WORLDWIDE: HEADLINES
UK Manufacturers Positive About 2022 Despite Brexit And Inflation
British manufacturers are optimistic that business conditions and productivity will improve this year despite most saying they have been hurt by Brexit and rising costs, according to an industry survey published on Monday.
Trade body Make UK and accountants PwC said 73% of manufacturers believed conditions for the sector would improve and 78% foresaw at least a moderate increase in productivity in 2022.
But two thirds of companies said Brexit had hampered their business in the nearly two years since Britain left the EU, while retaining staff and rising input costs linked to inflation also presented a challenge.
“It’s testament to the strength of manufacturers that they have emerged from the turbulence of the last couple of years in such a relatively strong position,” said Stephen Phipson, chief executive of Make UK.
“To build on this we now need to see a government fully committed to supporting the sector,” he said, adding that the government needed a longer-term vision for the economy.
Amid supply chain shortages linked to Brexit and the pandemic last year, more than a third of those surveyed said they would restore some operations within the next two years, while just over half said they did not intend to move any of their production back to the United Kingdom.
Full coverage: REUTERS
Chinese Developer Shimao Puts All Property Projects On Sale – Caixin
Shimao Group Holdings has put on sale all of its real estate projects, including both residential and commercial properties, as the cash-strapped Chinese property developer accelerates asset disposals, Caixin reported.
Shimao, which defaulted on a trust loan last week, has asked agents since late December to help seek buyers for its properties, Caixin reported over the weekend.
The company didn’t immediately respond to a request for comment.
Shimao Group (0813.HK) is largely focused on residential property development, with Shanghai Shimao Construction being its main China business platform. Shanghai Shimao Co Ltd (600823.SS), controlled by Shimao Group, mainly develops commercial properties.
Shimao has struck a preliminary deal with a Chinese state-owned company to sell its Shimao International Plaza Shanghai, a commercial property on Shanghai’s Nanjing Road, for more than 10 billion yuan, Caixin reported.
The property developer said last week that it has defaulted on a trust loan payment, while its unit Shanghai Shimao Construction has proposed extensions on maturities for two asset-backed securities (ABS) due this month.
Shimao has 34.2 billion yuan worth of outstanding ABS, as well as $5.72 billion worth of dollar bonds, according to Caixin.
Full coverage: REUTERS
WORLDWIDE: FINANCE/MARKETS
Asia Shares Subdued Before U.S. Inflation Test
Asian share markets were muted on Monday as investors count down to another U.S. inflation reading that could well set the seal on an early rate hike from the Federal Reserve, lifting bond yields and punishing tech stocks.
The explosion in coronavirus cases globally also threatens to crimp consumer spending and growth just as the Fed is considering turning off the liquidity spigots, tough timing for markets addicted to endless cheap money.
Early market action was thus cautious with S&P 500 futures off 0.2% and Nasdaq futures 0.1%.
MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) was near flat, while South Korea (.KS11) lost 0.7%. Japan’s Nikkei (.N225) held steady for now, after falling 1.0% last week.
Analysts fear the U.S. consumer price report on Wednesday will show core inflation climbing to its highest in decades at 5.4% and usher in a rate rise as soon as March.
While the December payrolls number did miss forecasts, the drop in the jobless rate to just 3.9% and strength in wages suggested the economy was running short of workers.
“It was consistent with the Fed’s evolving view that the labour market is getting close to or is already at maximum employment with wage pressures building,” said analysts at NatWest Markets.
“This should add to speculation about a March hike, and we have pulled our expectation for the Fed’s lift-off to occur in March instead of June.”
Full coverage: REUTERS
Dollar Firm As Inflation Test Looms
The dollar started the week with support as traders bet U.S. inflation data and appearances from several Federal Reserve officials would bolster the case for higher interest rates.
After dipping on Friday, the greenback stood around its 200-day moving average against the euro at $1.1357 in early Asia trade on Monday. It firmed slightly on the yen to 115.65 , fairly close to last week’s five-year high of 116.35 per dollar.
Trade in the Asia session was thinned by a holiday in Japan.
Federal Reserve chair Jerome Powell and governor Lael Brainard testify before Senate committees this week regarding their nominations as chair and deputy chair at the Fed.
U.S. inflation figures are due on Wednesday, with headline CPI seen climbing to a red-hot 7% year-on-year.
“The dollar index is likely to recoup some of its Friday losses this week on Powell’s likely hawkish commentary and rising U.S. inflation,” said Scotiabank FX strategist Qi Gao.
Eventually, though, he added that the greenback would probably run out of steam, and the index head towards 94 once money markets fully price in a Fed hike in March.
The dollar index last sat at 95.800.
U.S.-Russia talks over rising tension in Ukraine also have traders on edge as the two sides seem far apart and failure risks an armed confrontation on Europe’s doorstep.
The Australian dollar was marginally weaker at $0.7179 early in the Asia session and has been held below resistance around $0.7190.
Full coverage: REUTERS
Oil Drops For 2nd Session On Concerns Over Rising COVID-19 Cases
Oil lost more ground on Monday as rapidly climbing cases of the Omicron COVID-19 variant hit economic activity, although losses were curbed by supply disruptions in Kazakhstan and Libya.
Brent crude slid 38 cents, or 0.46%, to $81.37 a barrel, while U.S. West Texas Intermediate (WTI) crude was down 34 cents, or 0.43%, to $78.56 a barrel.
U.S. employment in the country increased less than expected in December amid worker shortages, and job gains could remain moderate in the near term as spiralling COVID-19 infections disrupt economic activity.
More than 304.87 million people have been reported to be infected by the novel coronavirus globally and 5,834,506 have died, according to a Reuters tally.
U.S. energy firms kicked off the new year by continuing to add oil and natural gas rigs after increasing the rig count in 2021 after two years of declines.
The oil and gas rig count, an early indicator of future output, rose two to 588 in the week to Jan. 7, its highest since April 2020, energy services firm Baker Hughes Co BKR.N said in its closely followed report on Friday.
However, disruption supply in other parts of the world are likely to support prices.
In Kazakhstan’s main city Almaty, security forces appeared to be in control of the streets and the president said constitutional order had mostly been restored, a day after Russia sent troops to help put down an uprising.
Full coverage: REUTERS
