Live Updates: Asia-Pacific Stocks Rise After US Rate Hike, Jay Powell Comments


Asia-Pacific stocks rise after US rate hike, Jay Powell comments

Asia-Pacific stocks followed Wall Street higher on Thursday after the US Federal Reserve raised its benchmark interest rate by 0.75 percentage points.

US stocks rebounded on Wednesday after five days of steep losses as investors took notice. Stocks were also boosted, with investors focusing on comments from Fed Chairman Jay Powell that such increases would not be common.

Japanese and South Korean stocks jumped the most on Thursday, with the Topix and Kospi up 2% and 2.2%, respectively. Hong Kong’s Hang Seng Index gained as much as 1.1%, while China’s CSI 300 gained 0.6%.

Oil prices also rose with Brent, the international benchmark, up 1.1% at $119.81 a barrel and US marker West Texas Intermediate adding 1.2% to $116.71.

The yield on the 10-year Treasury note fell 0.02 percentage points to 3.38% on Thursday.

China to set up centralized iron ore buyer to counter Australia’s dominance

Import of iron ore at a port in the Chinese province of Shandong. The country’s steel industry, of one billion tonnes a year, absorbs around 70% of the world’s production © AFP via Getty Images

China is set to consolidate the country’s iron ore imports through a new centrally controlled group by the end of this year, as the Xi Jinping administration seeks to increase the power of Beijing pricing on the industry.

The initiative, led by the China Iron and Steel Association and the Ministry of Planning, involves major state-owned mining and steel groups such as Baowu, China Minmetals Corp and Aluminum Corporation of China, according to people close to the government. ‘effort.

China is the world’s largest consumer of iron ore with its billion-tonne-a-year steel industry absorbing around 70% of global output, most of which is supplied by Australia. Any attempt to control prices is likely to alarm Canberra given the status of iron ore as the country’s top export.

Beijing hopes the new entity can secure lower prices through larger bulk purchases made on behalf of companies.

The project will also seek to boost domestic iron ore production and organize greater investment in overseas mines.

Government officials and political advisers have told the Financial Times that Xi’s administration has become frustrated with the sharp price swings of recent years in an industry dominated by Australian producers such as Fortescue Metals Group and BHP, which are likely to fall. be very concerned about this decision.

Learn more about the Beijing Iron Ore Plan here.

What to watch in Asia today

India: The South Asian nation is hosting a meeting of ASEAN foreign ministers in New Delhi for the first time, marking the 10th anniversary of its strategic partnership with the group.

China: Shanghai Disney Resort’s Disneyland Hotel and Disneytown shopping, dining and entertainment complex will reopen after closing on March 21 due to rising Covid-19 cases in the city. The main park will remain closed for the time being.

Japan: The country will release trade balance figures for the month of May. Commercial imports are expected to have grown at the fastest pace in six months, according to a Reuters poll.

Economic news: Taiwan is expected to raise its benchmark interest rate by a quarter of a percentage point at a meeting of its central bank. New Zealand is due to release gross domestic product figures for the first quarter.

Markets: Asia-Pacific stocks will react to news that the US Federal Reserve has announced that it will raise its funds rate by 0.75 percentage points from its level of between 0.75% and 1%. The rise will be the first move of such magnitude since 1994. U.S. stocks closed higher on Wednesday after five days of declines, suggesting investors had already calculated for the move, with the S&P 500 ending up 1.5 % and the Nasdaq Composite up 2.5% cent for the day.

THG pursuers set to drop hunt for e-commerce group

©REUTERS

Two investment firms are set to drop their pursuit of e-commerce retailer THG, presenting yet another setback for investors in the company.

The Manchester-based group said last month that Belerion Capital and King Street Capital Management had made an “unsolicited, highly preliminary and indicative non-binding proposal” of 170p per share, or around £2billion.

The overture was dismissed as inadequate, but making it public set the countdown to a June 16 ‘set it up or shut up’ deadline under UK takeover rules.

A person familiar with the approach said an official statement confirming the withdrawal was likely on Thursday. The parties cannot then proceed to a new approach for six months, unless another party submits an offer.

Belerion is already a shareholder in the group and Iain McDonald, its chief investment officer, has been a non-executive director since 2010. Both Belerion and King Street declined to comment, as did THG.

Their intention to drop their lawsuit was first reported by Bloomberg News.

Learn more about THG’s failed takeover bid here.

FDA advisory committee backs Covid-19 vaccines for children under 5

US government advisers have recommended giving babies and toddlers Covid-19 vaccines, paving the way for the nationwide rollout of shots as early as next week.

On Wednesday, scientists on a Food and Drug Administration advisory committee voted unanimously in favor of “child-sized” injections developed by Moderna and BioNTech/Pfizer for about 20 million children from the last age group who do not have access to Covid jabs.

The Biden administration is preparing to begin vaccinating young children next week and is making 10-minute doses available for distribution, pending a final recommendation in favor of the Centers for Disease Control and Prevention expected later this week.

If US regulators give the shots the go-ahead, it would be the first time a major Western country has extended the rollout of the Covid vaccine to children aged six months to five years. So far only China and a handful of other countries have offered Covid vaccines to this age group using alternatives to Moderna and Pfizer.

Moderna’s vaccine is about a quarter of the size of an adult dose and is for children under six in a two-dose schedule. Meanwhile, the Pfizer vaccine is about a tenth the size of an adult dose and is aimed at children under five in a three-dose schedule.

Both were found to be safe and effective, according to FDA briefing materials prepared for the advisory group.

Learn more about the FDA advisory committee’s decision here.

US stocks close higher after Federal Reserve raises interest rates

U.S. stocks and government bond prices rebounded from five straight days of declines on Wednesday after the Federal Reserve announced its biggest interest rate hike in nearly 30 years in a bid to fight stubborn inflation high.

The US central bank said it would raise the federal funds rate by 0.75 percentage points from its level of between 0.75% and 1%. This increase is the first of such magnitude since 1994.

Line chart of performance as of June 15, 2022 (%) showing rally in US stocks as Powell says giant rate hikes won't be common

Stocks hovered throughout the afternoon, but stabilized as investors focused on Fed Chairman Jay Powell’s assertion that such large rate hikes would not become commonplace.

The S&P 500 index oscillated between a loss of 0.4% and a gain of 2.7% before closing up 1.5% for the day, slightly ahead of where it was trading before the Fed’s announcement. The tech-dominated Nasdaq Composite jumped 2.5%.

Stock and bond markets have sold off sharply since the release of surprisingly high inflation figures last week, raising the prospect of a more aggressive approach from the Fed. The previous five sessions had marked the S&P’s worst five-day run since the start of the coronavirus pandemic.

Powell said he expected the central bank to consider another 0.5% or 0.75% hike at its next policy meeting in July, when interest rates would be close to lows. “more normal” that do not stimulate economic activity.

Learn more about today’s market moves here.

Anthony Fauci tested positive for Covid-19

Dr. Anthony Fauci, chief medical adviser to US President Joe Biden and director of the National Institute of Allergy and Infectious Diseases (NIAID), has tested positive for Covid-19.

Fauci, who has been vaccinated and boosted twice, tested positive in a rapid antigen test on Wednesday and is currently showing mild symptoms, the institute said in a statement.

Fauci, 81, has led the US response since the pandemic began. He has advocated for a cautious approach to containing the virus and has often disagreed with former President Donald Trump when he downplayed the risks of the virus.

“Dr. Fauci will self-isolate and continue to work from home,” NIAID said. “Dr. Fauci will follow the Centers for Disease Control and Prevention’s Covid-19 guidelines and the medical advice of his doctor and return to the [National Institutes of Health] when he tests negative.

NIAID added that Biden and senior officials had not been in close contact with Fauci.

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