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China is making good on President Xi Jinping’s promise to open the nation’s financial markets, while the dollar and Treasury yields continued their ascent. Here are some of the things people in markets are talking about.
China Eases Grip on Outflows
China granted additional quota for funds to invest in securities overseas for the first time in three years, easing capital curbs and further opening its $40 trillion financial sector. The Qualified Domestic Institutional Investor quota was bumped to $98.33 billion as of April 24 from $89.99 billion, the first increase since March 2015, data showed. A strengthening currency gave policymakers the confidence to allow more capital to flow out of the country, easing a policy of tough restrictions. The move also fits in with President Xi Jinping’s push for deeper integration with the global financial system.
Treasury Yields, Dollar Keep on Climbing
The Treasuries selloff continued Wednesday as 10-year notes failed to find buyers even above the pivotal 3 percent level. The dollar resumed its rebound, upending crowded short-greenback bets as the currency rose to a fresh three-month high. U.S. stocks rallied late as investors weighed the implications of rising U.S. rates and disappointing earnings. Tech weakness sent the Nasdaq Composite to its fifth straight loss, the longest slide since 2016. Disappointing earnings weighed on some of the biggest names in the sector, with Twitter dropping as much as 7.7 percent as analysts questioned its pace of growth. Greener pastures may await, however, as Facebook announced after the close that first-quarter revenue rose 49 percent to $11.97 billion, beating the $11.4 billion average analyst projection.
Ma Calls for Asia Chip Independence
Alibaba co-founder Jack Ma argued that nations from Japan to China need to develop their own semiconductor technology to get around America’s grip on the global chip market. The billionaire, explaining company's growing interest in chips, said he’s motivated in part by a desire to make chips cheap, efficient and available to all. He said his company has invested in five semiconductor firms in the past four years. "100 percent of the market for chips is controlled by Americans,” he told students and entrepreneurs at Tokyo’s Waseda University. “And suddenly if they stop selling -- what that means, you understand. And that’s why China, Japan, and any country, you need core technologies.”
Huawei Probed by FBI
The U.S. Justice Department has joined two other agencies probing Huawei Technologies for possible violations of sanctions banning sales to Iran, according to two people familiar with the matter. Agents from the Federal Bureau of Investigation, which is overseen by the Justice Department, have been looking into transactions by the Shenzhen, China-based mobile and telecommunications giant, the people said. According to one of them, the criminal inquiry grew out of an earlier sanctions-violation probe that ultimately led to penalties against another Chinese technology company, ZTE.
Thursday brings earnings galore in Asia, with Samsung, Nintendo and China Construction Bank set to report. Sinopec is also due. South Korean first quarter GDP, Australian import and export prices, Singapore industrial output and Hong Kong trade are among the economic data highlights before the main event gets underway in Europe with the ECB policy decision.
What we’ve been reading
This is what caught our eye over the last 24 hours.
- Apple CEO Tim Cook met with Trump in the Oval Office.
- BofA’s plans for China don’t include a securities venture.
- Those U.S. sanctions cost Oleg Deripaska $3.8 billion in three weeks.
- France's Emmanuel Macron tells the U.S. not to turn its back on the world.
- Asia’s private wealth boom is driving growth at Credit Suisse.
- Cryptocurrencies take a pause on bug concerns.
- Porsche says the Chinese are falling for its classic sports cars.
- Visiting Hong Kong? Here's where you're likely to find yourself.
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