SYDNEY, Nov 19 (Reuters) – Australia’s central bank said on Tuesday that there was no immediate need to change interest rates, having left them steady for a year now, but it was important to be ready to act as the economic outlook evolves.

Minutes of its November 4-5 board meeting released on Tuesday showed the Reserve Bank of Australia (RBA) again discussed scenarios under which the cash rate of 4.35% may need to be cut, raised or held steady for a prolonged period.

In one such scenario, the RBA said a drastic slowdown in inflation could warrant a rate cut, but the board will need to observe more than one good quarterly inflation outcome to be confident that such a decline is sustainable.

Markets have not fully priced a cut in rates until May next year, with a move in February after the fourth-quarter inflation report just at a 38% probability.

A majority of economists, however, still look for a rate cut in February.

The central bank considered a range of scenarios that might require a timely response from policy.

“It is important to remain forward looking, avoiding an excessive reliance on backward-looking information that may lead the board to react too late to a change in economic conditions,” said the RBA.

Policy might need to be tightened if the board judged that the current stance is not restrictive enough, said the RBA, adding that it will closely watch data such as credit growth, banks’ willingness to lend and growth in asset prices.

The central bank has kept rates steady for a year now, judging that the cash rate of 4.35% – up from a record-low 0.1% during the pandemic – is restrictive enough to bring inflation to its target band of 2-3% while preserving employment gains.

The RBA does not expect inflation to return to its target band until 2026. Headline inflation slowed to 2.8% in the third quarter, mainly due to government rebates on electricity, while underlying inflation ran at a still elevated 3.5%.

Other scenarios for a change in the cash rate include developments around consumption and the labour market. Card data from banks showed consumer spending has been weaker than expected even with the government’s tax cuts, while the labour market has stayed surprisingly strong, with the jobless rate staying at 4.1% for six months or so.

If the supply capacity of the economy was much more limited than assumed as productivity growth fails to pick up, it could necessitate a tighter policy stance, noted the RBA.

The central bank was also watching for major changes in U.S. economic policy and the size of the stimulus package from China.

By Kevin Buckland

TOKYO (Reuters) – Asian stocks rose on Tuesday while U.S. bond yields and the dollar hung back from multi-month highs as traders awaited President-elect Donald Trump’s cabinet selection and sought to gauge the outlook for Federal Reserve easing.

Tech shares advanced, tracking Wall Street’s recovery from last week’s steep losses although Nvidia (NASDAQ:NVDA)’s upcoming earnings on Wednesday limited the scope for big moves.

Markets have pared bets for a quarter-point interest-rate cut at the Fed’s next meeting in December to less than 59%, down from 62% a day earlier and more than 65% a week ago, according to CME FedWatch.

Trump’s mooted fiscal spending, higher tariffs and tighter immigration are seen as inflationary by analysts, potentially impeding Fed rate cuts, which are already being hampered by a run of resilient economic data.

Trump has begun making appointments, filling health and defence roles last week, but key positions for financial markets – Treasury secretary and trade representative – have yet to be announced.

Japan’s Nikkei added 0.2% as of 0129 GMT, while South Korea’s Kospi and Australia’s equity benchmark each ticked up 0.1%.

Hong Kong’s Hang Seng climbed 0.8%, and mainland blue chips gained 0.3%.

U.S. S&P 500 futures pointed slightly lower, but following a 0.4% advance overnight for the cash index.

MSCI’s index of world stocks snapped a four-day losing streak on Monday.

“With a lack of data and a lull in market moving news…the marginal driver of asset prices right now is how the incoming Trump administration will impact economic conditions, international trade and global geopolitics,” said Kyle Rodda, senior financial markets analyst at Capital.com.

“Concurrently, the markets are trying to estimate how those policies will impact interest rate settings, especially the Fed, with the markets walking back the depth of rate cuts previously discounted into the curve.”

U.S. Treasury yields extended overnight declines, with the two-year yield ticking down to 4.278% and the 10-year yield edging down to 4.412%.

That kept pressure on the dollar, which languished close to its overnight low versus major peers. The dollar index, which tracks the currency against a basket of six others, was flat at 106.20, close to Monday’s trough at 106.12. It reached the highest in a year at 107.07 on Thursday.

The dollar sagged 0.35% to 154.165 yen, while firming slightly to $1.0591 per euro.

Bitcoin, which surged to a record high of $93,480 last week on bets for more favourable cryptocurrency regulation under Trump, continued its week-long consolidation around $90,000, last trading at around $90,960.

Safe-haven gold was flat at $2,614.80 after jumping nearly 2% on Monday, its biggest one-day advance since mid-August, amid softness in the dollar and heightened concerns about the Russia-Ukraine conflict.

In a significant reversal of Washington’s policy, President Joe Biden’s administration allowed Ukraine to use U.S.-made weapons to strike deep into Russia, two U.S. officials and a source familiar with the decision said on Sunday.

The Kremlin said on Monday that Russia would respond to what it called a reckless decision by the Biden administration, having previously warned that such a decision would raise the risk of a confrontation with the U.S.-led NATO alliance.

The escalating tensions continued to push both crude oil benchmarks up on Tuesday, following gains of about $2 a barrel each in the previous session.

Brent crude futures added 7 cents to $73.37 a barrel, while U.S. West Texas Intermediate crude futures were at $69.26 a barrel, up 8 cents.

Crude was also buoyed by the shutdown of Norway’s massive Johan Sverdrup oilfield due to a power outage.

SEOUL (Reuters) – South Korean President Yoon Suk Yeol has pledged a 45% increase in the country’s contribution to the World Bank’s International Development Association fund to more than $600 million, the finance ministry said on Tuesday.

The country, once a beneficiary during the 1960-1970s, will contribute this year around 845.6 billion won ($608.26 million) to the fund for financial aid to low-income countries, up from 584.8 billion won in the previous fund replenishment round in 2021.

“It is for South Korea to play a leading role as a global pivot state and to induce active contributions from other countries,” the ministry said in a statement.

U.S. President Joe Biden on Monday pledged a record $4 billion contribution during a closed session of the Group of 20 summit in Rio de Janeiro, up from $3.5 billion in 2021.

($1 = 1,390.2000 won)

By Rae Wee

SINGAPORE (Reuters) – The yen got some much-needed respite on Tuesday as it steadied on the stronger side of 155 per dollar thanks to a pullback in the U.S. currency, which ran into profit-taking after a stellar rally that saw it scale a one-year high.

The yen last edged 0.2% higher to 154.40 per dollar, recovering from its fall in the previous session after Bank of Japan Governor Kazuo Ueda stuck to his usual script and failed to offer any hints on whether a rate hike could come in December.

“Recent (yen) weakness had many market participants expecting Ueda to sound hawkish, but in the end the Governor stuck to his recent narrative,” said Rodrigo Catril, senior FX strategist at National Australia Bank (OTC:NABZY).

“We think the economy and price pressures are making a strong case for a hike in December, but much will depend on whether there is any political push back, given the LDP is looking to regain public support, after a poor show at the recent Lower House election.”

The yen has fallen some 7% since October and had weakened past the 156 per dollar level for the first time since July last week, leaving traders on alert for any intervention from Japanese authorities to shore up the currency.

In the broader market, the dollar was on the back foot as it eased further away from last week’s one-year top against a basket of currencies.

Sterling steadied at $1.2676, while the dollar index tacked on 0.04% to 106.26, after falling 0.4% overnight.

“You do get bouts of profit taking after big moves like this,” said Jarrod Kerr, chief economist at Kiwibank.

The greenback has risen more than 2% for the month thus far, buoyed by reduced expectations of the extent of Federal Reserve rate cuts and on the view that President-elect Donald Trump’s touted policies of tariffs, reduced immigration and debt-funded tax cuts will be inflationary to the U.S. economy.

The euro similarly rebounded from last week’s one-year low and last bought $1.0590.

Two top European Central Bank policymakers signalled on Monday they were more worried about the damage that expected new U.S. trade tariffs would do to economic growth in the euro zone than any impact on inflation.

Elsewhere, the Australian dollar fell 0.15% to $0.6499.

Minutes of the Reserve Bank of Australia’s November board meeting released on Tuesday showed policymakers saw no immediate need to change interest rates, having left them steady for a year now, but said it was important to be ready to act as the economic outlook evolves.

Markets have not fully priced a cut in rates until May next year, with a move in February after the fourth-quarter inflation report at just a 38% probability.

The Reserve Bank of New Zealand, meanwhile, meets next week and traders have priced in 50 basis points worth of easing from the central bank.

The kiwi last traded 0.24% lower at $0.5880.

By Scott Murdoch

(Reuters) -China’s largest express delivery company S.F. Holding said on Tuesday it plans to raise up to HK$6.17 billion ($792.71 million) in a Hong Kong listing, the latest sign of a revival in the city’s capital markets.

The Shenzhen-listed company will issue 170 million shares in a price range of HK$32.30 to HK$36.30 per share, according to its regulatory filings.

The final price will be set on Nov. 25, and the stock is due to start trading on Nov. 27.

The courier group, known for its flagship SF Express delivery business, is regarded as China’s answer to FedEx (NYSE:FDX) and DHL.

The listing has attracted ten cornerstone investors, led by Oaktree Capital Management, which have subscribed for up to HK$204.8 million worth of stock, the filings showed.

The company said about 45% of the funds raised in the listing would be spent on growing its international business, especially across South-east Asia. It added it has earmarked about HK$1.1 billion for buyout activity, forming joint ventures or making minority investments in businesses.

S.F. Holding, initially filed for a Hong Kong listing in August last year. Reuters reported in May last year the company was aiming to raise between $2 billion and $3 billion.

There have been $9.1 billion worth of new listings in Hong Kong in 2024, according to Dealogic data, compared to $5.88 billion in 2023.

While well off the 2020 peak of $51.6 billion, the prospect of lower global interest rates has prompted some revival in the city’s listing market.

S.F. Holding’s Shenzhen-listed share price has risen 4.75% this year.

($1 = 7.7834 Hong Kong dollars)

By Leika Kihara

TOKYO (Reuters) – The Bank of Japan will release next month its findings on the pros and cons of the various unconventional monetary easing tools used in its 25-year battle with deflation, in another symbolic step towards ending its massive stimulus.

While the BOJ has said the outcome of the review will not have direct implications on near-term monetary policy, it will likely include findings and surveys that justify its plan to steadily proceed with policy normalisation.

The BOJ will release the findings after its final policy meeting of this year on Dec. 18-19, when some analysts expect it to hike interest rates from the current 0.25%.

The review will be the BOJ’s first attempt to take a deeper, analytical look at the drawbacks of prolonged monetary easing.

Notably, it will likely explain how central banks have limited power in changing public perceptions about future price moves, as seen in the mixed results of former Governor Haruhiko Kuroda’s radical stimulus that sought to shock Japan out of a deflationary mindset.

The findings of Governor Kazuo Ueda’s flagship project, which began when he took office in April last year, may offer insight into what tools the BOJ would use – and prefer not to use – in dealing with the next economic downturn.

It may also include hints on what risks the BOJ may focus on as it continues to taper asset buying and raise interest rates from still-near zero levels.

“We hope to provide material that will be useful in thinking about desirable monetary policy in the long run,” BOJ Governor Kazuo Ueda told a news conference on Oct. 31.

The review may become a handy guide for other central banks as an encyclopedia of unconventional easing tools and their efficacy.

Japan’s 25-year experience of deflation and economic stagnation forced the BOJ to become a pioneer of unconventional policies such as zero interest rates and quantitative easing.

Other global central banks later resorted to similar radical measures during severe downturns such as the global financial crisis and COVID pandemic, but have been largely able to exit them fairly quickly when their economies began bouncing back.

As a board member, Ueda played a key role in the BOJ’s introduction in 1999 of forward guidance – or a promise to keep rates low for a prolonged period in hope of stimulating demand.

The most controversial policy came in 2013 when, under Kuroda, the BOJ launched a huge asset-buying scheme that later combined negative interest rates and bond yield control.

As inflation continued to fall short of its 2% target, the BOJ conducted several reviews on the side-effects of prolonged easing, mostly to extend the lifespan of its stimulus.

This time, the review will take a step-back approach on what did not quite work. Specifically, it will explain how Kuroda’s stimulus reflated growth and created jobs, but pushed up inflation only by 0.7 percentage point – not enough to achieve the BOJ’s target.

It will also highlight key flaws such as how the BOJ’s huge asset buying and bond yield cap drained market liquidity, distorted asset pricing, eroded bank profitability and forced financial institutions to increase high-risk lending such as those to the property sector.

Such findings will be based on nearly three dozen academic research papers by its staff, many of which have already been released by the BOJ.

WHAT’S NEXT?

Another takeaway would be findings and surveys showing how Japan is experiencing structural changes that allow for the BOJ to raise borrowing costs.

Among them will be a survey conducted by the BOJ’s branch offices that showed how more companies now see rising prices and wages in a more positive light than in the past.

Other research to be included in the review will explain how a tightening job market and rising material costs are shifting firms away from their long-held aversion to price hikes.

In a speech in May, Deputy Governor Shinichi Uchida said Japan was on the cusp of eradicating a “deflationary norm,” or the perception of households and firms that prices and wages won’t rise much – remarks preluding the review’s highlight.

The BOJ, however, won’t delve into thorny topics such as the cost of its huge holdings of exchange-traded funds (ETF), which could hurt its balance sheet if stock prices tank.

It is also unlikely to offer a pin-point estimate on Japan’s neutral rate of interest, or the rate at which monetary policy is neither contractionary nor expansionary.

The BOJ has not disclosed its own estimate on the neutral rate, which is crucial for gauging how far it may push up borrowing costs. Analysts put it somewhere around 1%, well above the BOJ’s current policy rate of 0.25%.

Taken together, the review will aim at taking a neutral, scientific view over the controversy surrounding the BOJ’s radical stimulus that led a deep and sometimes emotional rift between its proponents and critics.

“There won’t be straight answers to many of the issues the review touches on. But the point was to hold discussions on past monetary easing steps and highlight some positive changes happening in the economy,” said Mari Iwashita, chief market economist at Daiwa Securities and a veteran BOJ watcher.

“It’s a good way to move on and comes at a nice timing, when Japan is finally seeing early signs of sustained inflation.”

By Svea Herbst-Bayliss

NEW YORK (Reuters) -Activist investor Ananym Capital Management is urging healthcare products distributor Henry Schein (NASDAQ:HSIC) to refresh its board, cut costs, tackle succession planning and consider selling its medical distribution business, sources close to matter said on Monday.

A sale of the medical distribution business could help drive up the share price by roughly 20%, while earnings per share could jump by some 35% if spending were curtailed, Ananym has told Schein executives, according to the sources.

Henry Schein shares closed up 7.5% at $73.89 on Monday. Since January, it has lost roughly 2% in a market that has seen record highs this year.

Ananym, a newly launched firm run by veteran investors Charlie Penner and Alex Silver, argues that Schein needs new board members and ultimately a new chief executive to tackle spending that has spiraled out of control, integrate recent acquisitions and nurture and hold onto new talent, the sources said.

The new firm is concerned that Schein, currently valued at $9 billion, is complacent and satisfied to outperform only its direct dental distribution peers Patterson and Benco, instead of competing with the largest U.S. healthcare distribution companies like Cardinal Health (NYSE:CAH), Cencora, and McKesson (NYSE:MCK).

Ananym has held informal talks with the company but is now stepping up the pressure with calls for new directors, a plan to replace CEO Stanley Bergman, who has been in the position for 35 years, and tackle other strategic priorities, the sources said.

“Henry Schein regularly engages in dialogue with its shareholders with the goal of enhancing shareholder value. We analyze any shareholder input in that context,” a company representative said.

The two Ananym partners have prominent resumes in the activist world. Penner, successfully challenged Exxon Mobil (NYSE:XOM)’s board in 2021 at upstart investor Engine No. 1 and previously was a partner at activist Jana Partners. Silver was a founding partner at P2 Capital Partners (WA:CPAP).

The new firm, which has some $250 million in capital and began putting money to work in September, is focused on constructive, value-enhancing engagements with mid-sized public companies.

Ananym has told Schein that it has recruited qualified director candidates who could replace some of the company’s 13 board members who have served too long and lack relevant industry experience, the sources said.

After Schein spent more than $4 billion on acquisitions in the last five years, Ananym wants it to focus on integration of newer assets rather than on additional purchases.

Shareholders who have been frustrated by the company’s decisions would gain confidence in its leadership if M&A activities were curtailed and the company were to buy back stock, Ananym has argued, the sources said.

The new investment firm is pushing Schein to consider selling the medical distribution business, where it says it is quickly becoming tougher to compete and the company is not positioned to generate long-term, sustainable free cash flows.

That business could be valued at $2.5 billion or more in a sale, Ananym has argued, according to the sources. The company could use proceeds to repurchase its undervalued shares, the sources said.

(Reuters) – U.S. President-elect Donald Trump said in a statement on Monday that he was picking former Wisconsin Representative Sean Duffy, now a Fox News host, to be transportation secretary.

By Jamie McGeever

(Reuters) – A look at the day ahead in Asian markets. 

Investors in Asia will likely take their cue from global dynamics and drivers given the dearth of local market-moving events on Tuesday, and if that’s the case, the signs are reasonably encouraging.

The rocky ride last week that saw a sharp reversal in stocks and risk appetite gave way to a much smoother start to this week on Monday. Broad measures of implied volatility, bond yields and the dollar all fell to varying degrees, paving the way for a rebound in riskier assets.

There doesn’t appear to be any fresh catalyst or impetus for the generally upbeat start to the week, so equally, one could argue that there’s little guarantee Monday’s global momentum will continue into Asia on Tuesday.

But last week’s selling was heavy, and many shorter-term speculative positions will have been cleaned out. The MSCI World and Nasdaq both posted their biggest losses in 10 weeks, and the MSCI Asia ex-Japan index had its worst week since June 2022.

World stocks snapped a four-day losing streak on Monday while Asian stocks climbed for a second straight day, a surprisingly rare feat over the past six weeks.

Investors continue to weigh up the outlook for U.S. interest rates in light of Fed Chair Jerome Powell’s remarks last Thursday that the central bank is in no rush to raise them, and last week’s relatively strong U.S. economic data.

There’s a case to make that the ‘hawkish’ swing in the rates market’s implied Fed pricing since Powell’s comments – and indeed, over the last several weeks – has limited room to run.

It wasn’t that long ago talk of a possible 75 basis point rate cut in December was circulating and traders were betting on the fed funds rate ending next year around 2.75%. Now, even a 25 bps rate cut next month is by no means assured, and the implied end-2025 fed funds rate is not much below 4.00%.

Perhaps the pendulum has swung a little too far.

Investors may also be reluctant to take firm directional bets ahead of Nvidia (NASDAQ:NVDA)’s results on Wednesday. The semiconductor giant, at the vanguard of the global AI frenzy, is the world’s most valuable company, and an earnings ‘beat’ or ‘miss’ will help set the global market tone for the rest of the week and probably year.

The local calendar in Asia on Tuesday is light. The main highlight will be the Reserve Bank of Australia’s minutes of its last policy meeting, where it kept the cash rate steady at 4.35% and signaled the need to remain “vigilant” to upside inflation risks.

The RBA is only expected to start its easing cycle in May next year, and even then cut rates just half a percentage point by next December.

Here are key developments that could provide more direction to markets on Tuesday:

– RBA meeting minutes

– G20 summit in Rio de Janeiro

– Euro zone flash inflation estimate (October)

(Reuters) -Chipmaker Wolfspeed (NYSE:WOLF) said on Monday that its board ousted Gregg Lowe as its CEO without cause, amid growing challenges from slowing demand for electric vehicles, sending its shares up about 6%.

The Durham, North Carolina-based company faced manufacturing issues at its factory, which it has announced will be shut down. It has also been struggling with slowing orders from the industrial and energy end markets.

Between a weak demand environment, Wolfspeed’s existing restructuring plan and reduced capital expenditure for fiscal 2025, the new management cannot do much to ignite a rally in the shares other than a full-on sale, analysts at Charter Equity Research said.

Wolfspeed’s shares are down about 85% so far this year, widely underperforming the S&P 500 and the Philadelphia semiconductor index.

The company, which makes chips using silicon carbide (SiC), a more energy-efficient material than standard silicon, counts General Motors (NYSE:GM) and Mercedes-Benz (OTC:MBGAF) among its customers.

Lowe, who has served as the company’s CEO since 2017, will receive a severance payment as part of the settlement, the company said in a filing.

Lowe did not immediately respond to a Reuters request for comment.

The company also named Chairman Thomas Werner as executive chairman and said its board was conducting a search for a permanent CEO.

Wolfspeed had forecast quarterly revenue below Wall Street estimates earlier this month and said it would book $174 million in restructuring charges for the planned closure of a facility.

The company also announced to lay off 20% of its workforce on its latest post-earnings call. Last month, it had also dropped plans to build a factory in Ensdorf, Germany, citing the slower adoption of EVs in Europe.