2023-11-02 06:03

TOKYO, Nov 2 (Reuters) - Japanese Prime Minister Fumio Kishida said on Thursday the government will spend over 17 trillion yen ($113 billion) on a package of measures to cushion the economic blow from inflation, which will include tax cuts. To fund part of the spending, the government will compile a supplementary budget for the current fiscal year of 13.1 trillion yen, Kishida told reporters. Including spending by local governments and state-backed loans, the size of the package will total 21.8 trillion yen. "Japan's economy is seeing a big opportunity open up to shift to a new stage for the first time in three decades," as it exits from a deflationary spiral, Kishida told a meeting of government and ruling party executives on Thursday. "That's why we need to help companies boost profitability and earn revenues to boost wages," he said. Reuters reported on Wednesday the government is considering spending more than 17 trillion yen for the package, which will include temporary cuts to income and residential taxes as well as subsidies to curb gasoline and utility bills. Inflation, fuelled by rising costs of raw materials, has kept above the central bank's target of 2% for more than a year, weighing on consumption and clouding the outlook for an economy making a delayed recovery from scars left by COVID-19. The rising cost of living is partly blamed for pushing down Kishida's approval ratings, piling pressure on the prime minister to take steps to ease the pain on households. With increases in wages proving too slow to offset rising prices, Kishida had said the government will cushion the blow by returning to households some of the expected increase in tax revenues generated by solid economic growth. Analysts, however, doubt whether the roughly 5 trillion yen to be spent on tax cuts and payouts would do much to boost consumption and Japan's economic growth. Takahide Kiuchi, a former Bank of Japan board member who is currently an economist at Nomura Research Institute, expects the measures to lift gross domestic product (GDP) by just 0.19% for the year. "It's a policy that isn't very cost effective," he said. "With Japan's output gap having turned positive in April-June, the economy doesn't need a stimulus package in the first place." Japan's economy expanded an annualised 4.8% in the second quarter, the biggest increase in more than two years, as an end to COVID-19 pandemic curbs boosted consumption. But falling real wages in July adds to doubts over central bank projections that domestic demand can keep the country on a steady recovery path. ($1 = 150.5100 yen) https://www.reuters.com/markets/asia/japans-kishida-announces-113-bln-package-combat-inflation-pain-2023-11-02/

2023-11-02 05:34

Nov 2 (Reuters) - A look at the day ahead in European and global markets from Wayne Cole. It's been a day for relief rallies in Asia as investors became increasingly confident the next move in U.S. interest rates will be down, not up. All the major Asian equity markets are higher, as are U.S and European stock futures. While Federal Reserve Chair Jerome Powell maintained the option of another hike, he sounded less than committed to the idea. Risks were now "more two sided" and almost "balanced", he said in his presser. They were making progress on inflation and, crucially, expectations of inflation "were in a good place". That was enough for markets to lower the risk of a December rate hike to 22%, and a January move to 28%. Meanwhile, the probability of a rate cut by June next year advanced to almost 70% and futures now imply around 85 basis points of easing for all of 2024. Powell, of course, played down the chance of cuts but he must know that with inflation steadily cooling real rates are rising. If the Fed does nothing at all, policy will effectively tighten into next year even as the economy is expected to slow, thus adding to the risks of recession. The Treasury market has played its part by pushing yields up in recent weeks, and duly celebrated by pulling them down again, at least for now. Ten-year yields are off 22 basis points from Wednesday's high of 4.71%, though that remains far above the 4.0% levels held in early August. The 30-year yields dropped back under 5% helped by relief Treasury's refunding plans included less issuance at the longer end than many had feared. The dovish mood proved infectious as investors pared back rate risks across much of the developed world. The Dec 2024 EURIBOR future jumped to a five-month high and now implies almost 100 basis points of easing in 2024. The Bank of England is seen as odds-on to hold rates when it meets later on Thursday, with a near 70% chance its tightening cycle is done and dusted. For currencies, the drop in Treasury yields pulled the U.S. dollar down modestly, while the improvement in risk sentiment gave a lift to the battered Aussie and kiwi dollars. The next major hurdle for equities will be results from the $2.7 trillion behemoth Apple (AAPL.O) after the bell. The focus will be on iPhone 15 sales and whether a strong start was slowed by cooling demand in China. Guidance for the crucial December quarter holiday season could also help. Markets will now be hoping the payrolls report on Friday doesn't rain on the party. Key developments that could influence markets on Thursday: - Appearances by ECB Board members Edouard Fernandez-Bollo and Isabel Schnabel, and by chief economist Philip Lane - Interest rate decisions from the Bank of England and Norges Bank - German reports unemployment data, while U.S. has weekly jobless claims, durable goods orders and auto sales https://www.reuters.com/markets/europe/global-markets-view-europe-2023-11-02/

2023-11-02 05:17

SYDNEY, Nov 2 (Reuters) - Santos (STO.AX) said on Thursday an Australian court has granted an interim injunction preventing it from starting work on laying undersea pipelines on its $3.6 billion Barossa gas project off northern Australia. The ruling comes after Simon Munkara, a traditional land owner from the Tiwi Islands, lodged proceedings with the Federal Court of Australia to halt the pipeline works until its impact and risk to underwater cultural heritage were properly assessed. Law firm Environmental Defenders Office (EDO) represented Munkara and other indigenous elders from the Tiwi Islands who had urged the government to make an urgent declaration to block the pipeline construction. The pipeline would cause significant damage to ancient burial grounds, aboriginal art and other sacred ancestral sites, Munkara said, according to a statement from EDO. The court will sit on Nov. 13 to determine whether to extend the injunction until the final hearing, which will be held on an expedited basis. Santos, which aims to start producing gas from Barossa in the first half of 2025, said its guidance on cost and schedule for the project remained unchanged. It will continue to defend the court proceedings. Australia's offshore regulator ordered Santos in January to evaluate the environmental risks to underwater indigenous cultural heritage before starting pipeline work though it did not prohibit the start of work. Santos has said, citing an independent expert, that there were no specific underwater cultural heritage sites along the planned route of the pipeline. A Santos ship was hours away from beginning work on the pipeline, lawyers for Munkara told the court. Santos said the vessel will remain at its current location but no pipeline works will be conducted during the interim injunction. The court's ruling poses another hurdle for the project and a win for Indigenous groups opposing fossil fuel developments, who have been raising concerns it could damage the environment and their cultural heritage. In September, the federal court halted approval for Woodside (WDS.AX) to conduct seismic blasting under the seabed for its $12 billion Scarborough gas project after a legal challenge by an Indigenous woman. https://www.reuters.com/markets/commodities/court-orders-santos-halt-barossa-pipeline-work-after-indigenous-groups-request-2023-11-02/

2023-11-02 04:50

WASHINGTON, Nov 2 (Reuters) - China, the world's largest emitter of methane, is expected to unveil its strategy to cut output of the greenhouse gas "imminently" but may stop short of setting specific reduction targets, two people familiar with the plan said. China produces over 14% of global methane emissions, but has so far resisted pressure to join a global pact to cut its methane output 30% by 2030 that was signed by over 150 other nations, led by the U.S. "I would say that what we could expect from this is going to be a very detailed plan of policies - of different regulations - that will be enacted," said Marcelo Mena, head of the Global Methane Hub and former environment minister of Chile. He said he discussed the plan with China's special climate envoy Xie Zhenhua during a visit to China last month. Mena told Reuters the plan focuses on some of China's most challenging methane sources, including emissions from coal mine seams and agriculture - including rice production - but he did not see any numerical targets in the plan. He said Xie told him the plan would be published before, or at, the upcoming, two-week COP28 climate summit in Dubai, which begins on Nov. 30. "This will be likely the most ambitious commitment and will cut the biggest chunk out of emissions from developing countries," he said. Another person familiar with the plans who declined to be named because they were not authorized to speak to the media said that China has been reluctant to include numerical targets in the strategy given concerns raised by its agriculture and energy ministries about the impact. China's environment ministry did not immediately respond to questions on when the report would appear and whether it would include hard targets. The ministry said last week that it was "pushing forward" the publication of the plan, state media reported, but it did not give a timeframe. The agriculture ministry last year recommended new farming practices, such as paddy irrigation management and low-protein diets for livestock, as ways to bring down methane. A study published in August by scientists at California's Lawrence Berkeley National Laboratory suggested that reforms to China's industrial and agriculture sectors could lead to 30-40% reduction in methane from 2015 levels by the end of the decade. China's massive coal sector could prove the biggest challenge since the country is the world's largest source of methane from coal mines, with 28% of the world's biggest methane emissions points, according to environmental research group Kayrros. The second source said China is expected to unveil its methane plan before resuming bilateral talks with the U.S. this week at Sunnylands in California ahead of the APEC summit in San Francisco. Sunnylands, a retreat located in the southern California desert, was where former US President Barack Obama and Chinese President Xi Jinping reached a historic agreement 10 years ago, which led to a US-China climate deal that paved the way for the 2015 Paris Agreement. Chinese officials on Thursday confirmed the meeting will take place from Nov 4 to 7. The U.S. and China first agreed at the Glasgow climate summit in 2021 to work together on measuring and reducing methane. China has already set a goal to bring carbon dioxide emissions to a peak by 2030 and achieve net-zero CO2 emissions by 2060. https://www.reuters.com/sustainability/cop/china-methane-reduction-plan-be-released-soon-may-lack-clear-targets-sources-2023-11-02/

2023-11-02 04:31

Nov 1 (Reuters) - (This Nov. 1 story has been corrected to remove inaccurate information and change sourcing from Public Citizen to Federal Energy Regulatory Commission, in paragraph 1) A company owned by Goldman Sachs' (GS.N) private equity arm, Rhythm Energy, petitioned the U.S. Federal Energy Regulatory Commission (FERC) in October to sell electricity, according to a filing with the regulatory agency. If approved, Rhythm Energy, which is owned by Goldman Sachs’ West Street Capital Partners VII fund, would offer retail electricity contracts, according to the filing dated Oct. 16. On Oct. 24, the FERC approved applications by Goldman Sachs-owned J. Aron & Company LLC to control GenOn's fleet of fossil fuel power facilities out of bankruptcy, according to a FERC filing. Both of the public filings were cited in a Nov. 1 press release by consumer rights group Public Citizen. https://www.reuters.com/business/goldman-sachs-applies-sell-us-retail-electricity-contracts-2023-11-01/

2023-11-02 04:27

HONG KONG, Nov 2 (Reuters) - The Hong Kong Monetary Authority (HKMA) on Thursday left its base rate charged through the overnight discount window unchanged at 5.75%, tracking a move by the U.S. Federal Reserve to keep rates steady. The U.S. central bank held interest rates steady on Wednesday, pausing its aggressive monetary tightening to assess if conditions are restrictive enough to tame inflation. HSBC Holdings also said it would keep its best lending rate in Hong Kong unchanged at 5.875%. HKMA said it is premature to conclude whether the U.S. rate hike cycle has been completed, and the high interest-rate environment is likely to last for some time. "The Hong Kong dollar exchange rate remains stable, and the Hong Kong dollar interbank rates might remain high for some time," HKMA said in a statement, adding that local financial and monetary markets continue to operate in a smooth and orderly manner. The public should carefully assess and manage the relevant risks when making property purchase, mortgage or other borrowing decisions, HKMA said. Hong Kong's monetary policy moves in lock-step with the United States as the city's currency is pegged to the greenback in a tight range of 7.75-7.85 per dollar. https://www.reuters.com/markets/asia/hong-kong-central-bank-leaves-interest-rate-unchanged-tracking-fed-move-2023-11-02/