Economy
Asia stocks rally, USD restrained before inflation test looms
Asian share markets rallied on Monday on hopes a key reading on U.S. inflation will show some cooling, while the U.S. dollar was limited by the risk of higher European interest rates and Japanese intercession.
Holidays in China and South Korea made for slow trading, while brokers were unsure what implications Ukraine’s surprising success against Russian powers could have.
MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) added 0.5%, having bounced modestly from a two-year low hit last week. Japan’s Nikkei (.N225) added another 1.1%, after rallying 2% last week.
Chinese blue chips (.CSI300) firmed 1.3% ahead of retail and industry data due later in the week that may show some improvement in August after a disappointing July.
Wall Street struggled to extend Friday’s bounce with S&P 500 futures and Nasdaq futures flat. EUROSTOXX 50 futures gained 0.6% and FTSE futures 0.2%.
Bulls are hoping Tuesday’s reading on U.S. customer costs will hint at a peak for inflation as falling petrol prices are seen pulling down the headline index by 0.1%.
The core is figure to rise 0.3%, though some analysts see a chance of a softer report.
“Arguably, with the economy having contracted through the first half, and household discretionary spending capacity under significant pressure, we are due a modest downside surprise,” said economists at Westpac.
“As such, we forecast +0.2% for core and -0.2% for headline,” they added. “If achieved though, it should not be assumed that October and beyond will see repeats, with volatility likely to persist.”
A delicate number might revive speculation the Federal Reserve will only hike by 50 basis points this month, though it would likely have to be very weak to have a real impact given how stridently hawkish policymakers have been as of late.
The market at present implies an 88% chance the Fed will hike by 75 basis points.
BofA global economist Ethan Harris fears that by focusing on actual inflation to determine when to stop, central banks may go too far. The bank has lifted its target for the federal funds rate to a range of 4.0-4.25%, with a 75bp hike in September and smaller rises thereafter.
“For investors, this means more pressure on interest rates, more weakness in risk assets and further upside for the super-strong dollar,” said Harris.
“In our view, these trends only turn when markets price the full fury of central bank hikes and we are not quite there yet.”
For now, the dollar has run into some profit taking from a market that is very long the currency after a month of sustained gains.
So rapidly has the dollar risen on the yen that Japanese authorities are becoming increasingly vocal in protesting their currency’s decline, sparking speculation of intervention and putting pressure on the Bank of Japan to moderate its policy of yield curve control.
Japan’s government must take steps as needed to counter excessive declines in the yen, a senior government official said on Sunday, after it hit its weakest level against the dollar in 24 years.
Yet after an early dip, the dollar soon rallied to be up 0.4% at 143.14 yen, though still off last week’s top of 144.99.
The dollar index stood at 108.770, having reached as high as 110.790 last week.
The euro nudged up 0.4% to $1.0080, and away from its recent trough of $0.9865.
Analysts at ANZ noted the dollar over the past month was up roughly 9% against the euro and the Chinese yuan, 12% against the British pound and 19% against the yen.
“The rampant USD is causing strain in developing countries, which are finding imports priced in USD more expensive,” they said in a note.
“With Fed speakers using every opportunity to hammer home a hawkish message and quantitative tightening looming, the USD is not about to dramatically turn.”
The ascent of the dollar combined with high bond yields has been a drag for gold, which was hovering at $1,713 an ounce after hitting a low of $1,690 last week.
Oil prices have also been trending lower amid concerns about a global economic slowdown, though cuts to supply did prompt a 4% bounce on Friday.
On Monday, Brent was down $1.29 at $91.55, while U.S. crude shed $1.28 to $85.51 per barrel.
Expatriate Bangladeshis sent approximately US$ 2.11 billion in remittances during the first 28 days of September in the fiscal year 2024-25, according to data released by Bangladesh Bank on 29 September.
Of this total, state-owned and specialised banks handled $679.10 million, while private banks received $1.43 billion in remittances.
Chief Adviser to Bangladesh’s interim government, Professor Muhammad Yunus, has vowed to expedite reforms and hold elections swiftly. Yunus, who recently assumed the role after the collapse of Prime Minister Sheikh Hasina’s 15-year administration, expressed his commitment during an interview with Tokyo-based news outlet NHK WORLD in New York on Sunday. He was attending the United Nations General Assembly at the time.
Following mass student-led protests that ended Hasina’s long-standing rule in August, Yunus stepped in as the leader of the caretaker government. Known for founding Grameen Bank, an institution providing microloans to the underprivileged, Yunus, along with the bank, earned the Nobel Peace Prize in 2006 for his efforts in poverty alleviation.
During the interview, Yunus emphasized that the interim government’s primary mission is to implement reforms promptly and ensure elections are held as soon as the groundwork is complete. He underscored the importance of success, stating, “Failure is not something that we can accept.”
Addressing the pivotal role of students in the ousting of the Hasina administration, Yunus acknowledged the sacrifices made by young people, referring to their involvement as part of a “revolution.” He highlighted his intention to engage the younger generation in shaping policy.
Furthermore, Yunus called for continued support from Japan, Bangladesh’s largest donor, during this crucial transition period. He stressed that Japan’s assistance is vital to stabilizing Bangladesh’s economy and fostering a democratic foundation in the nation.
Syeda Rizwana Hasan, the Adviser for Environment, Forests, and Climate Change, announced today that steps will be taken to restrict the use of polythene shopping bags to safeguard future generations.
Starting from October 1, polythene bags will be banned in shopping malls, followed by a ban in kitchen markets from November 1.
“Everyone must take responsibility and stop using polythene voluntarily. Action against polythene producers will begin from November 1,” Rizwana Hasan stated during a seminar.
The Department of Environment (DoE) organized the seminar to raise public awareness about alternatives to banned polythene bags.
Rizwana Hasan highlighted that the restriction on polythene will be executed in phases according to legal provisions, and discussions with shopping centers and store owners are ongoing to ensure a smooth transition.
She also announced plans to make the government secretariat a plastic-free zone by December.
Other speakers at the seminar included Environment Secretary Dr. Farhina Ahmed, DoE Director General Dr. Abdul Hamid, Director Rajinara Begum, President of the Shop Owners Association Muhammad Helal Uddin, and Md. Arifur Rahman Bhuiyan, Assistant Professor of Environmental Science at BUP. They discussed the harmful effects of polythene and the need for alternative products.
Earlier, Rizwana Hasan inaugurated a fair showcasing eco-friendly alternatives to polythene bags and visited 24 stalls. The fair featured products from government and private entrepreneurs, including reusable bags, jute bags, paper bags, and items made from bamboo and cane.
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