2025-01-05 21:47

Jan 6 (Reuters) - A look at the day ahead in Asian markets. The first full trading week of 2025 kicks off in Asia on Monday with the sharp slide in China's currency and bond yields, an increasingly tense and fluid political situation in South Korea and a blocked U.S.-Japanese corporate merger all vying for investors' attention. A raft of purchasing managers index reports is also on deck, offering investors the first glimpse into how many of Asia's biggest economies, including China's, closed out 2024. The global market backdrop looks relatively bright after Friday's rebound on Wall Street, and equity and bond market volatility seems well-contained. But emerging market currencies and assets are on the defensive, thanks to elevated U.S. Treasury yields and a soaring dollar. The greenback softened a bit on Friday, but it hit a fresh two-year high the day before and has rallied almost 10% in the last three months. Much of the dollar's appeal comes from the surge in long-dated U.S. Treasury yields since the Fed began cutting interest rates in September. The central bank's 100 basis points of easing has been met with a rise of 100 bps in the 10-year yield, a remarkable turn of events that has bamboozled most investors - and likely policymakers too. The picture in China could not be more different. As investors position for a year of policy easing and liquidity provision from Beijing, the yuan and bond yields are coming under heavy downward pressure. Attention is focusing on the short end of the Chinese curve, with the two-year yield on the brink of breaking below 1.00%. It is already the lowest on record, having tumbled 50 bps in the last two months and 100 bps since last March. The psychological 1.00% barrier could break on Monday. In this context, Chinese inflation data later this week will take on even greater significance, and a Reuters poll suggests annual consumer inflation in December held steady at 0.2%. Although China's economic surprises index has been rising in recent weeks, markets will be highly sensitive to added deflationary pressures. The spot yuan on Friday slid to a four-month low, breaking through the 7.30 per dollar level that the People's Bank of China had appeared to be defending. A move through 7.35 per dollar would signal a fresh 17-year low. Selling pressure on the yuan looks pretty strong, as evidenced by the spread between the spot dollar/yuan rate and the central bank's daily fixing. It is now the widest since last July, hovering around its widest levels on record. Are authorities in Beijing getting nervous? The central bank on Friday warned fund managers against slamming bond yields even lower, amid worries that a bubble in bonds might undercut Beijing's efforts to revive growth and manage the yuan. Here are key developments that could provide more direction to markets on Monday: - China, Japan, India, Australia services PMIs (December) - Thailand inflation (December) - Vietnam GDP (Q4) Sign up here. https://www.reuters.com/markets/asia/global-markets-view-asia-graphic-2025-01-05/

2025-01-05 18:18

Policymakers also say they don't want to increase unemployment Fed has signaled slower rate cuts this year than last Effect of Trump policies on economy remains a wildcard Jan 4 (Reuters) - (This Jan. 4 story has been refiled to remove repetitive paragraphs) Two Federal Reserve policymakers on Saturday said they feel the U.S. central bank's job of taming inflation is not yet done, but also signaled they do not want to risk damaging the labor market as they try to finish that job. The remarks, from Governor Adriana Kugler and San Francisco Fed President Mary Daly, highlight the delicate balancing act facing U.S. central bankers this year as they look to slow their pace of rate-cutting. The Fed lowered short-term rates by a full percentage point last year, to a current range of 4.25%-4.50%. Inflation by the Fed's preferred measure is well down from its mid-2022 peak of around 7%, registering 2.4% in November. Still that's above the Fed's 2% goal, and in December policymakers projected slower progress toward that goal than they had earlier anticipated. "We are fully aware that we are not there yet - no one is popping champagne anywhere," Kugler said at the annual American Economic Association conference in San Francisco. "And at the same time ... we want the unemployment rate to stay where it is" and not increase rapidly. In November, unemployment was 4.2%, consistent in both her and colleague Daly's view with maximum employment, the Fed's second goal alongside its price stability goal. "At this point, I would not want to see further slowing in the labor market -- maybe gradually moving around in bumps and chunks on a given month, but certainly not additional slowing in the labor market," said Daly, who was speaking on the same panel. The policymakers were not asked, nor did they volunteer their views, about the potential impact of incoming President Donald Trump's economic policies, including tariffs and tax cuts, which some have speculated could fuel growth and reignite inflation. Sign up here. https://www.reuters.com/world/us/feds-kugler-daly-say-job-not-done-taming-inflation-2025-01-04/

2025-01-05 17:49

PARIS, Jan 5 (Reuters) - Convoys of farmers set off on Sunday to try to block roads around Paris in protest against what they say is unfair competition from overseas and excessive regulation. Farmers from France, the European Union's biggest agricultural producer, led European-wide protests at the start of 2024, but demonstrations fizzled out as the year went on. However, a move last month by the EU and South American nations in the Mercosur bloc to announce an agreement in principle on a free trade deal has given new impetus to French farmers opposed to the Mercosur deal. French farmers also remain unhappy about regulation which they say is hitting their profits. Farming trade union officials are due to meet French Prime Minister Francois Bayrou on Jan. 13 to express their concerns. "They don't understand the level of misery and distress that farmers are going through at the moment," Amelie Rebiere, vice-president of the Co-ordination Rurale farming trade union, told BFM TV. Those who back the EU's Mercosur deal, such as Germany, say it offers a way to reduce reliance on trade with China, and insulates EU nations from the impact of trade tariffs being threatened by U.S. President-elect Donald Trump. Nevertheless, many European farmers - often led by those from France - have repeatedly protested against the EU-Mercosur deal, arguing it would lead to cheap imports of South American commodities, notably beef, that do not meet EU safety standards. Sign up here. https://www.reuters.com/world/europe/farmers-convoys-head-paris-restart-protest-movement-2025-01-05/

2025-01-05 13:59

Investors seek stable economy to support 2025 equity gains Labor market data crucial for Fed's interest rate plans December jobs report expected to show 150,000 job growth NEW YORK, Jan 3 (Reuters) - The stock market faces its first major test of the year in the coming week, with investors counting on the U.S. jobs report to show a stable but not overheated economy that underpins expectations for equity gains in 2025. Stocks wobbled at the end of December and the start of January, cooling off after a torrid run. The benchmark S&P 500 closed 2024 with a 23% rise and posted its biggest two-year gain since 1997-1998. Prospects for a third straight standout year hinge in part on the strength of the economy, with labor market data among the most important reads into the economy's health. The data could also help clarify the Federal Reserve's interest rate plans after the central bank last month rattled markets by reducing its projected rate cuts for 2025. "Investors are going to want to see confirmation that labor trends remain solid, which means the economic outlook probably remains firm," said Anthony Saglimbene, chief market strategist at Ameriprise Financial. "Any kind of data that suggests things are weakening a little bit more than expected I think could create volatility," Saglimbene said. Investors enter the year generally upbeat about the U.S. economy. A Natixis Investment Managers survey conducted at the end of last year found 73% of institutional investors said the U.S. will avoid a recession in 2025. Labor market data has been volatile in recent months following aerospace industry strikes and hurricanes. November data showed growth of 227,000 jobs that rebounded from a tepid rise in October. The three-month average gain of 138,000 "suggests that hiring continues to slow gradually," Capital Economics analysts said in a note. The report for December, due out on Jan 10, is expected to show growth of 150,000 jobs with the unemployment rate at 4.2%, according to a Reuters poll of economists. Following the prior two reports, "this is going to be probably the first clean read of what is the underlying trend in the labor market," said Angelo Kourkafas, senior investment strategist at Edward Jones. Investors are also wary of the jobs report revealing an overly strong economy, with a revival of inflation seen as one of the key risks to markets early in the year. The Fed at its December meeting lifted its forecast for expected inflation in 2025, paving the way for higher interest rates than it previously forecast. After lowering its benchmark rate at three straight meetings, the Fed is expected to pause its easing cycle when it next meets at the end of January before making further cuts of about 50 basis points over the rest of the year. For the jobs report, the market is "looking for that Goldilocks number -- neither too hot, nor too cold," Kourkafas said. OTHER EMPLOYMENT DATA While the payrolls data will be the most closely followed release, the coming week brings other market-sensitive employment figures, as well as reports on factory orders and the services sector. Despite a strong 2024, stocks were weak in December, with the S&P 500 falling 2.5%. December had only five days with more stocks in the index gaining as opposed to declining, the lowest share of such relatively positive days for any month going back to 1990, according to Bespoke Investment Group. Following the end-of-year holiday period, "next week probably ushers in more robust volumes, which would certainly be a better indication of directionality for the market," said Art Hogan, chief market strategist at B. Riley Wealth. "A solid jobs report would certainly help turn things around in this market that has otherwise been pretty soft to end the year and start the new year," Hogan said. Wall St Week Ahead runs every Friday. For the daily stock market report, please click Sign up here. https://www.reuters.com/markets/us/wall-st-week-ahead-us-jobs-report-poses-first-big-stocks-test-2025-2025-01-03/

2025-01-05 11:45

Jan 5 (Reuters) - Liverpool's Premier League fixture with Manchester United is expected to go ahead as scheduled on Sunday despite adverse weather conditions and snowfall, both clubs announced after two safety meetings. Britain's Met Office on Friday issued an amber warning, its second-most severe after red, for snow and ice in parts of England and Wales on the weekend, while Liverpool's John Lennon Airport also temporarily closed on Sunday. League Two matches between Chesterfield and Gillingham, and Fleetwood Town and AFC Wimbledon were postponed on Sunday, as well as a Women's FA Cup tie between Burnley and Nottingham Forest. "Today's fixture against Manchester United will go ahead as planned. Two safety meetings were held earlier to assess the weather and travel conditions," Liverpool said in a statement. "We thank everyone involved in helping us to get this game on today." Liverpool top the standings with 45 points and have a game in hand over the other title contenders. They are five points ahead of second-placed Arsenal, while United, with five losses in their last six league games, are languishing in 14th with 22 points. Liverpool's Merseyside derby against Everton was postponed last month due to adverse weather conditions caused by storm Darragh. Sign up here. https://www.reuters.com/sports/soccer/liverpool-v-man-utd-go-ahead-scheduled-2025-01-05/

2025-01-05 00:37

Jan 4 (Reuters) - Millions of Americans from the Plains to the East Coast faced the threat of blizzards, heavy snow, treacherous ice and freezing rain through Monday, the National Weather Service said on Saturday. Governors in Kentucky and Virginia declared states of emergency ahead of the winter storm. "The storm is still taking shape," meteorologist Rich Bann of the NWS's Weather Prediction Center said Saturday evening. "But this thing has multiple hazards from heavy snows in the Plains to significant icing covering roads farther south." He added that more than 60 million people in the U.S. were affected by winter weather warnings, watches or advisories this weekend. A swath extending eastward from Nebraska and Kansas through Ohio, Indiana, southwestern Pennsylvania and northwestern Virginia could see from 1 inch (2.54 cm) to 1 foot (30 cm) of snow. Ice could knock out power lines and cause widespread outages. A wintry mess of freezing rain and ice will hit southern Missouri, Kentucky and Tennessee on Sunday, Bann said, likely making roads hazardous and downing power lines. "It'll be nearly impossible to drive in some areas," he said. The Kansas City International Airport in Missouri closed temporarily on Saturday afternoon due to rapid ice accumulation, officials said on social media. Bann said that the storm should move past the East Coast and into the Atlantic Ocean by late on Monday, but a new blast of Arctic air will bring frigid cold to the eastern two-thirds of the U.S. by the middle of next week. Sign up here. https://www.reuters.com/world/us/massive-winter-storm-clobber-us-plains-east-coast-2025-01-05/