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  • Big tech bets big on AI – but can India keep pace in the global race?

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    India is a hedge against the global AI bubble, some experts say [NurPhoto via Getty Images)]

    This week, tech giants Amazon and Microsoft pledged an eye-popping $50bn-plus combined investment in India, putting artificial intelligence (AI) in the spotlight.

    Microsoft’s Satya Nadella announced his company’s largest investment ever in Asia – $17.5bn (£13.14bn) – “to help build the infrastructure, skills, and sovereign capabilities needed for India’s AI-first future”.

    Amazon followed suit, and said it was putting in more than $35bn in the country by 2030, with an unspecified chunk of that investment going into boosting AI capabilities.

    The announcements come at a particularly interesting juncture.

    As fears of an AI bubble swept global markets and tech stock valuations soared, several leading brokerages took a contrarian view on India’s AI landscape.

    Christopher Wood of Jefferies said the country’s stocks were a “reverse AI trade”. That basically means India should outperform other markets in the world “if the AI trade suddenly unwinds” – or simply put, the global bubble bursts.

    HSBC also held a similar view, saying Indian equities offered a “hedge and diversification” for those uneasy with the ongoing AI rally.

    This comes as Mumbai stocks have lagged behind their Asian peers over the past year, with foreign investors moving billions into Korean and Taiwanese AI-driven tech companies in the absence of comparable opportunities in India.

    In this backdrop, the Amazon and Microsoft investments provide a much-needed fillip – yet it remains worth asking where India truly stands in the global AI race.

    Indian undergraduate students work on their computers as they take part in HackCBS, a 24 hour event of software development. Students gathered in teams to take part in a challenge to develop their ideas in the fields of Internet of Things (IoT), Artificial Intelligence (AI) an Blockchain among others.
    India ranks among the top globally in terms of AI talent and developer activity [AFP via Getty Images]

    There are no easy answers.

    The adoption of AI in India has been rapid. Investments into some parts of the value chain – such as data centres, the physical backbone of AI, or chip-making facilities – have begun trickling in. Just this week, American chipmaker Intel announced a collaboration with Mumbai-based Tata Electronics to manufacture chips locally.

    But when it comes to a sovereign AI model, it appears India is continuing to play catch-up.

    About a year-and-a-half ago, the Indian government launched an AI mission through which it began supplying start-ups, universities and researchers with high-end computing chips to develop a large homegrown AI model like OpenAI or China’s DeepSeek.

    According to the federal electronics ministry, the launch of the sovereign model – which supports more than 22 languages – is imminent. In the interim though, the likes of DeepSeek and OpenAI have made further advances, launching newer variants.

    While the government has recognised the need to reduce over-dependence on foreign platforms because of the risk of surveillance and sanctions, India’s $1.25bn sovereign mission is a shadow of France’s $117bn or Saudi Arabia’s $100bn programmes.

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  • Dollar Steadies as Markets Focus on US-China Trade Tensions, Politics

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    The U.S. dollar recovered from a selloff in early trade on Monday as investors hoped Washington may temper its latest escalation of the trade war with Beijing, while political developments in France and Japan undermined the euro and the yen.

    The dollar index, which measures the greenback’s strength against a basket of six currencies, edged higher to 99.002, retracing some losses sustained after U.S. President Trump announced 100 percent tariffs on China.

    That revived fears of Trump’s Liberation Day rollout of sweeping tariffs in April, sparking a selloff in stocks and cryptocurrencies on Friday. “Certainly it’s pretty nervous out there,” said Tim Kelleher, head of institutional FX Sales at Commonwealth Bank in Auckland.

    “If you look at the U.S. and China stuff, it looks like Trump has done a bit of a TACO again and softened his tone,” he added, referring to a trading rule of thumb that “Trump always chickens out.”

    Earlier in the day, Trump said: “Don’t worry about China, it will all be fine! Highly respected President Xi just had a bad moment,” he posted on the Truth Social network. “He doesn’t want Depression for his country, and neither do I. The U.S.A. wants to help China, not hurt it!!!”

    Market liquidity may be affected by holidays as the U.S. observes Columbus Day/Indigenous Peoples’ Day today, while Japan is also closed to mark Health and Sports Day.

    Against the yen, the dollar fetched 151.985 yen, up 0.5 percent as markets assessed the path ahead for new Liberal Democratic Party leader Sanae Takaichi after Komeito quit the ruling coalition on Friday, dealing a blow to her hopes to become the first female prime minister of the world’s fourth largest economy.

    The euro stood at $1.1609, down 0.1 percent, after the French presidency announced Prime Minister Sebastien Lecornu’s new cabinet line-up on Sunday, reappointing Roland Lescure, a close ally of Emmanuel Macron, as finance minister.

    Cryptocurrency markets fluctuated between gains and losses after a sharp selloff on Friday, with bitcoin last trading up 0.4 percent at $115,486.04. Gold hit a fresh record of $4,059.30 and was last up 0.8 percent.

    The offshore yuan traded at 7.137 yuan per dollar, tacking on 0.1 percent in early Asian trade. The Australian dollar fetched $0.6513, rising 0.6 percent in early trade, while the kiwi traded at $0.57345, up 0.3 percent. Sterling changed hands at $1.33415, up 0.1 percent so far on the day.

    Reporting by Gregor Stuart HunterEditing by Shri Navaratnam

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  • Scotch maker Ardgowan secures distribution deals

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    Scotch whisky producer Ardgowan Distillery Company has secured distribution agreements for its product portfolio in five new global markets.

    The company has signed contracts with distributors in Germany, Sweden, Canada, Singapore, and Malaysia to sell its Cyldebuilt single malt whisky and eventually its Ardgowan Single Malt once it has matured.

    Clydebuilt was previously available as a blended malt. As of June this year, the company now also sells a single malt, sourcing the liquid from a third party and maturing the product at Ardgowan’s distillery in Inverclyde.

    In Germany, German spirits importer Kammer-Kirsch will have distribution rights for the Ardgowan product portfolio in the country.

    The company said it saw Germany as a “key market” and that it believed “a closeknit collaboration will lead to Germany becoming a ‘top three’ market for Clydebuilt and eventually Ardgowan Single Malt”.

    Its other distribution partnerships are with Roy + Co for Canada, Galatea in Sweden, and Single Malt Sdn Bhd, covering Singapore and Malaysia.

    When asked about the company’s rationale for entering in these markets, Ardgowan said: “Germany is key market and Kammer Kirsch have a proven track record in building brands, the Canadian Liquor Boards are amongst the largest buyers in the world so to get market presence and start building awareness of the Ardgowan story is important. Singapore and Malaysia is our first formal arrangement in Asia which we will build on.”

    Set up in 2016, Ardgowan’s largest markets are the UK and Austria.

    Roland Grain is the majority shareholder and CEO of the business.

    Commenting on the new distribution agreements, Ardgowan sales and marketing director David Keir said: “These new partnerships mark a significant step in Ardgowan’s journey as we bring our boutique Clydebuilt brand and future Ardgowan Single Malt to discerning whisky drinkers in these important markets.

    “Consumers in these countries hold a strong appreciation for Scotch whisky, and by working closely with our new partners, we can share our enthusiasm for quality, innovation and craftsmanship on a much wider scale”

    The group began producing its own spirit, Ardgowan Single Malt, in June at the Inverclyde distillery. The business told Just Drinks the first Ardgowan Single Malt could spend between six to 12 years in maturation before heading to market.

    “Scotch maker Ardgowan secures distribution deals” was originally created and published by Just Drinks, a GlobalData owned brand.

     


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  • Trading Day: Nvidia beats but shares retreat

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    By Jamie McGeever

    ORLANDO, Florida (Reuters) -TRADING DAY

    Making sense of the forces driving global markets

    By Jamie McGeever, Markets Columnist

    The S&P 500 hit a record high on Wednesday, as Wall Street rose broadly on expectations the Federal Reserve will lower interest rates next month and on investor confidence that tech giant Nvidia‘s results would deliver another resounding ‘beat’.

    More on that below. In my column today, I look at examples of where the overt politicization of monetary policy has had severe economic and market consequences. And contrary to perceived wisdom, these have not just been in emerging markets.

    If you have more time to read, here are a few articles I recommend to help you make sense of what happened in markets today.

    1. Fed’s credibility is an asset whose decline could becostly 2. The fight for the Fed reaches its decisive moment 3. India hit by U.S. doubling of tariffs, plans to cushionblow 4. Tariff-bolstered U.S. credit rating is still tarnished:Mike Dolan 5. Investors worry Trump‘s Intel deal kicks off era of U.S.industrial policy

    Today’s Key Market Moves

    * STOCKS: S&P 500 hits new high. China’s benchmark indexesslump 1.5% or more. Europe flat, Britain’s FTSE 100 falls for asecond day from Monday’s record high. * SHARES/SECTORS: Nvidia shares fall as much as 5% inextended trade after earnings, despite beating on Q2 revenue andforecasting strong Q3 revenue on robust AI chip demand. * FX: Dollar index gives back gains, ends flat. In G10space, dollar falls most vs Canadian dollar and Norwegian krone. * BONDS: French 30-year yield highest since 2011. U.S.2-year yield falls to 3.62%, lowest since May. 5-year auctiongoes reasonably well. * COMMODITIES: Oil rebounds 1% plus from Tuesday’sselloff. Brent crude futures have now swung 1% or more in nineof the last 10 trading sessions.

    Today’s Talking Points:

    * Wings of a dove

    Investors remain confident that the Fed will cut interest rates next month as the controversy around President Donald Trump’s attempts to fire Fed Governor Lisa Cook persists. Traders are putting a near-90% probability on a move next month, and the 2-year Treasury yield fell to its lowest since May.

    New York Fed President John Williams said rates are probably headed lower, but officials need to see more economic data before deciding if a cut next month is appropriate.

    * Stock rotation

    The S&P 500 clocked a new high on Wednesday, led by the energy and healthcare sectors. As August draws to a close, the rotation into small cap and value stocks from tech and growth stocks shows no sign of reversing.

    The Russell 2000 index has lagged all year but on Wednesday notched a new 2025 high, again outperforming Wall Street’s big three indices. Will this continue next month? Much will depend on the impact of Nvidia’s Q2 results, and expectations of what the Fed will do on September 17.

    * China takes stock

    Chinese stocks have been on a tear, roaring to decade highs earlier this week. But the AI-driven rally sputtered on Wednesday, and the Shanghai Composite slid nearly 2% for its biggest fall since the tariff turmoil of early April.

    It may just be natural profit-taking as month-end looms. But maybe the rally is stretched – Hong Kong’s tech index is up 10% in August and up 60% from the April low, and China’s economy is still not out of its funk: China’s economic surprises index last week fell to its lowest level this year.

    Danger ahead! Five examples of risky central bank politicization

    There is legitimate debate about the actual independence of modern-day central banks, but almost everyone agrees that overt politicization of monetary policy – as we appear to be seeing in the United States – is dangerous. Why is that?

    Central banks are essentially arms of government, and many worked in close conjunction with national Treasuries in response to the Global Financial Crisis and pandemic, so absolute independence is a bit of a myth.

    But what U.S. President Donald Trump is currently doing goes well beyond that. By threatening to fire Chair Jerome Powell, actively trying to sack Governor Lisa Cook, and attempting to fill the Board of Governors with appointees sympathetic to his calls for lower interest rates, he is shattering the Fed’s veneer of operational independence.

    Examples of the naked politicization of monetary policy down the years show that it can, to put it mildly, deliver sub-optimal results – loss of credibility, currency weakness, spiking inflation, rising debt, elevated risk premia, and, potentially, much higher borrowing costs.

    These are certainly far from guaranteed outcomes in the U.S., but they show where excessive political interference in monetary policy can lead.

    TURKEY

    “Erdoganomics”, the unorthodox economic theories and policies of Recep Tayyip Erdogan, who has been President of Turkey since 2014, are a prime example of politicized monetary policy. Erdogan, an avowed “enemy” of interest rates, is on record as saying high interest rates cause inflation and that the way to reduce inflation is therefore to lower borrowing costs.

    He fired or replaced five central bank governors between 2019 and 2024, some for hiking interest rates or refusing to cut them.

    With inflation and interest rates hovering around 20% in late 2021, the central bank succumbed to Erdogan’s pressure and slashed borrowing costs. The result? The currency collapsed and inflation soared above 85%.

    ARGENTINA

    Few central banks in the modern era have so clearly been de facto arms of government as Argentina’s Banco Central de la Republica Argentina. Successive governments have leaned heavily on the BCRA to print money to fund their spending, with predictable results. The country has been in and out of economic crises, and battling high or even hyper-inflation for decades.

    The tenure of a BCRA president tends to be short: there have been 13 BCRA heads this century. And there were seven in the first seven years of Carlos Menem’s Presidency between 1989 and 1996. President Cristina Fernandez de Kirchner also notoriously fired BCRA chief Martin Redrado in 2010 because he opposed her plan to use $6.6 billion in FX reserves to pay down debt.

    INDIA

    Pressure on the Reserve Bank of India has intensified under the government of Prime Minister Narendra Modi. In December 2018 RBI Governor Urjit Patel resigned abruptly after just over two years in the job following months of government pressure to ease lending conditions and allow the government more access to reserves to boost spending ahead of national elections.

    In the months before Patel’s departure, Modi also removed RBI board members and appointed his supporters in their place, unnerving investors. This helped push the rupee to a then-record low against the dollar that October, and annual inflation more than trebled over the following year to nearly 8%.

    JAPAN

    The situation here is a bit different – given that Japanese leaders have often been actively seeking a weaker currency and higher inflation – but the cozy relationship between the government and the Bank of Japan has still arguably had a negative impact on the country’s long-term economic health.

    The Japanese government and central bank have worked almost as one while completing several FX interventions over the years. The ties deepened with the roll out of “Abenomics” in 2012, the economic reforms introduced by Prime Minister Shinzo Abe, that included the ‘three arrows’ of fiscal policy, monetary policy, and structural reform.

    At the heart of Abenomics was unprecedentedly loose monetary policy, even by BOJ standards. The central bank expanded its balance sheet massively – it’s still around six times larger than the Fed’s as a share of GDP – and deployed negative interest rates for years.

    Did it work? Many critics argue not, as growth remained sluggish, inequality rose, and Japan is now hamstrung by the world’s largest public debt load.

    UNITED STATES

    Last is, perhaps surprisingly, the U.S. itself. In the early 1970s, President Richard Nixon pressured then-Fed Chair Arthur Burns to keep monetary policy loose ahead of the 1972 election even though inflationary pressures were building.

    Nixon also reportedly told Burns in 1969, just after he nominated him, that previous Fed chair Bill Martin was always six months “too late” doing anything. “I’m counting on you, Arthur, to keep us out of a recession,” adding: “I know there’s the myth of the autonomous Fed…”

    Burns served as Fed chair for eight years through 1978, during which time inflation exploded and didn’t fully come down until the early 1980s. Many observers consider him to be one of the least successful chairs in the Fed’s history.

    It barely needs saying that the U.S. is unlike any other country. Its economy and capital markets dwarf all others, the dollar is the world’s reserve currency, and its rates and bond markets are the benchmarks for global borrowing costs.

    That means that the magnitude of any market or economic impact from Trump’s political interference could very well be smaller than the ructions of the past. But America’s global heft also means that the worldwide impact of these moves could be much greater.

    What could move markets tomorrow?

    * South Korea interest rate decision * Philippines interest rate decision * Bank of Japan board member Junko Nakagawa speaks * China earnings, including ICBC half-yearly results * Euro zone sentiment indicators (August) * Canada current account (Q2) * U.S. GDP (Q2, second estimate) * U.S. weekly jobless claims * U.S. Treasury auctions $44 bln of 7-year notes * Reaction to Nvidia Q2 results released late Wednesday * U.S. earnings including Dollar General, Best Buy, HP

    Want to receive Trading Day in your inbox every weekday morning? Sign up for my newsletter here.

    Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

    (By Jamie McGeever; Editing by Nia Williams)

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  • Morning Bid: Navigating US election, Fed, bond market tumult

    Morning Bid: Navigating US election, Fed, bond market tumult

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    By Jamie McGeever

    (Reuters) – A look at the day ahead in Asian markets.

    Global markets will be overwhelmingly dominated by the U.S. presidential election and interest rate decision later this week, so Monday’s activity may be driven by position adjustments as investors take in the latest polls, newsflow, earnings and economic indicators.

    If Friday’s moves are any guide, Monday promises to be something of a rollercoaster with no clear, unifying signal. Bond yields shot up to fresh multi-month highs on election and fiscal jitters, reversing an earlier fall on the back of surprisingly weak U.S. employment data, and the dollar duly strengthened.

    But Wall Street shrugged off any political or deficit fears. Latching onto strong earnings and a renewed conviction that the Fed will cut rates on Thursday – and probably again next month – stocks rallied strongly.

    Can this ‘risk on’ sentiment prevail with the U.S. election so close, and with bond yields on the rise not just in the US but around the world?

    The ‘MOVE’ index of implied volatility in U.S. Treasuries is the highest in over a year, and British gilt yields are the highest in a year too. The ‘bond vigilantes’ suffered a bit of whiplash after the U.S. payrolls data on Friday, but soon took charge again.

    So traders in Asia on Monday will have to weigh up whether they go with upbeat U.S. earnings and rate cut optimism, or hunker down in the face of rising yields, a stronger dollar and heightened nervousness on the eve of the U.S. election.

    Last week was challenging for Asian markets. The MSCI Asia/Pacific ex-Japan index fell for a fourth week in a row last week, and October’s slide of 4.9% marked the worst month since August last year.

    After taking in $32.2 billion inflows in September, Asia ex-Japan equity funds recorded “heavy redemptions” in the last three weeks, according to flows tracker EPFR. The latest week saw investors pull over $4 billion from Asia ex-Japan equity funds, extending their longest outflow streak since the fourth quarter of last year.

    Much of that is down to outflows from China funds as some of the hyper excitement sparked by Beijing’s raft of measures to support the domestic economy and markets cools off.

    But attention will once again center on Beijing this week. China’s top legislative body the National People’s Congress meets on Nov. 4-8, with markets widely expecting the approval of more fiscal stimulus measures.

    This week also sees the release of Chinese economic indicators including trade and lending. Other highlights include interest rate decisions from Australia and Malaysia, GDP figures for Indonesia and the Philippines, and earnings from Toyota and Nissan.

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  • What the Fed must do to soothe markets after a historic global sell-off, according to JPMorgan strategy chief David Kelly

    What the Fed must do to soothe markets after a historic global sell-off, according to JPMorgan strategy chief David Kelly

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    David Kelly, chief global strategist, JPMorgan Asset ManagementJPMorgan Asset Management

    • The Fed has caught some heat for its role in the latest stock market sell-off.

    • Kelly says the Fed needs to broadcast its confidence in the economy to soothe jittery markets.

    • JPMorgan’s David Kelly told Business Insider he sees a possibility for even deeper losses following the big rout.

    Stocks are up on Tuesday, but investors are still rattled from a historic three-day global sell-off sparked by a confluence of weak US data and a surprise rate hike in Japan.

    In the US, the bloody market rout should be the Federal Reserve’s cue that it needs to do more to help investors feel confident about the economy as they weather this period of extreme volatility.

    That’s according to David Kelly, chief global strategist of JPMorgan Asset Management, who told Business Insider in an interview during Monday’s tumuly that the Fed should broadcast a strong message to markets that the situation is in hand.

    “I think what they should say is, we’ve expected the economy is going to see a slowdown. That’s what we’re seeing here. We do stand ready to cut rates as appropriate but we don’t think there’s a very urgent situation here,” Kelly said.

    Some commentators have called for emergency rate cuts after the massive sell-off. However, Kelly says he doesn’t think such a move would be constructive because cutting rates so quickly reduces interest income, which causes investors to lose out on the current high yields on the $6 trillion sitting in money market funds.

    More importantly, cutting rates abruptly would potentially instill more fear about the economy among investors, Kelly said.

    On Monday, US stock indexes tanked, with the Dow Jones falling over 1,000 points and the Nasdaq Composite tumbling more than 3%. In global markets, Japan’s Nikkei 225 dropped 12.4% in its biggest single-day decline since the 1987 Black Monday crash, while European markets also dropped.

    The selloff prompted some investors to break out the recession playbook, investing in defensive stocks, dividend-paying shares, and government bonds while selling high-flying growth stocks tied to popular trades like AI.

    Kelly said one of the big problems is that the Fed should have never kept rates so high for as long as it did.

    “The Federal Reserve should always, I think, aim to get back to neutral and stay there. They shouldn’t try and overshoot into a tightening policy, or even an easing policy to try and stimulate the economy.”

    In short, by waiting too long to cut rates, the Fed allowed the job market to weaken, which partly caused the panic that set off the multi-day market plunge.

    But even cutting rates at the last policy meeting would not have been a quick fix that would have prevented the surge in volatility, and rate cuts, similar to rate hikes, have a lagged effect on the economy.

    “I think people just don’t get that. And I don’t think the Federal Reserve tells people that, or maybe they don’t appreciate it themselves,” Kelly said, adding, “It’s a drag before it’s a stimulus.”

    Kelly thinks that the economy will most likely continue to slow, and a recession is possible, as is a steeper stock correction.

    “A 10% correction, or a 20% drop with the bear market, is absolutely possible,” he said. “If you’re an investor, the problem is this you don’t know when it starts.”

    Read the original article on Business Insider

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  • China Is Front and Center of Gold’s Record-Breaking Rally

    China Is Front and Center of Gold’s Record-Breaking Rally

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    (Bloomberg) — Gold’s rise to all-time highs above $2,400 an ounce this year has captivated global markets. China, the world’s biggest producer and consumer of the precious metal, is front and center of the extraordinary ascent.

    Most Read from Bloomberg

    Worsening geopolitical tensions, including war in the Middle East and Ukraine, and the prospect of lower US interest rates all burnish gold’s billing as an investment. But juicing the rally is unrelenting Chinese demand, as retail shoppers, fund investors, futures traders and even the central bank look to bullion as a store of value in uncertain times.

    Biggest Buyer

    China and India have typically vied over the title of world’s biggest buyer. But that shifted last year as Chinese consumption of jewelry, bars and coins swelled to record levels. China’s gold jewelry demand rose 10% while India’s fell 6%. Chinese bar and coin investments, meanwhile, surged 28%.

    And there’s still room for demand to grow, said Philip Klapwijk, managing director of Hong Kong-based consultant Precious Metals Insights Ltd. Amid limited investment options in China, the protracted crisis in its property sector, volatile stock markets and a weakening yuan are all driving money to assets that are perceived to be safer.

    “The weight of money available under these circumstances for an asset like gold – and actually for new buyers to come in – is pretty considerable,” he said. “There isn’t much alternative in China. With exchange controls and capital controls, you can’t just look at other markets to put your money into.”

    Imports Jump

    Although China mines more gold than any other country, it still needs to import a lot and the quantities are getting larger. In the last two years, overseas purchases totaled over 2,800 tons — more than all of the metal that backs exchange-traded funds around the world, or about a third of the stockpiles held by the US Federal Reserve.

    Even so, the pace of shipments has accelerated lately. Imports surged in the run-up to China’s Lunar New Year, a peak season for gifts, and over the first two months of the year are 53% higher than they were in 2023.

    Central Bank

    The People’s Bank of China has been on a buying spree for 17 straight months, its longest-ever run of purchases, as it looks to diversify its reserves away from the dollar and hedge against currency depreciation.

    It’s the keenest buyer among a number central banks that are favoring gold. The official sector snapped up near-record levels of the precious metal last year and is expected to keep purchases elevated in 2024.

    Shanghai Premium

    It’s indicative of gold’s allure that Chinese demand remains so buoyant, despite record prices and a weaker yuan that robs buyers of purchasing power.

    As a major importer, gold buyers in China often have to pay a premium over international prices. That jumped to $89 an ounce at the start of the month. The average over the past year is $35 versus a historical average of just $7.

    For sure, sky-high prices are likely to temper some enthusiasm for bullion, but the market’s proving to be unusually resilient. Chinese consumers have typically snapped up gold when prices drop, which has helped establish a floor for the market during times of weakness. Not so this time, as China’s appetite is helping to prop up prices at much higher levels.

    That suggests the rally is sustainable and gold buyers everywhere should be comforted by China’s booming demand, said Nikos Kavalis, managing director at consultancy Metals Focus Ltd.

    China’s authorities, which can be quite hostile to market speculation, are less sanguine. State media have warned investors to be cautious in chasing the rally, while both the Shanghai Gold Exchange and Shanghai Futures Exchange have raised margin requirements on some contracts to snuff out excessive risk-taking. SHFE’s move followed a surge in daily trading volumes to a five-year high.

    ETF Flows

    A less frenetic way to invest in gold is via exchange-traded funds. Money has flowed into gold ETFs in mainland China during almost every month since June, according to Bloomberg Intelligence. That compares with chunky outflows in gold funds in the rest of the world.

    The influx of money has totaled $1.3 billion so far this year, compared with $4 billion in outflows from funds overseas. Restrictions on investing in China are again a factor here, given the fewer options for Chinese beyond domestic property and stocks.

    Chinese demand could continue to rise as investors look to diversify their holdings with commodities, BI analyst Rebecca Sin said in a note.

    –With assistance from Jack Wang and Eddie Spence.

    Most Read from Bloomberg Businessweek

    ©2024 Bloomberg L.P.

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  • Morning Bid: Markets brace for supply chain aftershock

    Morning Bid: Markets brace for supply chain aftershock

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    A look at the day ahead in European and global markets from Tom Westbrook

    The strongest quake to hit Taiwan in at least 25 years has also hit a pressure point in the global supply chain.

    The island accounts for about 90% of production for chipmaker TSMC and while its plants are mostly on the opposite coast from the epicentre, they are full of fragile equipment that’s crucial to turning out chips for global firms.

    TSMC said it had evacuated some fabrication plants and its safety systems were operating normally, while it confirmed details of the impact. The quake has killed four people, knocked down buildings in the eastern county of Hualien, and was felt in Shanghai as aftershocks rattled Taipei through the morning.

    Serious damage to chip foundries would ripple around the world and highlight the urgency of U.S. President Joe Biden’s strategy of encouraging onshore production to reduce reliance on Taiwan’s output.

    Shares of TSMC, which has a more than 60% share of global contract chipmaking and a monopoly over advanced microprocessors, were down 1.4% in early trade.

    Apple supplier Foxconn’s stock fell more than 2% and shares of flat-panel maker Au Optronics dropped 1.7%. Markets more broadly also slipped as investors await an appearance from U.S Federal Reserve Chair Jerome Powell and U.S. services and jobs figures due later in the day.

    Easter Monday’s stronger-than-expected U.S. manufacturing data seemed to trigger selling in the bond market that pushed benchmark 10-year yields past major chart resistance, unleashing even more selling.

    Ten-year yields steadied at 4.35% in Asia trade on Wednesday. An uneasy calm has settled on foreign exchange markets, with traders leery of testing the mettle of Japanese authorities who have ramped up warnings of possible intervention.

    The yen was steady at 151.55 per dollar. [FRX/]

    European inflation figures are also due later in the session, with a slight cooling expected.

    Key developments that could influence markets on Wednesday:

    Economics: Euro zone inflation, U.S. non-manufacturing ISM, ADP employment

    Speeches: Fed’s Powell

    (Reporting by Tom Westbrook; Editing by Jacqueline Wong)

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  • Stocks, Treasuries Drop as Japan Rattles Markets: Markets Wrap

    Stocks, Treasuries Drop as Japan Rattles Markets: Markets Wrap

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    (Bloomberg) — Stocks fell and bond yields rose amid speculation that the Bank of Japan will soon scrap the world’s last negative interest-rate regime.

    Most Read from Bloomberg

    The yen strengthened 1% against the dollar and Japan’s 10-year yield jumped as much as 13 basis points. Investors are speculating that higher rates could come earlier than expected following comments from BOJ Governor Kazuo Ueda on more challenging policy ahead and a weak auction of long-term debt.

    Global markets moved in response, with European stocks opening lower. The yield on 10-year US Treasuries added seven basis points and the dollar fell for the first time in four days.

    “When it comes to the last 24 hours, markets have seen a sharp reversal in tone, with bond yields seeing a significant increase overnight and equities losing ground,” said Jim Reid at Deutsche Bank AG.

    “The main catalyst for this have been comments from Bank of Japan officials, which have suddenly seen investors ramp up the chances that the BoJ could bring an end to their negative interest rate policy.”

    Overnight-indexed swaps at one point on Thursday showed an almost 45% chance that the BOJ would end the policy this month.

    Traders are also focused on Friday’s US jobs report after private payrolls data that fell short of estimates in a sign of softening in the employment market.

    Fed policymakers meet next week for the last time in 2023. While no change is expected in their target for the federal funds rate, they are scheduled to release quarterly forecasts that could alter market-implied expectations. Those bets have been gravitating toward more easing next year in response to weaker-than-forecast economic data.

    “Inflation fears are melting,” said Prashant Newnaha, a rates strategist at TD Securities. “Central banks believe they have clearly done enough and may need to cut, otherwise real rates may be too high and restrictive.”

    Oil stabilized after a five-day run of losses on signs that global supplies are eclipsing demand despite plans by OPEC+ to rein in its production into 2024. A key gauge for prices of raw materials earlier tumbled to the lowest level since August 2021.

    Elsewhere, gold extended Wednesday’s gains, while bitcoin traded just below $44,000, a level not seen since June last year.

    Key events this week:

    • Eurozone GDP, Thursday

    • Germany industrial production, Thursday

    • US wholesale inventories, initial jobless claims, Thursday

    • Germany CPI, Friday

    • Japan household spending, GDP, Friday

    • Reserve Bank of Australia’s head of financial stability Andrea Brischetto speaks at Sydney Banking and Financial Stability conference, Friday

    • US jobs report, University of Michigan consumer sentiment, Friday

    Some of the main moves in markets:

    Stocks

    • The Stoxx Europe 600 fell 0.2% as of 8:03 a.m. London time

    • S&P 500 futures were little changed

    • Nasdaq 100 futures were little changed

    • Futures on the Dow Jones Industrial Average were little changed

    • The MSCI Asia Pacific Index fell 0.4%

    • The MSCI Emerging Markets Index fell 0.5%

    Currencies

    • The Bloomberg Dollar Spot Index fell 0.2%

    • The euro rose 0.1% to $1.0778

    • The Japanese yen rose 1.1% to 145.64 per dollar

    • The offshore yuan rose 0.2% to 7.1609 per dollar

    • The British pound rose 0.2% to $1.2581

    Cryptocurrencies

    • Bitcoin was little changed at $43,828.74

    • Ether rose 0.6% to $2,260.95

    Bonds

    • The yield on 10-year Treasuries advanced six basis points to 4.16%

    • Germany’s 10-year yield advanced two basis points to 2.22%

    • Britain’s 10-year yield advanced six basis points to 4.00%

    Commodities

    • Brent crude rose 0.9% to $74.94 a barrel

    • Spot gold rose 0.2% to $2,029.03 an ounce

    This story was produced with the assistance of Bloomberg Automation.

    –With assistance from Rita Nazareth, Jing Jin and Yumi Teso.

    Most Read from Bloomberg Businessweek

    ©2023 Bloomberg L.P.

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  • The stock market’s latest rally is about to fizzle amid a barrage of concerns, JPMorgan says

    The stock market’s latest rally is about to fizzle amid a barrage of concerns, JPMorgan says

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    Traders work on the floor of the New York Stock Exchange (NYSE) on June 01, 2023 in New York City.Spencer Platt/Getty

    • The stock market’s latest rally is set to fizzle, according to JPMorgan’s Marko Kolanovic.

    • He highlighted a number of looming concerns for investors, from valuations to higher-for-longer interest rates.

    • “We believe that equities will soon revert back to an unattractive risk-reward,” Kolanovic said.

    Last week’s stock market rally is about to fizzle, according to JPMorgan’s chief global markets strategist Marko Kolanovic.

    The S&P 500 surged 6% last week, representing its strongest weekly gain of the year. The jump was driven in part by a cooler-than-expected October jobs report that sent bond yields plunging. But Kolanovic isn’t buying it because of a barrage of risks that are starting to converge.

    “We believe that equities will soon revert back to an unattractive risk-reward as the Fed is set to remain higher for longer, valuations are rich, earnings expectations remain too optimistic, pricing power is waning, profit margins are at risk and the slowdown in topline growth is set to continue,” he said.

    On top of that, the idea that bad news for the economy is good news for the stock market is extremely precarious, as a further deterioration in economic data could sound the alarms that an economic recession is imminent.

    “It is difficult to distinguish between a healthy slowdown and the initial stages of recession without the benefit of hindsight,” Kolanovic said.

    Markets currently expect the Federal Reserve to keep rates steady until the spring, when a cut rather than a hike is being priced in.

    While stock market investors would like to see interest rates drop, the reason behind any potential cut is what matters the most.

    A Fed that is easing monetary policies because inflation has been tamed and the economy remains solid would be bullish for stocks, whereas the Fed cutting interest rates because of a weakening economy would be bearish.

    And if the Fed doesn’t cut or hike interest rates and instead keeps them at current levels, that could be an even bigger problem for the stock market.

    “As the Fed is set to remain higher for longer at the short end, markets could start to price in a policy mistake, leading to lower long yields down the line, and that might not ultimately be helpful for stocks, especially if 2024 earnings projections start to reset lower,” Kolanovic said.

    Kolanovic isn’t the only bear on Wall Street. Morgan Stanley’s Mike Wilson reiterated his view on Monday that the recent rally in stocks is nothing more than a bear market rally.

    Both investment strategists have been consistently bearish towards stocks this year, even in the face of a strong rally throughout much of 2023.

    Read the original article on Business Insider

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  • Global Stocks Rise After U.S. Inflation Cools

    Global Stocks Rise After U.S. Inflation Cools

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    BEIJING (AP) — Global stock markets rose Friday after U.S. inflation eased in March and China reported unexpectedly strong exports.

    London and Frankfurt opened higher. Shanghai, Tokyo and Hong Kong advanced. Oil prices rose.

    Wall Street futures were lower, giving up part of Thursday’s gains after U.S. inflation at the wholesale level slowed more than expected.

    Asian markets were “taking cues from a solid rally on Wall Street,” said Anderson Alves of ActivTrades in a report.

    In early trading, the FTSE 100 in London gained 0.2% to 7,862.09. The DAX in Frankfurt advanced 0.2% to 7,843.38 and the CAC 40 in Paris was 0.2% higher at 7,497.61.

    On Wall Street, the future for the benchmark S&P 500 index was off 0.2%. That for the Dow Jones Industrial Average was down 0.3%.

    On Thursday, the S&P 500 rose 1.3% after government data showed prices paid to U.S. producers in March rose at their slowest rate in more than two years.

    The Dow advanced 1.1%. The Nasdaq jumped 2% to 12,166.27.

    In Asia, the Shanghai Composite Index closed up 0.6% at 3,338.15 after China’s March exports rose 14.8% over a year earlier, rebounding from a decline in January and February.

    The Nikkei 225 in Tokyo jumped 1.2% to 28,493.47. The Hang Seng in Hong Kong added 0.5% to 20,438.81.

    The Kospi in Seoul advanced 0.4% to 2,571.49. Sydney’s S&P-ASX 200 was 0.5% higher at 7,361.60.

    New Zealand declined while Singapore and Jakarta gained. Indian markets were closed for a holiday.

    A person walks past in front of an electronic stock board showing Japan’s Nikkei 225 index at a securities firm Friday, April 14, 2023, in Tokyo. Asian stock markets followed Wall Street higher on Friday after U.S. inflation eased in March and China reported unexpectedly strong exports. (AP Photo/Eugene Hoshiko)

    Traders hope signs that stubbornly high inflation is weakening might prompt the Federal Reserve and other central banks to postpone or scale back plans for interest rate hikes to cool business and consumer activity.

    Government data Thursday showed prices paid to U.S. producers rose 2.7% over a year earlier, the smallest gain in more than two years.

    On Wednesday, separate data showed consumer inflation slowed to 5% from February’s 6%.

    Another report Thursday said slightly more American workers applied for unemployment benefits last week than expected, though the job market has remained resilient.

    Notes from the Fed’s March 21-22 meeting showed members agreed its next rate hike would be one-quarter percentage point instead of a half-point.

    Some traders are betting the Fed might keep its benchmark lending rate steady at its May meeting.

    Others expect the U.S. central bank to start cutting rates as early as mid-year to shore up the economy. Fed officials have said they expect at least one more increase this year and then for the benchmark rate to stay elevated through at least early 2024.

    Meanwhile, big U.S. companies are starting to tell investors how much they earned during the first three months of the year.

    Expectations are low. Forecasts call for the sharpest drop in earnings since the pandemic was pummeling the economy in 2020.

    The biggest banks are due to report results following a flurry of anxiety about the industry after two high-profile failures in the United States and one in Switzerland. That stirred fears banks were cracking under the strain of rate hikes. Regulators appear to have soothed that unease by promising more lending to institutions and other steps if needed.

    Notes from the Fed meeting said its staff economists see such weakness potentially causing a mild recession later this year.

    In energy markets, benchmark U.S. crude edged up 3 cents to $82.19 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.10 on Thursday to $82.16. Brent crude, the price basis for international oil trading, gained 1 cent to $86.10 per barrel in London. It lost $1.24 the previous session to $86.09.

    The dollar fell to 132.45 yen from Thursday’s 132.77 yen. The euro gained to $1.1060 from $1.1046.

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  • Stocks, oil skid as China’s COVID protests roil sentiment

    Stocks, oil skid as China’s COVID protests roil sentiment

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    Stocks and oil weakened on Monday as rare protests in major Chinese cities against the country’s strict zero-COVID policy raised worries about the management of the virus in the world’s second-largest economy.

    MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.6% after US stocks ended the previous session with mild losses.

    Australian shares lost 0.47% while Japan’s Nikkei stock index was down 0.37%.

    South Korea’s KOSPI 200 index retreated 1.35% in early trade and New Zealand’s S&P/NZX50 Index was off 0.4%.

    In China, demonstrators and police clashed in Shanghai on Sunday night as protests over the country’s stringent COVID restrictions flared for the third day.

    There were also protests in Wuhan, Chengdu, and parts of the capital Beijing late Sunday as COVID restrictions were put in place in an attempt to quell fresh outbreaks.

    The dollar extended gains against the offshore yuan, rising 0.74%, and the focus shifts to the opening of China’s markets later in the Asian morning.

    The COVID rules and resulting protests are creating fears the economic hit for China will be greater than expected.

    “A growing list of cities, including those with large populations, have imposed strong restrictions on movement because of a surge in infections, there will inevitably be a negative impact on economic activity from the restrictions on movement,” CBA analysts said on Monday.

    “Even if China is on a path to eventually move away from its zero-COVID approach, the low level of vaccination among the elderly means the exit is likely to be slow and possibly disorderly. The economic impacts are unlikely to be small.”

    China’s case numbers have hit record highs, with nearly 40,000 new infections on Saturday.

    Fears about Chinese economic growth also hit commodities in Asia trade.

    S&P 500 and Nasdaq futures both fell, pointing to possible declines in Wall Street later in the day.

    US crude CLc1 dipped 0.25% to $76.08 a barrel. Brent crude LCOc1 fell 0.16 to $83.48 per barrel.

    Both benchmarks slid to 10-month lows last week and declined for a third consecutive week

    “Mobility data in China is showing the impact of a resurgence in COVID-19 cases,” ANZ analysts wrote in a research note Monday. “This remains a headwind for oil demand that, combined with weakness in the US dollar, is creating a negative backdrop for oil prices.”

    Yields on benchmark 10-year Treasury notes rose to 3.6905% from its US close of 3.702% on Friday. The two-year yield, which tracks traders’ expectations of Fed fund rates, touched 4.467% compared with a US close of 4.479%.

    The dollar rose 0.22% against the yen to 139.4 JPY. It remains well off its high this year of 151.94 on Oct. 21.

    The euro was down 0.2% on the day at $1.0371, having gained 4.94% in a month, while the dollar index, which tracks the greenback against a basket of currencies of other major trading partners, was up at 106.3.

    In the United States, a speech by Federal Reserve Chair Jerome Powell in Washington on Wednesday to the Brookings Institute on the economic outlook and the labour market will be closely watched by investors.

    Gold was slightly lower. Spot gold was traded at $1750.49 per ounce.

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