Asian markets mixed but little joy as traders eye more Fed hikes

HONG KONG - Markets were mixed Thursday, with little buying enthusiasm after minutes from a Federal Reserve policy meeting indicated interest rates will likely keep rising longer than previously feared.

A blockbuster jobs report and sticky inflation data this month have dealt a hammer blow to earlier expectations the US central bank could soon pause its monetary tightening campaign or even cut borrowing costs before year's end.

Several Fed officials have lined up to warn traders they were too optimistic and that with the labour market still strong, rates would need to keep rising until it had weakened and prices were under control.

Minutes from the Fed's February 1 decision reinforced that broad agreement as policymakers try to get inflation down to their target of two percent.

"Participants observed that a restrictive policy stance would need to be maintained until the incoming data provided confidence that inflation was on a sustained downward path to two percent, which was likely to take some time," the minutes said.

"Almost all participants agreed that it was appropriate to raise the target rate for the federal funds rate 25 basis points at this meeting."

And it noted that "a few participants" were in favour of a 50-point increase.

Analysts pointed out that the minutes came before the latest jobs and inflation figures.

National Australia Bank's Taylor Nugent, meanwhile, noted "the absence of any mention of 'disinflation' in the minutes, which contrasts (bank boss Jerome) Powell's press conference where he noted many times that the disinflationary process was underway".

After a healthy rally through January, global markets have rowed back this month as investors come to terms with the higher-for-longer rates narrative and recession fears return.

After Wednesday's sell-off, Asian markets were mixed.

Hong Kong, Shanghai, Sydney, Singapore, Mumbai Bangkok and Manila all fell, though Seoul, Wellington, Taipei and Jakarta edged up.

London dipped at the open, though Frankfurt and Paris edged higher.

"One of our big concerns coming into this year was the market was anticipating an event that wasn't likely to occur, that being a dovish Fed pivot," Oaktree Capital Management's Danielle Poli told Bloomberg Television.

"The market has woken back up a little bit in these last two weeks."

Investors are now awaiting the release of US jobless claims later in the day, which could provide a fresh idea about the strength of the labour market.

Crude prices edged up slightly Thursday but made only a small dent in the losses of at least three percent suffered the day before as the prospect of higher rates and a possible recession drags on demand expectations.

Agence France-Presse

Markets boosted by rate hopes ahead of Fed decision

HONG KONG - Most markets rose Monday ahead of a crucial Federal Reserve policy meeting later in the week, with investors hoping for a less hawkish tilt in their plans for interest rates.

A sense of relief has settled on trading floors over the past week following a report that the US central bank could take its foot off the accelerator in its push to rein in decades-high inflation.

Adding to the positive mood has been an indication that others around the world are looking at slowing down, though the excitement was tempered Friday by record inflation readings in Europe and data showing prices remained elevated.

Asian dealers were given a strong lead from Wall Street, where all three main indexes ended more than two percent higher thanks to a rally in tech firms following a strong earnings report from Apple.

Tokyo, Seoul, Sydney, Singapore, Taipei, Mumbai, Bangkok and Wellington all piled on more than one percent, while Jakarta was also up.

However, Hong Kong and Shanghai fell on concerns about China's growth outlook as the government continues its zero-Covid strategy of lockdowns, with restrictions imposed in towns and cities nationwide.

Data showing activity in the factory and services sectors contracted last month highlighted the impact the measures are having on the world's number two economy.

The drops also come after China announced a tally of over 2,500 new virus cases, the biggest outbreak in more than two months, fanning concerns of further painful shutdowns.

All eyes are on the Fed's policy meeting, which ends Wednesday.

While it is widely expected to announce a fourth successive 75 basis point hike, traders will be poring over the post-meeting statement looking for a hint that officials are open to dialing back the pace of increases.

The gathering comes as other central banks have recently indicated they are willing to ease up, with Canada raising rates less than expected last week, while authorities in Australia and Europe have taken a more dovish view.

Concerns that rapidly rising borrowing costs will send economies into a recession have hammered markets globally this year.

"There has been a succession of central bank downshifts, adding to the 'peak hawkishness' theme running through macro markets," said SPI Asset Management's Stephen Innes. "And investors are entirely focused on these U-turns as peak rates get priced in. 

"So, people don't want to miss the stock market rally wagon, especially if the Fed conveys a similar policy downshift this week, sending the rally into overdrive as pivot procrastinators will be forced to chase."

The policy decision is followed Friday by the release of US jobs figures, which will give a fresh snapshot of the economy in light of rising prices and interest rates.

A better-than-expected earnings season has also provided support to global markets, easing concerns that tighter monetary policies would hammer firms' bottom lines, though big-name tech giants have taken a blow.

National Australia Bank's Rodrigo Catril said more than 70 percent of companies that had reported had beaten forecasts, though he added that while markets had risen over the past month, some traders remained cautious.

"Those with a positive inclination may look at October's equity performance as a sign of a new uptrend while others would suggest we have not yet seen the worst given the lag effects from monetary policy and the prospect of still more tightening to come," he said in a note.

Key figures around 0710 GMT 

Tokyo - Nikkei 225: UP 1.8 percent at 27,587.46 (close)

Hong Kong - Hang Seng Index: DOWN 1.1 percent at 14,700.12

Shanghai - Composite: DOWN 0.8 percent at 2,893.48 (close)

Euro/dollar: DOWN at $0.9945 from $0.9967 on Friday

Pound/dollar: DOWN at $1.1596 from $1.1618 

Dollar/yen: UP at 147.76 yen from 147.46 yen

Euro/pound: UP at 85.79 pence from 85.77 pence

West Texas Intermediate: DOWN 0.9 percent at $87.09 per barrel

Brent North Sea crude: DOWN 1.0 percent at $94.85 per barrel

New York - Dow: UP 2.6 percent at 32,861.80 (close)

London - FTSE 100: DOWN 0.4 percent at 7,047.67 (close) 

Agence France-Presse

Stocks drop and dollar rises as inflation, rate fears return

HONG KONG - Equities tumbled Thursday, tracking a sell-off on Wall Street, while the dollar jumped further as surging inflation, interest rate hikes and recession fears returned to the fore.

Traders in Europe were keeping tabs on Westminster a day after Prime Minister Liz Truss's government was plunged into a fresh crisis and facing collapse following the resignation of home secretary Suella Braverman.

That came days after the sacking of finance minister Kwasi Kwarteng and has left Truss's premiership on a knife-edge.

The positive start to the week, helped by forecast-beating earnings and a major UK government policy U-turn, gave way to the downbeat mood that has characterized markets all year as traders contemplated an extended period of uncertainty.

News that UK inflation bounced back above 10 percent in September highlighted the struggle central banks have in bringing prices down, despite lifting borrowing costs in recent months.

That followed a similarly glum reading out of New Zealand earlier in the week and helped push up government bond yields around the world, indicating higher interest rates.

The unease on trading floors, and concerns that prices are showing no sign of easing, also sent investors back into the safety of the dollar, adding more inflationary pressure outside the United States and dragging on stock markets.

"As is often the case, rising US yields and the strong US dollar are the sledgehammers pounding global equities lower," said SPI Asset Management's Stephen Innes. 

After Wall Street's drop, markets across Asia were deep in the red, with selling also fuelled by concerns about the Chinese economy as Covid cases spike in the country and leaders stick to lockdown strategies.

A decision to delay the release of third-quarter growth data this week added to the unease among investors.

Hong Kong led losses, shedding almost three percent at one point, while Tokyo, Sydney, Seoul, Wellington, Taipei, Shanghai, Mumbai and Manila were also in the red.

There was a brief rally in the afternoon sparked by a report that China was considering easing quarantine rules for people coming into the country, though traders were unable to maintain momentum.

London's FTSE 100 fell in the morning. Frankfurt was also down but Paris edged up.

The losses wiped out most of the gains enjoyed at the start of the week, even as positive earnings reports came in from Netflix and top Wall Street banks, with Ellen Hazen of F.L.Putnam Investment Management warning worse could be yet to come.

"As we look at third-quarter results, we think there are going to be more misses than the market is currently expecting," she told Bloomberg Radio.

"If you look at GDP for this year, it keeps getting revised downward and it's really hard for companies to keep growing their earnings in the face of that."

On forex markets the dollar briefly broke to as high as 150.08 yen for the first time since 1990, putting pressure on Japanese authorities who said saying they were keeping a close watch on the market and were ready to step in to support the beleaguered currency.

But analysts warned the yen would continue to slide as long as the Bank of Japan refuses to tighten monetary policy at the same time as the Federal Reserve presses on with its sharp rate hikes.

The pound was also back under pressure, having bounced Monday after Britain's new finance minister Jeremy Hunt reversed virtually all of Truss's debt-fuelled, tax-cutting mini-budget that hammered financial markets.

Sterling was hovering just above $1.12 -- against more than $1.14 Tuesday -- owing to the chaos in Westminster, with many of the prime minister's own party calling for her to stand down, while there is speculation that more members of the cabinet could walk.

Oil prices extended Wednesday's rally that came in reaction to a drop in US petroleum stockpiles, and despite President Joe Biden's decision to release 15 million barrels from US strategic reserves.

The crude was the last batch to be released from the 180 barrels pledged by Biden earlier this year, aimed at bringing costs down.

But Innes added: "Markets will mostly ignore further releases from the Strategic Petroleum Reserves -- prices are elevated because of the medium- and longer-term gap between supply and demand resulting from years of oil industry swoon and the resulting low capital expenditure.

"So, the impact of additional... releases will likely have diminishing returns with (reserves) at a multi-decade low."

Key figures around 0810 GMT 

Tokyo - Nikkei 225: DOWN 0.9 percent at 27,006.96 (close)

Hong Kong - Hang Seng Index: DOWN 1.4 percent at 16,280.22 (close)

Shanghai - Composite: DOWN 0.3 percent at 3,035.05 (close)

London - FTSE 100: DOWN 0.2 percent at 6,914.36

Pound/dollar: DOWN at $1.1210 from $1.1219 on Wednesday

Dollar/yen: UP at 149.90 yen from 149.88 yen

Euro/dollar: UP at $0.9794 from $0.9778 

Euro/pound: UP at 87.18 pence from 87.10 pence

West Texas Intermediate: UP 1.5 percent at $86.86 per barrel

Brent North Sea crude: UP 1.2 percent at $93.52 per barrel

New York - Dow: DOWN 0.3 percent at 30,423.81 (close)

Agence France-Presse

Markets drop again as traders brace for another big Fed hike

HONG kong - Markets fell Monday as traders extended last week's rout across risk assets, with expectations high that the Federal Reserve will this week announce another outsized interest rate hike.

With recent data showing US inflation rooted at four-decade highs, investors are increasingly pessimistic about the outlook for the global economy.

Some observers have warned of a sharp recession in many countries caused by the huge rate increases, which are hitting families in the pocket.

And with uncertainty rife owing to a range of issues, including Russia's war in Ukraine and China's lockdown-induced slowdown, equities are in danger of revisiting the lows they hit in June.

Several central banks are due to make rate announcements this week, with Japan and Britain among the biggest, although the main event is Wednesday's Fed decision.

There had been a hope that after two 75-basis-point increases in a row, and economic data showing weakness, officials would take their foot off the pedal this month.

But last Tuesday's disappointing consumer price figures shocked traders and ramped up bets for a third successive 75-point rise, while some have predicted a whole percentage point move.

Policymakers, including Fed boss Jerome Powell, have repeatedly said their ultimate aim is to bring inflation under control, even if that means sending the economy into recession.

"It is clear that the Fed will project hawkish messaging, once again reiterating that it will bring down inflation unconditionally," said Vasileios Gkionakis at Citigroup.

Wall Street's worst week since June ended with more losses after FedEx reported Thursday that it shipped fewer packages than expected over the summer owing to weakness in the global economy.

That came as CEO Raj Subramaniam said he expects a global recession.

Asian equity investors continued the selling on Monday.

Hong Kong closed down one percent, even after reports that the city's government was considering ending mandatory hotel quarantine for incoming travelers.

Shanghai was also down despite news that megacity Chengdu was ending a two-week Covid-19 lockdown that saw 21 million people affected.

Sydney, Seoul, Singapore, Taipei, Manila and Wellington were also in the red, though Mumbai and Bangkok inched up and Jakarta was flat. Tokyo was closed for a holiday.

Frankfurt and Paris both opened lower. London was closed for the funeral of Queen Elizabeth II.

The prospect of more big Fed rate hikes is also keeping the dollar at multi-decade highs against its major peers, with the yen feeling most of the pressure as the Bank of Japan refuses to tighten policy.

"Speculative selling of the yen is readily justified by the ongoing widening in US-Japan yield differentials," said Ray Attrill, of National Australia Bank.

"Until or unless something happens to arrest or reverse this spread widening, the yen is susceptible to additional selling pressure."

The Japanese unit last week hit a fresh 24-year low of 144.99 to the dollar, though it has bounced slightly after comments from BoJ officials that signaled they were ready to intervene to provide support.

Oil prices dipped despite the news out of Chengdu as demand fears are fuelled by the growing fear of recession around the world.

Agence France-Presse

Asian markets drop as Fed minutes cause fresh rate hike woe

HONG KONG - Markets dropped in Asia on Thursday following a sell-off in New York spurred by minutes from the Federal Reserve indicating officials intended to keep lifting interest rates to tackle decades-high inflation.

While policymakers said they would eventually have to start tempering their tightening pace, they said they would keep borrowing costs elevated "for some time", though admitted there was a risk of going too far and damaging the economy.

The minutes dampened hopes that after a period of quick, sharp increases this year, the bank could possibly begin lowering them in 2023 once inflation was coming down.

Bets on a more dovish approach in the new year had been boosted by data showing inflation came down quicker in July than expected. That helped drive a rally in equities from their June lows and weighed on the dollar.

But the realization that policy would likely stay restrictive undermined the sense of optimism, pushing all three indexes on Wall Street down Wednesday with the tech-heavy Nasdaq taking the biggest hit, while the dollar rallied and extended gains in Asia. 

And news that UK inflation spiked above 10 percent for the first time since 1982 added to the downbeat mood.

Asian traders appeared increasingly worried that the Fed will slip up as it tries to bring down inflation without causing another recession in the world's biggest economy.

Tokyo, Hong Kong, Sydney, Shanghai, Seoul, Taipei, Mumbai, Wellington and Bangkok were down, though Singapore, Manila and Jakarta edged up. 

London fell in the morning while Frankfurt and Paris rose.

"The key takeaway from these minutes would appear to show that there is little inclination on the part of anyone on the (policy board) to even look at the possibility of rate cuts," said Michael Hewson at CMC Markets.

He added that they "chime with more recent comments from Fed officials which suggest that we could see at least another 1.5% in rate rises by year end".

And JP Morgan Asset Management's Meera Pandit told Bloomberg Television: "We do still anticipate there's going to be a lot of interest-rate volatility in the back half of the year, especially once markets start to perhaps acknowledge the fact that we might not necessarily see cuts in 2023 that are being priced in."

Sentiment was also dragged by continuing worries about China's economy, with Goldman Sachs and Nomura slashing their growth outlooks again following another weak round of data and as the country reels from Covid-19 lockdowns.

The announcements came after Beijing on Monday cut interest rates in a surprise move, before Premier Li Keqiang called on six key provinces -- accounting for about 40 percent of the economy -- to bolster pro-growth policies.

But Nomura economists said that while officials will likely unveil further measures "rolling out a comprehensive stimulus package is of low probability in a year of government reshuffle, while the need for maintaining zero-Covid makes conventional stimulus measures much less effective". 

Agence France-Presse

Asian markets down as investors look to uncertain 2022

HONG KONG - Asian stocks were mostly down in Wednesday trade as a "Santa Claus rally" showed signs of fatigue and continued fears over the Omicron variant -- as well as uncertainty about economic prospects for 2022 -- weighed on markets.

Covid-19 cases have surged across the world, prompting governments to impose new measures to limit contagion while the travel industry faced thousands of flight cancellations.

Warnings from the World Health Organization that the risk from the variant remains "very high" have compounded the sense that the pandemic is far from over, though data showing a reduced risk of hospitalization has lifted spirits.

Reflecting the uncertainty, Tokyo closed down in thin holiday trade on Wednesday, with the market weighed down by US futures losses.

Seoul was also down, while Sydney and Wellington rose. Europe opened mixed, with London's FTSE slightly up while Paris and Frankfurt fell. 

In China, markets fell, in a slide analysts partly attributed to losses in shares of major liquor brands -- including Kweichow Moutai, one of the world's biggest drinks companies.

"The drop is mostly contributed by some blue chips, in particular the baijiu names," Zhang Gang, a strategist at Central China Securities, told Bloomberg.

"It's likely that some funds want to cash out before the year-end after the recent rebound."

Hong Kong's Hang Seng Index was down as investors eyed uncertain prospects for 2022 as well as a continued debt crisis in the mainland's property market.

A continued regulatory clampdown by Beijing on overseas listings by Chinese firms has also weighed down markets -- though expectations that the country's central bank will add further stimulus in 2022 offered some hope.

FITS AND STARTS 

But trading volumes remain thin going into the new year, when prospects for global growth and the long-term impact of the Omicron variant are expected to become clearer.

Moody's economist Mark Zandi said in a note the Omicron wave would dent growth in the first quarter, but "not have a material impact" on 2022 overall because of a rebound later in the year.

"Even after the Omicron wave abates, there will almost surely be others. But we expect each new wave to be less disruptive to the healthcare system and economy than the wave before it," he said.

Katie Nixon, chief investment officer for Northern Trust Wealth Management, was also upbeat, saying her firm was "pretty constructive going into 2022".

"We're having fits and starts related to this Omicron variant of course. This will create maybe demand delayed but not destroyed," she told Bloomberg TV.

There was also optimism on oil markets, with crude holding a roughly one-month high on hopes that the Omicron variant will not dent global travel in the ways many had feared.

Agence France-Presse

World stocks in third day of gains as Omicron fears ease

LONDON - A rebound in market sentiment continued in early European trading on Wednesday, with world shares set for their biggest two-day jump since November last year as investors became less concerned about the Omicron variant.

World shares plunged at the end of last month when the discovery of a new COVID-19 variant spooked investors. But sentiment has rebounded sharply this week in the absence of indications that the variant would derail the economic recovery.

The STOXX 600 had its biggest daily jump since November 2020 on Tuesday and, despite European stock index futures initially being in the red on Wednesday, at 0901 GMT the STOXX 600 was up 0.4 percent, set for its third consecutive day of gains.

The MSCI world equity index, which tracks shares in 50 countries, was up 0.2 percent - its highest since Nov. 26, when Omicron fears first hit markets.

"To be honest, it was more the absence of bad news rather than any concrete good news helping to drive sentiment," wrote Deutsche Bank strategist Jim Reid in a note to clients.

"Every day that passes without a wave of severe cases driven by Omicron is offering more hope that this won't be the curveball to throw the recovery off course."

British drugmaker GSK said on Tuesday its antibody-based COVID-19 therapy with US partner Vir Biotechnology was effective against all mutations of Omicron.

But a study in South Africa suggested that the Pfizer vaccine may only partly protect against Omicron.

"Clearly in the very short term uncertainty has risen over the Omicron virus... but overall at this stage we do not believe it will derail the macro picture in the medium-term," said Jeremy Gatto, multi-asset portfolio manager at Unigestion.

OUTLOOK FOR RATES

Oil prices eased as investors waited for more information about the extent to which the variant would impact demand. At 0911 GMT, Brent crude futures were down 0.4 percent and US West Texas Intermediate crude was down 0.5 percent on the day.

The dollar index was steady around 96.233, while the euro was up 0.1 percent at $1.1283.

The euro-dollar pair has struggled to recover from the 2021 lows it reached in November, hurt by expectations that the US Federal Reserve will tighten monetary policy more quickly than the dovish European Central Bank.

Last week, Fed Chair Jerome Powell said it might be time to stop seeing inflation as transitory, suggesting the central bank could speed up tapering.

"The market is pricing between two to three hikes next year now. We think that that pricing is too optimistic. We believe that the Fed will actually be slower to deliver on these rate hikes," said Unigestion's Gatto, adding that this would be supportive for equities.

The US 10-year Treasury yield, which had its biggest weekly drop since June 2020 last week due to a combination of Powell's hawkish comments and fears over Omicron, was a touch lower on Wednesday at 1.4597 percent.

US inflation data is due on Friday.

Meanwhile, shares in China's Evergrande Group hit a record low, after a missed debt payment deadline put the developer at risk of becoming the country's biggest defaulter - but the news had limited global market impact because it is already "well-priced" by the market, Unigestion's Gatto said.

In virtual talks, President Joe Biden warned Russian President Vladimir Putin that the West would impose "strong economic and other measures" on Russia if it invaded Ukraine, while Putin demanded guarantees that NATO would not expand farther eastward.

(Reporting by Elizabeth Howcroft; Editing by Alex Richardson)

-reuters- 

Bulls back in charge in global markets as omicron worries wane

LONDON - Waning Omicron COVID-19 variant worries and a timely booster shot of Chinese stimulus lifted world stock markets and oil on Tuesday and left traders offloading safe-haven currencies and bonds again.

The FTSEurofirst 300 index was on track for its first back-to-back run of plus 1 percent gains since February while Asia saw record bounces from some of China's biggest firms such as Alibaba and Baidu.

The risk-on mood also helped the dollar climb against safe haven currencies such as the Japanese yen,, which had lost 0.6 percent overnight, as the confidence-sensitive Australian dollar also found buyers.

Safe-harbour government bonds went the other way with yields - which move inverse to bond prices - up 2.5 percent on Germany's benchmark 10-year Bund after falling to a three-month low on Monday.

Reports in South Africa said Omicron cases there had only shown mild symptoms and the top US infectious disease official, Anthony Fauci, told CNN "it does not look like there's a great degree of severity" so far.

"Good news relating to the severity of Omicron should be taken with a pinch of salt. Faster transmission could offset the benefits of milder symptoms," researchers at ING said in a note. "More broadly, it is still early days, even if markets are starting to display Omicron fatigue."

The gains also came after China's central bank on Monday injected its second shot of stimulus since July by cutting the amount of cash that banks must hold in reserve.

There was still uncertainty about its property sector as Evergrande teetered on the brink of default again but data showing much stronger import growth was "a positive sign on the strength of domestic demand", RBC analyst Adam Cole said.

Elsewhere, Australia's S&P/ASX200 rose 0.95 percent, while Japan's Nikkei advanced 2.1 percent as risk-on sentiment pushed markets higher.

MSCI's main Asia ex-Japan benchmark has lost about 5 percent so far this year, with Hong Kong markets figuring among the big losers, while Indian and Taiwan stocks outperformed.

Shares in embattled developer Evergrande edged up 1.7 percent after hitting a record low on Monday as markets waited to see if the real estate giant has paid $82.5 million with a 30-day grace period coming to an end.

Elsewhere, markets were supported by gains on Wall Street, where economically sensitive stocks outperformed.

"While epidemiologists have rightly warned against premature conclusions on Omicron, markets arguably surmised that last week's brutal sell-off ought to have been milder," Vishnu Varathan, head of economics and strategy at Mizuho Bank, said in a note.

"After all, early assessments of Omicron cases have been declared mild, spurring half-full relief."

Also supporting the dollar in FX markets was the expectation the Federal Reserve will accelerate the tapering of its bond-buying programme when it meets next week in response to a tightening labour market.

Oil prices jumped another 2 percent to $74.60 a barrel, adding to a near 5 percent rebound the day before as concerns about the impact of Omicron on global fuel demand eased.

Copper prices also ticked higher while gold was steady at $1,778.5 per ounce on expectations US consumer price data due later this week will show inflation quickening.

(Additional reporting by Anshuman Daga in Singapore; Editing by Nick Macfie)

-reuters-

Starbucks sales miss as virus spike keeps customers at home

Starbucks Corp on Tuesday reported a larger-than-expected fall in quarterly sales as the renewed surge in coronavirus cases in the United States kept customers at home.

The world’s largest coffee chain’s global same-store sales fell 5 percent in its first quarter, which ended Dec. 27, more than analysts’ estimates of a 3.4 percent decline, according to Refinitiv IBES data.

Shares fell slightly in extended trading.

The second wave of COVID-19 infections and accompanying restrictions dented traffic at the coffee chain’s stores, hampering its efforts to boost demand through product launches and new drive-thrus.

Comparable sales declined 6 percent for the Americas region, compared with a 5.2 percent fall expected by analysts.

But in China, Starbucks’ biggest growth market, comparable sales rose 5 percent as the company benefited from the popularity of its rewards program and the return of pre-coronavirus consumer habits.

Customers also spent more money per order, helping to offset fewer transactions.

Starbucks also said Chief Operating Officer Roz Brewer would be leaving the company next month to take a chief executive officer role at another company.

Walgreens Boots Alliance Inc later announced that Brewer would take the helm at the company effective March 15.

For the second quarter, Starbucks said it expects U.S. comparable sales to rise between 5 percent and 10 percent, while in China they were forecast to grow nearly two-fold a year after the pandemic hit the region.

The company did not change its guidance of an expected rebound overall this year, with global comparable sales expected to rise 18 percent to 23 percent in 2021.

Net revenue fell 5 percent to $6.7 billion, missing expectations of $6.93 billion.

The Seattle-based company has been closing some stores, adding drive-thrus to others, remaking some with smaller cafes and building a few with no seating at all as it focuses on expanding to-go options.

Overall, the company opened 278 net new stores in the quarter, for 4 percent year over year growth. It now has 32,938 stores around the world, 51 percent of which are company-operated.

Starbucks also saw coffee lovers return to its Rewards loyalty program, with its count of 90-day active U.S. members increase 15 percent year over year to 21.8 million.

-reuters-

Philippine central bank sends stocks soaring with surprise rate cut

MANILA - Philippine shares led emerging Asian markets on Friday, surging 2.5 percent after the country's central bank delivered a surprise cut in interest rates to shore up a domestic economy struggling after months of on-off coronavirus restrictions.

The region's foreign exchange markets were largely higher, with new steps from the Bank of 

Thailand to stem gains for the baht seeing little success. The currency rose almost half a percent in morning trade.

Equity markets across Asia were up across the board, with Singapore gaining over 1 percent, as an improved global mood and the region's relative success in controlling the COVID-19 pandemic encourages investment.

Most of the region's emerging stock markets were set to post weekly gains of around 2 percent.

The Philippine central bank fuelled gains in Manila by cutting another 25 basis points off its main interest rates on Thursday, bringing them to a new low of 2.0 percent.

"Loose monetary policy could be good for stock valuations and could drive a further rally for local bond yields," said Jennifer Lomboy, a fixed income fund manager at First Metro Asset in Manila.

The Philippine stock index hit its highest since late-February, while the peso edged 0.2 percent higher.

Analysts and investors were unimpressed with the Thai central bank's announcement of easier rules for investing in foreign currencies and securities, its latest move to try and halt the baht's rise. 

The bank, which held off on an outright cut in interest rates on Wednesday, has warned again of the damage the baht's strength can do the economy after a more than 3 percent jump in the currency this month. 

"The measures seem to be more of the same old, same old, which is to encourage outflows," Kobsidthi Silpachai, the head of capital markets research at Kasikornbank said, arguing that the heart of the problem is high taxation. 

"Since excise taxes on imported goods are high, it suppresses imports, which makes the current account surplus even higher, which leads to a strong baht," he said. "We have seen many years of monetary measures... we need to try fiscal measures like tax reforms."

Bank Indonesia also surprised by cutting rates this week, by 25 basis points to 3.75 percent, dimming the appeal of its high-yielding local bond market.

The central bank governor said the rupiah, which dipped 0.2 percent on Friday, was still undervalued. The currency has been one of the outperformers among the region's emerging markets, climbing over 3 percent this month.

"We expect a possible rate cut in the near-term for as long as the rupiah remains on its current appreciation bias," said Nicholas Mapa, a senior economist at ING.

-reuters-

Equities stutter on economy, second wave fears

HONG KONG - Equities and oil sank Friday while the dollar rallied as investors ran for the hills following the worst Wall Street rout since March, fuelled by worries about the economic recovery and a second virus wave in the US.

And the magnitude of the financial earthquake caused by the crisis was brought home by data showing the British economy shrank 20.4 percent month-on-month in April.

World markets have blasted higher since hitting a deep trough three months ago, supported by trillions of dollars in government and central bank help and an easing of lockdown measures.

But the optimism on trading floors was shattered Wednesday when Federal Reserve boss Jerome Powell signalled the world's top economy would take some time to bounce back from the crisis.

While his comments, and the bank's decision to keep interest rates at near zero for at least two years, was expected, the dose of reality jolted traders.

That coincided with figures showing a spike in new infections in key states including Texas, California, Arizona and Florida, which fanned concerns of a new wave as the nation slowly reopens.

However, Treasury Secretary Steven Mnuchin said there would be no more shutdowns, telling CNBC: "I think we've learned that if you shut down the economy, you're going to create more damage."

"Investors have been arguing in recent weeks that the stock market performance and economic reality have been disconnected, wondering when reality might hit the market," said JP Morgan Asset Management strategist Tai Hui. 

"The fear of a rising rate of COVID-19 infections is the most important driver in our view for this sell-off."

Hong Kong, Sydney, Mumbai, Singapore, Jakarta and Bangkok all fell between one and two percent while Wellington and Seoul were more than two percent lower. Tokyo finished 0.8 percent lower and Shanghai was slightly off.

London opened more than one percent lower after the GDP figures were released, while Paris and Frankfurt were also lower.

Still, the losses were shallower than earlier in the day and much lighter than on Wall Street on Thursday, where all three main indexes were routed.

The correction that was needed?

Analysts also blamed profit-taking after the huge run-up since March, which has seen some indexes rise more than 50 percent, with many saying investors had run ahead of themselves on hopes for a V-shaped recovery.

"There is an argument to be made that equities were due a decent correction in light of the gains made in the past three months," said David Madden of CMC Markets.

"On the other hand, economies can't stay locked down forever so a jump in the infection rate is going to be the cost of trying to get things back to normal."

The world equities retreat was reflected in oil markets, with both main contracts tumbling more than eight percent Thursday, hit by uncertainty over demand and data showing a jump in US stockpiles.

And the losses continued into Friday, weighing on energy giants in the region.

The dollar, under pressure for weeks owing to the huge Fed easing measures and the return of risk-taking, rallied as investors sought its safe-haven status. The greenback was up more than one percent against the Canadian, Australian and New Zealand dollars as well as Indonesia's rupiah.

It also jumped more than two percent against the Mexican peso and South African rand.

"Who knows whether this is just the 'correction we had to have' or the start of something more serious," said National Australia Bank's Ray Attrill.

"Certainly though, we don't doubt the ongoing power of central bank policy actions -- from the Fed in particular -- in continuing to place a floor under risk assets relative to the underlying economic fundamentals on which stock prices are supposed to be based."

Agence France-Presse

Asian markets mostly down as virus fears grow

HONG KONG - Asian markets fell Monday following a steep drop on Wall Street as the jubilation from last week's enormous US stimulus package faded and investors returned their attention to the soaring infection and death rate of the coronavirus.

Donald Trump finally signed off the more than $2 trillion pump-priming measures on Friday, but equities -- which enjoyed a rally for much of the week -- ended on a negative note as dealers took profits.

While the disease ravages populations and the global economy grinds to a halt with 40 percent of the planet in lockdown, experts are struggling to get a grip on the scale of the crisis that is forecast to cause a worldwide recession.

And analysts say there are likely more dark days ahead, with Trump abandoning his timetable for life returning to normal in the United States and extending emergency restrictions for another month.

The president said he expected the country to "be well on our way to recovery" by June 1 -- dropping his previous target of mid-April.

Meanwhile, senior US scientist Anthony Fauci issued a tentative prediction that COVID-19 could claim up to 200,000 lives in the US.

Governments and central banks have acted to shore up the global economy, pledging around $5 trillion in stimulus support, with China on Monday joining the party by lowering bank borrowing costs and pumping billions of dollars into financial markets, while Singapore also eased rates.

AxiCorp's Stephen Innes said markets looked like they were "nearing policy fatigue where it becomes less effective, and as the surprise element diminishes, no one cares".

"So, while policy responses in the US and Europe have been spectacular... the coronavirus keeps spreading globally, deepening fears of the economic and financial impact across countries. More market turmoil likely lies ahead."

He also pointed out that with the corporate reporting season approaching "now we are about to enter a vortex of bad earnings, bad economic data, and bankruptcies."

THE BIG UNKNOWN

The downbeat mood weighed on Asian equities, though most pared their morning losses. Tokyo and Hong Kong ended more than one percent down, while Shanghai was off 0.9 percent. Mumbai and Manila lost more than two percent, while Taipei slipped 0.7 percent.

Seoul was flat, while there were also losses in Bangkok and Jakarta.

Singapore slid more than four percent as investors brushed off the city-state's monetary policy easing measures that came days after data showed it was heading for a deep recession.

However, Sydney soared seven percent in its best one-day performance ever following a more than five percent slide Friday. Traders also were buoyed by data pointing to a slowdown in new infections in Australia as well as an $80 billion economic government support package that was unveiled after markets closed but was widely expected.

In early trade, London and Paris each lost around 2.8 percent while Frankfurt was down 1.6 percent.

"The big question for markets is whether the huge stimulus introduced so far across the globe will be enough to help the global economy withstand the economic shock from the COVID-19 containment measures," said National Australia Bank's Rodrigo Catril.

"To answer this question one needs to know the magnitude of the containment measures and for how long they will be implemented. This is the big unknown and it suggests markets are likely to remain volatile until this uncertainty is resolved."

The return to a risk-averse environment on trading floors also sent the dollar back up against higher-yielding currencies with the Mexican peso, Indonesian rupiah and South Korean won losing more than one percent apiece.

The South African rand plunged more than two percent to a record low after Moody's slashed its credit rating on the country to below investment grade.

Crude plunged with the market remaining in turmoil, with the Saudi-Russian price war adding to the impact of battered demand caused by the virus. And there are warnings the commodity, already at near two-decade lows, could sink even further as production remains heightened and storage tanks around the world approach full capacity.

"When the storage capacity is filled, we should probably expect a response from Saudi Arabia, Russia, and other essential oil producers," Innes added, though he warned "the longer their response takes, the higher the risk of another steep decline in oil prices".

source: news.abs-cbn.com

Global stocks, oil plunge as Fed virus move fails to ease fears

LONDON - Stock markets and oil prices went into freefall Monday as interest rate cuts and fresh stimulus measures by central banks failed to lift confidence, with analysts warning that the Federal Reserve may have reached the limits of its power to fend off recession as the coronavirus spreads.

Brent North Sea oil plunged more than ten percent to a four-year low, as a price war between major producers Saudi Arabia and Russia added to sliding crude demand caused by the virus.

The euro surged one percent against the dollar after the Fed on Sunday slashed borrowing costs to almost zero -- its second emergency cut in less than two weeks. 

The US central bank also unveiled a massive asset-buying programme, similar to measures put into place during the global financial crisis more than a decade ago.

The Bank of Japan joined in on Monday, saying it would ramp up its bond-buying programme.

New Zealand's central bank also slashed rates to record lows in an attempt to cushion the economic blow, while the People's Bank of China has injected vast sums into financial markets to ease liquidity worries.

In joint action coordinated with the European Central Bank, Bank of England, Bank of Japan, Bank of Canada and the Swiss National Bank, the Fed moved to counteract global "dollar funding pressures" according to its boss Jerome Powell.

But traders were left unimpressed, with the virus showing no sign of letting up, while the head of the World Health Organization chief Tedros Adhanom Ghebreyesus said it was impossible to tell when it would peak globally.

With G7 leaders set to hold crisis videoconference talks later Monday, IMF chief Kristalina Georgieva called Monday for global governments to work together to provide massive spending as in the 2008 financial crisis to help the economy withstand the damage from the coronavirus pandemic.

Trading was halted on Wall Street just after the opening bell, with the Dow dropping nearly 10 percent. 

In afternoon trading in Europe, Paris 10.7 percent, Milan 10.9 percent, Madrid 11.3 percent, Frankfurt 9.5 percent and London 7.9 percent.

Airlines and tourism groups were the biggest fallers after slashing capacity, with TUI down by nearly a third and British Airways-parent IAG crashing 28 percent.

The car sector also slid as carmakers Fiat Chrysler and Peugeot-Citroen said they were halting production.

"While these (central bank) moves may go some way to easing any potential blockages in the plumbing of the financial markets, they won't adequately compensate for the upcoming economic shocks that are about to come our way," said CMC Markets analyst Michael Hewson.

The scale of the crisis was laid bare by data showing Chinese industrial production for January and February shrank 13.5 percent, the first contraction in around 30 years.

Meanwhile, manufacturing activity in New York state fell to its lowest level since 2009, according to the New York Federal Reserve Bank's monthly industry survey.

Equity markets continue to be whipsawed by the disease, which has now infected almost 170,000 people and killed more than 6,000 with several countries going into lockdown as Europe becomes the new epicentre of the outbreak.

ASIA MELTDOWN

Sydney's stock market led losses in Asia-Pacific, tumbling 9.7 percent in its worst daily drop on record, while Manila shed nearly eight percent and Bangkok and Mumbai dropped more than five percent.

Hong Kong, Singapore, Taipei and Jakarta all lost more than four percent. Wellington and Seoul were more than three percent off.

Shanghai tumbled 3.4 percent after the release of the industrial production data, which came a week after news that Chinese exports had collapsed.

Tokyo ended 2.5 percent lower, after a rally sparked by the Bank of Japan's support measures announcement fizzled.

The broad retreat followed a tumultuous week that saw some stock markets suffer their worst days in decades and in some cases their worst ever.

And experts said there was a concern that the Fed might be running on empty with regards to further action.

Sunday's move "raises the question of whether the Fed has anything left in the tank should the spread of the virus not be contained", said Kerry Craig at JP Morgan Asset Management.

"Our view is that the drag on the services sector from social distancing policies and shock from the fall of the oil price on the energy sector will be enough to tip the US into recession, but not necessarily a long one."

source: news.abs-cbn.com

World markets buoyed by growing trade optimism

LONDON - European and Asian markets extended gains Tuesday, after a record lead from Wall Street, as trade optimism gave another lift to sentiment.

Global bourses had already soared on Monday on expectations that economic superpowers China and the United States were close to a mini trade deal.

Those gains spilled over into Tuesday following a report that President Donald Trump was considering cutting some tariffs on Chinese goods.

Markets also banked higher on a reported easing in China's one-year lending rate, while London advanced after a survey showed Britain's key services sector had avoided contraction in October.

"European markets are following Asian stocks higher, as optimism over talks between the US and China continues to boost sentiment," said IG analyst Joshua Mahony.

"With the PBoC (People's Bank of China) deciding to cut the one-year medium-term lending rate in China, it is clear that the bank remains committed to supporting the Chinese economy while negotiators work on removing the current US tariffs."

He added: "A cut to the Chinese lending rate has helped improve sentiment as rumors circle that the US could remove ... tariffs."

The Financial Times said Tuesday that the White House is considering dropping existing tariffs on more than $100 billion of imports to seal the deal with China.

It cited unnamed sources as saying officials were looking at rolling back levies on a range of imports including clothing, appliances, and flatscreen monitors, which have been subject to 15 percent rates since September 1.

The US has imposed duties on Chinese goods worth hundreds of billions and the removal of some of these is said to be a key demand of Beijing in any trade agreement.

Meanwhile, a Bloomberg News article said Chinese officials were looking at locations in the United States where Xi Jinping and Donald Trump could hold a signing ceremony as early as this month.

In Asia, Tokyo led gainers as it reopened after a long weekend to play catch-up with Monday's rally.

The Nikkei ended 1.8 percent higher, while Shanghai rose 0.5 percent and Sydney added 0.2 percent.

Hong Kong won 0.5 percent as investors brushed off data showing a key measure of business confidence fell to its lowest level in more than a decade as the city reels from global trade woes and violent protests.

Last Friday's forecast-busting US jobs report has meanwhile lifted investor hopes that the US economy -- the world's biggest -- is stabilizing.

source: news.abs-cbn.com

Are you ready to be a global investor?

MANILA, Philippines - After reading about equities and mutual funds in our recent reports, it’s time for you to explore the world.

That’s right - given the various opportunities that exist for investors in the global capital markets, you may want to take part in the action. After all, the global markets offer a great deal more options for any investor – but don’t forget they also have attendant risks.

Investing directly in global markets is a more difficult process for a retail investor than investing in domestic markets. This is because there are different government restrictions (such as those governing the outflow of money from the Philippines), as well as the difficulty in getting foreign currencies for purposes other than business and travel.

Moreover, not all investment funds are open to all nationalities; there may be administrative requirements that a Filipino national may not be able to meet. Also, the required investment amount may be large. Add to this the challenges that may come with transacting with someone in a different continent and a different time zone.

These, however, should not keep you from looking at investing in global markets. In fact, there are ways that you can do so using local channels and brokerages, by tapping into those funds that are invested in global markets. Of late, larger banks and financial institutions have been offering unit investment trust funds (UITFs) and other funds invested in these vehicles, providing the Philippine-based investor with a convenient way to tap into the much larger global capital markets.


Here’s a guide to help you get started on investing in global markets:
 
Assess your diversification needs. 

Before you choose to invest in the global markets, it is important to have a thorough understanding of your financial goals, investment needs, and financial status. Also know how much risk you want to take on. Investing using a different currency, which is usually required when investing in global funds, may or may not be appropriate for your needs. Therefore, you would have to assess if investing in global funds is the right step to take at this stage in your life, in view of your financial objectives and related considerations. If you don’t know how to proceed, this may be a good time to consult a professional financial advisor.

Do your research. 

Know what is being offered out there for retail investors. If you are thinking of global funds, there are plenty of options to choose from to suit various preferences—bonds, equities, and many others. These may be denominated in dollars or in euros. You will also have to think of what your investment strategy is, and what type of investments is best for your needs. In the Philippines, financial institutions can give you access to exchange traded funds (ETF) and UITF, invested in different vehicles to meet various investor profiles. You can also open an individual brokerage account. Check out what the brokers have to offer and if these products dovetail with your financial goals.

Obtain the needed currency for your fund. 

Most global investment funds require that the invested funds be in a foreign currency, most often the US dollar. If you have a dollar account, then withdraw this now. If you do not have the needed currency and plan to purchase these, be mindful of rules pertaining to this. Note that banks have restrictions on dollar purchases, especially for those related to investments.

Open your investment account with the financial institution of your choice. 

You will be asked to sign documents to signify your understanding of and compliance with government rules (especially pertaining to anti-money laundering) and fill up an investor profile assessment. The latter will help the brokers know your needs and will enable them to recommend appropriate funds. Make sure you check out the required holding period and transaction fees.

Monitor the performance of your fund. 

Most funds report their performance daily on their company websites. Also monitor the currency exchange rate from time to time. When you invest in global funds, you should be looking at both the performance of the fund and the currency it is invested in. By monitoring your funds, you will know if you should top up or diversify into another investment vehicle. If you have questions or concerns regarding how to move forward, seek professional advice.

Investing in global funds requires doing your homework and research, to ensure that you meet your financial objectives and that your investment decisions support these. By investing in global funds, you can diversify your investments and spread your risks beyond one country, hopefully to get the best returns for your money and help you meet your financial objectives.

Diversification is one of the most important pillars of effective investing and should be well thought of. Next week, we will discuss why it is never a good thing to put all your eggs in one basket.

source: www.abs-cbnnews.com