tag

Investors Tuesday welcomed more dovish comments from Federal Reserve officials reinforcing hopes it will cut interest rates next month, while a tech-led rally on Wall Street soothed recent AI bubble worries.In Tokyo, the Nikkei 225 closed up 0.1% to 48,659.52 points; Hong Kong - Hang Seng Index ended up 0.7% to 25,894.55 points andShanghai - Composite closed up 0.9% to 3,870.02 points Tuesday.After a swoon in recent weeks, optimism appeared to be returning to trading floors as the chances of a third successive reduction in US borrowing costs increases as a weakening labour market offsets stubbornly high inflation.Fed governor Christopher Waller told Fox Business on Monday that inflation was not his main worry and that his "concern is mainly the labour market, in terms of our dual mandate" of the Fed to support jobs and keep a cap on prices."So I'm advocating for a rate cut at the next meeting."His comments echoed those of San Francisco Fed president Mary Daly, who told the Wall Street Journal: "On the labour market, I don't feel as confident we can get ahead of it."She added that the risk of a bust higher in inflation was a lower risk as the impact of US President Donald Trump's tariffs had been less than expected.New York Fed boss John Williams said Friday that he still sees "room for a further adjustment" at the bank's December 9-10 policy meeting.Analysts pointed out that the lack of pushback from the Fed on the remarks suggested boss Jerome Powell backed them and was preparing for another cut.Traders now see about a 90% chance of a reduction, having been around 35% last week.The prospect of lower borrowing rates pushed Wall Street sharply higher for a second successive day Monday, with the S&P 500 up around 1.6%.The Nasdaq charged 2.7% higher thanks to a surge in market heavyweights including Alphabet, Meta and Amazon.And the gains continued in Asia, which built on Monday's strong performance.Tokyo, Hong Kong, Shanghai, Sydney, Seoul, Taipei, Mumbai, Bangkok and Jakarta all advanced, though there were pullbacks in Manila, Singapore and Wellington.London, Paris and Frankfurt opened higher.Tech firms have enjoyed a revival after suffering a period of selling in recent weeks, owing to concerns that the AI-led splurge this year may have pushed valuations too far and the huge investments made in the sector could take time to come to fruition.While there is debate about whether the advance has more legs, observers say the outlook is more nuanced."AI remains one of the most powerful forces reshaping markets, but the tone is changing," wrote Saxo Markets' Charu Chanana."Strong earnings from leading chipmakers... reassure investors that demand is real, yet the sharp swings in market reaction show that enthusiasm now sits alongside questions around sustainability, profitability, and execution."The broad 'everything goes up' phase of the AI trade is fading. What replaces it is a more nuanced market: one that rewards fundamentals over narratives."She added that investors now had to "separate the durable players from those caught up in the momentum".Sentiment was also given a lift after Trump praised "extremely strong" US-China relations following a call with his Chinese counterpart Xi Jinping.He also said he will visit China in April and that Xi will make a trip to Washington later in 2026.However, he made no mention of the fact that they had spoken about the ever-sensitive issue of Taiwan. China's foreign ministry said Trump had told Xi the United States "understands how important the Taiwan question is to China".The call came after the pair met in late October for the first time since 2019, engaging in closely watched trade talks between the world's top two economies.

Bessent says inflation due to services economy, not tariffsTreasury secretary says Republicans should end filibuster in event of another shutdownBessent says administration working to lower prices where it canTreasury Secretary Scott Bessent on Sunday said the 43-day government shutdown caused an $11bn permanent hit to the US economy, but he was optimistic about growth prospects next year given easing interest rates and tax cuts.Bessent told NBC's "Meet the Press" program that parts of the US economy that are sensitive to interest rates, including housing, had been in recession, but he did not see the entire economy at risk of negative growth. He blamed the services economy, not US President Donald Trump's sweeping tariffs, for inflation - repeating the Trump administration's longstanding mantra - and added that he expected lower energy prices to drive down prices more broadly. "I am very, very optimistic on 2026.We have set the table for a very strong, non-inflationary growth economy," he said. Bessent cited positive data for October, including a drop in energy prices and higher home sales, and said the administration was working hard to bring down inflation.The Treasury secretary noted that inflation was 0.5% higher in Democratic-controlled states than those run by Republicans, attributing the difference to increased regulation. Last week's moves to cut tariffs on food imports like bananas and coffee were the result of trade deals that had been negotiated for months, Bessent said, adding, "Inflation is a composite number and we look at everything.So we are trying to push down the things we can control". Trump on Wednesday signed legislation ending the longest government shutdown in US history that extends funding through January 30, setting the stage for another showdown between Democrats and Trump's Republicans next year.Bessent said Republicans should immediately vote to end the filibuster if Democrats closed the government again, something Trump has also demanded, but dodged a question on whether there were enough votes to do so.Bessent said policy changes that cap taxes on overtime, cut taxes on tips and Social Security for some individuals, and make auto loans deductible would boost real income levels for working Americans and help offset higher costs.Taxpayers would see substantial federal tax refunds in the first quarter of 2026 given the changes in tax rates, he added. The Trump administration also planned an announcement this week at lowering health care costs, Bessent said, echoing similar remarks from a senior White House official last week, but giving no details.A rash of trade deals would also help boost the economy, Bessent said, predicting new plant openings across the country. 

Gold and silver prices surged to new record highs on Monday, driven by strong safe-haven demand amid renewed trade tensions between the United States and China, as well as expectations that the US Federal Reserve will cut interest rates. Spot gold rose 0.7% to $4,044.29 per ounce, while US gold futures for December delivery advanced 1.6% to $4,062.50. Silver climbed 2% in spot trading to a record $51.52 per ounce, extending its recent rally. Gold, which yields no interest, has gained 54% so far this year, supported by anticipation of lower borrowing costs and increased geopolitical uncertainty. Among other precious metals, platinum rose 2.6% to $1,628.80 per ounce, while palladium gained 2.6% to $1,442.06.

Lower bank rates in Qatar will be an additional boost to consumers and corporates, Emirates NBD Research has said in a report.Recently, the Qatar Central Bank (QCB) decided to reduce the current interest rates for deposits, lending and repo by 0.25% or 25 basis points (bps). The new rates took effect on September 18.The QCB’s deposit rate (QCBDR) is now 4.35%, lending rate (QCBLR) 4.85% and repo rate (QCBRR) 4.60%.The QCB said the rate cut followed its “assessment of the current monetary policy of Qatar.On the impact (of the US Federal Reserve rate cut) on GCC economies, Emirates NBD Research said, “The rate cut has been matched by the GCC given that the currency pegs mean that monetary policy tends to move in lockstep with that of the Fed.Besides Qatar, the UAE, Saudi Arabia, Bahrain, Oman, and Kuwait central banks have all cut their benchmark policy rates by 25bps, Emirates NBD noted.In a report, the UAE banking group said: “Lower rates will be an additional boost to consumers and corporates in the GCC economies. Credit growth to the private sector has accelerated in 2025 for both the UAE and Saudi Arabia compared with 2024.“In the UAE, banking claims on the private sector have recorded an average year/year growth of more than 8% this year, compared with 7% for 2024. In Saudi Arabia, credit demand has been even more robust with growth of more than 14% year-to-date up to July compared with around 11% in 2024.”The report noted: “As rates move lower, that will free up more income for consumption and investment and at the margin create more demand for credit. In a recent Central Bank of the UAE survey on credit demand, interest rates were the least critical variable cited as affecting demand for loans from the domestic banking system with corporates instead seeking to match the performance of the non-oil economy.”Emirates NBD said: “The US Federal Reserve cut rates by 25 bps (0.25%) at the September FOMC, in line with our expectations. This was the first rate change from the FOMC since December 2024 and takes the upper bound of the benchmark Fed funds rate to 4.25%.”According to the bank, the next FOMC meeting is at the end of October and will very much be a live meeting with the expectation of another 25bps cut nearly 90% priced in by markets following the September meeting. Should economic data continue to follow the path seen in the last few months — moderate inflation pressures with worsening labour market conditions — then an October cut looks more likely than not. We still expect a rate cut at the December FOMC at this time.For 2026, the Fed projected a more hawkish stance than markets are expecting as it keeps an eye on the inflationary risks of tariffs and sticky services inflation.“We still expect that the Fed will need to cut rates next year, targeting an end of 2026 Fed Funds rate at 3% by end of year,” Emirates NBD noted.

Qatar Central Bank (QCB) decided to reduce the current interest rates for deposits, lending and repo by 0.25% or 25 basis points (bps).The new rates will take effect on September 18, QCB noted.Qatar Central Bank’s deposit rate (QCBDR) will now be 4.35%, lending rate (QCBLR) 4.85% and repo rate (QCBRR) 4.60%.In a statement, QCB said the rate cut followed its “assessment of the current monetary policy of the State of Qatar.

Despite the challenges posed by higher US tariff rates, the global economy will remain largely resilient against the uncertainty and the disruptions in global trade flows, according to QNB.At the beginning of the year, the global outlook pointed to steady economic growth, against a backdrop of cautious optimism. Tailwinds included the policy rate cutting cycles by major central banks, resilient growth of the US economy, cyclical recoveries in China and the Euro Area, and constructive overall investor sentiment, QNB noted in an economic commentary.Growth in both Advanced Economies (AE) and Developing Economies (DE) was initially expected to remain unchanged compared to last year, adding up to a world economic expansion rate of 3.3%.But the optimistic tone began to shift as the new US administration embarked on an aggressive agenda of policy change, with sweeping implications for the global macroeconomic landscape.On April 2, a day that came to be known as “Liberation Day,” President Trump announced sweeping tariffs, including a 10% baseline levy on all imports, and higher rates on selected countries.Financial markets reacted sharply to the announcements, with global stocks tumbling on fears of broader and deeper trade wars, as well as tainted policy credibility.The outlook narrative then debated the odds of a world recession. At its worst moment, growth expectations for the global economy dropped from the recent peak by 0.5 percentage point (p.p.) to 2.8%, a significant downgrade in a very short period of time.Since then, asset prices have recovered, with key indices reaching new highs, as the more negative trade-war scenarios were ruled out, AI-driven growth tailwinds regained the spotlight, and corporate profits remained robust.According to QNB, growth expectations have stabilised and even slightly recovered. The group of AE, which represents 40% of the world economy, is now expected to grow 1.5% this year, from a low of 1.4%.More significantly, after falling 0.5 p.p. to 3.7%, expectations for growth in the Developing Economies (DE) climbed to 4.1%, re-gaining most of the previous losses.Thus, recovering growth projections across the AE and DE groups are contributing to improving the outlook for global economic growth, which is expected to reach 3%.In QNB’s view, despite the challenges posed by higher US tariff rates, the global economy will remain largely resilient against the uncertainty and the disruptions in global trade flows.QNB has discussed two key factors that support its view of an improving global economic outlook.First, the US administration has concluded a first set of negotiations, which helped moderate uncertainty and discard the most extreme negative scenarios. The initially unyielding position of President Trump shifted towards pragmatism as deals were reached with the UK, Japan, Indonesia, Vietnam, the Philippines, and the EU, among others, narrowing the range of potential tariff rates for the rest of the world. Furthermore, even as the US has become more protectionist, the rest of the world is largely continuing to move in the opposite direction.From the European Union (EU) to Asia and Latin America, most major economies continue to view trade as essential to their growth models, and are actively pursuing deeper integration via new or deeper trade agreements. Even as the world adjusts to a more protectionist US, the outlook on global trade has improved, contributing to a less pessimistic growth scenario.Second, monetary policy easing cycles by major central banks will contribute to improve overall financial conditions and the stability of the global economy. Bringing inflation under control has allowed the US Federal Reserve and the European Central Bank (ECB), the two most important central banks in the AE, to start their interest rate cutting cycles.In the US, the Federal Reserve is set to cut its policy interest rate by 125 basis points over the next year, while the ECB could implement one more cut, bringing its benchmark rate to 1.75%. Stock markets have staged a notable recovery backed by resilient corporate earnings, while corporate credit spreads are narrowing, signalling improved market sentiment and easier credit for firms.The Financial Conditions Index (FCI) provides an informative summary of the overall state of markets, and is signalling that improving conditions are reducing borrowing costs for households and business, adding support to consumption and investment.“All in all, the global outlook initially deteriorated sharply after the US tariff announcements, but pessimism has gradually subsided on the back of improving prospects for international trade and better financial conditions supporting consumption and investment, leading to a broad based upgrade of performance expected across the AE and the DE,” QNB added.

Turkish inflation came in higher than expected in August, at nearly 33% annually and more than 2% on a monthly basis, readings that are likely to slow the central bank's plans to cut interest rates as it also weighs stronger economic growth.Annual consumer price inflation stood at 32.95% last month, official data showed on Wednesday, above a Reuters poll estimate of 32.6%. It was up 2.04% on a monthly basis.In further evidence that consumer demand remains strong despite the effects of prolonged monetary tightening, separate data on Monday had shown that Turkiye's economy grew by 4.8% in the second quarter, above expectations.The data flurry comes at a jittery time for investors in Turkiye. A court on Tuesday ousted the Istanbul provincial head of the main opposition Republican People's Party (CHP), dealing a fresh judicial blow to opponents of President Tayyip Erdogan and triggering sharp falls in Turkish share and bond markets.According to a poll conducted in July, economists had expected the central bank to cut its policy rate to 36% by year-end, or some 700 basis points from the current 43%. However the latest inflation and GDP data could cause it to slow the pace of the easing, analysts said."Looking ahead to the central bank's September 11 meeting, we expect the market's current consensus for a 300bps rate cut to moderate towards 200-250bps," Oyak Securities said in a note to clients on Wednesday.In July, the central bank cut the policy rate by 300 basis points, relaunching an easing cycle paused in March, and it promised to use all policy tools in the event of a significant and persistent deterioration in inflation."After Wednesday's GDP growth data and today's inflation data, the probability of the central bank cutting rates by 300 basis points in September has become very low," Hakan Kara, a former central bank chief economist now on the faculty at Bilkent University in Ankara, said on X.The monthly inflation reading for August of 2.04% was affected by higher food, education, and housing prices, as well as the continued impact of a mid-year update of taxes on tobacco and fuel items.In July, CPI inflation stood at 33.52% on an annual basis, while the monthly reading was 2.06%.In the Reuters poll, the monthly inflation rate for August had been expected to come in at 1.8%.The domestic producer price index rose 2.48% month-on-month in August for an annual rise of 25.16%, the data showed.Inflation is seen slowing to 30% at the end of this year according to the poll median, higher than the central bank forecast range of 25%-29%.