Bloomberg Daybreak: Europe 04/10/2024

Summary

In today's financial news, Hong Kong shares rallied as Treasury yields dipped from 2024 highs ahead of the latest US inflation data. Federal Reserve's Raphael Bostic indicated a potential shift from his previous stance on a single rate cut this year, should economic data warrant it. Meanwhile, Apple's production in India doubled, signaling a strategic shift from China. Fitch Ratings downgraded China's outlook to negative amidst concerns over foreign debt and fiscal buffers, while Chinese equities showed resilience. TSMC reported a 34% year-on-year increase in sales, underlining the tech giant's growth. Geopolitical tensions and economic indicators are closely watched as they continue to influence market trends and strategic decisions globally.

Takeaways

• 📈 Hong Kong shares rallied as Treasury yields declined from 2024 highs ahead of the latest US inflation data release.
• 💡 Fed's Raphael Bostic anticipates only one US rate cut this year, but is open to changing his view if the economic situation evolves.
• 📱 Apple doubled its iPhone production in India in the last fiscal year, signaling a strategic shift away from China and towards India as a manufacturing hub.
• 🌐 Fitch Ratings downgraded China's outlook to negative from stable, citing concerns over foreign debt and fiscal buffers, while affirming its A-plus default rating.
• 📉 The S&P 500 dipped below the 5200 level, with tech shares leading the losses, as markets await the US inflation report.
• 🛫 Boeing faces allegations of taking shortcuts in the production of its 787 Dreamliner, leading to a slide in shares and an investigation by the Federal Aviation Authority.
• 💔 At least three people were killed in an explosion at a hydro power plant in northern Italy, disrupting the power supply and raising concerns about safety measures.
• 🚀 TSMC reported a 34% year-on-year increase in sales for March, reaching over 6.1 billion USD, and is set to receive substantial grants and loans from the US government for its Arizona expansion.
• 🌍 South Africa and the European Union are working on plans for a bilateral summit, following reports of a strained relationship due to South Africa's naval exercises with Russia and China.
• 🏦 The Financial Conduct Authority estimates that about 7.5 million people in the UK are struggling to pay their bills, a significant drop from 11 million at the start of the previous year.

Q & A

What is the current situation in Hong Kong's stock market according to the transcript?

Hong Kong's stock market is rallying while Treasury yields come off their 2024 highs as traders anticipate the latest US inflation report.

What does Fed's Raphael Bostic predict about US rate cuts this year?

Fed's Raphael Bostic sees only one US rate cut this year, but he is open to changing his view if the economic data justifies it.

How did Apple's production in India change in the last fiscal year?

Apple doubled its iPhone production in India in the last fiscal year, making it worth 4 billion USD as the company accelerates its pivot away from China.

What was the response of the Chinese ministry to Fitch Ratings' outlook downgrade for China?

The Chinese ministry expressed disappointment about Fitch's outlook revision and stated that it will continue to resolve local government debt problems, asserting that the scale of local hidden debt has been gradually reduced.

What is the current status of the US dollar and Brent crude prices?

The US dollar is pretty steady, while Brent crude prices are back below $90 a barrel, holding a two-day decline due to a mix of factors including a gain in US crude stockpiles and geopolitical tensions in the Middle East.

What does the transcript suggest about the overall Asian market?

The overall Asian market is experiencing a quiet light trading day ahead of the CPI report and a couple of holidays in Asia. Most of the attention is currently on the forex market, with the yen just below a 34-year low against the dollar.

What is the significance of the TSMC sales numbers mentioned in the transcript?

TSMC's sales for March increased by 34% year on year, reaching more than 6.1 billion USD, which is slightly ahead of their own guidance and indicates a strong start to the year for the company.

What are the potential implications of the US inflation report for the markets?

The US inflation report could significantly impact the markets as it has been a key factor influencing the Federal Reserve's decisions on interest rates and as traders are closely watching for signs of disinflation.

What is the current status of the US-China relationship according to the transcript?

The transcript suggests ongoing tensions between the US and China, with Apple's increased production in India being seen as a move to diversify away from China, and the US ambassador to Japan stating that the US strategy is to isolate China with the help of its allies.

What is the situation with the European Union and South Africa's bilateral summit?

Plans for a bilateral summit between the European Union and South Africa have been thwarted, with South Africa failing to commit to a date. This has raised concerns about the trade relationship between the two, especially considering the EU is South Africa's biggest trade partner and foreign investor.

What are some of the key economic data points to watch for in the transcript?

Key economic data points to watch for include the US inflation report, the US ten-year note auction, the Fed meeting minutes, and the US monthly budget statement.