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Dollar extends rally in Asia after US data but stocks tumble

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Asian markets start the week on a cautious note

HONG KONG: The dollar continued to brush aside other currencies Thursday after further proof of the booming US economy sent Treasury yields surging, but Asian equities sank with more Federal Reserve rate hikes looking certain.
A forecast-busting private jobs report, a surge in activity in the services sector and optimism in the retail market were the latest evidence that the world’s top economy is firing on all cylinders, helping send the Dow to a record close for the second day in a row.
However, the news also saw a sell-off in safe-haven Treasuries – a sign of confidence – sending the cost of borrowing to its highest level in seven years, in turn fuelling a surge in the dollar, helping it hit an 11-month high against the yen.
Hawkish comments from Fed boss Jerome Powell also provided momentum to dollar buying.
The greenback extended Wednesday’s gains against its major peers, with easing concerns about a row between Italy and EU leaders unable to staunch a sell-off in the euro.
Higher-yielding and emerging market currencies were among the worst hit.
The Chinese yuan took a hit, despite mainland markets being closed. The dollar jumped 0.2 percent to 6.9 against the offshore yuan, with some predicting it could break 7 at some point.
The US unit hit a record 73.82 Indian rupees and a fresh 20-year high against the Indonesian rupiah, with the two countries battered by surging oil prices and an outflow of cash as investors shift attention to US assets.
It was two percent higher against the South African rand, 1.5 percent up on the Mexican peso and one percent higher against the Australian dollar and South Korean won.
The New Zealand dollar and Thai baht were also sharply lower.
The prospect of borrowing becoming even more expensive rattled equity traders in Asia.
Hong Kong lost 1.7 percent with property firms hit by concerns the higher rates — the city’s monetary policy is linked to the Fed’s — will hammer the booming real estate market.
Tokyo ended 0.6 percent lower, while Singapore, Seoul, Manila, Taipei and Jakarta shed more than one percent. Mumbai was down 2.3 percent.
Sydney added 0.5 percent while Shanghai was closed for a public holiday.
“This withdrawal of liquidity and gradual tightening of monetary policy” by the Fed is reverberating across financial markets, Bob Baur, chief global economist at Principal Global Investors, told Bloomberg TV. He warned US Treasuries would likely rise further “later this year, early next year — and I think that’s going to be a real problem for stock markets.”
However, Stephen Innes, head of Asia-Pacific trading at OANDA was more upbeat about the outlook.
“With positive signs gradually showing up for Shanghai and the Nikkei, Asia equities, while still pulling up the rear, should make leaps and bounds this quarter, even more if the US and China resolve their trade issues.”
He added that the central People’s Bank of China had a big enough war chest to support the economy.
“It will take some patience, but three months down the road we should start to see a shift higher in mainland economic data after the PBoC stimulus efforts,” he said.
On oil markets both main contracts edged down after serving up yet another sharp rise on Wednesday on the back of comments from US Secretary of State Mike Pompeo and White House National Security Advisor John Bolton regarding Iran that exacerbated worries about a supply hit from the region.
With US sanctions on Tehran due to be implemented early next month there are worries about narrowing supplies, while upheaval in Venezuela and the strong dollar have also helped the rally.
In early European trade London fell 0.3 percent, Paris lost 0.4 percent and Frankfurt eased 0.1 percent.
Tokyo – Nikkei 225: DOWN 0.6 percent at 23,975.62 (close)
Hong Kong – Hang Seng: DOWN 1.7 percent at 26,608.11 (close)
Shanghai – Composite: Closed for a public holiday
London – FTSE 100: DOWN 0.3 percent at 7,490.21
Euro/dollar: DOWN at $1.1478 from $1.1505 at 2100 GMT
Pound/dollar: DOWN at $1.2955 from $1.2966
Dollar/yen: UP at 114.50 from 114.46 yen
Oil – West Texas Intermediate: DOWN 16 cents at $76.25 per barrel
Oil – Brent Crude: DOWN 15 cents at $86.14 per barrel
New York – Dow Jones: UP 0.2 percent at 26,828.39 (close)

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Ankara train crash leaves nine dead

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ANKARA: Nine people were killed and nearly 90 injured after a high-speed train crashed into a locomotive in the Turkish capital on Thursday, officials said, becoming the latest rail disaster to hit the country.
The accident comes less than six months after 24 people were killed in a train crash in northwestern Turkey in a series of several fatal accidents in recent years.
Transport Minister Cahit Turhan told reporters that three of those killed were operators of the train. One of the victims died in hospital, he added.
Among those killed was a German citizen, a source in the Ankara governor’s office told AFP, confirming reports in German media.
The Ankara public prosecutor said 86 people were injured. Health Minister Fahrettin Koca earlier said 34 of those injured were still in hospital for treatment.
Two were in a serious condition, Koca added on Twitter.
The fast train had been on its way from Ankara’s main station to the central province of Konya. According to Hurriyet daily, there were 206 passengers on board.
Turkish President Recep Tayyip Erdogan said three people had been detained. In a speech in Ankara, he vowed those responsible would be held to account.
The three were employees of the Turkish state railways agency who were detained over suspected negligence, according to state news agency Anadolu.
Ankara governor Vasip Sahin said the accident happened “after the 6.30 high-speed train to Konya hit a locomotive tasked with checking rails on the same route.”
Turhan said the accident took place six minutes after the train left Ankara as it entered the Marsandiz station.
The governor said, “technical investigations” were underway to find out exactly what caused the crash in Yenimahalle district.
The capital’s chief prosecutor launched an investigation into the crash, Anadolu said.
Images published by Turkish media showed some wagons had derailed and debris from the train scattered on the track, which was covered in snow.
The windows of one wagon were completely broken while another wagon had been smashed after hitting the footbridge, which also collapsed, an AFP correspondent at the scene said.
The correspondent saw at least seven bodies taken away as rescue workers searched the blue and white wagons covered with debris.
Turkish Red Crescent relief workers distributed blankets and tea to the survivors, who were gathered on a road near the scene that had been blocked to traffic.
A female witness whose name was not given told NTV broadcaster that the passenger train had not yet increased its speed when the crash happened.
A relative of one of those aboard the train told the channel that some passengers had broken windows and then safely exited the wagons.
One of those killed was Berahitdin Albayrak, a science lecturer and former vice-chancellor at Ankara University, the institution said on Twitter.
Later trains from Konya to Ankara and vice versa were canceled.

 

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ADB to provide $7.528 bn to Pakistan

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ISLAMABAD: The Asian Development Bank (ADB) has planned to support Pakistan with lending of $7.528 billion for various development projects during the next three years.

In its new Country Operations Business Plan (COBP) for Pakistan 2019-21 revealed on Thursday, the ADB has proposed a sovereign lending program for next three years worth $7.528 billion, consisting of $5.37 billion from regular Ordinary Capital Resource (OCR) lending and $2.158 billion from Concessional COR Lending (COL). COL includes a carryover of $600 million from 2018. The non-lending program for 2019–2021 is $21.7 million, including transaction technical assistance for various pipeline projects. An amount of $2.245 billion in ADB loan financing is allocated for the energy sector, which is 29.8 percent of the total pipeline for 2019–2021.  

The pipeline includes a multi-tranche financing facility for Transmission Strengthening (tranche 1) for National Transmission and Dispatch Company (NTDC), Hydropower Development Project for Water and Power Development Authority (WAPDA), and support for the Turkmenistan-Afghanistan-Pakistan-India Gas Pipeline Project. For the transport sector, some $1.394 billion of ADB loan financing for the sector (18.5% of the total pipeline) have been allocated for the transport sector.  The pipeline includes the Sustainable National Highway Project and the Sindh Hyderabad Southern Bypass Project.

ADB also proposes support for the revitalization of Pakistan Railways to improve transport sector sustainability, including exploring non-conventional financing arrangements. For agriculture, natural resources, and rural development, ADB has allocated $794 million in loan financing to the sector (10.6% of the total pipeline).  The pipeline includes the Greater Thal Canal Irrigation Project, the Kurram Tangi Water Resources Project, and the Smaller Cholistan Water Resources Development Project. Similarly, for water and other urban infrastructure and services, the ADB has allocated $470 million in ADB loan financing (6.2% of the total pipeline).  The pipeline includes a cross-sector project readiness facility for Punjab and the Punjab Cities Improvement Project. ADB has also allocated $2.4 billion in loan financing to the finance and public sector management sectors (31.9% of the total pipeline).

The COBP, 2019-2021, includes new projects such as trade and competitiveness program (subprogram 1) in 2019; financial markets development in 2020; infrastructure financing and PPPs in 2021; as well as the second phase of support for the Benazir Income Support Program in 2020. The education and health sectors pipeline includes $225 million in loan financing (3.0% of the total pipeline). ADB’s re-engagement in education and health sectors includes $175 million for projects on secondary education in Sindh and improving workforce readiness and skills development in Punjab, and $50 million projects to improve quality of health care services in Khyber Pakhtunkhwa (KP).

ADB will also provide technical assistance across sectors to help project implementation and to generate and disseminate knowledge products to support policy and project development, as well as to enhance project quality and readiness. Pakistan, a group B developing member country, is eligible for regular OCR lending and concessional OCR lending (COL).  The indicative resources available during 2019–2021 for sovereign operations amount to $5,712 billion, comprising $4.29 billion for regular OCR lending and $1.422 billion for COL. The final allocation will depend on available resources, project readiness, project performance and debt distress rating of the country among others. ADB’s non-sovereign operations will supplement these resources.  ADB will also explore co-financing from other sources and seek financing from the regional pool under concessional resources and regular OCR for regional cooperation and integration.

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Modi loosing from traditional stronghld!

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NEW DEHLI: India’s ruling party looked set to lose power in at least one of three traditional stronghold states releasing election results on Tuesday, in a blow to Prime Minister Narendra Modi ahead of national polls in 2019.

Early election results in the central state of Chhattisgarh indicated the main opposition Congress party of Rahul Gandhi would win 59 seats compared to just 11 for Modi’s Bharatiya Janata Party.

The Hindu nationalist BJP has ruled Chhattisgarh for the past 15 years.

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