Asian equity markets decline following global rate increases
William Langley in Hong Kong
Asian equity markets declined further on Friday, continuing a downward trend triggered by the US Federal Reserve’s move to increase its benchmark lending rate by 0.75 percentage points this week.
Hong Kong’s Hang Seng index was down 0.7 per cent, China’s CSI 300 dropped 0.8 per cent, Japan’s Topix declined 0.2 per cent and South Korea’s Kospi shed 1.4 per cent.
Asia’s stock markets were hit on Thursday following the Fed’s rate increase the day before, with the Hang Seng touching its lowest level since 2011.
Global stocks and government bond prices also fell on Thursday after more central banks joined the Fed in raising interest rates to curb persistently high inflation.
On Wall Street, the S&P 500 share gauge closed down 0.9 per cent. The Nasdaq Composite, which is stacked with rate-sensitive technology stocks, lost 1.4 per cent.
But European futures pointed higher on Friday, with contracts for the FTSE 100 and the Euro Stoxx 50 up 0.4 per cent and 0.2 per cent, respectively.
Oil prices slipped, with Brent crude, the international benchmark, down 0.5 per cent to trade at $90.03 a barrel. West Texas Intermediate fell 0.4 per cent to hit $83.18.
Japan to allow visa-free entry as Kishida eases travel curbs
Eri Sugiura in Tokyo
Japan will allow visa-free entry for individual travellers from Oct. 11, scrapping a series of Covid-19 border rules that have hindered the revival of the tourism industry.
Prime Minister Fumio Kishida announced the relaxation of restrictions during his visit to New York, saying that individual visitors will be allowed to enter and visa waivers will be reinstated. He added that the cap on daily arrivals in the country, which is now set at 50,000, will also be removed.
The move comes as Japan, which currently only allows package tours and requires visas for all visitors, seeks to boost inbound tourism following a recent decline in Covid cases. The government also wants to take advantage of the weak yen, which has hit a series of 24-years lows in recent weeks, making Japan an inexpensive destination for foreign tourists.
Japan has been the only country among the Group of seven to introduce a cap on daily arrivals. The tourism industry as well as Japan’s largest business lobby, Keidanren, have long called for relaxed border measures, but the Kishida administration had remained cautious over further reopening as the public was still nervous about infections.
Before the pandemic, Japan welcomed a record 31.8 million visitors in 2019, as the government promoted international tourism as a pillars of its strategy for revitalising the country’s economy.
Kishida added that the government will also introduce discounts for domestic travel on Oct. 11.
What to watch in Asia today
William Langley in Hong Kong
Inflation: Malaysia and Singapore release August consumer price indices. Use our inflation tracker to see how your country compares on rising prices.
Hong Kong: Property owners and businesses in the financial hub, which is home to one of the world’s most expensive property markets, will face higher costs as the bank implements a rise in its prime rate for the first time in four years.
Markets: Futures for Hong Kong’s Hang Seng index and Japan’s Topix pointed 0.4 per cent and 0.8 per cent lower, respectively, as Asia’s stock markets looked set to continue a downward spiral in response to the US Federal Reserve’s decision to raise interest rates by 0.75 percentage points for the third consecutive time. Stocks and government bond prices fell on Thursday as more of the world’s central banks joined the Fed in boosting rates. On Wall Street, the S&P 500 share gauge closed down 0.9 per cent. The Nasdaq Composite lost 1.4 per cent. Europe’s Stoxx 600 index closed 1.8 per cent lower.
Zelenskyy calls on mobilised Russian soldiers to run away or surrender
Roman Olearchyk in Kyiv
Ukraine’s president urged Russian citizens to protest Vladimir Putin’s order to mobilise at least 300,000 men to fight in the war and called for soldiers called into duty to “run away” or surrender.
“55,000 Russian soldiers died in this war within six months. Tens of thousands are wounded and maimed. Do you want more? No? Then protest. Fight back. Run away. Or surrender to Ukrainian captivity. These are options for you to survive,” Volodymyr Zelenskyy said in a Thursday evening video address that was delivered partially in Russian language.
Putin recently ordered the “partial mobilisation” of 300,000 army reservists to support its campaign in Ukraine. Widespread antiwar protests in cities across Russia followed Putin’s announcement. More than 500 people were detained.
“Russia’s decision to mobilise is a frank admission that their personnel army, which was prepared for decades to take over a foreign country, could not stand it and crumbled,” Zelenskyy said.
Zelenskyy recalled how Ukraine’s forces repelled a Russian advance into Kyiv and referenced the Ukrainian counteroffensive earlier this month that recaptured previously occupied territory in the northeastern Kharkiv region. He pledged to liberate all 15 per cent of territory still occupied in far eastern and southern regions.
“It is a choice to die or live, to become crippled or to preserve health. For women in Russia, the choice is to lose their husbands, sons, and grandchildren forever, or to try to protect them from death, from war, from one person,” Zelenskyy said, referring to Putin.
FedEx announces cost savings plan and price rises after gloomy quarter
Jaren Kerr in Toronto
FedEx revealed a plan to cut costs by up to $2.7bn in its current fiscal year and said it would raises delivery rates by almost 7 per cent in the wake of its surprise profit warning last week.
The package delivery group’s actions mark a response to a gloomier economic outlook, which FedEx said had resulted in a slowdown in demand for shipments in recent weeks.
The company said Thursday it expects to cut $2bn to $2.7bn in costs in fiscal 2023 by reducing flight frequencies, closing office locations, and suspending some Sunday operations. It also announced it would increase its prices for deliveries by an average of 6.9 per cent at the beginning of 2023.
“We’re moving with speed and agility to navigate a difficult operating environment,” FedEx chief executive Raj Subramaniam said.
FedEx shares were up 1.5 per cent on Thursday after the company announced its results midway through the afternoon trading session on Wall Street. The company was due to report after the closing bell.
The company’s shares tumbled 21.4 per cent last Friday — their biggest one-day drop since listing in 1978 — to a 26-month low after issuing a profit warning and a weak set of preliminary results the previous evening.
The company reported a 19 per cent drop in earnings to $3.33 a share in its first quarter, on a 5 per cent drop in revenues to $23.2bn. Both figures missed analyst expectations.
The company’s air-based service FedEx Express reported a 69 per cent decline in operating income after global package and freight volume fell 11 per cent year over year. That was partially offset by a 67 per cent year-on-year increase in operating income in the FedEx Freight division, driven by higher fuel surcharges.
Nato slams ‘sham’ referendums in Ukrainian regions
Steff Chávez in Chicago
Nato decried Russia’s plans to hold “sham referenda” in four Russian-occupied Ukrainian territories, in what its members dubbed an escalation of the war.
“We condemn in the strongest possible terms the plan to hold so-called ‘referenda’” on Donetsk, Luhansk, Zaporizhzhia, and Kherson joining the Russian Federation, Nato said in a statement on Thursday.
The referenda “have no legitimacy and will be a blatant violation of the UN Charter. Nato allies will not recognise their illegal and illegitimate annexation,” the alliance said, calling on all countries to reject the “territorial conquest”.
The stage-managed votes coupled with Russian president Vladimir Putin’s plan to mobilise hundreds of thousands of reserve troops, are considered by Nato to be “a further escalation in Russia’s illegal war against Ukraine”. The body also called Russia’s thinly veiled nuclear threats, made on Wednesday, “irresponsible”.
The condemnation came a day after Russian foreign minister Sergei Lavrov defended his country’s invasion of Ukraine to western powers at a meeting of the UN security council on Wednesday. Calling the war “inevitable,” he attacked the west for providing weaponry to Ukraine.
Voting will commence on Friday and run through September 27.
US senators increase pressure on Apple over possible Chinese chipmaker deal
Demetri Sevastopulo in Washington
US senators have asked the intelligence community to examine the threat a potential deal between Apple and the Chinese chipmaker Yangtze Memory Technologies Co poses to national security, in an escalation of the political pressure being applied to the iPhone maker over the arrangement.
Mark Warner, the Democratic chair of the Senate intelligence committee, and the Republican vice-chair Marco Rubio wrote to director of national intelligence Avril Haines requesting a review just days after the Financial Times reported that Apple was considering buying memory chips from YMTC for the new iPhone 14.
“We write to convey our extreme concern about the possibility that Apple Inc will soon procure 3D NAND memory chips from Yangtze Memory Technologies Co,” the senators said. “Such a decision would introduce significant privacy and security vulnerabilities to the global digital supply chain that Apple helps shape given YMTC’s extensive, but often opaque, ties to the Chinese Communist party.”
The FT has reported that YMTC has supplied memory chips to Huawei, the controversial Chinese telecoms equipment giant, for at least two phones, including its flagship foldable Mate Xs 2, in a possible violation of a US export control that effectively bars companies from providing products containing American technology to Huawei.
US government and industry experts assume that all Chinese chipmakers use US technology since American chip design software and manufacturing tools are ubiquitous in all semiconductor supply chains.
Read more here.