2026-01-16 02:50

BOJ set to keep policy rate steady at 0.75% in January Many in BOJ see scope for more hikes, some won't rule out April Analysts expect BOJ to wait until July before raising rates Weak yen may add to already broadening inflationary pressure Attention to yen-induced price pressure broadening within BOJ TOKYO, Jan 16 (Reuters) - Some Bank of Japan policymakers see scope to raise interest rates sooner than markets expect with April a distinct possibility, as a sliding yen risks adding to already broadening inflationary pressure, four sources familiar with its thinking said. BOJ policymakers are facing the unenviable task of pushing up years of ultra-low borrowing costs even as rising global headwinds weigh on growth in an economy that has only recently started to shake off the effects of chronic deflation. Sign up here. Having just raised interest rates to a 30-year high of 0.75% in December, the central bank is set to keep borrowing costs steady at its two-day policy meeting ending on January 23. But many BOJ policymakers see scope for further rate hikes with some not ruling out the chance of action in April, the sources said, which would be earlier than dominant private-sector views centred on monetary tightening occurring in the second half of this year. Analysts polled by Reuters expect the BOJ to wait until July before raising rates again, with more than 75% of them expecting it to climb to 1% or higher by September. But some in the BOJ aren't ruling out earlier action if there is sufficient evidence that Japan will durably achieve its 2% inflation target, the sources said. The sources commented on condition of anonymity as they were not authorised to speak with the media. The BOJ expects food-driven inflation to moderate in coming months and help achieve more wage-induced price rises that will keep core inflation sustainably at its 2% target - a projection it will likely maintain at next week's policy meeting. The yen's sharp declines since October, however, have heightened uncertainty on whether cost-push price pressures will moderate as smoothly as the BOJ projects. A weak yen pushes up the cost of importing fuel, food and various materials that could lead to higher prices of broader consumer products. With companies already eager to pass on rising costs, persistent yen falls could give them another excuse to push up prices, a risk that is drawing increasing attention within the central bank, the sources said. At next week's policy meeting, the BOJ is likely to raise its economic growth and inflation forecasts for fiscal 2026, the sources said. In current forecasts made in October, it projects the economy to expand 0.7% and core inflation to hit 1.8%. "After seeing the yen weaken despite the BOJ's December rate hike, I'm getting a stronger sense the BOJ may be behind the curve in addressing inflation risks and could be forced to raise rates sooner than expected," said Katsutoshi Inadome, a senior strategist at Sumitomo Mitsui Trust Asset Management. "With the yen still falling, there's a good chance of an April hike. I won't rule out further hikes in July and October." APRIL MEETING KEY To be sure, there is no consensus within the board on how soon the BOJ should pull the trigger. Governor Kazuo Ueda has signalled the need to tread cautiously, with a close eye on how past rate hikes could affect the fragile economy. But others in the nine-member board appear to favour a more hawkish approach. A summary of opinions at the BOJ's December meeting showed one of them calling for steady rate hikes to avoid being behind the curve in addressing inflationary risks. Another wanted a hike once every few months, while a third said timely rate increases will keep excessive yen falls at bay, the summary showed. The need for vigilance against mounting price pressure is likely being shared beyond hawkish members Naoki Tamura and Hajime Takata, who in December dissented to the BOJ's view that it will take until October and beyond for inflation to durably hit 2%. Core consumer inflation, which hit 3.0% in November, has remained above the BOJ's 2% target for nearly four years due largely to stubbornly high food prices. The slow pace of BOJ rate hikes has kept Japan's real interest rates deeply negative, drawing criticism from some politicians as a factor accelerating yen falls. Since fiscal and monetary dove Sanae Takaichi became prime minister in October, the yen has fallen about 8% against the dollar to briefly hit an 18-month low of 159.45 earlier this week. In a news briefing after December's rate hike, Ueda said some board members called for caution against inflationary pressures from a weak yen, a sign sharp yen declines could serve as a key trigger for another rate hike. The BOJ's meeting on April 27-28, which will follow one in January and March, will be critical, some analysts say. By then, many firms will have concluded their annual wage negotiations with unions where an intensifying job shortage is seen prodding many of them to offer bumper pay hikes. The BOJ's next quarterly business survey, due on April 1, will offer clues on how past rate hikes have affected business expenditure plans. The board will also produce for the first time its growth and inflation projections extending through fiscal 2028, which would require a more thorough analysis of the BOJ's longer-term rate hike path, analysts say. "If the BOJ were to push forward the timing of its next rate hike, realistically it would be in April when it releases its quarterly outlook report," analysts at SMBC Nikko Securities wrote in a research note. https://www.reuters.com/world/asia-pacific/some-boj-see-scope-raise-rates-sooner-than-markets-expect-sources-say-2026-01-16/

2026-01-16 01:32

Share of Russia in India's Dec oil lowest since December 2023 Share of Middle East rose to 38-month high Russia still top oil supplier to India in December and 2025 NEW DELHI, Jan 15 (Reuters) - India's Russian oil imports fell to their lowest level in two years in December, as Western sanctions pushed refiners to tap alternatives, lifting OPEC's share of imports to an 11-month high, trade data showed. Lower imports of Russian oil, sold at a discount, is likely to hit profits of refiners in the world's third largest oil importer and consuming nation and push them to turn to suppliers in the Middle East, the U.S. and South America. Sign up here. Tighter U.S. and European Union sanctions have slowed Russian oil flows to India, with imports dropping about 22% to 1.38 million barrels per day in December from the previous month, reducing Russia's share to 27.4%, the lowest since January 2023, while OPEC's share rose to 53.2%, the data showed. Reliance Industries (RELI.NS) , opens new tab, the largest Indian buyer of Russian oil, stopped receiving crude under its deal with Rosneft (ROSN.MM) , opens new tab in the final 10 days of December, with its imports from Russia falling to a nearly two-year low, the data showed. State refiners, meanwhile, continued to source Russian oil from non-sanctioned suppliers. RUSSIA REMAINS TOP SUPPLIER Despite the drop, Russia remained the top supplier of oil to India in December and during first nine of this fiscal year to March 31, 2026, followed by Iraq and Saudi Arabia. Some cargoes that arrived in December, however, were discharged in January, the data showed. India's Russian oil imports are expected to average around 1.2 million to 1.4 million bpd in January, with the pullback looking more like a short-term disruption from compliance issues rather than India moving away from Russia completely, said Sumit Ritola, lead research analyst, refining and modelling at Kpler. To keep track of refiners' oil purchases, the Indian government is seeking weekly details on crude purchases from Russia and the U.S. OPEC SHARE RISES For 2025, OPEC's share of India's crude imports edged up to 50%, from 49% from a year earlier, while Russia's portion shrank to 33.3% versus 36% in 2024. India emerged as the biggest buyer of discounted Russian seaborne crude following the start of the Ukraine war in 2022. The purchases have fuelled a backlash from Western nations, which have targeted Russia's energy sector with sanctions, arguing that oil revenues help fund Moscow's war effort. The U.S. doubled import tariffs on Indian goods to 50% last year as punishment for its heavy purchasing of Russian oil. The two countries are currently negotiating a potential trade deal. https://www.reuters.com/business/energy/opec-regains-share-india-russian-oil-imports-slump-december-2026-01-15/

2026-01-16 00:41

Taiwan offers investment in exchange for lower tariffs Fast-growing TSMC looks to expand in Arizona Deal deepens ties between Washington and Taipei as China tensions simmer Many of Trump's tariffs still face Supreme Court review Taiwan needs 'to keep our president happy' to protect 'their country,' US official says WASHINGTON, Jan 15 (Reuters) - The U.S. and Taiwan clinched a trade deal on Thursday that cuts tariffs on many of the semiconductor powerhouse's exports, directs new investments in the U.S. technology industry and risks infuriating China. The deal deepens the Trump administration's ties with Taipei at a critical time as China ratchets up pressure on the island, which it views as its own, and Washington has worked to avoid an all-out trade war with Beijing. Sign up here. Under the long-negotiated deal, Taiwanese chipmakers like TSMC (2330.TW) , opens new tab that expand U.S. production will be charged a lower tariff on semiconductors or related manufacturing equipment and products they import into the U.S. and can import some duty-free. Broad tariffs that apply to most other Taiwanese exports to the U.S. will fall from 20% to 15%. Generic pharmaceuticals, aircraft components and "unavailable natural resources" will face a 0% tariff, the Commerce Department said. The U.S. also committed that Taiwan will be treated no worse than anyone else should chips tariffs be increased later, according to Taiwan. In exchange, Taiwanese companies will invest $250 billion to increase production of semiconductors, energy and artificial intelligence in the U.S. That includes $100 billion already committed by TSMC in 2025, with more to come, according to U.S. Commerce Secretary Howard Lutnick. Taiwan will also guarantee an additional $250 billion in credit to facilitate further investment, the Trump administration said. Lutnick said in an interview on CNBC on Thursday that the objective was to bring 40% of Taiwan's entire chip supply chain and production to the U.S. He said that if they did not build in the U.S., the tariff was likely to be 100%. BOOST FOR CHIPMAKERS' MAJOR SUPPLIERS The boost in chip production will likely provide more business for TSMC's major suppliers, including major chip manufacturing toolmakers such as ASML (ASML.AS) , opens new tab, Lam Research (LRCX.O) , opens new tab and Applied Materials (AMAT.O) , opens new tab. It should also provide a boost to smaller suppliers of chemicals and materials, such as Sumitomo Corp (8053.T) , opens new tab and DuPont spinoff Qnity Electronics (Q.N) , opens new tab. Many of those firms have long had a presence in Arizona due to Intel's (INTC.O) , opens new tab major operations there, but they have expanded facilities with TSMC's arrival in the state, where it is enlarging an existing manufacturing plant. Shares of chip company Nvidia (NVDA.O) , opens new tab, which depends on TSMC for manufacturing, rose more than 2%, keeping most of its gains from earlier in the day. Intel shares were modestly lower. Depository receipts and shares of ASML, Lam, Applied Materials and Qnity rose about 4% to 6%. WASHINGTON SEES COMPUTER CHIPS AS NATIONAL SECURITY ISSUE Washington has grown increasingly impatient with its reliance on computer chips from abroad, especially an island in China’s sights. Semiconductors were invented in the U.S., many are designed there and it remains a top importer of them for everything from consumer gadgets to AI chatbots and advanced weaponry. But many of the most cutting-edge chips are manufactured abroad, especially in Taiwan. Intel and South Korea's Samsung Electronics (005930.KS) , opens new tab are also expanding U.S. production capacity. TSMC announced its Arizona factory in 2020, during U.S. President Donald Trump's first term, and expanded it under his Democratic successor Joe Biden. As it expands further, TSMC risks overspending on a high-flying industry, running into labor and skill shortages, navigating tricky politics around foreign worker immigration and shifting business away from Taiwan at a time of immense geopolitical vulnerability for the island. China views Taiwan as its own territory, a position Taipei rejects. Washington has formal diplomatic ties with Beijing, but maintains unofficial relations with Taiwan and is the island's most important arms supplier. "Look, they need to keep our president happy, right," said Lutnick told CNBC, referring to Taiwan. "Because our president is the key to protecting their country." TAIWAN'S SEMICONDUCTOR POWERHOUSE SET TO EXPAND IN U.S. Under the agreement, chipmakers that expand in the U.S. will be able to import up to 2.5 times their new capacity of semiconductors and wafers with no extra tariffs during an approved construction period. Preferential treatment will apply to chips that exceed that quota. Dan Hutcheson, vice-chair of technology analysis firm TechInsights, said the deal was likely to drive higher demand in the chipmaking supply chain as Taiwanese firms build U.S. operations. Trump on Wednesday imposed a 25% tariff on certain AI chips, such as the Nvidia H200 AI processor. But the rule includes broad exemptions for those used in U.S. data centers and leaves most other chips untouched, for now. TSMC reported a forecast-smashing 35% jump in fourth-quarter profit earlier on Thursday. CEO C.C. Wei said the company was applying for permits in Arizona to begin construction on a fourth factory and the first advanced packaging plant. Tariffs on auto parts, timber, lumber and wood products from Taiwan will total no more than 15% under the new deal, which Taipei said was subject to review in Taiwan's parliament. The U.S. Supreme Court is expected to rule soon on the president's authority to impose broad tariffs without congressional approval. It is not clear how the Taiwan or other trade deals Trump struck would change if the court rules many of his tariffs unconstitutional. https://www.reuters.com/world/china/us-taiwan-reach-trade-deal-focused-semiconductors-commerce-department-says-2026-01-15/

2026-01-16 00:24

Governors, Trump administration to sign two-year price cap deal for future PJM power auctions-sources PJM grid covers 67 million people in 13 mid-Atlantic and inland states Governors of Pennsylvania, Ohio, Virginia and Maryland expected to be among those attending-sources WASHINGTON, Jan 15 (Reuters) - Governors from U.S. states seeing a rapid expansion in data center construction will visit the White House on Friday to sign an agreement with the Trump administration intended to curb rising electricity costs, said two sources with direct knowledge of the matter. The agreement includes price caps for two years on future auctions in the PJM grid covering 67 million people in mid-Atlantic and inland states and forcing new data center operators like Amazon (AMZN.O) , opens new tab and Google (GOOGL.O) , opens new tab to take on a greater share of the cost of expanding the grid. Sign up here. The White House event comes as President Donald Trump seeks to combat consumer price inflation that risks undermining support for Republicans ahead of November's mid-term elections. The governors will be from among the 13 states within the PJM grid, which is experiencing a rapid increase in data center construction, according to the sources, who were not authorized to speak publicly about the matter. The list includes Democrats Josh Shapiro of Pennsylvania and Wes Moore of Maryland, along with Republicans Mike DeWine of Ohio and Glenn Youngkin of Virginia, the sources added. Representatives from the governors' offices and the White House did not respond to requests for comment. A PJM spokesperson said representatives from the grid operator did not have plans to attend. RISING POWER BILLS HAVE LED TO BACKLASH Data centers are major consumers of electricity and are being built due to rising demand for artificial intelligence. Several guiding principles on how PJM should operate will be unveiled at the event, including expediting the interconnection of power plants to ensure PJM has enough capacity to meet the surging demand for power, according to the sources. It will also call for triggering PJM's reliability backstop option to create a separate auction for new generation, the sources added. Rising power bills in PJM's region have led to a political backlash over the last year and threats by some governors to abandon the regional grid. Last summer, nine state governors wrote an open letter to the PJM board of managers criticizing the grid operator for not doing enough to address an escalating electricity affordability crisis. On Thursday, U.S. Senator Chris Van Hollen, a Maryland Democrat, introduced a bill called the "Power for the People Act" to rein in rising electricity costs Americans are facing from the huge amounts of energy required by data centers. “Americans are already struggling to make ends meet – they shouldn’t have to foot the bill for big corporations’ massive expansion of data centers," Van Hollen said in a press release. https://www.reuters.com/business/retail-consumer/governors-head-white-house-friday-unveil-sign-curb-power-prices-sources-say-2026-01-15/

2026-01-16 00:03

No rate debate in near term if baseline holds, Lane says Current rates deliver baseline for the next several years Cyclical growth recovery seen this year and next FRANKFURT, Jan 16 (Reuters) - The European Central Bank will not debate any rate change in the near term if the economy stays on course, but new shocks, like a ‌potential deviation by the Federal Reserve from its mandate, could upset the outlook, ECB chief economist Philip Lane said. The ECB has kept rates on hold since ending a rapid rate cut cycle in June and signalled last month that it was in no hurry to change policy again since economic growth is surprisingly strong and inflation seems to have settled around ‌the 2% target for the next several years. Sign up here. A potential risk to this rather benign outlook is U.S. President Donald Trump's continued efforts to exert greater control over interest rates and push down borrowing costs much quicker than the Fed considers appropriate given lingering price pressures. "It would be economically difficult for us if inflation ‍in the U.S. did not return to target, or if financial conditions in the United States spilled over to a rising term premium," Lane told Italian newspaper La Stampa in an interview published on Friday. "A reassessment of the future role of the dollar, could ⁠also constitute a kind of financial shock to the euro," Lane said. "So there are scenarios where, if the ‍Federal Reserve departed from its mandate, that would create a problem." Unlike most central banks, which focus primarily on inflation, the Fed ‌has ‌an unusual dual mandate of promoting maximum employment and stable prices, deemed to be an inflation rate of 2%. The euro firmed sharply against the dollar last year as investors pulled out of dollar assets on policy uncertainty, weakening European export competitiveness at a time when cheap Chinese goods are already pricing European products out of key markets. Still, Lane expressed ⁠confidence in Fed policy ⁠and said the euro zone was likely to see a sustained stabilisation of inflation at 2%, as seen by its December projections. "In these circumstances, there is no near-term interest rate debate," Lane said, batting back a question about a potential rate hike. "The current level of the ‍interest rate delivers the baseline for the next several years. "But if we see developments in either direction, we will react," he said. Markets for a brief period at the turn of the year saw the possibility of a rate hike in late 2026 but now see the deposit rate holding steady at 2% this year. Lane argued ‍that the 21-nation euro zone is likely to see a stronger cyclical recovery this year and next but potential growth itself was low and deeper structural changes were needed to kick it into higher gear. https://www.reuters.com/business/ecb-steady-rate-path-now-fed-tussle-risk-chief-economist-warns-2026-01-16/

2026-01-15 23:47

TSMC predicts robust growth, boosts US chip tool stocks Goldman, Morgan Stanley rise after results Indexes: Dow up 0.6%, S&P 500 up 0.3%, Nasdaq up 0.3% NEW YORK, Jan 15 (Reuters) - U.S. stocks rose on Thursday after two days of declines as Morgan Stanley and Goldman Sachs shares shot up following upbeat quarterly results, while Taiwan-based chipmaker ‌TSMC's blockbuster results boosted shares of U.S. chipmakers. Goldman Sachs (GS.N) , opens new tab and Morgan Stanley (MS.N) , opens new tab both reported a rise in quarterly profit, helped by a flurry of dealmaking. Shares of Goldman rose 4.6%, giving the Dow its biggest boost, and Morgan Stanley gained 5.8%. Sign up here. Earlier this week, other banks reported mixed results that weighed on the sector, along with worries about U.S. President Donald Trump's proposed one-year cap that would limit credit-card ‌interest rates to 10%. Investors are still buying stocks that are undervalued compared with tech, said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma. "It's been growth, tech or bust in this market," in recent years, he said. Today, "it's the banks and old-school industrials" that are standouts. The S&P 500 industrials index (.SPLRCI) , opens new tab notched a closing record high again. Tech stocks ‍also rose, led by chipmakers. The world's main producer of advanced artificial intelligence chips, TSMC (2330.TW) , opens new tab, predicted robust annual growth and flagged more U.S. manufacturing capacity was in the works. U.S.-listed shares of TSMC jumped 4.4%. An index of semiconductors (.SOX) , opens new tab climbed 1.8%. Shares of Nvidia (NVDA.O) , opens new tab, Broadcom (AVGO.O) , opens new tab and chipmaking tool company Applied Materials (AMAT.O) , opens new tab all climbed. The Dow ⁠Jones Industrial Average (.DJI) , opens new tab rose 292.81 points, or 0.60%, to 49,442.44, the S&P 500 (.SPX) , opens new tab gained 17.87 points, or 0.26%, to 6,944.47 and ‍the Nasdaq Composite (.IXIC) , opens new tab gained 58.27 points, or 0.25%, to 23,530.02. With tech, "there was some worry as far as valuations - that they were getting a little ‌too ‌far ahead of themselves," said Alan Lancz, president of Alan B. Lancz & Associates Inc., an investment advisory firm, based in Toledo, Ohio. "That's been kind of squashed this morning with the news from Taiwan Semiconductor." Richly valued tech and growth stocks have lost some momentum recently as investors kicked off the year by chasing bargains. Both mid-caps (.IDX) , opens new tab and the small-cap Russell 2000 (.RUT) , opens new tab have been outperforming the S&P 500 so far ⁠this year. The Russell 2000 reached a ⁠closing record high. The equal-weighted S&P 500 (.SPXEW) , opens new tab has risen about 4% since the end of December versus an increase of 1.4% for the S&P 500. Among other financial companies, BlackRock (BLK.N) , opens new tab, the world's largest asset manager, gained 5.9% after a rally in markets lifted fee income and pushed its assets under management to a record $14.04 trillion in ‍the fourth quarter. Results from the banks essentially have kicked off the fourth-quarter U.S. earnings season. The season picks up steam next week with a more diverse group of companies set to report. Volume on U.S. exchanges was 19.12 billion shares, compared with the 16.81 billion average for the full session over the last 20 trading days. Advancing issues outnumbered decliners by a 1.92-to-1 ratio on the ‍NYSE. There were 759 new highs and 55 new lows on the NYSE. On the Nasdaq, 2,683 stocks rose and 2,137 fell as advancing issues outnumbered decliners by a 1.26-to-1 ratio. https://www.reuters.com/business/wall-st-futures-rise-tsmc-sparks-semiconductor-rally-financial-earnings-deck-2026-01-15/