TOKYO (Reuters) – Core consumer prices in Japan’s capital, a leading indicator of nationwide trends, rose at their fastest annual pace in 40 years in November and exceeded the central bank’s 2% target for a sixth straight month, signalling broadening inflationary pressure.

The increase, driven mostly by food and fuel bills but spreading to a broader range of goods, cast doubt on the view of the Bank of Japan (BOJ) that recent cost-push inflation will prove transitory, some analysts said.

The Tokyo core consumer price index (CPI), which excludes fresh food but includes fuel, was 3.6% higher in November than a year earlier, government data showed on Friday. The rise exceeded a median market forecast of 3.5% and the 3.4% increase seen in October

The last time Tokyo inflation was faster was April 1982, when the core CPI was 4.2% higher than a year before.

While the rise was driven mostly by electricity bills and food prices, companies were also charging more for durable goods as the weak yen pushed up the cost of imports, the data showed.

“Price hikes are broadening and suggests the weak yen could keep inflation elevated well into next year,” said Mari Iwashita, chief market economist at Daiwa Securities.

“Core consumer inflation may stay around the BOJ’s 2% target for much of next year, which would make it hard for the bank to keep arguing that the price rises are temporary.”

The Tokyo core-core CPI index, which excludes fuel as well as fresh food, was 2.5% higher in November than a year earlier, picking up from the 2.2% annual gain seen in October.

BOJ AN OUTLIER

The BOJ has kept interest rates ultra-low on the view that inflation will slow back below its target next year when the boost from fuel price gains dissipate. The central bank has therefore remained an outlier from a wave monetary tightening around the world aimed at combating soaring inflation.

Contrary to the experience of some western economies, where wages have surged with inflation, growth in wages and services prices remain muted in Japan.

Of the components making up the Tokyo CPI data, services prices in November were up just 0.7% on a year earlier, after a 0.8% annual increase seen in October. That compared with a 7.7% spike in durable goods prices for November, which followed October’s 7.0% annual gain.

Separate data released by the BOJ on Friday showed the corporate service price index, which measures prices that firms charge each other for services, had been 1.8% higher in October than a year earlier. That was slower than a 2.1% annual gain seen in September.

BOJ Governor Haruhiko Kuroda has repeatedly said that, for inflation to sustainably hit his 2% inflation target, wages must rise enough to offset the rise in goods prices.

Slow wage growth has been among factors delaying Japan’s recovery from the coronavirus pandemic. The world’s third-largest economy unexpectedly shrank an annualised 1.2% in the third quarter, partly because of soft consumption.

The Tokyo CPI data heightens the chance of further rises in nationwide core consumer prices, which in October were 3.6% higher than a year earlier, also marking a 40-year high. The nationwide data for November is scheduled for release on Dec. 23.

(Reporting by Takahiko Wada and Leika Kihara; Editing by Sam Holmes and Bradley Perrett)

Investing.com – European stock markets are expected to open marginally higher in subdued trading Thursday, as investors digest the minutes from the latest Federal Reserve meeting as well as news of fresh stimulus from China.

At 02:00 ET (07:00 GMT), the DAX futures contract in Germany traded 0.1% higher, CAC 40 futures in France climbed 0.1% and the FTSE 100 futures contract in the U.K. rose 0.1%.

The minutes from the early November FOMC meeting increased the prospect of the Federal Reserve easing the pace of its aggressive interest rate hikes going forward, helping the main equity indices on Wall Street close higher Wednesday, the day before the Thanksgiving holiday.

Investors now largely expect the Fed to hike by 50 basis points to 4.25%-4.5% at the December policy meeting, after four consecutive increases of 75 basis points.

The European Central Bank publishes the account of its latest meeting later in the session, but markets are not expecting similar largesse with Eurozone inflation above 10% while the flash November PMI readings suggested the region had entered a recession.

European Central Bank policymaker Robert Holzmann said on Tuesday he has not decided how he will vote at the next rate-setting meeting in December but he was leaning towards an increase of 75 basis points.

Elsewhere, China announced a new rescue package for its battered property sector as well as a likely cut to the banks’ reserve requirement ratio, but the surging COVID cases still dominate investor sentiment with infections hitting a record high. 

Nomura cut its forecasts for China’s economic growth for this year to 2.8% from 2.9%, and next to 4% from 4.3%, citing a “slow, costly and bumpy” reopening of the country as COVID cases surge.

The German Ifo Business Climate index for November is due later in the session, while there are a number of ECB speakers due, including Vice President Luis de Guindos, Board member Andrea Enria and Executive Board member Isabel Schnabel.

Crude oil prices fell Thursday, continuing the previous session’s selloff as traders digested the proposed price cap on Russian oil from the Group of Seven countries. 

The G7 is looking at a cap on Russian seaborne oil at $65-$70 a barrel, according to reports Wednesday, although more talks are scheduled for later Thursday as this has yet to be agreed.

The range would be higher than markets had expected, and is seen as less likely to provoke Russian President Vladimir Putin into disrupting global supply.

Elsewhere, the Energy Information Administration reported that U.S. crude inventories fell by 3.7 million barrels last week, more than expected, but both gasoline and distillate inventories rose substantially.

By 02:00 ET, U.S. crude futures traded 0.6% lower at $77.50 a barrel, while the Brent contract fell 0.6% to $84.94. Both contracts fell more than 3% last session.

Additionally, gold futures rose 0.7% to $1,757.15/oz, while EUR/USD traded 0.4% higher at 1.0439.

By Ambar Warrick 

Investing.com– Gold prices rose past key levels on Thursday, benefiting from a weaker dollar as the minutes of the Federal Reserve’s latest meeting showed that a growing number of members supported a slower pace of interest rate hikes. 

The minutes, released on Wednesday, showed that the Fed was becoming increasingly concerned over the impact of its recent monetary policy tightening on the economy and inflation. The central bank hiked its benchmark rate by 375 basis points (bps) this year, with four consecutive hikes of 75 bps. 

But markets are now pricing in a nearly 80% chance that the central bank will raise rates by a relatively smaller 50 bps in December.

Spot gold rose 0.2% to $1,753.40 an ounce, while gold futures rose 0.2% to $1,753.50 an ounce by 19:05 ET (00:05 GMT). Both instruments jumped about 0.6% after the release of the minutes on Wednesday, while the dollar sank 1%.

Fed members still remain uncertain over the level at which U.S. interest rates will peak during this hiking cycle, given that inflation is still trending well above the central bank’s 2% annual target. 

Markets will look to November’s CPI inflation readings, due next month, to gauge whether inflation is steadily retreating in the country. But strength in consumer spending and the labor market suggest that inflation may be sticker than expected in the coming months.

Still, the prospect of smaller rate hikes by the Fed is positive for metal markets, given that sharp rises in interest rates this year greatly pushed up the opportunity cost of holding non-yielding assets.

Platinum futures rose 0.2%, while silver futures rallied 1.2%. 

Gains in industrial metals were relatively subdued, as the space grapples with slowing demand in major importer China. 

Copper futures fell 0.1% on Thursday after rising 0.5% in the prior session. 

While weakness in the dollar supported prices of the red metal, concerns over China’s worst COVID-19 outbreak yet sapped broader appetite for copper. The country introduced new restrictions in several major cities this month, as it faces a record-high rise in daily infections. 

Headwinds from Chinese demand have largely offset signs of tightening copper supply this year.  

SYDNEY (Reuters) – Asian share markets were mostly in positive territory on Wednesday despite rising COVID-19 cases in mainland China leaving investors uncertain over how much the fresh outbreaks could slow the reopening of the world’s second-largest economy.

MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.3%, after U.S. stocks ended the previous session with gains. The index is up 12% so far this month.

Australian shares were up 0.7%, with most gains coming from mining and resources giants as a result of higher oil prices. Japan’s stock market was closed for a national holiday.

New Zealand’s central bank raised interest rates by 75 basis points – its largest ever move – on Wednesday to a near 14-year high of 4.25% and flagged more hikes are on the way as it struggles to contain stubbornly high inflation.

Hong Kong’s Hang Seng Index was up 0.6% in early trade while China’s CSI300 Index opened broadly flat.

China on Wednesday reported 29,157 new COVID infections for Nov. 22, according to the National Health Commission, compared with 28,127 new cases a day earlier. Case numbers in Beijing and Shanghai are steadily rising, prompting authorities to close some facilities.

“The biggest story for investors in Asia is still the China reopening,” said Suresh Tantia, Credit Suisse’s senior investment strategist in Singapore.

“We had seen China markets rally up to 20% but those expectations are being dialled back, we think a reopening will be a slower process and will not be done in a hurry. That means a lot of investors are trimming their exposure, cutting their losses or booking any profits they might have made on China.”

Meanwhile the release of U.S. Federal Reserve minutes from its November policy meeting later on Wednesday is being keenly awaited by investors as they look for insight of how officials view economic conditions.

The Dow Jones Industrial Average rose 1.2% to 34,098.1 on Tuesday, the S&P 500 gained 1.4% to 4,003.58 and the Nasdaq Composite added 1.4% to 11,174.41. Energy stocks led the gains, stoked by rising oil prices.

The yield on benchmark 10-year Treasury notes rose to 3.7578% compared with its U.S. close of 3.758% on Tuesday.

Two-year yield, which rises with traders’ expectations of higher Fed fund rates, touched 4.5227% compared with a U.S. close of 4.517%.

The dollar dropped 0.02% against the yen to 141.21.

The European single currency was up 0.0x?% on the day at $1.0303, having gained 4.26% in a month, while the dollar index, which tracks the greenback against a basket of currencies of other major trading partners, was down at 107.14.

“The U.S. dollar lost a little of its recent gains (as) central bankers’ consensus about how much more interest rates should rise is fraying,” Commonwealth Bank analyst Tobin Gorey wrote on Wednesday.

“Smaller or fewer rate rises are perhaps not a cause for optimism, it is cause for less pessimism.”

Oil remained higher on Wednesday after top exporter Saudi Arabia said OPEC+ would maintain output cuts and could take further steps to balance the market.

In Asian trading, U.S. crude ticked up 0.3% to $81.15 a barrel. Brent crude rose to $88.35 per barrel.

Gold was slightly lower. Spot gold was traded at $1740.09 per ounce. [GOL/]

While the FTX exchange collapse continues to roil cryptocurrency markets, Bitcoin was 0.33% higher in Asian trading hours to $16,184.

(Reporting by Scott Murdoch in Sydney; Editing by Kenneth Maxwell)

JAKARTA (Reuters) – Indonesia’s annual economic growth may slow to 4.37% next year partly due to the impact of domestic monetary tightening, the country’s central bank (BI) governor told a parliamentary hearing on Monday.

In last week’s policy meeting, BI maintained 2022 GDP growth forecast biased toward the upper end of 4.5% to 5.3%.

BI Governor Perry Warjiyo gave the GDP forecast as part of a discussion with parliament on the central bank’s 2023 budget.

Warjiyo said predicting economic indicators was difficult due to volatility in the global economy, adding that the numbers could be discussed further with lawmakers.

The governor also gave a headline inflation forecast of 6.11% for end-2022 and 3.61% for end-2023 at the hearing. His presentation showed the figure for 2022’s inflation were BI’s forecast as of Nov. 3.

Warjiyo last week said BI expected a headline inflation rate of 5.6% at the end of the year.

He did not explain why the figures were different and BI’s spokesperson did not immediately respond to a request for comment.

Last week, BI raised its key policy rate for a fourth consecutive monthly meeting in a move aimed at anchoring inflation expectations, which the governor said was “too high”. In total BI has lifted interest rates by 175 basis points since August.

Indonesia’s annual headline inflation rate cooled to 5.71% in October, but remained near a seven-year high of 5.95% in September.

BI’s inflation target is at range of 2% to 4%.

BI’s deputy governor Dody Budi Waluyo said on Friday inflation may decelerate further this month to 5.5%.

Warjiyo is expected to lay out BI’s policy guidance for 2023 at an annual gathering with financial stakeholders on Nov. 30.

(Reporting by Stefanno Sulaiman; Writing by Gayatri Suroyo; Editing by Ed Davies)

SYDNEY (Reuters) – Asian share markets turned hesitant on Monday as investors fretted about the economic fallout from fresh COVID-19 restrictions in China, while bonds and the dollar braced for more updates on U.S. monetary policy.

Beijing’s most populous district urged residents to stay at home on Monday as the city’s COVID case numbers rose, while at least one district in Guangzhou was locked down for five days.]

The rash of outbreaks across the country has been a setback to hopes for an early easing in strict pandemic restrictions, one reason cited for a 10% slide in oil prices last week.

It also dragged MSCI’s broadest index of Asia-Pacific shares outside Japan off a two-month high, though it still ended firmer on the week. Early Monday, the index was down 0.1%. Japan’s Nikkei added 0.3%, while South Korea eased 0.4%.

S&P 500 futures were down 0.2%, while Nasdaq futures slipped 0.1% in quiet trade.

The Thanksgiving holiday on Thursday combined with the distraction of the soccer World Cup could make for thin trading, while Black Friday sales will offer an insight into how consumers are faring and the outlook for retail stocks.

Minutes of the U.S. Federal Reserve’s last meeting are due on Wednesday and could sound hawkish, judging by how officials have pushed back against market easing in recent days.

Atlanta Federal Reserve President Raphael Bostic on Saturday said he was ready to step down to a half-point hike in December but also underlined that rates would likely stay high for longer than markets expected.

Futures imply a 76% chance of a rise of 50 basis points to 4.25-4.5% and a peak for rates around 5.0-5.25%. They also have rate cuts priced in for late next year.

“We are comfortable that the deceleration under way in U.S. inflation and European growth produces a moderation in the pace of tightening starting next month,” said Bruce Kasman, head of research at JPMorgan.

“But for central banks to pause they also need clear evidence that labour markets are easing,” he added. “The latest reports in the U.S., euro area, and U.K. point to only a limited moderation in labour demand, while news on wages points to sustained pressures.”

There are at least four Fed officials scheduled to speak this week, a teaser ahead of a speech by Chair Jerome Powell on Nov. 30 that will define the outlook for rates at the December policy meeting.

PRICED FOR RECESSION

Bond markets clearly think the Fed will tighten too far and tip the economy into recession as the yield curve is the most inverse it has been in 40 years.

On Monday, 10-year note yields of 3.84% were trading 71 basis points below the two-year.

The Fed chorus has helped the dollar stabilise after its recent sharp sell-off, though speculative positioning in futures has turned net short on the currency for the first time since mid-2021.

Early Monday, the dollar was a touch softer at 140.26 yen, after last week’s bounce from a low of 137.67. The euro held at $1.0327, and short of the recent four-month top of $1.1481. [FRX/]

The U.S. dollar index stood at 106.900, off last week’s trough of 105.300.

“Given how far U.S. bond yields and the dollar have dropped in the past couple of weeks, we think there is a good chance that they rebound if the Fed minutes are in line with the recent hawkish language from members,” said Jonas Goltermann, a senior markets economist at Capital Economics.

Meanwhile, turmoil in cryptocurrencies continued unabated with the FTX exchange, which has filed for U.S. bankruptcy court protection, saying it owes its 50 biggest creditors nearly $3.1 billion.

In commodity markets, gold was a fraction firmer at $1,751 an ounce, after dipping 1.2% last week. [GOL/]

Oil futures were trying to find a floor after last week’s drubbing saw Brent lose 9% and WTI roughly 10%.

Brent edged up 18 cents to $87.80, while U.S. crude added 10 cents to $80.18 per barrel. [O/R]

(Reporting by Wayne Cole; Editing by Kenneth Maxwell)

(Bloomberg) — Stocks in Asia were mixed while a closely watched section of the US yield curve remained near levels not seen in four decades — a sign of investor concern about the world’s biggest economy.

US equity futures rose, after a decline Wednesday in the S&P 500 and Nasdaq 100 amid indications from Federal Reserve officials that policy would tighten policy further. Shares in Australia and Japan climbed.

Benchmarks for Hong Kong and mainland stocks fell after the People’s Bank of China warned inflation may pick up, limiting monetary easing. Meanwhile, China doubled its injection of short-term cash into the banking system as optimism about economic growth stoked a rapid selloff in government bonds.

Benchmark 10-year government bond yields in Australia and New Zealand fell. Treasury yields climbed slightly after moves on Wednesday that widened the difference between long-date and short-dated bonds to levels not seen since the early 1980s, underscoring investor concern about the risk of recession.

The action Treasuries followed the biggest increase in eight months for US retail sales, outpacing estimates and indicating Fed tightening has further to run to stymie inflation. San Francisco Fed President Mary Daly said a pause in rate hikes was “off the table,” and New York Fed President John Williams said the central bank should avoid incorporating financial stability risks into its considerations.

Goldman Sachs Group Inc. increased its forecast for peak US interest rates to 5.25% at the top of the range, up from the previous call 5%.

“Every time equity and bond markets are thinking the Fed is done and start taking off in a rally, the Fed gets out and starts talking that back down again,” Cheryl Smith, economist and portfolio manager for Trillium Asset Management, said on Bloomberg Television.

The dollar rose slightly following a volatile day in currency markets Wednesday after a missile struck Poland, a NATO member. Polish officials said it was the result of Ukraine’s missile defense system rather than Russia, calming sentiment.

Elsewhere, European Central Bank policy makers may slow down their tempo of rate hikes, with only a 50 basis-point increase next month, according to people with knowledge of the matter.

(RTTNews) – European stocks may see a tepid start on Wednesday as geopolitical tensions rattle financial markets.

Investors got jittery as a Russian strike on Poland raised fears the nine-month Ukraine war could escalate.

The White House said it could not confirm the reports and was working with the Polish government to gather more information.

Ukrainian President Volodymr Zelenskyy decried the strike as a very significant escalation of the war.

Russia denied the allegations and dismissed the reports as “a deliberate provocation aimed at escalating the situation”.

Asian markets fell broadly, but the downside remained capped after a meeting between the presidents of the world’s two largest economies ended with a positive outcome.

The U.S. dollar rose on safe-haven demand and gold steadied near a three-month high, while oil prices fell as China reported 19,609 cases for Tuesday, the highest since late April when financial hub Shanghai was in the midst of a two-month lockdown.

Trading later in the day may be impacted by reaction to a speech from ECB’s Lagarde and U.S. reports on retail sales and industrial production.

U.S. stocks ended higher overnight, as Fed Vice Chair Lael Brainard’s comments and weak producer price inflation data added to hopes of smaller Fed rate rises.

Walmart’s strong results also brought some cheer, but stocks pulled back well off their best levels of the day following reports that Russian missiles had landed in NATO-member Poland, killing two people.

The tech-heavy Nasdaq Composite climbed 1.5 percent to a nearly two-month closing high, the S&P 500 gained 0.9 percent and the Dow 0.2 percent.

European stocks rose for the fourth day on Tuesday amid signs of easing U.S.-China tensions.

The pan European STOXX 600 rose 0.4 percent. The German DAX and France’s CAC 40 index both added around half a percent while the U.K.’s FTSE 100 slipped 0.2 percent.

NEW YORK: Wall Street’s main indexes gained on Tuesday, shaking off an unconfirmed report of Russian missiles crossing into Poland that sparked volatility, as investors seized on softer-than-expected inflation data that raised hopes of a pullback in rate hikes by the US Federal Reserve.

Equities were boosted by Tuesday’s inflation report that showed producer prices rising 8% in the 12 months through October against an estimated 8.3% rise.

The gains built on a rally that was kicked off late last week by a cooler-than-expected report on consumer prices.

“The market has been driven by the inflation number that came out a little bit lower than expected and confirmed last week’s number to some degree that we may have rounded the corner on inflation,” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.

The market was “a little bit more volatile this afternoon as news stories came out about the Russian missile landing in Poland,” Tuz said.

The Dow Jones Industrial Average rose 56.22 points, or 0.17%, to 33,592.92, the S&P 500 gained 34.48 points, or 0.87%, to 3,991.73 and the Nasdaq Composite added 162.19 points, or 1.45%, to 11,358.41.

Two people were killed in an explosion in Przewodow, a village in eastern Poland near the border with Ukraine, firefighters said as NATO allies investigated reports that the blast resulted from Russian missiles.

The Associated Press earlier cited a senior US intelligence official as saying the blast was due to Russian missiles crossing into Poland. But the Pentagon said it could not confirm that account.

Stocks pulled back around mid-day after the report, with the Dow turning negative, before they steadied.

“The decline was triggered by reports of a Russian missile landing in Poland,” said Steve Sosnick, chief strategist at Interactive Brokers. “This could develop into something far worse, but right now markets are nervous, not panicked.”

Shares of Walmart Inc jumped 6.5% after the top US retailer lifted its annual sales and profit forecasts, benefiting from a steady demand for groceries despite higher prices.

Shares of other retailers, including Target Corp and Costco, also rose following Walmart’s report. Target, which is due to report on Wednesday, rose 3.9%, while Costco gained 3.3%.

Home Depot shares rose 1.6% after the home improvement chain’s results showed it tapped higher prices to override a drop in customer transactions for the third quarter.

Advancing issues outnumbered declining ones on the NYSE by a 3.25-to-1 ratio; on Nasdaq, a 2.01-to-1 ratio favored advancers.

The S&P 500 posted 5 new 52-week highs and no new lows; the Nasdaq Composite recorded 85 new highs and 76 new lows.

About 13.1 billion shares changed hands in U.S. exchanges, compared with the 12.2 billion daily average over the last 20 sessions. — Reuters

By Lewis Krauskopf, Ankika Biswas and Amruta Khandekar

(Reuters) – Wall Street’s main indexes ended lower on Monday, with real estate and discretionary sectors leading broad declines, as investors digested comments from U.S. Federal Reserve officials about plans for interest rate hikes and looked for next catalysts after last week’s big stock market rally.

Losses accelerated toward the end of the up-and-down session, with focus turning to Tuesday’s producer price index report and markets highly sensitive to inflation data.

Earlier on Monday, Fed Vice Chair Lael Brainard signaled that the central bank would will likely soon slow its interest rates hikes. Her comments somewhat buoyed sentiment for equities that had been dampened after Federal Reserve Gov. Christopher Waller on Sunday said the Fed may consider slowing the pace of increases at its next meeting but that should not be seen as a “softening” in its commitment to lower inflation.

A massive equity rally late last week was set off by a softer-than-expected inflation report that boosted investor hopes the Fed could dial back on its monetary tightening that has punished markets this year.

“There is still a sensitivity to Fed speak… One was a little hawkish, one was a little dovish,” said Eric Kuby, chief investment officer at North Star Investment Management Corp.

The Dow Jones Industrial Average fell 211.16 points, or 0.63%, to 33,536.7, the S&P 500 lost 35.68 points, or 0.89%, to 3,957.25 and the Nasdaq Composite dropped 127.11 points, or 1.12%, to 11,196.22.

The S&P 500 last week posted its biggest weekly percentage gain since late June, while the tech-heavy Nasdaq notched its best week since March.

More Fed officials are due to speak later this week along with a slew of data, including on retail sales and housing, and earnings reports from major retailers.

“It just makes sense the market wants to pause and really both try to make sense of the trajectory (of Fed policy) and what the next drivers are going to be,” said Yung-Yu Ma, chief investment strategist at BMO Wealth Management.

Among S&P 500 sectors, real estate fell 2.7%, consumer discretionary dropped 1.7% and financials declined 1.5%.

In company news, Amazon (NASDAQ:AMZN) shares fell 2.3% as The New York Times on Monday reported the company was planning to lay off about 10,000 people in corporate and technology jobs starting as soon as this week.

Shares of Biogen Inc (NASDAQ:BIIB) and Eli Lilly (NYSE:LLY) gained 3.3% and 1.3%, respectively, after the failure of Swiss rival Roche’s Alzheimer’s disease drug candidate.

Declining issues outnumbered advancing ones on the NYSE by a 2.23-to-1 ratio; on Nasdaq, a 1.61-to-1 ratio favored decliners.

The S&P 500 posted 15 new 52-week highs and 2 new lows; the Nasdaq Composite recorded 72 new highs and 74 new lows.

About 11.5 billion shares changed hands in U.S. exchanges, compared with the 12.1 billion daily average over the last 20 sessions.