MARKET UPDATE

Asia FX weakens on U.S. rate hike fears.

Most Asian currencies fell on Wednesday as strong U.S. economic readings raised concerns over the Federal Reserve having enough room to keep raising interest rates, while weak economic trends in China also dented sentiment.

Data on Tuesday showed that U.S. retail sales grew more than expected in July, presenting more upside risks to consumer inflation and potentially giving the Fed more headroom to keep raising interest rates.

This boosted the dollar and kept appetite for riskier Asian currencies limited. The dollar index and dollar index futures both steadied near five-week highs in Asian trade on Wednesday.

Focus was also on the minutes of the Fed’s recent meeting, due later on Wednesday.

Chinese yuan falls on more weak signals, rate cut expectations

The Chinese yuan fell 0.2% on Wednesday as data showed that Chinese house prices continued to decline in July, raising more concerns over the country’s flailing property sector.

China’s central bank also unexpectedly cut interest rates on Tuesday, although analysts said that the bank would have to do more in order to stimulate the economy.

 

Oil prices dip as China gloom offsets large U.S. inventory draw.

Oil prices crept lower in Asian trade on Wednesday, shrugging off signs of a bigger-than-expected draw in U.S. inventories as concerns over worsening Chinese economic conditions and rising interest rates weighed.

Crude prices fell sharply from 2023 highs in recent sessions as weak economic indicators from top importer China continued to pour in, while signs of a potential resurgence in U.S. inflation boosted the dollar.

While oil prices were still trading relatively higher for the year on the prospect of tighter supplies, their stellar rally over the past two months now appeared to have run out of steam.

Data from the American Petroleum Institute showed that U.S. oil stockpiles saw a much bigger-than-expected 6.2-million-barrel draw in the week to August 11.

 

Intel to drop $5.4 billion Tower deal after China review delay.

Intel Corp will drop its $5.4 billion deal to acquire Israeli contract chipmaker Tower Semiconductor (NASDAQ:TSEM) Ltd once their contract expires later on Tuesday without regulatory approval from China, according to people familiar with the matter.

Intel (NASDAQ:INTC), which signed the deal to buy Tower in February 2022, did not secure approval from Chinese regulators for the acquisition on time as required under the contract, the sources said, requesting anonymity ahead of an official announcement.

The development underscores how tensions between the United States and China over issues including trade, intellectual property and the future of Taiwan are spilling over into corporate dealmaking, especially when it comes to technology companies.

Intel does not plan to negotiate an extension of the contract and will instead pay Tower a $353 million break-up fee to walk away, the sources added.

It was unclear whether regulators would have approved the deal had the companies extended their contract and waited for the review’s completion.

Intel and Tower declined to comment. Representatives for the State Administration for Market Regulation, China’s antitrust regulator, could not be immediately reached for comment.

Intel Chief Executive Pat Gelsinger had said he was trying to get the Tower deal approved by Chinese regulators and had visited the country as recently as last month to meet with government officials.

But Gelsinger also said Intel was investing in its foundry business, which makes chips for other companies, irrespective of the Tower deal.

 

 

 

 

 

Important Note: The information found on Ausprime platform is intended only to be informative, is not advice nor a recommendation, nor research, or a record of our trading prices, or an offer of, or solicitation for a transaction in any financial instrument and thus should not be treated as such. The information provided does not include any specific investment objectives, financial situation and needs of any specific person who may receive it. The past performance is not a reliable indicator of future performance and/or results. Past Performance or Forward-looking scenarios are not a guarantee of future performance. Actual results may differ materially from those anticipated in forward-looking or past performance statement