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Short-term yields leap with inflation, China tech drops

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October 27, 2021

By Tom Westbrook

SINGAPORE (Reuters) – Asian stocks slipped on Wednesday with new regulatory worries sparking the steepest sell-off in seven weeks for Chinese tech shares, while short-term Treasury yields spiked as investors wagered on inflation pulling forward interest rate rises.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.8% led by a 3.5% decline on the Hang Seng tech index after China’s internet watchdog said it plans stricter registration rules for younger net users. [.HK]

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Japan’s Nikkei fell 0.6%. U.S. stock markets are at record highs but futures were listless amid creeping worries about central bankers’ responses to inflation. FTSE futures were flat and European futures fell 0.3%.

The latest evidence of worldwide pressure on consumer prices came from Australia, where data showed core inflation hit a six-year high last quarter.

The Aussie dollar rose and bonds dived to reflect bets the central bank cannot hold rates at record lows. [AUD/]

Two-year U.S. Treasury yields surged to a 19-month high of 0.5010% ahead of next week’s Federal Reserve meeting. [US/]

“There are a couple of things that are of concern to investors, and inflation news is everywhere,” said Khoon Goh, head of Asia research at ANZ Bank in Singapore.

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“This is where expectations of when the Fed might start to lift interest rates is starting to come in to focus. The announcement of tapering next week is pretty much a done deal – markets have moved past tapering and are focused on tightening.”

The Fed has all but confirmed it will soon start to whittle back its asset purchases, though has said that shouldn’t signal rate hikes are imminent. Nevertheless, Fed funds futures are priced for a lift-off in the second half of next year.

“We updated our Fed call to show a hike in Q4 2022 and four hikes in 2023,” analysts at NatWest said in a note.

“The inflation overshoot has been persistent,” they said. “There is (only) so much the Fed can tolerate before reacting … it feels inevitable that that conversation will be brought up more and more as we go into next year.”

EARNINGS SUPPORT

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In China, besides a further tightening of rules over online access for the young, energy stocks suffered with new measures to curb zooming coal prices which also dropped 10% and have fallen 40% from record peaks.

That seemed to cap gains in the Australian dollar, which settled around 0.3% higher at $0.7526. Three year Australian government bond futures plunged about 19 basis points to their lowest since mid-2019.

Broader currency markets were quiet as traders look to central bank meetings over the next week or so for guidance, with Canada first up at 1400 GMT. The Canadian dollar hovered just below last week’s four month high. [FRX/]

The European Central Bank meets on Thursday, when Bank of Japan also concludes its two-day meeting. No changes are expected from Tokyo, but traders are expecting the ECB to push back on market inflation forecasts and are looking for hawkish clues from the Bank of Canada as prices put pressure on rates.

Earnings reports from Ford, Coca-Cola, McDonald’s and Boeing are due later in the day. Solid results have helped Wall Street to fresh records this week, though on Tuesday Facebook shares fell after the company warned of a hit from changes to Apple’s privacy rules.

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“Earnings are enough to hold the big three indexes at record highs, but not enough to reinvigorate the rally onto new highs,” said Jeffrey Halley, senior analyst at broker OANDA.

Oil prices eased from overnight peaks, with Brent crude futures down 0.5% at $85.92 a barrel and U.S. crude down 0.7% to $84.05 a barrel. [O/R]

Gold was steady at $1,788 an ounce and bitcoin held above $60,000 after a late-session drop on Tuesday. [GOL/]

(Reporting by Tom Westbrook; Editing by Lincoln Feast.)

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Canada’s Shopify records Black Friday sales up 21%

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November 27, 2021

(Reuters) – Canadian e-commerce company Shopify Inc recorded worldwide sales of nearly $2.9 billion on Black Friday, an increase of about 21% in comparison to last year, the company said Saturday.

New York, London and Los Angeles were among the top-selling cities, the company said, while apparel and accessories was the top-selling product category.

Shopify also said it funded 23,000+ tonnes of carbon removal to counteract emissions from the delivery of every order placed on its platform on Black Friday.

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(Reporting by Aakriti Bhalla in Bengaluru; Editing by Nick Zieminski)

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Xiaomi to open car plant in Beijing with annual output of 300,000 vehicles – Beijing govt

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November 27, 2021

SHANGHAI (Reuters) – Chinese smartphone giant Xiaomi Corp will build a plant that can produce 300,000 vehicles annually in Beijing for its electric vehicle unit, authorities in the capital said on Saturday.

The plant will be constructed in two phases and Xiaomi will also built its auto unit’s headquarters, sales and research offices in the Beijing Economic and Technological Development Zone, the government-backed economic development agency Beijing E-Town said on its official WeChat account.

Beijing E-Town said it anticipated the plant reaching mass production in 2024, a goal announced by Xiaomi’s Chief Executive Lei Jun in October.

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In March, Xiaomi said it would commit to investing $10 billion in a new electric car division over 10 years. The company completed the business registration of its EV unit in late August.

The company has been opening thousands of stores to spur domestic sales growth for its smartphone business but eventually intends to use these shops as a channel for its plans to sell electric vehicles.

(Reporting by Brenda Goh; Editing by William Mallard)

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Eni sells Snam 49.9% stake in Algeria gas pipelines for 385 million euros

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November 27, 2021

MILAN (Reuters) -Italian energy group Eni has agreed to sell gas group Snam 49.9% of its stake in strategic pipelines carrying Algerian gas into Italy for 385 million euros ($436 million), the two companies said on Saturday.

The pipelines will be jointly controlled by the two companies, they said in a joint statement.

Italy imports more than 90% of its overall gas needs and Algerian gas currently accounts for around 30% of flows.

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“This transaction allows us to free up new resources to be used on our energy transition path,” Eni Chief Executive Claudio Descalzi said.

Eni is working on spinning off a series of oil and gas operations into new joint ventures to help reduce debt and fund its shift to low-carbon energy.

Snam, which owns a 20% stake in the TAP pipeline that carries Azeri gas into Italy, makes most of its money from managing Italy’s gas transport grid.

It has pledged to spend more on new green business lines such as hydrogen and, like other gas grid operators in Europe, is upgrading its gas network to be hydrogen ready.

“In the future, North Africa could also become a hub for producing solar energy and green hydrogen,” Snam CEO Marco Alvera said.

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The pipeline companies involved in the deal posted net income of around 90 million euros in 2020.

($1 = 0.8836 euros)

(Reporting by Stephen Jewkes, editing by Giselda Vagnoni)

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