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S&P 500, Nasdaq Face Big Test In Week Ahead As Mega-Cap Tech Earnings Loom By Investing.com

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By Jesse Cohen

Investing.com – Stocks on Wall Street on Friday, with the posting its first daily gain in four sessions to cap off another volatile week.

The Dow closed 112 points higher, or about 0.4%, at 28,606. The ended little changed, settling at 3,483. The meanwhile ended the day down around 0.4% at 11,671.

For the week, the Dow and S&P 500 rose 0.1% and 0.2%, respectively, to notch their third straight weekly gain. The Nasdaq meanwhile climbed 0.8%, posting a four-week winning streak.

Several companies kicked off the third quarter earnings season in the past week with better-than-expected results. (NYSE:), (NYSE:), and Morgan Stanley (NYSE:) all reported stronger reports than analysts had forecast.

U.S. stocks could face more volatility in the week ahead as Q3 earnings season shifts into high gear with reports expected from many of the big-name U.S. technology stocks, including (NASDAQ:), (NASDAQ:), (NYSE:), and (NASDAQ:).

The week after that then sees high-profile companies such as (NASDAQ:), (NASDAQ:), (NASDAQ:), (NASDAQ:), and (NASDAQ:) all release their quarterly results.

To see more of Investing.com’s weekly comics, visit: http://www.investing.com/analysis/comics

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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Economy

IMF Says Asia Faces Long Recovery Slog Even as China Grows By Bloomberg

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© Bloomberg. People gather outside the Kashiram Colony Banda, a state-run housing development for the poor, in Banda, Uttar Pradesh, India, on Sunday, Oct. 11, 2020. Covid-19 is exposing India’s big divides, like access to quality health care, proper sanitation and who gets to eat, and who doesn’t. Even before the lockdowns, roughly three-quarters of the population (more than 1 billion people) couldn’t afford a healthy diet. Photographer: Prashanth Vishwanathan/Bloomberg

(Bloomberg) — The Asia Pacific region is likely to see economic output remain below pre-pandemic trends over the medium term, even as China’s recovery leads the rest of the world, according to the International Monetary Fund.

In its latest assessment of the region, the IMF warned of significant downside risks and economic scarring as labor market participation falls with the most vulnerable likely to be the hardest hit.

While the Washington-based lender said Asia is slowly clawing its way out of its worst-ever recession, it lowered its regional growth forecast to −2.2% in 2020, 0.6 percentage points lower than the forecast in June. The downgrade was mostly due to sharper contractions in India, the Philippines and Malaysia. The fund tips China to grow 1.9% this year.

“Returning to full capacity will be a long slog,” the IMF wrote in its Regional Economic Outlook report, citing ongoing fears of infection, social distancing measures and border closures that will especially hammer countries that rely on tourism.

“Not being premature with withdrawing support both fiscally and monetary should be on the agenda for policy makers not just in China, but globally,” Helge Berger, the IMF’s China mission chief said in an interview on Bloomberg TV.

The IMF’s downbeat outlook for Asia underscores how hard the road to recovery will be even in a region that drives global growth and where, in countries like China and South Korea, the virus has largely been contained.

Also hampering the recovery is employment that has taken a much bigger hit than during the global financial crisis, with women and younger workers suffering the most.

Among support measures governments and central banks can offer to their economies, the IMF said debt monetization can be an option.

“In some cases where inflation remains low, debt monetization could be appropriate, provided it is well communicated, limited in size, time-bound, and implemented within a clear operational framework that preserves central bank independence and does not impede monetary policy,” the fund said.

The current crisis has prompted some central banks in Asia, like Bank Indonesia, to buy sovereign debt directly, while others have said it’s an option that can be used if needed. Critics say the policy risks fanning inflation and undermining the currency in emerging economies, thereby eroding foreign investors’ confidence.

Geopolitical tensions, particularly between the U.S. and China, can also put a break on the recovery given Asia’s central role in global value chains, the fund warned.

“Although China’s recovery can boost regional trade, weak global growth, closed borders, and festering tensions around trade, technology, and security have worsened the prospects for a trade-led recovery in the region,” the IMF said.

(Adds comment from IMF China mission chief in fifth paragraph.)

©2020 Bloomberg L.P.





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Asian investors prepare for choppy trade as U.S. stimulus talks drag on By Reuters

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© Reuters. FILE PHOTO: A TV reporter stands in front of a large screen showing stock prices at the Tokyo Stock Exchange after market opens in Tokyo

By Jessica DiNapoli

NEW YORK (Reuters) – Asian investors prepared for rough trading on Thursday after a bumpy session on Wall Street amid fears that agreement on a key U.S. stimulus bill will not be reached until after the presidential election on Nov. 3.

In early Asian trade, Australian stocks () fell at the open.

“We’re looking at a fairly rough day for regional investors, we had a volatile session in the U.S.,” said Michael McCarthy, chief markets strategist at CMC Markets in Sydney. “Futures markets are reflecting a worse day here. We’ll see losses across the region.”

MSCI’s gauge of stocks across the globe () shed 0.06%.

On Wednesday, the Nikkei 225 index () closed up 0.31% at 23,639.46. The futures contract is down 0.31% from that close.

Hong Kong’s Hang Seng index futures () <.hsic1> were up 0.32%.

Wall Street’s three major averages closed lower on Wednesday after a choppy trading session, as investors eyed difficult negotiations in Washington for a fresh coronavirus stimulus package.

The Dow Jones Industrial Average () inched lower by 0.35%, while the S&P 500 () lost 0.22%. The tech-heavy Nasdaq Composite () dropped 0.28%.

U.S. lawmakers had not reached an agreement on the stimulus package by late Wednesday. President Donald Trump blasted Democrats in a Tweet, accusing them of being unwilling to compromise, despite earlier reports of progress.

The dollar hit a seven-week low on Wednesday against a basket of currencies, while benchmark U.S. Treasury yields rose to four-month highs, after Trump and House Speaker Nancy Pelosi boosted hopes an agreement on stimulus was close.

Oil prices ended lower after U.S. inventories showed demand weakening for refined products as global COVID-19 cases rose.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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IMF endorses Japan PM Suga’s reform agenda, urges BOJ to review inflation goal By Reuters

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© Reuters. Japanese PM Suga walks past the Indonesian national flag as he arrives for a press conference in Jakarta

By Leika Kihara

TOKYO (Reuters) – The International Monetary Fund gave a thumbs-up on Wednesday to plans by new Japanese Prime Minister Yoshihide Suga to maintain the thrust of his predecessor’s “Abenomics” stimulus programmes, while pushing through reforms to revitalise the economy.

Odd Per Brekk, deputy director of the IMF’s Asia and Pacific department, also urged the Bank of Japan (BOJ) to consider reviewing its 2% inflation target to make it more flexible — repeating a recommendation made earlier this year.

“Such a review would provide the BOJ with an opportunity both to reconfirm its commitment to the target and to increase policy flexibility as needed,” he told Reuters in a written interview.

In succeeding Shinzo Abe as prime minister last month, Suga pledged to maintain the first two “arrows” of Abenomics – huge fiscal and monetary stimulus measures to prop up growth.

He also vowed to pursue a re-modeled version of structural reforms, such as steps to boost smaller firms’ productivity, promote digitalisation and consolidate regional banks.

“Giving renewed momentum to the ‘third arrow’ of structural reform would help in the recovery and in putting the economy on a longer-term growth path,” Brekk said.

“In this regard, reforms to promote the digital economy, revive regional economies, and deal with regional bank issues should be given high priority,” he said.

Labour market reforms, such as opening up more career opportunities for women and encouraging more telework, must also remain a priority, Brekk said.

Japan’s economy suffered its biggest postwar slump in the second quarter as the coronavirus pandemic slammed domestic and global demand, and analysts expect any rebound to be modest as uncertainty over the outlook weighs on consumption and capital spending.

FLEXIBLE TARGET NEEDED

The economy was already in recession before the health crisis due to the blow from last year’s sales tax hike. Regional banks are reeling from sluggish credit demand, a rapidly ageing population and narrowing margins from years of ultra-low interest rates.

With high uncertainty over the economic outlook, the BOJ should avoid a premature withdrawal of stimulus and wait until a recovery takes hold, Brekk said.

It could take additional steps if needed, such as an expansion of its special lending programmes, a cut in longer-term yield targets and an increase in purchases of exchange-traded funds, he said.

In the longer run, the BOJ should consider a review of its price target and policy framework to allow itself more room to address financial system risks, Brekk said.

Under yield curve control (YCC), the BOJ guides short-term rates at -0.1% and 10-year bond yields around zero as part of efforts to achieve its elusive 2% inflation target.

Years of heavy money printing and the adoption of YCC, however, have failed to fire up inflation, drawing criticism that the policies were doing more harm than good by hurting commercial banks and discouraging them from boosting lending.

Brekk’s comments followed those in a staff report in February, in which the global lender urged the BOJ to re-define its inflation target as a long-term goal with room for some allowances.

It said this would give the central bank more flexibility in whittling down stimulus to ease the pain on financial institutions.





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