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MANILA, Jan 19 (Reuters) – The Philippines posted a balance of payments (BOP) surplus of $612 million for December, compared with a $991 million surplus recorded in the same month in 2021, the central bank said on Thursday.
That brought the full-year 2022 BOP deficit to $7.3 billion, a reversal from the $1.3 billion surplus recorded in 2021, it said in a statement.
(Reporting by Enrico Dela Cruz)
KUALA LUMPUR, Jan 19 (Reuters) – Oil futures fell by nearly USD 1 on Thursday, extending losses from the previous day, as a surprise jump in US crude stocks weighed on the market along with fears of a recession that were heightened by disappointing US retail sales and output data.
Brent crude futures were last down 84 cents, or 1%, to USD 84.14 a barrel at 0710 GMT, after earlier easing to USD 83.76. US West Texas Intermediate (WTI) crude futures also declined 91 cents, or 1.1%, to USD 78.57 a barrel. It earlier fell to a low of USD 78.13.
“The deterioration in US economic data darkened the (oil) demand outlook as recession fears mount again. Risk-off sentiment has sent growth-sensitive commodities down,” said Tina Teng, an analyst at CMC Markets, adding that profit-taking could have played a part also.
US December retail sales fell by the most in a year, while
manufacturing output recorded its biggest drop in nearly two years, as higher borrowing costs hurt demand for goods.
Still, Federal Reserve officials said interest rates needed to rise beyond 5% even as inflation shows signs of having peaked and economic activity is slowing.
“This raised the spectre of a recession, with risk appetite suffering as a consequence,” ANZ Research analysts said in a client note.
Adding to the pall, data from the American Petroleum Institute showed U.S. crude oil inventories rose by about 7.6 million barrels in the week ended Jan. 13, according to market sources.
The mean average forecast from a Reuters’ poll of nine analysts had been for a fall of about 600,000 barrels.
The big build marked the second consecutive week of large inventory increases.
However, distillate stockpiles, which include diesel and heating oil, fell by about 1.8 million barrels against analysts’ expectations for a 120,000-barrel increase.
The API report was delayed by a day due to Monday’s Martin Luther King Day public holiday in the United States. The government’s Energy Information Administration will release its weekly inventory report on Thursday.
With aggressive rate hikes still on the cards, the US dollar climbed, weighing on oil demand as a stronger greenback makes the commodity more expensive for those holding other currencies.
(Reporting by Sonali Paul in Melbourne and Emily Chow in Kuala Lumpur; Editing by Edwina Gibbs, Himani Sarkar and Simon Cameron-Moore)
NEW YORK, Jan 18 (Reuters) – US 10-year Treasury yields fell to a four-month low on Wednesday as data showed US retail sales declined more than expected in December, while the yen was weaker against the dollar in the wake of the Bank of Japan’s decision to maintain ultra-low interest rates.
Wall Street stocks ended lower following profit-taking after recent gains, with hawkish comments from Federal Reserve officials adding to the day’s bearishness. A global stocks index also fell.
Some investors said the drop in US retail sales, together with subsiding inflation, could encourage the Fed to further scale back the pace of its interest rate increases next month.
A separate report showed US producer prices also fell more than expected in December.
Even as inflation was showing signs of cooling, Fed policymakers reiterated their support for hiking the US central bank’s target interest rate above 5%.
The US central bank is expected to raise rates by 25 basis points when it concludes its two-day meeting on Feb. 1.
Earlier, the Bank of Japan maintained its ultra-easy policy, including a bond yield cap, defying market expectations it would phase out its massive stimulus program because of increasing inflation pressures.
The decision caused the yen to fall, with investors unwinding bets based on expectations the central bank would overhaul its yield control policy.
In late-afternoon US trading, the dollar was up 0.6% against the yen. The US dollar index was nearly flat.
On Wall Street, the Dow Jones Industrial Average fell 613.89 points, or 1.81%, to 33,296.96, the S&P 500 lost 62.11 points, or 1.56%, to 3,928.86 and the Nasdaq Composite dropped 138.10 points, or 1.24%, to 10,957.01.
“The market was overbought,” said Sam Stovall, chief investment strategist at CFRA research. He said some investors took profits in areas of recent strong gains.
The pan-European STOXX 600 index rose 0.23% and MSCI’s gauge of stocks across the globe shed 0.71%.
In other currencies, the Australian dollar fell 0.7% to USD 0.6936, after hitting its highest level since August last year. The New Zealand dollar traded flat on the day at USD 0.6430.
Benchmark 10-year notes fell as low as 3.372%, the lowest since Sept. 13. Two-year yields reached 4.072%, the lowest since Oct. 4. The yield spread between two-year and 10-year notes was last a minus 70 basis points.
In the energy market, oil prices fell as worries about a possible US recession outweighed optimism over China’s lifting of COVID-19 curbs.
Brent futures fell 94 cents, or 1.1%, to settle at USD 84.98 a barrel. US West Texas Intermediate (WTI) crude fell 70 cents, or 0.9%, to settle at 79.48.
Bitcoin was last down 1.8%.
(Reporting by Caroline Valetkevitch in New York; Additional reporting by Sinead Carew in New York and Nell Mackenzie and Alun John in London; Editing by Sharon Singleton and Matthew Lewis)
DAVOS, Switzerland/MANILA, Jan 18 (Reuters) – Philippines President Ferdinand Marcos Jr said his country would resist global recessionary headwinds, but warned that increasing tensions in the South China Sea were harming trade.
Marcos was bullish about the country’s economic prospects in a speech on Wednesday at the World Economic Forum’s (WEF) annual meeting, which has been dominated by talk of an impending global recession brought on by the cost of living and energy crises.
“My belief is that as long as the unemployment rate stays low, we will be able to resist the recessionary forces,” he said.
He said the upskilling of his country’s labour force was powering economic growth, including remittances from overseas workers.
But increasing tensions in the South China Sea were affecting trade on all of the exchanges in the region, he said.
“The future of the region has to be decided by the region, not outside powers,” he said.
Earlier, Marcos said he expects the domestic economy to grow around 7% this year, saying strong fundamentals, prudent fiscal management and reforms in key sectors will cushion against risks from a potential global recession.
The Southeast Asian country, which will announce its 2022 economic performance on Jan. 26, also expects last year’s gross domestic product growth to be faster than the 6.5%-7.5% target.
“Our strong macroeconomic fundamentals, fiscal discipline, structural reforms and liberalisation of key sectors instituted over the years have enabled us to withstand the negative shocks caused by the pandemic and succeeding economic downturns and map a route toward a strong recovery,” Marcos was quoted as saying in a statement his office issued on Wednesday.
Marcos was in Davos, Switzerland this week for the World Economic Forum, accompanied by his economic team and several Philippine business executives. There he met with potential investors to seek support for his infrastructure development programme.
Pent-up domestic demand following the removal of pandemic restrictions propped up economic growth last year and will continue supporting consumer spending this year, Bangko Sentral ng Pilipinas Governor Felipe Medalla said on Jan. 10.
“Our actual projection is 6.5 (percent for 2023) but there are signs that we might be able to surpass that,” Marcos said in Davos, where he also presented his proposed sovereign wealth fund to potential investors.
He said they were mainly introducing the idea. “We want people to be aware that this is in the pipeline. This is something that we can look forward to, and that we will be able to utilize for the continuing development in the Philippines,” he said.
Critics have raised concerns over the transparency and governance of the wealth fund, which has been approved by the House of Representatives, and is pending deliberation in the Senate.
Under the bill, state lenders Development Bank of the Philippines and Land Bank of the Philippines would provide a total 75 billion pesos (USD 1.37 billion) for initial capital, while the central bank will contribute subsequently through dividends.
The Philippines is also grappling with soaring prices of onions, widely used in many local dishes, and prompting the government to approve emergency onion imports.
Marcos said prices had already started to come down thanks to the imports, but in the long term there was no getting around the need to increase production.
Asked about criticism that poor planning by the government, such as delayed decisions on imports, was to blame for the situation, he said the government had great difficulty in determining how much they had and also blamed illegal imports.
“We have a better handle on it now and I think we can see it in terms of our scheduling of our buying,” he said. “But the long term solution is productivity.”
(Reporting by Enrico Dela Cruz; Editing by Alexander Smith, Elaine Hardcastle)
Jan 18 (Reuters) – Gold prices turned negative on Wednesday, erasing gains made on weak US economic data yet staying above the USD 1,900 level, as key members of the Federal Reserve signaled their intent to keep pushing interest rates higher to combat inflation.
The dollar pared losses from near multi-month lows and held steady, making gold less attractive for other currency holders.
Spot gold fell 0.2% to USD 1,904.84 per ounce by 1:45 p.m. ET (1845 GMT), after hitting a session low of USD 1,896.32 earlier.
US gold futures settled down 0.2% at USD 1,907.
“We’re due for a bigger correction here,” said Daniel Pavilonis, senior market strategist at RJO Futures.
“We’ve seen a sharp selloff in 10-year yields – from just shy of 4% down to 3%. At the same time, we’ve seen a sharp rally in the metals. I just think we’re going to see a retracement of that rally… gold could sell off maybe USD 150 from here and again become a buying opportunity.”
Bank of St. Louis President James Bullard in a Wall Street Journal interview said policy rates should be moved to above 5% “as quickly as we can”, while Cleveland Fed President Loretta Mester echoed similar sentiments.
Traders’ bets, however, were at 91.6% for a 25-basis point rate hike by the Fed in February.
Lower interest rates tend to be beneficial for bullion, decreasing the opportunity cost of holding the non-yielding asset.
Earlier in the day, US producer prices fell more than expected in December as the costs of energy products and food declined, offering evidence that inflation was slowing.
“Recession worries and the Fed’s policy decision would be the major catalysts for prices in the near future,” said Hareesh V, head of commodity research at Geojit Financial Services.
Spot silver fell 1.6% to USD 23.55 per ounce, platinum gained 0.2% to USD 1,041.25 while palladium dipped 2% to USD 1,708.59.
(Reporting by Seher Dareen and Ashitha Shivaprasad in Bengaluru; Editing by Louise Heavens and Emelia Sithole-Matarise)
SINGAPORE/LONDON, Jan 18 (Reuters) – The yen slid against major currencies on Wednesday after the Bank of Japan maintained ultra-low interest rates, disappointing some investors who had hoped the central bank would relax its yield curve control policy further.
The central bank stunned the market last month by raising its cap on the 10-year yield to 0.5% from 0.25%, doubling the band it would permit above or below its target of zero. Since then, speculation had swirled that the BOJ could tweak its yield curve control (YCC) policy further or even scrap it.
At a two-day policy meeting, the BOJ kept intact its YCC targets, set at -0.1% for short-term interest rates and around 0% for the 10-year yield, by a unanimous vote. It also made no change to its guidance that allows the 10-year bond yield to move 50 basis points either side of its 0% target.
As a result, the yen suffered broad losses, with the Asian currency down 1.7% against the dollar and was set for its worst day since mid-December.
The euro and sterling gained 2% to 141.08 yen and 160.351 yen, respectively. The Australian dollar gained 1.9%. The US dollar was last up 1.6% at 130.20 yen, its biggest daily jump against the yen in a month.
“The BOJ was likely surprised by the reaction to its policy tweak in December which is likely why they didn’t take new intitiatives today,” said Nordea chief analyst Niels Christensen.
“The BOJ’s forecasts are expecting higher inflation which is why we expect monetary tightening further down the road,” Christensen added, although he said that would likely to come when a new BOJ governor is in place in April.
Some investors have been betting the BOJ will be forced to adjust, or even dismantle, YCC on the view the central bank cannot sustain the massive volume of bond buying needed to defend the cap.
On Wednesday, Japanese government bond yields tumbled the most in two decades at one point, retreating sharply from the central bank’s 0.5% ceiling after the decision. The 10-year yield has repeatedly breached the ceiling in the past four sessions.
“The downtrend in dollar-yen is still intact,” Nordea’s Christensen said.
“We’ll likely see a lower dollar-yen going forward but for now we might see some range trading until we get more data on the inflation outlook,” Christensen added.
The dollar index, which measures the safe-haven dollar against six peers including the yen, fell 0.2% at 102.19.
Sterling rose to its highest level in over a month even as consumer price inflation fell to a three-month low as core CPI failed to moderate, remaning at 6.3%. The pound was last up 0.4% at USD 1.2330.
“The small fall in CPI inflation … and unchanged core rate … suggests it is too early for the Bank of England to declare victory in its fight against inflation,” said Capital Economics senior UK economist Ruth Gregory in a note.
“With underlying inflation, activity and wage growth all ending last year a bit stronger than expected, we doubt the Bank of England will call time on rate hikes.”
Meanwhile the euro strengthened 0.5% to USD 1.0846, approaching its highest level since April 2022 of USD 1.0874 reached on Monday.
The Australian dollar rose 0.7% to USD 0.7034, while the kiwi rose 0.9% to USD 0.6487, its highest level in a month.
(Reporting by Samuel Indyk in London, Ankur Banerjee in Singapore; Editing by Sam Holmes, Simon Cameron-Moore, Kim Coghill and Raissa Kasolowsky)
SHANGHAI, Jan 18 (Reuters) – Overseas investors increased their holdings of Chinese bonds in December, snapping a record 10-month spate of outflows, and capital inflows are expected to continue into the new year, the country’s foreign exchange regulator said.
Risk appetite improved and investor sentiment was boosted after Beijing abruptly dismantled most of its strict COVID-19 curbs in December and reopened borders earlier this month, fuelling expectations for a solid economic rebound this year.
Foreign investors purchased a net USD 7.3 billion of Chinese bonds and another USD 8.4 billion of A-shares in December, according to the State Administration of Foreign Exchange (SAFE).
And foreigners added another USD 12.6 billion worth of Chinese stocks and bonds combined on a net basis in the first half of this month, it added.
Overseas institutional investors’ holdings of yuan-denominated bonds traded on China’s interbank market rose to 3.39 trillion yuan (USD 500.61 billion) at end-December from 3.33 trillion yuan a month earlier, the central bank’s Shanghai head office said.
But they still sold a net 610-billion-yuan worth of yuan bonds last year, according to Reuters calculation based on the official data.
Cross-border flows are expected to become more stable this year, the regulator said, noting optimization in COVID policies and pro-growth measures should help the economy rebound.
“Supported by the stabilization of the Chinese economic growth, the increasing attractiveness of yuan-denominated assets, and the prominence of the safe-haven properties of the yuan assets, foreign investors will continue to steadily invest in China’s securities markets,” the SAFE said in an online statement.
In less than three weeks of 2023, foreign buying of Chinese stocks has exceeded last year’s total as investors bet on the country’s rapid recovery after COVID-19 lockdowns were lifted.
Some investment banks, including ING, JPMorgan, and Goldman Sachs, have already raised their growth prospects for China this year.
“With a stronger end to 2022 than we had expected, plus indications of stronger retail expenditure ahead, the outlook for GDP growth in 2023 has improved compared to our prior outlook,” said Iris Pang, Greater China economist at ING.
“That is not to ignore the fact that China still faces considerable headwinds, including external demand, with recessions likely in the US and Europe this year.”
JPMorgan upgraded its 2023 China gross domestic product (GDP) growth forecast to 5.6% from 4.4% previously, while Goldman Sachs raised its forecast to 5.5% from 5.2% previously.
Economic growth slowed sharply to just 3.0% last year, one of its worst levels in nearly half a century, as activity was hit hard by the strict COVID curbs and a deep property market slump.
(USD 1 = 6.7717 Chinese yuan)
(Reporting by Winni Zhou and Brenda Goh; Editing by Kim Coghill)
MANILA, Jan 18 (Reuters) – Philippine President Ferdinand Marcos Jr expects the domestic economy to grow around 7% this year, saying strong fundamentals, prudent fiscal management and reforms in key sectors will cushion against risks from a potential global recession.
The Southeast Asian country, which will announce its 2022 economic performance on Jan. 26, also expects last year’s gross domestic product growth to be faster than the 6.5%-7.5% target.
“Our strong macroeconomic fundamentals, fiscal discipline, structural reforms and liberalisation of key sectors instituted over the years have enabled us to withstand the negative shocks caused by the pandemic and succeeding economic downturns and map a route toward a strong recovery,” Marcos was quoted as saying in a statement his office issued on Wednesday.
Marcos was in Davos, Switzerland this week for the World Economic Forum, accompanied by his economic team and several Philippine business executives. There he met with potential investors to seek support for his infrastructure development programme.
Pent-up domestic demand following the removal of pandemic restrictions propped up economic growth last year and will continue supporting consumer spending this year, Bangko Sentral ng Pilipinas Governor Felipe Medalla said on Jan. 10.
“Our actual projection is 6.5 (percent for 2023) but there are signs that we might be able to surpass that,” Marcos said in Davos, where he also presented his proposed sovereign wealth fund to potential investors.
Critics have raised concerns over the transparency and governance of the wealth fund, which has been approved by the House of Representatives, and is pending deliberation in the Senate.
Under the bill, state lenders Development Bank of the Philippines and Land Bank of the Philippines would provide a total 75 billion pesos (USD 1.37 billion) for initial capital, while the central bank will contribute subsequently through dividends.
(Reporting by Enrico Dela Cruz; Editing by Kanupriya Kapoor)
Jan 18 (Reuters) – Oil prices extended early gains to rise around 1% on Wednesday, on optimism that the lifting of China’s strict COVID-19 curbs will lead to a recovery in fuel demand in the world’s top oil importer.
Brent crude futures climbed 76 cents, or 0.88%, to USD 86.68 a barrel by 0721 GMT, following a 1.7% rally in the previous session.
US West Texas Intermediate (WTI) crude futures went up 85 cents, or 1.06%, to USD 81.03, having risen 0.4% on Tuesday.
Both crude futures surged by more than USD 1 a barrel to hit fresh 2023 highs around midday in Asia, with Brent reaching USD 87 a barrel and WTI futures hitting USD 81.42 a barrel.
China’s economic growth slowed sharply to 3% in 2022, missing the official target of “around 5.5%” and marking its second-worst performance since 1976. But the data still beat analysts’ forecasts after China started rolling back its zero-COVID policy in early December. Analysts polled by Reuters see 2023 growth rebounding to 4.9%.
The Organization of the Petroleum Exporting Countries (OPEC) said in a monthly report that Chinese oil demand would grow 510,000 barrels per day (bpd) this year after contracting for the first time in years in 2022 due to COVID containment measures.
But OPEC kept its 2023 global demand growth forecast unchanged at 2.22 million bpd.
“Growing hopes that China’s fuel demand will pick up after a recent shift in its COVID-19 policy lent support to oil prices,” said Toshitaka Tazawa, an analyst at Fujitomi Securities Co Ltd.
“OPEC’s optimistic outlook on China’s demand also supported the market sentiment,” he said, predicting a bullish tone for this week.
The market was also supported by expectations of a drawdown in US crude stocks by around 1.8 million barrels despite higher oil product inventories, according to a Reuters poll.
On the supply-side, oil output from top shale regions in the United States is due to rise by about 77,300 bpd to a record 9.38 million bpd in February, the US Energy Information Administration (EIA) said in a productivity report on Tuesday.
Russia, meanwhile, expects Western sanctions to have a significant impact on its oil product exports and its production, likely leaving it with more crude oil to sell, said a senior Russian source with knowledge of the nation’s outlook.
The market is also closely watching for more demand data from China in the International Energy Agency’s monthly report due later on Wednesday, according to ING analysts in a client note.
(Reporting by Yuka Obayashi in Tokyo and Trixie Yap in Singapore; Editing by Kim Coghill and Jacqueline Wong)
NEW YORK, Jan 18 (Reuters) – Oil prices fell about 1% on Wednesday, surrendering early gains as worries about a possible US recession outweighed optimism that China’s lifting of COVID-19 curbs will fuel demand for crude in the world’s top oil importer.
Brent futures fell 94 cents, or 1.1%, to settle at USD 84.98 a barrel. US West Texas Intermediate (WTI) crude fell 70 cents, or 0.9%, to settle at 79.48.
The session high for both benchmarks was the highest since Dec. 5. For WTI, Wednesday was the first time in nine sessions that the contract settled down.
Oil prices reversed gains early in the afternoon along with Wall Street’s main indexes as hawkish comments from US Federal Reserve (Fed) officials sparked worries the central bank may not pause interest rate hikes any time soon.
Markets at first reacted positively to US data, which showed retail sales and manufacturing production declined more than forecast in December, on hopes the Fed would now ease up on interest rate hikes.
However, the gains were short-lived as St. Louis Fed President James Bullard
and Cleveland Fed President Loretta Mester said rates needed to rise beyond 5% to control inflation.
Microsoft Corp (MSFT) said it would eliminate 10,000 jobs and take a USD 1.2-billion charge, as cloud-computing customers reassess spending and the company braces for potential recession.
“Coming on the back of the weakness in retail sales, the steep drop in industrial production and news of more job lay-offs adds to fears the US could already be in recession,” analysts at ING, a bank, told customers in a note.
Supporting oil prices early in the session, China reported economic data that beat forecasts after the country started rolling back its zero-COVID policy in early December.
China’s lifting of restrictions should boost global oil demand to a record high this year, according to the International Energy Agency (IEA), while price cap sanctions on Russia could dent supply.
Rystad Energy, a consultancy, said the effect of sanctions on Russian crude exports after 1.5 months of the European Union embargo and G7 price cap has not been as devastating as some predicted.
Rystad said the losses were at about 500,000 barrels per day and that India and China remain key buyers of Russian crude.
Analysts expect a drawdown in US crude stocks of about 600,000 barrels last week, a Reuters poll showed, which could provide some price support.
The American Petroleum Institute (API) was set to release industry data at 4:30 p.m. EST (2130 GMT). The US government reports at 11 a.m. on Thursday. Both weekly reports were delayed a day due to Monday’s Martin Luther King Day federal holiday.
(Additional reporting by Rowena Edwards and Julia Payne in London, Yuka Obayashi in Tokyo and Trixie Yap in Singapore; Editing by Marguerita Choy, Kirsten Donovan and David Gregorio)
