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Draft shows that Japan will pledge bold spending increases in its stimulus package
According to a draft version of the stimulus package presented by premier Sanae Takaichi on Wednesday, Japan's government is expected to pledge to increase its spending "without hesitation" in order to help an economy that's on the verge of emerging from stagnation. The draft doesn't mention how much money will be spent, but it does call for "bold strategic" investments in growth and crisis management areas. This is a clear indication that the package will include hefty spending. The draft said that the government would spend "boldly and without hesitation" on the necessary policies. Drafts of the package showed that it would include lower utility bills and gas subsidies, assistance to businesses affected by increased U.S. Tariffs, and an increase in defence expenditure. According to the draft, the government will also encourage investment in key growth sectors such as artificial Intelligence (AI), semiconductors, and shipbuilding. Takaichi’s administration will finalise this package in the next few weeks and prepare a supplementary budget to cover a portion of the expenditure. Analysts at Daiwa Securities stated in a research report that "the size of the package" will be large, as Japan's economic needs still fiscal support. They also noted the long list areas in which the administration has promised to invest. They said: "We won't surprise ourselves if the spending funded by this extra budget reaches up to 20 trillion yen (133 billion dollars)."
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Investors cash out as gold rally slows down, dollar edge higher
Gold prices fell on Wednesday. They were dragged down by a rebounding dollar and profit booking after bullion had risen to a three-week-high in the previous session, on the expectation of Federal Reserve interest rate reductions next month. As of 0421 GMT spot gold was down by 0.5% to $4,107.41 an ounce after reaching its highest level since October 23. U.S. Gold Futures for December Delivery edged down 0.1% to $4,113.80 an ounce. Tim Waterer, KCM Trade's Chief Market Analyst, said that the dollar's decline has helped gold and silver. Both metals have seen gains in this week. Gold is trading above $4,100, and the precious metal will continue to move higher if U.S. macroeconomic data continues to support additional monetary policy ease. The dollar index edged up 0.1% against its rivals, and was on track to snap a five-session losing streak. This made gold less appealing for holders of other currencies. The U.S. Senate approved a deal Monday to restore funding for the federal government after a record-long shut down that affected millions of food benefits, caused hundreds of thousands of federal employees not to be paid, snarled up air traffic and delayed the release economic data from the government. According to CME's FedWatch, traders are now pricing in an approximately 68% chance that the U.S. Central Bank will reduce rates by 25 basis point next month. This is up from 64% the previous session. Gold that does not yield tends to perform well when interest rates are low and economic uncertainty is present. Fed Governor Stephen Miran stated on Monday that a rate cut of 50 basis points would be appropriate in December. He noted that the inflation rate was falling, while the unemployment rate was rising. SPDR Gold Trust is the largest gold-backed ETF in the world. Its holdings increased 0.41% on Tuesday to 1,046.36 tons from 1,042.06 tonnes on Monday. Other than that, silver spot fell by 0.4%, to $51.05 an ounce. Platinum dropped 0.4%, to $1.578.95, and palladium was down nearly 1%, to $1.431.47.
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Asian markets are advancing as US shutdown is set to end
The U.S. Congress appeared to be on track to end the shutdown, and traders were looking for guidance in the absence any government data. The broadest MSCI index of Asia-Pacific stocks outside Japan rose by 0.4%, as House of Representatives members prepared to vote on legislation that would restore funding for government agencies and bring an end to the shutdown which began on October 1, and is the longest in U.S. History. Analysts from Westpac stated in a report that "Sentiment improved" after the U.S. Senate approved a bill ending the longest U.S. Government shutdown ever. The House is expected approve the bill within the next few days. S&P 500 futures are trading 0.2% higher following a mixed session on Tuesday for U.S. shares. The Dow Jones Industrial Average rose 1.2%, reaching a record closing while the Nasdaq Composite fell 0.3%. ADP's weekly data on jobs showed that private employers lost an average of 11,250 positions per week over the last four weeks, ending October 25. The Federal Reserve is increasing its bets. Fed funds futures have a 67% implied probability that the U.S. Central Bank will cut rates by 25 basis points at its next meeting, on December 10. This is up from a 62% implied probability a day before. The U.S. Dollar Index, which measures the strength of the greenback against a basket six currencies, closed the last session 0.1% higher, at 99.574. It was trading a little higher after hitting the lowest levels in this month earlier. The U.S. Dollar strengthened by 0.2% to 154.48 against the Japanese yen. The euro fell 0.1% to $1.1575. Taiwanese shares led the gains in Asia with a 1% gain, while Topix in Japan rose 0.6%, hitting a new record high. SoftBank Group, which had announced that it had acquired a majority stake in the company earlier this year, bucked trends with a 6.2% drop. This brings its loss for the month to date up to 21%. The company sold all its stake Nvidia shares on Tuesday. Even after the recent drop, shares of Japan's largest tech sector investor are up more than twice this year. Sean Taylor, Chief Investment Officer at Matthews Asia said: "It is certainly a sign that we have reached or passed peak momentum." He added, "But the fundamentals remain good - AI capital expenditure, U.S. lowering rates, and earnings." "At the moment, the market is torn by short-term positioning due to lack of catalysts following good performance and a fundamentally sound story with growth picking up in 2026." Brent crude fell 0.3% to $64.93 a barrel after reaching its highest level since October 31. The impact of U.S. sanctions against Russian oil, and optimism about a possible end to the shutdown were the main factors. Gold is now 0.5% lower, at $4105.69. Bitcoin is now at $103,321.77, up 0.7%. (Reporting and editing by Gregor Stuart Hunter, Kim Coghill).
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Tokyo protests Russia's expanded entry ban due to Ukraine sanctions
Japan condemned as "absolutely inacceptable" the extension of a Russian entry ban to another 30 citizens, including a spokesperson for the foreign ministry, following Tokyo's sanctions against Moscow's nearly 4-year-old conflict in Ukraine. Japan, following similar moves made by Western nations in September, had imposed additional sanctions on Russian individuals, companies and other entities, as well as lowered its cap on Russian crude oil at sea. The Russian Foreign Ministry published a list on Tuesday of Japanese who are now facing an "indefinite" ban. Toshihiro kitamura was added to the list, along with journalists and academics. Minoru Kihara, the Chief Cabinet Secretary, told a press conference on Wednesday that Japan had protested the "regrettable move". He added that the importance of people-to-people contacts between the two nations remained. He accused Moscow that it was shifting the blame in its invasion of Ukraine. In retaliation to sanctions, Moscow has taken similar steps against Japanese officials and civil servants. Japan continues to import energy, however, from the island of Sakhalin in the far east of Russia, despite the United States' calls for allies, to cut ties with Moscow. Kihara refused to comment on whether Tokyo would increase its sanctions against Moscow and how the British ban on insurance of Russian gas shipping will affect energy from Sakhalin. He added that Japan would take the appropriate steps to secure its national interest while achieving peace in Ukraine. (Reporting from ; Additional reporting in Tokyo by Kantaro Kommiya; Editing by Matthew Lewis & Clarence Fernandez
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Copper prices steady as traders consider US data and progress in ending the shutdown
The price of copper was not much changed on Wednesday, as U.S. data on private sector employment added to the expectations for a Federal Reserve rate reduction. Meanwhile, markets were looking to see if there had been any progress in ending the long-running U.S. Government shutdown. As of 0311 GMT, the most active copper contract at the Shanghai Futures Exchange had risen 0.02% to 86,720 Yuan ($12174.65) per ton. Copper for the benchmark three-month contract also showed minimal movement. It eased 0.03%, to $10,824 per ton. ADP, a payroll processor, reported on Tuesday that US firms lost more than 11,00 jobs during the week ending in late October. However, it had previously stated that the month of October saw a total gain of 42,000 new jobs. Recent signs of a softening in labor conditions were bolstered by the ADP report. This alternative labor data is unavailable because of the U.S. Government shutdown. Fed officials cite similar trends to argue for another rate reduction in order to support the growth. The expectation of a rate cut weighed heavily on the U.S. Dollar, giving commodities that are traded in greenbacks some support. Dollar-priced commodities are more attractive to investors who use other currencies when the dollar is weaker. Meanwhile, the longest U.S. government shutdown in history is nearing a possible end, as members of the Republican-controlled House of Representatives returned to Washington on Tuesday for a vote on a bill to fund federal agencies. Market participants stated that a possible resolution would reduce the near-term uncertainties and restore the flow key economic data. However, the risk sentiment was still cautious. Other base metals in the SHFE rose 0.28%. Tin climbed 1.43%. Zinc fell 0.44%. Nickel declined 0.90%. Lead was up 0.12% on the LME, while zinc and nickel were both down 0.39%. Tin fell 0.18% and aluminium was essentially unchanged. Wednesday, November 12, DATA/EVENTS 0700 Germany HICP final YY Oct
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Iron ore gains as China's stimulus hopes dominate
The price of iron ore futures rose on Wednesday as the hopes for a fresh stimulus from China, the world's largest consumer, outweighed worries about a gloomy forecast due to a growing supply and decreasing demand. As of 0209 GMT the most traded January iron ore contract at China's Dalian Commodity Exchange rose 1.18%, to 772.5 Yuan ($108.45), a metric tonne, its highest level since November 7. As of 0159 GMT, the benchmark December iron ore traded on Singapore Exchange was trading at $102.5 per ton. China's central banks Tuesday announcement that it will maintain an "appropriately" loose monetary policy and keep liquidity abundant while improving policy transmission was a welcome boost to hopes of further stimulus. The positive policy message came after the second largest economy in the world suffered its worst export slump since February, as tariffs hit U.S. consumer demand. Analysts were surprised by the price increases of the main steelmaking ingredient as the giant Simandou Project in Guinea began production. This coincided with a faltering China market, and weighed on the price outlook. Coke and other steelmaking materials, such as coking coal, fell by 1.61% and 1.66 percent, respectively. The benchmarks for steel on the Shanghai Futures Exchange have been moving sideways. Rebar increased by 0.33%. Hot-rolled coils rose by 0.37%. Wire rod decreased 0.06%. Stainless steel fell 0.72%. ($1 = 7.1230 Chinese yuan). (Reporting and editing by Amy Lv, Lewis Jackson)
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Gold prices continue to rise as dollar weakens and Fed rate cuts are expected
Wednesday saw gold rise for the fourth consecutive session, with a lower dollar and the expectation that the reopening U.S. Government and the flow of economic data would strengthen bets on a Federal Reserve rate cut in the next month. Gold spot rose 0.2%, to $4,133.99 an ounce, at 0155 GMT. It had reached its highest level since October 23, Tuesday. U.S. Gold Futures for December Delivery rose 0.6%, to $4140.10 an ounce. Tim Waterer, KCM Trade's Chief Market Analyst, said that the dollar's decline has helped gold and silver. Both metals have seen gains in this week. Gold is trading above $4,100, and the precious metal will continue to move higher if U.S. macroeconomic data continues to support additional monetary policy ease. Gold became more appealing to other currency holders as the dollar index hovered near a more than one-week-low. The U.S. Senate approved a deal Monday to restore funding for the federal government after a record-long shut down that affected millions of food benefits, caused hundreds of thousands of federal employees not to be paid, clogged air traffic and delayed release of economic data. According to CME's FedWatch, traders are now pricing in an approximately 68% chance that the U.S. Central Bank will reduce rates by 25 basis point next month. This is up from 64% the previous session. Gold that does not yield tends to perform well when interest rates are low and economic uncertainty is present. Fed Governor Stephen Miran stated on Monday that a rate cut of 50 basis points would be appropriate in December. He noted that the inflation rate was falling, while the unemployment rate was rising. SPDR Gold Trust is the largest gold-backed ETF in the world. Its holdings increased 0.41% on Tuesday to 1,046.36 tons from 1,042.06 tonnes on Monday. Spot silver rose 0.2%, to $51.33, platinum was unchanged at $1,588.10, and palladium fell 0.3%, to $1,439.43. (Reporting and editing by Sumana Nady and Rashmi aich in Bengaluru)
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Oil prices remain unchanged as markets await the reopening of US government
The oil prices are little changed today after they rose in the previous session. This is because of the expectation that the end of the longest U.S. government shut down could increase demand in this country, the world's largest crude consumer. Brent crude futures fell 8 cents or 0.12% to $65.08 per barrel at 0106 GMT, after rising 1.7% on the previous day. U.S. West Texas Intermediate Crude was down 7 cents or 0.11% to $60.97 per barrel after gaining 1.5% the previous session. The U.S. Republican-controlled House of Representatives is set to vote on Wednesday afternoon on a bill, already signed off by the Senate, that would restore funding to government agencies through January 30. In a recent note, IG analyst Tony Sycamore said that a reopening of the government would increase consumer confidence, economic activity and demand for crude oil. The end of the U.S. Government shutdown, which has disrupted thousands of flights over the past few days, could lead to an increase in travel and jet-fuel consumption in advance of the holiday season. The fallout from U.S. sanction against Russia's biggest oil producers Lukoil, and Rosneft is further supporting the price. Indirectly, the sanctions have led to the closure of Sinopec's Luoyang Petrochemical subsidiary, a Sinopec subsidiary, as reported by Tuesday. Last month, President Donald Trump imposed the first sanctions against Russia since the beginning of his second presidential term. (Reporting and editing by Colleen Waye)
The US Congress is ready to resume work in the morning.
Gregor Stuart Hunter gives us a look at what the future holds for European and global markets.
The U.S. Government is about to reopen, restoring potential pay for unpaid federal employees and ending the drought of economic data which has left the Federal Reserve virtually blinded for more than one month.
The latest sign that normalcy is returning could be Congressmen taking advantage of the free publicity. Thousands of flights have been delayed or cancelled due to the shutdown. Some Congressmen are carpooling with their colleagues, or taking a 16-hour Harley Davidson across the country to return to Washington D.C. in order to reopen government.
The Republican-controlled House is due to vote later today on a compromise that would restore funding to government agencies and end a shutdown that started on October 1 and is now the longest in U.S. history.
The dollar was able to rise from its lowest level for the month as optimism about the end of the shutdown grew.
The U.S. S&P500 e-minis futures are slightly higher before the vote. This follows a third day of gains on the benchmark index for Tuesday. MSCI's broadest Asia-Pacific share index outside Japan is up 0.3%.
Tokyo's Topix index rose 1%, setting a new record. SoftBank Group's losses for the month to date have risen by up to 25%, despite its 10% fall. Despite this, the shares of Japan's largest tech sector investor are up more than twice as much in 2018.
But it's still not all bad from the AI patch. Advanced Micro Devices' shares rose 4.8% after-hours, boosted by the company's expectations that it will post $100 billion in annual data center chip revenues within five years and more than triple earnings.
Early European trading saw pan-regional futures up 0.3%. German DAX Futures rose 0.4%. FTSE Futures were flat.
The following are key developments that may influence the markets on Wednesday.
Earnings:
Infineon Technologies Experian PLC SSE PLC
Economic Data
CPI for Germany in October
Debt auctions:
Germany: Government debt for 21 and 31 years
(source: Reuters)