Live News: Asia-Pacific stocks fall after Powell comments on rate hike

China’s embassy in Germany has criticized a reported plan to ban Huawei and ZTE from parts of the European country’s 5G network.

The German interior ministry said Tuesday the government was conducting a review of security risks posed by components already installed on the country’s 5G networks.

German media also reported that the government is planning to ban certain parts of Chinese telecoms giants Huawei and ZTE, which have played large roles in German communications networks.

“If the reports are true, China . . . expresses its strong dissatisfaction and extreme confusion,” the embassy said late Tuesday evening.

Japan’s current account deficit hit a record high in January, according to Treasury Department data released Wednesday morning.

With 1.98 trillion. Yen ($14.41 billion) Japan’s trade deficit for the month significantly beat market forecasts. It was also the country’s largest-ever recorded deficit for a single month.

With Asia’s second-largest economy heavily dependent on fuel and commodity imports, officials blamed rising energy costs — as well as weak exports to China during the Lunar New Year holiday — for the record deficit.

Asia-Pacific stocks fell Wednesday morning as investors were spooked by aggressive comments from Federal Reserve Chair Jay Powell.

South Korea’s Kospi lost 1.1 percent and Australia’s S&P/ASX 200 lost 0.9 percent. Futures for Hong Kong’s Hang Seng index were down 1.3 percent.

Powell warned Tuesday that the Fed is poised to return to larger rate hikes to fight inflation. His comments pushed the US two-year Treasury yield above 5 percent for the first time since 2007. The S&P 500 and Nasdaq Composite fell 1.5 percent and 1.2 percent, respectively.

Jakarta: China and the Association of Southeast Asian Nations are set to meet in the Indonesian capital to discuss the South China Sea, where tensions have risen amid overlapping territorial claims between a number of ASEAN member states and Beijing.

Merits: Cathay Pacific publishes results. Hong Kong airport traffic has recovered from its pandemic lows, but transit numbers still remain well below 2019 levels.

Markets: Stocks fell in Japan and futures in Hong Kong pointed lower. Wall Street stocks fell after Federal Reserve Chairman Jay Powell warned the central bank could hike interest rates more aggressively if the economy grows too quickly.

Elon Musk said Twitter could return to positive cash flow in the next quarter as the chief executive tries to cut costs, lure advertisers back and deal with the platform’s technical woes.

Speaking at a Morgan Stanley investor conference on Tuesday, Musk said the company’s cash flow, which he bought for $44 billion last year, will break even in the second quarter, adding that it could even turn positive during that period.

He said Twitter’s costs are expected to be about $3 billion a year, compared to the $4.5 billion the company would have otherwise incurred in 2023.

Read more about Musk’s cost-cutting plans here.

Senate Democrats and Republicans have introduced a bill that would give the government new powers to ban Chinese apps that pose security threats, including popular video-sharing platform TikTok.

Mark Warner, the chairman of the Democratic Intelligence Committee, announced the bill Tuesday as part of an effort to create a more coordinated approach across government to counter threats from countries like China, Russia and Iran.

The Restrict Act would require the Secretary of Commerce to establish a process to identify communications and information technology-related threats and develop solutions to address them.

Read more about the draft law here.

The two-year Treasury yield, which moves with interest rate expectations, topped 5 percent for the first time since 2007.

The yield hit a high of 5.01 percent – up 0.13 percentage points on the day – after comments from Federal Reserve Chair Jay Powell, who suggested the Federal Reserve might be ready to do so Pace of rate hikes in response to accelerate hotter than expected economic data.

Investors now expect interest rates to peak at 5.6 percent in September, with some likelihood of a single rate cut by December.

Ukraine has denied its involvement in last year’s blasts that damaged the Nord Stream gas pipelines connecting Russia and western Europe after media reports in the US and Germany suggested pro-Ukrainian activists could be behind the attacks.

“Although I like to collect amusing conspiracy theories about the Ukrainian government, I have to say: Ukraine has nothing to do with the Baltic Sea disaster and has no information about ‘pro-Ukrainian sabotage groups’,” said Mykhailo Podolyak, adviser to President Volodymyr Zelenskyy, wrote.

Podolyak was responding to a New York Times report that US officials were reviewing new information suggesting that a “pro-Ukrainian group” carried out the underwater bombing of the Nord Stream 1 and 2 pipelines.

Read more about the alleged perpetrators here.