US stocks mostly up as holiday shopping season begins

NEW YORK -- Wall Street stocks mostly climbed to end a shortened trading day on Friday, with investors keeping close watch on consumer spending at the unofficial start of the year-end shopping season.

The Dow Jones Industrial Average rose 0.3 percent to 35,390.15.

The broad-based S&P 500 edged up 0.1 percent to 4,559.34, while the tech-heavy Nasdaq Composite Index ticked down 0.1 percent to 14,250.85.

Markets closed early on "Black Friday," the Friday after the Thanksgiving holiday when retailers often offer major discounts.

The annual sales day, which is followed by the newer "Cyber Monday," marks the start of the holiday shopping season.

"Today's lack of movement can be ascribed to a general lack of trading interest befitting the day after Thanksgiving," said Briefing.com in a note.

Consumers are expected to be increasingly price-conscious this year, still jaded by stubborn inflation and lingering effects from the upheaval of the pandemic.

But "how that ends up impacting retailers' profits remains to be seen" for now, Briefing.com added.

Among major retailers, Walmart shares advanced 0.7 percent while Target was up 0.5 percent.

Amazon shares were flat after it was hit by strikes in Europe, as workers demand better wages and working conditions.

UNI Global Union warned Amazon would face strikes and protests in more than 30 countries around the world, including the United States.

Agence France-Presse

Stock markets rise as US inflation data, ECB rate loom

NEW YORK -- Global markets rose on Monday at the start of a busy week that includes the release of key US inflation data and a European Central Bank decision on interest rates.

Wall Street pushed higher, with traders already focused on Wednesday's consumer price index (CPI) report, which could determine the Federal Reserve's next move on interest rates.

"Today's generally quiet session means that attention is focusing squarely on the US CPI data and ECB decision due this week," said Chris Beauchamp, chief market analyst at online trading platform IG.

"With the risk that both could deliver nasty surprises, risk appetite has been limited," he added.

Investors have worried that the Fed's rate-hike campaign to combat high inflation could tip the world's biggest economy into a severe recession.

But US Treasury Secretary Janet Yellen said Sunday she was optimistic that the economy was on course for a soft landing.

"I am feeling very good about that prediction," she said. "I think you'd have to say we're on a path that looks exactly like that."

She added: "Every measure of inflation is on the road down."

The Paris and Frankfurt stock exchanges closed higher even though the European Commission cut its 2023 growth outlook for the eurozone, from 1.1 percent to 0.8 percent.

The data will give the ECB more food for thought when it meets Thursday to decide whether to continue or pause its own rate hikes.

The commission said the higher borrowing costs had an impact on the eurozone economy.

"The new forecasts won't come as a major surprise and may even prove overly optimistic over time but they do come days ahead of the next ECB meeting and could tempt some policymakers into voting to pause the tightening cycle," said Craig Erlam, senior market analyst at the OANDA trading platform.

"Weaker economic readings will probably drive a lively debate and they obviously won't suggest, if they do hike, that it's job done," he added.

Elsewhere, London also rose while Tokyo and Hong Kong finished lower.

After a slow start, Asian traders turned more positive through the day and tracked last week's gains on Wall Street, with data showing a pick-up in Chinese inflation lifting sentiment.

Traders took heart from news that China's consumer price index rebounded in August, having contracted the month before.

While the 0.1 percent rise was less than expected, it gave traders some hope that the economy is slowly on the mend after a painful 2023 so far.

On currency markets, the yen picked up after sinking last week to a 10-month low against the dollar, with support coming from comments seen as hawkish by Bank of Japan boss Kazuo Ueda.

He told the Yomiuri newspaper that policymakers would have a better idea later in the year about wage rises, a key data point for rate decisions.

The yen has tumbled around 10 percent owing to the BoJ's refusal to move away from its ultra-loose monetary policy while the Fed pushed borrowing costs to a two-decade high.

The yuan also bounced back from a 16-year low against the dollar after the People's Bank of China said it would crack down on speculation that distorts the value of the currency after months of volatility.

In energy markets, gas prices rallied as strikes continued at Chevron plants in Australia.

Agence France-Presse

US, European stocks push higher as inflation eases

NEW YORK -- Wall Street rebounded Friday and eurozone stocks edged higher on data showing easing inflation, while the yen yo-yoed after Japan's central bank tweaked its ultra-loose monetary policy.

The Dow added 0.5 percent, while the broader S&P 500 climbed 1.0 percent and the tech-heavy Nasdaq Composite Index jumped 1.9 percent.

This came after data showed that the Federal Reserve's preferred gauge of inflation, the personal consumption expenditures price index, rose 3.0 percent last month from June 2022.

The figure was down from a 3.8 percent rise in May, extending a downward trend.

The indicator is still above the central bank's two percent target over the longer run, "yet the Fed is bound to take some solace from the recognition that it continues to move in the right direction," said Briefing.com analyst Patrick O'Hare.

Stock markets have enjoyed a broadly positive week on hopes the US Fed and other central banks were at or close to the end of more than a year of monetary tightening as inflation comes down.

The Fed on Wednesday said that future rate decisions would be determined by data, which was welcomed by investors who saw recent indicators -- pointing to an easing of price pressure and softening of the labor market -- as giving it room to hold off more increases.

And on Thursday, European Central Bank boss Christine Lagarde left open the possibility of a pause in rate hikes.

Paris stocks edged 0.2 percent higher on Friday after data showed the French economy grew a forecast-busting 0.5 percent in the second quarter, while inflation eased in July.

Frankfurt added 0.4 percent, setting another record close, on slowing inflation despite data showing the German economy stagnated in the second quarter.

"With price pressures in Germany also slowing more than expected in July there is a sense that this week's rate hike by the ECB may well have been its last, with a number of ECB policymakers expressing increasing caution over the growth outlook," said analyst Michael Hewson at CMC Markets.

After a closely-watched meeting, the Bank of Japan (BoJ) said it would allow "greater flexibility" in government bond markets, having allowed them to move in a tight band in a process known as yields curve control.

But on Friday it said that while it would maintain that range, its upper and lower limits would be used as references, rather than being rigid.

The move means rates in Japan would be allowed to rise more than previously. The yen swung around after the announcement, but was lower against both the dollar and the euro near 2100 GMT.

The currency has been hammered for more than a year as the BoJ refused to shift from its loose policy, even as central banks around the world pushed up interest rates to fight surging inflation.

However, with prices picking up at home and the yen struggling, pressure has been growing on the bank to change tack.

The Nikkei 225 index sank more than two percent on the prospect of higher borrowing costs before paring the losses by the close.

"Market reaction has been very choppy as it is not a straightforward decision to digest," said Khoon Goh, of Australia and New Zealand Banking Group.

Asian markets closed out the week mixed. Hong Kong and Shanghai were boosted by hopes for further measures by Beijing to boost the struggling Chinese economy.

- Key figures around 2050 GMT -

New York - Dow: UP 0.5 percent at 35,459.29 (close)

New York - S&P 500: UP 1.0 percent at 4,582.23 (close)

New York - Nasdaq: UP 1.9 percent at 14,316.66 (close)

London - FTSE 100: FLAT at 7,694.27 (close)

Frankfurt - DAX: UP 0.4 percent at 16,469.75 (close)

Paris - CAC 40: UP 0.2 percent at 7,476.47 (close)

EURO STOXX 50: UP 0.4 percent at 4,466.50 (close)

Tokyo - Nikkei 225: DOWN 0.4 percent at 32,759.23 (close)

Hong Kong - Hang Seng Index: UP 1.4 percent at 19,916.56 (close)

Shanghai - Composite: UP 1.8 percent at 3,275.93 (close)

Dollar/yen: UP at 141.17 yen from 139.48 yen on Thursday

Euro/dollar: UP at $1.1020 from $1.0979

Pound/dollar: UP at $1.2851 from $1.2796

Euro/pound: DOWN at 85.72 from 85.80 pence

West Texas Intermediate: UP 0.6 percent at $80.58 per barrel

Brent North Sea crude: UP 0.9 percent at $84.99 per barrel

Agence France-Presse

British crypto lender suffers $200 million hack

PARIS — Hackers on Monday stole almost $200 million from a British company that specializes in lending to crypto projects, a security firm said, in the biggest such attack for months. 

The security firm PeckShield pointed out the apparent hack to British lender Euler on Twitter, posting details of transactions it said showed losses of $197 million.

The China-based firm wrote a message to British lender Euler on Twitter saying: "Hi @eulerfinance: you may want to take a look".

PeckShield said the flurry of transactions by hackers seem to have exploited a flaw in Euler's system.

Euler said it was "aware" and "currently working with security professionals and law enforcement."

"We will release further information as soon as we have it," the lender said on Twitter.

The hack on Euler is the most substantial this year, according to crypto critic Molly White, who chronicles hacks and scams on her blog Web3 is Going Just Great.

White ranked the incident at number eight on the all-time list of biggest thefts -- though it is dwarfed by the crypto sector's biggest scams, some of which have run into billions of dollars.

The industry was flying high early last year, with the market in cryptocurrencies and digital tokens apparently worth hundreds of millions of dollars.

Crypto companies were taking out TV adverts, sponsoring sports teams and touting their technology as world-changing as they sought new investors among the general public.

But the sector has been shredded by a severe economic downturn, rampant criminality, crackdowns from regulators and the collapse of high-profile companies.

Agence France-Presse

Art market pushes on with rocky crypto romance

PARIS - The closest most people get to owning a world-famous artwork is to buy a cheap poster from a gallery, but art dealers are determined to harness technology to draw in new collectors.

Anaida Schneider, a former banker based in Switzerland, is among those promoting new ownership schemes -- for a small fee, investors can buy a digital chunk of a painting and share in the profits when she sells.

"Not everyone has $1 million to invest," she told AFP. "So I came up with the idea to split, to make like a mutual fund but on the blockchain."

Each buyer gets an NFT, the unique digital tokens created and stored on the blockchain, the computer code that underpins cryptocurrencies.

Although cryptoassets have been routed this year with plunging values, collapsing projects and widening scandals, the NFT art sector has weathered the storm better than other parts of the crypto world.

NFT artworks accounted for some $2.8 billion in sales last year and the rate has declined only slightly in the first half of this year, according to analyst firm NonFungible.

Collectors and artists are among the most eager experimenters with the technology, even if it means owning only a slice of a digital copy of a painting.

A fifth of 300 collectors surveyed by the website Art+Tech Report said they had already engaged in so-called fractional ownership.

Schneider's Liechtenstein-based company Artessere offers squares of paintings by Soviet artists including Oleg Tselkov and Shimon Okshteyn for 100 or 200 euros ($100 or $200) a piece.

She is giving herself 10 years to resell them. 

Schneider owns the paintings she sells, thus avoiding legal complications, but attempts to offer novel digital ownership schemes for publicly owned works is proving more tricky.

'Complex and unregulated' 

Thirteen Italian museums recently signed deals with Cinello, a firm that sells limited edition digital reproductions, to offer ownership of digital replicas of masterworks.

The buyer gets a unique, high-resolution digital copy to project onto a screen and a certificate from the museum, which gets half the proceeds.

The company held a splashy London show in February displaying digitised works by Renaissance masters including Raphael, Leonardo and Caravaggio. It has since sold a handful of them.

But the Italian culture ministry was reportedly irked that a replica of Michelangelo's "Doni Tondo" sold for around 240,000 euros but Florence's Uffizi gallery got less than a third of the proceeds.

A spokesman for the ministry was quoted in several outlets last month as saying the issue was "complex and unregulated" and asked museums not to sign any new contracts around NFTs.

Cinello boss Francesco Losi was not pleased with the characterization, telling AFP: "We don't sell NFTs."

Buyers can ask for an NFT to go with their image, but the firm said they had their own patented system to secure ownership, which they call DAW.

Mixed blessing 

Cinello said it had digitized more than 200 works and its sales had generated 296,000 euros in extra revenue for Italian museums.

But the firm's difficulties in Italy underline the mixed blessing of NFTs -- they bring publicity but also suspicion.

The NFT sector -- which covers anything from avatars in computer games to million-dollar cartoon apes -- is replete with scams, counterfeit works, thefts and wash trading.

Losi said he was well aware that NFTs could be used "in the wrong way" and was unsure what future they had in the art world. 

Anaida Schneider stressed that her project was protected by law in Liechtenstein, the tiny principality being among the first jurisdictions to pass a law regulating blockchain companies in 2019.

Beyond that, she said her insurance would cover damage to the artworks and she had also factored in the possibility that the paintings would fall in value, though she declined to give exact details.

"I hope it never happens," she said. "For me, it's very important to put this idea in the market."

Agence France-Presse

ANZ announces major banking takeover

MELBOURNE, Australia - Australian banking giant ANZ announced Monday a Aus$4.9 billion (US$3.3 billion) deal to swallow regional lender Suncorp Bank -- one of the biggest takeovers in the sector for more than a decade.

The takeover of the Queensland-based lender would push ANZ up one spot to make it the nation's third-largest mortgage provider.

But critics warned the deal -- reportedly the largest in Australian banking since 2008 -- would cut competition and concentrate the power of Australia's big four banks, if regulators allow it to go ahead.

ANZ chief executive Shayne Elliott described it as a "cornerstone investment" and a show of confidence in Queensland.

"We know there will rightly be questions from government and regulators about the competition aspects of this transaction," Elliott said in a statement.

"As the smallest of the major banks, we believe a stronger ANZ will be able to compete more effectively in Queensland offering better outcomes for customers," he added.

Rival Queensland lender Heritage Bank's chief executive Peter Lock warned that the takeover of Suncorp Bank would "simply increase the power of the major banks in Australia".

ANZ said it planned to raise Aus$3.5 billion to pay for the deal by offering extra stock to existing shareholders. The balance would be financed with existing capital.

The bank said trading in its shares in Australia and New Zealand had been suspended until Thursday to give institutional investors time to act on its offer.

The takeover, which is subject to approval by the Australian federal treasurer and competition regulators, was expected to be wrapped up in the second half of 2023, it said.

Agence France-Presse

German prosecutors raid Deutsche Bank in 'greenwashing' probe

German prosecutors raided Deutsche Bank offices in Frankfurt on Tuesday as part of a probe into allegations that the financial institution was marketing investment products as "greener" than they actually were.

Investigators were carrying out raids "on suspicion of investment fraud" at the offices of the bank and its asset management subsidiary DWS, Frankfurt prosectors said in a statement.

The searches related to "greenwashing accusations" at DWS, Deutsche Bank said in a statement.

DWS said it would "work together with all relevant regulators and authorities", according to the statement.

The accusations were based on "statements made by a former DWS employee" who became a whistleblower for US securities regulators in 2021, the prosecutors said.

Investigators had found "sufficient indications" that ESG (environmental, social and governance) standards were only taken into account "in a minority of investments" contrary to information in DWS's "sales prospectus", they said.

The probe was targeting "as yet unknown" employees at DWS, prosecutors said.

The asset manager is already under investigation by federal prosecutors in the US on suspicion of lying about the scale of their green investments.

ESG products have become a major asset class as financial institutions seek to bring their portfolios in line with global climate targets.

US securities regulators last week put forward proposals to tighten disclosure requirements on the rising number of ESG investments.

Seeking to address the problem of "greenwashing", the Securities and Exchange Commission said the measure was meant to avoid cases where a fund "could exaggerate its actual consideration of ESG factors."

Agence France-Presse

Visa, Mastercard suspend operations in Russia: statements

Card payment giants Visa and Mastercard announced Saturday they will suspend operations in Russia, the latest major US firms to join the business freeze-out of Moscow over its invasion of Ukraine.

"Noting the unprecedented nature of the current conflict and the uncertain economic environment," Mastercard said it had "decided to suspend our network services in Russia."

Visa, for its part, said that "effective immediately" it would "work with its clients and partners within Russia to cease all Visa transactions over the coming days."

US President Joe Biden "welcomed the decision" during a phone call with his Ukrainian counterpart Volodymyr Zelensky in which the two discussed US, ally and private industry actions to deter Russia from aggression, according to a White House readout.

Major corporations across a range of industries have halted business in Russia since its invasion began 10 days ago, including everything from US-based tech firms such as Intel and Airbnb to French luxury giants LVMH, Hermes and Chanel.

Visa and Mastercard had already announced that they were complying with US and international sanctions imposed on Russia in the wake of its attack.

"Our colleagues, our customers and our partners have been affected in ways that most of us could not imagine," Mastercard said, stating that its cards issued by Russian banks would no longer be supported by the company's network.

Visa similarly said that cards issued in Russia would no longer work outside the country.

Both companies said cards issued abroad would no longer work in Russia.

Russian banks downplay effects

"We are compelled to act following Russia's unprovoked invasion of Ukraine, and the unacceptable events that we have witnessed," Visa CEO Al Kelly said.

Russia's major banks, including its largest lender Sberbank and the Russia Central Bank, downplayed the effects that the cards' suspensions would have on their clients.

"All Visa and Mastercard bank cards issued by Russian banks will continue to operate normally on Russian territory until their expiration date," the Russia Central Bank said.

Sberbank said in a statement on its official Telegram account that the cards "can be used for operations in the Russian territory -- to withdraw cash, make transfers using the card number, and for payment at offline as well as at online Russian stores."

The cards would continue to work on Russian territory, it said, because all payments in Russia are made through a national system and do not depend on foreign systems.

However, the central bank warned that Russians traveling abroad should carry alternate means of payment.

Mastercard added that it would continue to provide pay and benefits to its nearly 200 employees in Russia.

Agence France-Presse

US Fed signals 3 rate hikes in the cards in 2022 as inflation fight begins

The Federal Reserve said it would end its pandemic-era bond purchases in March and pave the way for three quarter-percentage-point interest rate hikes by the end of 2022 as the economy nears full employment and the US central bank copes with a surge of inflation.

"The economy no longer needs increasing amounts of policy support," Fed Chair Jerome Powell said in a news conference in which he contrasted the near-depression conditions at the onset of the coronavirus pandemic in 2020 with today's environment of rising prices and wages and rapid improvement in the job market.

The pace of inflation is uncomfortably high, he said after the end of the Fed's latest two-day policy meeting, and "in my view, we are making rapid progress toward maximum employment," a combination of circumstances that has now convinced all Fed officials, even the most dovish, that it is time to exit more fully the pandemic policies put in place two years ago.

The scenario laid out by the central bank in its new policy statement and economic projections envisions the pandemic, despite the spread of the Omicron variant, giving way to a particularly benign set of economic conditions - a "soft landing" in which inflation eases largely on its own, interest rates increase comparatively slowly, and the unemployment rate is pinned to a low 3.5 percent level for three years.

Some analysts were skeptical.

"This is a forecast that implicitly has favorable developments that allow them to leave accommodation but get favorable inflation," said Vincent Reinhart, chief economist at Dreyfuss & Mellon, noting that the three-year rate hike cycle projected by Fed officials never reaches levels that would be considered restrictive, yet inflation is still expected to fall.

"Is that the way to bet?" he said.

The core of Fed officials thinks so. In their new economic projections, policymakers forecast that inflation would run at 2.6 percent next year, an increase over the 2.2 percent they projected in September, but then fall to 2.3 percent in 2023 and 2.1 percent in 2024.

Unemployment is seen dropping to 3.5 percent next year, well below the point Fed officials feel is sustainable in the long run, and remaining there through 2024.

As a result of that combination of rising prices and strong employment, officials at the median projected the Fed's benchmark overnight interest rate would need to rise from its current near-zero level to 0.90 percent by the end of 2022. That would kick off a hiking cycle that would see the policy rate climb to 1.6 percent in 2023 and 2.1 percent in 2024 - still loose by most estimates.

Dropped from the latest policy statement was any reference to inflation as "transitory," with the Fed instead acknowledging that price increases had exceeded its 2 percent target "for some time."

Annual inflation has been running at more than double the Fed's target in recent months.

To open the door to higher borrowing costs, the Fed announced it was doubling the pace of its bond-buying taper, putting it on track to end the purchases of Treasuries and mortgage-backed securities (MBS) by March. Until recently, the central bank had been buying $120 billion of Treasuries and MBS each month to help fuel the economic recovery.

US stocks closed higher, with the S&P 500 gaining more than 1.6 percent, while yields on Treasury securities were also up. The dollar initially strengthened after the release of the Fed statement and projections before surrendering the gains to trade lower on the day against a basket of major trading partners' currencies.

Traders in interest rate futures were pricing a first rate hike in May, and two more by the end of 2022.

PRICE STABILITY

Though the Fed made any rate hikes contingent on some further improvement in the job market, the new policy projections left little doubt that borrowing costs will rise next year, absent a major economic shock. All 18 policymakers indicated at least a single rate increase would be appropriate before the end of 2022.

All told, the new projections and policy statement began to pin down the central bank's plan to exit the extraordinary monetary policy put in place in the spring of 2020 to nurse the economy through the fallout of the pandemic.

The health crisis is still underway, the Fed acknowledged, with the new variant adding to uncertainty about the course of the economy.

Powell, for example, told reporters that he would like to know how the US labor market will function after people are free of healthcare, childcare and other pandemic worries, but "it doesn't look like that is coming anytime soon."

Yet he also downplayed Omicron's potential economic risks, saying he did not expect the Fed would have to resume emergency bond purchases or take other steps to counter any fresh COVID-19 wave, and that economic performance would be less and less influenced by the pace of coronavirus infections.

Fed officials projected US economic growth of 4.0 percent next year, an increase over the 3.8 percent forecast in September and more than double the economy's underlying trend.

In some of his most pointed comments about inflation yet, Powell said that sharply rising prices had now emerged as a bigger threat to jobs than the pandemic.

"What we need is another long expansion," he said. "That's what it would really take to get back to the kind of labor market that we'd like to see, and to have that happen we need to make sure that we maintain price stability."

-reuters-

Existing home sales surge as interest rates point higher

Sales of previously occupied U.S. homes bounced back in September to their strongest pace since January as mortgage rates tick higher, motivating buyers to get off the sidelines.

The National Association of Realtors said Thursday that existing homes sales rose 7% compared with August to a seasonally-adjusted annual rate of 6.29 million units. That was stronger than the 6.11 million units that economists had been expecting, according to FactSet.

Sales were down 2.3% compared with September last year, a time when home purchases surged as buyers who had held off during the early months of the pandemic returned in force.

“The increase in sales in the latest month I would attribute to mortgage rates,” said Lawrence Yun, the NAR’s chief economist. “This autumn season looks to be one of the best autumn home sales seasons in 15 years.”

Yun noted that a dip in mortgage rates in August gave buyers urgency to close deals on homes, which translated into the sharp September increase in completed transactions.

While the average rate for a 30-year mortgage remains near historic lows, it has been inching higher since August, when the weekly rate averaged 2.77%, according to mortgage buyer Freddie Mac.

This week, the average rate rose to 3.09%, the highest level since April, when it peaked at 3.18%. A year ago, the rate averaged 2.8%. When mortgage rates rise, it gives would-be homeowners less buying power.

Economists expect mortgage rates to rise up to 4% next year as the Federal Reserve takes action to control rising inflation. The central bank is widely expected to announce a timetable for reducing its monthly bond purchases at its policy meeting next month. Those bond purchases have helped keep mortgage rates at ultralow levels for much of the last 18 months.

The median home price jumped to $352,800 last month, a 13.3% increase from September last year. The rise in prices continued to weigh on first-time buyers, who accounted for 28% of all sales last month. That’s the lowest level since July 2015, the NAR said.

Homes purchased in cash rose 23% in September from the previous month. Individual investors, who account for many cash sales, accounted for 13% of all home sales last month.

Despite the sharp increase in sales last month, there are signs the housing market frenzy that drove 20% to 25% annual increases in the median home price is easing. Properties on the market are receiving fewer multiple offers and buyers increasingly are refusing to waive their right to a home inspection or appraisal, Yun said.

Still, the inventory of homes on the market remains tight in much of the country, which continues to support higher prices.

At the end of September, the inventory of unsold homes stood at just 1.27 million homes for sale, down 0.8% the previous month and down 13% from a year ago. At the current sales pace, that amounts to a 2.4 months’ supply, down from 2.7 months a year ago, the NAR said.

Homes continue to sell within days of being put up for sale. Homes typically remained on the market 17 days before getting snapped up last month. That’s held steady the past six months. In a market that’s more evenly balanced between buyers and sellers, homes typically remain on the market 45 days. All told, 86% of homes sold last month were on the market for less than 30 days.

The inventory of homes for sale should begin to improve next year, as builders continue to ramp up construction and the end of mortgage forbearance programs force homeowners in financial straits to put their home up for sale, Yun said.

“The days of inventory being down 20% or 25%, those days are over,” Yun said. “The decline is lessening and soon in 2022 we’ll begin to see inventories are higher year-over-year.”

-Associated Press

Philippines launches new long-term U.S. dollar bonds issue

MANILA - The Philippine government launched an offering of 10.5-year and 25-year U.S. dollar-denominated bonds on Wednesday to raise funds needed to mitigate the economic damage of the coronavirus pandemic.

The long-term benchmark bonds would carry a yield of around 100 basis points above the 10-year U.S. Treasury benchmark, based on the government's initial guidance.

National Treasurer Rosalia De Leon could not say at this stage how much the government aimed to raise from the bond sale, which follows a similar U.S. dollar bond offering in April that raised $2.35 billion. 

The Philippines, one of Asia's most active issuers of sovereign debt, would use the proceeds from the bond sale to support its budget, the Bureau of the Treasury said.

Both chambers of congress have approved a record 4.5 trillion pesos ($93.7 billion) budget for 2021, part of which will be used to purchase COVID-19 vaccines as the government aims to immunize a third of its 108 million population.

Credit Suisse, Daiwa Capital Markets, Deutsche Bank, Morgan Stanley, Standard Chartered Bank and UBS are joint bookrunners, IFR reported. 

Fitch assigned a 'BBB' rating to the country's proposed USD bonds, while Moody's gave the Philippines' global dual-tranche bond offerings a 'Baa2' rating.

-reuters-

Investors celebrate Biden winning US presidency

NEW YORK - Investors and financial executives took a big sigh of relief on Saturday after major networks declared Democrat Joe Biden winner of the US presidential election, offering some certainty after days of conflicting reports about who might run the White House next term.

Although current President Donald Trump said he would fight the results in court, Wall Streeters who offered comments felt there was little doubt Biden would ultimately succeed after election predictors including the Associated Press, NBC and Edison Research, upon which Reuters relies, called the presidency for Biden.

"Biden is good news for the markets," Christopher Stanton, chief investment officer at Sunrise Capital Partners, said on Saturday. "We're all so tired of the whipsaw that came with the Trump tweets."

Republicans have filed several lawsuits over ballot counting already and Trump said his campaign will file more. The Republican National Committee has been trying to raise at least $60 million to fund legal challenges brought by Trump, Reuters reported on Friday.

Apart from those battles, investors have been worried about the people Biden might appoint to his Cabinet, and whether the U.S. Senate would go to Republicans or Democrats.

A Republican Senate would offer a check on Biden's appointments, forcing him to opt for more moderate selections. Expected run-offs in two Senate races in Georgia could muddy that scenario.

For now, though, investors said they were happy with the election finally being called after what seemed like unending tension as ballots were counted following Election Day on Tuesday.

"Markets are going to like it because Biden is not going to go too far left," said Jim Awad, senior managing director of Clearstead Advisors. "It’s going to be a centrist government, not a government by tweet."

The financial industry was not reacting in a bubble: major cities from New York to San Francisco erupted in celebration on Saturday. Though Trump undoubtedly has significant support throughout the country, including on Wall Street, 2020 has been a difficult year for the United States.

The coronavirus pandemic has taken a huge toll on the country, killing some 236,250 people so far, while social unrest over the police killing of George Floyd, a Black man, has only hardened divisions that already existed.

Many voters were hoping for a decisive election that would offer some calm, whichever candidate they cast ballots for.

JPMorgan Chase & Co Chief Executive Jamie Dimon, who heads the largest U.S. bank and is a leading voice for the financial industry, called for unity and calm.

"Now is a time for unity," Dimon said in a statement. "We must respect the results of the U.S. presidential election and, as we have with every election, honor the decision of the voters and support a peaceful transition of power."

Robert Wolf, a major Democratic donor and former UBS Group AG executive who now runs 32 Advisors, was less demure: "I am ecstatic, relieved and deeply hopeful for the future of this country," he said in a text message.

During his campaign, Biden issued a series of left-of-center policy proposals that made Wall Street cringe regarding taxes and regulations. The proposals were seen as a carrot for progressive voters who preferred other candidates, but few now believe he will actually get them passed, since Republicans may win the Senate and Biden is not showing a landslide win.

As such, it is not clear whether Biden's Cabinet choices will be seen as market-friendly. The picks are important, because some of those officials will likely be involved in economic stimulus packages the White House will have to negotiate with Congress and will have extensive powers to craft Wall Street regulations.

Current US Federal Reserve governor and former McKinsey consultant Lael Brainard's name has been floated as a potential Treasury Secretary, while Biden has already tapped former derivatives market regulator and Goldman Sachs Group Inc banker Gary Gensler for advice on financial regulation.

Major US stock indexes registered their biggest weekly gains since April this week, as investors bet that Biden would win and Republicans would hold onto the Senate, a scenario that could prevent any major tax increases or regulatory tightening that pinches companies.

Nonetheless, investors have worried that the candidates could contest results for weeks or months. If Trump gains traction with his challenges, it could shake asset prices.

"Investors need to be prepared for some volatility," said Jason Ware, chief investment officer at Albion Financial Group. "There is certainly a risk to stock prices if we get bad tweets. The good news is that it would be short-lived and we are changing hands to someone who I believe is a lot more capable."

-reuters-

More Americans signed contracts to buy homes in June

SILVER SPRING, Md. (AP) — The number of Americans signing contracts to buy homes rose for the second straight month after a devastating spring freeze brought on by the coronavirus outbreak.

The National Association of Realtors said Wednesday that its index of pending sales rose 16.6%, to 116.1 in June. That’s up from a reading of 99.6 in May.

Contract signings are now 6.3% ahead of where they were last year after being significantly behind last year’s pace due to the pandemic. An index of 100 represents the level of contract activity in 2001.

All four regions saw more contract signings for the second straight month. The Northeast led the way with a 54.4% increase. Sales in the Midwest, South and West all jumped around 12%.

“It is quite surprising and remarkable that, in the midst of a global pandemic, contract activity for home purchases is higher compared to one year ago,” said Lawrence Yun, NAR’s chief economist. “Consumers are taking advantage of record-low mortgage rates resulting from the Federal Reserve’s maximum liquidity monetary policy.”

Freddie Mac reported last week that average interest rates on a 30-year fixed rate mortgage rose to 3.01%. The average had been 2.98% the previous week, the first time in 50 years that it slipped below 3%. The Federal Reserve wraps up a two day meeting Wednesday and is not expected to change its main borrowing rate.

In May, the number of Americans signing contracts to buy homes rebounded a record 44.3% after plunging during the usually busy spring season as buyers and sellers were sidelined by coronavirus-related closures and regulations.

May’s recovery was the highest month-over-month gain in the index since since its inception in January 2001.

Last week, the government reported that sales of new homes jumped 13.8% in June, the second straight increase after two months when sales plunged as the country went into lockdown because of the coronavirus. June’s increase followed a 19.4% jump in May, further evidence the housing market has turned around.

Associated Press

Five things to know about the Wirecard scandal

FRANKFURT AM MAIN, Germany - German payments provider Wirecard is in crisis after it admitted Monday that 1.9 billion euros ($2.1 billion) recorded in its accounts "do not exist".

Here are the most important facts about a scandal that is drawing comparisons with the collapse of US energy company Enron in the early 2000s over accounting fraud.

What does Wirecard do?

At its heart, Wirecard is a payments processor, offering companies services allowing them to accept credit cards and digital payments like Apple Pay or Paypal in stores, online or on mobile.

The company collects a commission for assuring that merchants will receive the money they are owed.

Around that, it sells its customers extra services like analytics based on the data generated from those transactions that it says can help boost sales and track trends.

Wirecard claims around 300,000 firms worldwide as customers, and deals with giants in the sector like China's AliPay and WeChat, Apple and Google have offered hot prospects for growth.

How did Wirecard make it big?

Wirecard was founded in 1999, starting out offering its services to porn and gambling sites.

Such stable revenue streams helped it survive the early-2000s dotcom crisis, and as more savory forms of online commerce ramped up through the 2000s and 2010s, the group's star mounted with it.

In the early days, founder Markus Braun increased his stake to seven percent, becoming the largest shareholder.

Wirecard now highlights clients like KLM, Deutsche Telekom and FedEx on its website.

First listed on the Frankfurt stock exchange in 2005, by 2018 it elbowed traditional lender Commerzbank out of the blue-chip DAX share index.

In early 2019, Wirecard's market value hit around 17 billion euros, matching crisis-ridden Deutsche Bank with 15 times fewer workers and revenues.

The past week's revelations have now collapsed that value to two billion.

Why weren't weak spots uncovered?

Beginning in January 2019, a string of Financial Times reports highlighted accounting irregularities, notably in Wirecard's Asian division.

Bosses denied any wrongdoing and the German financial world appeared to close ranks around its favourite.

Markets watchdog BaFin announced a probe into potential links between the FT and short sellers betting against Wirecard stock.

The fact his agency did not catch the scandal sooner was "a shame", BaFin chief Felix Hufeld said Monday.

"We weren't effective enough to prevent something like this happening," Hufeld added.

Wirecard's status as a Payment Service Provider (PSP) subjected it to multiple EU directives since 2008 obliging it to better fight payment fraud, but companies are not subject to as much scrutiny over their accounting practices.

Who controls Wirecard?

Wirecard was founded by Austrian Markus Braun, who until Friday served as chief executive.

Braun resigned after the company was forced to acknowledge the 1.9 billion euros might be missing.

Chief operating officer Jan Marsalek had been dismissed the day before.

American James Freis, installed as compliance chief on Thursday, was promoted to acting CEO on Braun's departure.

Freis had previously been compliance chief at German stock market operator Deutsche Boerse.

Aside from Freis, Braun and the remainder of Wirecard's former four-person board are under investigation by Munich prosecutors over "market manipulation" relating to how they presented KPMG's findings in its audit of their old accounts.

Wirecard's five-person supervisory board is headed by Thomas Eichelmann, a former business consultant who later switched to the financial sector including a stint at Deutsche Boerse.

Who is behind the missing cash?

German news weekly Der Spiegel named Mark Tolentino, a lawyer working in the Philippines, as the trustee responsible for the missing cash.

Based in Philippine financial centre Makati City, his website had vanished by Monday, although a Facebook page with public legal Q+A video sessions remained online.

Meanwhile one of the country's largest banks -- BPI -- where some of the missing money was supposedly deposited -- confirmed to AFP that an employee was on "preventive suspension".

Media had reported that an assistant manager at BPI signed a forged document relating to the supposed deposits at the bank.

Agence France-Presse

Pandemic propels old-school bond traders towards an electronic future

LONDON - The mammoth bond market has long been the old-school bastion of the financial world, but the COVID-19 pandemic has cast a light on its future - and it looks electronic. Well, mainly.

At the height of the market panic in March, Seattle-based Brandon Rasmussen, a senior fixed-income trader at $300 billion asset manager Russell Investments, had a client order to sell $2.5 billion worth of US Treasuries.

He found, though, that such a transaction was near-impossible in a highly volatile market that made no exceptions for even one of the world's most sought-after assets.

Dealers refused to quote prices by phone, adding to the stress of executing a large order without distorting the market.

The solution Rasmussen eventually settled on was to break the order up into smaller chunks and process them electronically - something he may not have considered a few weeks earlier.

"The feedback that we got from dealers was that they were not quoting on the phone. They couldn't do that, they couldn't keep up with that," he said. "I think what this crisis has shown is that really if you weren't trading electronically, you should be trading electronically."

His experience illustrates how the volatility caused by the crisis, along with a new remote mindset of working from home, has pushed more traders to go digital in a market that has historically lagged stocks and forex in electronification.

That trend is reflected in the business on electronic bond-trading platforms.

For example MarketAxess, one of the biggest players, enjoyed record trading volumes in March. At rival Tradeweb, average daily turnover hit a record aggregate $1 trillion in that month, a more than 41 percent year-on-year increase.

Meanwhile MTS, part of the London Stock Exchange Group , said it won several large asset managers in Europe as clients during the crisis.

Yet traders stress that dealers and clients speaking to one another will long remain a key component of the industry, especially at times of heightened volatility.

Even as Rasmussen went electronic to push through his trade, for example, he was also talking to buyers to agree "switches" - swapping one type of US bond for another to share risk.

The jump in electronic trading activity coincided with both a rush into government bonds as the coronavirus sparked demand for safe-haven assets, and then a sharp selloff as investors sold their most liquid assets to make up for losses elsewhere.

LIQUIDITY & TRANSPARENCY

Electronic trading - where transactions are carried out using software on online platforms, rather than via dealer-client "voice" trades - can carry major benefits for the $100 trillion-plus world of government and corporate debt.

Regulations such as MiFID II in Europe to improve transparency have also boosted electronic trading.

For one, traders executing deals can quickly gauge market depth on their screens, freeing time for more complex trades. For another, it offers lower costs for investors; two dealers estimated it to be 10 percent to 30 percent cheaper than traditional voice trades.

Nonetheless, while most bond industry players acknowledge that much of the future is digital, many have been reluctant to go fully electronic.

Around 45 percent of the European fixed-income market is electronically traded, versus 38 percent a year ago, consultancy Greenwich Associates estimates. In the $6.6 trillion-a-day currency market, 90 percent of spot trading is conducted digitally.

However the COVID-19 crisis is accelerating the electronification of the bond market, according to industry players.

Many such as Tony Rodriguez, US-based head of fixed income strategy at Nuveen Asset Management, said a need for greater liquidity had boosted electronic trading activity.

"A lot of trades were pushed electronically because of greater liquidity and transparency - so the crisis pushed what was already in place," he said.

Andrew Falco, global head of FX and fixed income trading at Fidelity International in London credits electronic trading with allowing connectivity in a market suddenly dispersed by remote working.

This kind of technology enabled the transition from working in an office to working from kitchen tables, he told Reuters.

He said some lessons had been learned about this last year when Fidelity's Hong Kong team struggled to work in the office because of the unrest roiling the city.

"So for us in 2020, we finessed the e-trading home set-up and ensured it worked well, whether it was in HK, Shanghai, Dublin or the UK," he added.


'IMAGINE THIS 25 YEARS AGO' 

For the banks who provide dealer and execution services, though, the electronic shift may be eating into fixed-income revenues; during the March quarter, earnings from bond trading at the world's biggest 12 banks remained below levels seen in 2014, research firm Coalition calculates.

But they too are accelerating the push to digital services, particularly for the automation that helps them when volatility spikes.

JP Morgan, for instance, uses an algorithm to help generate price quotes on its forward FX platform, which includes bonds, fielding "hundreds of thousands of enquiries" and transacting "thousands of trades a day" during the crisis, said Tom Prickett, co-head of EMEA rates at the bank.

Another big player, Goldman Sachs, said clients ramped up calls for the electronification and automation of companies' bond sales, until now a slow process conducted manually.

"The crisis revealed some of those shortcomings in bright lights," said David Wilkins, Goldman's head of FICC execution services in EMEA.

Investors and traders acknowledged that digital technology had been a savior during the pandemic, a view expressed across a host of industries.

"Imagine something like this happening 25 years ago, when emails didn't exist, electronic communication was not really there," said Zoeb Sachee, head of euro linear rates trading at Citibank who oversees government bond trading in European markets.

THE OLD AND THE NEW

But, for the foreseeable future at least, the bond market is likely to encompass the old and the new: technology as well as traditional trading models based on dealer-client relationships.

Traders of European investment-grade corporate bonds during the crisis often negotiated deals by phone before using a platform to settle, according to an International Capital Market Association (ICMA) report.

"Bond markets are very much relationship-driven and I don't see how that goes away," said report author Andy Hill.

This was echoed by Falco at Fidelity.

"The view that we felt as a team was that we would use technology where we had confidence in the price that we could see on the screen, and when we didn't have the confidence in the price, we would execute manually."

-reuters-

CEO of scandal-hit Wirecard resigns

The founder and chief executive of scandal-hit Wirecard resigned on Friday after the German payments provider was hit with fresh fraud allegations that have left it struggling for survival.

Markus Braun "resigned today with immediate effect", the firm said in a statement, adding that the decision was made "in mutual consent with the supervisory board".

He will be replaced on an interim basis by US manager James Freis.

The bombshell comes a day after auditors from Ernst & Young said 1.9 billion euros ($2.1 billion) were missing from Wirecard's accounts, intensifying a months-long crisis in the company.

The news prompted investors to abandon the once popular fintech company in droves, sending Wirecard's share prices into a tailspin.

The stock has plunged by more than 76 percent since Thursday morning and was trading at 23.90 euros a share by 1130 GMT on Friday.

It marks a stunning fall from grace for the Bavarian start-up, set up in 1999 and once seen as a darling of the fintech scene thanks to the growing global popularity of electronic payments.

It entered Germany's prestigious DAX 30 index with great fanfare in 2018 after nudging out traditional lender Commerzbank.

But since then Wirecard has been dogged by a series of articles in the Financial Times alleging accounting irregularities in its Asian operations.

The company's four board members -- including Braun -- have been under investigation since early June by Munich prosecutors for "market manipulation", and Wirecard's headquarters were searched as part of the probe.

The scandal deepened on Thursday when the firm was forced to delay the publication of its 2019 results for a fourth time.

Instead, Wirecard said in a statement that auditors Ernst & Young had identified "spurious balance confirmations" relating to "cash balances on trust accounts".

- Ticking clock -

The auditors' red flag was raised over escrow accounts at two Asian banks, which were supposed to hold 1.9 billion euros to manage risk for merchants using Wirecard's payment services.

Wirecard said there were "indications" that the balances had been falsified "in order to deceive the auditor".

The two Philippine banks that were supposed to hold the cash denied having a relationship with Wirecard, according to Bloomberg News.

Wirecard's board responded by fling a legal complaint against "unknown persons", saying they could have fallen victim to a vast fraud.

"It is currently unclear whether fraudulent transactions to the detriment of Wirecard AG have occurred," Braun said on Thursday.

But the clock is ticking for Wirecard, as two billion euros of credit could be withdrawn if it is unable to publish its results for last year by Friday.

According to preliminary figures, the group said it had processed 173 billion euros of transactions in 2019, up 38.5 percent.

Revenues grew 37.5 percent, to 2.8 billion euros, while net profits added 39 percent at 482 million, Wirecard said. 

Agence France-Presse

US Treasury to borrow record $2.999 trillion in Q2

The United States Treasury said Monday it will to borrow a record $2.999 trillion in the April-June period largely to finance spending on relief programs amid the coronavirus pandemic.

That amount for the second quarter is five times the most spent in any three month period and far outstrips total debt issued in most years. In the 2019 fiscal year, the government issued just $1.28 trillion in debt, a Treasury official told reporters.

The increase is "primarily driven by the impact of the COVID-19 outbreak, including expenditures from new legislation to assist individuals and businesses" and deferred taxes, Treasury said in a statement.

Congress rushed out nearly $3 trillion in aid for individuals and businesses as the pandemic forced much of the economy to shut down, including increased unemployment payments and loans to small businesses and major industries to try to keep them afloat and paying their workers.

In addition, the annual rite of paying income taxes by April 15 was pushed back three months.

The Treasury official said the borrowing assumptions "include only legislation that has been passed to date" and could be adjusted or shifted into later months depending on how quickly the funds are pushed out.

For the July-September quarter, Treasury currently estimates the need to borrow $677 billion.

Despite the massive amount, the US government should not have any problems finding buyers for the debt, which is seen as a solid investment for domestic and foreign investors alike.

Agence France-Presse

Top creditors to suspend poorest countries' debt payments, France says

PARIS - Major international creditors have agreed to suspend debt payments owed by the poorest countries this year, throwing a financial lifeline to help cope with the coronavirus crisis, France's finance minister said on Tuesday.

Some 76 countries, of which 40 are in sub-Sahara Africa, were eligible to have debt payments worth a combined $20 billion suspended, out of a total of $32 billion the countries were to spend on debt servicing this year.

"We have obtained a debt moratorium at the level of bilateral creditors and private creditors for a total of $20 billion euros," Bruno Le Maire told journalists.

The government creditors, including not only the Paris Club but also China and other members of the Group of 20 economic powers, are to suspend $12 billion under the agreement, which remains to be finalised on Wednesday.

Separately, a senior German official spoke of a debt moratorium by official creditors worth up to $14 billion.

"We're glad in particular that China agreed to participate in this moratorium. All that will free up money for the countries that need it the most," Le Maire said.

China has become a major creditor to developing countries, especially in Africa, but there is little transparency about how much they owe.

Private creditors have agreed on a voluntary basis to roll over or refinance $8 billion in debt, a French finance ministry source said.

Of the total $32 billion due this year, the remaining 12 billion euros is owed by multilateral lenders, mainly the World Bank, Le Maire said, urging such lenders to join the debt relief initiative.

The World Bank and the International Monetary Fund called last month on government creditors to give debt relief and the IMF said on Monday it would do so for 25 countries under its Catastrophe Containment and Relief Trust, which has about $500 million in resources on hand.

French President Emmanuel Macron said in a television address to the French nation on Monday that African countries should be helped by "massively cancelling their debt".

Le Maire said that at the end of the year outright debt cancellation should take place on a case-by-case basis and in coordination with multilateral lenders depending on the economic situation of the countries as well as developments in commodity markets and capital flows. 

-reuters-

No late fees, finance charges on credit card payments during grace period: BSP

MANILA – Credit card users don’t need to worry about paying late fees and finance charges during the 30-day grace period for payments due within the enhanced community quarantine in Luzon, the Bangko Sentral ng Pilipinas said on Thursday. 

BSP managing director Pia Roman-Tayag said that under the implementing rules and regulations of the Bayanihan to Heal As One Act, collecting these fees is not allowed during the lockdown period. 

“There, it is very explicit, that no fees and charges will be incurred, and no interest,” said Tayag, who heads the BSP’s Center for Learning and Inclusion Advocacy. 

Credit card issuers are allowed to collect interest charges on people who pay only the minimum amount required, Tayag said. But this interest will be paid on a staggered basis to spare credit card users from a “bill shock,” the BSP official said. 

People who pay their credit card bills in full will not get any extra charges in their bills, which means their due date is effectively extended, Tayag said. 

The BSP said the grace period applies not only to consumer loans, such as credit card, auto and housing loans, but also to commercial loans. 

Tayag added that the grace period covers not just loans extended by banks and financial institutions supervised by the BSP, but to all businesses that extend loans, including real estate companies with in-house financing. 

The entire island of Luzon was placed under enhanced community quarantine to stop the spread of COVID-19 from March 17 to April 12.

source: news.abs-cbn.com

Buy, sell or hold? How to navigate the coronavirus-infected stock market

MANILA -- Wild swings in stock prices here and abroad due to the coronavirus pandemic show the nature of the equities market: it's volatile, an analyst said Thursday.

How investors should respond will depend on their tolerance for risk, the size of their emergency fund, even their age, said Marvin Fausto, president and CIO of COL Investment Management.

Fausto gave some tips on how to manage stock portfolios during the COVID-19 crisis, which formed many countries, including the Philippines, to lock down millions.

BUY STOCKS IF...

"Wealth accumulators" in their 30s and 40s have many years left in terms of investing and can take advantage of low prices, provided they have emergency funds, Fausto said.

"If you have a long way to go, it may good for them to buy because they can accommodate that kind of volatility," he said.

SELL STOCKS IF...

Retired persons who rely on fixed income can reduce their exposure to risky assets such as stocks, Fausto said.

These types of investors can "sell and be comfortable with what you have," he said.

OR, JUST HOLD

The equities market is inherently volatile and at the mercy of global events such as COVID-19. As with most cycles, financial markets recover, Fausto said.

"Don't look with too much concern with how the market moves. That's how it moves, it goes up and down," he said.

source: news.abs-cbn.com