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Stocks slide, dollar steady as market gauges Fed’s rate policy

NEW YORK/LONDON, Dec 6 (Reuters) – Global stocks headed for a third straight day of losses on Tuesday and the dollar held steady as the market assesses how long the Federal Reserve keeps interest rates higher and the likelihood that policy provokes a recession.

U.S. stocks followed European shares lower, with all sectors in the red, with the exception of the defensive utilities sector (.SPLRCU), which seesawed between gains and losses.

MSCI’s U.S.-centric all-country world index (.MIWD00000PUS) fell 1.06%, on track for a third session in a row of declines after hitting a three-month high last week.

Treasury yields fell, but more at the long end of maturities than the short end, which deepened the inverted yield curve, a market indicator of a looming recession. The gap between yields on two- and 10-year notes was -82.6 basis points.

The market needs to recognize that a recession most likely is a reality, not just a hypothetical, and that valuations need to go lower, said Jason Pride, chief investment officer of private wealth at Glenmede in Philadelphia.

“During recessions, markets on average price at a discount to fair value, which they have not yet done,” Pride said. “There is not a single instance in which a market has bottomed before the recession started.”

Data released on Monday showing U.S. services industry activity unexpectedly picked up in November and last week’s robust U.S. payrolls report have raised doubts about how soon the Fed would ease monetary policy from being restrictive.

Futures show the market expects the Fed’s peak terminal rate to rise to 4.9951% next May, but by December 2023 to have declined to 4.565% on speculation the Fed will cut rates to help the economy rebound from an expected slowdown in growth.

Wall Street was dragged lower by banking shares and Meta Platforms Inc (META.O), after European Union regulators ruled its Facebook and Instagram units should not require users to agree to personalized ads based on their digital activity.

The Dow Jones Industrial Average (.DJI) fell 0.79%, the S&P 500 (.SPX) slid 1.19% and the Nasdaq Composite (.IXIC) dropped 1.57%. In Europe, the STOXX 600 index (.STOXX) lost 0.56%.

The dollar was mostly unchanged against the euro and yen after strong gains on Monday, with investors awaiting next week’s expected 50 basis points rate hike by the Fed.

The euro rose 0.24% to $1.0516, while the yen strengthened 0.22% at 136.44 per dollar.

Euro zone government bond yields fell after two European Central Bank officials signaled inflation and rates may be close to peaking in the run-up to a raft of major central bank decisions.

The ECB, the Bank of England and the Fed all meet next week to discuss monetary policy. The Reserve Bank of Australia offered a glimpse of decisions to come after raising interest rates to decade highs and sticking with a prediction of more hikes ahead.

All eyes will be on the release next Tuesday of November’s U.S. consumer price index data, which will provide insight into the pace of inflation.

The yield on U.S. 10-year notes fell 4.2 basis points to 3.557%.

Oil prices fell in a volatile market as the dollar stayed strong and economic uncertainty offset the bullish impact of a price cap placed on Russian oil and the prospects of a demand boost in China.

On Monday, crude futures recorded their biggest daily drop in two weeks.

U.S. crude fell 2.24% to $75.21 a barrel and Brent was at $80.70, down 2.39% on the day.

Spot gold added 0.3% to $1,774.09 an ounce.

Reuters Graphics

Reporting by Herbert Lash, additional reporting by Anshuman Daga in Singapore and Alun John in London; Editing by Simon Cameron-Moore, Angus MacSwan and Jonathan Oatis

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Asia shares bank on eventual China opening; oil gains

  • https://tmsnrt.rs/2zpUAr4
  • China shares push higher, dollar slips
  • More Chinese cities ease coronavirus controls
  • Cap on Russia oil comes into effect, impact uncertain

SYDNEY, Dec 5 (Reuters) – Asian shares extended their rally on Monday as investors hoped steps to unwind pandemic restrictions in China would eventually brighten the outlook for global growth and commodity demand, nudging the dollar down against the yuan.

The news helped oil prices firm as OPEC+ nations reaffirmed their output targets ahead of a European Union ban and price caps on Russian crude, which begin on Monday.

More Chinese cities announced an easing of coronavirus curbs on Sunday as Beijing tries to make its zero-COVID policy less onerous after recent unprecedented protests against restrictions. read more

There were also reports Beijing might lower the threat classification for COVID-19, though clarity was lacking on timetables for future steps. read more

“While the easing of some restrictions does not equate to a wholesale shift away from the dynamic COVID zero strategy just yet, it is further evidence of a shifting approach and financial markets look to be firmly focussed on the longer term outlook over the near-term hit to activity as virus cases look set to continue,” said Taylor Nugent, an economist at NAB.

Chinese blue chips (.CSI300) gained 1.7%, on top of last week’s 2.5% bounce, while the Hang Seng (.HS11) jumped 3.5%.

MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) added 1.7% to a three-month top, after rallying 3.7% last week. Japan’s Nikkei (.N225) edged up 0.1%, while South Korea (.KS11) eased 0.4%.

EUROSTOXX 50 futures added 0.1%, while FTSE futures were flat. S&P 500 futures and Nasdaq futures both fell 0.1%.

Wall Street had lost some momentum on Friday after November’s robust U.S. payrolls report challenged hopes for a less aggressive Federal Reserve, though Treasuries still ended last week with solid gains. read more

Indeed, 10-year note yields have fallen 74 basis points since early November, effectively undoing much of the tightening of the Fed’s last outsized increase in cash rates.

Markets are wagering Fed rates will top out at 5% and the European Central Bank around 2.5%.

“But U.S. and Euro area labour demand remain surprisingly strong, and alongside a recent easing in financial conditions, the risks are shifting toward higher-than-anticipated terminal rates for both the Fed and the ECB,” warns Bruce Kasman, head of economic research at JPMorgan.

“The combination of labour market resilience with sticky wage inflation adds to the risk that the Fed will deliver a higher than 5% rate forecast at its upcoming meeting and that Chair Jerome Powell’s press conference will shift to more open-ended guidance regarding any near-term ceiling on rates.”

DOLLAR VULNERABLE

The Fed meets on Dec. 14 and the ECB the day after. Speaking on Sunday, French central bank chief Francois Villeroy de Galhau said he favoured a hike of half a point next week. read more

Central banks in Australia, Canada and India are all expected to raise their rates at meetings this week.

The steep decline in U.S. yields has taken a toll on the dollar, which fell 1.4% last week on a basket of currencies to its lowest since June.

It lost 3.5% on the yen alone and last traded at 134.34 , leaving October’s peak of 151.94 a distant memory. The euro resumed it rise to $1.0578 , having added 1.3% last week to its highest since early July.

The dollar also slipped under 7.0 yuan in offshore trade to hit the lowest in three months at 6.9677.

The drop in the dollar and yields has been a boon for gold, which was up 0.5% at a four-month peak of $1,807 an ounce after rising 2.3% last week.

Oil prices bounced after OPEC+ agreed to stick to its oil output targets at a meeting on Sunday.

The Group of Seven and European Union states are due on Monday to impose a $60 per barrel price cap on Russian seaborne oil, though it was not yet clear what impact this would have on global supply and prices. read more

Brent gained $1.67 to $87.24 a barrel, while U.S. crude rose $1.46 to $81.44 per barrel.

Reporting by Wayne Cole; Editing by Sam Holmes

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Shares rise, U.S. Treasury yields drop ahead of Fed minutes’ release

  • Fed minutes for November due at 1900 GMT
  • Wall Street stocks trade higher
  • U.S. Treasury yields retreat
  • Crude prices drop more than 4%
  • U.S. dollar falls

NEW YORK, Nov 23 (Reuters) – World equities rose while U.S. Treasury yields were lower ahead of the release of the Federal Reserve’s meeting minutes that would offer a glimpse on whether officials are likely to soften their stiff monetary policy stance.

Traders are expecting the minutes, which will be published on Wednesday, to provide clues that the Fed is set to end its pace of sharp interest rate hikes in response to a moderation in economic conditions.

Labor Department data showed on Wednesday that U.S. jobless claims increased more than expected last week while U.S. business activity contracted for a fifth month in November, according to the S&P Global flash U.S. Composite PMI Output Index.

“What investors are hoping for is that the Fed acknowledges that since the consumer price index looks like it might be peaking that there’s going to be some language that they see a pause on the near-term horizon,” said Jordan Kahn, chief investment officer at ACM Funds in Los Angeles, California.

The MSCI All Country stock index (.MIWD00000PUS) was up 0.8%, while European shares (.STOXX) rose 0.62%.

U.S. Treasury yields were trading lower. Benchmark 10-year notes were down to 3.7242% while the yields on two-year notes dropped to 4.4835%.

The yield curve that compares these two bonds widened further into negative territory, to -76.30 basis points. When inverted, that part of the curve is seen as an indicator of an upcoming recession.

“I tend to think that investors that are looking for any sought of hint of a pause are going to be disappointed. I think the Fed is going to keep the message they’ve been saying for a while, which is that their job isn’t done yet and need to bring down demand,” Kahn said.

“The yield curve is still screaming that the economy is on the precipice of a slowdown,” he added.

On Wall Street, all three major indexes were trading higher, led by gains in technology, consumer discretionary, communication, and industrial stocks.

The Dow Jones Industrial Average (.DJI) rose 0.29% to 34,196.78, the S&P 500 (.SPX) gained 0.56% to 4,025.81 and the Nasdaq Composite (.IXIC) added 0.96% to 11,282.14.

Oil prices fell more than 4% as the Group of Seven (G7) nations looked at a price cap on Russian oil that is above where it is currently trading and as gasoline inventories in the United States built more than analysts expected.

Brent futures for January delivery fell 4.2% to $84.65 a barrel, while U.S. crude fell 4.46%, to $77.34 per barrel.

The U.S. dollar fell across the board ahead of the release of the Fed’s minutes and new data showing weaker economic conditions. The dollar index fell 0.7%, with the euro up 0.62% to $1.0366.

Gold prices were choppy as the U.S. dollar fell. Spot gold added 0.1% to $1,742.66 an ounce, while U.S. gold futures fell 0.10% to $1,736.50 an ounce.

Reporting by Chibuike Oguh in New York
Editing by Bernadette Baum

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Myanmar junta frees Australian economist, former UK envoy in mass amnesty

  • Australian held for 650 days for state secrets breach
  • Opponents sceptical of junta’s motives
  • Turnell headed for Australia – PM
  • Amnesty a bright spot at ‘incredibly dark time’ – Blinken

Nov 17 (Reuters) – Myanmar’s ruling military on Thursday freed a former British ambassador, a Japanese filmmaker and an Australian economic adviser to deposed leader Aung San Suu Kyi, officials said, among nearly 6,000 prisoners included in a mass amnesty.

Australia said economist Sean Turnell left Myanmar on Thursday and had arrived in neighbouring Thailand, while a diplomatic source confirmed former British envoy Vicky Bowman had also left the country.

Myanmar’s state-run MRTV showed footage of the pair as well as Japan’s Toru Kubota, signing exit documents with officials. The United States said its citizen, Kyaw Htay Oo, was released.

Turnell was arrested a few days after the army seized power from Suu Kyi’s elected government in February last year, ending a decade of tentative democracy.

The coup sparked chaos and a bloody army crackdown on dissent that has drawn international condemnation and fuelled an armed resistance movement against the military.

Australian Prime Minister Anthony Albanese thanked the leaders of Thailand and Cambodia for pressuring the military to free Turnell, who was found guilty of a state secrets violation and sentenced in September to three years in jail.

“I’ve just spoken to Sean Turnell, who has been released from 650 days of unfair, unjust imprisonment in Myanmar,” Albanese told reporters in Bangkok, where he is attending the Asia-Pacific Economic Cooperation summit.

“He will travel overnight to Australia to be with his family.”

State-controlled media said the amnesty included 5,774 prisoners and foreigners were released “for the relationship with other countries and also for humanitarian purposes”.

Speaking in Bangkok, U.S. Secretary of State Antony Blinken said the release was “one bright spot in what is otherwise an incredibly dark time.”

“Whether this signals anything more broadly about the intentions of the regime, I can’t tell you – too soon to say.”

‘HOSTAGE TACTICS’

Myanmar’s shadow National Unity Government, which backs the resistance movement, said it was heartened by the amnesty, but said the world should not be duped.

“These types of hostage tactics by the junta should not fool the international community into believing that the military has changed its colours,” said Htin Linn Aung, an NUG minister and spokesperson.

A junta spokesperson did not answer Reuters’ calls seeking comment.

Bowman, Britain’s ambassador from 2002-2006 who heads a group promoting ethical business in Myanmar, had been jailed for immigration violations.

Kyaw Htay Oo was detained on terrorism charges, media has reported. Kubota was last month sentenced to 10 years in prison for violating sedition and communications laws.

Human rights groups have said their detentions, as well as thousands of others, were politically motivated. The junta has denied that.

Japan’s chief cabinet secretary Hirokazu Matsuno earlier on Thursday said Japan “will continue to demand Myanmar take specific and appropriate actions to rebuild democratic society, and to solve problems peacefully and seriously.”

Others included in the amnesty were 11 celebrities plus Kyaw Tint Swe, a former minister and a close aide to Suu Kyi, according to state media.

Suu Kyi’s former ruling party spokesperson Myo Nyunt and prominent democracy advocate Mya Aye were among those seen by witnesses leaving the Insein prison in the biggest city Yangon.

“I will be together with Myanmar people no matter what the situation is,” Mya Aye said.

The Assistance Association for Political Prisoners (AAPP), which has been documenting the military’s crackdown, said the junta had freed the foreigners to ease political pressure.

“Yet again, political prisoners are being used as bargaining chips,” it said.

Phil Robertson, deputy Asia director of Human Rights Watch, said people should not be jailed for expressing political views.

“One hopes this release will not be a one-off event but rather the start of a process by the junta to release all political prisoners,” he said.

Reporting by Reuters staff; Writing by Kanupriya Kapoor and Martin Petty; Editing by Lincoln Feast, Simon Cameron-Moore, William Maclean

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Dutch court sentences three to life in prison for 2014 downing of MH17 over Ukraine

  • Crash killed 298 passengers and crew
  • Court finds Russian missile downed the plane
  • Convicted men are fugitives, believed in Russia

AMSTERDAM, Nov 17 (Reuters) – Dutch judges convicted two Russian men and a Ukrainian man in absentia of murder for their role in the shooting down of Flight MH17 over Ukraine in 2014 with the loss of 298 passengers and crew, and handed them life sentences.

Ukraine welcomed the ruling, which will have implications for other court cases Kyiv has filed against Russia, while Moscow called the ruling “scandalous” and said it would not extradite its citizens.

Malaysian Airlines Flight MH17 departed from Amsterdam and was bound for Kuala Lumpur when it was shot down over eastern Ukraine on July 17, 2014, as fighting raged between pro-Russian separatists and Ukrainian forces, the precursor of this year’s conflict.

The ruling came as a relief to victims’ family members, more than 200 of whom attended the court in person, wiping away tears as the judgement was read.

“Only the most severe punishment is fitting to retaliate for what the suspects have done, which has caused so much suffering to so many victims and so many surviving relatives,” Presiding Judge Hendrik Steenhuis said.

The three men convicted were former Russian intelligence agents Igor Girkin and Sergey Dubinskiy, and Leonid Kharchenko, a Ukrainian separatist leader.

The three were all found to have helped to arrange the transport into Ukraine of the Russian military BUK missile system that was used to shoot down the plane, though they were not the ones that physically pulled the trigger.

They are fugitives and believed to be in Russia. A fourth former suspect, Russian Oleg Pulatov, was acquitted on all charges.

The incident in 2014 left the plane’s wreckage and victims’ remains scattered across fields of corn and sunflowers.

Russia invaded Ukraine in February and claims to have annexed the Donetsk province where the plane was shot down.

“The families of victims wanted the truth and they wanted justice to be done and those responsible to be punished and that is what happened. I am pretty satisfied,” Piet Ploeg, who heads a foundation representing victims, told Reuters. Ploeg’s brother, his brother’s wife and his nephew died on MH17.

Meryn O’Brien of Australia, who lost her 25-year old son Jack, said she felt relieved. “Everyone was relieved the process has come to an end, and it is very fair, and it has been meticulous.”

“There’s no celebration,” said Jordan Withers of Britain, whose uncle Glenn Thomas died. “Nothing is going to bring any of the victims back.” They came from 10 different countries.

The judgment included a 16 million euro damages award.

Ukrainian President Volodymyr Zelenskiy hailed the first sentences handed down over MH17 as an “important decision” by the court in The Hague.

“But it is necessary that those who ordered it also end up in the dock because the feeling of impunity leads to new crimes,” he wrote on Twitter. “We have to dispel this illusion. Punishment for all Russian atrocities – both then and now – will be inevitable.”

The ruling found that Russia had “overall control” over the forces of the Donetsk People’s Republic in Eastern Ukraine from mid May 2014.

“This is groundbreaking,” said Marieke de Hoon, assistant professor of international law at Amsterdam University. The ruling was “authoritative” and would likely boost Ukraine’s other international cases against Russia relating to the 2014 conflict.

‘NO REASONABLE DOUBT’

Judge Steenhuis said there was ample evidence from eyewitness testimony and photographs which tracked the missile system’s movements into and back out of Ukraine to Russia.

“There is no reasonable doubt” that MH17 was shot down by a Russian missile system, Steenhuis said.

Moscow denies any involvement or responsibility for MH17’s downing and in 2014 it also denied any presence in Ukraine.

In a statement, the Russian foreign ministry said “throughout the trial the court was under unprecedented pressure from Dutch politicians, prosecutors and the media to impose a politically motivated outcome”.

“We deeply regret that the District Court in The Hague disregarded the principles of impartial justice in favour of the current political situation, thus causing a serious reputational blow to the entire judicial system in the Netherlands,” it added.

Prosecutors had charged the four men with shooting down an airplane and with murder in a trial held under Dutch law, as more than half of the victims were Dutch. Phone call intercepts that formed a key part of the evidence suggested the men believed they were targeting a Ukrainian fighter jet.

Steenhuis said that, while that counted for something in terms of lessening the severity of their criminal responsibility, they still had a murderous intent and the consequences of their actions were huge.

Of the suspects, only Pulatov had pleaded not guilty via lawyers he hired to represent him. The others were tried in absentia and none attended the trial.

The police investigation was led by the Netherlands, with participation from Ukraine, Malaysia, Australia and Belgium.

Thursday’s ruling is not the final word on holding people accountable for MH17, Dutch and Australian authorities said.

Andy Kraag, the head of the police investigation, said research was continuing into possible suspects higher in the chain of command. Investigators are also looking at the crew of the missile system which launched the fatal rocket.

The Dutch and Australian governments, which hold Russia responsible, have started a proceeding against the Russian Federation at the International Civil Aviation Organization (ICAO).

Reporting by Toby Sterling, Stephanie van den Berg and Bart Meijer; Editing by Jon Boyle, Alex Richardson, Toby Chopra, Alexandra Hudson

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Asian stocks shaken by blast in Poland; dollar gains

HONG KONG, Nov 16 (Reuters) – Asian stocks dropped and the dollar gained on Wednesday after a blast in Poland that Ukraine and Polish authorities said was caused by a Russian-made missile.

Worries over a potential ratcheting up of geopolitical tensions spurred a drop of 1% in MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS).

Australian shares (.AXJO) fell 0.4%, while Japan’s Nikkei stock index (.N225) dropped 0.1%.

Hong Kong’s Hang Seng Index (.HSI) shed 1.1% and China’s CSI 300 (.CSI300) fell 0.4% by the midday break. The struggling property sector weighed on the markets, with China’s new home prices falling at their fastest pace in more than seven years in October, weighed down by COVID 19-related curbs and industry-wide problems.

U.S. stock futures, the S&P 500 e-minis , fell 0.2%.

In early European trade, the pan-region Euro Stoxx 50 futures lost 0.9%, German DAX futures dipped 1%, and FTSE futures fell 0.5%.

NATO member Poland said on Wednesday that a Russian-made rocket killed two people in eastern Poland near Ukraine, and it summoned Russia’s ambassador to Warsaw for an explanation after Moscow denied it was responsible.

“(It) interrupted what is a far more constructive tone in markets over the last three, four days,” said Dwyfor Evans, head of Asia Pacific macro strategy at State Street Global Markets in Hong Kong, who noted optimism in the financial markets that U.S. inflation was cooling.

U.S. President Joe Biden said the United States and its NATO allies were investigating the blast but early information suggested it may not have been caused by a missile fired from Russia.

“I do think President Biden’s comment was clear in representing the U.S. government,” said Quincy Krosby, chief global strategist at LPL Financial in Charlotte, North Carolina.

“Unless there’s evidence to the contrary, (market concerns) should dissipate.”

The safe-haven U.S. dollar pared gains against its major peers but was still mostly higher, led by a 0.63% advance versus the yen .

Sterling lost 0.32%, while the risk-sensitive Aussie dollar weakened 0.34%. The euro was flat.

“A lot of headlines are going on around today but there’s a feeling that this is not going to, at this stage… result in an escalation in tensions, or at least there is no appetite to go in that direction,” said Rodrigo Catril, senior currency analyst at National Australia Bank in Sydney.

The fact that the risk-sensitive, pro-growth Australia and New Zealand dollars retained most of their big gains from Tuesday, following soft U.S. PPI readings, is an indication that “there is a lot of appetite to push the U.S. dollar lower,” Catril said.

The yield on benchmark 10-year Treasury notes rose to 3.8068% in Tokyo, compared with 3.799% at the close of U.S. trading on Tuesday. It earlier fell as low as 3.757%, matching the previous session’s intraday trough, which was the lowest since Oct. 6.

U.S. crude dipped 0.74% to $86.29 a barrel. Oil prices rose on Tuesday after news that oil supply to Hungary via the Druzhba oil pipeline had been temporarily suspended due to a fall in pressure.

Gold was slightly lower, with spot gold trading at $1,778.17 per ounce.

Reporting by Xie Yu; Additional reporting by Ankur Banerjee; Editing by Edwina Gibbs and Edmund Klamann

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Shares sobered by Fed warning, China acts on property

  • Fed’s Waller plays down CPI as just one number
  • Beijing lays out property support, COVID steps
  • Biden to meet Xi at G20 meeting

SYDNEY/LONDON, Nov 14 (Reuters) – Share markets continued last week’s rally in more modest fashion on Monday after a top U.S. central banker warned investors against getting carried away over one inflation number, while Chinese stocks gained on aid for the country’s property sector.

A modest miss on U.S. inflation was enough to see two-year Treasury yields dive 33 basis points for the week and the dollar lose almost 4% – the fourth biggest weekly decline since the era of free-floating exchange rates began over 50 years ago.

However, the resulting easing in U.S. financial conditions was not entirely welcomed by the Federal Reserve, with Governor Christopher Waller saying on Sunday it would take a string of soft reports for the bank to take its foot off the brakes.

Waller added the markets were well ahead of themselves on just one inflation print, though he did concede the Fed could now start thinking about hiking at a slower pace.

Futures are wagering heavily on a half-point rate rise to 4.25-4.5% in December, and then a couple of quarter-point moves to a peak in the 4.75-5.0% range.

Two-year yields edged down to 4.39%, after diving as deep as 4.29% on Friday.

“The CPI downside surprise aligns with a broad range of indicators pointing to a downshift in global inflation that should encourage a moderation in the pace of monetary policy tightening at the Fed and elsewhere,” said Bruce Kasman, head of economic research at JPMorgan.

“This positive message needs be tempered by the recognition that downshift in inflation will be too little for central banks to declare mission-accomplished, and more tightening is likely on the way.”

The benchmark European STOXX index rose 0.37% (.STOXX), and MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) added 0.73%, after jumping 7.7% last week.

U.S. markets looked set to open lower, with S&P E-mini futures down 0.26% .

EYES ON CHINA

Dealers were also waiting to see if Chinese stocks could extend their big rally amid reports regulators have asked financial institutions to extend more support to stressed property developers. read more

China’s real estate index (.CSI000952) jumped 3.5% in response. Blue chips (.CSI300) rose 1%, helped by a slew of changes to China’s COVID curbs, even as the country reported more cases over the weekend. read more

“It’s hard to see how the case news is anything but negative from an economic standpoint, but it’s the symbolism of the movement, however small, in the zero COVID strategy that markets are happily latching onto,” said Ray Attrill, head of FX strategy at NAB.

The support for China’s property sector, which consumes a vast amount of metals, boosted copper towards a five-month high. Three-month copper on the London Metal Exchange (LME) rose 0.3% at $8,519 a tonne by 0725 GMT.

U.S. President Joe Biden will meet Chinese leader Xi Jinping in person on Monday for the first time since taking office, with U.S. concerns over Taiwan, Russia’s war in Ukraine and North Korea’s nuclear ambitions on top of his agenda.

The news on COVID rules had stoked a short-covering bounce in the yuan, which added to broad pressure on the dollar as yields dived. The yuan was set 1.4% firmer on Monday – the largest such move since 2005.

The dollar index moved down a fraction on Monday at 106.69 , still well short of last week’s 111.280 top.

The euro eased a touch to $1.0308 , after climbing 3.9% last week, while the dollar firmed to 139.56 yen following last week’s 5.4% drubbing.

The dollar lost almost as much to the Swiss franc , steered in part by warnings from the Swiss National Bank that it would use rates and currency purchases to tame inflation.

Sterling eased back to $1.1755 ahead of the British Chancellor’s Autumn Statement on Thursday, where he is expected to set out tax rises and spending cuts.

Crypto currencies remained under pressure as at least $1 billion of customer funds were reported to have vanished from collapsed crypto exchange FTX.

Bitcoin recovered 2.9% at $16,785 , having shed almost 22% last week.

Oil prices pared earlier gains and fell on Monday, after hopes of a boost in China demand were offset by the firmer U.S. dollar. Brent crude futures were down 32 cents, or 0.3%, to $95.67 a barrel by 0725 GMT after settling up 1.1% on Friday

Reporting by Wayne Cole and Lawrence White; Editing by Shri Navaratnam, Kenneth Maxwell, William Maclean

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Biden and Xi to meet ahead of G20

NUSA DUA, Indonesia, Nov 14 (Reuters) – Chinese leader Xi Jinping will arrive on the Indonesian island of Bali on Monday for a long-awaited meeting with U.S. President Joe Biden, ahead of a Group of 20 (G20) summit set to be fraught with tension over Russia’s invasion of Ukraine.

The two leaders are expected to discuss Taiwan, Ukraine and North Korea’s nuclear ambitions, issues that will also loom over the G20 that opens on Tuesday without Russian President Vladimir Putin in attendance.

Billionaire Elon Musk, the CEO of Tesla Inc (TSLA.O) and Twitter Inc, addressed a business forum that is part of the summit and said he had “too much work” on his plate.

Speaking by videolink, he appeared lit by candles, wearing a batik shirt sent by the organisers. He said he was speaking from a place that had just lost power.

Foreign Minister Sergei Lavrov will represent the Russian president at the G20 summit – the first since Russia invaded Ukraine in February – after the Kremlin said Putin was too busy to attend.

On the eve of Monday’s meeting with Xi, Biden told Asian leaders in Cambodia that U.S. communication lines with China would stay open to prevent conflict, with tough talks almost certain in the days ahead.

The United States would “compete vigorously” with China while “ensuring competition does not veer into conflict”, said Biden, stressing the importance of peace in the Taiwan Strait during an address to the East Asia Summit in Cambodia. He arrived in Bali on Sunday night.

Relations between the superpowers have sunk to their lowest in decades, marred by growing tensions in recent years over a host of issues ranging from Hong Kong and Taiwan to the South China Sea, trade practices and U.S. restrictions on Chinese technology.

But U.S. officials said there have been quiet efforts by both Beijing and Washington over the past two months to repair ties.

“These meetings do not take place in isolation, they are part of a very sustained process,” said one Biden administration official. “We have engaged in serious, sustained – dozens and dozens of hours – of quiet diplomacy behind the scenes.

“I think we are satisfied with the seriousness that both sides have brought to that process.”

Biden and Xi, who have held five phone or video calls since Biden became president in January 2021, last met in person during the Obama administration when Biden was vice president.

Monday’s face-to-face meeting will be at The Mulia, a luxury beachside hotel on Nusa Dua bay in Bali. It is unlikely to produce a joint statement, the White House has said, but it could help stabilise the bilateral relationship.

Both leaders will attend the opening of the G20 summit on Tuesday.

‘SOME DISCOMFORT’

One of the main topics at the G20 will be Russia’s war in Ukraine and Biden will be “unapologetic” in his defence of the European nation, U.S. officials said last week.

Xi and Putin have grown increasingly close in recent years, bound by their shared distrust of the West, and reaffirmed their partnership just days before Russia invaded Ukraine. But China has been careful not to provide any direct material support that could trigger Western sanctions against it.

Chinese Premier Li Keqiang emphasised the “irresponsibility” of nuclear threats during the summit in Cambodia, suggesting China was uncomfortable with strategic partner Russia’s nuclear rhetoric, the Biden administration official said.

The West has accused Russia of making irresponsible statements on the possible use of nuclear weapons since its February invasion of Ukraine. Russia has in turn accused the West of “provocative” nuclear rhetoric.

“There have been areas where China and Russia have worked together to deepen and broaden their relationship economically,” said the U.S. official. “But on some of these big issues, I think there is undeniably some discomfort in Beijing about what we’ve seen in terms of reckless rhetoric and activity on the part of Russia.”

Russia’s Lavrov said on Sunday the West was “militarising” Southeast Asia in a bid to contain Russian and Chinese interests, setting the stage for more confrontation with Western leaders at the G20.

Ukrainian President Volodymyr Zelenskiy has said he will address the G20 gathering by videolink on Tuesday.

British Prime Minister Rishi Sunak is expected to meet Lavrov at the summit, a Downing Street spokesperson said in a statement. He is also likely to hold a bilateral meeting with Biden.

The G20 bloc, which includes a broad array of countries ranging from Brazil to India and Germany, accounts for more than 80% of the world’s gross domestic product (GDP) and 60% of its population.

Australian Prime Minister Anthony Albanese is due to join Indonesian President Joko Widodo to address the parallel B20 business forum taking place on Monday ahead of the G20 summit.

Reporting by Nandita Bose, Fransiska Nangoy, Leika Kihara and Simon Lewis in Nusa Dua; Writing by Kay Johnson and Raju Gopalakrishnan; Editing by Ed Davies and Robert Birsel

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Asian shares fall ahead of U.S. CPI, crypto worries mount

  • https://tmsnrt.rs/2zpUAr4
  • Dollar stays firm, crypto stokes spillover fears
  • European markets set to open lower
  • China mainland, Hong Kong shares battered by COVID case surge
  • Focus on U.S. inflation for signs of slowdown in Fed rate hike

SYDNEY, Nov 10 (Reuters) – Asian share markets pulled back on Thursday and the dollar held its overnight gains before the big test of a U.S. consumer inflation report, while market sentiment took a dive as the likely collapse of a major crypto exchange spooked investors.

With no final results available from the U.S. mid-term elections, investors were turning to upcoming inflation data later in the day, which is likely to show a slowing in both the monthly and yearly core numbers for October to 0.5% and 6.5%, respectively, according to a Reuters poll.

European markets are set to extend the cautious mood, with the pan-region Euro Stoxx 50 futures down 0.7%. However, U.S. S&P 500 futures edged up 0.2% while the Nasdaq futures rose 0.3%.

MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) fell 1.2%, dragged lower by a 1.0% drop in China’s bluechips (.CSI300) and a 1.8% retreat in Hong Kong’s Hang Seng index (.HSI).

Japan’s Nikkei (.N225) lost 1.0%.

China is again grappling with a COVID surge, with the southern metropolis of Guangzhou reporting thousands of cases. Apple Inc (AAPL.O) supplier Foxconn (2317.TW) plans to update its fourth-quarter outlook on Thursday, after strict COVID curbs remained in place at its major plant in China despite the lifting of a lockdown.

Elsewhere, focus remained squarely on inflation.

“The high probability is we see a number that is fairly in line with expectations – that is obviously harder to call, and we may need to wait for the guidance from Fed speakers in the session ahead to see how they interpret it,” said Chris Weston, head of research at brokerage Pepperstone.

Minneapolis Federal Reserve Bank President Neel Kashkari on Wednesday said it’s “entirely premature” to discuss any pivot away from the Fed’s current policy tightening.

A slew of Fed officials including Board Governor Christopher Waller, Bank of Philadelphia President Patrick Harker, Bank of Dallas President Lorie Logan will be speaking tonight.

The futures market currently showed investors believe the Fed could step down to a 50 basis point hike next month, while the target U.S. federal funds rate could peak around 5.1% by next June.

Overnight on Wall Street, shares ended lower as Republican gains in midterm elections appeared more modest than some had expected. Republicans were still favoured to win control of the House of Representatives but key races were too close to call.

In the crypto world, bitcoin rose 3.6% to $16,443 on Thursday, after tumbling for two straight sessions to its lowest level since late 2020.

Binance, the world’s biggest crypto exchange, said late on Wednesday that it had decided not to acquire smaller rival FTX, which has grappled with a severe liquidity crunch and faced bankruptcy without more capital.

“You can’t deny the growing correlation between bitcoin and risk assets. The FTX news is having an outsized effect on asset prices,” said Stephen Innes, managing partner at SPI Asset Management.

“Bitcoin spillovers are not negligible, and given how widely crypto coins are held, it could mean more forced liquidation of other assets to cover margin calls as long position investors were massively wrong-footed.”

The U.S. dollar on Thursday held onto most of its overnight gains against a basket of currencies.

The sterling gained 0.4% against the greenback to $1.1409, after tumbling 1.6% in the previous session.

U.S. Treasury yields were lower on Thursday.

The yield on benchmark 10-year notes eased 8 basis points to 4.0751% while the yield on two-year notes edged 3 basis points lower to 4.5963%.

In commodities, oil prices trimmed earlier losses on Thursday, after tumbling around 3% in the previous session on fears of demand from China and rising U.S. crude stocks.

U.S. crude oil futures was flat at 0.3% to $85.83 per barrel, while Brent crude futures stabilised at $92.71.

Gold was higher, with the spot price at $1,709.08 per ounce.

Reporting by Stella Qiu; Editing by Bradley Perrett and Sam Holmes

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Dollar shrugs off suspected yen intervention, Europe clings to Fed hopes

  • Dollar buffeted vs yen by suspected BOJ intervention
  • European shares rise ahead of earnings-packed week
  • China GDP beats forecasts but retail sales disappoint
  • Pound gains as Sunak emerges as front-runner for PM

LONDON/SYDNEY, Oct 24 (Reuters) – The dollar weathered another suspected blast of Japanese intervention to rise against the yen on Monday, while European markets got a lift from hopes that U.S. interest rates could rise more slowly than previously thought.

The dollar roared to 149.70 yen in early trade before hastily retreating to 145.28 in a matter of minutes in what traders and analysts said appeared to be at the hands of the Bank of Japan. It was last down almost 1% at 149.24.

The Financial Times reported the BOJ may have sold at least $30 billion on Friday to try to protect the yen from yet more weakness, which has sharply lifted the cost of Japan’s imports, particularly for resources.

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Japanese authorities again declined to confirm whether they had intervened, but the price action suggested they had.

Any action to support the yen runs counter to the BOJ’s commitment to controlling Japanese government borrowing costs and could increase the pressure on it to step back on yield curve control at its policy meeting this week.

Sterling, meanwhile, see-sawed in volatile trade on news Boris Johnson had dropped out of the running for British prime minister.

Former finance minister Rishi Sunak, who is the market’s preferred candidate, has emerged as the front-runner for the job, which could reduce some of the political uncertainty hanging over the pound.

The news initially saw sterling jump almost a cent to $1.1402, but it could not hold and was last trading at $1.1328 as investors waited for more clarity on the contest. The leadership could potentially be settled later on Monday if Sunak becomes the only candidate to secure the minimum number of MPs’ votes required to progress.

“The day-to-day is tricky. My favourite expression on all of it this morning is this is a time to be a poker player, not a chess player. It’s all about positioning and sentiment and understanding who you’re playing against,” Societe Generale strategist Kit Juckes said.

Equities mostly extended the bounce that began late in New York on Friday on talk the Federal Reserve was debating when to slow the pace of hikes and might signal a step back at its November meeting.

Markets are still priced for a rise of 75 basis points next month, but have scaled back bets on a matching move in December. The peak for rates has also edged down to around 4.87%, from above 5% early last week.

ECB, BoC SET TO HIKE

Stocks in Europe opened on an upbeat note, with the STOXX 600 up 0.7% on the day, ahead of a week of packed earnings, as 118 companies, including big guns like HSBC (HSBA.L), Unilever (ULVR.L) and TotalEnergies (TTEF.PA) are set to report.

Chinese blue chips (.CSI300) slid almost 3%, while the offshore yuan hit another record low against the dollar after Xi Jinping secured a precedent-breaking third leadership term, picking a top governing body stacked with loyalists. Xi is likely to stick to his zero-COVID policy that is damaging growth, analysts say.

Delayed data on gross domestic product(GDP) showed the Chinese economy grew 3.9% in the third quarter, above forecasts for 3.5%, but retail sales disappointed, with a rise of 2.5%.

Markets now await figures on U.S. GDP due on Thursday and core inflation measures the day after. The economy is forecast to have grown an annualised 2.1% in the third quarter, while the Atlanta Fed GDP Now indicator rose to 2.9% in the latest week, from 2.8%.

Sentiment will also be tested by some major earnings with Apple (AAPL.O), Microsoft (MSFT.O), Google-parent Alphabet (GOOGL.O) and Amazon (AMZN.O) all reporting.

The European Central Bank meets this week and is widely expected to raise its rates by 75 basis points, though it is less clear whether it will signal a further such move in December.

“Although we do not expect any ‘dovish’ policy signal, we maintain a bias towards a lower rate path than currently priced by markets,” said analysts at NatWest Markets in a note.

“We forecast +50bp in December and +25bp in early 2023 to a 2.25% peak,” they added. “There is more uncertainty around QT (quantitative tightening), where beginning sales in Q1 2023 could well be announced.”

The euro was off a fraction at $0.9835 , having briefly been as high as $0.9899 early in the session.

The Bank of Canada is also expected to tighten by 75 basis pointsat its meeting this week.

The possibility of a slowdown in U.S. rate increases helped bonds pare some of their recent heavy losses, with U.S. 10-year Treasury yields easing to 4.16% compared to a 15-year peak of 4.337% on Friday.

In commodity markets, gold was sidelined at $1,654 an ounce .

Oil prices surrendered early gains following soft data on Chinese demand. Brent retreated 42 cents to $93.08 a barrel, while U.S. crude fell 41 cents to $84.64.

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Reporting by Wayne Cole; Editing by Jacqueline Wong, Christopher Cushing and Susan Fenton

Our Standards: The Thomson Reuters Trust Principles.

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