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Tag: Recessions and depressions

  • Sunak to become UK leader at meeting with King Charles III

    Sunak to become UK leader at meeting with King Charles III

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    LONDON — Rishi Sunak is due to be installed as Britain’s third prime minister of the year by King Charles III on Tuesday, before appointing a Cabinet that will have to wrestle with the U.K.’s economic and political crises.

    Sunak, the U.K.’s first leader of color, was selected as leader of the governing Conservative Party on Monday as it tries to stabilize the economy, and its own plunging popularity, after the brief, disastrous term of Liz Truss.

    Truss will depart after making a brief public statement outside 10 Downing St., seven weeks to the day after she was appointed prime minister by Queen Elizabeth II. The queen died two days later. Now her son will take over the ceremonial role of accepting Truss’ resignation at Buckingham Palace before asking Sunak to form a government.

    Sunak — at 42 the youngest British leader for more than 200 years — must try to shore up an economy sliding toward recession and reeling after his predecessor’s experiment in libertarian economics, while also attempting to unite a demoralized and divided party that trails far behind the opposition in opinion polls.

    His top priorities will be appointing Cabinet ministers, and preparing for a budget statement that will set out how the government plans to come up with billions of pounds (dollars) to fill a fiscal hole created by soaring inflation and a sluggish economy, and exacerbated by Truss’ destabilizing economic experiments.

    The statement, set to feature tax increases and spending cuts, is currently due to be made in Parliament on Monday by Treasury chief Jeremy Hunt — if Sunak keeps him in the job.

    Sunak, who was Treasury chief himself for two years until July, said Monday that Britain faces “a profound economic challenge.”

    Sunak becomes prime minister in a remarkable reversal of fortune just weeks after he lost to Truss in a Conservative election to replace former Prime Minister Boris Johnson. Party members in the summer chose her tax-cutting boosterism over his warnings that inflation must be tamed.

    Truss conceded last week that she could not deliver on her plans — but only after her attempts triggered market chaos and worsened inflation at a time when millions of Britons were already struggling with soaring borrowing costs and rising energy and food prices.

    The party is now desperate for someone to right the ship after months of chaos under Truss and Johnson, who quit in July after becoming mired in ethics scandals.

    Sunak was chosen as Conservative leader after becoming the only candidate to clear the hurdle of 100 nominations from fellow lawmakers to run in the party election. Sunak defeated rival Penny Mordaunt, who may get a job in his government, and the ousted Johnson, who dashed back from a Caribbean vacation to rally support for a comeback bid but failed to get enough backing to run.

    As well as stabilizing the U.K. economy, Sunak must try to unite a governing party that has descended into acrimony as its poll ratings have plunged.

    Conservative lawmaker Victoria Atkins, a Sunak ally, said the party would “settle down” under Sunak.

    “We all understand that we’ve now really got to get behind Rishi — and, in fairness, that’s exactly what the party has done,” she told radio station LBC.

    ———

    Follow all AP’s reporting on British politics at https://apnews.com/hub/british-politics

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  • Global stocks lower amid British political turmoil

    Global stocks lower amid British political turmoil

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    BANGKOK — Global stock markets declined Thursday as the British prime minister faced demands to quit and Japan reported its 14th straight monthly trade deficit.

    London and Frankfurt opened lower and Shanghai, Tokyo and Hong Kong declined. Oil rose more than $1 per barrel.

    British Prime Minister Liz Truss faced demands to resign following chaotic scenes in Parliament during a vote on a fracking ban. Truss has been defiant despite financial market turmoil caused by multiple policy U-turns.

    Truss “precipitated this political crisis by triggering the market crisis,” said Michael Every of Rabobank in a report. Britain is “deep in an emerging-market rut.”

    In early trading, the FTSE 100 in London was off 0.2% at 6,914.12 and the DAX in Frankfurt fell 0.7% to 12,655.08. The CAC 40 in Paris was little-changed at 6,041.18.

    On Wall Street, the future for the benchmark S&P 500 index was off 0.3%. That for the Dow Jones Industrial Average was up less than 0.1%.

    On Wednesday, the S&P fell 0.7%, breaking two days of gains. The Dow slipped 0.3% and the Nasdaq composite sank 0.9%.

    In Asia, the Nikkei 225 in Tokyo tumbled 0.9% to 27,006.96 after September imports ballooned 46% over a year earlier due to a surging oil prices and a weak yen. The Japanese currency is trading at a 32-year low against the dollar.

    The yen weakened to 149.82 to the dollar from Wednesday’s 149.81 yen.

    The dollar has gained against other currencies following repeated interest rate hikes by the Federal Reserve, which increases the return on assets valued in dollars. Investors also see the U.S. currency as a stable haven amid global uncertainty.

    “Rising U.S. yields and the strong U.S. dollar are the sledgehammers pounding global equities lower,” said Stephen Innes of SPI Asset Management in a report.

    The Shanghai Composite Index lost 0.3% to 3,035.05 and the Hang Seng in Hong Kong fell 1.4% to 16,280.22.

    The Kospi in Seoul retreated 0.9% to 2,218.09 and Sydney’s S&P-ASX 200 sank 1% to 6,730.70.

    On Wednesday, Wall Street pulled back as investors reviewed earnings and Treasury yields climbed to multiyear highs.

    Netflix soared 13% and United Airlines rose 5% after releasing quarterly results. Abbott Laboratories, M&T Bank and others sank.

    The yield on the 10-year Treasury, which influences mortgage rates, climbed to 4.13%, its highest level since June 2008. It was at 4.02% late Tuesday.

    The yield on the two-year Treasury, which responds to expectations of future Fed action, rose to 4.54% from 4.43%.

    The Fed and central banks in Europe and Asia have been raising interest rates to cool inflation that is at multi-decade highs. Investors worry they might tip the global economy into recession.

    Inflation in Britain hit a 40-year high of 10.1% over a year earlier in September.

    In energy markets, benchmark U.S. crude rose $1.56 to $86.08 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the price basis for international oil trading, advanced $1.34 to $93.75 per barrel in London.

    The euro gained to 97.83 cents from Wednesday’s 97.68 cents.

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  • Wall Street wavers up and down as more earnings roll in

    Wall Street wavers up and down as more earnings roll in

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    NEW YORK — Stocks wavered between gains and losses in early trading on Wall Street, leaving indexes mixed as another batch of companies reported their latest quarterly results.

    Several companies including Netflix and United Airlines rose sharply while others, including Abbott Laboratories and M&T Bank, sank.

    The S&P 500 shook off an early slump and was little changed as of 10:23 a.m. Eastern. The Dow Jones Industrial Average rose 56 points, or 0.2%, to 30,582 and the Nasdaq fell 0.1%. Smaller companies fell more than the rest of the market.

    Stocks are coming off of two days of gains, but trading remains unsteady overall. Treasury yields rose back near multi-year highs. Crude oil prices rose slightly.

    Homebuilders and other companies tied to the industry fell following a disappointing report on the housing industry. Construction on new homes declined more than expected in September. Homebuilder Lennar fell 4.4% and home-improvement retailer Lowe’s shed 5.1%.

    The yield on the 10-year Treasury, which influences mortgage rates, rose to 4.08% from 4.02% late Tuesday. The yield on the two-year Treasury, which tends to track expectations for future Federal Reserve action, also rose to 4.52% from 4.43%.

    U.S. crude oil prices rose 1.2% and energy stocks made gains. Exxon Mobil rose 2.2%. The White House plans to announce another release of oil from the U.S. strategic reserve.

    Investors have been focusing on the latest round of corporate earnings this week. The latest results are being closely watched for clues about how companies are dealing with the hottest inflation in four decades and how they intend to operate through the rest of the year and into 2023.

    Netflix soared 14.7% after the company said it picked up 2.4 million subscribers during the July-September period, a comeback from a loss of 1.2 million customers during the first half of the year.

    United Airlines rose 7.2% after reporting strong third-quarter financial results. American Airlines will report its results on Thursday.

    Household goods giant Procter & Gamble rose 2.2% after also reporting strong financial results. It joined a growing list of companies, including Hasbro and Johnson & Johnson, warning investors about a strong U.S. dollar cutting into revenue. A strong dollar decreases the value of overseas sales after converting the currency. The U.S. currency is now worth more than a euro for the first time in 20 years.

    The U.S. dollar has gained strength versus currencies worldwide as inflation and recession concerns prompt investors to look for relatively stable investments. Central governments and banks worldwide are dealing with stubbornly hot inflation. British food prices rose at the fastest pace since 1980 last month, driving inflation back to a 40-year high.

    The U.S. faces its own potential recession as high prices on everything from food to clothing barely budge and the Fed raises interest rates to temper inflation.

    The Fed’s rate increases are meant to make borrowing more difficult and slow economic growth in an effort to tame inflation. The strategy risks stalling the already slowing U.S. economy and bringing on a recession.

    ——

    Joe McDonald and Matt Ott contributed to this report.

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  • Asian stocks fall ahead of US inflation update

    Asian stocks fall ahead of US inflation update

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    BEIJING — European stocks and Wall Street futures gained Thursday while Asian markets fell ahead of U.S. inflation data that investors worry will reinforce Federal Reserve plans for more aggressive interest rate hikes.

    London and Frankfurt advanced. Shanghai, Tokyo and Hong Kong declined. Oil prices advanced.

    Wall Street’s benchmark S&P 500 ended lower Wednesday after inflation in producer prices edged down but still was near a multi-decade high.

    The more closely watched consumer price index was due out later Thursday.

    “A hawkish reaction to the data could add more pressure to stocks,” Anderson Alves of ActivTrades said in a report.

    The Fed and other central banks in Europe and Asia have raised rates by unusually big margins to cool inflation that is at multi-decade highs, but traders are afraid they might tip the global economy into recession.

    In early trading, the FTSE 100 in London gained 0.2% to 6,840.35. The DAX in Frankfurt rose 0.8% to 12,272.20 and the CAC 40 in Paris added 0.5% to 5,845.55.

    On Wall Street, futures for the benchmark S&P 500 index and the Dow Jones Industrial Average were up 0.5%.

    On Wednesday, the S&P 500 gave up 0.3% for its sixth daily decline and the Dow slide 0.1% after a report showed producer price inflation is very hot.

    Prices rose 8.5% in September, down from March’s peak of 11.7%. But prices gained 0.4% compared with August following two months of declines.

    Consumer inflation on Thursday and retail sales data Friday could give a clearer picture of where prices are hottest and how consumers are reacting.

    Minutes from the Fed’s last meeting, released Wednesday, underscored the central bank’s commitment to taming “unacceptably high” inflation.

    The S&P 500 is down 25% so far this year and close to a two-year low.

    In Asia, the Shanghai Composite Index lost 0.1% to 3,016.35 and the Nikkei 225 in Tokyo sank 0.6% to 26,237.42. Hong Kong’s Hang Seng tumbled 1.9% to 16,389.11, its lowest close in more than 11 years.

    The Kospi in Seoul fell 1.8% to 2,162.87 while Sydney’s S&P-ASX 200 gained less than 0.1% to 6,642.60.

    India’s Sensex lost 0.7% to 57,205.89. New Zealand’s benchmark lost 0.5% and Southeast Asian markets also declined.

    In energy markets, benchmark U.S. crude gained 19 cents to $87.64 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the price basis for international oil trading, added 31 cents to $92.67 per barrel in London.

    The dollar strengthened to 146.74 after hitting a 24-year high of 145.85 on Wednesday.

    The dollar’s exchange rate has been rising against other currencies due to the Fed’s rate hikes and recession fears. The yen’s weakness has prompted expectations Japan’s central bank might intervene for a second time to prop up the exchange rate following an intervention in September.

    The euro gained to 97.39 cents from 97.06 cents.

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  • Asian shares extend losses as specter of recession looms

    Asian shares extend losses as specter of recession looms

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    BANGKOK — Asian shares slipped on Monday, with Chinese markets logging moderate losses after they reopened from a weeklong holiday.

    The declines followed yet another dismal end to the week on Wall Street as a strong U.S. jobs report added to worries the Federal Reserve might consider the higher-than-expected hiring data as proof the economy hasn’t slowed enough to get inflation under control. That might mean still more hefty rate hikes that could make a recession more likely.

    A U.S. consumer prices report on Thursday will be one of the biggest factors for markets this week. Investors also are awaiting the latest updates on how companies are dealing with higher prices and interest rate hikes.

    Markets were closed Monday in Tokyo, Taiwan and South Korea. The Hang Seng in Hong Kong fell 2.5% to 17,298.32 while the Shanghai Composite index shed 0.4% to 3,012.58. Bangkok’s SET lost 0.6% and India’s Sensex gave up 1.2%.

    The dollar rose to 145.44 Japanese yen from 145.34 late Friday, adding to pressure on Japan’s central bank to counter the yen’s prolonged slide by adjusting its policy of keeping its benchmark interest rate below zero to fend off deflation.

    Prices have been rising in Japan, pushed higher mainly by global inflation and surging costs for oil and gas, but the Bank of Japan has stuck to its ultra-loose monetary policy while the Fed has pressed ahead with sharp rate hikes. The higher expected returns have pushed the dollar higher against the yen.

    On Friday, the S&P 500 fell 2.8% to 3,639.66. It ended with a 1.5% gain for the week, its first weekly gain in four weeks. The Dow Jones Industrial Average skidded 2.1% to 29,296.79. The Nasdaq tumbled 3.8% to 10,652.40. The Russell 2000 index fell 2.9%, to 1,702.15.

    The government report showing employers hired more workers last month than economists expected might clear the way for the Fed to continue hiking interest rates aggressively, something that risks causing a recession if done too severely.

    Employers added 263,000 jobs last month. That’s a slowdown from the hiring pace of 315,000 in July, but it’s still more than the 250,000 that economists expected.

    Stocks have tumbled over 20% this year from record highs this year on worries about inflation, interest rates and the possibility of a recession.

    The major indexes managed to notch a gain for the week, thanks to a powerful but short-lived rally Monday and Tuesday after some investors squinted hard enough at some weaker-than-expected economic data to suggest the Fed may take it easier on rate hikes. But Friday’s jobs report may have dashed such hopes for a “pivot” by the Fed. It’s a pattern that has been repeated several times this year.

    By hiking interest rates, the Fed is hoping to starve inflation of the purchases needed to keep prices rising even further. The Fed has already seen some effects, with higher mortgage rates hurting the housing industry in particular. But if the rate hikes go too far, that could squeeze the economy into a recession. In the

    Crude oil, meanwhile, had its biggest weekly gain since March. Benchmark U.S. crude jumped 4.7% to settle at $92.64 per barrel Friday. Brent crude, the international standard, rose 3.7% to settle at $97.92.

    Oil prices have surged because big oil-producing countries have pledged to cut production in order to keep prices up. That should keep the pressure up on inflation, which is still near a four-decade high but hopefully moderating.

    On Monday, the U.S. benchmark fell 97 cents to $91.67 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude gave up $1.02 to $96.90 a barrel.

    Beyond higher interest rates, analysts say the next hammer to hit stocks could be a potential drop in corporate profits. Companies are contending with high inflation and interest rates eating into their earnings, while the economy slows.

    The euro was unchanged at 97.36 U.S. cents.

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  • EU leaders struggle to bridge gas price cap divide

    EU leaders struggle to bridge gas price cap divide

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    PRAGUE — European Union leaders converged on Prague Castle on a crisp Friday morning to try to bridge significant differences over a natural gas price cap as winter approaches and Russia’s war on Ukraine fuels a major energy crisis.

    The price cap is one of several measures the 27-nation bloc is preparing to contain an energy crisis in Europe that is driving up prices for consumers and business and which could lead to rolling blackouts, shuttered factories and a deep recession over the winter.

    As the Europeans bolster their support for Ukraine in the form of weapons, money and aid, Russia has reduced or cut off natural gas to 13 member nations, leading to surging gas and electricity prices that could climb higher as demand peaks during the cold months.

    Standing in the way of an agreement is the simple fact that each member country depends on different energy sources and suppliers, and they’re struggling to see eye-to-eye on the best way ahead.

    A group of 15 member countries has urged the EU’s executive branch, the European Commission, to propose a cap on gas prices as soon as possible, but the idea has not secured unanimous support, with Germany notably blocking.

    For now, the commission says, Europe’s gas storage capacity stands at about 90%, even as Russian gas supplies to the EU declined by 37% between January and August, with the U.S. and Norway stepping in to provide liquefied natural gas. But those replacement supplies have not been cheap.

    “I therefore recommend stepping up negotiations with our reliable suppliers to reduce the prices of imported gas of all kinds,” commission President Ursula von der Leyen said in a letter to the leaders ahead of Friday’s summit in the Czech capital.

    Von der Leyen also recommended that countries work together to “develop an intervention to limit prices in the natural gas market,” where prices have fluctuated wildly over jitters about the war and potentially uncoordinated national responses to the problem.

    For now, a breakthrough on the price cap seems a distant prospect, but the leaders may make enough progress to conclude some kind of agreement when they meet again in Brussels on Oct 20-21.

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  • IMF warns of higher recession risk and darker global outlook

    IMF warns of higher recession risk and darker global outlook

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    WASHINGTON — The International Monetary Fund is once again lowering its projections for global economic growth in 2023, projecting world economic growth lower by $4 trillion through 2026.

    Kristalina Georgieva, managing director of the IMF, told an audience at Georgetown University on Thursday that “things are more likely to get worse before it gets better,” saying the Russian invasion of Ukraine that began in February has dramatically changed the IMF’s outlook on the economy.

    The ongoing COVID-19 pandemic, rising inflation and worsening climate conditions are also impacting world economies, exacerbating other crises, like food insecurity and high debt levels held by lower-income countries.

    “The risks of recession are rising,” she said, adding that the IMF estimates that countries making up one-third of the world economy will see at least two consecutive quarters of economic contraction this or next year.

    Georgieva said the institution downgraded its global growth projections already three times. It now expects 3.2% for 2022 and now 2.9% for 2023.

    The bleak projections come as central banks around the world raise interest rates in hopes of taming rising inflation. The U.S. Federal Reserve has been the most aggressive in using interest rate hikes as an inflation-cooling tool, though central banks from Asia to England have begun to raise rates this week.

    Georgieva said “tightening monetary policy too much and too fast — and doing so in a synchronized manner across countries — could push many economies into prolonged recession.”

    Many countries are already seeing major impacts of the invasion of Ukraine on their economies, and the IMF’s grim projections are in line with other forecasts for declines in growth.

    The Organization for Economic Cooperation and Development last week said the global economy is set to lose $2.8 trillion in output in 2023 because of the war.

    The projections come after the OPEC+ alliance of oil-exporting countries decided Wednesday to sharply cut production to support sagging oil prices in a move that could deal the struggling global economy another blow and raise politically sensitive pump prices for U.S. drivers just ahead of key national elections in November.

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  • OPEC+ makes big oil cut to boost prices; pump costs may rise

    OPEC+ makes big oil cut to boost prices; pump costs may rise

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    FRANKFURT, Germany — The OPEC+ alliance of oil-exporting countries on Wednesday decided to sharply cut production to support sagging oil prices, a move that could deal the struggling global economy another blow and raise politically sensitive pump prices for U.S. drivers just ahead of key national elections.

    Energy ministers meeting at the Vienna headquarters of the OPEC oil cartel cut production by 2 million barrels per day starting in November at their first face-to-face meeting since the start of the COVID-19 pandemic.

    Besides a token trim in oil production last month, the major cut is an abrupt turnaround from months of restoring deep cuts made during the depths of the pandemic and could help alliance member Russia weather a looming European ban on oil imports.

    In a statement, OPEC+ said the decision was based on the “uncertainty that surrounds the global economic and oil market outlooks.”

    The impact of the production cut on oil prices — and thus the price of gasoline made from crude — will be limited somewhat because OPEC+ members are already unable to meet the quotas set by the group.

    The alliance also said it was renewing its cooperation between members of the OPEC cartel and non-members, the most significant of which is Russia. The deal was to expire at year’s end.

    The decision comes as oil trades well below its summer peaks because of fears that major global economies such as the U.S. or Europe will sink into recession due to high inflation, rising interest rates meant to curb rising consumer prices, and uncertainty over Russia’s war against in Ukraine.

    The fall in oil prices has been a boon to U.S. drivers, who saw lower gasoline prices at the pump before costs recently started ticking up, and for U.S. President Joe Biden as his Democratic Party gears up for congressional elections next month.

    White House press secretary Karine Jean-Pierre told reporters Tuesday that the U.S. would not extend releases from its strategic reserve to increase global supplies.

    Biden has tried to receive credit for gasoline prices falling from their average June peak of $5.02 — with administration officials highlighting a late March announcement that a million barrels a day would be released from the strategic reserve for six months. High inflation is a fundamental drag on Biden’s approval and has dampened Democrats’ chances in the midterm elections.

    Oil supply could face further cutbacks in coming months when a European ban on most Russian imports takes effect in December. A separate move by the U.S. and other members of the Group of Seven wealthy democracies to impose a price cap on Russian oil could reduce supply if Russia retaliates by refusing to ship to countries and companies that observe the cap.

    The EU agreed Wednesday on new sanctions that are expected to include a price cap on Russian oil.

    Russia “will need to find new buyers for its oil when the EU embargo comes into force in early December and will presumably have to make further price concessions to do so,” analysts at Commerzbank wrote in a note. “Higher prices beforehand — boosted by production cuts elsewhere — would therefore doubtless be very welcome.”

    Dwindling prospects for a diplomatic deal to limit Iran’s nuclear program have also lowered prospects for a return of as much as 1.5 million barrels a day in Iranian oil to the market if sanctions are removed.

    Oil prices surged this summer as markets worried about the loss of Russian supplies from sanctions over the war in Ukraine, but they slipped as fears about recessions in major economies and China’s COVID-19 restrictions weighed on demand for crude.

    International benchmark Brent has sagged as low as $84 in recent days after spending most of the summer months over $100 per barrel.

    At its last meeting in September, OPEC+ reduced the amount of oil it produces by 100,000 barrels a day in October. That token cut didn’t do much to boost lower oil prices, but it put markets on notice that the group was willing to act if prices kept falling.

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  • Hong Kong shares soar 6%, leading Asian market gains

    Hong Kong shares soar 6%, leading Asian market gains

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    TOKYO — Hong Kong’s share benchmark soared more than 6% on Wednesday as Asian shares tracked gains on Wall Street.

    New Zealand’s share benchmark rose 0.8% after its central bank hiked its benchmark interest rate to 3.5%, saying inflation remained too high and labor scarce. The half-point rate hike was the fifth in a row made by the Reserve Bank of New Zealand since February.

    Statistics New Zealand said inflation was running at 7.3% and unemployment at 3.3%. The rate hike came on the same day the government announced its finances were in better shape than forecast.

    The Hang Seng in Hong Kong rose 6.0% to 18,108.69, catching up with gains elsewhere as markets reopened following a holiday Tuesday. Markets in mainland China remained closed for a holiday.

    Japan’s benchmark Nikkei 225 added 0.5% to 27,138.99. Australia’s S&P/ASX 200 climbed 1.7% to 6,815.70. Shares in Australia got a boost after the Reserve Bank of Australia ordered a smaller-than-expected 25 basis points interest rate hike on Tuesday.

    South Korea’s Kospi gained 0.4% to 2,217.88.

    Analysts said the latest data on South Korea’s inflation may push the Bank of Korea to raise interest rates at its meeting set for next week, but such hikes were expected to slow in pace as inflation is brought under control.

    “We expect headline inflation to rise again in October. Gasoline prices will likely decline further, but city gas and power rates were raised at the beginning of October and fresh food prices will also probably rise ahead of winter,” said a report by Robert Carnell, regional head of research Asia-Pacific at ING.

    On Wall Street, the Dow Jones Industrial Average climbed more 2.8% to 30,316.32. The S&P 500 had its best day since May 2020 on Tuesday as the market clawed back more of the ground it lost over the past miserable several weeks. It surged 3.1% to 3,790.93.

    Twitter surged 22.2% after Elon Musk said he would go ahead with his $44 billion acquisition of the social media company, abandoning efforts to get out of the deal.

    The Nasdaq composite climbed 3.3% to 11,176.41. Small company stocks also made solid gains, lifting the Russell 2000 advanced 3.9% to 1,775.77.

    The two-day rally has hit markets as investors look for signs that central banks might ease up on aggressive rate hikes aimed at taming the hottest inflation in four decades. The rate hike by Australia’s central bank was smaller than previous ones.

    In the U.S., a government report on job openings showed the number of available jobs in the U.S. plummeted in August compared with July. It’s a sign that businesses may pull back further on hiring and potentially cool chronically high inflation, which could allow the Federal Reserve to slow the pace of rate increases.

    Investors are watching closely as central banks raise interest rates to make borrowing more difficult and slow economic growth to try to tame inflation. Investors are hoping that they will eventually ease off their aggressive rate hikes and the move by Australia’s central bank is a hopeful sign for some.

    Investors worry that the rate hikes, especially the increases from the Fed, could go too far in slowing growth and send economies into a recession. The Fed has already pushed its key overnight interest rate to a range of 3% to 3.25%, up from virtually zero as recently as March.

    Economic growth is already slowing globally and the U.S. economy contracted during the first two quarters of the year, which is considered an informal signal of a recession.

    Wall Street will get a more detailed look at the employment situation in the U.S. this week, with a report on hiring by private companies due out Wednesday, the latest tally of weekly applications for unemployment benefits on Thursday and the government’s monthly jobs report for September on Friday.

    In energy trading, benchmark U.S. crude fell 16 cents to $86.39 a barrel in electronic trading on the New York Mercantile Exchange. It surged $2.89 to 86.52 on Tuesday. Brent crude, the international standard for pricing, lost 8 cents to $91.72 a barrel.

    In currency trading, the U.S. dollar rose to 144.19 from 144.12 Japanese yen. The euro cost 99.69 cents, down from 99.87 cents.

    ———

    Damian J. Troise, Alex Veiga and Nick Perry contributed to this report.

    Yuri Kageyama is on Twitter https://twitter.com/yurikageyama

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  • Asian shares rise after ‘relief rally’ on Wall Street

    Asian shares rise after ‘relief rally’ on Wall Street

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    TOKYO — Asian shares rose Tuesday, encouraged by a rally in U.S. shares after some weak economic data raised hopes that the Federal Reserve might ease away from aggressive interest rate hikes.

    Japan’s benchmark Nikkei 225 added 2.8% in afternoon trading to 26,959.25. South Korea’s Kospi gained 2.5% to 2,209.98.

    Australia’s S&P/ASX 200 jumped 3.8% to 6,699.30 after its central bank boosted its benchmark interest rate for a sixth consecutive month to a nine-year high of 2.6%. The Reserve Bank of Australia’s increase of a quarter percentage point to the cash rate was smaller than those at recent monthly meetings.

    When the bank lifted the rate by a quarter percentage point at its board meeting in May, it was the first rate hike in more than 11 years. It’s now at its highest point since August 2013, when the bank cut the rate from 2.75% to 2.5%.

    Markets in Hong Kong and Shanghai were closed for holidays.

    “Asian equities were positive on Tuesday after a corrective session as traders eye potentially oversold market conditions,” Anderson Alves at ActivTrades said in a report.

    On Monday, Wall Street soared to its best day in months in a widespread relief rally after some unexpectedly weak data on the economy raised the possibility that the Federal Reserve won’t have to be so aggressive about hiking interest rates.

    The S&P 500’s leap of 2.6% to 3,678.43 was its biggest since July, the latest swing for a scattershot market that’s been mostly falling this year on worries about a possible global recession.

    The Dow Jones Industrial Average jumped 2.7%, to 29,490.89, and the Nasdaq composite gained 2.3% to 10,815.43.

    Stocks took their cue from the bond market, where yields fell to ease some of the pressure that’s been battering markets this year. The yield on the 10-year Treasury, which helps set rates for mortgages and many other kinds of loans, fell to 3.62% from 3.83% late Friday. It got as high as 4% last week after starting the year at just 1.51%.

    A report on U.S. manufacturing came in weaker than expected, along with data showing a drop off in construction spending from July to August. That may seem discouraging, but could mean the Federal Reserve can ease off on raising interest rates to beat down the high inflation damaging households’ finances.

    By raising rates, the Fed is making it more expensive to buy a house, a car or most anything else purchased on credit. The hope is to slow the economy just enough to starve inflation of the purchases needed to keep prices rising so quickly.

    The Fed has already pulled its key overnight interest rate to a range of 3% to 3.25%, up from virtually zero as recently as March. Most traders expect it to be more than a full percentage point higher by early next year.

    But stresses are building in financial markets and corporate profits have weakened as central banks around the world hike rates in concert.

    The yield on the two-year Treasury, which more closely tracks expectations for Fed action, fell to 4.11% from 4.27% following the weaker-than-expected reports on the economy.

    Besides stocks, lower rates also boost prices for everything from cryptocurrencies to gold, which can suddenly look a bit more attractive when bonds are paying less in income.

    Stocks of high-growth companies and particularly risky or expensive investments have been the most affected by changes in rates. Bitcoin rallied Monday with the reprieve in yields, while technology stocks did the heaviest lifting to carry the S&P 500. Apple and Microsoft both rose more than 3%.

    Monday’s rally came despite an 8.6% drop for Tesla, one of the most influential stocks on Wall Street because of its massive market value. The maker of electric vehicles delivered fewer vehicles from July through September than investors expected.

    The latest update on the U.S. jobs market comes on Friday. Along with reports on inflation, the jobs report is one of the most highly anticipated pieces of data on Wall Street each month.

    It will be the last jobs report before the Fed makes its next decision on interest rates, scheduled for Nov. 2. Continued strength would give the central bank more leeway to keep hiking. Traders say the likeliest move is a fourth straight increase of a whopping three-quarters of a percentage point, triple the usual move.

    In energy trading, benchmark U.S. crude added 23 cents to $83.86 a barrel. It jumped Monday amid speculation big oil-producing countries could soon announce cuts to production. Shares of energy-producing companies made big gains. Exxon Mobil leaped 5.3%, and Chevron climbed 5.6%. Brent crude, the international standard, added 42 cents to $89.28 a barrel.

    In currency trading, the U.S. dollar inched up to 144.84 Japanese yen from 144.81 yen. The euro cost 98.28 cents, inching down from 98.40 cents.

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    Yuri Kageyama is on Twitter https://twitter.com/yurikageyama

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  • UK’s Truss meets with fiscal watchdog amid economic crisis

    UK’s Truss meets with fiscal watchdog amid economic crisis

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    LONDON — British Prime Minister Liz Truss and her Treasury chief met with the independent Office of Budget Responsibility on Friday amid efforts to ease concerns about unfunded government tax cuts that have unleashed turmoil on financial markets.

    The meeting was significant because it was the government’s failure to publish the OBR’s analysis of its tax-cutting plans that spooked investors, sending the pound to a record low against the dollar earlier this week and forcing the Bank of England to intervene in the bond market to protect pension funds.

    The OBR promised an analysis by Oct. 7, far sooner than the date previously suggested — Nov. 23 — when the government releases more details on its economic plans. The oversight body promised that its forecast “will, as always, be based on our independent judgment about economic and fiscal prospects, and the impact of the government’s policies.”

    The chairman of the House of Commons’ Treasury committee said the meeting was an opportunity for the government to change course. Truss and Treasury chief Kwasi Kwarteng were likely to have “difficult” conversations with the OBR because investors want to see independent analysis showing that their plans won’t push government borrowing to unsustainable levels, said Mel Stride, a member of Truss’ Conservative Party.

    “The judgment so far of the markets, and indeed myself and many others, is that what was announced last Friday, unfortunately, doesn’t stack up fiscally and some changes are almost certainly going to need to be made,” Stride told the BBC.

    Truss defended her plan Thursday and shrugged off the market chaos, saying she was willing to make “controversial and difficult decisions” to get the U.K. economy growing. She said the problems facing the economy — namely high inflation driven by soaring energy prices — were global and spurred by Russia’s invasion of Ukraine.

    She got a piece of good news Friday, with revised figures showing the U.K. economy grew slightly in the three months through June, indicating the country isn’t technically in a recession, with two consecutive quarters of shrinking GDP being one definition.

    Her government’s economic stimulus program calls for 45 billion pounds ($48 billion) of tax cuts and no spending reductions, meaning a surge of borrowing would be used to pay for the cuts that many see as benefiting the wealthy. She also has capped energy bills for households and businesses that are driving a cost-of-living crisis, though prices are still going up Saturday as natural gas prices soar.

    Treasury minister Andrew Griffith had played down the significance of the meeting between the government and OBR, but nonetheless described it as a “very good idea.”

    “Just like the independent Bank of England, they have got a really important role to play,’’ Griffith said of the OBR during an interview with Sky News. “We all want the forecasts to be as quick as they can, but also as a former finance director, I also know you want them to have the right level of detail.”

    The decision to meet with the OBR also was welcomed by Conservative lawmakers and senior party figures, including former Chancellor George Osborne, who oversaw the creation of the independent spending watchdog in 2010.

    “Turns out the credibility of the institution we created 12 years ago to bring honesty to the public finances is more enduring than that of its critics,” Osborne said on Twitter.

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