The mood among Japan's big manufacturers' soured for a second straight quarter in the three months to June, a central bank survey showed on Friday, hit by rising input costs and supply disruptions caused by China's strict COVID-19 lockdowns.
Jackson Hole, eurozone PMIs, Korean rates decision
The US Federal Reserve’s Jackson Hole symposium, a chance of a South Korean rate hike and a series of business surveys out of Europe top the main economic events to be covered by Reuters bureaus next week.
Next week features the end-of-summer event that every economist has been waiting for: the Fed’s annual get together in Jackson Hole, Wyoming.
Returning as an in-person gala held against the backdrop of the towering Grand Teton Mountains after last year’s pandemic-induced online affair, the event features a keynote speech from the head of the Fed.
Chair Jerome Powell this year will address the “economic outlook” at 10 a.m. E.T. (1400 GMT) on Friday. The full symposium runs Thursday through Saturday.
The Fed’s last two meetings have shown that U.S. monetary policy is nearing a key turning point away from the crisis-era accommodation put in place in 2020, and Powell’s speech could be the last hint at their next steps before the September policy meeting.
The week also includes U.S. housing data with reports on existing and new home sales for July out on Monday and Tuesday, respectively. Near the end of the week is revised second-quarter GDP, and the Fed’s preferred gauge of inflation will be released, which has been running near a 30-year high.
Full coverage: REUTERS
China Evergrande in talks with Xiaomi consortium to sell EV unit stake-sources
Embattled Chinese property developer Evergrande Group (3333.HK) is in talks with smartphone maker Xiaomi (1810.HK) and Shenzhen state-backed investment firms as it looks to sell part of a 65% stake in its electric vehicle (EV) unit, three sources said.
The Evergrande New Energy Vehicle (NEV) Group (0708.HK) had a market capitalisation of $12.5 billion on Thursday and one of the sources said the consortium is looking to buy a significant minority stake.
Evergrande said in a statement on Friday that its unit, Evergrande NEV, had held preliminary talks with Xiaomi regarding it coming on as a strategic shareholder, although there was no in-depth discussions.
Xiaomi and Shenzhen’s state asset regulator did not respond to requests for comment.
The talks were said by the sources to be at an early stage and subject to changes.
The developer said last week that it was in discussions with several independent third-party investors on the proposed sale of certain assets, including stakes in Evergrande NEV, as part of its efforts to reduce its debt.
Full Coverage: REUTERS
WORLDWIDE: FINANCE / MARKETS
Asian shares fall further, dollar stays strong
Asian shares extended losses on Friday from the 2021 low set a day earlier, while the dollar held onto its recent gains sitting at a nine-month high.
MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) dropped 0.75%, with Chinese blue chips (.CSI300) down 1.22% and Hong Kong (.HSI) down 0.53%.
Japan’s Nikkei (.N225) fell 0.53%, and U.S. stock futures, the S&P 500 e-minis, were down 0.26%.
A day earlier Asian and European stock markets and oil fell sharply and the dollar rose to a nine month high, after the prospect of the Federal Reserve cutting back bond purchases spooked investors.
This also sent the dollar to its highest level since early November, gains which it held onto on Friday.
The dollar index , which measures the currency against six rivals, was little changed from the previous day at 93.517 on Friday.
“The recent weakness in Asian equity markets is partly driven by the strengthening of the US dollar as the market prepares for the gradual reduction of monetary stimulus,” said Fan Cheuk Wan, HSBC’s Asia chief investment officer for private banking.
“The strong dollar will keep Asian equity markets volatile, so we need to wait for clarity from Jackson Hole,” she added.
The US Federal Reserve will hold its annual research conference in Jackson Hole, Wyoming, next week. Fed Chair Jerome Powell is due to give a speech that will be scoured for clues on the central bank’s next steps.
Full coverage: REUTERS
Oil steadies but set to slump for the week on Delta anxiety
Oil prices came off three-month lows on Friday but were on track for a weekly decline of around 6% as new lockdowns in countries with low vaccination rates facing surging cases of the Delta variant dimmed the outlook for fuel demand.
Broader investor risk aversion also weighed on oil with the U.S. dollar jumping to a nine-month high on signs the U.S. Federal Reserve is considering reducing stimulus this year.
U.S. West Texas Intermediate (WTI) crude futures for September, due to expire on Friday, rose 35 cents or 0.5% to $64.04 a barrel at 0115 GMT after sliding 2.7% on Thursday. The more active October contract rose 33 cents or 0.5% to $63.83.
Brent crude futures rose 27 cents or 0.4% to $66.72 a barrel after dropping 2.6% on Thursday to its lowest close since May.
Dollar holds firm as risk aversion hammers Canadian dollar, Aussie
The safe-haven US dollar hovered near a 9-1/2-month high against major peers on Friday, buoyed by fears that the Delta coronavirus variant could delay the global economic recovery.
The greenback has also been boosted by expectations the Federal Reserve could still start to taper stimulus this year, even with COVID-19 infections surging this month in the United States.
The dollar index , which measures the currency against six rivals, was little changed at 93.544 from Thursday, when it touched 93.587 for the first time since early November. For the week, it’s on track to gain 1.1%, the most in two months.
The Canadian dollar dropped to a fresh six-month low of C$1.2832 amid a plunge in oil prices on those economic growth worries, while the Aussie and New Zealand dollars languished near nine-month lows.
“Risk aversion in the air has buoyed the greenback, with pro-growth currencies bearing the brunt of it,” Rodrigo Catril, a strategist at National Australia Bank, wrote in a client note.
The yen , another safe-haven currency, slipped 0.1% to 109.87 per dollar on Friday, but remains in the centre of its trading range of the past six weeks.
The euro ticked up 0.05% to $1.6825, but still traded near the 9 1/2-month low of $1.16655 reached overnight. It is down 0.94% this week, the most since mid-June.