Pictet sees Europe as the most likely candidate for recession, expects a huge rise
The European economy is the world’s “number one” candidate for recession, says Pictet Wealth Management ahead of an expected hike by the European Central Bank.
The head of Macro Research, Alexandre Tavazzi, said that this is due to the increase in energy prices, which makes companies lose their competitiveness.
He added that “other fundamentals” such as natural gas inventory levels would also be a key factor for his currency, which fell below parity for the first time in 20 years.
—Lee Ying Shan
Malaysia’s central bank raises interest rates for the third time in a row
Malaysia’s central bank raised its interest rate by 25 basis points, according to a statement.
Bank Negara Malaysia cited high inflation concerns and China’s strict border control measures as reasoning for its decision to raise the interest rate to 2.50%.
The central bank said Malaysia’s headline inflation is expected to peak in the third quarter of 2022 and that adjustments to its monetary policy setting going forward will be made in a “measured and gradual manner”.
– Jihye Lee
Australia’s central bank sees arguments to raise rates more slowly
Reserve Bank of Australia Governor Philip Lowe said the central bank “recognizes” that “the case for a slower rise in interest rates becomes stronger as the level of cash rate”.
National Australia Bank economist Tapas Stickland said Lowe’s comments could be “signaling a downward shift to 25bp increments at some point”.
“Given the delays in the operation of monetary policy and the rapid rise in interest rates over the past four months, this could be soon, and a pause at some point is also likely,” he said of Lowe’s remarks.
– Jihye Lee
Nio says the restrictions on Nvidia’s chips won’t hurt them
Nio said the US restrictions on the sale of Nvidia chips in China will not affect the carmaker’s business.
“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 an earnings call on Wednesday.
“According to our estimates, our computing power is sufficient for the development of our autonomous driving technology in the aspect of AI training at the moment,” Li said.
Read the full story here.
—Evelyn Cheng
Oil prices rise after Russian threat to halt energy exports
Oil prices rose, recovering from losses in the previous session, after Russian President Vladimir Putin threatened to halt oil and gas exports if European nations impose price caps on Russian oil.
Brent crude futures rose 1% to settle at $88.88 a barrel, while U.S. West Texas Intermediate rose 1.1% to $82.83 a barrel.
“The relaxation in global oil prices was prompted by concerns about slower growth in China after August trade data,” according to a Mizuho note.
—Lee Ying Shan
Commodity rates peaked earlier than expected as global trade slows, S&P says
Freight rates for containers and dry bulk (or ships carrying raw materials and bulk goods) have fallen over the past three months, S&P said, adding that rates peaked earlier than expected in the second trimester.
S&P’s commodity rate forecasting models have also predicted 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 ahead to recover slightly in 2024.
This highlights the growing risks of a global recession as consumer demand shrinks amid rising costs of living and inflation.
Read the full story here.
— Su-Lin Tan
Australia sees record drop in trade surplus; exports of iron ore and coal fall
Australia posted a record drop in its trade surplus, mainly due to falling iron ore and coal exports.
Exports in July fell 10% from the previous month, while imports rose 5%, leading to a narrowing of the trade surplus to A$8.7 billion in July from A$17.1 billion in previous month
Capital Economics said the decline in the trade surplus was “well below the analyst consensus of A$14.5 billion and even our fund of A$10.5 billion consensus forecast”.
“The recent fall in iron ore prices has not yet fully fed into iron ore exports. Indeed, with the RBA’s August commodity price index up 20% below its peak in May, it is clear that the trade surplus has peaked,” Capital. Marcel Thieliant, Senior Economics Economist.
— Su-Lin Tan
Apple suppliers in Asia increase after iPhone 14 announcements
US dollar has legs to move even higher, Wells Fargo strategist says
The U.S. dollar has room to rise further thanks to rate differentials on the back of a hawkish Federal Reserve, according to Wells Fargo Securities currency strategist Brendan McKenna.
“We believe that many of these international banks will not be able to raise rates as aggressively as the markets have priced them,” he told CNBC’s “Squawk Box Asia.”
“So it’s kind of a combination of a more brutal Fed and a less brutal tightening cycle from these international central banks that support the dollar for the rest of this year,” he said.
– Jihye Lee
Huawei launches first smartphone to connect to rival China with GPS
Huawei took the wraps off the Mate 50 smartphone, its latest attempt to stay relevant in the mobile market despite losing a lot of ground due to US sanctions.
Huawei claims this is the first smartphone released to the public that can connect to China’s Beidou satellite network, a rival to the US state-owned Global Positioning System (GPS) that was completed in 2020.
US sanctions on the company over the past three years have cut the company off from key components and software and crushed its smartphone business.
Read the full story here.
-Arjun Kharpal
Goldman Sachs raises Fed rate hike forecasts for this year
Goldman Sachs revised its forecasts for the Federal Reserve’s upcoming rate decisions this year.
Analysts led by chief economist Jan Hatzius said in a note that the firm expects a rise of 75 basis points in September, up from a previous forecast of 50 basis points, as well as a rise of 50 basis points in November , also reviewed. of a previous projection of 25 basic points.
He also expects a 25 basis point hike in December, citing recent comments from the authorities.
The memo said Fed officials “seemed to imply that progress toward taming inflation has not been as smooth or as rapid as they would like,” the memo said.
– Jihye Lee
Japan’s economy grew 3.5% annually, beating estimates
Japan’s economy grew by an annualized 3.5% in the second quarter, beating estimates in a Reuters poll of 2.9% growth.
The economy grew by 0.9% quarter-on-quarter, according to official data.
Spending growth will continue to be positive in Japan, according to Darren Tay, economist at Capital Economics Japan.
“Consumers have a lot of pandemic-forced savings that they can rely on,” Tay told CNBC’s “Squawk Box Asia,” adding that investors are betting on further widening of interest rate spreads interest between the Federal Reserve and a conciliatory Bank of Japan. .
– Jihye Lee, Charmaine Jacob
CNBC Pro: Wall Street pro predicts when the S&P 500 will rally 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 rebound” in the cards as market conditions improve.
He predicts when the rally will be and names his best picks for trading volatility.
Professional subscribers can read more here.
— Xavier Ong
All major averages close higher, Nasdaq snaps 7-day losing streak
Stocks rallied on Wednesday as Wall Street looked past concerns about aggressive rate hikes from the Federal Reserve.
The Dow Jones Industrial Average gained 435.98 points, or 1.40%, to end 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.
—Carmen Reinicke
Brainard says Fed is ‘in this for as long as it takes’
Federal Reserve Vice Chairman Lael Brainard on Wednesday vowed to continue the central bank’s run on inflation, saying rising prices were hurting lower-income households.
“We’re in this for as long as it takes to bring inflation down,” Brainard said in prepared remarks for a speech in New York. “So far, we have quickly raised the policy rate to the high of the previous cycle, and the policy rate will need to rise further.”
Brainard said there were some examples of price cuts in the retail sector, but that “there could also be room for reduction” in the profit margins of auto companies in particular.
– Jesse Pound, Jeff Cox