WORLDWIDE: HEADLINES

UK economy set to grow faster than the U.S. this year – Goldman

Britain looks set to see faster economic growth than the United States this year as the country races ahead with its vaccination program after its slump in 2020, Goldman Sachs said on Sunday.

The bank said in a note to clients that it now expects British gross domestic product to grow by a “striking” 7.8% this year, “above our expectations for the U.S.”

A Reuters poll of analysts published on April 13 showed an average forecast for growth of 5.0% in the UK, the world’s fifth-biggest economy in 2021. The International Monetary Fund has projected a 5.3% expansion.

But since those forecasts were made there have been signs of an acceleration in the pace of recovery with the country now having given a first coronavirus vaccine to more than half of its total population.

“The UK economy is rebounding sharply from the Covid crisis,” Goldman Sachs said.

“The April flash PMI was much stronger than expected in the UK, with the services PMI moving strongly further into expansionary territory,” it said.

The bank also noted a much-stronger-than-expected 5.4% monthly jump in retail sales in March.

The note did not provide a comparison forecast for U.S. economic growth this year. In February, Goldman said it expected U.S. GDP would grow by 6.8% in 2021 as President Joe Biden pushed ahead with a huge fiscal stimulus program.

Britain’s economy shrank by nearly 10% last year as it was hit by longer coronavirus lockdowns than many of its peers. By comparison, the U.S. economy shrank by an estimated 3.5%, according to the IMF.

Full coverage: REUTERS

China digital currency trials show threat to Alipay, WeChat duopoly

In China’s commercial hub Shanghai, six big state banks are quietly promoting digital yuan ahead of a May 5 shopping festival, carrying out a political mandate to provide consumers with a payment alternative to Alipay and WeChat Pay.

The banks are persuading merchant and retail clients to download digital wallets so that transactions during the pilot program can be made directly in digital yuan, bypassing the ubiquitous payment plumbing laid by tech giants Ant Group, an affiliate of Alibaba 9988.HK, and Tencent 0700.HK.

“People will realize that digital yuan payment is so convenient that I don’t have to rely on Alipay or WeChat Pay anymore,” said a bank official involved in the rollout of e-CNY for the Shanghai trial, under the guidance of China’s central bank. The official is not authorized to speak with media and declined to be identified.

China’s development of a sovereign digital currency, which is far ahead of similar initiatives in other major economies, looks increasingly poised to erode the dominance of Ant Group’s Alipay and Tencent’s WeChat Pay in online payments.

That turf encroachment coincides with Beijing’s expanding effort to clamp down on anticompetitive behavior in the internet sector, part of a wider reining in of the clout of sector heavyweights.

Regulators scuppered Ant’s record $37 billion IPO in November and earlier this month imposed a sweeping restructuring on the fintech conglomerate controlled by Jack Ma. Ma’s Alibaba Group Holdings was recently hit with a record $2.8 billion antitrust penalty.

In public, the People’s Bank of China (PBOC) says e-CNY won’t compete with AliPay or WeChat Pay, and serves only as a “backup” or “redundancy”.

Full coverage: REUTERS

WORLDWIDE: FINANCE / MARKETS

Dollar grinds lower on bets U.S. tapering remains distant

The dollar edged lower on Monday amid speculation that U.S. Federal Reserve Chairman Jerome Powell will shun talk of tapering bond purchases at a policy meeting this week.

The euro rose to a near two-month high against the greenback before data later on Monday forecast to show an improvement in German business sentiment, which would bolster hopes for a brighter economic outlook.

Powell is likely to face questions over whether an improving labor market and rising coronavirus vaccinations warrant a withdrawal of monetary easing, but most analysts expect him to say such talk is premature, which would put downward pressure on Treasury yields and the dollar.

“The dollar is likely to continue to trend lower in line with the gathering momentum in the world economy,” analysts at Commonwealth Bank of Australia wrote in a research note.

“We expect the Fed policy meeting to be a non-event for the dollar. The U.S. economy is a long way from meeting the ‘substantial further progress’ threshold for the Fed to taper its asset purchases.”

The dollar stood at 107.75 yen, close to its lowest since March 4.

The euro rose to $1.2110, adding to gains made on Friday after positive data on European services and manufacturing activity.

The British pound was quoted at $1.3897, adding to a 0.3% gain in the previous session.

The dollar was little changed at 0.9128 Swiss franc, close to a two-month low.

Elsewhere, the Australian and New Zealand dollars rose toward one-month highs but are likely to track moves in global commodity prices, traders said.

In the cryptocurrency market, Bitcoin reclaimed the $50,000 mark and smaller rival Ether rose, recouping some of their losses from last week triggered by U.S. President Joe Biden’s plan to raise capital gains taxes for wealthy investors.

Full coverage: REUTERS

Oil inches lower on concerns over COVID-19 surge in India, Japan

Oil prices eased slightly on Monday on concerns that a resurgence of coronavirus infections in India and Japan, the world’s third and fourth largest oil importers, would cut fuel demand in Asia.

Brent crude futures fell 8 cents, or 0.1%, to $66.03 a barrel by 0058 GMT, following a 1.1% rise on Friday. U.S. West Texas Intermediate (WTI) crude futures were down 4 cents, or 0.1%, at $62.10 a barrel, after rising 1.2% on Friday.

Both benchmark crudes fell about 1% last week.

“Market sentiment was dented on worries that surging number of COVID-19 cases in some countries, especially in India, will slash fuel demand,” Kazuhiko Saito, chief analyst at commodities broker Fujitomi Co.

Prime Minister Narendra Modi urged all citizens to be vaccinated and exercise caution, saying on Sunday the “storm” of infections had shaken India, as the country set a new global record for the most COVID-19 infections in a day.

In Japan, a third state of emergency in Tokyo, Osaka and two other prefectures began on Sunday, affecting nearly a quarter of the population as the country attempts to combat a surge in cases three months before the Tokyo Olympics is set to open.

“Investors, including speculators, have been shifting funds from oil markets to grain markets recently as volatility has been much higher in prices of corn and other grains,” Fujitomi’s Saito said.

The Organization of the Petroleum Exporting Countries and allies led by Russia, known as OPEC+, will hold a largely technical meeting this week, with major changes to policy unlikely, Russian Deputy Prime Minister and OPEC+ sources said last week.

Full coverage: REUTERS

Asian shares near 6-week highs, eyes on Fed, U.S. GDP

Asian stocks rose for a third straight session on Monday as risk appetite was aided by recent data showing the world economic recovery from the coronavirus pandemic was well on track while the U.S. dollar loitered near two-month lows.

MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) climbed 0.2% to 699.63, the highest since March 18.

The index has had a strong run lately as it clocked its second consecutive weekly rise on Friday and was on track for another month of gains. Since April 2020, the index has offered positive returns in all but three months.

South Korea’s KOSPI index (.KS11) rose 0.3% while New Zealand shares added 0.6%.

Japan’s Nikkei (.N225) was down 0.3% while Australia’s benchmark share index (.AXJO) was off a shade too with a public holiday in five of the country’s eight states and territories.

Risk appetite was whetted by early April manufacturing activity indicators out last week, which pointed to a robust start to the second-quarter with data hitting record highs in the United States and signaling an end to Europe’s double dip recession.

Investors embraced the strong data, shrugging off earlier concerns about potential higher U.S. taxes on capital gains under the Biden administration.

On Friday, U.S. shares ended firmer with the S&P 500 (.SPX) hitting a record intraday peak to end 1.1% higher. The Dow (.DJI) rose 0.7% while the Nasdaq Composite (.IXIC) added 1.4%.

E-mini futures for the S&P 500 were slightly weaker in early Asian trading on Monday.

Full coverage: REUTERS