By Jamie McGeever

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

Relief from the positive U.S. and UK inflation surprises this week appears to have evaporated, at least as far as equity markets are concerned, even as Treasury yields and the dollar continue to drift lower into the last trading day of the week.

Asian markets open on Friday against a mixed global backdrop. Yields are softening and Fed Governor Chris Waller on Thursday again signaled his willingness to cut rates, while U.S. bank earnings are beating expectations.

But more evidence is needed that the global bond and inflation respite is anything other than temporary, and investors are nervy ahead of U.S. President-elect Donald Trump’s inauguration on Monday.

Investors in Asia, therefore, could be forgiven for playing safe, minimizing exposure to risky assets ahead of the weekend, especially as it is a three-day break in the U.S. where markets are closed Monday for Martin Luther King Jr. Day.

But the monthly Chinese ‘data dump’ lands on Friday. Beijing releases the December readings of house prices, industrial production, fixed-asset investment and retail sales, all of which will contribute to the big one: fourth-quarter and full-year GDP.

Citi’s China economic surprises index is currently in positive territory, lifted by the series of policy pledges and market-boosting measures announced since September. But that boost has faded, and the index is its lowest in two months.

Could Friday’s raft of indicators stop the drift? It’s possible that some, like export and new loans data released earlier this week, are on the strong side as businesses and households ramp up activity before tariff-threatening Trump takes office.

On the other hand, the wider trend suggests negative surprises are more likely, and it’s worth noting that December was characterized by strong capital outflows, sluggish stock markets, and the biggest fall in bond yields since December 2008.

Investors will also be keeping an eye on the TikTok saga for signs of how cool or otherwise U.S.-Sino relations are ahead of Trump’s return to the White House.

The Chinese-owned video app, which is used by more than 170 million Americans monthly, is set to be banned on Sunday under a law mandating that it find a non-Chinese owner. But Trump’s incoming national security adviser said on Thursday the new administration will keep TikTok alive in the U.S. if there is a viable deal, in a potential reprieve for the firm.

Currency volatility in Asia, meanwhile, is ticking higher after two central bank policy surprises this week from South Korea and Indonesia, and as the Japanese yen rallies strongly ahead of a possible Bank of Japan rate hike next week.

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

– China ‘data dump’ (December)

– China GDP (Q4, full-year 2024)

– New Zealand manufacturing PMI (December)

Investing.com — The World Bank said on Thursday that a 10% across-the-board tariff imposed by the U.S. could decrease the global economic growth rate, which is already tepid at 2.7% in 2025, by 0.3 percentage point.

This is under the condition that America’s trading partners respond with their own tariffs.

The World Bank mentioned that these tariffs, proposed by U.S. President-elect Donald Trump, could potentially reduce U.S. economic growth, which is predicted to be 2.3% in 2025, by 0.9%.

This is assuming that retaliatory tariffs are put in place. However, the bank also stated that U.S. growth could rise by 0.4 percentage point in 2026 if U.S. tax cuts were continued, with minor global repercussions.

In its most recent Global Economic Prospect report, the World Bank projected a steady global economic growth rate of 2.7% in 2025 and 2026, the same as in 2024. The bank also cautioned that developing economies are now facing their weakest long-term growth outlook since 2000.

According to the bank, growth in developing countries is anticipated to reach 4% in 2025 and 2026. This is significantly lower than pre-pandemic estimates due to high debt loads, weak investment, slow productivity growth, and the escalating costs of climate change.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

(Reuters) – Chicago Federal Reserve Bank President Austan Goolsbee said he feels more comfortable that the labor market is stabilizing, the Wall Street Journal reported on Thursday.

“I have over the last several months become more comfortable that this is a stabilization of the job market at a full-employment-like level, as opposed to something that was crashing through normal and turning into something worse,” Goolsbee said in an interview this week, according to the Journal.

LONDON (Reuters) – Finance minister Rachel Reeves has urged Britain’s regulators to remove barriers to economic growth, tasking them with creating a regulatory environment that boosts investment and innovation.

In a meeting on Thursday, Reeves told the bosses of the competition, energy, water, media, aviation and railways watchdogs that economic growth was the “absolute top priority” for the government, the finance ministry said.

It comes as Britain’s Labour government, voted into power last July, grapples with a sluggish economy, which only grew 0.1% in November after contracting in September and October.

Reeves has also faced criticism from businesses after her tax-raising Oct. 30 budget, which included big increases in social security contributions paid by employers.

“Every regulator, no matter what sector, has a part to play by tearing down the regulatory barriers that hold back growth,” Reeves said.

“I want to see this mission woven into the very fabric of our regulators through a cultural shift from excessively focusing on risk to helping drive growth.”

The meeting follows a joint letter from Reeves and Prime Minister Keir Starmer to regulators, asking each of them to come up with proposals for five reforms to support economic growth in the coming year.

In total, 17 regulators will be called in to have their proposals scrutinised in the coming weeks, the finance ministry said.

While the regulators agreed in the meeting that they had a role to play in driving growth, they also highlighted some barriers, including their other legal responsibilities, it added.

Reeves also called on regulators to institute cultural change to deliver growth “instead of excessively focusing on risk.”

By Andrea Shalal

WASHINGTON (Reuters) – The World Bank on Thursday warned that U.S. across-the-board tariffs of 10% could reduce already lackluster global economic growth of 2.7% in 2025 by 0.3 percentage point if America’s trading partners retaliate with tariffs of their own.

Such tariffs, promised by U.S. President-elect Donald Trump, could cut U.S. growth – forecast to reach 2.3% in 2025 – by 0.9% if retaliatory measures are imposed, the bank said, citing economic simulations. But it noted that U.S. growth could also increase by 0.4 percentage point in 2026 if U.S. tax cuts were extended, it said, with only small global spillovers.

Trump, who takes office Monday, has proposed a 10% tariff on global imports, a 25% punitive duty on imports from Canada and Mexico until they clamp down on drugs and migrants crossing borders into the U.S., and a 60% tariff on Chinese goods.

The World Bank’s latest Global Economic Prospect report, issued twice yearly, forecast flat global economic growth of 2.7% in 2025 and 2026, the same as in 2024, and warned that developing economies now faced their weakest long-term growth outlook since 2000.

The multilateral development bank said foreign direct investment into developing economies was now about half the level seen in the early 2000s and global trade restrictions were five times higher than the 2010-2019 average.

It said growth in developing countries is expected to reach 4% in 2025 and 2026, well below pre-pandemic estimates due to high debt burdens, weak investment and sluggish productivity growth, along with rising costs of climate change.

Overall output in emerging markets and development economies was expected to remain more than 5% below its pre-pandemic trend by 2026, due to the pandemic and subsequent shocks, it said.

“The next 25 years will be a tougher slog for developing economies than the last 25,” World Bank chief economist Indermit Gil said in a statement, urging countries to adopt domestic reforms to encourage investment and deepen trade relations.

Economic growth in developing countries dropped from nearly 6% in the 2000s to 5.1% in the 2010s and was averaging about 3.5% in the 2020s, the bank said.

It said the gap between rich and poor countries was also widening, with average per capita growth rates in developing countries, excluding China and India, averaging half a percentage point below those in wealth economies since 2014.

The somber outlook echoed comments made last week by the managing director of the International Monetary Fund, Kristalina Georgieva, ahead of the global lender’s own new forecast, to be released on Friday.

“Over the next two years, developing economies could face serious headwinds,” the World Bank report said.

“High global policy uncertainty could undercut investor confidence and constrain financing flows. Rising trade tensions could reduce global growth. Persistent inflation could delay expected cuts in interest rates.”

The World Bank said it saw more downside risks for the global economy, citing a surge in trade-distorting measures implemented mainly by advanced economies and uncertainty about future policies that was dampening investment and growth.

Global trade in goods and services, which expanded by 2.7% in 2024, is expected to reach an average of about 3.1% in 2025-2026, but to remain below pre-pandemic averages.

(Reuters) – Scott Bessent, U.S. President-elect Donald Trump’s choice to head the Treasury Department, on Thursday said that extending Trump’s 2017 tax cuts that are set to expire at the end of this year is “the single most important economic issue of the day.” 

“If we do not renew and extend, then we will be facing an economic calamity,” Bessent told the U.S. Senate Finance Committee. “We will see a gigantic middle class tax increase.”

Investing.com — Scott Bessent, the fund manager selected by President-elect Donald Trump to head the Treasury Department, faced questions on tariffs, tax policy, and budget deficits during his confirmation hearing.

Bessent, who has spent his career in the private sector, advocated for reduced government spending, tariffs, and tax cuts on Thursday. He emphasized the importance of secure supply chains, judicious use of economic sanctions, and maintaining the dollar’s status as the world’s reserve currency.

Bessent showed a willingness to consider stricter sanctions on Russian oil producers and a potential fee or tariff based on carbon intensity.

If confirmed, Bessent will become a key part of Trump’s economic team, advocating for the extension of trillions of dollars in tax cuts set to expire at the end of the year. This, Bessent noted, is a critical test.

Bessent was chosen by Trump to lead the Treasury Department after a tough competition with Howard Lutnick, the long-serving CEO of Cantor Fitzgerald. Lutnick was selected by the president-elect as Commerce Secretary with oversight of trade policy.

Bessent’s nomination has been unopposed by Republicans, and his path to confirmation appears clear. Senate Finance Committee Chairman Mike Crapo (R., Idaho) praised Bessent and expressed his support for the nomination.

Democrats questioned Bessent on budget deficits and the potential for the administration’s trade and tax policies to predominantly benefit the wealthy. Sen. Ron Wyden (D., Ore.) argued that tariffs would harm consumers and characterized Trump’s economic policies as a “class war on typical American families.”

Bessent responded by reiterating that the U.S. has a spending problem, not a revenue problem. He cited data showing that high-income households paid a larger share of taxes after the 2017 tax law than before.

Sen. James Lankford (R., Okla) raised concerns about the global corporate minimum tax deal negotiated by the Biden administration through the Organization for Economic Cooperation and Development. Bessent described the policy as terrible and pledged to work towards its reversal.

Sen. Mark Warner (D., Va.) asked Bessent if he would support tougher sanctions on Russia. Bessent said he would if requested by Trump.

Bessent also addressed the prospect of carbon tariffs during the hearing, describing it as a very interesting idea that could be part of an entire tariff program.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

By Marc Jones

LONDON (Reuters) – Staff at central bank umbrella group, the Bank for International Settlements, have warned of a global bout of stagflation if trade tariffs promised by soon-to-be-U.S. President Donald Trump continue to drive up the dollar.

Stagflation – the combination of strong inflation and weak economic growth is viewed as Kryptonite by economists as consumers and firms are hit from both sides.

Just days before Trump takes office, the BIS-published report said the world economy was on track for a “soft landing” but it stressed growing uncertainty due to what it described as the new looming challenges.

It highlighted surveys showing a rise in the perceived probability of “no landing” – strong U.S. economic growth and sticky inflation, which could limit the degree to which the U.S. and other countries can cut interest rates.

At the same time, global trade is likely to face increased “frictions and fragmentation” with the broad-based trade war between Washington and other countries now “a tangible risk scenario,” it warned.

If the U.S. ends up barely cutting, or even raising its interest rates as a result, but other nations have to slash theirs, it could cause significant capital flow and exchange rate adjustments.

“The value of the U.S. dollar could continue its recent rise on the back of higher U.S. interest rates, a stronger U.S. economy and high political uncertainty,” the BIS report said.

“This could have stagflationary effects on the global economy due to the dollar’s dominant role in trade invoicing and international finance.”

A stronger dollar tends to boost inflation outside the U.S. by increasing import prices and inflation expectations, especially in developing world countries.

Dollar strength also tends to tighten financial conditions by pushing up global borrowing costs. That then dampens real economic activity, particularly in countries with weak fundamentals and vulnerable fiscal positions, the BIS said.

(Reuters) – The Federal Reserve should stay independent, Trump’s pick to be U.S. Treasury Secretary told a Senate panel on Thursday.

“I think on monetary policy decisions, the FOMC should be independent,” Scott Bessent told the U.S. Senate Finance Committee, referring to the Fed’s monetary policysetting panel, the Federal Open Market Committee.

“President Trump is going to make his views known,” Bessent said, just as senators do when they disagree with what the Fed does with interest rates, but the notion that Trump believes he should have influence over Fed’s policymaking by being in the room is “highly inaccurate.” 

By Jennifer Rigby and Christy Santhosh

(Reuters) – The World Health Organization called for the international community to step up and fund a scaled-up aid response in Gaza after Israel and Hamas reached a ceasefire deal to end 15 months of war in the region earlier this week.

The U.N. health agency said its member states, donors and the global community, including the private sector, should support both the urgent health needs and the longer-term rebuilding of Gaza’s healthcare system.

“The UN cannot deliver the response alone,” said Rik Peeperkorn, WHO representative for the Occupied Palestinian Territory, speaking at a virtual press conference on Thursday.

Part of the ceasefire deal requires 600 truckloads of humanitarian aid to be allowed into Gaza every day from when it is due to begin, on Sunday. Peeperkorn said the WHO was ready to deliver, although the “significant security and political obstacles to delivering aid across Gaza” need to be removed. He urged all parties to uphold the ceasefire deal.

“Now is the time for member states, donors and the global community to step up and provide flexible funding to enable this swift and effective response for urgent and longer term needs,” he said.

He said the costs for rebuilding the health system in Gaza were enormous, estimated at around $3 billion for the next year and $10 billion in the next six or seven years, although these are only early estimates.

“WHO remains committed to addressing the acute health needs of the people in Gaza now and after the deal takes effect and to support the rebuilding of Gaza’s health system. This will be a massive undertaking. Less than half of Gaza’s hospitals are functional,” said the WHO’s Director-General Tedros Adhanom Ghebreyesus.