WORLDWIDE : HEADLINES
Powell, Mnuchin enter the lion’s den again to discuss pandemic response
WASHINGTON – U.S. lawmakers on Tuesday will get another chance to grill the heads of the Federal Reserve and Treasury over the effectiveness of the nearly $3 trillion in emergency aid doled out to stem the economic fallout from the novel coronavirus pandemic.
The U.S. central bank, with Treasury’s backing, has launched programs to improve the flow of credit as economic activity cratered and millions of jobs were lost, including its new Main Street Lending Program for mostly medium-sized businesses.
Treasury has been at the forefront of the $660 billion forgivable-loan Paycheck Protection Program (PPP) aimed at keeping small businesses afloat and their employees on payrolls.
Fed Chair Jerome Powell and Treasury Secretary Steven Mnuchin are due to testify before the U.S. House of Representatives Financial Services Committee at 12:30 p.m. EDT (1630 GMT) to discuss how funds were disbursed to households and businesses.
Full coverage : REUTERS
WORLDWIDE : BUSINESS
China’s factory activity quickens, but pandemic drags on exporters and recovery
BEIJING – China’s factory activity expanded at a stronger pace in June in a boost to hopes for a quick economic recovery globally and at home, but the persistent weakness in export orders suggests the coronavirus crisis will remain a drag on growth for some time.
The official manufacturing Purchasing Manager’s Index (PMI) came in at 50.9 in June, compared with May’s 50.6, National Bureau of Statistics (NBS) data showed on Tuesday, and was above the 50.4 forecast in a Reuters poll of analysts.
The 50-point mark separates expansion from contraction on a monthly basis.
The uptick was underpinned by the quickening pace of expansion in production. The forward-looking total new orders gauge also brightened, rising to 51.4 from May’s 50.9, suggesting domestic demand is picking up as industries from non-ferrous metals to general equipment and electrical machinery all showed an improvement.
Full coverage : REUTERS
Wirecard North America seeks buyer, distances itself from German company
Wirecard North America Inc, a unit of German payments company Wirecard AG, on Monday said it has put itself up for sale, days after the troubled parent firm filed for insolvency. The U.S.-based unit, which was bought by Wirecard in 2016, said an investment bank is coordinating the sale process. The unit was formerly known as Citi Prepaid Card Services.
It did not provide further details but said Wirecard North America is a separate legal and business entity of Wirecard and is “substantially autonomous” from the German company, adding that it remains “self-sustaining”.
Last week, Wirecard filed for insolvency owing creditors almost $4 billion after disclosing a 1.9 billion euro ($2.14 billion) hole in its accounts that its auditor EY said was the result of a sophisticated global fraud.
The company said on Saturday it would proceed with business activities after the insolvency filing and an administrator was appointed on Monday.
($1=0.8895 euros)
Full coverage : REUTERS
Australia central bank urges ongoing government stimulus for economy
SYDNEY – Australia’s economy will need “considerable” support for some time, Reserve Bank of Australia Deputy Governor Guy Debelle said on Tuesday, adding it would be a “problem” if the government ended fiscal stimulus in September as initially flagged.
Australia’s fiscal response to the coronavirus pandemic is among the biggest in the world at almost 10% of gross domestic product. It comes as the central bank slashed interest rates to a record low 0.25% and launched an unlimited quantitative easing programme to help buffer the economy against the fallout of the global outbreak.
The emergency measures have so far been successful in supporting the A$2 trillion ($1.38 trillion) economy, though further support will be required, Debelle noted.
Full coverage : REUTERS
Japan factory output slumps as economy sinks deeper in recession
TOKYO – Japan’s industrial output fell for a fourth straight month in May to the lowest level since the global financial crisis and the jobless rate hit a three-year high, underscoring the broad economic pain caused by the coronavirus.
The world’s third-largest economy is bracing for its worst postwar recession, hurt by coronavirus lockdown measures at home and overseas that have upended supply chains, kept businesses shut and depressed consumer spending.
Ministry of Economy, Trade and Industry (METI) data out on Tuesday showed that factory output fell 8.4% month-on-month in May to 79.1, a level not seen since March 2009 when the financial crisis sapped global demand.
“The economy likely suffered a big contraction in April-June due to weak domestic and external demand,” said Taro Saito, executive research fellow at NLI Research Institute.
Full coverage : REUTERS
