World leaders drew praise yesterday not so much for the boldness of their US$1.1 trillion package to help revive the global economy as for at least not making the crisis worse by failing to agree.
US President Barack Obama hailed the G20 summit in London on Thursday as a “turning point,” the meeting coinciding with shreds of data in the US, Europe and China that suggested the worst crisis since the 1930s may have hit bottom.
Markets generally reacted favorably to the summit’s outcomes, although a test of that optimism would come later yesterday when US unemployment data for last month was to be released hard on the heels of other jobs figures pointing to a worsening employment market globally.
The yen fell against higher-yield currencies like the New Zealand dollar and hit a six-month low against the Australian dollar, analysts seeing support there and in emerging markets because of G20 moves to beef up the role of the IMF.
The euro and dollar were steadier against the yen, the dollar up slightly at ¥99.65 after earlier nudging above the psychologically important ¥100 level.
Asian stocks rose for a fourth straight day as perceptions of a coordinated global policy response grew after the G20 summit.
Asia’s rise came after Wall Street and European shares firmed after the G20 meeting broke up. The Dow Jones industrial average rose 2.8 percent.
The lack of any real negative fallout from the G20 meeting followed a smattering of positive news this week.
US factory orders rose in February for the first time in seven months, bolstering hopes that a recession in the world’s largest economy may have reached a bottom.
A rebound in China’s official purchasing managers’ index (PMI) last month showed that the Chinese economy also may have bottomed out.
The G20 leaders said the measures agreed to would raise world output by 4 percent by the end of next year, although they were hazy on the amount of stimulus spending to date, with estimates ranging between US$2 trillion and US$5 trillion.
They agreed to triple the IMF’s resources to US$750 billion and to a US$250 billion package over two years to support global trade flows, which are forecast to fall 9 percent this year.
The leaders of the world’s richest and biggest economies, which account for more than 80 percent of world trade, also agreed to tighten rules on tax havens, hedge funds and credit rating agencies.
Markets took the big headline US$1.1 trillion figure in their stride, but were perhaps cheered more by the fact there was no dramatic outcome after harsh words on the eve of the summit by French President Nicolas Sarkozy.
A split had threatened to emerge between Washington, which wants more money pumped into economies to stimulate a return to growth, and France and Germany who favor tighter regulations of the financial industry.
“We expected a lot of discord between the US and the UK, and France and Germany, with China poking its nose in as well, but they seem to come out of the event as one connected group, seemingly on the same page,” said Dwyfor Evans, currency strategist with State Street Global Markets in Hong Kong.
“It implies that there is policy coordination and not policy discord,” he said.
Some reaction to the G20 outcome was more skeptical.
“For now at least the trillions of unmovable, over-valued and mismarked loans that continue to sit on the balance sheets of the world’s banks are forgotten. It’s amazing what a winning smile and some collective handshakes can do,” said Sean Keane, managing director of Triple T Consulting in New Zealand and a former Credit Suisse strategist.
The generally positive G20 tone came as a US accounting standards board decided to allow banks more flexibility in how they value the toxic assets that forced billions of dollars in write-downs. The changes, to take effect in the second quarter, could reduce writedowns and soften the blow to bank earnings.
The G20 reaction also helped mask disappointment at the decision by the European Central Bank to cut its main financing rate by half the expected 50 basis points, to 1.25 percent. Investors shrugged off their disappointment, some betting more cuts were on the way.
But there has also been plenty of bleak news quantifying the human cost of the global crisis.
On Thursday, data showed the number of US workers claiming unemployment benefit was at its highest level in 26 years.
The number of unemployed seeking assistance also rose sharply in Spain last month and euro zone unemployment jumped to 8.5 percent in February.
The US unemployment data for last month is expected to show that the economy shed 650,000 nonfarm jobs and that the unemployment rate climbed to 8.5 percent, which would be the highest level since 1983.
EXPRESSING GRATITUDE: Without its Taiwanese partners which are ‘working around the clock,’ Nvidia could not meet AI demand, CEO Jensen Huang said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and US-based artificial intelligence (AI) chip designer Nvidia Corp have partnered with each other on silicon photonics development, Nvidia founder and CEO Jensen Huang (黃仁勳) said. Speaking with reporters after he met with TSMC chairman C.C. Wei (魏哲家) in Taipei on Friday, Huang said his company was working with the world’s largest contract chipmaker on silicon photonics, but admitted it was unlikely for the cooperation to yield results any time soon, and both sides would need several years to achieve concrete outcomes. To have a stake in the silicon photonics supply chain, TSMC and
IDENTITY: Compared with other platforms, TikTok’s algorithm pushes a ‘disproportionately high ratio’ of pro-China content, a study has found Young Taiwanese are increasingly consuming Chinese content on TikTok, which is changing their views on identity and making them less resistant toward China, researchers and politicians were cited as saying by foreign media. Asked to suggest the best survival strategy for a small country facing a powerful neighbor, students at National Chia-Yi Girls’ Senior High School said “Taiwan must do everything to avoid provoking China into attacking it,” the Financial Times wrote on Friday. Young Taiwanese between the ages of 20 and 24 in the past were the group who most strongly espoused a Taiwanese identity, but that is no longer
A magnitude 6.4 earthquake and several aftershocks battered southern Taiwan early this morning, causing houses and roads to collapse and leaving dozens injured and 50 people isolated in their village. A total of 26 people were reported injured and sent to hospitals due to the earthquake as of late this morning, according to the latest Ministry of Health and Welfare figures. In Sising Village (西興) of Chiayi County's Dapu Township (大埔), the location of the quake's epicenter, severe damage was seen and roads entering the village were blocked, isolating about 50 villagers. Another eight people who were originally trapped inside buildings in Tainan
‘ARMED GROUP’: Two defendants used Chinese funds to form the ‘Republic of China Taiwan Military Government,’ posing a threat to national security, prosecutors said A retired lieutenant general has been charged after using funds from China to recruit military personnel for an “armed” group that would assist invading Chinese forces, prosecutors said yesterday. The retired officer, Kao An-kuo (高安國), was among six people indicted for contravening the National Security Act (國家安全法), the High Prosecutors’ Office said in a statement. The group visited China multiple times, separately and together, from 2018 to last year, where they met Chinese military intelligence personnel for instructions and funding “to initiate and develop organizations for China,” prosecutors said. Their actions posed a “serious threat” to “national security and social stability,” the statement
RSS