
Asia shares struggle, dollar soars on lowered Fed rate cut bets
U.S. Treasury yields ticked to the highest in more than a month, lifting the dollar against the yen in particular.
However, tech shares remained resilient following a 4% rally in artificial-intelligence darling Nvidia (NVDA.O), opens new tab overnight.
Brent crude continued to hover around $69 per barrel.
Data on Tuesday showed U.S. consumer prices rose 0.3% in June, in line with forecasts, but the largest gain since January. Economists attributed the rise in prices across goods such as coffee and home furnishings to the Trump administration's escalating import tariffs.
The Fed has been keeping interest rates steady as it has waited for indications of the inflationary impact from tariffs, which Chair Jerome Powell had said he expected in the summer.
"We know the revealed preference of Fed Chair Powell, along with a few of his colleagues, is to wait for these tariff impacts to come through, and those in that camp are seeing that view bolstered by this data," Taylor Nugent, senior economist at National Australia Bank, said in a podcast.
As a result, markets saw "a fairly significant trimming of Fed expectations" for rate cuts, Nugent said.
Traders currently price in 43 basis points of rate reductions for the rest of this year, with 56.5% odds of a quarter-point cut in September.
Investors will now carefully monitor producer price data due later on Wednesday, looking for signs of whether inflationary pressures are also building on the factory floor.
Australia's equity benchmark (.AXJO), opens new tab South Korea's KOSPI (.KS11), opens new tab each lost around 0.6% as of 0127 GMT. Mainland Chinese blue chips (.CSI300), opens new tab slipped 0.1%.
Japan's tech- and exporter-heavy Nikkei (.N225), opens new tab was flat after alternating between small gains and losses, supported by both Nvidia's fortunes and the weak yen.
Taiwan's benchmark (.TWII), opens new tab added 0.5% and Hong Kong's Hang Seng (.HSI), opens new tab jumped 0.8%, adding to Tuesday's 1.6% tech-driven rally.
U.S. S&P 500 futures eased 0.2%, after a 0.4% decline for the cash index (.SPX), opens new tab overnight.
Beyond the Fed and U.S. President Donald Trump's tariffs, the earnings season is another focal point for investors.
Results from JPMorgan Chase (JPM.N), opens new tab and Citigroup (C.N), opens new tab beat expectations, but were met with a mixed market response. Wells Fargo (WFC.N), opens new tab cut its 2025 net interest income guidance even as it beat second-quarter profit expectations.
Bank earnings due on Wednesday include Goldman Sachs, Morgan Stanley and Bank of America.
U.S. 10-year Treasury yields rose as high as 4.495% on Wednesday, the highest since June 11.
The dollar stuck close to a multi-week high against major peers. The dollar index was little changed at 98.545 after rising as high as 98.699 on Tuesday for the first time since June 23.
The U.S. currency was steady at 148.785 yen , and earlier rose to 149.04 for the first time since April 3, in the aftermath of Trump's "Liberation Day" tariff announcement.
The euro edged up 0.1% to $1.1612, trying to pull away from Tuesday's three-week low of $1.1593.
Cryptocurrency bitcoin added about 1% to $117,696, as it stabilised following its 6% pullback earlier this week from Monday's all-time high at $123,153.22.
Gold added 0.3% to around $3,332.
Brent crude futures fell 5 cents to $69.16 a barrel, while U.S. West Texas Intermediate crude futures declined 9 cents to $66.89 a barrel. Both contracts settled more than $1 lower in the previous session.
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Reuters
an hour ago
- Reuters
Dollar heads for biggest weekly drop in a month as focus shifts to Fed, BOJ meets
SINGAPORE, July 25 (Reuters) - The dollar steadied near two-week lows on Friday, on track for its biggest weekly drop in a month, as investors contended with U.S. tariff negotiations ahead of a deadline while looking ahead to central bank meetings next week for clues on policy. Both the U.S. Federal Reserve and the Bank of Japan are expected to hold rates at next week's policy meetings, but traders are focusing on the subsequent comments to gauge the timing of the next move. "Next week's BOJ policy meeting will be closely watched for hints on the timing of the next rate hike," said Carol Kong, currency strategist at Commonwealth Bank of Australia. The prospect of rate hikes by the BOJ had improved, she added, after a trade deal struck with the United States this week lowered tariffs to 15% on auto imports from Japan. The yen stood at 147.10 to the dollar, on course for a weekly gain of 1%, its strongest such performance since mid-May. A majority of economists in a Reuters poll this week expect Japan's central bank to raise interest rates by 25 basis points this year. The dollar index , which measures the U.S. currency against six other units, was at 97.448, set for a drop of 1% this week, its weakest performance in a month. On Thursday, the European Central Bank left its policy rate at 2%, as expected, in a break from a year of policy easing, to await clarity over future U.S. trade ties after the European Commission said a negotiated solution was in reach ahead of the August 1 deadline. The euro was little changed at $1.1754 in early trade, but not far from $1.183, the near four-year high it touched at the start of the month. The euro is up 13.5% this year as tariff policies take the shine off the dollar. Progress on trade deals has also raised market hopes for talks with China, after U.S. Treasury Secretary Scott Bessent said officials of both countries would meet in Stockholm next week to discuss an extension of the deal negotiation deadline. The Australian dollar has been boosted by the rise in risk appetite after the trade deals and was last at $0.6593, hovering near an eight-month high touched on Thursday. Donald Trump locked horns on Thursday with Fed Chair Jerome Powell during a rare presidential visit to the central bank, criticising the cost of renovating two historical buildings at its headquarters and pressing the case for lower interest rates. Markets mostly shrugged off the visit, however, having become accustomed to Trump's repeated tirades against Powell and the Fed. "Trump's Fed visit was spectacle over substance," said Prashant Newnaha, senior Asia-Pacific rates strategist at TD Securities. "The market's focus is firmly on next week's Fed meeting. We expect Powell to repeat a patient, data-dependent policy outlook with flexibility but (he) is unlikely to commit to cuts." At their two-day rate-setting meet, the central bank's 19 policymakers are widely expected to leave their benchmark interest rate in the range of 4.25% to 4.50%. Traders are pricing in 43 basis points of rate cuts by the end of 2025. ANZ strategists expect the Fed to cut rates by 25 basis points in September and again in December. "Were it not for tariff uncertainty, we judge that rate cuts would already have resumed," they said in a note. "The labour market is weakening, service price disinflation is well established, demand growth has slowed and there is no discernible evidence that higher tariffs are spilling into a broader inflation problem." In cryptocurrencies, bitcoin eased 0.79% to $117,840, while Ethereum was 2% lower at $3,655.


Reuters
3 hours ago
- Reuters
Intel is cutting more jobs as CEO Tan tries to fix manufacturing missteps
July 24 (Reuters) - Intel (INTC.O), opens new tab is going to end the year with a workforce that is over a fifth smaller than last year, it said on Thursday, and new CEO Lip Bu Tan presented a blueprint for a more cost-disciplined, streamlined chipmaker that would issue "no more blank checks." The job cuts - a majority of which have been completed already - are part of an effort by Tan since he took the helm in March to turn around the storied U.S. chipmaker. Intel has divested businesses, laid off employees and redirected resources. The company has underperformed due to years of management blunders. Intel has virtually no foothold in the booming AI chip industry that is dominated by Nvidia (NVDA.O), opens new tab, and its longtime rival AMD (AMD.O), opens new tab has been gaining share in Intel's mainstay personal computer and server semiconductor markets. Its ambitious and costly plan for a chip contracting business that rivals that of Taiwan's TSMC ( opens new tab has failed to take off. But Tan on Thursday signaled that he had taken charge of the company and was trying to wrest it back from what he viewed as previous missteps. "There are no more blank checks," Tan wrote in a memo to employees. "Every investment must make economic sense. We will build what our customers need, when they need it, and earn their trust through consistent execution." But shares still fell 4.5% in extended trading after the company forecast steeper third-quarter losses than Wall Street estimated. Tan also told analysts on a conference call that he believes Intel's so-called 18A manufacturing process - in which his predecessor Pat Gelsinger had deeply invested - could generate a reasonable return only if it is used for Intel's own products. Reuters reported earlier this month that Tan is debating whether to quit offering that technology to external customers. As part of the job cuts, Intel attempted to take a 'surgical' approach and remove layers of middle management, finance chief David Zinsner told Reuters. 'We took out about 50% of the layers of the company,' he said. The company is cutting its workforce by 15% from 96,400 that it reported at the end of June. It plans to further reduce headcount to 75,000 by the end of the year, down 22% from the end of 2024, which will be through attrition and "other means," according to the company. "They may have overspent on 18A ... but I think this is the painted picture of a new fiscally disciplined base that they're going to go from here. I think that's the right approach," said Ben Bajarin, CEO of tech market analysis firm Creative Strategies. In the memo to employees, Tan said Intel is changing its strategy for building manufacturing capacity and now plans to build factories only when the demand for its chips is there. Previously, the company had built factories ahead of demand in the U.S. and elsewhere. Intel is now working to bring its 18A technology to high volume. Tan said in the memo that the company plans to take a disciplined approach to investments in the next-generation 14A manufacturing process, and in its quarterly securities filing, Intel said that if it fails to find a significant external customer for 14A, it may be forced to exit the chip manufacturing business. Tan wrote the company now plans to slow construction work on new factories in Ohio and halt planned factories in Poland and Germany, and consolidate chip packaging operations in Costa Rica with its other packaging operations in Vietnam and Malaysia. "I do not subscribe to the belief that if you build it, they will come," Tan said on the call with analysts. He later added that he will personally review and approve each of Intel's major chip designs. Intel said it expects a third-quarter loss of 24 cents per share, steeper than estimates of losses of 18 cents per share, according to data from LSEG. It expects revenue of $12.6 billion to $13.6 billion for the September quarter, with a midpoint of $13.1 billion that was higher than analysts' average estimate of $12.65 billion. While semiconductors are currently exempt from U.S. President Donald Trump's sweeping global tariffs, Intel and its fellow chipmakers are facing customers who are reluctant about spending commitments amid widespread macroeconomic uncertainty. Customers have pulled shipments forward to the first half of the year amid trade uncertainty. Intel's second-quarter revenue for the period ended June 28 was flat at $12.9 billion, snapping a four-quarter streak of sales declines. The result beat estimates of $11.92 billion. Intel said job cuts contributed to restructuring costs of $1.9 billion in the second quarter. It recorded June quarter adjusted losses of 10 cents per share, compared with estimates of a profit of 1 cent per share. Its unadjusted loss was 67 cents per share in the second quarter, steeper than analyst estimates of a 26-cent-per-share loss.


Reuters
4 hours ago
- Reuters
Trump presses Powell to cut rates during tense visit to Fed
WASHINGTON, July 24 (Reuters) - President Donald Trump locked horns with Federal Reserve Chair Jerome Powell during a rare presidential visit to the U.S. central bank on Thursday, criticizing the cost of renovating two historical buildings at its headquarters and pressing the case for lower interest rates. Trump, who called Powell a "numbskull" earlier this week for failing to heed the White House's demand for a large reduction in borrowing costs, wrapped up his visit to the Fed's $2.5 billion building project in Washington by saying he did not intend to fire Powell, as he has frequently suggested he would. "To do so is a big move and I just don't think it's necessary," Trump told reporters after the visit. In a post on his Truth Social media site, Trump later said of the renovation, "it is what it is and, hopefully, it will be finished ASAP. The cost overruns are substantial but, on the positive side, our Country is doing very well and can afford just about anything." The visibly tense interaction at the Fed's massive construction site marked an escalation of White House pressure on the central bank and Trump's efforts to get Powell to "do the right thing" on rates. It happened less than a week before the central bank's 19 policymakers are due to gather for a two-day rate-setting meeting, where they are widely expected to leave their benchmark interest rate in the 4.25%-4.50% range. The president has repeatedly demanded Powell slash rates by 3 percentage points or more. "I'd love him to lower interest rates," Trump said as he wrapped up the tour, as Powell stood by, his face expressionless. Powell typically spends the Thursday afternoon before a rate-setting meeting doing back-to-back calls with Fed bank presidents as part of his preparations for the session. The encounter between the two men became heated as Trump told reporters the project was now estimated to cost $3.1 billion. "I am not aware of that," Powell said, shaking his head. Trump handed him a piece of paper, which Powell examined. "You just added in a third building," the Fed chief said, noting that the Martin Building had been completed five years ago. White House budget director Russell Vought and Trump's deputy chief of staff, James Blair, who have spearheaded criticism of the renovation as overly costly and ostentatious, later told reporters they still have questions about the project. The two men, who joined Trump during the visit, have suggested poor oversight and potential fraud in connection with it. Senate Banking Committee Chair Tim Scott, a Republican who sent Powell a letter, opens new tab on Wednesday demanding answers to his own questions about the renovation, also took part in the visit. Elevated by Trump to the top Fed job in 2018 and then reappointed by former President Joe Biden four years later, Powell last met with the current president in March when Trump summoned him to the White House to press him to lower rates. The visit on Thursday took place as Trump battles to deflect attention from a political crisis over his administration's refusal to release files related to convicted sex offender Jeffrey Epstein, reversing a campaign promise. Epstein died in 2019. The Fed, in letters to Vought and lawmakers backed up by documents posted on its website, said the project - the first full rehab of the two buildings since they were built nearly a century ago - ran into unexpected challenges including toxic materials abatement and higher-than-estimated costs for materials and labor. Speaking outside of the construction site, Trump said there was "no tension" at his meeting with Powell and that they had a productive conversation about rates. Ahead of Trump's visit, Fed staff escorted a small group of reporters around the two construction sites. They wove around cement mixers and construction machines, and spoke over the sound of drills, banging, and saws. Fed staff pointed out security features, including blast-resistant windows, that they said were a significant driver of costs in addition to tariffs and escalations in material and labor costs. The project started in mid-2022 and is on track to be completed by 2027, with the move-in planned for March of 2028. A visit to the roof of the Eccles Building, a point of particular scrutiny by critics like Scott, who has complained about "rooftop garden terraces," revealed an impressive view of the Lincoln Memorial and the National Mall, according to the pool report. Staff explained that rooftop seating, although inexpensive, had been removed because of the appearance of it being an amenity and was one of only two deviations from the original plan. The other was the scrapping of a couple of planned fountains. Market reaction to Trump's visit was subdued. The yield on benchmark 10-year Treasury bonds ticked higher after data showed new jobless claims dropped in the most recent week, signaling a stable labor market not in need of support from a Fed rate cut. The S&P 500 equities index (.SPX), opens new tab closed largely flat on the day. Trump's criticism of Powell and flirtation with firing him have previously upset financial markets and threatened a key underpinning of the global financial system - that central banks are independent and free from political meddling. His trip contrasts with a handful of other documented presidential visits to the Fed. Then-President Franklin Delano Roosevelt visited the central bank in 1937 to dedicate the newly-built headquarters, one of the two buildings now being renovated. Most recently, former President George W. Bush went there in 2006 to attend the swearing-in of Ben Bernanke as Fed chief.