© Reuters. A medical worker in a protective suit collects a swab sample from a resident for nucleic acid testing, outside a closed entrance of a building during lockdown, amid the coronavirus disease (COVID-19) pandemic, in Shanghai, China, May 12, 2022. REUTERS/Aly
By Brenda Goh and Martin Quin Pollard
SHANGHAI/BEIJING (Reuters) – Shanghai authorities combed the city on Thursday for its last COVID-19 cases in the hope of clearing the way for an exit from a painful six-week lockdown, while Beijing curbed taxi services to keep a lid on its smaller outbreak.
The Chinese commercial hub of 25 million people has in recent days been tightening its lockdown for a final push to eradicate the virus by the end of the month, having made some significant progress, according to data this week.
Shanghai’s mass testing detected just two new cases outside areas facing the strictest curbs on May 11, officials said on Thursday, but that was two more than none the previous day.
Significantly, the cases were found in two of the city’s 16 districts, Xuhui and Fengxian, that authorities said this week were among eight that had achieved “zero COVID” status, having had no community cases for three consecutive days.
The latest cases show the difficulty in finishing off the highly transmissible Omicron variant despite ruthless enforcement of some of China’s harshest restrictions since the virus emerged in the city of Wuhan in late 2019.
The new infections also raise concern about how long a return to normal life might last under China’s uncompromising “zero COVID” policy after the lockdown is finally lifted.
Yu Linwei, vice-governor of Xuhui, told a news conference his district would not relax anti-epidemic efforts, making sure everyone is tested and that new cases and their close contacts are isolated in quarantine as quickly as possible.
“We dare not slack off,” he said.
Some of the district’s residents, who had in recent days been allowed to leave their compounds for walks and grocery shopping, say they have received notices telling them they can’t leave home and to prepare for more testing.
Overall, Shanghai reported 1,305 new local asymptomatic coronavirus cases for May 11, up from 1,259 a day earlier and 144 symptomatic cases, down from 228. But these were in areas already under the tightest controls.
The cases found in the relatively freer communities are the ones most closely watched for clues as to where Shanghai’s outbreak is heading. Other Chinese cities under similar lockdowns began easing curbs after a period of zero cases in such areas.
China’s caseloads are tiny fractions of what major cities around the world have come to shrug off, as most countries lift restrictions to “live with the virus” even though infections are still spreading.
China is bucking the global trend and has doubled down on its “zero COVID” policy, putting hundreds of millions of people in dozens of cities under movement curbs, causing significant economic damage and disruption to international trade and supply chains.
But China says it is saving lives.
It points to the 1 million COVID deaths in the United States, and many more millions elsewhere, while its official toll since the beginning of the pandemic is just over 5,000.
The head of the World Health Organization, Tedros Adhanom Ghebreyesus, said this week China’s policy was “not sustainable”, prompting an angry rebuke from Beijing and censorship of his “irresponsible” comments.
The capital, Beijing, reported 46 new COVID cases for May 11, up from 37.
Late on Wednesday, Beijing announced the suspension of taxis and ride hailing services in parts of Chaoyang district, Beijing’s largest and the epicentre of its outbreak, and two other districts.
Authorities there have banned dine-in services at restaurants, closed some malls, entertainment and tourist venues, suspended sections of its bus and subway systems and imposed lockdowns on some residential buildings.
Having tightened restrictions earlier in its outbreak, Beijing is faring much better than Shanghai did at this point in its latest outbreak.
In an apartment building in Shanghai’s central Jing’an district, residents were told once again they cannot leave their flats after being allowed out last week to walk around the compound.
“As restrictive as it was, those 10 minutes of freedom, being able to get some fresh air outside my building and walk my dog, kept my sanity,” building resident Stephanie Sam, 27, said on the WeChat social media site.
The re-tightening of curbs has “taken away the last slither of hope I had about this dystopian nightmare ending anytime soon”, she said.
The district has reported zero community cases and, like other areas in the city, has entered what authorities call “silent management mode”.
That usually means boards or fences around buildings, deliveries forbidden, and residents once again confined to their homes.
Fed’s Evans backs ‘front-loaded’ rate hikes, then measured pace
© Reuters. FILE PHOTO: Chicago Federal Reserve Bank President Charles Evans looks on during the Global Interdependence Center Members Delegation Event in Mexico City, Mexico, February 27, 2020. REUTERS/Edgard Garrido
By Dan Burns
(Reuters) – Chicago Federal Reserve Bank President Charles Evans on Tuesday said he supports an initial burst of monetary policy tightening, and then a more “measured” pace of rate hikes to allow time to assess inflation and the impact of higher borrowing costs on the job market.
“I think front-loading is important to speed up the necessary tightening of financial conditions, as well as for demonstrating our commitment to restrain inflation, thus helping to keep inflationary expectations in check,” Evans said in remarks prepared for delivery to Money Marketeers of New York University.
Inflation, running at more than three times the Fed’s 2% target, is “much too high,” Evans said, and the Fed should raise its policy rate “expeditiously” to a neutral range of about 2.25%-2.5%.
Fed policymakers have begun doing so. They raised rates by a bigger-than-usual half-of-a-percentage point earlier this month, to a range of 0.75%-1%, and Fed Chair Jerome Powell signaled at least two more such rate hikes to come. The Fed also plans to start trimming its $9 trillion balance sheet next month.
But Evans’ preference for transitioning to a more “measured pace” – a phrase that in the past has meant quarter-point rate hikes — sounded a bit more dovish than Fed Chair Jerome Powell, who spoke earlier in the day.
The central bank, Powell told the Wall Street Journal on Tuesday, will keep “pushing” on rate hikes until it sees inflation move down in a “clear and convincing way” and will not hesitate to move more aggressively it that does not happen.
Evans said that slowing the pace of rate hikes after an initial front-loading would give the Fed time to check if supply chain kinks ease, and to evaluate inflation dynamics and the impact of higher borrowing costs on what called a “downright tight” labor market.
Unemployment is at 3.6% and job openings are at a record high.
“If we need to, we will be well positioned to respond more aggressively if inflation conditions do not improve sufficiently or, alternatively, to scale back planned adjustments if economic conditions soften in a way that threatens our employment mandate,” Evans said.
With inflation pressures as broad and strong as they are, he said, interest rates may need to rise “somewhat” above neutral to bring down inflation.
Traders are betting on that, with prices in futures contracts tied to the Fed’s policy rate reflecting expectations for an end-of-year policy rate range of 2.75%-3%.
But in Evans’ view that doesn’t mean the Fed will end up triggering a recession, as critics including several former U.S. central bankers have recently warned.
“Given the current strength in aggregate demand, strong demand for workers, and the supply-side improvements that I expect to be coming, I believe a modestly restrictive stance will still be consistent with a growing economy,” Evans said.
Australian banks enter tech arms race as rising rates squeeze profit
© Reuters. FILE PHOTO: A view of a Commonwealth Bank of Australia branch in Sydney, Australia, April 18, 2018. REUTERS/Edgar Su
By Byron Kaye
SYDNEY (Reuters) – The 10-minute home loan – at the tap of a smartphone screen – is emerging as the next frontier in Australian banking as rising interest rates quash a pandemic-fuelled property boom, eating into mortgage income and renewing focus on cost-cutting tech.
The Big Four lenders booked blockbuster profit during the COVID-19 pandemic due to a leap of nearly one-third in property prices since 2020, but raging inflation brought a shock rate hike this month and expectations of several more.
That has left banks, which make most of their profit from mortgages, looking to automate every step of the loan process and cut overheads such as staffing and real estate to keep growing profit from what analysts say may be a shrinking pool of money.
So far only Commonwealth Bank of Australia (OTC:CMWAY) (CBA), the biggest lender, has put a speed target on its automation drive. It said a fully digitised loan service that went live on Tuesday could process an application in as little as 10 minutes.
But in earnings updates this month, National Australia Bank (OTC:NABZY) Ltd (NAB), Westpac Banking (NYSE:WBK) Corp and Australia and New Zealand Banking Group Ltd (ANZ) all pointed to automation to offset the impact of a cooling property market.
“They’re incentivised to invest in tech and get up to where CBA is because it drives people online,” said Hugh Dive, chief investment officer at Atlas (NYSE:ATCO) Funds Management, which holds shares of major banks.
“They can improve profit without growing their top line.”
Citi banking analyst Brendan Sproules in a client note said chief executive officers face an “endless battle to transform their 1970s/80s process and systems into the modern digital age”.
“A rising cash rate might just provide the opportunity to accelerate this transformation along faster than we first thought.”
Instead of filling in paper forms and supplying documents, to be verified and analysed by back-office staff, a customer would enter the address of a property they planned to buy plus their bank account login. Their computer or smartphone camera would confirm their identity.
Algorithms figure out the rest, such as employment history and probable purchase price.
A bank employee only steps in if the software picks up discrepancies in the data, people who work on loan automation software said.
Some smaller and online-only lenders already automate mortgage applications but – until now – not the Big Four, which dominate Australia’s A$10 trillion ($7.00 trillion) housing market with three-quarters of loans by value.
“What we’re seeing right now is a lot of optimisation using existing processes, using existing loan origination systems,” said Hessel Verbeek, head of banking strategy at KPMG Australia.
“The room for improvement will include when people actually start to replace some of the key systems.”
Banks have not specified how much money they plan to spend automating mortgage approvals, nor how much they would save.
Of the A$3.6 billion the Big Four invested in the first half of the 2022 financial year, 35% went to “productivity and growth”, versus 32% a year earlier, showed data from KPMG.
NAB, the second-biggest lender, said last week its “investment in customer experience, efficiency and sustainable revenue” rose 46% in October-March from the same period a year earlier, to A$228 million. It said it wants every home loan automated by 2024.
ANZ, which has been losing mortgages for two years as understaffing led to a surge in approval times, said it has only begun work digitising processes.
“There’s no doubt we’ve got some catching up to do,” CEO Shayne Elliott was quoted as saying in The Australian.
Banks were slow to start automating retail products partly because large compliance and risk management overhauls sapped both investment budgets and management attention since regulatory scrutiny dramatically increased in 2018, analysts and industry participants said.
Rebecca Engel, head of Microsoft Corp (NASDAQ:MSFT)’s Australian financial services unit, said there was a “massive increase in investment, deployment, acceptance and trust in technology” by banks in tandem with heightened regulatory attention and higher transaction volume during the pandemic.
“The goal should be higher levels of assurance, higher levels of quality, at a lower cost,” Engel told Reuters.
“That is driven by technology.”
($1 = 1.4282 Australian dollars)
Wall Street ends sharply higher, fueled by Apple
© Reuters. FILE PHOTO: A Wall Street sign is pictured outside the New York Stock Exchange in New York, October 28, 2013. REUTERS/Carlo Allegri
By Amruta Khandekar and Noel Randewich
(Reuters) – Wall Street finished sharply higher on Tuesday, lifted by Apple, Tesla (NASDAQ:TSLA) and other megacap growth stocks after strong retail sales in April eased worries about slowing economic growth.
Ten of the 11 major S&P sector indexes advanced, with financials, materials and technology among the top performers.
Investors were cheered by data showing U.S. retail sales increased 0.9% in April as consumers bought motor vehicles amid an improvement in supply and frequented restaurants.
Tuesday’s broad rally followed weeks of selling on the U.S. stock market that last week saw the S&P 500 sink to its lowest level since March 2021.
“The largest pockets of stocks that investors tend to buy have been essentially beaten up. They’re either in correction or bear market territory,” said Sylvia Jablonski, chief investment officer of Defiance ETF. “I think investors are looking at these opportunities to buy on the dip, and I suspect that today is a good day to do that.”
Another set of economic data showed industrial production accelerated 1.1% last month, higher than estimates of 0.5%, and faster than a 0.9% advance in March.
“This is consistent with continued economic growth in the second quarter and not a recession underway,” said Bill Adams, chief economist for Comerica (NYSE:CMA) Bank in Dallas.
The U.S. Federal Reserve will “keep pushing” to tighten U.S. monetary policy until it is clear inflation is declining, Fed Chair Jerome Powell said at an event on Tuesday.
Traders are pricing in an 85% chance of a 50-basis point rate hike in June.
According to preliminary data, the S&P 500 gained 81.54 points, or 2.03%, to end at 4,089.55 points, while the Nasdaq Composite gained 323.23 points, or 2.77%, to 11,986.02. The Dow Jones Industrial Average rose 432.62 points, or 1.35%, to 32,659.17.
Walmart (NYSE:WMT) Inc tumbled after the retail giant cut its annual profit forecast, signaling a bigger hit to margins.
United Airlines Holdings (NASDAQ:UAL) Inc gained after the carrier lifted its current-quarter revenue forecast, boosting shares of Delta Air, American Airlines (NASDAQ:AAL) and Spirit Airlines (NYSE:SAVE).
A positive first-quarter earnings season has been overshadowed by worries about the conflict in Ukraine, soaring inflation, COVID-19 lockdowns in China and aggressive policy tightening by central banks.
The S&P 500 is down about 14% so far in 2022, and the Nasdaq is off around 24%, hit by tumbling growth stocks.
U.S.-listed Chinese stocks jumped on hopes that China will ease its crackdown on the technology sector.
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