2024-08-30 00:18

BANGKOK, Aug 30 (Reuters) - Thailand's central bank chief and finance minister will meet in early September to open negotiations on an inflation target for 2025, a senior official said, as the government seeks a new goal with an eye on a rate cut that it has pushed for months. The government has been locked in a tussle with the Bank of Thailand (BOT) since last year, repeatedly asking the central bank to cut key interest rates to help revive a flagging economy, Southeast Asia's second-largest. Paetongtarn Shinawatra, who was elected prime minister earlier this month, in May even described the central bank's independence as an "obstacle" to resolving economic problems. A review of the 1-3% inflation target range, which has been in place since 2020, could raise the chance of a rate cut, her predecessor Srettha Thavisin, who was dismissed from office by a court order, said in June. At the upcoming meeting, the central bank would propose a target approved by its monetary policy committee (MPC), BOT assistant governor Piti Disyatat said. "We have to wait for the meeting to see whether they are differences of opinion," Piti told Reuters, declining to disclose the MPC's target. "We expect a mutual agreement to be reached." A scheduled first meeting for discussions between the BOT and finance ministry on the inflation target has not been previously reported. Despite government calls for an easing, the central bank has kept its benchmark interest rate (THCBIR=ECI) , opens new tab unchanged at a more than decade-high of 2.50%. The next rate review is due on Oct. 16. The finance ministry said it was preparing data ahead of the September meeting, the exact date for which would be fixed after Paetongtarn confirms her cabinet, including the finance minister. "We won't set our goal in advance but will wait to see what they will propose," said Pornchai Thiraveja, head of the ministry's fiscal policy office. "We must set a target that is appropriate." OPEN LETTER Thailand's inflation target is reviewed every year and must be agreed by the BOT and finance ministry, and approved by the cabinet before the end of the year. The BOT has said the current target range is functioning well, although headline inflation (THCPI=ECI) , opens new tab averaged just 0.11% in January-July. The central bank has not met the current inflation target range since it was set. Last month, Governor Sethaput Suthiwartnarueput said changing the target would put at risk credibility, inflation expectations and borrowing costs. The central bank was preparing an open letter to the finance minister to explain why inflation was outside the target, in line with existing protocols, Piti said. In its last such letter , opens new tab in February, the BOT said headline inflation had remained low in large part because of government energy subsidies that lowered electricity costs and retail oil prices. "Without such aforementioned subsidy measures, average headline inflation over the previous 12 months would have resided within the monetary target range at 1.6 percent," the letter said. Thailand's economic growth picked up to 2.3% in the April-June quarter from a year earlier, but analysts said fiscal policy uncertainty clouded the outlook. The BOT has predicted 2.6% growth for 2024, after last year's 1.9%. Sign up here. https://www.reuters.com/markets/asia/thai-central-bank-chief-finance-minister-meet-over-inflation-target-govt-eyes-2024-08-30/

2024-08-29 23:54

Aug 30 (Reuters) - A look at the day ahead in Asian markets. Financial market trading in many Asian countries could be choppy on Friday, with investors hoping to close out a remarkable month on a high but facing an economic calendar bursting at the seams with top-tier releases. Wall Street put in mixed performance on Thursday as investors digested Nvidia's results from the day before which pushed the Nasdaq into the red, and surprisingly strong U.S. GDP data that helped lift the Dow to a record high. But the moves in stocks, rates and yields were modest, and investors in Asia may plow their own furrow on Friday. They will certainly have plenty of potential drivers. The economic calendar includes second quarter GDP from India, retail sales and industrial production from South Korea, retail sales and private sector credit growth from Australia, current account data from Thailand, and retail sales from Hong Kong. There is also a data deluge from Japan, which includes retail sales, industrial production, unemployment, and perhaps most important of all, Tokyo inflation figures for August. On the corporate front, earnings releases from Chinese financial giants Industrial and Commercial Bank of China, CITIC and China Construction Bank are also on tap. It is worth noting where markets stand going into the last trading day of August. Especially bearing in mind the historic volatility and price swings that battered many markets earlier this month. Japan's Nikkei is down around 2% so far this month, the MSCI Asia ex-Japan is up 1.5%, world stocks and the S&P 500 are up more than 1%, the Nasdaq is flat, and China's blue chip index is down nearly 5%. The dollar index is down 2.6% and languishing at its weakest level of the year, although it has risen for two days in a row, while the yen is up around 3.7% and China's yuan is up around 1.5%. On the data front, annual consumer price inflation in Tokyo is expected to stay unchanged at 2.2% in August, ending three months of acceleration, according to a Reuters poll. Would this suggest the Bank of Japan may not be in such a hurry to raise rates again? On the other hand, the same poll also found factory output rose and retail sales kept growing in July, underscoring the strength of Japan's economy after better-than-expected April-June gross domestic product figures earlier this month. India's economic growth, meanwhile, likely moderated and grew at its slowest pace in a year in the April-June quarter due to lower government spending amid a national election that concluded in June, a Reuters poll found. Annual growth likely slowed to 6.9% in the quarter, down from 7.8% in the January-March period, the poll showed. The range of forecasts was wide - from 6.0% to 8.1%. Here are key developments that could provide more direction to Asian markets on Friday: - Japan - Tokyo inflation (August) - India - GDP (Q2) - Australia - retail sales (July) Sign up here. https://www.reuters.com/markets/asia/global-markets-view-asia-graphic-pix-2024-08-29/

2024-08-29 23:51

NEW YORK, Aug 29 (Reuters) - Elon Musk and his electric vehicle company Tesla (TSLA.O) , opens new tab won the dismissal of a federal lawsuit accusing them of defrauding investors by hyping the cryptocurrency dogecoin and conducting insider trading, causing billions of dollars of losses. The decision was issued on Thursday night by U.S. District Judge Alvin Hellerstein in Manhattan. Investors accused the world's richest person of using Twitter posts, a 2021 appearance on NBC's "Saturday Night Live" and other publicity stunts to trade profitably at their expense through several dogecoin wallets that he or Tesla controlled. They also said Musk deliberately drove up dogecoin's price more than 36,000% over two years and then let it crash, with he and Tesla often timing trades to Musk's public statements and activities concerning dogecoin. Investors said this included when Musk sold dogecoin in April 2023 after replacing Twitter's blue bird logo with the dogecoin Shiba Inu dog logo, causing dogecoin's price to rise 30%. Hellerstein, however, said Musk's tweets that dogecoin was the future currency of Earth, and could be used to buy Teslas or literally flown to the moon by his company SpaceX were "aspirational and puffery, not factual and susceptible to being falsified." The judge said that meant no reasonable investor could rely on the tweets to pursue a securities fraud claim. He also said it was "not possible to understand" the investors' market manipulation and insider trading claims. Hellerstein dismissed the lawsuit with prejudice, meaning it cannot be brought again. Investors originally sought $258 billion and had amended their complaint four times in two years. Lawyers for the investors did not immediately respond to requests for comment. Musk's lawyer Alex Spiro said in an emailed statement: "It's a very good day for dogecoin." In seeking a dismissal, Musk's lawyers said there was nothing wrong his "innocuous and often silly tweets." They also said there was no proof Musk owned two wallets for conducting suspicious trading, or that he or Tesla ever sold dogecoin. On "Saturday Night Live," Musk called dogecoin a "hustle" while playing a fictitious financial expert on a segment of "Weekend Update." Musk bought Twitter in October 2022 and rebranded it X. He is worth $239.3 billion according to Forbes magazine. The case is Gorog et al v. Musk et al, U.S. District Court, Southern District of New York, No. 22-05037. Sign up here. https://www.reuters.com/legal/elon-musk-tesla-win-dismissal-lawsuit-claiming-they-rigged-dogecoin-2024-08-29/

2024-08-29 23:14

PBOC pushes interest rate reform to improve policy transmission Aims to increase influence on credit demand, rather than supply Concerns remain about liquidity needs, safe haven appetite More structural reforms needed to develop capital markets BEIJING, Aug 30 (Reuters) - China's central bank wants to shift its policy framework to target the cost of credit rather than its size, but liquidity risks and uncooperative markets are making it difficult to transition the economy away from state-directed bank lending. The goal of giving markets a more prominent role in allocating resources was restated at a roughly twice-a-decade Communist Party leadership meeting in July and the People's Bank of China (PBOC) is expected to play a major role in the reforms. In recent months, the PBOC has taken steps towards creating a more market-driven interest rate curve, and it is expected to make further changes so that credit demand is more responsive to monetary policy moves. Longer-term, regulators hope these changes can also lead to the development of capital markets as an alternative source of financing, reducing the risk of wasteful investment by a state-dominated banking system. But a slowing economy, still heavily reliant on state-led infrastructure investment for growth and in the middle of modernising its industrial complex, has significant liquidity needs. Markets may be unwilling to provide funding in ways the PBOC considers beneficial for national development goals. In a recent tug-of-war between the PBOC and bond markets, safety flows into bonds pushed down government debt yields to levels that signal bearish bets on China's growth outlook. "The PBOC will continue to gradually reform its monetary policy framework towards the type adopted by major central banks globally. However the changes will be slow," said Louis Kuijs, Asia Pacific chief economist at S&P Global Ratings. The PBOC has shifted towards targeting the short end of the interest rate curve and announced plans to gradually increase bond trading to influence long-term borrowing costs, but more steps are needed to improve its policy transmission. "We are moving in the direction of developing market-based interest rates, but it's an arduous task and the road is long," said a government adviser who spoke on condition of anonymity as they are not authorised to speak to media. Future reforms are likely to involve phasing out liquidity supply levers, including credit guidance, analysts and policy advisers say. For more details, please click on factbox: read more LIQUIDITY NEEDS Credit guidance and other quantitative tools encourage banks to lend irrespective of market demand. This has created inefficiencies, with idle funds sloshing around the financial system as borrowers often park the money back with the banks in deposits or asset management products. But phasing these tools out carries risks. Debt levels of around three times annual economic output, and ambitious annual growth targets - this year's is set at around 5% - require greater liquidity injections year after year. Xing Zhaopeng, ANZ's senior China strategist, estimates the central bank needs to inject approximately 2 trillion yuan ($281 billion) in fresh liquidity annually to support the economy. The PBOC has indicated that the MLF will be the first to see a reduced monetary policy role. But at the end of June, outstanding funding through MLF stood at 7.07 trillion yuan ($994.6 billion) - about 5.6% of GDP. "I don't expect the MLF to be abruptly cut off as it remains quite important for longer-term financing," said Lynn Song, chief China economist at ING. "It will be a gradual process." MARKET TROUBLE Market preference for safe assets over other types of investment could lead to an inverted yield curve if the central bank freed up interest rates prematurely, ANZ's Xing said. Long-term borrowing costs falling below short-term rates usually signal recessions. In China's case, that could weaken the yuan and trigger capital flight. "Once you completely liberalise interest rates, it would be impossible to intervene," Xing said. "It's a contradiction: if you let the market work, you have less room to manoeuvre." Increasing the role of capital markets in financing growth also requires deep structural changes in the economy alongside interest rate reform. China's stock markets are dominated by retail investors and frequently described as a "casino" due to poor liquidity while debt markets are dominated by government-owned issuers, with banks being the main investors. Low household incomes relative to the size of the economy mean that private pension and insurance markets are small, limiting the number of institutional investors in stocks and bonds and resulting in a shallow capital pool for these assets. Foreign financial investor flows are also limited as China manages a tight capital account. There is little public debate on addressing any of these limitations on capital market development. "What the PBOC is doing regarding long-term interest rates isn't obviously in line with the long-term reform agenda," said Kuijs of S&P Global Ratings. ($1 = 7.1086 Chinese yuan) Sign up here. https://www.reuters.com/world/china/chinas-interest-rate-reform-will-be-arduous-long-process-2024-08-29/

2024-08-29 22:56

Q2 GDP second estimate shows US economy grows 3% CrowdStrike up after upbeat Q2 revenue Apple gains after Citigroup selects company as top AI pick S&P 500 flat, Nasdaq -0.23%, Dow +0.59% Aug 29 (Reuters) - The Dow notched a record high close on Thursday in mixed trading following robust U.S. economic data, while artificial intelligence chipmaker Nvidia dropped after its largely in-line forecast failed to impress investors. The U.S. economy grew faster than initial estimates due to strong consumer spending, the Commerce Department reported, supporting expectations the U.S. is likely to avoid a recession. "Downward revisions to inflation accompanying an upward revision to spending builds the case for a soft landing," said Jeffrey Roach, chief economist for LPL Financial. Nvidia's (NVDA.O) , opens new tab quarterly revenue forecast late on Wednesday disappointed investors accustomed to the chipmaker beating expectations by massive margins in recent quarters. Nvidia's stock fell over 6%, trimming its 2024 gain to 137%. Other AI-related stocks were mixed. Microsoft (MSFT.O) , opens new tab gained 0.6%, while Google-owner Alphabet (GOOGL.O) , opens new tab dipped 0.7%. Broadcom (AVGO.O) , opens new tab and Advanced Micro Devices (AMD.O) , opens new tab each slid almost 1%. "It's too early to put the bear suit on for AI related companies. We think there's still more upside," said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management. "We see the AI revolution still in the relatively early innings and that bodes well for tech names." Apple (AAPL.O) , opens new tab rose 1.5% after Citigroup named the iPhone maker its top AI pick. Apple and Nvidia are in talks to invest in OpenAI as part of a new fundraising round that could value the ChatGPT maker above $100 billion, according to media reports. The Dow Jones Industrial Average (.DJI) , opens new tab rose 0.59% to 41,335.05 points, an all-time closing high. The S&P 500 index (.SPX) , opens new tab ended barely changed at 5,591.96 points, just below its July record high close as expectations for a September interest rate cut remained robust. The Nasdaq declined 0.23% to 17,516.43 points. A Labor Department report showed marginally lower-than-expected jobless claims for the previous week. The July Personal Consumption Expenditures report, due on Friday, could offer hints on the central bank's monetary policy easing trajectory. CrowdStrike (CRWD.O) , opens new tab gained 2.8% after the cybersecurity company beat quarterly revenue estimates, while Dollar General (DG.N) , opens new tab slumped 32% after slashing its annual sales and profit forecasts. Advancing issues outnumbered falling ones within the S&P 500 (.AD.SPX) , opens new tab by a 2.1-to-one ratio. The S&P 500 posted 68 new highs and four new lows; the Nasdaq recorded 91 new highs and 90 new lows. Volume on U.S. exchanges was relatively light, with 10.5 billion shares traded, compared to an average of 11.6 billion shares over the previous 20 sessions. Sign up here. https://www.reuters.com/markets/us/nasdaq-sp-futures-flat-markets-assess-nvidias-results-2024-08-29/

2024-08-29 22:12

Aug 29 (Reuters) - The Biden administration on Thursday said it will auction two areas off the coast of southern Oregon to offshore wind developers on Oct. 15. The sale would be the first in the region and is key to the administration's plan to put wind turbines along every U.S. coastline. If developed, the areas could produce enough wind energy to power a million homes, the Interior Department said in a statement. The Coos Bay lease area is 61,203 acres (24,768 hectares) and is about 32 miles (51.5 km) from shore. The Brookings lease area is 133,792 acres and is 18 miles from shore. U.S. President Joe Biden has put offshore wind development at the forefront of his climate change agenda, but the industry has stumbled in the last year due to soaring costs and supply chain disruptions. Sign up here. https://www.reuters.com/sustainability/climate-energy/us-sets-october-date-oregon-offshore-wind-auction-2024-08-29/