China's Xiaomi soars as US judge lifts it from backlist

HONG KONG - Shares in Chinese smartphone maker Xiaomi surged more than 10 percent in Hong Kong on Monday after a US judge removed it from a blacklist that barred American companies from investing in it.

The firm's stock price has been hammered since mid-January when Donald Trump, in his last days in office, included it in a group the White House considered a threat to US national security.

The move classified Xiaomi, which is among the biggest smartphone makers in the world, as one of nine "Communist Chinese military companies" that also included state oil giant CNOOC, and popular social media app TikTok.

But US District Judge Rudolph Contreras ruled Friday that the Department of Defense and the Treasury "have not made the case that the national security interests at stake here are compelling".

He removed Xiaomi from the blacklist and suspended the investment ban after the firm appealed against the blacklisting.

The news sent shares in the firm surging 12 percent in Hong Kong morning trade Monday, having lost more than 40 percent since Trump's order. 

However, while Xiaomi was removed, US regulators listed Huawei and ZTE among Chinese telecom equipment makers considered a threat to national security, signalling that a hoped-for softening of relations is not on the cards.

Washington claims Huawei has close ties to China's military and that Beijing could use its equipment for espionage -- accusations the company denies.

Agence France-Presse

Market may climb anew this week

MANILA, Philippines — The stock market may continue to go up this week, sustaining the gains the previous weeks amid the scheduled resumption of US-China trade talks, traders said.

Michael Ricafort, chief economist at Yuchengco-owned Rizal Commercial Banking Corp. (RCBC), sees the index’s next resistance at the 8,000 mark.

“The Philippine Stock Exchange Composite index (PSEi) gained for the third week in four weeks by 58.85 points or 0.7 percent to close at 7,992.32, a new one-month high and also among four-month highs and also among 17-month highs,” Ricafort said.


This, he said, is amid improved global risk appetite recently with the scheduled resumption of the trade talks between the US and China by early October and recent gestures by both countries to improve the said trade talks.

“The next resistance is at 8,000, which is a gateway prior to further upside potential in the near future,” Ricafort said.


Earlier, US President Trump deferred by two weeks the scheduled higher tariffs (which would translate to additional five percent duties) on $250 billion US imports from China. Trump deferred this to Oct. 15 from Oct. 1 to improve the US-China trade talks.

Ricafort said this was a positive signal for the global financial markets.

China also agreed to exempt some US imports from tariffs for about a year starting Sept. 17, which Ricafort said was another positive signal for the markets.

“Trump administration plans to ease sanctions on Iran to help secure a meeting with Iranian leader Hassan Rouhani on the sidelines of the UN General Assembly in New York on Sept. 23. The markets are also anticipating the upcoming Fed rate-setting meeting on Sept. 18 amid possible 0.25 rate cut, which is another factor that could support sentiment in the global financial markets in the coming week,” Ricafort said.

source: philstar.com

Asian equities mostly up after US, China tariff moves

HONG KONG, China — Asian investors on Thursday cheered Donald Trump's decision to delay a hike in tariffs on Chinese goods and Beijing's announcement that it would remove a range of US products from its own planned levies.

The moves signal an easing of tensions between the two economic superpowers ahead of a much-anticipated meeting of top-level negotiators next month.

They also provided an extra shot in the arm for investors as they await key announcements from the US and European central banks that are expected to see a further easing of monetary policy.


In a tweet on Wednesday night, Trump said: "We have agreed, as a gesture of good will, to move the increased Tariffs on 250 Billion Dollars worth of goods (25% to 30%), from October 1st to October 15th."

He added that the delay was requested by "Vice Premier of China, Liu He, and due to the fact that the People's Republic of China will be celebrating their 70th Anniversary", on October 1.

Earlier in the day, China said it would temporarily exempt 16 categories of US exports from tariff increases in an olive branch to Washington before the talks take place and which Trump described as "a big move".

The more conciliatory tone from both sides -- after months of rancour -- fuelled hopes they can edge towards a solution to their long-running trade war, which has jolted the global economy and stock markets.

The delay "shows Trump doesn't want to increase tariffs before the trade talks in early October and it creates good conditions", said Tommy Xie, an economist at Oversea-Chinese Banking Corp. "It adds to the hope that there'll be good news from the October meeting, and markets will wait and see."

Wednesday's developments were broadly welcomed though Asian markets struggled to hold on to initial rallies owing to profit-taking from a healthy run-up this week.

Central banks in focus

Tokyo ended the morning 0.8 percent higher and Shanghai added 0.2 percent while Sydney climbed 0.5 percent. Wellington and Taipei also rose, as did Jakarta, but Hong Kong dipped 0.2 percent.

Jun Inoue, a senior economist at Mizuho Research Institute, said Trump's move indicates he "can be flexible to get concessions from China and that he’s not trying to punish Beijing at any cost".

The apparent easing of trade tensions boosted oil prices as the prospect of an end to the row revived hopes for demand.

However, the gains followed a sharp drop for both main contracts as traders bet on a possible return of Iranian crude to the market after the firing of Trump's hawkish national security adviser John Bolton eased fears of a conflagration in the Middle East.

Traders are now turning their attention to Frankfurt, where the European Central Bank is expected to unveil economy-boosting stimulus. While the exact measures are unknown observers say it could cut interest rates deeper into negative territory or a new mass bond-buying drive, among other things.

Then, next week the Federal Reserve meets, with speculation rife that it will lower borrowing costs again, which would please Trump, who in a Twitter outburst on Wednesday said they should "BE BROUGHT WAY DOWN".

In share trading, Hong Kong Exchanges and Clearing sank more than three percent after its shock bid of almost US$40 billion for the London Stock Exchange Group on Wednesday.

Reports said the proposal is likely to fail, however, as it is dependent on the LSEG scrapping a planned $27 billion takeover of US financial data provider Refinitiv, which the three-centuries-old exchange said it "remains committed" to buying.

There are also concerns about ongoing unrest in Hong Kong and the influence of China in the group, the Financial Times reported.

source: philstar.com

'Tiananmen Square' crackdown in Hong Kong would harm trade deal — Trump

WASHINGTON — US President Donald Trump on Sunday warned China that carrying out a Tiananmen Square-style crackdown on Hong Kong pro-democracy protesters would harm trade talks between the two countries.

"I think it'd be very hard to deal if they do violence, I mean, if it's another Tiananmen Square," Trump told reporters in New Jersey. "I think it's a very hard thing to do if there's violence."

The months-long trade dispute between the US and China has been blamed for setting world financial markets on edge amid signs of a possible global economic slowdown.

Trump's comments came as Washington and Beijing look to revive pivotal talks aimed at ending their trade war.

Phone calls between both countries' deputies are planned for the next 10 days, and if those are successful, negotiations could resume, Trump's chief economic advisor Larry Kudlow said on Sunday.

Hong Kong has meanwhile been dealing with more than two months of protests and on Sunday saw a crowd that organizers said numbered some 1.7 million people march peacefully in the city despite rising unrest and stark warnings from Beijing.

Chinese state media has run images of military personnel and armored personnel carriers in Shenzhen, across the border from the semi-autonomous city.

In the bloody 1989 crackdown in Beijing's Tiananmen Square, China deployed tanks to end student-led protests, resulting in an estimated death toll of hundreds if not thousands.


If such a situation was repeated in Hong Kong, "I think there'd be... tremendous political sentiment not to do something," Trump said, referring to the trade negotiations with China.

Creeping authoritarianism

Under a deal signed with Britain, China agreed to allow Hong Kong to keep its unique freedoms when the former crown colony was handed back in 1997.

But many Hong Kongers feel those freedoms are being chipped away, especially since China's hardline president Xi Jinping came to power.

Trump stopped short of endorsing the protesters, saying, "I'd love to see it worked out in a humane fashion," and calling on Xi to negotiate with the dissidents.

Last week, China's state-run daily The Global Times said there "won't be a repeat" of Tiananmen Square in a rare reference to the crackdown.

Analysts say any intervention in Hong Kong by Chinese security forces would be a disaster for China's reputation and economy.

The weeks of demonstrations have plunged the financial hub into crisis, with images of masked, black-clad protesters engulfed by tear gas during street battles against riot police stunning a city once renowned for its stability.

The unrest was sparked by widespread opposition to a plan for allowing extraditions to the Chinese mainland, but has since morphed into a broader call for democratic rights in the semi-autonomous city.

Sunday's march, billed as a return to the peaceful origins of the leaderless protest movement, was one of the largest rallies since the protests began about three months ago, according to organizers the Civil Human Rights Front.

source: philstar.com

G20 frets over global economy amid US-China trade war

FUKOUKA, Japan —The world's top finance policymakers Sunday weighed the impact of ballooning trade tensions on the global economy amid differences over the extent to which they are dragging on growth.

Finance ministers and central bank chiefs from the G20 group of the world's top economies are expected to note the "downside risks" to the global economy from trade battles, notably between the top economic superpowers China and the US.

Japanese Finance Minister Taro Aso, who is hosting the talks, told reporters as the first day of talks wrapped up on Saturday that the world economy should "firm" in the second half of the year but "downside risks still remain."

Aso said "market confidence could be eroded" if there were no rapid resolution to the ongoing trade war between Beijing and Washington, which has seen the world's top two economies impose billions of dollars of tit-fir-tat tariffs and threaten even tougher action.

IMF chief Christine Lagarde singled out trade tensions as the "major" headwind facing the global economy, adding that it was a "significant risk on the horizon," in an interview with Japan's Nikkei daily on Sunday.

Lagarde has previously described the trade wars as a "self-inflicted wound" and warned that US-China tariffs so far imposed and threatened could trim 0.5 percentage points off global GDP growth next year -- an amount $455 billion larger than the entire South African economy.

Meanwhile, French Finance Minister Bruno Le Maire said there was a "real risk" that "this global economic slowdown could turn into a global economic crisis due to trade tensions."

"A worsening of the international climate and a real trade war would lead to an even more marked slowdown in global growth, with a direct impact on our jobs, companies, factories and sectors," Le Maire told AFP in an interview on the sidelines of the meeting.

A Japanese official who declined to be named briefed reporters that "very many countries voiced concerns that escalation of the trade friction is a very significant downside risk to the world economy. That is a fact."

'Big economic opportunity' 

However, the treasury secretary from the US, which continues to threaten more tariffs on China if there is no trade deal, played down the risk of a global economic conflagration.

"Clearly there is a slowdown in Europe, there's a slowdown in China, there's a slowdown in other parts. I don't believe that's as a result of trade tensions. That slowdown has gone on for the last year," Steven Mnuchin told reporters on Saturday.

He acknowledged that other policymakers had voiced concerns over the economic impact of a prolonged trade war but pointed to a potential boon for other countries.

As companies move out of China in order to avoid US tariffs, "there's going to be a big economic opportunity for a lot of other countries," he said.

"There will be winners and losers," he predicted.

Nevertheless, Mnuchin also pointed to the positive boost to the world economy that could result from a breakthrough in trade talks, likely to be the main focus of a meeting between the US and Chinese leaders at a G20 summit later this month.

"I think if we get a deal, it's a very positive thing for economic growth, for us, for China, for Europe, for the rest of the world. The opening of these economies tends to lead, in my mind, to more growth on both sides," said Mnuchin.

source: philstar.com

Mahathir says Malaysia will use Huawei 'as much as possible'

TOKYO, Japan — Malaysia will continue using Huawei products "as much as possible," bucking a global trend prompted by security concerns and a US ban on the Chinese firm, the country's prime minister said Thursday.

Mahathir Mohamad, speaking at a conference in Tokyo, acknowledged the security concerns but said they would not deter Malaysia.


"Yes, there may be some spying. But what is there to spy (on) exactly in Malaysia? We are an open book," the 93-year-old said at the Future of Asia forum.

Mahathir said Huawei had access to research "far bigger than the whole of Malaysia's research equivalent."

"So we try to make use of their technology as much as possible."

"Everybody knows, if any country wants to invade Malaysia, they can walk through, and we will not resist because it's a waste of time," he added.

His comment came after a wave of controversy over the Chinese telecommunications firm, which has been hit by allegations of espionage and faces a US ban.

A number of countries have blocked Huawei from working on their mobile networks and companies have stepped back from the firm after the US ban, citing legal requirements.

The spat comes as the United States and China raise tariffs in tit-for-tat moves along with blistering rhetoric accusing each other of unfair trade practices.

Mahathir warned about the heated exchanges between Beijing and Washington, which come as the powers and their allies lock horns in the hotly contested South China Sea.

Mahathir said the United States and "the West" must accept that Asian nations now produce competitive products, and should not "threaten" business rivals.

"Yes, I understand Huawei has tremendous advance(s) over American technology even," he said.

"The US must compete with China. At times China will win, other times the US will win," he said.

He warned that the tense relations between the US and China might impact the situation in the South China Sea, where China claims sovereignty despite rival claims from other regional nations.

And he urged calm in the area, warning that small incidents could easily escalate into violence.

source: philstar.com

Index ends lower on weak GDP growth, US-China trade woes

MANILA, Philippines — The index ended the week in negative zone, finishing 13.42 points lower at 7,742.20.

Likewise, the broader All Shares gauge was down 16.59 points or 0.34 percent to end at 4,791.26.

Majority of the indices were down as well except for the financials and industrial gauges which ended in positive territory.

Total value turnover reached P7.551 billion. Market breadth was negative, 101 to 78 while 64 issues were unchanged.

Traders said the market is still digesting the lower-than-expected first quarter economic growth of 5.6 percent as well as the lack of resolution on the brewing US-China trade war.


Some specific issues, however, bucked the trend such as Holcim Philippines whose shares reached a new high of P15.30 or up 6.10 percent.

This after San Miguel Corp., Holcim Philippines and Lafarge Holcim confirmed the acquisition by San Miguel of Holcim Philippines.

Lafarge Holcim, Europe’s biggest cement maker, sold its 85.7 percent stake in the company.

Lafarge Holcim CEO Jan Jenish said the sale of the company’s stake in Holcim Philippines now completes the cement giant’s exit from Southeast Asia.

“With the divestment of our activities in the Philippines, we are completing our exit from the increasingly hyper competitive arena in South East Asia. While this decision is based on our strategic portfolio review, we have reached very attractive valuations allowing us to achieve a new level of financial strength,” Jenish said.

On the other hand, SMC’s shares dropped 2.81 percent.

source: philstar.com

Asian markets surge as Trump fuels China trade deal hopes

HONG KONG — Asian markets enjoyed another rally on Friday after Donald Trump hailed positive talks with Chinese President Xi Jinping and a report said he had asked officials to draw up a draft bill as he eyes a potential trade deal between the two.

Hong Kong jumped almost four percent in the afternoon, while Shanghai and the yuan soared as dealers seized on the news, hoping for a breakthrough in a standoff that has rocked global equities and fuelled warnings about global growth.

The gains follow a third straight advance on Wall Street as a sense of optimism returns after a diabolical October, with riskier, higher-yielding currencies enjoying a bounce against the dollar, and the pound holding on to most gains.


The day had already started with a bang after Trump tweeted that he had held positive talks with Xi, which was a rare sign of hope in the months-long stand-off between the world's top two economies.

"Just had a long and very good conversation with President Xi Jinping of China. We talked about many subjects, with a heavy emphasis on Trade," he wrote.


He added that trade talks were "moving along nicely" and meetings were "being scheduled" at the G20 summit in Buenos Aires at the end of the month.

The comment comes days after Trump warned he would impose tariffs on all China's shipments to the US before saying he thought he could "make a great deal with China" but it was not yet ready.

Later, Bloomberg News, citing unnamed sources, reported that the president has requested key cabinet secretaries put together an outline deal to call a ceasefire in the painful row. It said several agencies had been called in to help with putting the plan together.

Hong Kong and Shanghai were already buoyant after Beijing said it would introduce measures to kickstart the stuttering economy following a string of weak data, including growth at its slowest pace in nine years during the third quarter.

The yuan also rallied to 6.9080 to the dollar, having hit 6.9302 earlier in the morning and is well off the 10-year lows around 6.97 on Thursday.

'Still cautious'

The optimism spread across the region. Tokyo was up 2.7 percent in the afternoon, Singapore 1.3 percent and Seoul piled on three percent, while Sydney reversed early losses to sit 0.1 percent higher.

Taipei, Bangkok, Mumbai and Jakarta also posted healthy gains.

"Positive comments from President Trump over US-China trade tension are cheering the market in the short term," said Tai Hui, chief market strategist for Asia Pacific at JP Morgan Asset Management.

"Dollar moderation, the stabilising trade relationship between US and China and more stimulus from Beijing will be the key ingredients to revive market confidence in Asia.

"While we are still cautious over a full resolution of recent tensions in the medium term, resumption of dialogue between Washington and Beijing would be good enough to investors for now."

Oil prices recovered after Thursday's plunge of more than two percent on oversupply worries, with US sanctions on Iran due within days but other major producers ready to pick up the slack.

The commodity has lost around 15 percent from four-year highs at the start of last month as Russia and OPEC said they would bolster output and dealers grew concerned about the impact on demand from a trade war between China and the US.

On currency markets high-yielding units were well bought. The Australian dollar climbed 1.1 percent, South Korea's won strengthened 1.5 percent and the South African rand was 1.6 percent higher.

India's rupee, which has been hammered this week by a standoff between the government and central bank, climbed almost one percent.

The pound dipped but held most of its gains after a report that British Prime Minister Theresa May had reached a post-Brexit deal with Brussels securing access to the EU for Britain's key finance sector.

Sterling jumped almost two percent on the report despite London and Brussels officials' reservations.

source: philstar.com

Asian stocks mixed as investors await US tariff hike

BEIJING — Asian stocks were mixed Tuesday after Wall Street's gains as investors waited for a new U.S. tariff hike in a trade battle with China.

KEEPING SCORE: The Shanghai Composite Index lost 0.3 percent to 2,661.33, while Tokyo's Nikkei 225 added 1 percent to 22,595.52. Hong Kong's Hang Seng retreated 0.3 percent to 26,538.58 and Sydney's S&P-ASX 200 advanced 0.5 percent to 6,171.00. Seoul's Kospi shed 0.3 percent to 2,281.90, while New Zealand. Benchmarks in Taiwan and Southeast Asia declined.

WALL STREET: U.S. stocks broke a four-day losing streak as industrial companies and retailers rose. Technology companies recovered some of last week's losses. Nike, Home Depot and Walmart all climbed. Microsoft and other technology companies rose, but Apple fell after saying more U.S. tariff hikes could push it to raise prices. The Standard & Poor's 500 index gained 0.2 percent to 2,877.13. The Dow Jones Industrial Average lost 0.2 percent to 25,857.07. The Nasdaq composite rose 0.3 percent to 7,924.16.



TRADE TENSIONS: The Trump administration is due to announce a decision shortly on whether to go ahead with 25 percent tariffs on $200 billion of Chinese imports in a dispute over Beijing's technology policy. The two sides already have raised duties on $50 billion of each other's goods. Trump said Friday that he was considering extending penalties to extending penalties to nearly all Chinese imports to the United States by raising duties on an additional $267 billion of goods.

ANALYST'S TAKE: "Wall Street balanced the tech gloom against the fresh focus on tax cuts on Monday yielding mixed returns," Jinyi Pan of IG said in a report. "The protracted expectation for more bad news to set in with the looming tariffs remains the most important factor weighing on markets currently."

ENERGY: Benchmark U.S. crude gained 4 cents to $67.58 per barrel in electronic trading on the New York Mercantile Exchange. The contract lost 21 cents on Monday to close at $67.54. Brent crude, used to price international oils, advanced 11 cents to $77.48 in London. It rose 54 cents the previous session to $77.37.

CURRENCY: The dollar gained to 111.36 yen from Monday's 111.12 yen. The euro edged down to $1.1590 from $1.1595.

source: philstar.com

US-Mexico trade talks progressing but no breakthrough with China

WASHINGTON — Negotiations between the United States and Mexico to revise the nearly 25-year-old North American Free Trade agreement are making progress but will not wrap up this week, Mexico's Economy Minister Ildefonso Guajardo said Thursday.

But a Chinese delegation, in Washington for talks aimed at defusing the spiraling US trade war with Beijing, left without any breakthrough.

NAFTA and China have been two key targets of US President Donald Trump's aggressive trade strategy and he has largely brushed off concerns from the business community about the harm done to the US economy.

With NAFTA at least, there has apparently been progress.

The negotiations "are well advanced," Guajardo told reporters, but "we are not there yet."


Canada needs to re-engage in the talks before the NAFTA rewrite can be completed and "the only way that can happen is if we continue through the weekend and into next week," he added.

Guajardo and Mexico's Foreign Minister Luis Videgaray have been shuttling back and forth to Washington for more than a month for meetings with US Trade Representative Robert Lighthizer to try to iron out the bilateral issues, such as rules for the auto market, before the end of August.

Officials last week indicated they expected a breakthrough this week but "negotiations are highly complex," Guajardo said on his way into yet another meeting.

He has cautioned that some of the hardest issues were still on the table, including the US demand for a five-year "sunset clause," which would oblige the three countries to renew the pact regularly.

"There's been no indication of flexibility from the US on this issue," a senior Canadian official told AFP.

Nevertheless, Canadian Prime Minister Justin Trudeau said Thursday that he was "encouraged by the optimism expressed by the US and Mexico."

"We're ready to sit down and continue the hard work of modernizing and negotiating a better deal for all of us," he said, but stressed Canada would "only sign a good deal for Canadians."

Canada's top diplomat and chief NAFTA negotiator, Chrystia Freeland, said Wednesday she would rejoin the talks once Washington and Mexico City finish their bilateral discussions.

The three countries have been negotiating for a year to salvage the trade pact Trump says has been a "disaster" for the United States.

No breakthrough with China

As part of Trump's aggressive trade stance, Washington hit China with 25 percent punitive duties on another $16 billion in goods starting Thursday, triggering a swift tit-for-tat retaliation from Beijing.

China filed a complaint against the latest tariffs at the World Trade Organization the same day, the commerce ministry said.

Adding to the $34 billion targeted in July, that brings the total two-way trade weighed down by the steep tariffs to $100 billion, and the United States currently is considering hitting another $200 billion -- a move Trump indicated could come very soon.

"We've put a $50 billion number out there. Now, the total number is $250 billion," Trump said at the White House on Thursday. "And there's a 25-percent tax on that, now, coming in.... Some of it starts in a week."

Washington is accepting public comments on the $200 billion tariff tranche until September 6 -- but they could take effect soon after.

That is on top of US tariffs on Chinese appliances and solar panels, as well as steel and aluminum from around the world -- a total of 10,000 products.

China's Vice Commerce Minister Wang Shouwen and Vice Finance Minister Liao Min concluded two days of talks with a US team lead by David Malpass, US Treasury under secretary for international affairs -- their first trade discussions since June.

White House Deputy Press Secretary Lindsay Walters said the talks concluded after officials "exchanged views on how to achieve fairness, balance and reciprocity in the economic relationship."

Economic damage

US businesses have become increasingly concerned about the exchange of tariffs, which are raising prices for manufacturers and hurting US consumers and farmers.

But Trump has been unapologetic, insisting that his tough tactics will work.

Federal Reserve officials warn escalating trade disputes are "a potentially consequential downside risk" for the economy, possibly fueling inflation and impeding investment.

S&P Global Ratings on Thursday downgraded motorcycle maker Harley Davidson's debt rating, citing retaliatory tariffs among other "headwinds" facing the company.

And National Retail Federation Vice President Jonathan Gold said the tariffs "threaten to increase costs for American families and destroy the livelihoods of US workers."

China's commerce ministry said Thursday the country "firmly opposes the tariffs and has no choice but to continue to make the necessary counter-attacks."

US Commerce Secretary Wilbur Ross said Beijing would not be able to continue to retaliate at the same pace as Washington, noting: "We have many more bullets than they do."

However, Beijing also could target the local operations of US corporations with inspections and boycotts, as it has done in past disputes with South Korea and Japan.

source: philstar.com

Fed keeps key rate unchanged while signaling future hikes

WASHINGTON — The Federal Reserve on Wednesday (Washington time) left its benchmark interest rate unchanged while signaling further gradual rate hikes in the months ahead as long as the economy stays healthy.

The Fed's widely expected decision kept the central bank's key short-term rate at 1.75 percent to 2 percent — the level hit in June when the Fed boosted the rate for a second time this year.

The Fed projected in June four rate hikes this year, up from three in 2017. Private economists expect the next hike to occur at the September meeting with a fourth rate hike expected in December.

The Fed's statement was upbeat on the economy, pointing to a strengthening labor market, economic activity growing at "a strong rate," and inflation that's reached the central bank's target of 2 percent annual gains.

Analysts saw all the comments about economic strength as a clear signal that the Fed remains on track to raise rates two more times this year.

"All signs still point to a September rate hike," said Greg McBride, chief financial analyst at Bankrate.com. He said consumers should continue to pay down their home equity, credit card and other loans with variable rates that will rise further as the Fed keeps hiking rates.

"Refinance adjustable rate debt into fixed rates to insulate yourself from further rate hikes," McBride recommended.

There was no mention in the statement of what many economists see as one of the biggest risks at the moment: rising tariffs on billions of dollars of U.S. exports and imports that have been imposed as a result of President Donald Trump's new get-tough approach on trade.

The Fed statement also made no reference to criticism Trump has lodged recently against the Fed's continued rate hikes.

The Fed's decision was approved on a unanimous 8-0 vote. The action was not surprising, given that this meeting followed a June session where the Fed took a number of steps including raising rates by another quarter-point and changing its projection for hikes this year from three to four.

The March and June rate hikes followed three hikes in 2017 and one each in 2015 and 2016. The Fed's key policy rate is still at a relatively low level. But it's up from the record low near zero where it remained for seven years as the central bank worked to use ultra-low interest rates to lift the economy out of the Great Recession.

The string of quarter-point rate hikes is intended to prevent the economy from overheating and pushing inflation from climbing too high. But higher rates make borrowing costlier for consumers and businesses and can weigh down stock prices. Trump has made clear he has little patience for the Fed's efforts to restrain the economy to control inflation.

"Tightening now hurts all that we have done," Trump tweeted last month, a day after he said in a television interview that he was "not happy" with the Fed's rate increases.

Over the past quarter-century, presidents have maintained silence in public about Fed actions, believing that lodging complaints would be counter-productive. That's because it could produce even faster rate hikes if the central bank feels the need to convince financial markets that it will not yield to political pressure and allow inflation to rise to worrisome levels.

At the moment, economic growth is strong, rising at an annual rate of 4.1 percent in the April-June quarter, the best showing in nearly four years. Unemployment is at a low 4 percent, and some analysts believe it will fall further when the government releases the July figures on Friday.

But there are worries as well, led by fears of what a Trump-led trade war might do to growth in the United States and around the world.

Many analysts believe that the possible harm from rising tariffs was a key discussion topic this week. While trade was not mentioned in the statement, it likely will show up in the minutes of the Fed's discussion which will be released in three weeks.

Delivering the Fed's semi-annual report to Congress last month, Fed Chairman Jerome Powell refrained from criticizing the Trump administration's effort to use the threat of tariffs to try to lower trade barriers. But Powell noted that the Fed was hearing a "rising chorus of concern" from business contacts about the harm a trade war could cause.

Powell hasn't publicly addressed Trump's criticism of Fed rate hikes. But the chairman had previously said in a radio interview that the central bank has long operated independently in making interest-rate decisions based on what was best for the economy and not in response to political pressure.

source: philstar.com

US proposes tariffs on $200 billion more in Chinese imports

WASHINGTON — The Trump administration is readying tariffs on another $200 billion in Chinese imports, ranging from burglar alarms to mackerel, escalating a trade war between the world's two biggest economies.

The Office of the U.S. Trade Representative proposed 10 percent tariffs Tuesday on a list of 6,031 Chinese product lines.

The office will accept public comments and hold hearings on the plan Aug. 20-23 before reaching a decision after Aug. 31, according to a senior administration official who briefed reporters on condition of anonymity.

Last Friday, the U.S. imposed 25 percent tariffs on $34 billion in Chinese products, and Beijing responded by hitting the same amount of U.S. imports.


The administration said the new levies are a response to China's decision to retaliate against the first round of U.S. tariffs.

President Donald Trump has threatened to tax as much as $550 billion in Chinese products — an amount that exceeds America's total imports from China last year.

The United States complains that China uses predatory practices in a push to challenge American technological dominance. Chinese tactics, the administration says, include outright cybertheft and forcing U.S. companies to hand over technology in exchange for access to the Chinese market.

The initial U.S. tariff list focused on Chinese industrial products in an attempt to limit the impact on American consumers. By expanding the list, the administration is beginning to hit products that U.S. households buy, including such things as electric lamps and fish sticks.

"Tariffs on $200 billion in Chinese products amounts to another multibillion-dollar tax on American businesses and families," said Scott Lincicome, a trade lawyer and senior policy analyst for the group Republicans Fighting Tariffs. "Given China's likelihood of retaliation, it's also billions worth of new tariffs on American exporters."

Members of Congress are increasingly questioning Trump's aggressive trade policies, warning that tariffs on imports raise prices for consumers and expose U.S. farmers and manufacturers to retaliation abroad.

"Tonight's announcement appears reckless and is not a targeted approach," Senate Finance Chairman Orrin Hatch, R-Utah, said in a statement. "We cannot turn a blind eye to China's mercantilist trade practices, but this action falls short of a strategy that will give the administration negotiating leverage with China while maintaining the long-term health and prosperity of the American economy."

source: philstar.com

Asian stocks dip as trade tensions weigh on US tech sector

SINGAPORE — Asian markets were mostly lower on Tuesday, as moves by the U.S to gain an upper hand on trade with China weighed on the technology sector. Tech stocks have been the pillar of the Wall Street's long-running bull market.

KEEPING SCORE: Japan's benchmark Nikkei 225 index dropped 0.5 percent to 22,221.33 and South Korea's Kospi lost 0.9 percent to 2,337.60. Hong Kong's Hang Seng shed 1.2 percent to 28,619.21 and the Shanghai Composite in mainland China slipped 0.6 percent to 2,842.22. Australia's S&P/ASX 200 dipped 0.4 percent to 6,186.40. Taiwan's benchmark fell and Southeast Asian indexes were mostly lower.

WALL STREET: Major U.S. benchmarks finished broadly lower. The S&P 500 index dropped 1.4 percent to 2,717.07, its worst loss since April 6. The Dow Jones industrial average fell for the ninth time in 10 days, losing 1.3 percent to 24,252.80. The Nasdaq composite shed 2.1 percent to 7,532.01. The Russell 2000 index of smaller-company stocks slid 1.7 percent to 1,657.51.


TECH DOWNTURN: Stocks tumbled on reports that the Trump administration plans to limit exports of some high-tech products to China, and also limit investment in technology firms by companies with substantial Chinese ownership. Treasury Secretary Steven Mnuchin's suggestion that the investment restrictions wouldn't be limited to China caused stocks to slide further. The market recovered when Peter Navarro, one of President Donald Trump's top trade advisors, told CNBC that there was no plan for investment restrictions and that the administration's probe into alleged technology theft is limited to China. All but one of the 72 technology companies listed on the S&P 500 index closed lower on Monday.

TRADE TENSIONS: U.S. efforts to secure a pole position in trade are seeing some hit back. Iconic American motorcycle maker Harley-Davidson said it would move some production overseas to avoid tariffs the European Union is placing on motorcycles made in the U.S. Those tariffs were a response to taxes the U.S. placed on steel and aluminum from Europe. In less than two weeks, a 25 percent tariff will be imposed by the U.S. on billions of dollars of Chinese products. China will also raise import duties on $34 billion worth of American goods. China and the European Union agreed on Monday to launch a group that will, among other things, preserve support for international trade amid U.S. threats of import controls.

ANALYST'S TAKE: "Fears that China may pull investments in U.S. tech firms have caused a broad drawback. There is a sense that trade tensions could be long drawn and somewhat more antagonistic going forward," said Vishnu Varathan, head of economics and macro strategy at Mizuho Bank.
ENERGY: OPEC countries have agreed to raise the supply of crude oil by 1 million barrels a day. But investors aren't sure if the cartel will carry it out. Benchmark U.S. crude gained 7 cents to $68.15 per barrel in New York. It dipped 0.7 percent to settle at $68.08 per barrel on Monday. Brent crude, used to price international oils, rose 5 cents to $74.60 per barrel in London.

CURRENCIES: The dollar remained at 109.45 yen from late trading Monday. The euro strengthened to $1.1718 from $1.1704.

source: philstar.com

Asian stocks take a breather from trade tensions; markets up

SINGAPORE — Asian markets were mostly higher on Wednesday as traders sidelined tariffs that the U.S. and China have threatened to impose on one another, focusing on positive housing data instead.

KEEPING SCORE: Japan's benchmark Nikkei 225 index rose 1.2 percent to 22,540.07 and South Korea's Kospi gained 1.4 percent to 2,373.50. Hong Kong's Hang Seng rebounded 1.5 percent to 29,908.50 and the Shanghai Composite in mainland China increased 0.4 percent to 2,918.60. Australia's S&P/ASX 200 climbed 1.1 percent to 6,166.40. Taiwan's benchmark rose but Southeast Asian indexes were mixed.

U.S-CHINA TARIFFS: A burgeoning trade war between the U.S. and China is showing no signs of abating. On Tuesday, China's government called President Donald Trump's threat of new tariffs on $200 billion of Chinese goods "blackmail" and warned to retaliate with measures of its own. Trump has already announced a 25 percent tariff on up to $50 billion of Chinese products starting July 6. China retaliated by raising import duties on $34 billion worth of American goods, including soybeans, electric cars and whiskey.


POSITIVE HOUSING DATA: The solid U.S. job market has helped to boost demand for new homes. The Commerce Department said housing starts rose to a seasonally adjusted annual rate of 1.35 million in May, the strongest pace since July 2007. All of May's construction gains came from a 62 percent jump in the Midwest, while building slumped in the Northeast, South and West.


QUOTEWORTHY: "Trade tension is going to dominate market sentiment in the weeks to come. The market is waiting for Beijing to come out with counter measurements to offload more chips," said Margaret Yang, market analyst at CMC Markets Singapore.

WALL STREET: Major U.S. benchmarks finished lower. The S&P 500 index dropped 0.4 percent to 2,762.57 and the Dow Jones industrial average lost 1.1 percent to 24,700.21. The Nasdaq composite dipped 0.3 percent to 7,725.59.

ENERGY: Oil futures recovered losses from the previous day ahead of an OPEC meeting on Friday. Saudi Arabia and Russia are seeking to raise production by 1.5 million barrels per day, but they may not get their way. Benchmark U.S. crude rose 38 cents to $65.28 a barrel in electronic trading on the New York Mercantile Exchange. The contract settled at $64.90 per barrel on Tuesday. Brent crude, used to price international oils, gained 32 cents to $75.40 in London.
CURRENCIES: The dollar rose to 110.19 yen from 110.07 yen in late trading Tuesday. The euro ticked up to $1.1579 from $1.1575.

source: philstar.com

Asian stocks tumble after new Trump tariff threat

BEIJING — Asian stocks tumbled Tuesday after U.S. President Donald Trump escalated a dispute with Beijing over technology policy by threatening a tariff hike on additional Chinese goods.

KEEPING SCORE: The Shanghai Composite Index fell 2.3 percent to 2,953.54 points and Hong Kong's Hang Seng lost 2 percent to 29,685.28. Tokyo's Nikkei 225 retreated 0.9 percent to 22,482.89 and Seoul's Kospi lost 0.8 percent to 2,356.57. Markets in Taiwan, New Zealand and Southeast Asia also declined. Sydney's S&P-ASX 200 gained 0.3 percent to 6,123.00.

TRADE TENSIONS: Trump directed the U.S. Trade Representative to prepare new tariffs on $200 billion in Chinese imports, stepping up a dispute companies and investors worry could drag down global trade and economic growth. Trump accused Beijing of being unwilling to resolve the dispute over complaints it steals or pressures foreign companies to hand over technology. China's Commerce Ministry criticized the White House action as blackmail and said Beijing was ready to retaliate.

ANALYST'S TAKE: "President Donald Trump's unwillingness to back down became apparent this morning, once again sinking markets into a risk-off atmosphere," said Jingyi Pan of IG in a report. "Attention now turns to China for the country's response towards the latest accusations from the White House, but mostly signs of further retaliation."


WALL STREET: U.S. stocks finished mixed in trading that ended before Trump issued his latest tariff threat. Household goods companies took some of the worst losses as the Standard & Poor's 500 index fell for the third time in four days. The S&P 500 fell 0.2 percent to 2,773.75. The Dow Jones industrial average dropped 0.4 percent to 24,987.47. The Nasdaq composite edged up 0.65 points to 7,747.03. The Russell 2000 index of small-cap stocks rose 0.5 percent to a record 1,692.46. Many investors feel smaller and more U.S.-focused companies are less vulnerable in the event of a major trade dispute.

ENERGY: Benchmark U.S. crude lost 26 cents to $65.59 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 79 cents on Monday to $65.85. Brent crude, used to price international oils, fell 41 cents to $74.93 per barrel in London. The contract rose $1.90 the previous session to $75.34.

CURRENCY: The dollar declined to 109.98 yen from Monday's 110.54 yen. The euro edged up to $1.1633 from $1.1623.

source: philstar.com

Trump’s tariffs prompting some US fund managers to look overseas

NEW YORK – President Donald Trump’s announcement of import tariffs, and the prospect of retaliation by other countries, is prompting some fund managers to pare their holdings of US stocks and look for opportunities overseas.

The high turnover of key staff in the White House, including the exit of Gary Cohn, the director of the National Economic Council this week is undermining confidence in policy making also.

President Trump said Thursday that he would begin imposing import tariffs of 25 percent on steel and 10 percent on aluminum in 15 days, sparking fears of a global trade war.

Gary Cohn, the chief economic adviser to Trump, who argued against trade protectionism, resigned late Tuesday after
Trump first announced the tariff plan and his successor has yet to be named.

Fund managers from Oppenheimer, Federated, and Wells Fargo are among those that now see international and emerging market equities as more attractive than the US, where the prospect of higher interest rates contributed to a slump in stocks in February, leaving the benchmark S&P 500 stock index up about 2.0 percent for the year-to-date, after turning in a 7.0 percent gain in January.


Overseas stocks, by comparison, are benefiting from synchronized economic growth in both Europe, Asia and the Americas, but offer lower valuations.

The gross domestic product of countries in the eurozone, for example, expanded at a 2.7 percent annual rate in the fourth quarter, outpacing the 2.5 percent gain in the U.S. economy over the same time. The Stoxx 600, an index of companies in the eurozone, trades at a trailing price to earnings ratio of 14.9, compared with a 22.7 P/E ratio for the S&P 500, according to Thomson Reuters data.

“You’re still seeing an earlier stage of an expansion cycle overseas versus the United States, which is likely to bounce between expansion and slowdown in the year ahead,” said Brian Levitt, senior investment strategist at OppenheimerFunds.

Emerging markets such as China and Russia also look attractive given their prospects for economic growth and low equity valuations, he said.

In the US, meanwhile, a Democratic party takeover of at least one branch of Congress in elections in November would bring more stability to Washington by curbing President Trump’s ability to expand protectionist policies, he said.

“History suggests markets do better with divided government because there is less uncertainty with policy because it becomes harder to get anything enacted,” he said.

WHY TARIFFS HURT

The prospect of import tariffs could damage the U.S. economy by raising costs for US. manufacturers and consumers, while prompting its trading partners to impose their own levies on U.S. exporters, increasing their costs also and sapping overseas demand.

Daniel Pinto, a co-president at JPMorgan Chase & Co, said in an interview with Bloomberg on Thursday that the US equities could fall by between 20 and 40 percent over the next three years if a global trade war breaks out.

Brian Jacobsen, multi-asset strategist at Wells Fargo Asset Management, said that the risks of retaliatory tariffs is prompting him to add to emerging markets and international stocks but at a slow pace, despite the fact that they look more attractive on a fundamental basis.

“Strategically, we still really like international and emerging markets, but when you have asymmetric risks, that makes us a little cautious on non-U.S. assets for now”, given that markets have not yet priced in the possibility of more protectionist policies, he said.

Overall, US fund managers have been reducing their stake in domestic stocks as interest rates rise, making bonds more attractive.

US balanced funds, which hold both equities and bonds, now have an average of 55 percent of their assets in stocks, a 4.0 percent decline from 2014, and nearly 41 percent of their assets in bonds, according to Lipper data.

Yet Ashwin Alankar, head of global asset allocation at Janus Henderson Investors, said that he remains a fan of large-capitalization US stocks despite the likelihood of higher trade costs and inflation.

The recently-passed US corporate tax cuts provide on-going fiscal stimulus that should balance out higher interest rates, he said, a boost to stock prices that is not found in other markets.

As a result, he is moving more of his portfolio in large-cap US stocks, he said.

“Europe isn’t talking about fiscal spending, Japan isn’t,” he said. “The US is the only market in the world right now that could have the tailwind of fiscal spending.”

source: interaksyon.com