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  • Stocks waver on Wall Street ahead of speech by Fed chair

    Stocks waver on Wall Street ahead of speech by Fed chair

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    NEW YORK — Stocks are wavering in early trading on Wall Street ahead of a speech by Jerome Powell, the chair of the Federal Reserve, on the outlook for the economy and inflation. Treasury yields were higher and crude oil prices rose. The S&P 500 index was hovering around the breakeven line after the first few minutes of trading Wednesday. The tech-heavy Nasdaq was up 0.3% and the Dow Jones Industrial Average fell 0.2%. European markets were trading higher and Asian markets closed mixed overnight. The yield on the 10-year Treasury note, which influences mortgage rates, rose to 3.77%.

    THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.

    U.S. markets are flat ahead of a highly anticipated that may give clues about future interest rate hikes.

    On the last trading day of the month, futures for the Dow Jones industrials and the S&P 500 appeared static. Major U.S. indices are clinging to small gains in November, which if they hold, would be the second straight month of advances after a miserable September.

    There is hope on Wall Street that the Fed will slow the scale and pace of its interest rate hikes and investors are closely watching the latest data on inflation, consumer spending and the employment market. They’ll be looking for any signs of a shift in policy when Powell speaks at the Brookings Institution about the outlook for the U.S. economy and the labor market on Wednesday.

    The Fed’s benchmark rate currently stands at 3.75% to 4%, up from close to zero in March.

    The U.S. government will be releasing several reports about the labor market this week. A report about job openings and labor turnover for October will be released Wednesday, followed by a weekly unemployment claims report Thursday. The closely watched monthly report on the job market will be released on Friday.

    Investors were also keeping tabs on China, where protests have erupted over the “zero-COVID” strategy that has confined millions of people to their homes, sometimes for months.

    China has eased some controls after demonstrations in at least eight mainland cities and Hong Kong. It’s unclear if protests will start up again after authorities detained an unknown number of people and stepped up surveillance.

    Renewed restrictions on businesses and other activity have hit manufacturing, with an official survey announced Wednesday showing the purchasing managers index falling to 48.0 in November from 49.2 the month before. The index is on a scale of 0 to 100 where readings 50 and above show expansion.

    “A further fall in the new orders and new export orders indices suggests this was largely driven by weakening domestic and foreign demand,” Capital Economics said in a report. “Today’s surveys suggest that intensified virus disruption has delivered another blow to the economy this month.”

    Japan’s benchmark Nikkei 225 lost 0.2% to finish at 27,968.99 after reports said industrial production contracted 2.6% in October, compared with 1.7% in September, amid weakening demand from China and other world markets.

    Other regional markets advanced.

    Hong Kong’s Hang Seng added 2.1% to 18,584.49. The Shanghai Composite index inched up less than 0.1% to 3,151.34. Australia’s S&P/ASX 200 rose 0.4% to 7,284.20, while South Korea’s Kospi rose 1.6% to 2,472.53.

    “Due to a more reflective approach to the recent zero-COVID measures, Chinese stocks have taken substantial leaps and bounds this week. However, that optimism is giving way to hawkish contemplation as traders twiddle their thumbs awaiting a speech from Federal Reserve Chair Jerome Powell later Wednesday,” Stephen Innes, a managing partner at SPI Asset Management, said in a report.

    Shares in Europe climbed higher at midday after a report showed that inflation in the 19 countries that use the euro currency eased for the first time in more than a year as energy prices retreated from painful highs. But the 10% rate, a drop from 10.6% in October, still hovers near a record that has robbed consumers of their spending power and led economists to predict a recession.

    Britain’s FTSE 100 and France’s CAC 40 each added 0.8%, while Germany’s DAX gained 0.4%.

    In energy trading, benchmark U.S. crude gained $1.67 to $79.87 a barrel. Brent crude, the international standard, added $1.72 to $85.97 a barrel.

    In currency trading, the U.S. dollar rose to 138.72 Japanese yen from 138.65 yen. The euro cost $1.0365, up from $1.0331.

    ———

    Kageyama reported from Tokyo; Ott reported from Washington.

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  • A key US inflation gauge stayed at a high 6.2% in September

    A key US inflation gauge stayed at a high 6.2% in September

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    WASHINGTON — A measure of inflation that is closely monitored by the Federal Reserve remained painfully high last month, the latest sign that prices for most goods and services in the United States are still rising steadily.

    Friday’s report from the Commerce Department showed that prices rose 6.2% in September from 12 months earlier, the same year-over-year rate as in August.

    Excluding volatile food and energy costs, so-called core prices rose 5.1% last month from a year earlier. That’s also faster than the 4.9% annual increase in August, though below a four-decade high of 5.4% reached in February.

    The report also showed that consumers spent more last month, even after adjusting for inflation, a sign of Americans’ willingness to keep spending in the face of high prices. Consumer spending increased 0.6% from August to September, or 0.3% after accounting for price increases.

    The latest figures come just as Americans have begun voting in midterm elections in which Democrats’ control of Congress is at stake and inflation has shot to the top of voters’ concerns. Republicans have heaped blame on President Joe Biden and congressional Democrats for the skyrocketing prices that have buffeted households across the country.

    The persistence of high inflation, near the worst in four decades, has intensified pressure on the Federal Reserve to keep aggressively raising its key short-term interest rate to try to wrestle rising prices under control. Last month, the Fed raised its key rate by a substantial three-quarters of a point for a third straight time, and next week it’s expected to do so for a fourth time.

    The central bank’s latest rate hikes far exceed the quarter-point increases that it typically used in the past when it sought to tighten credit to fight inflation. But after being caught off guard beginning late last year, when prices accelerated far more than the Fed’s policymakers had anticipated, the officials have been raising their benchmark rate at the fastest pace in four decades. In doing so, they are raising the risk of a recession — something that many economists expect to occur sometime next year as a result.

    The Fed’s hikes have led to much higher loan rates for businesses and consumers, particularly for mortgages. The average 30-year fixed mortgage rate surged past 7% this week, according to Freddie Mac, the highest level in two decades and more than twice what it was a year ago.

    The rapid run-up in borrowing costs has crushed the housing market. Sales of existing homes have dropped for eight straight months and are down nearly 25% in the past year. New-home sales and construction are also falling.

    A weaker housing market has slowed the economy, as fewer home purchases also drag down sales of furniture, appliances, and home improvement gear.

    Home prices, which rocketed during the pandemic, have started to fall as a result. The S&P Case-Shiller home price index fell from July to August for a second straight month, according to the latest data available,

    But those declines have yet to show up in the government’s measures of housing costs, which include rents, which are still rising for many people as they renew their leases. It could take until late spring or summer before falling home prices work their way into the government’s inflation indexes. That delay could keep official measures of inflation from falling much over the next few months.

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  • New Zealand proposes taxing cow burps, angering farmers

    New Zealand proposes taxing cow burps, angering farmers

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    WELLINGTON, New Zealand — New Zealand’s government on Tuesday proposed taxing the greenhouse gasses that farm animals make from burping and peeing as part of a plan to tackle climate change.

    The government said the farm levy would be a world first, and that farmers should be able to recoup the cost by charging more for climate-friendly products.

    But farmers quickly condemned the plan. Federated Farmers, the industry’s main lobby group, said the plan would “rip the guts out of small town New Zealand” and see farms replaced with trees.

    Federated Farmers President Andrew Hoggard said farmers had been trying to work with the government for more than two years on an emissions reduction plan that wouldn’t decrease food production.

    “Our plan was to keep farmers farming,” Hoggard said. Instead, he said farmers would be selling their farms “so fast you won’t even hear the dogs barking on the back of the ute (pickup truck) as they drive off.”

    Opposition lawmakers from the conservative ACT Party said the plan would actually increase worldwide emissions by moving farming to other countries that were less efficient at making food.

    New Zealand’s farming industry is vital to its economy. Dairy products, including those used to make infant formula in China, are the nation’s largest export earner.

    There are just 5 million people in New Zealand but some 10 million beef and dairy cattle and 26 million sheep.

    The outsized industry has made New Zealand unusual in that about half of its greenhouse gas emissions come from farms. Farm animals produce gasses that warm the planet, particularly methane from cattle burping and nitrous oxide from their urine.

    The government has pledged to reduce greenhouse gas emissions and make the country carbon neutral by 2050. Part of that plan includes a pledge that it will reduce methane emissions from farm animals by 10% by 2030 and by up to 47% by 2050.

    Under the government’s proposed plan, farmers would start to pay for emissions in 2025, with the pricing yet to be finalized.

    Prime Minister Jacinda Ardern said all the money collected from the proposed farm levy would be put back into the industry to fund new technology, research and incentive payments for farmers.

    “New Zealand’s farmers are set to be the first in the world to reduce agricultural emissions, positioning our biggest export market for the competitive advantage that brings in a world increasingly discerning about the provenance of their food,” Ardern said.

    Agriculture Minister Damien O’Connor said it was an exciting opportunity for New Zealand and its farmers.

    “Farmers are already experiencing the impact of climate change with more regular drought and flooding,” O’Connor said. “Taking the lead on agricultural emissions is both good for the environment and our economy.”

    The liberal Labour government’s proposal harks back to a similar but unsuccessful proposal made by a previous Labour government in 2003 to tax farm animals for their methane emissions.

    Farmers back then also vehemently opposed the idea, and political opponents ridiculed it as a “fart tax” — although a “burp tax” would have been more technically accurate as most of the methane emissions come from belching. The government eventually abandoned the plan.

    According to opinion polls, Ardern’s Labour Party has slipped in popularity and fallen behind the main opposition National Party since Ardern won a second term in 2020 in a landslide victory of historic proportions.

    If Ardern’s government can’t find agreement on the proposal with farmers, who have considerable political sway in New Zealand, it’s likely to make it more difficult for Ardern to win reelection next year when the nation goes back to the polls.

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