Pictet sees Europe as most likely candidate for recession, expects huge rise
The European economy is the “number one” candidate in the world that is likely to suffer a recession, says Pictet Wealth Management before a expected giant walk by the European Central Bank.
The head of macro research, Alexandre Tavazzi, said this is because energy prices have soared, making companies lose their competitiveness.
He added that “other fundamentals” such as natural gas inventory levels would also be a key driver for his currency, falling below parity for the first time in 20 years.
Malaysian central bank raises interest rates for the third time in a row
Malaysia’s central bank raised its key interest rate by 25 basis points, according to a statement.
Bank Negara Malaysia cited concerns over high inflation and China’s strict border control measures as reasons for its decision to raise the official overnight rate to 2.50%, its third rate increase in a row.
The central bank said Malaysia’s third headline inflation is expected to peak in the quarter of 2022, and adjustments to its monetary policy settings going forward will be made in a “measured and gradual manner”.
—Ji Hye Lee
Australia’s central bank sees case for slower rate hikes
Reserve Bank of Australia Governor Philip Lowe said the central bank “recognizes” that “the case for a slower pace of interest rate rises becomes stronger as the level of the cash rate rises. “.
National Australia Bank economist Tapas Stickland said Lowe’s comments may be “signaling a shift down to 25bp increases at some point.”
“Given the delays in the operation of monetary policy and the rapid increase in interest rates in the last four months, this could be soon, and there is also likely to be a pause at some point,” he said of Lowe’s comments. .
—Ji Hye Lee
Nio says Nvidia’s chip restrictions won’t hurt them
“We believe this will not have an impact on our business operations,” Nio founder, chairman and CEO William Li said, according to a StreetAccount transcript of the company’s translation during a earnings call on wednesday.
“According to our estimates, our computing power is enough for the development of our autonomous driving technology in the aspect of AI training for now,” Li said.
Oil prices rise after Russian threat to halt energy exports
oil prices rose recovering from losses in the previous sessionafter the decision of Russian President Vladimir Putin threat stop oil and gas exports if European nations impose maximum prices on Russian oil.
“The decline in global oil prices was due to concerns about slower growth in China following August trade data,” according to a Mizuho note.
Freight rates peaked earlier than expected as global trade slows, says S&P
Freight rates for containers and dry bulk carriers, or vessels that carry raw materials and bulk products, have fallen in the past three months, S&P said, adding that rates peaked earlier than expected in the second quarter.
S&P Freight Rate Forecast models also forecast that the Baltic Dry Index, a barometer of the price of shipping major commodities by sea, is expected to fall 20% to 30% over the year before recovering slightly in 2024. .
This underscores the growing risks of a global recession as consumer demand recedes. amid rising cost of living and inflation.
Read the full story here.
Australia Posts Record Drop in Trade Surplus; Iron ore and coal exports fall
Australia posted a record drop in its trade surplus mainly due to falling exports of iron ore and coal.
Exports in July fell 10% from the previous month, while imports rose 5%, resulting in a reduced trade surplus of A$8.7bn in July from A$17.1bn the previous month. .
Capital Economics said the trade surplus slumped “well below the analyst consensus of A$14.5 billion and even below the consensus forecast of A$10.5 billion.”
“The recent fall in the price of iron ore has yet to be fully reflected in iron ore exports. In fact, with the RBA Commodity Price Index in August down 20% from its high in May, it is clear that the trade surplus has peaked,” Capital Senior Economics Economist Marcel Thieliant said.
Apple’s suppliers in Asia increase after iPhone 14 announcements
US dollar has legs to go higher, says Wells Fargo strategist
the American dollar has room to rise further thanks to rate spreads on the back of an aggressive Federal Reserve, according to Wells Fargo Securities FX strategist Brendan McKenna.
“We believe that many of these international banks will not be able to raise rates as aggressively as the markets price,” he told CNBC’s “Squawk Box Asia.”
“So it’s kind of a combination of a tougher Fed and a less harsh tightening cycle from these international central banks that support the dollar for the rest of this year,” he said.
–Ji Hye Lee
Huawei launches the first smartphone that connects to China’s rival’s GPS
Huawei revealed the Mate 50 smartphone, its latest attempt to stay relevant in the mobile market, even as it has lost a lot of ground due to US sanctions.
Huawei claims this is the first publicly released smartphone that can connect to China’s Beidou satellite network, a rival to the US state-owned Global Positioning System (GPS). which was completed in 2020.
US sanctions on the company over the past three years have disconnect the company from key components and software and crushed its smartphone business.
Read the full story here.
Goldman Sachs raises Fed hike forecasts for this year
Goldman Sachs revised its forecasts for the coming year of Federal Reserve rate decisions.
Analysts led by chief economist Jan Hatzius said in a note that the company expects a 75 basis point increase in September, against a previous forecast of 50 basis points, as well as a 50 basis point increase in November, also revised. from a prior projection of 25 basis points.
He also expects a 25 basis point hike in December, citing officials’ recent hawkish comment.
The note said that Fed officials “appeared to imply that progress toward controlling inflation has not been as smooth or as rapid as they would like,” the note said.
–Ji Hye Lee
Japan’s economy grew 3.5% annualized, beats estimates
Japan’s economy grew by 3.5% annualized in the second quarter, beating estimates in a Reuters poll that forecast 2.9% growth.
The economy grew by 0.9% quarter-on-quarter, according to official data.
Spending growth will remain positive in Japan, according to Darren Tay, an economist at Capital Economics Japan.
“Consumers have a lot of pandemic-forced savings they can rely on,” Tay said on CNBC’s “Squawk Box Asia,” adding that investors are betting on further widening of interest rate spreads between the Federal Reserve and a dovish Bank of Japan. .
–Jihye Lee, Charmaine Jacob
CNBC Pro: Wall Street pro predicts when the S&P 500 will recover and reveals how to trade it
Market volatility is here to stay, according to market veteran Phil Blancato.
But the chairman and CEO of Ladenburg Thalmann Asset Management sees a “strong rally” on the cards as market conditions improve.
He predicts when the rally will be and names his best options for trading volatility.
Professional subscribers can read more here.
All major averages close higher, Nasdaq snaps 7-day losing streak
Stocks rose on Wednesday as Wall Street shrugged off concerns about aggressive rate hikes coming from the Federal Reserve.
The Dow Jones Industrial Average gained 435.98 points, or 1.40%, to close the day at 31,581.28. The S&P 500 rose 1.83% to 3,979.90 and the Nasdaq Composite rose 2.14% to 11,791.90, snapping a seven-day losing streak.
Brainard says Fed is ‘on this as long as it takes’
Federal Reserve Vice Chair Lael Brainard pledged Wednesday to continue the central bank’s flight against inflationsaying rising prices were hurting lower-income households.
“We’re in this as long as it takes to bring inflation down,” Brainard said in remarks prepared for a speech in New York. “So far, we have quickly raised the policy rate to the previous cycle’s high, and the policy rate will need to be raised further.”
Brainard said there were some examples of falling prices in the retail sector, but “there could also be room for reduction” in the profit margins of car companies in particular.
—Jesse Libra, Jeff Cox