Investors are shedding stocks in China’s top-performing companies as concerns about the country’s economy continue to grow. In the past twelve days alone, overseas funds have withdrawn a total of £7.3 billion from the Chinese market, marking the longest period of continuous withdrawals since Bloomberg began tracking this data in 2016.
Here are five things you need to know to start your day:
1) The Bank of England warns that by the end of this year, half of all businesses in debt will be struggling. As Treasury receipts surge, there are increasing calls for additional support.
2) Rishi Sunak is aiming to attract Tesla billionaire Elon Musk, who recently met with French President Emmanuel Macron. Efforts are also underway to lure other high-profile investors, including Jeff Bezos, to a flagship summit.
3) A corruption case alleges that a former OPEC president was bribed with luxury items such as Cartier jewelry and Louis Vuitton. The accused, a former Nigerian government official, currently resides in London’s St John’s Wood.
4) Meta, the owner of Facebook, claims to have made a breakthrough in its quest to develop a language translator similar to the Hitchhiker’s Guide. It has revealed a free AI tool capable of translating speech from 100 different languages.
5) Waitrose, a high-end supermarket, has launched its first-ever meal deal for £5. The move comes as the supermarket faces pressure to win back cash-strapped customers.
Here’s a recap of what happened overnight:
Asian markets showed mixed results as investors awaited the earnings report from tech giant Nvidia. The report will provide insight into whether the sector’s high valuations can withstand a surge in bond yields. Additionally, disappointing factory readings from Japan added to overall market fragility.
The broadest index of Asia-Pacific shares, excluding Japan, saw a modest 0.3% increase, remaining close to its nine-month low. Japan’s Nikkei also experienced a slight gain of 0.3%.
Preliminary data released on Wednesday revealed that Japan’s factory activity contracted for the third consecutive month in August. This data offers an initial glimpse into the state of global manufacturing this month. The United States will also release its flash PMI readings on Wednesday, which are expected to show continued contraction in the factory sector.
The yield for the benchmark 10-year Japanese government bond reached a new 9.5-year high of 0.675%. Investors interpreted the Bank of Japan’s decision not to intervene in bond buying as a green light for further selling.
In China, blue-chip stocks failed to maintain gains from the previous day and fell by 0.9%. However, Hong Kong’s Hang Seng Index fared better, with a 0.6% increase following a 1% jump.
On Tuesday, Wall Street closed with lower stock prices as higher Treasury bond yields raised concerns about the Federal Reserve’s potential decision to keep interest rates higher for a longer period. The Dow Jones Industrial Average fell by 0.5% to 34,288.83, while the S&P 500 dropped by 0.3% to 4,387.55. The Nasdaq Composite Index, which focuses on technology stocks, slightly increased by 0.1% to conclude at 13,505.87.
Rising interest rate fears triggered a bond market sell-off, causing the benchmark 10-year Treasury yield to approach a 16-year high.
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