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Asian shares mixed as U.S. jobs report looms, ECB soothes (Reuters) Asian shares were mixed on Friday as caution about a U.S. jobs report jostled with signals from the European Central Bank that it is willing to take further steps to shore up the European economy. MSCI's broadest index of Asia-Pacific shares outside Japan slipped 0.2% after rising in early trade. They've fallen 3.4%t this week. Japan's Nikkei 225 fell 0.9%, extending losses this week to 6.0%.
IMF: China slowdown could keep global interest rates low (The Guardian) The recent turmoil in financial markets and the struggling Chinese economy could combine to hit global economic growth this year and force central banks to keep interest rates low, the International Monetary Fund (IMF) has said ahead of a meeting of G20 finance ministers in Ankara this weekend. The IMF also said countries continue to need to maintain government spending despite the still high public-sector debts left over from the 2008 banking crash.
Shrinking U.S. trade gap shows economy's underlying strength (Reuters) The Commerce Department said the trade gap narrowed 7.4 percent to $41.9 billion, the smallest since February. When adjusted for inflation, the deficit fell to $56.2 billion from $59.0 billion in the prior month. Data ranging from consumer spending to employment and housing have suggested the economy retained much of its momentum from the second quarter and was on solid footing when global financial markets were rocked by turbulence triggered by worries over China's economy.
ECB flags beefed up QE as growth, inflation outlook fades(Reuters)The European Central Bank cut its growth and inflation forecasts on Thursday, warning of possible further trouble from China and paving the way for an expansion of its already massive 1 trillion-euro plus asset-buying program. The ECB, which left interest rates unchanged in a widely expected decision, said growth would suffer from fading momentum in emerging markets, particularly China, and falling oil prices could drag the 19-member euro zone back into deflation in coming months.
Services PMI up in August, offsets decline in manufacturing growth (Business Standard) Contrary to manufacturing, services activities expanded in August vis-à-vis July, showed the widely-tracked Nikkei purchasing managers' index (PMI). However, expansion remained temperate. Nonetheless, firms did not hire additional manpower with growth being restrained. Inflation in services rose marginally, still leaving sufficient room for the Reserve Bank of India (RBI) to slash rates.
RBI will consider deflation while deciding interest rates: Jayant Sinha (Business Standard) India's Minister of State for Finance Jayant Sinha said slow growth, excess capacity, declining population and increase in labor force are responsible for deflationary trend globally. Global deflation will influence India's interest rate decisions, according to Sinha.
S. Korea's real GNI down 0.1% qoq in Q2 (MK Business News) South Korea's real gross national income (GNI) growth in the second quarter was below the real gross domestic product (GDP) growth, despite improvement in trade terms, because of a slump in net foreign factor income such as interest income and dividends. According to the Bank of Korea (BOK)'s national income for the second quarter in 2015 (estimate) released on Thursday, the nation's real GNI for the second quarter dropped 0.1% quarter-on-quarter (qoq). This is the first-ever decline since a 1.9% contraction tallied in the fourth quarter in 2010.
Japan August PMI survey shows services expand at fastest pace in almost two years (Reuters) Things are "looking up" in Japan. Japanese companies turned more optimistic on business conditions in a sign the economy may be bouncing back. The Markit/Nikkei Japan Services Purchasing Managers Index (PMI) rose to a seasonally adjusted 53.7 from 51.2 in July to reach the highest since October 2013. The index remained above the 50 threshold that separates expansion from contraction for the fifth consecutive month. The index for business expectations rose to 56.0 from 54.8 in the previous month to reach the highest since September 2013. The index for new business eased slightly to 52.9 from 53.2 in July but still signaled solid demand.
PMI hits lowest level in survey's history (The Taipei Times) A deepening economic slowdown pushed the official manufacturing purchasing managers' index (PMI) down to 45 last month, from 48.6 in July, marking the lowest level in the survey's history. An official at the Supply Management Institute in Taiwan said the market's response to Apple's new iPhone models would be crucial for the technology sector,
What if the China Panic Is All Wrong? (The Wall Street Journal) China's stock-market routs and economic deceleration are widely cited as the major trigger for the latest round of global market volatility. But what if the dominant narrative about China - that the world's No. 2 economy is on the verge of falling off a cliff - is wrong? It would mean the global market turmoil hitting equities, commodities and currencies is an overreaction.
Beijing won't fire its bazooka to boost economy (CNN) Experts say China is unlikely to launch a big fiscal stimulus package in the coming months. Instead, officials will continue to shore up growth with smaller, targeted measures, and further monetary easing. There will, in other words, be no "big bazooka" such as was used for massive stimulus during the Great Financial Crisis.
The Oil-Sands Glut Is About to Get a Lot Bigger (Bloomberg Business) The last place oil producers want to be when prices plummet to profit-demolishing lows is midstream on a billion-dollar project in one of the costliest parts of the planet to extract crude. Yet that's exactly where half a dozen oil sands operators from Suncor Energy Inc. to Brion Energy Corp. find themselves with prices for Canadian oil now hovering around $30 a barrel. While all around them projects have been postponed or canceled, their investments were judged too far along when the oil game suddenly moved from offense to defense. These projects will add at least another 500,000 barrels a day -- roughly a 25 percent increase from Alberta -- to an oversupplied North American market by 2017.
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