Market news

Bloomberg.com — New Zealand’s central bank said it expects to keep interest rates at a record low for another two years as the outlook for economic growth weakens.

Reserve Bank Governor Adrian Orr held the official cash rate at 1.75 percent and left the door open to a cut if needed. “We expect to keep the OCR at this level through 2019 and into 2020, longer than we projected in our May statement,” he said Thursday in Wellington. “The direction of our next OCR move could be up or down.”

The central bank lowered its forecast for economic growth over the coming year amid a slump in business confidence, a cooler housing market and risks to New Zealand exports from global trade tensions. It pushed out its forecast for the first rate increase to the third quarter of 2020, a full year later than it predicted in May. The rate has been at 1.75 percent since the end of 2016.

Two-year swap rates fell to 2.05 percent — the lowest since October 2016 — and the kiwi dollar dropped almost half a U.S. cent. It traded at 67.07 cents at 11:30 a.m. in Wellington from 67.47 cents beforehand. In a media briefing following the decision, Orr said he was “very pleased” with the currency’s level, which he thought was close to fair value. […]

Bloomberg.com — Asian stocks were mixed Thursday with Chinese equities again outperforming despite the ongoing tariff to-and-fro between China and the Trump administration. The dollar ticked higher, while oil held on to Wednesday’s losses.

A firmer yen weighed on Japanese shares before the currency gave up its gains, while Chinese and Hong Kong stocks pushed higher as earnings reports offered a respite from the recent sell-off. Stocks also rose in Australia and dipped in South Korea. Treasuries maintained gains made as investors scooped up a record $26 billion 10-year auction. The kiwi tumbled to a two-year low after the New Zealand central bank pushed out its forecast for a rate increase by a year as the outlook for economic growth weakens.

China said it will impose 25 percent tariffs on an additional $16 billion worth of imports from the U.S. from Aug. 23, matching Washington’s latest move in the trade war. Separately, the U.S. announced new sanctions on Russia, saying it’s made a final determination that Moscow was responsible for the March 4 nerve-agent attack on former double agent Sergei Skripal in the U.K. The ruble tumbled.

Elsewhere, crude pared a drop to around a seven-week low after the escalating trade dispute between the world’s biggest economies overshadowed a decline in U.S. crude stockpiles. Bitcoin was steady after dropping for four days, leading a sell-off in digital coins of all sizes.

Bloomberg.com — Equities in Asia pared gains on Wednesday as investors continued to fret about the next step in the trade tussles between the U.S. and China. The dollar fell and China’s yuan pared gains triggered by further moves to stabilize the currency.

The region’s equity benchmarks gave up some earlier advances, with shares in China pacing a retreat. Japan erased gains as the yen rose. Stocks in Hong Kong also reversed an increase, while Australia bucked the trend. European equity index futures signaled a softer open to trading. Treasury yields were steady.

Adding to previous moves to ease pressure on the currency, the People’s Bank of China urged some lenders to prevent any “herd behavior” and momentum-chasing moves in the currency market, according to people familiar with the matter. Japanese bond yields nudged higher as a summary of opinions from policy makers at the Bank of Japan’s July 30-31 meeting showed one member had wanted freedom for yields to move up and down by around 0.25 percent on either side of the zero percent target.

Trade tensions remain in focus as the U.S. said it will begin imposing 25 percent duties on an additional $16 billion in Chinese imports in two weeks. It will be the second time the U.S. slaps duties on Chinese goods in about the past month, despite complaints by American companies that such moves will raise business costs and eventually consumer prices. Meanwhile, China’s exports grew faster than expected in July and imports surged, underscoring solid demand at home and abroad despite the uncertainty of the trade tensions.

Trade is the biggest risk in terms of sentiment, said Kerry Craig, global markets strategist at JPMorgan Asset Management in Melbourne.

“We don’t expect it to fade any time soon and we do think it’s a big worry about the sentiment it creates in the markets,” Craig said.

Elsewhere, the Turkish lira declined. The New Zealand dollar jumped on higher outlook for inflation as well as robust Chinese export growth. Australia’s dollar made little headway after the central bank chief said inflation was expected to reach its target in 2020.

Bloomberg.com — Australia held its interest rate at a record low as the central bank delivered a more sobering take on the global economy.

Reserve Bank Governor Philip Lowe and his board kept the cash rate at 1.5 percent, where it has now been for two years, in Sydney on Tuesday. Lowe amended his language on China’s economy in his accompanying statement, saying growth “has slowed a little” instead of growing solidly. He noted authorities there easing policy while heeding risks in the financial sector.

“The RBA quite rightly sounded a little less upbeat on the global outlook,” said Paul Dales, chief economist for Australia at Capital Economics. It “suggested that interest rates won’t rise for a while yet. Our more cautious forecasts suggest that rates may not rise until late in 2019, if not sometime in 2020.”

Bloomberg.com — Asian stocks drifted Tuesday as risk appetite remained subdued and the earnings season continued. The yen edged higher, while the dollar and Treasuries were little changed.

Equity benchmarks ticked higher in Japan and Korea with Australian shares posting declines with trading volumes below their 30-day averages. Hong Kong and Chinese stocks outperformed as investors deemed the nation’s equities cheap after the recent sell-off. A Reuters report that the Bank of Japan had considered raising interest rates this year helped the yen gain.

Earlier, the S&P 500 Index closed at its highest since January as Berkshire Hathaway Inc. bolstered financial shares and higher oil prices boosted energy producers. The yield on 10-year Treasuries held below 3 percent and the Cboe Volatility Index fell to its lowest since Jan. 26.

Investors largely shrugged off early concern sparked by China’s signal it won’t flinch in a trade war, adding to heightened rhetoric from U.S. President Donald Trump. Meanwhile, geopolitical concerns continue to lurk in the background with confusion about the status of negotiations intended to lead to the denuclearization of the Korean peninsula and the Trump administration moving to restore some U.S. sanctions on Iran.

Elsewhere, the pound was little changed after weakening to an 11-month low on Brexit angst. Turkey’s lira advanced after sinking to a record low as heightened concern over a diplomatic spat with the U.S. overshadowed the central bank’s attempt to support the currency. U.S. crude traded around $69 a barrel after Saudi Arabian production cuts heightened concerns about tightening worldwide supplies.

Bloomberg.com — Asian stocks were mixed Monday as China pledged it will stand the course of a trade war with the U.S. The yuan pared some of its gains following a rally triggered by a surprise China central bank move to make it more expensive to bet against the currency.

Equities in Hong Kong traded higher while Chinese shares declined, with the Shanghai Composite Index down more than 20 percent from January’s high and set to close at its lowest since February 2016. Japanese shares fell. Investors struggled to take the markets it either direction as they continued to parse the latest earnings results, including HSBC Holdings Plc. The yield on 10-year Treasuries steadied at 2.95 percent while the dollar ticked higher.

China stepped in to try to cushion the yuan after a record string of weekly losses saw the currency closing in on the key milestone of 7 per dollar. After a weekend of claims by U.S. President Donald Trump that he has the upper hand in the trade war with China, Beijing responded through state media by saying the nation is ready to endure the economic fallout.

Elsewhere, the Australian dollar slipped as funds hedged against the possibility of the central bank cutting its long-term inflation forecasts this week. The Canadian dollar edged lower as Saudi Arabia froze new trade and investments with the country. Oil and gold advanced.

The deficit in the foreign trade balance of the USA in June 2018 increased by 7.2% to $ 46.3 billion from the revised $ 43.2 billion in May, as shows the report of the Ministry of Trade of the country released on Friday. Analysts expected an increase of 7.9% on average – from previously announced $ 43.1 billion to $ 46.5 billion.

The negative balance of US foreign trade without taking into account price fluctuations (this indicator is used to calculate GDP) increased to $ 79.3 billion, compared with $ 75.5 billion in May.

Import of goods and services in the US in June rose by 0.6% to $ 260.2 billion, mainly due to active purchases of oil and medicines.

Purchases of foreign oil in June increased by 2%, gasoline – decreased by 1.8%.

The volume of exports decreased by 0.7% from May to $ 213.8 billion. In particular, exports of consumer goods fell by 8.1%, shipments of cars and spare parts decreased by 5.2%.

The expert of soybeans rose to $ 4.2 billion from $ 4.1 billion in May, in annual terms, growth was 40%.

Deliveries of gasoline from the USA abroad increased in June to a record $ 19.9 billion. At the same time, the import of this fuel also increased and amounted to the maximum since November of $ 32.4 billion.

The trade deficit with China slightly changed the year before, to $ 32.5 billion against $ 32 billion in May. The negative balance of trade with Mexico rose to $ 6.7 billion, the balance deficit with the EU rose to $ 12.8 billion.

The growth of the US foreign trade balance deficit was fixed against the background of the escalation of the trade conflict with China.

Earlier this week, US authorities signaled the possibility of imposing higher duties on Chinese goods worth $ 200 billion – at a rate of 25% instead of the previously planned 10%.

China, in turn, on Friday published a plan to respond to US trade threats, announcing the introduction of duties with differentiated rates for goods from the US worth about $ 60 billion a year.

Bloomberg.com — The euro-area economy dispelled hopes of stronger momentum in July, with a slowdown in activity signaling that growth going forward might be sluggish at best.

A Purchasing Managers’ Index for manufacturing and services dropped to 54.3, ceding most of the ground it gained in June, IHS Markit said.

After the gauge declined in five out of seven months this year, that renders the outlook “a straight choice between the upturn being sustained at its current subdued pace or rising headwinds reining in growth further,” according to Rob Dobson, an economist at the London-based company.

While the composite reading is in line with a flash estimate, an index for services was revised lower to 54.2 from 54.4. Manufacturing has seen its most subdued spell in more than one- and-a-half years this summer, with July’s print only slightly stronger than the previous month.

Weakening order growth has been the main factor weighing down output, according to IHS Markit. Companies are also less optimistic about future business amid ongoing threats of trade wars.

“Improved domestic demand may offset some of this in the near-term, but will need to strengthen further if it is to maintain that role,” Dobson said.

A slight pickup in momentum in Germany, if sustained, should help to offset slower growth in France, Italy and Spain, he said.

The three countries have reported second-quarter growth data that missed economists’ estimates. A first reading for Germany, the region’s largest economy, is due on Aug. 14.

Bloomberg.com — Asian stocks were mixed on Friday, ending the worst week for the region’s shares since March, amid ongoing trade tensions. The yuan extended losses to reach fresh lows, while Japanese yields edged lower after a tumultuous week for the bond market.

Shares in Japan and Hong Kong dropped, while equities in South Korea and India gained. The Shanghai Composite steadied but remains on course for a near four percent slide this week. The dollar maintained gains and the yield on 10-year Treasuries ticked back below 3 percent. China’s currency headed for an eighth weekly decline, the longest run since the start of the country’s modern foreign-exchange rate regime in 1994.

The gloom on trade is coming up against a mostly-positive earnings season and an upbeat message on the American economy delivered by the Federal Reserve on Wednesday. Of the almost 400 members of the S&P 500 that have reported earnings this season, about 85 percent of them beat analysts’ estimates. Data due Friday will probably show that the U.S. economy added jobs at a healthy clip again in July.

Elsewhere, 10-year JGB yields slipped to 0.11 percent. Turkey’s lira, bonds and stocks extended their slide after the U.S. imposed sanctions on two government ministers over the detention of an evangelical pastor.

Oil rallied from the lowest level in more than a month amid signs the drain from the biggest U.S. supply hub will continue. The pound maintained losses after the Bank of England’s hawkish rhetoric failed to convince investors of a brighter economic outlook.