WORLDWIDE : HEADLINES
New Zealand economy in deepest recession as second quarter GDP shrinks
WELLINGTON – New Zealand fell into its deepest economic slump on record in the second quarter as its battle against the coronavirus pandemic paralysed business activity, official data showed on Thursday.
Gross domestic product contracted a seasonally adjusted 12.2% quarter-on-quarter, its sharpest quarterly contraction on record and largely in line with forecasts of a 12.8% decline from economists polled by Reuters. GDP fell 12.4% year-on-year.
The Reserve Bank of New Zealand had forecast a quarterly and annual GDP decline of 14% in its August statement.
Growth has been hit by a standstill in economic activity as a strict nationwide coronavirus lockdown in April and parts of May forced almost everyone to stay at home and businesses to shut.
The GDP data confirms New Zealand’s worst recession, defined as two straight quarters of contraction, since 2010, with GDP in the March quarter falling 1.6%.
Full coverage: REUTERS
Singapore August exports rise 7.7% year/year, higher than forecasts
SINGAPORE – Singapore’s August non-oil domestic exports (NODX) rose 7.7% from a year earlier, beating forecasts, official data showed on Thursday, helped by items such as non-monetary gold and specialised machinery.
That compared with a revised 5.9% increase in July. Economists had forecast a 3.7% increase for August, according to the median of eight estimates.
On a seasonally adjusted month-on-month basis, exports expanded 10.5% in August after a 1.2% rise in the previous month, Enterprise Singapore said in a statement. Economists had forecast a 0.9% rise.
Shipments of non-monetary gold rose 55.1% in August from a year earlier. The city-state is a big regional player in the gold trade, and exports can be affected by sharp swings in value. Electronics exports increased 5.7%.
Full coverage: REUTERS
Fed touts economic recovery, vows to keep interest rates low
WASHINGTON – The Federal Reserve on Wednesday vowed to keep interest rates near zero until inflation is on track to overshoot the U.S. central bank’s 2% target, a bold new promise aimed at bringing millions of out-of-work Americans back to the labor market.
But the new guidance also marked the start of a vigorous monetary policy debate as the Fed shifts from a crisis-era focus on keeping markets afloat during the coronavirus pandemic to managing what it now sees as a steady, multi-year recovery.
Underscoring the depth of disagreement, and the economic uncertainty that underlies it, the decision drew two dissents, one from a policymaker who thought it went too far, and the other from one who thought it didn’t go far enough.
It was also the Fed’s last policy decision before the Nov. 3 U.S. presidential election, delivering the winner a runway of low borrowing costs for years to come. All but one Fed policymaker saw rates staying at their near-zero level through 2022. Just four saw them higher than that in 2023.
Full coverage: REUTERS
WORLDWIDE : FINANCE / MARKET
Dollar rises after Fed’s upbeat economic outlook
TOKYO – The dollar edged up against major currencies on Thursday following the U.S. Federal Reserve’s upbeat assessment of the economic recovery and as its increased tolerance for higher inflation push bond yields higher.
At its policy meeting, the Fed pledged to keep rates near zero until the labour market reaches “maximum employment” and inflation is on track to “moderately exceed” the 2% inflation target.
The Fed also expects economic growth to improve from the coronavirus-induced drop they projected in June.
The dollar index rose 0.2% against six major currencies to trade at 93.389 =USD, while changing hands at 1.1777 against the euro EUR=EBS.
The greenback initially fell after the Fed’s announcement, and weaker-than-expected U.S. retail sales data, but swung into positive territory after Chair Jerome Powell’s comment on economic outlook.
Full coverage: REUTERS
Asian shares set for mostly weaker open after Fed
NEW YORK – Asian shares were set to drift lower on Thursday as concerns about the strength of the recovery from the COVID-19 pandemic remained, even after the U.S. Federal Reserve pledged to hold interest rates near zero until at least 2023.
Australian S&P/ASX 200 futures YAPcm1 lost 0.22% in early trading. Japan’s Nikkei 225 futures NKc1 were flat, while Hong Kong’s Hang Seng index futures .HSIHSIc1 lost 0.15%.
E-mini futures for the S&P 500 EScv1 rose 0.47%.
The Fed said it would keep interest rates near zero until inflation is on track to “moderately exceed” the central bank’s 2% inflation target “for some time,” with the aim of offsetting years of weak inflation and allowing the economy to add jobs for as long as possible.
The median forecast of Fed policy makers is for rates to stay near zero through 2023.
Full coverage: Business Insider
