Sydney, March 11, On Monday Volkswagen Australia it had quit the policymaking committee at the country’s auto lobby, days after Tesla cut ties with the group, as the German carmaker distances itself from a campaign against new fuel standards.
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Volkswagen quits Australian auto lobby committee as fight grows over green fuel
In a letter sent to other members of the Federal Chamber of Automotive Industries, Volkswagen said it quit the lobby group’s Policy Advisory Committee before a meeting later this week, according to a spokesperson. “Volkswagen Group Australia … speaks for itself on public and policy matters including the New Vehicle Efficiency Standard,” the spokesperson said in an email.
“A strong NVES is in the best interests of this country.” The move widens a breach first opened last week when electric car maker Tesla accused the group of making false claims and quit in protest over its campaign against the new standards. Fellow automaker Polestar followed a day later. To get more electric vehicles on the road and cut emissions, Australia last month proposed vehicle efficiency standards that will penalise car makers who import emissions-intensive models and reward those who bring in cleaner vehicles.
Russia and Australia are among the only industrialised countries without the standards. The peak automotive lobby group has said the government’s preferred option would raise prices and limit options, especially for the pick-up trucks popular in Australia. It wants the government to water down its policy. Toyota which tops auto sales with its range of pick-up trucks and SUVs, last week backed the lobby group’s position and called on the government to revisit its plan. Energy Minister Chris Bowen hinted on Sunday the government was open to a compromise and “where an idea has been made to us sensibly, we will consider it sensibly.”
As BOJ Ponders Positive Rates, Asia shares slips
Sydney, March 11, Asian share markets sputtered on Monday while the dollar looked vulnerable ahead of a reading on U.S. inflation that could hasten, or delay, the start of global rate cuts. The yen edged higher as Reuters reported a growing number of Bank of Japan policymakers are warming to the idea of ending negative rates this month on expectations of hefty pay hikes in this year’s annual wage negotiations.
Data released on Monday showed Japan was not, in fact, in recession after economic growth was revised up to an annualised 0.4% for the December quarter. Tuesday’s U.S. consumer price index (CPI) report for February is forecast to rise 0.4% for the month and keep the annual pace steady at 3.1%. Core inflation is seen rising 0.3%, which will nudge the annual pace down to the lowest since early 2021 at 3.7%.
The slower core would complement the softer conditions seen in the February payrolls report, where unemployment hit a two-year high of 3.9%, and would keep the Federal Reserve on track to cut rates in the next few months. “We continue to expect four 25bp cuts in the Fed funds rate this year, starting in June,” analysts at Goldman Sachs wrote in a note. “However, the soft employment report increases the odds that the FOMC begins the easing cycle in May instead.”
“We expect that developed market central banks will lower policy rates by 128bp on average over the next 12 months,” they added. “We also expect that emerging market central banks will cut rates by 190bp on average.” Futures imply about a 25% chance of a Fed cut in May and 75% for a first move in June. Chinese price data out over the weekend showed a welcome bounce in inflation to 0.7% in February, though producer prices remained mired in deflation.
Beijing also promised to improve home sales in a “forceful” and “orderly” way to support the country’s beleaguered residential property market, but was short on details. Hopes for lower borrowing costs have been a fillip for equities with MSCI’s broadest index of Asia-Pacific shares outside Japan easing 0.16%, after hitting an eight-month peak on Friday. Japan’s Nikkei retreated 2.2%, having scored a succession of all-time highs last week. Chinese blue chips added 0.57%
BOJ Turning Positive
S&P 500 futures eased 0.05% and Nasdaq futures dipped 0.1%, having both run into profit taking on Friday as artificial intelligence diva Nvidia shed 5.6%. EUROSTOXX 50 futures fell 0.6%, and FTSE futures dipped 0.36%. Treasury bonds continued their rally after the benign jobs report with 10-year yields touching a one-month low of 4.038% and last trading at 4.0672%.
The drop in yields has undermined the dollar, especially against the yen given market speculation that the BOJ will end its negative rate policy (NIRP) and yield curve control (YCC) this month. “We expect JPY strength tactically on short-covering in the build-up to the March 18/19th BoJ meeting, one we think is live for a change in YCC and NIRP, and recent higher inflation readings only add to our conviction to be tactically long JPY,” said Paul Robson, head of G10 FX strategy at NatWest Markets.
“We’ve turned tactically bearish the USD and initiated short positions vs both EUR and JPY,” he added. “Our short-term fair value model suggests EUR/USD is too low based on bond spreads and relative curve steepness.” The dollar was off at 146.98 yen , having shed 2% last week to a five-week low of 146.48. The euro was holding firm at $1.09395 , after bouncing 0.9% last week to as high as $1.0980.
The decline in the dollar and bond yields has been supportive of non-yielding gold which was up at $2,177.58 an ounce , having surged 4.5% last week to record peaks. Oil prices have had a tougher time as worries about China’s demand offset supply cuts by producer group OPEC+. Brent dipped 43 cents to $81.65 a barrel, while U.S. crude lost 48 cents to $77.53 per barrel.
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