GLOBAL NEWS-
Japanese manufacturing activity contracted in February at the fastest pace in two-and-a-half years as factories cut back output amid shrinking domestic and export orders, a revised survey showed on Friday. The survey highlighted the extent of the damage that the U.S.-China trade war has already inflicted on Japan and other export-oriented countries in Asia.The Final Markit/Nikkei Japan Manufacturing Purchasing Managers Index (PMI) was a seasonally adjusted 48.9, slightly above a flash reading of 48.5 but below January’s final 50.3.
Japan’s capital expenditure accelerated in October-December in a sign economic growth will be revised up for the quarter, but economists warn slowing global trade may still yet hurt activity in the first half of this year. Capital expenditure grew 5.7 percent in October-December from the same period last year, led by increased spending in the telecommunications, chemicals, and real estate sectors. That was faster than a 4.5 percent increase in the previous quarter. Excluding software, capital expenditure rose 3.3 percent in October-December from the previous quarter on a seasonally adjusted basis after a revised 4.4 percent decline in July-September.
Japan economy minister Toshimitsu Motegi said he wanted to start bilateral trade talks with the U.S. as soon as possible, a day after President Donald Trump turned up the tension by complaining about years of “unfair” trade. Motegi gave no specific date for talks when speaking to reporters in Tokyo Friday. His U.S. counterpart, Trade Representative Robert Lighthizer, told U.S. lawmakers this week that talks were a matter of urgency because U.S. farmers risk losing market share to Pacific and European nations that have already sealed trade deals with Asia’s second-largest economy. He said he planned to visit Japan in March. Japan, which has sought to lure the U.S. back to a Pacific regional trade deal rejected by Trump, was pressured into agreeing to bilateral talks in September under the threat of higher tariffs on its lucrative car exports. Since then, there has been no apparent progress toward scheduling talks, as Lighthizer wrestles with separate negotiations on a Chinese trade deal.
Weak demand in China and growing global fallout from the Sino-U.S. trade war took a heavier toll on factories across much of Asia in February, business surveys showed on Friday. Activity in China’s vast manufacturing sector contracted for the third straight month, pointing to more strains on its major trading partners and raising questions over whether Beijing needs to do more to stabilize the slowing economy. In many cases, business conditions were the worst Asian companies have faced since 2016, with demand weakening not only in China but globally.
Federal Reserve Chairman Jerome Powell repeated the central bank’s recent mantra of pledging patience in the face of conflicting economic signals and subdued inflation.“The Federal Open Market Committee will be patient as we determine what future adjustments to the target range for the federal funds rate may be appropriate to support our dual-mandate objectives,” Powell said in the text of a speech Thursday evening in New York.
“This common-sense risk-management approach has served the Committee well in the past,” he added. Powell’s remarks followed a report from the Commerce Department released earlier on Thursday showing the U.S. economy cooled by less than expected in the fourth quarter of 2018. Annualized growth for October to December hit 2.6 percent, compared with forecasts for 2.2 percent.
Powell didn’t reference the new data but described the economy as “in a good place,” with the now 10-year expansion pushing unemployment down for all racial and ethnic groups, increasing labor force participation and raising wages. That has all come, he noted, with continued low inflation. “Signs of upward pressure on inflation appear muted despite the strong labor market,” Powell said.
India’s economy slowed considerably last quarter, with little signs of a quick recovery amid rising political tensions with neighbouring Pakistan and weaker global demand.Gross domestic product rose 6.6 percent in the three months to December from a year ago, lower than the 6.7 percent median estimate in a Bloomberg survey and down from a revised 7 percent in the previous quarter.
Simmering tensions between the nuclear-armed rivals India and Pakistan have the potential to hurt foreign investments and sour business sentiment in an economy that’s been one of the fastest-growing in the world, but that’s now facing weaker domestic demand and a global slowdown. That may give the Reserve Bank of India, under new Governor Shaktikanta Das, a reason to cut interest rates again after February’s surprise easing.
Malaysian palm oil futures rose on Friday, in line to snap five sessions of declines, bolstered by a weaker ringgit and firmer related edible oils. The benchmark palm oil contract for May delivery 1FCPOc3 on the Bursa Malaysia Derivatives Exchange jumped 1.5 percent to 2,153 ringgit ($528.86) a tonne at the midday break, its biggest gain since Jan. 22. The market, however, is down 4.6 percent so far on the week, following a decline to its lowest levels in two months in the previous trading session. POI/
Trading volumes stood at 18,192 lots of 25 tonnes each at noon. 1FCPO-TOT"Firmer external markets lent palm support, along with the weaker ringgit," said a Kuala Lumpur-based futures trader, referring to palm's traded currency.A weaker ringgit usually makes the edible oil cheaper for holders of foreign currencies. The ringgit was last down 0.2 percent against the dollar at 4.0710.
In other related oils, the Chicago March soybean oil contract BOH9 had risen 0.5 percent on Thursday, but was last trading flat at around 0430 GMT on Friday. The May soyoil contract on the Dalian Commodity Exchange DBYK9 gained 1.7 percent and the Dalian May palm oil contract DCPK9 rose 1 percent. Palm oil prices are affected by movements in soyoil, as they compete for a share in the global vegetable oil market.
South Korea’s exports contracted at their steepest pace in nearly three years in February as demand from its major market China cooled further in yet another sign of faltering momentum in Asia’s fourth-largest economy. Overseas sales dropped 11.1 percent in annual terms, the sharpest decline since April 2016 and marked the third month of falling shipments. A Reuters survey had predicted a 10.8 percent decline for February.“China-bound sales are tumbling especially as memory chip prices are falling. Looking ahead, export growth should remain weak in March but the shrinking of exports should bottom out March or April as demand from China recovers on stimulus measures.
Faced with a serious slowdown in eurozone economic growth, the European Central Bank is set to delay hiking interest rates from record lows until next year and will soon re-launch its offer of long-term loans to banks, a Reuters poll found. But over 60 percent of economists said there would be no change to rate guidance at its March 7 policy meeting or any official announcement yet of long-term loans. That conclusion comes despite the fact that markets have now completely priced out ECB rate hikes and a new loans program is being actively discussed on trading desks. The latest findings come as a global economic slowdown is well underway, the Federal Reserve has made a U-turn on policy switching to the wait-and-see mode and other major central banks have backtracked on recent policy tightening plans.
Gold prices hit a two-week low on Friday as the dollar recouped losses on upbeat U.S. economic data, while mounting concerns over a slowdown in global growth offered support to the safe-haven metal. As of 0517 GMT, spot gold was flat at $1,312.67 per ounce, after slipping to its lowest since Feb. 15 at $1,311.61 earlier in the session.U.S. gold futures were down 0.1 percent at $1,314.30 per ounce. The dollar, which pulled back from over three-week lows, scaled a 10-week high against the yen and was marginally higher against major currencies. The U.S. Commerce Department’s report showed a better-than-expected performance in the fourth quarter pushed gross domestic product (GDP) up 2.9 percent for the year, just shy of the 3 percent annual growth target in 2018.“Gold is still fundamentally supported for the long term despite the bearish pressures we see for now due to a slight rise in bond yields and a firm dollar,” said Benjamin Lu, an analyst with Singapore-based Phillip Futures.
Oil prices climbed on Friday as markets tightened amid output cuts by producer club OPEC, but surging U.S. supply and concerns of global economic slowdown kept a lid on further gains. International Brent crude futures were at $66.73 per barrel at 0557 GMT, up 42 cents, or 0.6 percent, from their last settlement.U.S. West Texas Intermediate (WTI) crude oil futures were at $57.51 per barrel, up 29 cents, or 0.5 percent.Traders said oil markets were currently tightening.In Venezuela, oil exports have plunged by 40 percent to around 920,000 barrels per day (bpd) since the U.S. government slapped sanctions against its petroleum industry on Jan. 28. This drop comes as the Organization of the Petroleum Exporting Countries (OPEC), of which Venezuela is a founding member, has led efforts since the start of the year to withhold around 1.2 million bpd of supply to prop up prices.