By Leika Kihara

TOKYO (Reuters) -Bank of Japan Governor Kazuo Ueda said on Thursday central banks must be mindful that technological advances, such as in the area of artificial intelligence (AI), could bring new risks to financial stability.

The growing use of online banking and social media has heightened the risk that concern over a bank’s credit status could spread rapidly and trigger a rush of deposit withdrawals, Ueda said.

The rise of generative AI also brings specific challenges such as data protection concerns, he added.

“As financial services grow more diverse and complex, the channels of risk transmission have become less transparent, and current financial regulations may not be fully equipped to manage new types of financial services,” Ueda said.

“This environment underscores the need for operational resilience, including robust management of cybersecurity and third-party risks,” he said in a speech at the Paris Europlace Financial Forum in Tokyo.

Ueda said it was crucial for central banks and other authorities to monitor evolving financial intermediation functions, encourage relevant entities to establish sound governance, and build management frameworks to address new risks.

“A regulatory and supervisory framework that adapts to technological advancements is also essential,” he added.

A look at the day ahead in European and global markets from Ankur Banerjee

The prospect of slowing sales growth at AI juggernaut Nvidia (NASDAQ:NVDA) and simmering worries over geopolitical tensions are keeping investors on edge but bitcoin keeps marching upward, undeterred, towards $100,000 on bets that Trump 2.0 will be crypto-friendly.

Futures indicate that European stock markets are set for a subdued open as investors digest Nvidia’s projection of its slowest revenue growth in seven quarters. For investors used to the AI darling blowing past all estimates, the numbers proved disappointing.

The forecast will likely weigh on suppliers and the broader markets given Nvidia’s place at the centre of all things AI, which has driven most of the market gains in recent months.

With few economic readings due during the European session, the region’s tech stocks, which had already fallen to three-and-a-half-month lows this week, will likely weigh down the markets on Thursday.

Indian conglomerate Adani Group was in the spotlight after its chairman Gautam Adani was indicted in New York over his suspected role in a $265 million bribery scheme, according to U.S. prosecutors.

The fallout for the Adani empire, which was rocked by a short-seller attack in February 2023, was immediate, with shares in the conglomerate’s listed companies tumbling between 10% and 20%. Its dollar bonds also fell.

In the currency markets, the dollar remained on the front foot, with the dollar index hovering close to a one-year high touched last week.[FRX/]

The dollar has been on the rise since Donald Trump’s decisive victory early this month as investors expect his proposed tariffs will likely be inflationary, keeping U.S. rates higher for longer.

The talk of the town though remains bitcoin, which is up about 40% in the two weeks since the election as investors expect the Trump administration to set friendlier regulations for the crypto sector.

The biggest cryptocurrency touched a record high of $97,798 in Asian hours, with $100,000 not far off.

Key developments that could influence markets on Thursday:

Economic events: France business climate for November; euro zone consumer confidence flash for Nov

(By Ankur Banerjee in Singapore; Editing by Edmund Klamann)

BANGKOK (Reuters) – Thailand’s economy is expected to grow 2.7% this year, helped by an anticipated annual rise of 28% in foreign visitors to 36 million, Prime Minister Paetongtarn Shinawatra said on Thursday.

Southeast Asia’s second-largest economy will grow more than forecast in 2025 and the government will accelerate investment spending of more than 960 billion baht ($27.74 billion), she told a business forum.

“The economy is in the recovery phase. In each quarter, we have done better than expected” she said.

Thailand’s economy grew 3% in the July-September quarter annually, the fastest pace in two years and beating expectations. But officials and analysts expect increased challenges next year, including the fallout from trade wars.

Paetongtarn said the government would seek support measures if the United States takes action on countries with which it has trade deficits, which would include Thailand and China.

Thailand’s exports are accounted for 60% of gross domestic product, with 10% of shipments going to the United States, she added.

The government is confident it will stay in power until the end of its term in 2027 and foreigners can be assured that investment plans will not be changed, Paetongtarn said.

The government will announce its 90-day performance on Dec. 12, including future policies.

The State planning agency this week predicted growth of 2.3% to 3.3% in 2025.

Last year’s growth was 1.9%, lagging regional peers. The economy has recovered from the pandemic only slowly, hobbled by a weak manufacturing sector and high household debt levels.

($1 = 34.61 baht)

By Kevin Yao

BEIJING (Reuters) – Chinese government advisers are recommending that Beijing should maintain an economic growth target of around 5.0% for next year, pushing for stronger fiscal stimulus to mitigate the impact of expected U.S. tariff hikes on the country’s exports.

The ambition to sustain a growth pace that seemed difficult to reach throughout 2024, if confirmed, would surprise financial markets betting on a gradual slowdown in the world’s second-largest economy as trade tensions intensify.

Four of the six advisers who spoke with Reuters favour a 2025 target of around 5%. One adviser recommends a goal of “above 4%” and another suggests a 4.5-5% range. A Reuters poll this week predicted China will grow 4.5% next year, but also tipped that tariffs could impact growth by up to 1 percentage point.

The advisers, who do not participate in decision-making, will submit their proposals to the closed-door annual Central Economic Work Conference next month, when top leaders discuss policies and goals for next year.

The target, one of the most closely-watched indicators globally for clues of Beijing’s near-term policy intentions, will not be officially announced until an annual parliament meeting in March.

The recommendations of the advisers are considered by policymakers in the final decision-making process. The most popular view among the advisers is usually adopted although it is not always the case. Any plans could still change before the legislative session.

Most advisers commented on condition of anonymity as they were not authorised to speak to the media.

Holding lofty growth goals in the face of threatened tariffs in excess of 60% on Chinese goods imports from incoming U.S. President Donald Trump suggests Beijing is ready to spend big, particularly if it cannot negotiate lower levies or delay them.

“It’s entirely possible to offset the impact of Trump’s tariffs on China’s exports by further expanding domestic demand,” said Yu Yongding, one of the advisers and a government economist who advocates for a roughly 5% goal.

“We should adopt stronger fiscal policy next year,” said Yu, adding the budget deficit “should definitely exceed” this year’s planned level of 3% of gross domestic product (GDP).

Some economists have urged Beijing to ditch or adopt lower growth targets to reduce its reliance on stimulus, which has fuelled property bubbles and huge local government debts. But advocates for ambitious targets argue they are crucial for safeguarding China’s global stature, national security, and social stability.

President Xi Jinping’s vision of “Chinese-style modernisation” envisages doubling the size of the economy by 2035 from 2020 levels, potentially surpassing that of the United States. Economists outside China do not believe that goal is realistic, but it still influences domestic policy discussion.

“To meet the 2035 goals, we need to achieve economic growth of around 5% in 2025,” said a second government adviser.

It is not known how many such proposals the government receives.

VULNERABLE EXPORTS

International Monetary Fund Managing Director Kristalina Georgieva warned last month that China’s growth could slow “way below 4%” unless it shifts from an export- and investment-led economic model to one driven by consumer demand.

The tariff threat has rattled China’s industrial complex, which sells goods worth more than $400 billion annually to the United States. Many manufacturers have been shifting production abroad to escape tariffs.

Yu downplayed Trump’s threat, noting that China’s net exports’ GDP contribution is minor. They accounted for 2.2% of GDP in 2023 although gross exports made up close to 20% of total economic output, official data show.

Other economists argue that industrial output, revenues, investment and jobs depend heavily on external demand and that additional trade barriers could exacerbate deflationary pressures and growth headwinds.

“If China’s exports take a hit and cannot be offset by rising domestic demand, deflationary pressures will intensify,” said the adviser recommending a target of “above 4%.”

The adviser who proposed 4.5-5% said: “The pressure on the economy will be even greater next year. Our exports could be greatly affected.”

MORE STIMULUS?

This month, China unveiled a 10 trillion yuan ($1.4 trillion) debt package to ease municipal financing strains, but refrained from direct fiscal stimulus. Analysts say Beijing may want to keep the powder dry until Trump makes his first move.

Finance Minister Lan Foan said more stimulus measures were in the pipeline, without giving details on size or timing.

Government advisers say China’s budget deficit could spike to 3.5-4% of GDP next year and more special treasury bonds, typically not included in annual budgets, could be issued to fund infrastructure and other investment.

They say consumer-focused policies could include stronger financial support for low-income residents and expanding a subsidy scheme introduced this year to boost purchases of appliances, cars and other goods. Large scale cash voucher handouts are unlikely, the advisers say.

But they also urge officials to push ahead with promised tax, welfare and other policy changes to address structural imbalances.

“If reforms stall and we rely solely on policy stimulus, it will not be sustainable in the long run,” said the most conservative adviser.

LONDON (Reuters) – Growth in pay awards by British employers held steady in the three months to October but is expected to cool in 2025, according to a survey on Thursday that showed firms under pressure from the new government’s decisions on tax and wages.

Human resources data firm Brightmine said the median pay award held at 4% for a fourth month in a row – down from 6% at the end of 2023 – and was set to drop to 3% next year.

The Bank of England is trying to gauge how much inflation pressure remains in the economy as it prepares to cut interest rates further.

It is watching closely for how companies respond to an increase in social security contributions which formed the centrepiece of finance minister Rachel Reeves’ first budget.

That kicks in from April next year – just as the minimum wage is due to rise by nearly 7% – and is likely to constrain pay award decisions by employers, Brightmine said.

“Managing workforce expectations will be critical in the coming year and employers should clearly communicate pay decisions to maintain employee engagement during times of financial restraint,” Brightmine senior content manager Sheila Attwood said.

The latest data was based on 24 pay awards covering 240,000 employees which came into effect between Aug. 1 and Oct. 30.

By Brigid Riley

TOKYO (Reuters) – The U.S. dollar stood broadly firm on Thursday as traders awaited more clarity on U.S. President-elect Donald Trump’s proposed policies and sought to second-guess the prospects of less aggressive interest rate cuts from the Federal Reserve.

After stalling for three sessions, the greenback was back on the march higher, with investors lifting the dollar index measure against its key rivals closer to a one-year high of 107.07 hit last week.

The dollar has rallied more than 2% since the Nov. 5 U.S. presidential election on bets Trump’s policies could reignite inflation and temper the Fed’s future rate cuts.

At the same time, traders are sizing up what Trump’s campaign pledges of tariffs mean for the rest of the world, with Europe and China both likely on the firing line.

“It’s hard to short the USD right now,” given that investors are also increasingly weighing the possibility that the Fed might not cut rates next month after all, said senior market analyst Matt Simpson at City Index.

That sentiment was driven by sharp swings in market pricing, which currently sets the odds of a Fed rate cut at its December meeting at just under 54%, down from 82.5% just a week ago, according to CME’s FedWatch Tool.

A Reuters poll showed most economists expect the Fed to cut rates at its December meeting, with shallower cuts in 2025 than expected a month ago due to the risk of higher inflation from Trump’s policies.

Separate comments from two Fed governors Michelle Bowman and Lisa Cook on Wednesday gave little clarity about the Fed’s path forward, with one citing ongoing concerns about inflation and another expressing confidence that price pressures will continue to ease.

The dollar index held steady at 106.56, up from a one-week nadir hit in the previous session.

The euro was nearly flat at $1.054725 after slipping 0.5% on Wednesday, back toward last week’s low of $1.0496, its weakest against the dollar since Oct. 2023.

“The Russia-Ukraine conflict is heating up, which is further denting sentiment towards the euro alongside the prospects of trade tariffs,” another “bullish cue” for the dollar index given the euro’s heavy weighting, City Index’s Simpson said.

Ukraine fired a volley of British Storm Shadow cruise missiles into Russia on Wednesday, the latest new Western weapon it has been permitted to use on Russian targets a day after it fired U.S. ATACMS missiles.

The dollar gave up some gains against the yen, down 0.33% at 154.91 yen, although the Japanese currency remained under pressure.

The currency pair rose above the 156 mark last week for the first time since July, stirring worries that Japanese authorities may again take steps to shore up the yen.

The focus will be on Bank of Japan Governor Kazuo Ueda, who is scheduled to speak at a financial forum in Paris on Thursday after leaving the door open for a December rate hike in balanced remarks at the start of the week.

Investors will be looking for any stronger indication that a year-end rate hike is in the cards, with market pricing nearly evenly split amid the yen’s recent decline back toward the 38-year-lows touched in July.

Sterling was up 0.07% at $1.2656. Data on Wednesday showed British inflation jumped more than expected last month to rise back above the Bank of England’s 2% target, supporting the central bank’s cautious approach on interest rate cuts.

Elsewhere, bitcoin reached a record high of $95,016 on Wednesday, underpinned by a report Trump’s social media company was in talks to buy crypto trading firm Bakkt.

Bitcoin has been swept up in a blistering rally in the past few weeks on hopes the president-elect will create a friendlier regulatory environment for cryptocurrencies.

TOKYO (Reuters) – Japan’s government is considering 21.9 trillion yen ($141 billion) worth of fiscal spending under a new stimulus package to be approved this week, public broadcaster NHK said on Thursday.

The overall size of the package, which includes funding from the private sector, would total 39 trillion yen, with 13.9 trillion yen coming from the government general account, NHK reported without citing sources.

Major hurdles over the package were cleared on Wednesday after Japan’s ruling coalition agreed with a key opposition party on the draft of the package designed to help cushion the blow to households from rising prices.

($1 = 155.0400 yen)

By Renju Jose

SYDNEY (Reuters) – New Zealand’s Treasury said on Thursday it would likely cut its economic and fiscal forecasts because of a sustained productivity slowdown in the economy.

New Zealand Treasury’s May budget forecasts had anticipated a return to economic growth in the second half of 2024, but the latest data suggests the recovery will begin later, Treasury Chief Economic Adviser Dominick Stephens said in a speech.

“Economic growth has proved slower than anticipated. Weaker economic growth means a smaller economy and less tax revenue, increasing the challenge for the government in balancing its books,” Stephens said at the Chartered Accountants Australia and New Zealand conference in Wellington.

The New Zealand government in October reported a larger-than-expected budget deficit for the 2023-24 year as lower growth hurt government revenue but it vowed to bring discipline to public spending and get the books back in surplus.

Emerging data revealed that productivity had dropped back to pre-pandemic levels in 2024 as indicators of manufacturing and service activity remain contractionary suggesting little growth in the economy in recent months, Stephens said.

The New Zealand Treasury is expected to publish its half-year economic and fiscal update on Dec. 17.

New Zealand’s economy contracted in the second quarter as activity fell in several major industries, leaving room for more cuts in interest rates.

The Reserve Bank of New Zealand cut its benchmark rate in August, the first reduction since March 2020, and followed it up by slashing rates again by 50 basis points to 4.75% in October. It is widely expected to deliver a third straight cut next week.

(Reuters) – Palo Alto Networks (NASDAQ:PANW) beat Wall Street expectations for first-quarter revenue and profit on Wednesday, owing to healthy spending for its cybersecurity services amid a rise in digital threats.

However, shares of the Santa Clara, California-based company fell over 5% in extended trading. Palo Alto forecast second quarter as well as annual revenue largely in line with analysts’ expectations.

The company also announced a two-for-one stock split of its outstanding shares of common stock. Trading on a split-adjusted basis is expected to begin on Dec. 16.

Palo Alto raised its fiscal 2025 revenue outlook to between $9.12 billion and $9.17 billion, while analysts expected $9.13 billion, as per data compiled by LSEG.

A rise in cyber crimes and hacks has spurred companies to invest heavily into cybersecurity, benefiting large firms that provide a wide range of security services, such as Palo Alto.

The company has been attempting to get its clients to adopt a new “platformization” approach to security by consolidating individual tools into one platform and simplifying management.

“Our platformization progress continued in Q1, driving strong financial results,” said Dipak Golechha, Palo Alto’s finance chief.

Palo Alto reported revenue of $2.14 billion for the first quarter, beating estimates of $2.12 billion.

On an adjusted basis, the company earned $1.56 per share, compared with estimates of $1.48 apiece.

It forecast second-quarter revenue between $2.22 billion and $2.25 billion, compared with estimates of $2.23 billion.

The company also raised its forecast for adjusted net income per share to a range of $6.26 to $6.39 per share, from $6.18 to $6.31 per share it expected earlier. 

CAIRO (Reuters) – The International Monetary Fund said on Wednesday that its mission had concluded a visit to Egypt and made substantial progress on policy discussions toward the completion of the fourth review of IMF loan programme.

The review, which could unlock more than $1.2 billion in financing, is the fourth under Egypt’s latest 46-month IMF loan programme that was approved in 2022 and expanded to $8 billion this year after an economic crisis marked by high inflation and severe foreign currency shortages.

The IMF also said that Egypt “has implemented key reforms to preserve macroeconomic stability”, including the unification of the exchange rate that eased imports, with its central bank reiterating its commitment to sustain a flexible exchange rate regime.

Earlier on Wednesday, Egypt’s Prime Minister Mostafa Madbouly said Cairo has asked the IMF to modify the targets for the programme not only for this year, but for its full duration, he added without giving more details.

“Discussions will continue over the coming days to finalize agreement on the remaining policies and reforms that could support the completion of the fourth review,” the IMF added in its statement.