Day: March 5, 2023

(C) Reuters. FILE PHOTO: A worker walks across a construction site in the Central Business District, ahead of the opening of the National People’s Congress (NPC) in Beijing, China, February 28, 2023. REUTERS/Thomas Peter/File Photo

By Jamie McGeever

(Reuters) – A look at the day ahead in Asian markets from Jamie McGeever.

Asian markets will likely open on the front foot on Monday, following Wall Street’s whoosh higher on Friday, but a raft of Chinese economic data and remarks from U.S. Fed Chair Jerome Powell later in the week could quickly shift sentiment.

Monetary policy decisions from Australia and Japan on Wednesday and Friday, respectively, will be market-moving events too. Before that however, investors have a deluge of headlines from China this weekend to digest.

The annual session of the National People’s Congress, and reports from the finance ministry and state planner – the National Development and Reform Commission – have outlined Beijing’s broad goals and plans for the year ahead.

On the economy, the government said it would aim for growth this year of around 5%, lower than last year’s target of 5.5%. It will also take steps to minimize risks in the property sector, intensify its push to make China self-reliant in tech, and the central bank will provide ‘forceful’ support for economic development.

Perhaps most significantly, Beijing said it would boost defence spending by 7.2% – up on last year’s rate of increase and outpacing expected GDP growth – as Premier Li Keqiang called for the armed forces to boost combat preparedness.

(Graphic: MSCI Asia ex-Japan – weekly change – https://fingfx.thomsonreuters.com/gfx/mkt/zjvqjydnwpx/ChinaCPI.png)

Beijing’s macro, military and geopolitical vision for the next 12 months outlined this weekend comes as investors get more of an insight into how China’s economic reopening is progressing with the release of February trade, inflation, and credit and lending data this week.

Inflation figures from South Korea, The Philippines, Thailand and Taiwan this week will be closely watched by investors and policymakers alike. With the Fed seemingly on track to tighten policy further, a renewed rise in the dollar could intensify FX-fueled inflationary pressures in Asia.

Attention will turn to Japan later in the week, with the release of fourth-quarter GDP data on Thursday and BOJ’s policy decision on Friday, the last under the governorship of Haruhiko Kuroda.

(Graphic: MSCI Asia ex-Japan – weekly change – https://fingfx.thomsonreuters.com/gfx/mkt/klvygnjqgvg/MSCIASIA.png)

Asian stocks have generally underperformed their U.S. and global peers in recent weeks, but the underlying question still applies: How long can markets hold up – and volatility stay so low – in the face of soaring U.S. bond yields, rate and inflation expectations?

Global bond yields are moving sharply higher too. Something might be about to give.

Here are three key developments that could provide more direction to markets on Monday:

– China’s National People’s Congress

– South Korea inflation (February)

– Euro Zone retail sales (January)

(By Jamie McGeever; Editing by Diane Craft)

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(C) Reuters. Former U.S. President Donald Trump attends the Conservative Political Action Conference (CPAC) at Gaylord National Convention Center in National Harbor, Maryland, U.S., March 4, 2023. REUTERS/Evelyn Hockstein
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By James Oliphant

OXON HILL, Maryland (Reuters) – Reminders of former President Donald Trump’s towering influence over the Republican Party were everywhere at the annual Conservative Political Action Conference this weekend in Washington.

There were kiosks hawking Trump hats and shirts, attendees sporting “Make America Great Again” stickers and even a mock Oval Office where attendees could be photographed next to Trump’s picture.

The three-day conference illustrated the iron grip he holds over the right-wing, grassroots base of his party and how hard it could be for a challenger to deny Trump the Republican presidential nomination in 2024.

At the same time, it remains an open question whether Trump’s appeal still extends beyond his hard-core loyalists. Public opinion polls showing many Republicans are looking for an alternative such as Florida Governor Ron DeSantis, believing they may offer a better chance of winning the White House.

Trump served as the closing speaker for the event on Saturday. “We are going to finish what we started,” he said. “We’re going to complete the mission.” The capacity crowd in the ballroom chanted “Four more years!”

While Trump and his supporters were holding forth at CPAC, DeSantis, who has not yet declared a presidential run, was busy burnishing his national profile and connecting with potential high-dollar campaign donors.

He spoke at Republican fundraisers in Houston and Dallas and is expected to give a speech at the Ronald Reagan Presidential Library in California on Sunday.

DeSantis also attended a gathering for Republican donors in Florida held by the anti-tax group Club for Growth to which Trump was not invited.

While he has spoken at past events, DeSantis skipped CPAC this time around. Still, his influence could be felt.

Multiple speakers talked about pushing back against “wokeness,” diversity and equity plans in education and transgender student athletes, key themes for DeSantis that have taken root among conservatives nationwide.

The event, however, was heavily weighted toward Trump. The list of speakers was packed with Trump supporters such as U.S. Representative Marjorie Taylor Greene, longtime allies including his former campaign adviser Steve Bannon, and members of Trump’s family, who often received louder ovations than the officeholders who spoke.

Kari Lake, who last year lost her bid to become Arizona’s governor and who is an outspoken supporter of Trump’s false claims that the 2020 election was riddled with fraud, was given a prime speaking slot, as was Jair Bolsonaro, the former right-wing president of Brazil.

Both complained their elections had been stolen and both were greeted with applause from attendees.

By contrast, former South Carolina Governor Nikki Haley, who is also seeking the Republican nomination, received a polite, if tepid response from the crowd, as did former U.S. Secretary of State Mike Pompeo, another potential presidential candidate. Haley was met with chants of “Trump” in the hallway outside the ballroom where she gave her speech.

Haley and Pompeo raised the loudest cheers when they were detailing the accomplishments of the Trump administration.

In his remarks, Bannon maintained that Trump should be the Republican nominee, saying DeSantis and other potential challengers lacked experience. “We don’t have time for on-the-job training,” he said.

Trump and DeSantis both are scheduled in the coming days to visit Iowa, which holds the first Republican nominating contest next year.

SKIPPED BY MEMBERS OF CONGRESS

CPAC once was a premier gathering of the party’s Republicans in Washington but of late has become dominated by Trump and his supporters to the extent that it was skipped this year by most Republican members of Congress and the nation’s Republican governors. Many speakers spoke to a half-empty ballroom and attendance overall seemed noticeably lower than in years past.

Marleen Beck, 71, of Howard County, Maryland, said she would stand by Trump after voting for him twice. “Ron DeSantis is a good governor for Florida, but I don’t think he’s the person to run the country,” she said.

Beck said she was present for Trump’s speech in Washington on Jan. 6, 2021, when his supporters stormed the U.S. Capitol and argued he deserves no blame for the incident. Several attendees wore shirts memorializing Ashli Babbitt, who was killed by police inside the Capitol building.

Lisa Friedman, 54, of Colchester, Vermont, was selling Trump T-shirts in the exhibit hall and wore one herself that read: “Ultra MAGA.”

She said DeSantis should stay out of the race. “I think he should wait until next time around,” she said.

But Riley Kass, 24, of Cassopolis, Michigan, said he voted for Trump in 2020 but had an open mind about the upcoming primary. “I think competition is good,” Kass said, adding that he wished DeSantis had attended the conference.

J. Hogan Gidley, a former White House spokesman for Trump, said the show of support for Trump by rank-and-file Republicans at the event demonstrated why he will be a formidable candidate.

“These are the folks who are responsible for the blocking and tackling to win you elections, especially in the early primary states,” Gidley said.

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(C) Reuters. Chinese President Xi Jinping, Premier Li Keqiang, National People’s Congress (NPC) Standing Committee Chairman Li Zhanshu and Chinese People’s Political Consultative Conference (CPPCC) Chairman Wang Yang arrive for the opening session of the CPPCC at the
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By Thomas Peter and Kevin Yao

BEIJING (Reuters) -China set a modest target for economic growth this year of around 5% on Sunday as it kicked off the annual session of its National People’s Congress (NPC), which is poised to implement the biggest government shake-up in a decade.

The economy gave one of its weakest performances in decades last year, when gross domestic product (GDP) grew by just 3%, squeezed by three years of COVID controls, a crisis in the vast property sector and a crackdown on private enterprise.

In his work report, outgoing Premier Li Keqiang stressed the need for economic stability and expanding consumption, setting a goal to create around 12 million urban jobs this year, up from last year’s target of at least 11 million, and warned that risks remain in the real estate sector.

Li set a budget deficit target at 3.0% of GDP, widening from a goal of around 2.8% last year.

“Global inflation remains high, global economic and trade growth is losing steam, and external attempts to suppress and contain China are escalating,” Li said during his speech to open the parliament, which will run through March 13.

“At home, the foundation for stable growth needs to be consolidated, insufficient demand remains a pronounced problem, and the expectations of private investors and businesses are unstable,” he said.

This year’s growth target is at the low end of expectations, as policy sources had recently told Reuters a range as high as 6% could be set. It is also below last year’s target of around 5.5%.

Alfredo Montufar-Helu, Beijing-based head of the China Center at the Conference Board, said setting a higher growth target would have required massive stimulus and “exacerbated the structural imbalances that China is trying to deal with to achieve its long-term development goals.”

The lower target is more achievable, he said, and “recognises that the Chinese economy will be dealing with significant economic headwinds this year”.

China’s state planner said it aims to increase the incomes of low earners and bring more people into the middle income group. The planner unveiled measures to spur consumption, but stopped short of direct spending, such as cash handouts.

To bolster growth, the government plans to stick with its playbook of spending on infrastructure, increasing funding for big-ticket projects with 3.8 trillion yuan ($550 billion) in special local government bonds, up from last year’s 3.65 trillion yuan.

The 67-year-old Li and a slate of more reform-oriented policy officials are set to retire during the congress, making way for loyalists to President Xi Jinping, who further tightened his grip on power when he secured a precedent-breaking third leadership term at October’s Communist Party Congress.

During the NPC, former Shanghai party chief Li Qiang, 63, a longtime Xi ally, is expected to be confirmed as premier, tasked with reinvigorating the world’s second-largest economy.

The rubber-stamp parliament will also discuss Xi’s plans for an “intensive” and “wide-ranging” reorganisation of state and Communist Party entities, state media reported on Tuesday, with analysts expecting a further deepening of Communist Party penetration of state bodies.

MILITARY BUDGET RISE

Li said China’s armed forces should devote greater energy to training under combat conditions and boost combat preparedness, and the budget included a 7.2% increase in defence spending this year, a slightly bigger increase than last year’s budgeted 7.1% rise and again exceeding expected GDP growth.

On Taiwan, Li struck a moderate tone, saying China should promote the peaceful development of cross-Strait relations and advance the process of China’s “peaceful reunification”, but also take resolute steps to oppose Taiwan independence.

Beijing faces multiple challenges including increasingly fraught relations with the United States, which is trying to block its access to cutting edge technology, and a worsening demographic outlook, with plunging birth rates and a population drop last year for the first time since the famine year of 1961.

China plans to lower the costs of childbirth, childcare and education and will actively respond to an ageing population and a decrease in fertility, the nation’s state planner said in a work report released on Sunday.

The NPC opened on a smoggy day amid tight security in the Chinese capital, with 2,948 delegates gathered in the cavernous Great Hall of the People on the west side of Tiananmen Square.

During the session, China’s legislature will vote on a plan to reform institutions under the State Council, or cabinet, and decide on a new cabinet line-up for the next five years, according to a meeting agenda.

It is the first NPC meeting since China abruptly dropped its zero-COVID policy in December, following rare nationwide protests. Excluding the pandemic-shortened meetings of the previous three years, this year’s session will be the shortest in at least 40 years, according to NPC Observer, a blog.

($1 = 6.9048 Chinese yuan renminbi)

(C) Reuters

By Brad Brooks

(Reuters) -Storms producing tornadoes and heavy rains rolled through parts of the southern United States on Friday, killing at least nine people and leaving over 1 million customers without power, authorities said.

The National Weather Service said the powerful storm had mostly left the South by late Friday and was moving to the Northeast, where it was forecast to cause heavy snow and sleet from southeastern Michigan east to New York state. Parts of central New York and southern New England may see over a foot (30 cm) of snow by Saturday afternoon.

Kentucky Governor Andy Beshear said at least two tornadoes sparked by the storm system ripped through the western part of his state on Friday. The governor said on social media that at least three people were killed in the severe weather, though he did not provide any more details. A fourth person was killed by the storm Kentucky, a woman who died when a tree fell on the car she was in, the Fayette County coroner’s office said.

Aside from the tornadoes, Beshear said thunderstorms in Kentucky were generating winds of 80 miles per hour (128.75 kph), which are “strong enough to blow tractor trailers off the road.”

Alabama Governor Kay Ivey said on social media that three people were killed in the storm in her state, though she provided no details.

In Arkansas, a man died when he was swept into a swollen river by flood waters after driving on a flooded street, according to the Scott County Sheriff’s Department.

In Mississippi, Governor Tate Reeves said on social media on Friday that overnight storms producing high winds had resulted in one person’s death, though he gave no more details.

More than 1.4 million homes and businesses were without power in states impacted by the storm, according to data from PowerOutage.us.

Violent storms are frequent in the southern United States in winter months, as warm, moist air comes up from the Gulf of Mexico and collides with colder air moving down from the north, meteorologists say.

(C) Reuters

By Noreen Burke

Investing.com — The release of Friday’s U.S. jobs report for February will shed more light on the strength of the labor market and investors will be watching Congressional testimony from Federal Reserve Chairman Jerome Powell for fresh insights on the future path of interest rates. Equity markets look set to remain volatile, central banks in Japan, Canada and Australia are to meet and data out of the U.K. will show how the struggling economy held up at the start of the year. Here’s what you need to know to start your week.

Nonfarm payrolls

Friday’s employment report for February will be the last before the Fed’s upcoming meeting on March 21-22 and takes on extra significance after January’s blowout report prompted investors to reevaluate expectations for the future path of interest rates.

Expectations are for the economy to have added 200,000 jobs last month, moderating from January’s blistering jobs growth of 517,000, while the unemployment rate is expected to hold steady at a more than five-decade low of 3.4%.

Another stronger-than-expected report could stoke fears of more hawkish Fed action – strong demand in the labor market bolsters wage growth, which contributes to higher inflation – keeping pressure on the Fed to push rates higher.

Investors are currently expecting another 25-basis point hike from the Fed this month but market pricing suggests a slightly higher chance for a bigger increase than had previously been the case.

Powell testimony

Before Friday’s jobs report Powell will be appearing before Congress to present the central bank’s semi-annual monetary policy report. He will be testifying before the Senate on Tuesday and the House of Representatives on Wednesday.

His comments will be closely followed for hints on whether a larger rate hike is under consideration this month after recent data pointing to still persistent inflation. Powell has said the January jobs report showed why the battle against inflation will “take quite a bit of time”.

The Fed slowed the pace of rate hikes to 25 basis points at its last meeting on Feb. 1, after a 50-basis point increase in December that came in the wake of four consecutive 75 basis-point increases.

Stock market volatility

Wall Street rallied on Friday at the end of a volatile week with the S&P 500 snapping a three-week losing streak and the Dow Jones Industrial Average posting its first weekly advance since late January.

After rebounding sharply in January, bonds and equities retreated in February as investors fretted that the Fed will push interest rates higher than previously expected and keep them elevated for longer to thwart inflation.

More market volatility could well be in store ahead of the Fed’s March meeting.

Meanwhile, fourth-quarter earnings season is on the final stretch, with all but seven of the companies in the S&P 500 having reported. Results for the quarter have beaten consensus estimates 68% of the time, according to Refinitiv data.

Central bank decisions

Central banks in Japan, Australia and Canada are all to hold monetary policy meetings this week.

On Friday, Bank of Japan Governor Haruhiko Kuroda chairs his last meeting after a decade at the helm overseeing super-easy monetary policy. No changes are expected before his successor Kazuo Ueda takes the reins on April 8th.

The Reserve Bank of Australia meets Tuesday and while officials had hinted at the prospect of further tightening at their meeting last month, investors are now expecting rates to remain on hold after recent data showing the economy grew at the weakest pace in a year in the fourth quarter and January figures indicating inflation may have peaked.

The Bank of Canada is also expected to hold rates steady when it meets on Wednesday, its first meeting since policymakers announced a conditional pause in January to allow the economy time to adjust to higher borrowing costs.

U.K. GDP

The U.K. is to publish GDP data on Friday showing how the economy fared in January after narrowly avoiding falling into a recession in the final three months of 2022. Economists are expecting gross domestic product to have expanded by just 0.1% in January from the prior month.

Britain’s economy is showing slightly more momentum than expected and pay growth is proving a bit faster than the central bank forecast last month, Bank of England Chief Economist Huw Pill said Thursday.

That said, Britain is the only G7 economy that is still smaller than before the coronavirus pandemic. The International Monetary Fund believes it will be the only G7 economy to shrink this year.

The BOE might now have to keep raising rates, as consumers appear to be holding up in the face of double-digit inflation.

–Reuters contributed to this report