Business

By Tetsushi Kajimoto and Daniel Leussink

TOKYO (Reuters) -Japanese policymakers held fast to their usual line on yen weakness on Wednesday, stating that rapid moves were undesirable, but confounded expectations they may escalate warnings about the sliding currency as it fell to fresh 20-year lows.

“Various macro models suggest (the weak yen) is a plus to the economy,” as long as its moves are stable, Bank of Japan Governor Haruhiko Kuroda told parliament on Wednesday, reiterating his stance.

Finance Minister Shunichi Suzuki said in parliament that the weak yen has both positives and negatives for the economy, although it could be negative if wages remain stagnant, which would mean potential harm to households because of higher costs of living.

The yen weakened beyond 133 to the dollar <JPY=EBS> on Wednesday and slumped to a seven-year trough below 143 against the euro , with an expected rate move by the European Central Bank likely to leave Japan as the sole major central bank sticking to an ultra-easy monetary policy in the face of surging inflation.

Speculation in financial markets has lingered that Japan may somehow intervene to arrest the yen weakness, which is pushing up import prices and households’ cost of living, by intervening to sell dollars – a switch from its traditional stance of trying to weaken the yen.

Japan has not intervened in the currency markets since it sought to tame a surge in the yen after a devasting earthquake and tsunami in March 2011.

In the past, policymakers have preceded any action in currencies by escalating their verbal warnings, which have drawn close attention from the markets.

“There’s no clear threshold as to when policymakers may escalate warning against weak yen. They may wait until it tops 140 yen,” said Daisuke Karakama, chief market economist at Mizuho Bank.

“With voters’ support staying high, policymakers appear complacent. Therefore they did not want Kuroda to say something unnecessary to rock the boat.”

Kuroda was on the defensive on Wednesday over a remark he made earlier this week that Japanese households were becoming more accepting of higher prices.

He retracted the comment in his appearance before parliament, after drawing criticism for apparent insensitivity to the impact of higher living costs for consumers.

“My expression that households are becoming more accepting of price hikes was not appropriate at all, so I withdraw it,” he said.

“What’s most important is for firms with better profits from the weak yen to boost capital expenditures and raise wages, to drive a positive cycle of greater incomes leading to more spending.”

Kuroda said moves in the dollar may not be affected much by U.S. rate hikes unless they are stronger than expected, according to a recording of an online interview by the Financial Times.

(Reporting by Tetsushi Kajimoto and Daniel Leussink; Editing by Jacqueline Wong, Edmund Klamann and Kim Coghill)

source

By David Lawder and Andrea Shalal

WASHINGTON (Reuters) -U.S. Treasury Secretary Janet Yellen told senators on Tuesday that she expected inflation to remain high and the Biden administration would likely increase the 4.7% inflation forecast for this year in its budget proposal.

During a Senate Finance Committee hearing, Yellen said that the United States was dealing with “unacceptable levels of inflation,” but that she hoped price hikes would soon begin to subside.

U.S. Consumer Price Index inflation has been tracking above 8% in recent months, the highest readings in over 40 years and well above President Joe Biden’s administration’s forecast for its fiscal 2023 budget.

But another metric, the core Personal Consumption Expenditures price index excluding volatile food and energy costs, has begun to cool, edging down to 4.9% in April

“I do expect inflation to remain high although I very much hope that it will be coming down now,” she said.

Yellen repeatedly rejected Republican assertions that inflation was being fueled by Biden’s $1.9 trillion American Rescue Plan (ARP) COVID-19 spending legislation last year.

“We’re seeing high inflation in almost all of the developed countries around the world. And they have very different fiscal policies,” Yellen said. “So it can’t be the case that the bulk of the inflation that we’re experiencing reflects the impact of the ARP.”

The Biden administration is still pushing for a scaled-back version of its stalled climate and social spending agenda, which would offer tax credits for clean energy technologies and reform prescription drug pricing – policies that Yellen argued would help lower expenses for American consumers weary of price hikes.

Yellen repeated her views that inflation was being fueled by high energy and food prices caused by Russia’s war in Ukraine, a shift to goods purchases during the pandemic, and by new COVID-19 variants and persistent supply chain disruptions.

‘TRANSITORY’ WRONG WORD

Yellen has come under fire from Republicans after acknowledging she was wrong last year in forecasting that inflation would be transitory and quickly subside. She will face more tough questions on the issue in a House Ways and Means Committee hearing on Wednesday.

Yellen added that both she and Federal Reserve Chair Jerome Powell both “probably could have used a better term than transitory” in describing inflation that they thought would fade quickly.

“When I said that inflation would be transitory, what I was not anticipating was a scenario in which we would end up contending with multiple variants of COVID that would be scrambling our economy and global supply chains, and I was not envisioning impacts on food and energy prices we’ve seen from Russia’s invasion of Ukraine,” Yellen said.

She testified as the World Bank on Tuesday warned of a heightened risk of “stagflation” – the 1970s mix of feeble growth and high inflation – returning as it slashed its global growth forecast by nearly a third to 2.9% for 2022.

(Reporting by David Lawder and Andrea Shalal;Editing by Jonathan Oatis, Andrea Ricci and Howard Goller)

source

By Stefanno Sulaiman

JAKARTA (Reuters) – Indonesia Trade Minister Muhammad Lutfi said on Tuesday the government would bring down its combined maximum crude palm oil export and levy rate to $488 per tonne from $575 per tonne to encourage shipments.

Indonesia, the world’s biggest palm oil producer, has allowed palm oil exports to resume after a three-week ban, but progress has been slow due to red tape, keeping palm mills’ storage tanks full.

Farmers have complained that prices of palm fruits remain low because mills are still limiting their purchases.

The government would raise the maximum tax to $288 per tonne, but lower maximum levy to $200 per tonne, Lutfi said. Indonesia currently charges a maximum $200 per tonne for export tax and a maximum $375 per tonne for levy.

Lutfi did not specify when the new fees will be imposed.

The current total tax and levy charges are “burdensome”, said Trade Ministry senior official Oke Nurwan.

“Exports must flow, because storage tanks are full,” he told reporters.

Indonesia banned export of crude palm oil and some of its derivatives from April 28 for three weeks in efforts to control soaring domestic prices of cooking oil, made from palm oil.

To ensure secure domestic supply of palm oil after the ban was lifted, the government has put in place a policy stating producers must sell a portion of their products to the local market before they are granted export permits.

Industry groups have requested that the government allow a bigger exports quota during the transition period to free up storage after a number of palm oil mills stopped buying palm fruits from farmers.

Asked about the request, Lutfi said “we are reviewing” the proposal. He said companies are allowed to export five times the amount they have sold locally.

(Reporting by Stefanno Sulaiman; Writing by Fransiska Nangoy; Editing by Kanupriya Kapoor)

source

By Caroline Valetkevitch

NEW YORK (Reuters) – U.S. stocks rallied late on Tuesday to end higher for a second straight day as technology and energy shares gained, while Target Corp’s warning about excess inventory weighed on retail stocks for much of the session.

Apple Inc shares climbed 1.8% despite news earlier in the day that the company must change the connector on iPhones sold in Europe by 2024 after EU countries and lawmakers agreed to a single charging port for mobile phones, tablets and cameras.

The S&P 500 technology index rose 1% and gave the benchmark index its biggest boost. Microsoft Corp shares added 1.4%.

The S&P 500 energy sector index jumped 3.1% to end at its highest level since 2014, with oil prices sharply higher.

At the same time, shares of Target Corp fell 2.3% after the retailer said it would have to offer deeper discounts and cut back on stocking discretionary items.

Equity trading was choppy, with indexes down early in the day, but the market has been recovering from recent steep losses.

Recently, “we’ve had a nice bounce … and in general investors are feeling better right now. But we are very much in a seesaw market as we’ve seen all year,” said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York.

“At some point, we will put in a bottom, and the market will move higher. We have a hard time believing that’s any time soon, given a number of fundamental issues overhanging the market,” he said. “Certainly what we’ve seen today from Target isn’t good news in terms of the consumer.”

Long-dated U.S. Treasury yields tumbled after the Target news, however, as it fueled some speculation that the worst of inflation may be in the past.

The Dow Jones Industrial Average rose 264.36 points, or 0.8%, to 33,180.14, the S&P 500 gained 39.25 points, or 0.95%, to 4,160.68 and the Nasdaq Composite added 113.86 points, or 0.94%, to 12,175.23.

Shares of Walmart fell 1.2%, and the S&P retail index was down 1%.

Consumer price data on Friday is expected to show that inflation remained elevated in May, though core consumer prices, which exclude the volatile food and energy sectors, likely ticked down on an annual basis.

Not all retailers were in the red. Kohl’s Corp shares jumped 9.5% after news the department store chain entered exclusive talks with retail store operator Franchise Group Inc over a potential sale that would value it at nearly $8 billion.

Advancing issues outnumbered declining ones on the NYSE by a 2.36-to-1 ratio; on Nasdaq, a 1.69-to-1 ratio favored advancers.

The S&P 500 posted 3 new 52-week highs and 30 new lows; the Nasdaq Composite recorded 35 new highs and 121 new lows.

Volume on U.S. exchanges was 10.38 billion shares, compared with the 12.50 billion average for the full session over the last 20 trading days.

(Reporting by Caroline Valetkevitch in New York; Additional reporting by Devik Jain, Susan Mathew, Mehnaz Yasmin in Bengaluru; Editing by Maju Samuel and Matthew Lewis)

source

MOSCOW — The Russian military says it has destroyed several artillery systems provided by the West in the latest series of strikes on Ukrainian targets.

Maj. Gen. Igor Konashenkov said Tuesday that the Russian artillery hit a howitzer supplied by Norway and two other artillery systems given to Ukraine by the United States. He said that the Russian artillery barrage destroyed other Ukrainian equipment in the country’s east while the Russian air force hit Ukrainian troops and equipment concentrations and artillery positions.

Konashenkov’s claims couldn’t be independently confirmed.

___

KEY DEVELOPMENTS IN THE RUSSIA-UKRAINE WAR:

— AP Exclusive: Ukraine recovers bodies from steel-plant siege

— Ukraine’s leader says Russia is trying to capture a key southeastern city

— US general says US, allies will keep sending ‘significant’ aid to Ukraine

— UN: Climate shocks and Ukraine war fuel multiple global food crises

___

Follow AP’s coverage of the war in Ukraine at https://apnews.com/hub/russia-ukraine

___

OTHER DEVELOPMENTS:

LVIV, Ukraine — A Ukrainian official says Russia has deployed additional troops to eastern Ukraine to help capture a key city.

Luhansk governor Serhiy Haidai told The Associated Press that the Russian forces control industrial outskirts of Sievierodonetsk, one of two cities in the Luhansk region left to be seized by Russia. The Russian forces have so far failed to take over all of it and have been forced to deploy additional troops, he said.

“Toughest street battles continue, with varying degrees of success, the situation constantly changes, but the Ukrainians are repelling attacks,” Haidai said.

The neighboring Lysychansk — the second city still not taken in the region, 95% of which is under Russian control — is being barraged by artillery. Haidai said. He said the Russian troops shelled a local market, a school and a college building, destroying the latter. Three people with wounds were sent to hospitals elsewhere Ukraine.

“A total destruction of the city is underway, Russian shelling has intensified significantly over the past 24 hours. Russians are using the scorched earth tactics,” Haidai said.

In all, the Ukrainian forces have repelled 10 Russian attacks over the past 24 hours, according to the Luhansk governor.

___

KYIV, Ukraine — In a latest sign of Ukrainian resilience, a theater in Ukraine’s capital reopened for the first time since Russian forces invaded the country on Feb. 24, and tickets sold out for Sunday’s performance.

Cinemas and the National Opera opened their doors at the end of May in Kyiv.

“We were wondering how it would be, whether spectators would come during the war, whether they think at all about theater, whether it’s of any interest,” said one of the actors, Yuriy Felipenko. “And we were happy that the first three plays were sold out.”

Actor Kostya Tomlyak says he had hesitated to perform in wartime. But the influx of people returning to Kyiv since hostilities there have lessened persuaded him that it’s necessary to go on.

Said Tomlyak: “You continue living, although you don’t forget that there is the war. The main question is how actors can be helpful.”

____

MOSCOW — Russia’s Foreign Ministry announced Monday that is levying sanctions on 61 U.S. nationals,.

It said the move was being taken “in response to the ever-expanding U.S. sanctions against Russian political and public figures, as well as representatives of domestic business.”

The list includes U.S. officials and former and current top managers of large American companies, such as Treasury Secretary Janet Yellen, Energy Secretary Jennifer Granholm, White House communications director Kate Bedingfield and Netflix CEO Reed Hastings.

___

UNITED NATIONS — European Council President Charles Michel accused Russia of using food supplies as “a stealth missile against developing countries” and blamed the Kremlin for the looming global food crisis, prompting Moscow’s U.N. ambassador to walk out of a Security Council meeting.

Michel addressed Russian Ambassador Vassily Nebenzia directly at a council meeting Monday, saying he saw millions of tons of grain and wheat stuck in containers and ships at the Ukrainian port of Odessa a few weeks ago “because of Russian warships in the Black Sea.” He said Moscow’s attacks on Ukraine’s transport infrastructure and grain storage facilities, and its tanks, airstrikes and mines are preventing Ukraine from planting and harvesting.

“This is driving up food prices, pushing people into poverty and destabilizing entire regions,” Michel said. “Russia is solely responsible for this looming food crisis. Russia alone.”

Michel accused Russian forces of stealing grain from areas in Ukraine that it has occupied “while shifting the blame of others,” calling this “cowardly” and “propaganda, pure and simple.”

Nebenzia walked out, giving Russia’s seat to another diplomat. Russia’s deputy U.N. ambassador Dmitry Polyansky tweeted later on Telegram’s Russian channel that Michel’s comments were “so rude” that the Russian ambassador left the Security Council chamber.

___

COLLEVILLE-SUR-MER, France — The United States and its allies will keep providing “significant” support to Ukraine out of respect for the legacy of D-Day soldiers, whose victory over the Nazis helped lead to a new world order and a “better peace,” Army Gen. Mark Milley, chairman of the Joint Chiefs of Staff, said Monday.

In an interview with The Associated Press overlooking Omaha Beach in Normandy, Milley said Russia’s war on Ukraine undermines the rules established by Allied countries after the end of World War II. He spoke on the 78th anniversary of the D-Day invasion of Allied troops onto the beaches of France, which led to the overthrow of Nazi Germany’s occupation.

One fundamental rule of the “global rules-based order” is that “countries cannot attack other countries with their military forces in acts of aggression unless it’s an act of pure self-defense,” he stressed. “But that’s not what’s happened here in Ukraine. What’s happened here is an open, unambiguous act of aggression.”

“I think that the United States and the allied countries are providing a significant amount of support to Ukraine, and that will continue,” he said.

___

KYIV, Ukraine — Russia has begun turning over the bodies of Ukrainian fighters killed at the Azovstal steelworks, the fortress-like plant in the destroyed city of Mariupol where their last-ditch stand became a symbol of resistance against Moscow’s invasion.

Dozens of the dead taken from the bombed-out mill’s now Russian-occupied ruins have been transferred to the Ukrainian capital, Kyiv, where DNA testing is underway to identify the remains, according to both a military leader and a spokeswoman for the Azov Regiment.

The Azov Regiment was among the Ukrainian units that defended the steelworks for nearly three months before surrendering in May under relentless Russian attacks from the ground, sea and air.

It was unclear how many bodies might remain at the plant.

Meanwhile, Russian forces continued to fight for control of Sievierodonetsk, an eastern Ukrainian city that is key to Moscow’s goal of completing the capture of the industrial Donbas region.

___

NEW YORK — U.S. authorities moved Monday to seize two luxury jets — a $60 million Gulfstream and a $350 million aircraft believed to be one of the world’s most expensive private airplanes — after linking both to Russian oligarch Roman Abramovich.

A federal magistrate judge signed a warrant authorizing the seizure of the Gulfstream and a Boeing jet that authorities said was worth less than $100 million before a lavish customization.

The action takes place just days after the United States announced new sanctions and penalties on Russian oligarchs and elites, Kremlin officials, businessmen linked to President Vladimir Putin and their yachts, aircraft and firms that manage them.

President Joe Biden promised after Russia’s February invasion of Ukraine to pursue Russian elites’ “ill-gotten gains.”

U.S. Attorney Damian Williams said Monday that his office was using every legal tool available to respond to “Russian’s illegal war in Ukraine.”

___

KYIV, Ukraine — Ukraine’s president is asking for a secure corridor for Ukrainian vessels to be able to ship out grain and prevent food shortages in Africa and Asia.

Volodymyr Zelenskyy told a news conference on Monday that Kyiv is in talks with countries like Turkey and the U.K. about security guaranties for Ukrainian ships.

Zelenskyy adds that “if now we have 22-25 million tons blocked there, in the fall we might have 75 (million tons).”

“What are we going to do? he asked. ”That’s why we can’t do without the ports.”

The issue of blocked grain will be on the agenda on Wednesday during Russian Foreign Minister Sergey Lavrov’s visit to Turkey. Ankara is involved in efforts by the United Nations to reach an agreement for the shipment of Ukrainian grain amid an escalating food crisis.

Zelenskyy says Kyiv hasn’t been invited, possibly because Turkey wants to get security guarantees from Russia for its own ships first.

___

UNITED NATIONS — The U.N. envoy on sexual violence in conflict says sexual violence in Ukraine especially against women and girls remains prevalent and underreported, and the humanitarian crisis in the war-torn country is turning into “a human trafficking crisis.”

Pramila Patten told the U.N. Security Council Monday that there is a gap between its resolutions aimed at preventing rape and other sexual attacks during conflicts and the reality on the ground for the most vulnerable — women and children.

As of June 3, she said, the U.N. human rights office had received 124 allegations of conflict-related sexual violence — 97 against women and girls, 19 against men, 7 against boys and 1 gender unknown. Verification of these cases is on-going, she said.

Patten said Ukraine’s prosecutor general informed her during a visit in May that a national hot line reported the following forms of conflict-related sexual violence between Feb. 24, when Russian troops invaded the country, and April 12: “rape, gang rape, pregnancy following rape, attempted rape, threats of rape, coercion to watch an act of sexual violence committed against a partner or a child, and forced nudity.”

___

KYIV, Ukraine — Ukraine’s president says the Russian forces intend to capture the southeastern city of Zaporizhzhia, a move that could severely weaken Ukraine’s standing and allow the Russian military to advance closer to the center of the country.

“In the Zaporizhzhia region … there is the most threatening situation there,” Volodymyr Zelenskyy told reporters on Monday. He added that part of the region already has been taken and Russia wants to take the city next.

In the south of Ukraine, Russia has already seized large cities of Kherson and Mariupol. The Zaporizhzhia region, with the population of 1.6 million people, is one of the biggest industrial hubs of Ukraine’s southeast. The city itself has 722,000 people.

Zelenskyy also said that the Ukrainian troops continue to fight in the eastern part of the country known as the Donbas. In the Luhansk region, the Ukrainian resistance continues in Sievierodonetsk, one of two cities still not in Russia’s hands, he said.

“There are more of them, they are more powerful, but we have every chance to fight on there,” Zelenskyy said.

In the northern Kharkiv region, the Ukrainian army “step by step de-occupies our lands,” Zelenskyy said.

___

MOSCOW — The Russian foreign minister has warned the West that if it provides Ukraine with long-range rockets, Moscow will respond by taking over larger areas of Ukraine.

Speaking during an online news conference Monday, Sergey Lavrov said that “the longer the range of weapons you supply, the farther away the line from where neo-Nazis could threaten the Russian Federation will be pushed.”

The U.S. and Britain have announced they will provide Ukraine with multiple rocket-launchers capable of striking targets up to 80 kilometers (50 miles) away. The systems are capable of firing longer range rockets that can hit areas of up to 300 kilometers (186 miles) away, but U.S. said it wouldn’t supply the rockets.

Asked how Moscow would respond if the U.S. and its allies change their mind and provide Ukraine with long-range rockets, Russian President Vladimir Putin said in televised comments Sunday that Moscow will “draw appropriate conclusions and use our strike means, which we have plenty of, in order to hit the facilities that we haven’t struck yet.”

source

By Kevin Yao and Sophie Yu

BEIJING (Reuters) – China’s sputtering economy has a lot riding on its consumers, who are just now emerging from lockdowns in Shanghai and other big cities. But those hopes are running up against the likes of Wu Lei, a soccer coach in Beijing who has put off buying a new mobile phone.

“I’ve lost the lion’s share of my income since Beijing called a stop to after-school sports clubs in April,” said Wu, a 37-year-old with two daughters. The five-week-long near-shutdown of the Chinese capital under China’s stringent COVID-19 measures was eased on Monday.

“We have no spare money even in normal months, so now we feel really under financial pressure,” he said.

China is moving to spur spending that was depressed by COVID curbs in some of its biggest cities, but piecemeal measures such as vouchers, subsidies for car buyers and digital yuan payments have been modest compared with other big global economies. Policymakers have instead stuck to their preferred approach to stimulus, which focuses on businesses and infrastructure.

Those measures, analysts said, will not be enough to drive a recovery in consumer spending, which accounted for more than two-thirds of first-quarter growth in China’s economy, as it rebalances away from a heavy dependence on exports and investments. That will, in turn, impede the strength of recovery in the world’s second-largest economy, a crucial engine of global growth.

“Consumers are rattled,” said Mark Tanner, managing director at Shanghai-based research and marketing consultancy China Skinny.

“They are lacking confidence that they had before, partly due to the uncertainty around the highly transmissible Omicron being contained for long, but also as they are not feeling as good relative to other countries,” he said.

Constraining the rebound, analysts said, are not just income losses during the lockdowns, but lingering fears about job security and COVID-related curbs, as well as authorities’ reticence towards policies that would get more money quickly into consumers’ pockets.

China’s retail sales shrank 11.1% in April from a year earlier, the biggest fall since the height of China’s first COVID outbreak two years ago that ravaged the city of Wuhan.

The rebound that followed then was robust for upmarket brands such as Louis Vuitton and Gucci, but wider consumption struggled. Retails sales for 2020 fell 3.9% from the previous year, the first contraction since 1968.

But the overall economy grew 2.2% in 2020, roaring back from a record slump in the first quarter and making China the only major world economy to expand.

This time, analysts said, the picture is murkier. China’s once high-flying property and tech sectors are wobbling and persistent job stresses have undercut the “revenge consumption” that typically follows when lockdowns ease up, and shoppers flock back to stores with a vengeance.

China’s urban jobless rate rose to 6.1% in April, the highest since February 2020 and well above the government’s target ceiling of 5.5%. Some economists expect employment to worsen before it gets better, with graduates entering the workforce in record numbers.

FEAR OF LOCKDOWNS

Fears of fresh lockdowns also loom large, especially in Shanghai, where some of the upscale, tree-lined neighbourhoods of the former French Concession were fenced in over the weekend and residents taken away after new COVID cases were discovered.

In Shenzhen, which went through a week-long lockdown in March, residents must be tested every 72 hours to use subways and taxis or enter malls and parks. Employees of restaurants and hairdressers noted fewer customers since the system was implemented. Similar rules apply in Beijing and Shanghai.

Chinese authorities, however, have been reluctant to spur consumption with cash handouts similar to those in developed countries.

They face fiscal constraints, and fear that handouts would end up favouring China’s wealthiest regions, which were hardest hit by the lockdowns, at a time when the government has pledged to address economic inequality. Authorities also worry that any government cash given to China’s typically thrifty consumers would end up in savings accounts rather than getting spent.

Instead, China’s cabinet has unveiled a package of policy measures to help COVID-hit businesses and spur investment, with only limited steps to encourage purchases of cars and home appliances.

Shenzhen has allotted 500 million yuan ($75 million) for consumption vouchers and 100 million yuan in subsidies for consumer electronics, which combined are equivalent to roughly $5 per resident.

Shanghai is offering subsidies of 10,000 yuan for residents who switch to electric cars. Most of its measures to reboot an economy shattered by two months of lockdown have focused on supporting businesses.

Such support for consumers hard-pressed by the pandemic is dwarfed by the $3,200 in stimulus checks received by millions of Americans since early 2020.

“The authorities are rolling out policies to stimulate consumption, but it would be hard to see a sharp rebound,” said Zhang Yiping, economist at China Merchants Securities in Shenzhen.

“People’s incomes are diminished and there’s very heavy pressure on employment.”

The consumption slump has stoked debate among economists and policy advisers on whether China should take more direct stimulus steps to support consumers.

Lin Yifu, a Peking University professor and former World Bank chief economist, recommends giving 1,000 yuan to families in areas under lockdown. His colleague Yao Yang goes further, suggesting that China give 1,000 yuan to each resident, preferably in digital currency.

But Chinese policymakers show no signs of budging from their preference for supporting businesses and infrastructure projects, policy insiders said.

“We should focus on boosting effective investment. Without investment, consumption will falter soon,” Jia Kang, the former head of the finance ministry’s think tank who now runs the China Academy of New Supply-side Economics, told Reuters.

(Reporting by Kevin Yao and Sophie Yu in Beijing; Additional reporting by Brenda Goh in Shanghai and David Kirton in Shenzhen; Editing by Tony Munroe and Edmund Klamann)

source

By Stephen Nellis

CUPERTINO, Calif. (Reuters) -Apple Inc on Monday announced it would more deeply integrate its software into the core driving systems of cars, while the iPhone maker rolled out a slew of features for payments and business collaboration.

Apple also announced that its new MacBook Air laptop was redesigned around a new M2 silicon processor, which it says is 35% faster than the previous M1 chip. The new laptop will be 2.7 pounds (1.2 kg) and have a 1080p high-definition camera to provide better images on video calls. The MacBook Air will start at $1,199, Apple announced at WWDC 2022, its annual software developer conference.

The M2 chip will also power the 13-inch MacBook Pro, which will start at $1,299 and be available next month. Prices are $100 lower for education customers as Apple targets the back-to-school market.

Apple showed off a new car dashboard that it said would be able to display data from major instruments such as speed, fuel levels and gas mileage. Apple said it was in talks with automakers such as Ford Motor Co, Nissan Motor Co and Honda Motor Corp.

The software connects more deeply into core driving systems than prior versions that were limited to the vehicle’s infotainment displays for playing music and showing maps. Apple said vehicles using the software will not be announced until late next year.

Polestar, the premium electric vehicle maker owned by China’s Geely and Volvo Cars, is installing the current version of Apple CarPlay into its Polestar 2 cars through an over-the-air update later this month, Polestar spokesman JP Canton said. Which Polestar cars will get the newer version Apple announced on Monday are under discussion and no further information was available, he said.

A spokeswoman for Ford, which announced a software deal with Alphabet’s Google last year, declined to comment on Apple’s announcement. Ford and other automakers have formed a number of alliances with big technology industry companies including Apple, Google and Amazon.com . But automakers remain wary of allowing the tech giants unfettered access to the data generated by connected cars, or to allow them to displace the automakers’ brands with their own in dashboard displays.

Apple also announced that users can buy now and pay later for purchases. Apple Pay Later will be available anywhere that Apple Pay is accepted and managed through the Apple Wallet. Users can make four equal payments with no interest or fees. The move puts Apple in direction competition with payment providers like Affirm Holdings Inc and PayPal Holdings Inc.

Apple’s iPad also received a revamp of its operating system to make it easier for users to juggle multiple applications and displays and to collaborate more easily on business-centric documents such as presentations. The company also previewed an app called Freeform, which will act as a virtual whiteboard that multiple users can tap to share ideas during video meetings over Apple’s FaceTime service. The productivity features put Apple in more direct competition with Microsoft , whose Surface tablet computers are popular among business users.

Apple also added an edit button to iMessage for sent messages, beating Twitter to a long-requested feature.

The tech giant is also adding a tool called “Safety Check” to turn off access to sensitive information for people in abusive situations.

Apple introduced a new technology called Passkeys to replace passwords on websites. Apple said Passkeys are safer than traditional passwords because Passkeys are never stored on a web server. The company said it is working to enable the use of Passkeys with non-Apple devices.

Apple also introduced tweaks to popular apps including live sport scores on Apple TV, making the shared video-watching app available in messaging and shared tabs on its browser.

Apple shares closed up less than 1%, similar to their level at the start of the presentation.

So far, Apple only provided a few updates to augmented reality developers. It introduced a new interface called RoomPlan, which utilizes the iPhone and iPad to create a 3-D floor plan of a room.

Apple did not provide any hints about future devices such as a mixed-reality headset. Such a device would be Apple’s first entry into a new category of computing device since the Apple Watch shipped in 2015 and would put it in direct competition with Meta, which has disclosed plans for a mixed-reality headset code named “Cambria” to be released this year.

(Reporting by Stephen Nellis; Additional reporting by Nivedita Balu, Shivansh Tiwary and Bhanvi Satijain in Bengaluru, and Joseph White and Ben Klayman in Detroit; Editing by Peter Henderson and Lisa Shumaker)

source

By Herbert Lash

NEW YORK (Reuters) -Global equity markets rose on Monday on signs of an easing of COVID-19 pandemic-related and other restrictions by China and as investors took expected interest rate hikes in coming days in their stride despite crude oil hitting $120 a barrel.

The dollar gained against the euro ahead of a European Central Bank policy meeting on Thursday but risk appetite ebbed after being higher earlier on the day.

Sterling rose ahead of a confidence vote in Parliament that Prime Minister Boris Johnson won, but a rebellion by 148 of his 359 Conservative Party lawmakers dealt a serious blow to his authority.

A Wall Street Journal report that Chinese regulators are concluding probes into ride-hailing giant Didi Global Inc, as well as the easing of domestic pandemic-related curbs, have bolstered sentiment, said Marc Chandler, chief market strategist at Bannockburn Global Forex.

“You’ve got the world’s second-largest economy continuing to open up,” Chandler said, referring to China. “It looks like Didi may be available again at the mobile app stores and Beijing opened up public transportation.”

Didi shares closed up 24.3% after earlier surging more than 50% on the Journal report. The news earlier helped Hong Kong’s Hang Seng tech index close 4.6% higher..

Sentiment also was aided by comments by U.S. Commerce Secretary Gina Raimondo that President Joe Biden has asked his team to look at the option of lifting some tariffs on Chinese imports.

People no longer speculate that the Federal Reserve might hike interest rates by 75 basis points and have backtracked a bit from a 50 basis-point hike in September, which also has boosted sentiment, Chandler said.

The major U.S. stock indexes rose, as did the big bourses for Britain, Germany, France, Italy and Spain, all closing up 1% or higher.

The pan-European STOXX 600 index rose 0.92% and MSCI’s gauge of stocks across the globe gained 0.35%.

On Wall Street, the Dow Jones Industrial Average fell 0.08% after briefly dipping lower. The S&P 500 gained 0.20% and the Nasdaq Composite added 0.25%. Growth shares rose 0.3%, or more than double the 0.1% advance in value stocks.

U.S. Treasury yields rose as the market prepared for the sale of $96 billion in debt this week and ahead of data on Friday expected to show U.S. inflation is still running hot.

The consumer price index (CPI) is expected to have gained 0.7% last month, compared with 0.3% in April, with annual inflation unchanged at 8.3%, according to the median estimate of economists polled by Reuters.

The three U.S. debt auctions this week are likely to push yields higher as banks and investors prepare to absorb the issuance.

The yield on 10-year Treasury notes was up 8.5 basis points at 3.040%, the first time the benchmark’s yields have topped 3% in almost three weeks.

At the ECB meeting on Thursday, President Christine Lagarde is considered certain to confirm an end to bond-buying this month and a first rate increase in July, though the jury is out on whether that will be 25 or 50 bps, as some investment banks ramped up their expectations.

Money markets are priced for 130 bps of rate increases by year-end, with a 50 bps move at a single meeting fully priced in by October.

A high number would only add to expectations of aggressive tightening by the Fed next week, with markets already priced for half-point increases in June and July and almost 200 basis points (bps) by the end of the year.

The dollar index rose 0.274%, with the euro down 0.23% at $1.0694. The yen weakened 0.73% at $131.85 and sterling rose 0.32% at $1.2528.

Oil prices were largely unchanged in choppy trade, buoyed by Saudi Arabia raising its July crude prices but amid doubts that a higher output target for OPEC+ producers would ease tight supply. [O/R]

U.S. crude futures settled down 37 cents at $118.50 a barrel and Brent fell 21 cents to settle at $119.51.

Gold prices slid, pressured by an uptick in the dollar and Treasury yields.

U.S. gold futures settled down 0.4% at $1,843.70 an ounce.

(Reporting by Herbert Lash in New YorkAdditional reporting by Huw Jones in LondonEditing by John Stonestreet, Will Dunham and Matthew Lewis)

source

By Caroline Valetkevitch

NEW YORK (Reuters) – U.S. stocks ended a choppy session slightly higher on Monday, helped by gains in Amazon.com and other mega-cap growth shares, while persistent worries over inflation and interest rates kept a lid on the market.

Shares of Amazon.com Inc rose 2% and were the biggest positive for the S&P 500 and Nasdaq after the online retailer split its shares 20 for 1.

Apple Inc shares climbed 0.5%. The tech giant at its annual software developer conference announced among other things that it would more deeply integrate its software into the core driving systems of cars.

Among sectors, consumer discretionary and communication services had the day’s biggest gains.

But investors remain focused on inflation and rising interest rates. A U.S. consumer price index report on Friday is expected to show still-high inflation, and U.S. Treasury yields rose on Monday.

A solid jobs report on Friday lowered hopes of a pause in the Federal Reserve’s aggressive policy-tightening plan to fight inflation.

“There’s been a push-pull in the markets now for a while,” said Paul Nolte, portfolio manager at Kingsview Investment Management in Chicago.

The jobs report was evidence that “the economy is still in OK shape,” he said. But “with inflation running kind of high and commodity prices still rising and putting in new all-time highs, maybe that peak of inflation is still in that ethereal future.”

Helping sentiment were easing regulatory crackdowns in China and signs in parts of China of a return to more normal activity after the country’s biggest COVID-19 outbreak in two years.

The Dow Jones Industrial Average rose 16.08 points, or 0.05%, to 32,915.78, the S&P 500 gained 12.89 points, or 0.31%, to 4,121.43 and the Nasdaq Composite added 48.64 points, or 0.4%, to 12,061.37.

Twitter Inc shares slipped 1.5% after billionaire Elon Musk said he might walk away from his buyout offer if the social media company fails to provide data on spam and fake accounts.

U.S.-listed shares of Chinese firms rallied after a report that Chinese regulators are concluding probes into ride-hailing giant Didi Global Inc and two other firms. The KraneShares CSI China Internet ETF jumped 4.7% and Didi Global gained 24.3%.

Advancing issues outnumbered declining ones on the NYSE by a 1.29-to-1 ratio; on Nasdaq, a 1.01-to-1 ratio favored decliners.

The S&P 500 posted 1 new 52-week high and 29 new lows; the Nasdaq Composite recorded 58 new highs and 129 new lows.

Volume on U.S. exchanges was 10.64 billion shares, compared with the 12.75 billion average for the full session over the last 20 trading days.

(Reporting by Caroline Valetkevitch in New York; Additional reporting by Medha Singh, Susan Mathew and Devik Jain in Bengaluru and Tom Westbrook in Singapore; Editing by Maju Samuel and Matthew Lewis)

source

Despite Global ‘Perfect Storm’ of Bad News, Israel’s Economy Expected to Stay Strong

But the tech sector, which accounts for more than half of exports, is starting to retrench

The economic horizon for Israel is cloudy and obscured. Local and international developments have plunged the country into a period of uncertainty. With a continuous increase in the cost of living, soaring housing and fuel prices, inflation generally, climbing interest rates, and a negative May for the Tel Aviv Stock Exchange, Israel is holding its breath.

Israel managed to weather the storm of previous global financial crises. Both in 2008, when world economies took a hit, and during the COVID-19 pandemic, the Israeli economy remained resilient. Israel is also used to bouncing back from security crises.

The war in Ukraine, global inflation, and world stock markets plummeting, together with domestic hurdles, are now testing Israel.

According to the Bank of Israel, inflation is at 4%. While it has risen in the past year, it remains significantly lower than in many other developed economies. The central bank forecasts do not see it rising much higher in the coming years. Gross Domestic Product dropped slightly in the first quarter of 2022, and although the bank said the economy recorded “strong growth,” it decided to raise the benchmark interest rate.

Professor Elise Brezis, head of the Aharon Meir Center for Banking and Economic Policy at Bar-Ilan University in Ramat Gan, the central bank forecast for the rest of 2022 may be a bit too sunny.

“The current data is still influenced by the past, by money already spent,” she told The Media Line. “But later this year, people will see they have less money – prices are higher, and wages haven’t risen accordingly.”

While the Bank of Israel expects the economy to grow by over 5% this year, Brezis believes the figure, while still positive, will be lower.

The positive forecast shows the economy remaining vital, thus supporting the rise in interest rates that has many in the public concerned. In several interviews, Bank of Israel Governor Amir Yaron said the interest rate will be further increased during 2022.

Unemployment continues to be low. The budget deficit is low, and the shekel continues to be very strong, despite a recent weakening.

Yet, the conditions for what many economists call a “perfect storm” exist globally.

The strength of the economy leans largely on Israel’s booming high-tech sector, which is home to thousands of startup companies and many established tech firms.

“The high-tech is essentially Israel’s lifeline,” said Dr. Alex Coman, head of the Operations Excellence Program at Tel Aviv University. “This helped the country through the pandemic when the tech sector was minimally hit.”

The contribution came in the form of taxes entering the public treasury, both from multimillion-dollar deals that saw the purchase of Israeli tech firms by investors and from above-average salaries which pay above-average income taxes.

According to the Israel Innovation Authority in the Economy Ministry, tech accounts for more than half of exports. The sector produces 15% of GDP, according to central bank data.

“This time around, Israel will be affected by the global conditions, not independent of the world,” said Brezis.

The international bubble started to burst last month. As Israelis saw the Nasdaq Stock Market crash in New York, they buckled up. As the US tech market sees companies laying off workers, or completely shutting down, Israeli companies are carefully eyeing the nearing storm. After years in which money flowed easily, it seems about to slow down significantly.

Salaries in the Israeli high-tech sector are more than double the average in the country.

“Companies will start looking for cheap labor outside of Israel,” said Coman. “This is already starting, with companies outsourcing some of the junior positions.”

At the beginning of May, Israeli grocery delivery startup AVO announced it was firing almost two-thirds of its employees and then later announced it was ceasing all operations in Israel. It also cut back its US activity. The decision was made after company executives realized they would not be able to raise more capital in the current global climate.

AVO could just be the beginning. It is not the only Israeli firm that struggles with attracting new investment. As stock markets plummet, investors are going to be less inclined to take risks on startups. The appetite for risk further drops as interest rates rise around the world.

This has a domino effect that could impact Israel.

Israel also faces a housing crisis. With a continuing rise in demand for real estate and a major lag in supply, prices are soaring. Until this year, interest rates were low, making it attractive to take large mortgages. With every rise in interest rates, there is concern that people who managed to purchase a home will soon not be able to make payments, especially as inflation rises.

“This is a real burden on the Israeli economy,” said Brezis.

But Israel’s greatest challenge may be its political instability. Currently governing is a shaky coalition that could fall any day.

“The government is doing a great job on the economy, but it might not survive,” said Brezis. “It wants to take care of issues, but it cannot. This is the main cause of uncertainty in the country.”

With a fragmented coalition that has lost its majority and has difficulty agreeing on core issues, there is much talk of the need for further reforms but little action.

“It is very complicated to pass laws, to change regulations,” said Coman.

The strength of the Israeli economy leaves room for optimism regarding its ability to weather the global storm. However, this immunity will remain provisional, especially if conditions worsen.

source