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Japan cuts economy view on weaker factory output – Financial Post

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TOKYO — Japan’s government has trimmed its overall view on the economy for the fourth time this year due to a downgrade in its assessment of manufacturing output in spite of a U.S.-China trade truce.

It described the economy as recovering at a moderate pace, in its December report, but said weakness centered on manufacturers increased a notch amid continued softness in exports, which was a slightly bleaker view than last month.

The assessment suggests domestic demand remains strong enough to offset risks to Japan’s export-reliant economy from slowing global growth and pressures on exports from the 17-month-long Sino-U.S. trade war.

But the downbeat estimation could add pressure on the government to devise new steps to support growth and for the central bank to maintain its ultra-loose monetary policy.

On Thursday, the Bank of Japan kept its short- and long-term rate targets steady though it warned that risks to the recovery remained high.

The last time the government marked down its view on the economy four times in a single year was in 2012.

The downgrade was mainly the result of a cut in the view on industrial production because of the widening impact from declining car exports, including on steel, chemical and electronic component manufacturers.

“Some weakness that appeared in other industries related to car production was the trigger for this further downgrade,” an official from the Cabinet Office, which helps coordinate government policy, said at a briefing.

The government left untouched its view on most of the other individual components of the report, offering a generally positive view of domestic demand.

It also downgraded its overall assessment of the economy in October, May and March this year.

Japan’s economy, the world’s third-largest, grew in the third quarter at the slowest pace seen so far this year, though it still expanded an annualized 1.8%, mostly driven by robust capital spending and domestic demand. (Reporting by Daniel Leussink; Editing by Jacqueline Wong)

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Economy

Carney, OTPP CEO set timelines for climate friendly economy at Davos – BNN

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Two Canadian investment leaders endorsed a transition to clean energy at a virtual Davos World Economic Forum on Wednesday, as more investors worldwide push for concrete sustainability commitments.

Former Bank of Canada governor Mark Carney said that politicians can help markets finance the transition to zero-emission economies by setting credible forward commitments.

Canada’s carbon pricing plan is an example of a forward commitment, Carney said, since it would hike the federal tax to $170 a tonne by 2030 from $30 currently.

“I think we’re reaching the tipping point. The question is execution. How is that political will channelled?” said Carney, who was speaking in his capacity as United Nations Special Envoy for Climate Action and Finance.

He pointed to recent COVID-19 vaccine purchase agreements as an example of the power of putting political will behind contracts.

Carney, who is also vice-chairman at Brookfield Asset Management, said that financial and economic markets will adjust to future goals, such as upcoming bans of internal combustion engines in Europe. Carney pointed to his research with U.S. Treasury Secretary and former Federal Reserve chairwoman Janet Yellen, which suggested that markets will “smooth” out the carbon price hikes.

“That’s what markets do best. And by the time you get to the point where the price is high, the economy has adjusted,” said Carney.

In a separate session, Ontario Teachers’ Pension Plan chief executive Jo Taylor said the pension plan tries to push its portfolio companies toward sustainability, rather than immediately divesting in carbon-intensive companies. The pension plan said last week it would commit to reaching net-zero greenhouse gas emissions by 2050.

“Through that engagement, rather than divestment, I think we can particularly push these companies to do a better job and actually provide some additional help and services in and around the world where they may not be immediately available,” said Taylor.

Carney and Taylor’s comments at Davos came as 61 global business leaders said at the forum they would begin using a standardized set of environmental, social and governance metrics and disclosures.

Global investment firm BlackRock Inc. also said this week it would start giving “heightened scrutiny” to investments that posed a climate-change risk, calling for more company disclosures not only on climate change but also social goals such as equity, diversity and inclusion. In his letter to CEOs, BlackRock chief executive Laurence Fink said that between January and November 2020 there was a 96 per cent year-over-year increase in sustainable asset investments in mutual funds and exchange traded funds.

Carney said that as more governments sign on to net-zero pledges, it is “cascading down” to large pension funds, insurance companies and sovereign wealth funds.

“We don’t often invest on our own, so what we need to do is also persuade other investors,” said Taylor. “Some of the investors we work with have a much more short-term view of what they’re trying to achieve.”

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Gold's rally to slow, not stop, as global economy recovers: poll – The Globe and Mail

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Analysts and traders have downgraded their forecasts for gold but still expect prices to recover from current levels and many see it achieving record highs this year, a Reuters poll showed on Wednesday.

Traditionally seen as a safe place to store wealth, gold surged to a record level of $2,072.50 an ounce last summer as the coronavirus swept the globe.

But prices have since dipped to around $1,850 as the rollout of vaccines encourages investors to channel more money into assets such as equities that benefit from economic growth.

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Gold will average $1,900 an ounce during the January-March quarter, $1,925 an ounce for the full year and $1,908 in 2022, according to the median forecasts returned by a survey of 40 analysts and traders.

That is lower than the prediction from a similar poll three months ago that gold would average $1,965 in 2021.

“We expect gold to perform well in 2021, although at a slightly more subdued rate compared to 2020,” said Ross Norman, an independent analyst.

“We expect gold to score a fresh all-time high in 2021.”

“Financial markets remain vulnerable and we think investors will continue to see gold as the near perfect antidote,” he said.

Gold has benefited from action by central banks to slash interest rates and pump cash into the economy, which raises the threat of inflation and reduces returns on bonds, a competing asset class.

But while global economic recovery may weaken the dollar, helping gold by making it cheaper for buyers outside the United States, it also is likely to raise bond yields, making gold less attractive, said Julius Baer analyst Carsten Menke.

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Silver behaved in a similar way to gold last year, surging to $29.84 an ounce in the summer, its highest since 2013, before falling to around $25.

The poll returned median forecasts for prices to average $25.86 this year, a little lower than the prediction of $26.00 returned by the poll three months ago, and $25.30 in 2022.

Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.

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Economy

Gold's rally to slow, not stop, as global economy recovers: poll – The Globe and Mail

Published

 on


Analysts and traders have downgraded their forecasts for gold but still expect prices to recover from current levels and many see it achieving record highs this year, a Reuters poll showed on Wednesday.

Traditionally seen as a safe place to store wealth, gold surged to a record level of $2,072.50 an ounce last summer as the coronavirus swept the globe.

But prices have since dipped to around $1,850 as the rollout of vaccines encourages investors to channel more money into assets such as equities that benefit from economic growth.

Story continues below advertisement

Gold will average $1,900 an ounce during the January-March quarter, $1,925 an ounce for the full year and $1,908 in 2022, according to the median forecasts returned by a survey of 40 analysts and traders.

That is lower than the prediction from a similar poll three months ago that gold would average $1,965 in 2021.

“We expect gold to perform well in 2021, although at a slightly more subdued rate compared to 2020,” said Ross Norman, an independent analyst.

“We expect gold to score a fresh all-time high in 2021.”

“Financial markets remain vulnerable and we think investors will continue to see gold as the near perfect antidote,” he said.

Gold has benefited from action by central banks to slash interest rates and pump cash into the economy, which raises the threat of inflation and reduces returns on bonds, a competing asset class.

But while global economic recovery may weaken the dollar, helping gold by making it cheaper for buyers outside the United States, it also is likely to raise bond yields, making gold less attractive, said Julius Baer analyst Carsten Menke.

Story continues below advertisement

Silver behaved in a similar way to gold last year, surging to $29.84 an ounce in the summer, its highest since 2013, before falling to around $25.

The poll returned median forecasts for prices to average $25.86 this year, a little lower than the prediction of $26.00 returned by the poll three months ago, and $25.30 in 2022.

Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.

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