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World

Russia trying to get ballistic missiles from Iran, says Britain

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UNITED NATIONS, Dec 9 (Reuters) – Russia is attempting to obtain more weapons from Iran, including hundreds of ballistic missiles, and offering Tehran an unprecedented level of military and technical support in return, Britain’s U.N. Ambassador Barbara Woodward said on Friday.

Since August Iran has transferred hundreds of drones – also known as unmanned aerial vehicles (UAVs) – to Russia, which had used them to “kill civilians and illegally target civilian infrastructure” in Ukraine, Woodward said.

“Russia is now attempting to obtain more weapons, including hundreds of ballistic missiles,” Woodward told reporters.

“In return, Russia is offering Iran an unprecedented level of military and technical support. We’re concerned that Russia intends to provide Iran with more advanced military components, which will allow Iran to strengthen their weapons capability,” she said.

She also said that Britain was “almost certain that Russia is seeking to source weaponry from North Korea (and) other heavily sanctioned states, as their own stocks palpably dwindle.”

The Iranian, North Korean and Russian missions to the United Nations did not immediately respond to a request for comment.

Iran last month acknowledged that it had supplied Moscow with drones, but said they were sent before the war in Ukraine. Russia has denied its forces used Iranian drones to attack Ukraine.

Iran has promised to provide Russia with surface-to-surface missiles, in addition to more drones, two senior Iranian officials and two Iranian diplomats told Reuters in October.

The United States said on Wednesday that it has seen the continued provision of Iranian drones to Russia, but that Washington had not seen evidence that Iran has transferred ballistic missiles to Russia for use against Ukraine.

Woodward spoke ahead of a Security Council meeting later on Friday, requested by Russia, on weapons from the Ukraine conflict that Russia says are “falling into the hands of bandits and terrorists” elsewhere in Europe, the Middle East and Africa.

The United Nations is examining “available information” about accusations that Iran supplied Russia with drones, U.N. Secretary-General Antonio Guterres told the Security Council in a report earlier this week in the face of Western pressure to send experts to Ukraine to inspect downed drones.

Britain, France, Germany, the United States and Ukraine say the supply of Iranian-made drones to Russia violates a 2015 U.N. Security Council resolution enshrining the Iran nuclear deal.

Russia argues that there is no mandate for Guterres to send U.N. experts to Ukraine to investigate the origin of the drones.

Guterres said in the latest report that the transfer of drones or ballistic missiles – with a range of more than 186 miles (300 km) – from Iran to another country would require prior approval from the Security Council.

Reporting by Michelle Nichols and Doina Chiacu; Editing by Chizu Nomiyama and Howard Goller

Our Standards: The Thomson Reuters Trust Principles.

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World

China’s trade suffers worst slump in 2-1/2 yrs as COVID woes, feeble demand take toll

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  • China’s exports worst since Feb. 2020, miss forecast
  • Imports fall steepest since May 2020 on sluggish demand
  • Global economic slowdown, China’s COVID woes heap pressure
  • Politburo meet points to domestic demand key driver in 2023, analyst says

BEIJING, Dec 7 (Reuters) – China’s exports and imports shrank at their steepest pace in at least 2-1/2 years in November, as feeble global and domestic demand, COVID-led production disruptions and a property slump at home piled pressure on the world’s second-biggest economy.

The downturn was much worse than markets had forecast, and economists are predicting a further period of declining exports, underlining a sharp retreat in world trade as consumers and businesses slash spending in response to central banks’ aggressive moves to tame inflation.

Exports contracted 8.7% in November from a year earlier, a sharper fall from a 0.3% loss in October and marked the worst performance since February 2020, official data showed on Wednesday. They were well below analysts’ expectations for a 3.5% decline.

Beijing is moving to ease some of its stringent pandemic-era restrictions, but outbound shipments have been losing steam since August as surging inflation, sweeping interest rate increases across many countries and the Ukraine crisis have pushed the global economy to the brink of recession.

Exports are likely to shrink further over coming quarters, Julian Evans-Pritchard, senior China Economist at Capital Economics, said in a note.

“Outbound shipments will receive a limited boost from the easing of (China’s) virus restrictions, which are no longer a major constraint on the ability of manufacturers to meet orders,” he said.

“Of much greater consequence will be the downturn in global demand for Chinese goods due to the reversal in pandemic-era demand and the coming global recession.”

Responding to the broadening pressure on China’s economy, state media reported on Wednesday that a high-level meeting of the ruling Communist Party held on the previous day had emphasised the government’s focus in 2023 will be on stabilising growth, promoting domestic demand and opening up to the outside world.

“The Politburo meeting held yesterday points to domestic demand as the major driver for growth for the next year, and the fiscal policy will remain proactive to support demand,” said Hao Zhou, chief economist at Guotai Junan International

Reuters Graphics

‘BUMPY REOPENING’

Almost three years of pandemic controls have exacted a heavy economic toll and caused widespread frustration and fatigue in China.

The widespread COVID curbs hurt importers too. Inbound shipments were down sharply by 10.6% from a 0.7% drop in October, weaker than a forecast 6.0% decline. The downturn was the worst since May 2020, partly also reflecting a high year-earlier base for comparison.

Imports of soybeans and iron ore fell in November from a year earlier while those of crude oil and copper rose.

This resulted in a narrower trade surplus of $69.84 billion, compared with a $85.15 billion surplus in October and marked the lowest since April when Shanghai was under lockdown. Analysts had forecast a $78.1 billion surplus.

The government has responded to the weakening economic growth by rolling out a flurry of policy measures over recent months, including cutting the amount of cash that banks must hold as reserves and loosening financing curbs to rescue the property sector.

But analysts remain sceptical the steps could achieve quick results, as the full-blown relaxation of pandemic controls will take more time and as both domestic and external demand remains weak.

Many businesses are struggling to recover, while surveys last week on factory activity in China and globally suggested many more months of hard grind ahead.

Apple supplier Foxconn (2317.TW) said that revenue in November dropped 11.4% year-on-year, after production problems related to COVID controls at the world’s biggest iPhone factory in Zhengzhou.

“The shift away from zero-COVID and step up in support for the property sector will eventually drive a recovery in domestic demand but probably not until the second half of next year,” Evans-Pritchard said.

With the Chinese yuan already down sharply this year, policymakers’ room for manoeuvre is also limited as hefty monetary policy stimulus at home at a time of rapidly rising interest rates globally could trigger large scale capital outflows.

The Ukraine war, which sparked a surge in already high inflation globally, has intensified geopolitical tensions and further undermined the business outlook.

China’s economy grew just 3% in the first three quarters of this year, well below the annual target of around 5.5%. Full-year growth is widely expected by analysts to be just over 3%.

Zhiwei Zhang, chief economist at Pinpoint Asset Management, cautioned about China’s “bumpy reopening” process.

“As global demand weakens in 2023, China will have to rely more on domestic demand,” he said.

Reporting by Ellen Zhang and Ryan Woo; Editing by Shri Navaratnam

Our Standards: The Thomson Reuters Trust Principles.

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Business

FX swap debt a $80 trillion ‘blind spot’ global regulator says

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LONDON, Dec 5 (Reuters) – Pension funds and other ‘non-bank’ financial firms have more than $80 trillion of hidden, off-balance sheet dollar debt in FX swaps, the Bank for International Settlements (BIS) said.

The BIS, dubbed the central bank to the world’s central banks, also said in its latest quarterly report that 2022’s market upheaval had largely been navigated without major issues.

Having repeatedly urged central banks to act forcefully to dampen inflation, it struck a more measured tone and picked over crypto market troubles and September’s UK bond market turmoil.

Its main warning concerned what it described as the FX swap debt “blind spot” that risked leaving policymakers in a “fog”.

FX swap markets, where for example a Dutch pension fund or Japanese insurer borrows dollars and lends euro or yen before later repaying them, have a history of problems.

They saw funding squeezes during both the global financial crisis and again in March 2020 when the COVID-19 pandemic wrought havoc that required central banks such as the U.S. Federal Reserve to intervene with dollar swap lines.

The $80 trillion-plus “hidden” debt estimate exceeds the stocks of dollar Treasury bills, repo and commercial paper combined, the BIS said. It has grown from just over $55 trillion a decade ago, while the churn of FX swap deals was almost $5 trillion a day in April, two thirds of daily global FX turnover.

For both non-U.S. banks and non-U.S. ‘non-banks’ such as pension funds, dollar obligations from FX swaps are now double their on-balance sheet dollar debt, it estimated.

“The missing dollar debt from FX swaps/forwards and currency swaps is huge,” the Switzerland-based institution said, adding the lack of direct information about the scale and location of the problems was the key issue.

Off and on-balance sheet dollar debt

CLOSER

The report also assessed broader recent market developments.

BIS officials have been loudly calling for forceful interest rate hikes from central banks as inflation has taken hold, but this time it struck a more measured tone.

Asked whether the end of the tightening cycle may be looming next year, the head of the BIS’ Monetary and Economic Department Claudio Borio said it would depend on how circumstances evolve, noting also the complexities of high debt levels and uncertainty about how sensitive borrowers now are to rising rates.

The crisis that erupted in UK gilt markets in September also underscored that central banks could be forced to step in and intervene – in the UK’s case by buying bonds even at a time when it was raising interest rates to curb inflation.

“The simple answer is one is closer than one was at the beginning, but we don’t know how far central banks will have to go,” Borio said about interest rates.

“The enemy is an old enemy and is known,” he added, referring to inflation. “But it’s a long time since we have been fighting this battle”.

Market volatility

DINO-MITE

The report also focused on findings from the recent BIS global FX market survey, which estimated that $2.2 trillion worth of currency trades are at risk of failing to settle on any given day due to issues between counterparties, potentially undermining financial stability.

The amount at risk represents about one third of total deliverable FX turnover and is up from $1.9 trillion from three years earlier when the last FX survey was carried out.

FX trading also continues to shift away from multilateral trading platforms towards “less visible” venues hindering policymakers “from appropriately monitoring FX markets,” it said.

The bank’s Head of Research and Economic Adviser Hyun Song Shin, meanwhile, described recent crypto market problems such as the collapse of the FTX exchange and stable coins TerraUSD and Luna as having similar characteristics to banking crashes.

He described many of the crypto coins sold as “DINO – decentralised in name only” and that most of their related activities took place through traditional intermediaries.

“This is people taking in deposits essentially in unregulated banks,” Shin said, adding it was largely about the unravelling of large leverage and maturity mismatches, just like during the financial crash more than a decade ago.

Reporting by Marc Jones; Editing by Toby Chopra and Alexander Smith

Our Standards: The Thomson Reuters Trust Principles.

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World

Asia shares bank on eventual China opening; oil gains

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  • 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

Our Standards: The Thomson Reuters Trust Principles.

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World

Canada launches new Indo-Pacific strategy, focus on ‘disruptive’ China

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OTTAWA, Nov 27 (Reuters) – Canada launched its long-awaited Indo-Pacific strategy on Sunday, vowing more resources to deal with a “disruptive” China while working with the world’s second-biggest economy on climate change and trade issues.

The 26-page document outlined C$2.3 billion ($1.7 billion) spending, including to boost Canada’s military presence and cyber security in the region and tighten foreign investment rules to protect intellectual property and prevent Chinese state-owned enterprises from snapping up critical mineral supplies.

The blueprint is to deepen ties with a fast-growing region of 40 countries accounting for almost C$50 trillion in economic activity. But the focus is on China, which is mentioned more than 50 times, at a moment when bilateral ties are frosty.

“China is an increasingly disruptive global power,” said the strategy. “China is looking to shape the international order into a more permissive environment for interests and values that increasingly depart from ours.”

Prime Minister Justin Trudeau’s Liberal government wants to diversify trade and economic ties that are overwhelmingly reliant on the United States. Official data for September show bilateral trade with China accounted for under 7% of the total, compared to 68% for the United States.

The strategy highlighted Beijing’s “foreign interference and increasingly coercive treatment of other countries.

“Our approach … is shaped by a realistic and clear-eyed assessment of today’s China. In areas of profound disagreement, we will challenge China,” it said.

Tensions soared in late 2018 after Canadian police detained a Huawei Technologies executive and Beijing subsequently arrested two Canadians on spying charges. All three were released last year, but relations remain sour.

Earlier this month Canada ordered three Chinese companies to divest their investments in Canadian critical minerals, citing national security.

The document, in a section mentioning China, said Ottawa would review and update legislation enabling it to act “decisively when investments from state-owned enterprises and other foreign entities threaten our national security, including our critical minerals supply chains.”

The document recognized the significant opportunities for Canadian exporters and said co-operation with Beijing was necessary to address some of the “world’s existential pressures,” including climate change, global health and nuclear proliferation.

Goldy Hyder, CEO of the Business Council of Canada, said it is important that the government converts “aspirations to actions and actions into accomplishments.”

The document said Canada would boost its naval presence in the region and “increase our military engagement and intelligence capacity as a means of mitigating coercive behavior and threats to regional security.”

Canada belongs to the Group of Seven major industrialized nations, which wants significant measures in response to North Korean missile launches.

The document said Ottawa was engaging in the region with partners such as the United States and the European Union.

Canada needed to keep talking to nations it had fundamental disagreements with, it said, but did not name them.

($1 = 1.3377 Canadian dollars)

(This story has been corrected to fix the amount to C$2.3 billion from C$2.6 billion in the second paragraph.)

Reporting by David Ljunggren; Editing by Denny Thomas, Leslie Adler and Daniel Wallis

Our Standards: The Thomson Reuters Trust Principles.

David Ljunggren

Thomson Reuters

Covers Canadian political, economic and general news as well as breaking news across North America, previously based in London and Moscow and a winner of Reuters’ Treasury scoop of the year.

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Business

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

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  • 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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World

Asian stocks shaken by blast in Poland; dollar gains

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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

Our Standards: The Thomson Reuters Trust Principles.

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Business

Shares sobered by Fed warning, China acts on property

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  • 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

Our Standards: The Thomson Reuters Trust Principles.

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Business

Nearly half of Meta job cuts were in tech, reorg underway – execs say

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OAKLAND, Calif., Nov 11 (Reuters) – Facebook owner Meta Platforms (META.O) told employees on Friday that it would stop developing smart displays and smartwatches and that nearly half of the 11,000 jobs it eliminated this week in an unprecedented cost-cutting move were technology roles.

Speaking during an employee townhall meeting heard by Reuters, Meta executives also said they were reorganizing parts of the company, combining a voice and video calling unit with other messaging teams and setting up a new division, Family Foundations, focused on tough engineering problems.

The executives said that the first mass layoff in the social media company’s 18-year history affected staffers at every level and on every team, including individuals with high performance ratings.

Overall, 54% of those laid off were in business positions and the rest were in technology roles, Meta human resources chief Lori Goler said. Meta’s recruiting team was cut nearly in half, she said.

The executives said further rounds of job cuts were not expected. But other expenses would have to be cut, they said, noting reviews underway about contractors, real estate, computing infrastructure and various products.

SMART DEVICES CUT

Chief Technology Officer Andrew Bosworth, who runs the metaverse-oriented Reality Labs division, told staffers Meta would end its work on Portal smart display devices and on its smartwatches.

Meta had decided earlier this year to stop marketing Portal devices, known for their video calling capabilities, to consumers and focus instead on business sales, Bosworth said.

As the economy declined, executives decided more recently to make “bigger changes,” he said.

“It was just going to take so long, and take so much investment to get into the enterprise segment, it felt like the wrong way to invest your time and money,” said Bosworth.

Portal had not been a major revenue generator and drew privacy concerns from potential users. Meta had yet to unveil any smartwatches.

Bosworth said the smartwatch unit would focus instead on augmented reality glasses. More than half of the total investment in Reality Labs was going to augmented reality, he added.

Chief Executive Officer Mark Zuckerberg on Friday reiterated his apology from Wednesday about having to cut 13% of the workforce, telling employees he had failed to forecast Meta’s first dropoff in revenue.

Meta aggressively hired during the pandemic amid a surge in social media usage by stuck-at-home consumers. But business suffered this year as advertisers and consumers pulled the plug on spending in the face of soaring costs and rapidly rising interest rates.

The company also faced increased competition from TikTok and lost access to valuable user data that powered its ad targeting systems after Apple made privacy-oriented changes to its operating system.

“Revenue trends are just a lot lower than what I predicted. Again, I got this wrong. It was a big mistake in planning for the company. I take responsibility for it,” Zuckerberg said.

Going forward, he added, he was not planning to “massively” grow headcount of the Reality Labs unit.

Meta shares closed up 1% at $113.02.

Reporting by Paresh Dave in Oakland, California, Katie Paul in Palo Alto, California, Chavi Mehta in Bengaluru; Editing by Aurora Ellis

Our Standards: The Thomson Reuters Trust Principles.

Paresh Dave

Thomson Reuters

San Francisco Bay Area-based tech reporter covering Google and the rest of Alphabet Inc. Joined Reuters in 2017 after four years at the Los Angeles Times focused on the local tech industry.

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

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  • 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

Our Standards: The Thomson Reuters Trust Principles.

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