of plant has a sophisticated immune response to defend against microbial invasion. So to establish an infection, each F. oxysporum strain uses its accessory genome to suppress a plant’s unique defense system. This functional compartmentalization allows F. oxysporum to greatly increase its host range.

Petri dish with four red, oblong colonies crowing on separate corners
The genomic structure of Fusarium oxysporum allows it to have a wide range of hosts, such as tomatoes, cucumbers and watermelon.
Edward L. Barnard, Florida Department of Agriculture and Consumer Services, Bugwood.org, CC BY-SA

In our newly published research, my team and colleagues in China and South Africa found that the TR4 strain that kills Cavendish bananas has a different evolutionary origin and different sequences in its accessory genome compared with the strain that killed Gros Michel bananas.

Looking at the interface of where the TR4 strain is battling with its Cavendish banana host, we found that some of its activated accessory genes release nitric oxide, a gas harmful to the Cavendish banana. This sudden burst of toxic gases facilitates infection by disarming the plant’s defense system. At the same time, the fungus protects itself by increasing production of chemicals that detoxify nitric oxide.

Increasing banana diversity

In tracing the global spread of this new version of Fusarium oxysporum, we realized that a major cause for the recent resurgence of this fungal infection is the domination of the international banana industry by a single clone of banana.

Growing different varieties of bananas can make agriculture more sustainable and reduce disease pressure on a single crop. Farmers and researchers can control Fusarium wilt of banana by identifying or developing banana varieties that are tolerant or resistant to TR4. Our findings suggest that another way to protect Cavendish bananas would be to design effective nitric oxide scavengers to reduce the toxic pressure of the gas burst.

The banana industry has dark origins.

It can be hard to imagine how a consumer who simply enjoys eating bananas could participate in the battle against the disease devastating banana crops. However, consumers determine the market, and farmers are forced to grow what the market demands.

You can help increase banana diversity in your supermarket by intentionally trying one or more of the other hundreds of other existing banana varieties when they show up there. You can also buy local varieties of other fruits and agricultural products to help preserve plant diversity and support local growers.

Collaboration among scientists, farmers, industry and consumers around the world can help avoid future shortages of bananas and other crops.The Conversation

About the Author:

Li-Jun Ma, Professor of Biochemistry and Molecular Biology, UMass Amherst

This article is republished from The Conversation under a Creative Commons license. Read the original article.

 

Economics & Fundamentals Opinions
22 Aug

Thailand’s democracy has taken another hit, but the country’s progressive forces won’t be stopped

By Adam Simpson, University of South Australia 

After two tumultuous weeks in Thai politics, the country has a new prime minister and new opposition party in parliament. The sweeping changes have demonstrated yet again the power of the Constitutional Court over Thailand’s fragile democratic institutions.

The political intrigue began on August 7 when the court dissolved the progressive Move Forward Party, the main opposition party in parliament following its surprising showing in the 2023 national elections.

Two days later, the party reconstituted itself as the People’s Party and announced it would continue to lead the opposition.

Then, on August 14, the Constitutional Court disqualified Prime Minister Srettha Thavisin of the Pheu Thai party from holding the post, and removed him from office.

And two days after that decision, the parliament duly elected Pheu Thai leader Paetongtarn Shinawatra as his replacement. She is the third member of her family to serve as prime minister after her father, Thaksin Shinawatra (2001–06), and aunt, Yingluck Shinawatra (2011–14).

Unfortunately, these kinds of incidents have become normalised in Thailand. They demonstrate the extent to which conservative forces in the country continue to use various tools of “lawfare”, including the Constitutional Court, to target opposition politicians and parties and stifle the will of the people.

Despite these setbacks to Thailand’s democracy, the country is changing fast. It is becoming more progressive and less submissive to military and monarchy authority.

So, these latest manoeuvres by the country’s gerontocracy may not be a show of strength after all. Rather, as one Thai politics expert put it, these moves may be the “last gasp” of the conservative old guard that has long dominated Thai politics and society.

Revolving door of prime ministers

Over the last two decades, five prime ministers from the Pheu Thai party and its predecessors have been forced from office.

Thaksin Shinawatra was removed in a military coup in September 2006 and his party was later dissolved by the Constitutional Court.

Yingluck Shinatwatra led another successor party to a win at the 2011 elections, but she, too, was removed from power by the Constitutional Court in 2014, followed by another military coup.

With Paetongtarn Shinawatra’s elevation to prime minister last week, the powerful Shinawatra family has made a stunning return to the top of Thai politics. However, this may not be quite the triumphant re-establishment of a family political dynasty that Thaksin Shinawatra expects.

Paetongtarn Shinawatra is just 37 years old and inexperienced. And despite the fact the economy showed some growth in the first quarter of this year, her government faces significant economic challenges, such as high levels of household and corporate debt and an economic slowdown in the US and China.

Thaksin Shinawatra also remains in the cross-hairs of the conservative military establishment. After spending 15 years in self-imposed exile to avoid facing charges he contends were politically motivated, he returned to Thailand last year after Pheu Thai took power.

He was then indicted in June for allegedly insulting the monarchy during a media interview in 2015.

Another new progressive party dissolved

Perhaps the more concerning development in recent days, however, was the Constitutional Court’s decision to dissolve the progressive Move Forward party, which had won the most seats in parliament in last year’s election.

Progressive politicians have fallen afoul of the court a number of times in recent years.

In the 2019 elections, for example, Future Forward, a brand new progressive political party led by a young, charismatic politician, Thanathorn Juangroongruangkit, stunned observers by winning 80 seats. The court, however, soon disqualified Thanathorn from parliament and dissolved the party.

The party reconstituted itself as Move Forward under the leadership of another young leader, Pita Limjaroenrat, and it did even better in the 2023 elections, winning 151 seats in the House of Representatives.

The court, however, suspended Pita and dissolved his party over its attempts to reform the anti-democratic lese majeste law. It also banned the party’s leadership, including Pita, from politics for ten years.

The party’s remaining MPs will be able to stay in parliament under the banner of the People’s Party, though nearly 40 are now under investigation for alleged ethics violations, including its new leader, Natthaphong Ruengpanyawut.

What does this mean for Thai democracy?

There now appear to be three distinct centres of political power in Thailand:

  • Thaksin Shinawatra and the Pheu Thai party
  • the military-monarchy complex and their associated parties
  • the new progressive People’s Party.

While Pita warned against the continued use of “lawfare” to muzzle the opposition in an essay for The Economist earlier this month, there is some room for optimism.

It appears much of the population has moved on from the nepotism and rampant self-interest that has long defined Thai politics. According to a recent poll, nearly half of respondents said their preferred prime minister would be Pita (47%), while Paetongtarn was favoured by just 10.5% and Srettha just 8.7%.

The People’s Party is also offering a much more democratic vision for Thailand, based on integrity and reforming the lese majeste law. (Its leader, Natthaphong, has acknowledged, though, that the party must now “think carefully about how to amend it”.)

The party’s electoral march towards government looks difficult to stop. It’s likely Move Forward’s win in the 2023 election will turn into a landslide for the People’s Party at the next election.

The historical obedience and submission to the monarchy and military in Thai society is gradually being whittled away, as older, conservative voters are being replaced by those who want a more democratic and responsive government.

In recent years, there has also been some improvement in Thailand for personal freedoms — notably the legalisation of same-sex marriage and cannabis. The pressure to expand and consolidate basic political freedoms within a multi-party democracy will only increase.

Thailand is not an authoritarian regime – unlike its neighbours Myanmar and Laos – and at some point in the not-too-distant future, the rapidly changing Thai society may well force the military-monarchy complex to cede power for good.The Conversation

About the Author:

Adam Simpson, Senior Lecturer, International Studies, University of South Australia

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Economics & Fundamentals Opinions
22 Aug

The dovish FOMC minutes supported the growth of indices. The Australian index has been growing for 10 consecutive trading sessions

By JustMarkets

Stocks in the US ended the session higher on Wednesday. The Dow Jones Index (US30) rose by 0.14%, while the S&P 500 Index (US500) gained 0.42%. The NASDAQ Technology Index (US100) closed positive, 0.57% yesterday. Stocks rose on Wednesday after a significant downward revision to US payrolls data and a dovish FOMC meeting minutes from July 30-31 drove bond yields lower and reinforced the likelihood that the Fed will cut interest rates next month. The minutes from the July 30-31 FOMC meeting said that “a few” officials considered cutting interest rates at the July meeting, but the “overwhelming majority” of officials thought a rate cut in September was likely. Markets now await Fed Chairman Powell’s opening comments on Friday at the Fed’s annual symposium in Jackson Hole, Wyoming, for more clues about the Fed’s future policy path.

The US Bureau of Labor Statistics (BLS) revised the US employment numbers for the year to March downward by 818,000, stronger than expectations of 600,000 and the largest downward revision since 2009. The report was dovish for Fed policy, pointing to a weaker US labor market than initially reported.

Equity markets in Europe mostly went up yesterday. Germany’s DAX (DE40) rose by 0.50%, France’s CAC 40 (FR40) closed 0.52% higher, Spain’s IBEX 35 (ES35) gained 0.24%, and the UK’s FTSE 100 (UK100) closed up 0.12%.

WTI crude oil prices fell by 1.7% to $71.9 per barrel on Wednesday, settling at their lowest level since January, as investors reacted to the latest Federal Reserve meeting minutes and a significant downward revision to estimates of US job growth. Oil declined despite a drop in US crude inventories, which fell by 4.6 million barrels in the week ended August 16, exceeding analysts’ expectations. In addition, concerns over economic weakness in China could reduce the demand for crude oil and put further pressure on oil prices.

Asian markets traded yesterday without any unified dynamics. Japan’s Nikkei 225 (JP225) fell by 0.29%, China’s FTSE China A50 (CHA50) was down 0.17%, Hong Kong’s Hang Seng (HK50) lost -0.69% over yesterday, while Australia’s ASX 200 (AU200) was positive 0.16%.

The ASX 200 Index (AU200) gained 0.21%, extending its winning streak to a tenth session, as good Australian business activity data boosted market sentiment. Australia’s composite PMI rose to 51.4 in August from 49.9 in July. This is the fastest rise in three months, driven by a pickup in service sector activity despite a deeper contraction in manufacturing output.

Malaysia’s annual inflation rate for July 2024 stood at 2.0%, just below market expectations of 2.1%, and unchanged for the third consecutive month. The reading remained at its highest level since August 2023, with prices continuing to rise for food (1.6% vs. 2.0% in June), alcoholic beverages and tobacco (0.9% vs. 0.7%), and housing (3.2% vs. 3.2%). Core consumer prices, excluding volatile fresh food prices and administrative costs, rose 1.9% y/y in June, holding steady for a fourth month and remaining at the highest level since December 2023.

Au Jibun Bank’s Japan Manufacturing PMI rose to 49.5 in August 2024 from a four-month low of 49.1 in the previous month, compared with the market forecast of 49.8. Preliminary estimates showed a second consecutive month of contraction in factory activity. It also marked the sixth consecutive month of contraction in the manufacturing sector this year, driven by a further decline in new orders.

As expected, the Bank of Korea kept the benchmark rate unchanged at 3.5% for the 13th time at its August meeting. The decision came amid conflicting economic signals, with inflation falling but household debt rising and housing prices soaring after recent government measures. The council noted that short-term inflation expectations have fallen to the upper end of the 2% range. Meanwhile, this year, consumer inflation could reach the lower end of the 2% range, with an annualized rate of 2.5%.

S&P 500 (US500) 5,620.85 +23.73 (+0.42%)

Dow Jones (US30) 40,890.49 +55.52 (+0.14%)

DAX (DE40) 18,448.95 +91.43 (+0.50%)

FTSE 100 (UK100) 8,283.43 +10.11 (+0.12%)

USD index 101.16 −0.28 (−0.28%)

Important events today:
  • – Australia Manufacturing PMI (m/m) at 02:00 (GMT+3);
  • – Australia Services PMI (m/m) at 02:00 (GMT+3);
  • – Japan Manufacturing PMI (m/m) at 03:30 (GMT+3);
  • – Japan Services PMI (m/m) at 03:30 (GMT+3);
  • – German Manufacturing PMI (m/m) at 10:30 (GMT+3);
  • – German Services PMI (m/m) at 10:30 (GMT+3);
  • – Eurozone Manufacturing PMI (m/m) at 11:00 (GMT+3);
  • – Eurozone Services PMI (m/m) at 11:00 (GMT+3);
  • – UK Manufacturing PMI (m/m) at 11:30 (GMT+3);
  • – UK Services PMI (m/m) at 11:30 (GMT+3);
  • – Jackson Hole Symposium at 15:00 (GMT+3);
  • – US Initial Jobless Claims (w/w) at 15:30 (GMT+3);
  • – US Manufacturing PMI (m/m) at 16:45 (GMT+3);
  • – US Services PMI (m/m) at 16:45 (GMT+3);
  • – US Existing Home Sales (m/m) at 17:00 (GMT+3);
  • – US Natural Gas Storage (w/w) at 17:30 (GMT+3).

By JustMarkets

 

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

Economics & Fundamentals Financial News
21 Aug

Inflationary pressures are easing in Canada. Riksbank cut interest rate by 0.25%

By JustMarkets

On Tuesday, stocks in the US ended the session lower. The Dow Jones Index (US30) was down 0.15%, while the S&P 500 Index (US500) fell by 0.20%. The NASDAQ Technology Index (US100) closed negative 0.33%. Volatility increased ahead of the upcoming Jackson Hole Symposium and the release of minutes from the Fed’s last meeting, which could provide insight into the potential size of the expected September rate cut. Weakness in microchip stocks also weighed on the overall market. Energy producers also fell after crude oil prices fell to a one-week low.

Boeing (BA) fell 4.2% after its 777x test fleet was grounded due to structural cracks.

Canada’s annual inflation rate fell to 2.5% in July 2024 from 2.7% in the previous month, matching market expectations and marking the softest rise in consumer prices since March 2021. The result matched the Bank of Canada’s prognosis that inflation would fall to the 2.5% mark in the second half of the year, although inflation is still expected to jump due to the incoming base effect for gasoline prices. In addition, the closely watched median and truncated averages of key rates came in below expectations at 2.4% and 2.7%, respectively, reinforcing dovish expectations for the Bank of Canada.

Equity markets in Europe were mostly down yesterday. The German DAX (DE40) was down 0.35%, the French CAC 40 (FR40) closed down 0.22%, the Spanish IBEX 35 (ES35) was down 0.13%, and the British FTSE 100 (UK100) closed down 1.00%.

Eurozone construction output rose by 1.7% m/m in June, the largest increase in 17 months. Germany’s July Producer Price Index fell by 0.8% y/y, marking the thirteenth consecutive month of year-on-year price declines. The Bundesbank said in its monthly report that relatively strong wage growth in the Eurozone will likely keep core inflation “elevated.” That sets the stage for the euro to strengthen against the US dollar in the medium term. However, swaps discount the chances of a 25bp ECB rate cut at the September 12 meeting to 100%.

Sweden’s Riksbank cut its key rate by 25 bps to 3.5% at its August 2024 meeting, in line with market consensus, and signaled that two or three more rate cuts would be needed this year if inflation evolves in line with the Central Bank’s estimates. It was the second rate cut in this cycle. The Riksbank noted that inflation has continued to fall in recent months, with core rates converging quickly to the 2% target, giving the Central Bank more confidence that the disinflation projected in the June policy report correctly gauges the economic backdrop. In addition, policymakers noted that the growth outlook for Sweden’s economy may be weaker than expected earlier this year.

Turkey’s Central Bank left the benchmark weekly repo auction rate unchanged at 50% at its August 2024 meeting, as expected by markets. The Monetary Policy Committee noted that core inflation in the Turkish economy rose slightly as expected but remained below the second-quarter average amid signs that the restrictive monetary backdrop has led to a slowdown in domestic demand.

WTI crude oil prices settled near $74 a barrel on Tuesday after dropping 2.5% in the previous session amid hopes of a ceasefire in the Middle East. The US Secretary of State Antony Blinken confirmed that Israeli Prime Minister Benjamin Netanyahu has accepted an offer to resolve differences preventing a ceasefire agreement in Gaza, but tensions remain high.

Asian markets traded flat yesterday. Japan’s Nikkei 225 (JP225) rose by 1.80%, China’s FTSE China A50 (CHA50) was down 0.45%, Hong Kong’s Hang Seng (HK50) was down 0.33%, while Australia’s ASX 200 (AU200) was positive 0.22%.

S&P 500 (US500) 5,597.12 −11.13 (−0.20%)

Dow Jones (US30) 40,834.97 −61.56 (−0.15%)

DAX (DE40) 18,357.52 −64.17 (−0.35%)

FTSE 100 (UK100) 8,273.32 −83.62 (−1.00%)

USD Index 101.37 −0.52 (−0.51%)

Important events today:
  • – Japan Trade Balance (m/m) at 09:00 (GMT+3);
  • – US Crude Oil Reserves (w/w) at 17:30 (GMT+3);
  • – US FOMC Meeting Minutes at 21:00 (GMT+3).

By JustMarkets

 

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

Economics & Fundamentals Financial News
20 Aug

PBoC expectedly left rates unchanged. Bitcoin returned to the $60,000 mark

By JustMarkets

At Monday’s close, the Dow Jones (US30) Index was up 0.58%, while the S&P 500 (US500) Index increased by 0.97%. The NASDAQ Technology Index (US100) closed positive 1.39%. That day, dovish Fed comments drove bond yields lower and supported equities. San Francisco Fed President Daly said that recent US economic data has given the Fed “more confidence” that inflation is under control and it is time to consider adjusting the underlying cost of borrowing. In addition, Minneapolis FRB President Kashkari signaled that he would be open to a Fed rate cut at the September FOMC meeting. Positive corporate news also supported stocks on Monday, with Advanced Micro Devices (AMD) rising more than 4% and leading chip maker stocks higher after acquiring server maker ZT Systems in a deal valued at $4.9 billion.

The US leading indicators for July fell by 0.6% m/m, weaker than expectations of 0.4% m/m.

Markets rate the odds of a 25bp rate cut at the September 17–18 FOMC meeting at 100% and a 50bp rate cut at 24%. Investor optimism is high as they anticipate a possible interest rate cut by the Federal Reserve, with Fed Chairman Jerome Powell’s speech at the upcoming symposium in Jackson Hole taking center stage.

Canada will release its inflation report today. Inflation is expected to remain at 2.9% y/y, and core inflation (excluding food and energy prices) is expected to remain at 1.9% y/y. However, it is important to remember that the Bank of Canada (BoC) also targets median rates. According to the median estimate, inflationary pressures are expected to ease slightly from 2.6% y/y to 2.5% y/y. Overall, lower inflation will increase the likelihood of further rate cuts by the Bank of Canada, which will hurt the Canadian dollar. If the data shows a surprise in the form of rising inflation, it will increase the likelihood that the BoC will not be in a hurry to cut rates further and will support the Canadian dollar.

Bitcoin rose above the $60,000 mark on Tuesday, hitting a one-week-high amid improving risk sentiment and a steady increase in global liquidity. Traders also argued that cryptocurrencies could now resume their rally on the back of seasonality.

Equity markets in Europe mostly went up yesterday. Germany’s DAX (DE40) rose by 0.54%, France’s CAC 40 (FR40) closed higher by 0.70%, Spain’s IBEX 35 (ES35) added 1.40%, and the UK’s FTSE 100 (UK100) closed up 0.55%. In Europe today, investors will be evaluating German producer inflation data and the latest decision by Sweden’s Central Bank.

On Monday, WTI crude oil prices fell more than 2.5% below $75 per barrel, extending a 1.9% decline from the previous session amid ongoing Gaza ceasefire talks and concerns about weakening demand, especially from China. US Secretary of State Antony Blinken is in Israel emphasizing the urgency of achieving a ceasefire and hostage release, with further talks scheduled in Cairo this week. This desire for peace could ease geopolitical tensions and lower the risk premium for oil. In addition, China’s recent economic data has been disappointing, with slowing growth, falling house prices, and rising unemployment. This has forced Chinese refineries to cut back on crude oil processing, further reducing demand.

The US natural gas (XNG/USD) prices rose by 5% to over $2.20/MMBtu, nearing a one-month high amid tightening supply and demand. Estimates predict a heat wave across much of the western, central, and southern US this week, which is expected to increase cooling demand and boost natural gas consumption.

Asian markets were mostly up yesterday. Japan’s Nikkei 225 (JP225) was down 1.77%, China’s FTSE China A50 (CHA50) added 0.51%, Hong Kong’s Hang Seng (HK50) was up 0.80%, and Australia’s ASX 200 (AU200) was positive 0.12%.

Minutes of the Reserve Bank of Australia’s August meeting showed that board officials discussed further tightening but decided that keeping the current rate would better balance risks. The Central Bank also indicated that the money rate might need to remain stable for an extended period, saying the risks that inflation will not return to the 2–3% target within a reasonable time frame have increased. Governor Michele Bullock recently said the Central Bank still has a long way to go in easing monetary policy as core inflation remains too high.

The People’s Bank of China (PBoC) kept key lending rates at record lows, which was in line with market expectations. The one-year prime rate (LPR), the benchmark for most corporate and household loans, remained unchanged at 3.45%, while the five-year rate, the key benchmark for mortgages, remained at 3.85%. The decision underscores the Central Bank’s commitment to avoiding “radical” economic measures.

S&P 500 (US500) 5,608.25 +54.00 (+0.97%)

Dow Jones (US30) 40,896.53 +236.77 (+0.58%)

DAX (DE40) 18,421.69 +99.29 (+0.54%)

FTSE 100 (UK100) 8,356.94 +45.53 (+0.55%)

USD index 101.87 −0.59 (−0.58%)

Important events today:
  • – New Zealand Trade Balance (q/q) at 01:45 (GMT+3);
  • – China PBoC Loan Prime Rate at 03:15 (GMT+3);
  • – Australia Monetary Policy Meeting Minutes (m/m) at 04:30 (GMT+3);
  • – Switzerland Trade Balance (m/m) at 09:00 (GMT+3);
  • – Eurozone Consumer Price Index (m/m) at 12:00 (GMT+3);
  • – Switzerland SNB Chairman Jordan Speaks at 12:30 (GMT+3);
  • – Canada Consumer Price Index (m/m) at 15:30 (GMT+3);
  • – US FOMC Member Bostic Speaks at 20:35 (GMT+3);
  • – US FOMC Member Barr Speaks at 21:45 (GMT+3).

By JustMarkets

 

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

Economics & Fundamentals Financial News
19 Aug

Oil prices are declining due to weakening demand from China. US and European stock indices continue to rise in price

By JustMarkets

On Friday, the Dow Jones (US30) Index gained 0.24% (+2.79% for the week), while the S&P 500 (US500) Index gained 0.20% (+3.78% for the week). The NASDAQ Technology Index (US100) closed positive 0.21% (for the week +4.99%). A busy week of economic data helped the market recover from earlier losses in August. Lower inflation, strong retail sales, and fewer jobless claims helped calm fears of a possible recession. In addition, investor sentiment was boosted by Federal Reserve officials signaling a possible rate cut in September, which supported the week’s momentum.

The US presidential race is heating up as Democrats seek to boost Vice Presidential nominee Kamala Harris during the party’s convention in Chicago, which begins on Monday. During the four-day event, prominent Democratic figures are expected to deliver speeches to bolster Harris’s support. Harris has energized the Democratic base and narrowed the gap with Republican nominee Donald Trump in some opinion polls. As the election race tightens, investors seek clarity on Harris’ policy positions. In particular, Harris has emphasized her commitment to maintaining the independence of the Federal Reserve, which is in stark contrast to Trump’s stance.

Equity markets in Europe mostly rose on Friday. Germany’s DAX (DE40) rose by 0.77% (for the week +3.03%), France’s CAC 40 (FR40) closed up 0.35% (for the week +2.09%), Spain’s IBEX 35 (ES35) added 0.59% (for the week +2.52%), and the UK’s FTSE 100 (UK100) closed down 0.43% (for the week +1.75%).

WTI crude futures fell 1.9% to settle at $76.65 per barrel on Friday following reports that Qatar urged Iran to ease tensions with Israel during ceasefire talks in the Gaza Strip. The drop in oil prices also reflects broader concerns about weakening demand from China, the world’s top oil importer. Recent data on China’s economy show slowing growth, falling housing prices, and rising unemployment, which has prompted Chinese refineries to cut back on oil processing. In addition, the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA) lowered their estimates for oil demand growth due to China’s weakening economy.

Asian markets were mostly up last week. Japan’s Nikkei 225 (JP225) rose by 7.91%, China’s FTSE China A50 (CHA50) added 1.15%, Hong Kong’s Hang Seng (HK50) gained 1.91% over 5 trading days, and Australia’s ASX 200 (AU200) posted a positive 2.49%.

The Nikkei 225 Index (JP225) fell by 1.77%, and the broader Topix Index lost 1.4% on Monday, ending a five-day run of gains amid profit-taking and a rising yen-pressured domestic equities. A stronger yen hurts the profitability outlook for Japan’s export-oriented industries and discourages investors from borrowing the currency to invest in higher-yielding assets. Markets now await Japanese inflation data on Friday to clarify the Bank of Japan’s (BoJ) monetary policy path.

Thailand’s economy grew by 0.8% in the second quarter of 2024, compared with market estimates of 0.9% after a marginally revised 1.1% growth in the first quarter. The slowdown came amid heightened political uncertainty due to several major court cases in the constitutional court. Private consumption growth slowed sharply (0.3% vs. 1.1% in the first quarter) amid uncertainty over the fate of the $14 billion stimulus plan.

S&P 500 (US500) 5,554.25 +11.03 (+0.20%)

Dow Jones (US30) 40,659.76 +96.70 (+0.24%)

DAX (DE40) 18,322.40 +139.16 (+0.77%)

FTSE 100 (UK100) 8,311.41 −35.94 (−0.43%)

USD Index 102.40 −0.06 (−0.06%)

There are no important events today.

 

by JustMarkets, 2024.08.19

We advise you to get acquainted with the daily forecasts for the major currency pairs.
By JustMarkets

 

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

Economics & Fundamentals Financial News
16 Aug

International students will offer a big boost to the US economy this back-to-school season

By Barnet Sherman, Boston University 

Of the millions of young adults heading off to college this fall, many will be international students. If trends continue, about 1 million students from around the world will come to the U.S. to pursue higher education this year.

These young scholars make a big economic impact. Altogether, they pump more than US$40 billion into the U.S. economy and support over 368,000 jobs. That’s not just paying professors and buying textbooks – it includes everything from renting apartments to late-night DoorDash and Grubhub deliveries. And it’s near a record high.

In fact, higher education is the 10th-leading export of the United States, according to the U.S. Bureau of Economic Analysis – except the export is really an import, of students from around the world.

Think of it this way: If you went to Paris to see the Olympics this year, the Olympics was the export that brought you – the tourist, or, in economic terms, the import – to France. In the complex world of economic balance of trade accounting, international students are the tourists visiting U.S. campuses.

Only economists could think that studying and taking exams is somehow a vacation.

While China, India and South Korea send the most students to the U.S., young people come from around the globe to pursue degrees here. Last year, they represented some 221 nations and territories, including three students from the independent island nation of Tuvalu.

A boon to local economies

In any of the 50 largest American cities, you’ll find at least one college or university with international students on campus. For these communities, global learners offer a most welcome financial aid package.

Consider Boston. With its pantheon of venerable institutions – including Boston University, where I teach multinational finance and trade – the region boasts over 50 colleges and universities. Boston’s economic gains from the more than 60,000 international students at these schools are huge: some $2.7 billion.

Or look at Greater Philadelphia. The region’s higher education institutions rank fifth nationwide in attracting students from around the world. From the perennially top-drawing University of Pennsylvania — itself ranked in the top 25 for international students — or the more specialized Curtis Institute of Music, together they can expect to host nearly 17,000 international students in fall 2024.

Prestigious private schools are a draw, but hands down the biggest pull for international students are state universities and colleges. Of the nation’s top schools enrolling these students last year, 32 were state colleges and universities, attracting over 240,000 students in total.

In the top three of those public institutions alone — Arizona State University, the University of Illinois Urbana-Champaign and the University of California, Berkeley — international students contributed nearly $1.6 billion, supporting close to 16,900 jobs. Expand that to the top 10 — the University of California system takes four of those spots — and the numbers pop up to $4.5 billion and 47,900 jobs.

Bringing the world to Mankato

But it’s not just the geographically sprawling University of California and other large state systems. Mankato, Minnesota, hosts a Minnesota State University campus; in the 2022 academic year, some 1,700 international students called this small city, 80 miles from Minneapolis, their home away from home.

Those students brought an infusion of $44.9 million into that community, supporting around 190 jobs. There are dozens of similar campuses in cities and towns like Mankato across the country. It adds up quickly.

In addition to private and public universities, community colleges also attract thousands of international students. Although their international enrollment has fallen off in recent years, community colleges still attracted just shy of 53,600 international students in 2023, with China, Vietnam and Japan leading the list.

Generating some $1.5 billion and supporting 6,620 jobs, they have a major economic impact – particularly in Texas, California and Florida, where the majority of these students come to learn.

One thing’s for sure: Whether they’re attending small-town community colleges or Ivies in big cities, international students have a “high degree” of economic impact.The Conversation

About the Author:

Barnet Sherman, Professor, Multinational Finance and Trade, Boston University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Economics & Fundamentals Opinions
16 Aug

What is mpox? A microbiologist explains what’s known about this smallpox cousin

By Rodney E. Rohde, Texas State University 

On Aug. 14, 2024, the World Health Organization declared mpox a public health emergency of international concern. There have been over 15,600 cases and over 530 deaths reported in the Democratic Republic of the Congo and neighboring countries in Africa. The disease had previously caused a global outbreak from 2022 to 2023.

Mpox – previously called monkeypox – isn’t a new disease. The first confirmed human case was in 1970, when the virus was isolated from a child suspected of having smallpox in the Democratic Republic of Congo (DRC). Though usually mild, mpox can still potentially cause severe illness. Health officials are concerned that more cases will arise with increased travel.

I’m a researcher who has worked in public health and medical laboratories for over three decades, especially in the realm of diseases with animal origins. What exactly is happening in the current outbreak, and what does history tell us about mpox?

A cousin of smallpox

Mpox is caused by the monkeypox virus, which belongs to a subset of the Poxviridae family of viruses called Orthopoxvirus. This subset includes the smallpox, vaccinia and cowpox viruses. While an animal reservoir for monkeypox virus is unknown, African rodents are suspected to play a part in transmission. The monkeypox virus has only been isolated twice from an animal in nature. Diagnostic testing for mpox is currently only available at Laboratory Response Network labs in the U.S. and globally.

The name “monkeypox” comes from the first documented cases of the illness in animals in 1958, when two outbreaks occurred in monkeys kept for research. However, the virus did not jump from monkeys to humans, nor are monkeys major carriers of the disease.

Electron microscope view of monkeypox virus, showing oval-shaped, mature virus particles and spherical, immature virions
The virus that causes mpox belongs to the Poxviridae family of viruses, which includes smallpox.
CDC/ Cynthia S. Goldsmith

Epidemiology

Since the first reported human case, mpox has been found in several other central and western African countries, with the majority of infections in the DRC. Cases outside of Africa have been linked to international travel or imported animals, including in the U.S. and elsewhere.

The first reported cases of mpox in the U.S. was in 2003, from an outbreak in Texas linked to a shipment of animals from Ghana. There were also travel-associated cases in July and November 2021 in Maryland. The outbreak of mpox that began May 2022 is ongoing.

Because mpox is closely related to smallpox, the smallpox vaccine can provide protection against infection from both viruses. Since smallpox was officially eradicated, however, routine smallpox vaccinations for the U.S. general population were stopped in 1972. Because of this, mpox has been appearing increasingly in unvaccinated people.

Transmission

The virus can be transmitted through contact with an infected person or animal or contaminated surfaces. Typically, the virus enters the body through broken skin, inhalation or the mucous membranes in the eyes, nose or mouth. Researchers believe that human-to-human transmission is mostly through inhalation of large respiratory droplets rather than direct contact with bodily fluids or indirect contact through clothes.

Health officials are worried that the virus may currently be spreading undetected through community transmission, possibly through a new mechanism or route. Where and how infections are occurring are still under investigation.

Signs and symptoms

After the virus enters the body, it starts to replicate and spread through the body via the bloodstream. Symptoms usually don’t appear until one to two weeks after infection.

Mpox produces smallpox-like skin lesions, but symptoms are usually milder than those of smallpox. Flu-like symptoms are common initially, ranging from fever and headache to shortness of breath. One to 10 days later, a rash can appear on the extremities, head or torso that eventually turns into blisters filled with pus. Overall, symptoms usually last two to four weeks, while skin lesions usually scab over in 14 to 21 days.

While mpox is rare and usually nonfatal, one version of the disease kills around 10% of infected people. The form of the virus currently circulating is thought to be milder, with a fatality rate of less than 1%.

Vaccines and treatments

Treatment for mpox is primarily focused on relieving symptoms. According to the Centers for Disease Control and Prevention, no treatments are available to cure mpox infection.

Because smallpox is closely related to mpox, the smallpox vaccine can protect against both diseases.

Evidence suggests that the smallpox vaccine can help prevent mpox infections and decrease the severity of the symptoms. One vaccine known as Imvamune or Imvanex is licensed in the U.S. to prevent mpox and smallpox.

Vaccination after exposure to the virus may also help decrease chances of severe illness. The CDC currently recommends smallpox vaccination only in people who have been or are likely to be exposed to mpox. Immunocompromised people are at high risk.

This is an updated version of an article originally published on May 20, 2022.The Conversation

About the Author:

Rodney E. Rohde, Regents’ Professor & Chair, Medical Laboratory Science, Texas State University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Economics & Fundamentals Financial News
16 Aug

The German DAX Index has risen for 8 consecutive sessions. Malaysia’s GDP shows strong growth

By JustMarkets

On Thursday, the Dow Jones (US30) Index gained 1.61%, while the S&P 500 (US500) Index closed 1.39% higher. The NASDAQ Technology Index (US100) closed yesterday positive 2.34%. Signs of a strengthening US economy are driving stocks higher today after July retail sales posted the largest increase in a year, and weekly initial jobless claims unexpectedly fell to a 5-week low. The strong reports bolstered the projection for a soft economic landing.

The US weekly initial jobless claims unexpectedly fell by 7,000 to a 5-week low of 227,000, indicating a strengthening labor market versus expectations of a rise to 235,000. US retail sales for July rose 1.0% m/m, exceeding expectations of 0.4% m/m and the largest increase in a year and a half. Atlanta Fed President Bostic said he is “open” to an interest rate cut in September. The Fed cannot “afford to be late” in easing monetary policy amid signs of cooling in the labor market. St. Louis Fed President Musalem said that from his perspective, “the risk to both sides of the Fed’s mandate seems more balanced. Accordingly, the time is approaching when an adjustment to the moderately restrictive policy may be appropriate ahead of future meetings.” Markets rate the odds of a 25 bps rate cut at the September 17–18 FOMC meeting at 100% and a -50 bps rate cut at this meeting at 28%.

Walmart (WMT) is up more than 6% after reporting a second-quarter revenue of $169.34 billion, which is better than the consensus estimate of $168.46 billion, and it is raising its net sales prognosis. Cisco Systems (CSCO) rose more than 8%, leading gains in the Dow Jones Industrials and Nasdaq 100 stocks after the company reported fourth-quarter revenue of $13.64 billion, better than the consensus of $13.53 billion, and projection of above-average earnings.

Equity markets in Europe were mostly up on Thursday. Germany’s DAX (DE40) rose by 1.66%, France’s CAC 40 (FR40) closed 1.23% higher, Spain’s IBEX 35 (ES35) added 1.23%, and the UK’s FTSE 100 (UK100) closed up 0.80%.

Germany’s DAX (DE40) Index has risen for 8 consecutive sessions, and it has nearly reversed losses from the global equity sell-off that ended last week. Financial stocks took center stage, with Deutsche Bank and Commerzbank adding between 2.9% and 3.3%. Finally, Mercedes, Porsche, BMW, and Volkswagen continued yesterday’s gains, although Siemens and Airbus were in slightly negative territory. Meanwhile, the UK economy slowed slightly in Q2 and stalled in June, which was in line with prognoses, but business investment unexpectedly contracted.

WTI crude oil prices rose 1.5% to $78.16 a barrel on Thursday, rebounding from two days of losses as recession fears eased. There were also fears of possible Iranian retaliation against Israel following reports that Hamas is unlikely to take part in new ceasefire talks in Gaza. However, gains were halted by lingering demand concerns, with EIA data showing an unexpected rise in US crude inventories, which increased by 1.357 million barrels last week, ending a six-week decline and contrary to expectations of a 2 million barrel drop.

The US natural gas (XNG/USD) prices hit a one-month high of $2.28 per MMBtu in August as declining domestic supply coincided with expectations of strong cooling demand. The latest EIA data showed that US utilities withdrew 6 billion cubic feet of natural gas in the week ended August 9, despite a seasonal upward trend, marking the first August decline since 2006 and contrasting with market expectations of a 43 billion cubic feet increase. Lower production is expected to support prices, making them more sensitive to any supply disruptions or additional warming.

Asian markets also had the advantage of rising yesterday. Japan’s Nikkei 225 (JP225) rose by 0.78%, China’s FTSE China A50 (CHA50) added 1.10% Hong Kong’s Hang Seng (HK50) was down 0.02%, while Australia’s ASX 200 (AU200) was positive 0.19%.

The Bank of Japan (BoJ) will take a more cautious approach to raising interest rates after the recent turmoil in global markets to avoid a rapid appreciation of the yen, BMI said in a recent note. BMI strategists said the Bank of Japan will take a more cautious approach and will only raise rates by 25 bps to 0.50% this year, down from our previous estimate of 50 bps.

Malaysia’s economy grew by 5.9% y/y in Q2 2024, compared to preliminary growth of 5.8% and 4.2% growth in Q1. This was the highest GDP growth since Q4 2022 on the back of strong output across all sectors. Activity in services accelerated (5.9% vs. 4.8% in Q1), helped by wholesale and retail trade. Production in the manufacturing industry also increased (4.7% vs. 1.9%) due to non-metallic minerals, basic metals, and products thereof, as well as petroleum, chemical, rubber, and plastics industries.

S&P 500 (US500) 5,543.23 +88.02 (+1.61%)

Dow Jones (US30) 40,563.58 +555.19 (+1.39%)

DAX (DE40) 18,183.24 +297.64 (+1.66%)

FTSE 100 (UK100) 8,347.35 +66.30 (+0.80%)

USD index 103.00 +0.44 (+0.43%)

Important events for today:
  • – New Zealand Producer Price Index (q/q) at 01:45 (GMT+3);
  • – Australia RBA Gov Bullock Speaks at 02:30 (GMT+3);
  • – New Zealand RBNZ Gov Orr Speaks at 05:30 (GMT+3);
  • – UK Retail Sales (m/m) at 09:00 (GMT+3);
  • – Eurozone Trade Balance (m/m) at 12:00 (GMT+3);
  • – US Building Permits (m/m) at 15:30 (GMT+3);
  • – US Michigan Consumer Sentiment (m/m) at 17:00 (GMT+3).

By JustMarkets

 

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

Economics & Fundamentals Financial News
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