Japan’s annual labour talks end with the highest wage hike in 33 years

The US dollar

The USD rose to an eight-day high yesterday at the release of a hotter-than-anticipated producer price index in the US, casting more doubt on when the Fed could start cutting rates. US indices ended the session in negative territory on Thursday and are poised to trade lower on Friday.

The Bank of Japan

In Japan, annual labour talks ended up with the highest wage hike in 33 years, reinforcing views that the BOJ will soon shift away from its stimulus program. The Bank of Japan (BOJ) is one of the four central banks to decide on rates next week.

The People's Bank of China

As expected, the People's Bank of China (PBOC) maintained its one-year medium-term lending facility unchanged at 2.50% on 387 billion yuan worth of loans. That is lower than the 481 billion yuan worth of Municipal Liquidity Facility (MLF) loans set to expire this month. The Chinese authorities are withdrawing cash from a medium-term policy loan as they now want to prioritize currency stability. This marked the first cash withdrawal through the lending instrument since November 2022. The central bank said in a statement this morning that this latest loan operation has "fully met financial institutions' demand" to maintain banking system liquidity that is reasonably ample.

China's house price index

Meanwhile, China's new home prices dropped for an eighth straight month in February. New home prices fell 0.3% month-on-month, in line with January's decline. On a year-on-year basis, prices fell 1.4%, faster than the 0.7% drop in January and the biggest decline in 13 months.

Vodafone

Vodafone announced this morning that it plans to return €4 billion to shareholders via buybacks. This came after Swisscom said it would buy Vodafone Italia for €8 billion and merge the business with its Italian subsidiary, Fastweb. The deal, expected to be closed in the first quarter of 2025, will create Italy's second-biggest fixed-line broadband operator.

Adobe

Adobe shares slumped in extended trading. Better-than-expected earnings failed to support the stock. Earnings came in at $4.48 per share, 10 cents higher than forecast. Revenue also beat expectations, albeit marginally, rising 11% to $5.18 billion. Likewise, the market ignored the announcement of a new $25 billion stock repurchase program. Investors reacted to Adobe's forecast for its current quarter. The group sees second-quarter revenue between $5.25Bln and $5.30Bln, below analysts' estimates of $5.31Bln.

Adobe feels the pressure on two fronts. It has to deal with weak demand from companies and individuals, who have shifted focus to cutting costs in a difficult economic environment. Stiffer competition is also a growing concern. Even though Adobe has incorporated AI features into its offerings, it now faces competition from start-ups that offer AI services similar to Adobe.

Oil

oil prices this morning traded at a four-month high. WTI and Brent rose on Thursday as the International Energy Agency predicted a tighter market in 2024 and raised its view on oil demand growth this year. The International Energy Agency (IEA) raised its view on 2024 oil demand growth for the fourth time since November and now sees demand rising by 1.3 million barrels per day in 2024, up 110,000 bpd from last month. The IEA also cut its 2024 supply forecast and now expects oil supply to rise by 800,000 bpd to 102.9 million bpd this year. Tonight, Baker Hughes rig count data. Last Friday, the weekly survey showed a drop in total rig count to 622 last week, from 629 in the previous one. The number of oil rigs in operation fell by two to 504.