Live news: Chinese embassy in Germany ‘puzzled’ by reported plan to ban Huawei

Asian currencies declined against the dollar on Wednesday, as comments from US Federal Reserve chair Jay Powell signalling that the central bank could return to larger interest rate increases boosted the greenback.

All prices are given against the dollar:

• China’s renminbi fell as much as 0.2 per cent to a low of Rmb6.976, its lowest level since late December

• The South Korean won fell 1.8 per cent to Won1,322.41

• The Japanese yen sank 0.4 per cent to ¥137.68, after declining 0.9 per cent on Tuesday, also to hit its weakest level since December

• The Australian dollar lost 0.2 per cent to A$0.657, after dropping 2.2 per cent on Tuesday

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

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

German media also reported that the government was planning to ban certain parts made by Chinese telecoms groups Huawei and ZTE, which have played a large role in German communications networks.

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

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

At ¥1.98tn ($14.41bn), Japan’s trade deficit for the month significantly exceeded markets forecasts. It was also the country’s largest ever recorded deficit for a single month.

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

Asia-Pacific stocks retreated on Wednesday morning as investors took fright at hawkish comments from Federal Reserve chair Jay Powell.

South Korea’s Kospi shed 1.1 per cent and Australia’s S&P/ASX 200 declined 0.9 per cent. Futures for Hong Kong’s Hang Seng index pointed 1.3 per cent lower.

Powell warned on Tuesday that the Fed was prepared to return to bigger interest rate rises to fight inflation. His comments sent the yield on the two-year US Treasury above 5 per cent for the first time since 2007. The S&P 500 and Nasdaq Composite dropped 1.5 per cent and 1.2 per cent, respectively.

Jakarta: China and the Association of Southeast Asian Nations will 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.

Earnings: Cathay Pacific releases earnings. Traffic at Hong Kong’s airport has rebounded from its pandemic lows but numbers passing through still remain significantly down on 2019 levels.

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

Elon Musk said Twitter could return to posting positive cash flow next quarter, as the chief executive attempts to cut costs, lure back advertisers and navigate the platform’s tech woes.

Speaking at a Morgan Stanley investor conference on Tuesday, Musk said that cash flow at the company he bought for $44bn last year would break even in the second quarter, adding that it might even become positive in that period.

He said Twitter’s costs were projected to run at about $3bn a year, down from the $4.5bn he said 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 administration new powers to ban Chinese apps that pose security threats, including the popular video-sharing platform TikTok.

Mark Warner, the Democratic head of the intelligence committee, announced the bill on Tuesday as part of an effort to create a more co-ordinated approach across the government to address threats from countries including China, Russia and Iran.

The Restrict Act would require the commerce secretary to establish a process to identify threats related to communications and information technology and create solutions to address them.

Read more on the proposed bill here.

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

The yield reached a peak of 5.01 per cent — up 0.13 percentage points on the day — following remarks on Tuesday by Federal Reserve chair Jay Powell, who indicated that the US central bank may be prepared to accelerate the pace of interest rate increases in response to hotter-than-expected economic data.

Investors now expect interest rates to peak at 5.6 per cent in September, with some chance of a single cut by December.

Ukraine has denied involvement in last year’s explosions that damaged the Nordstream gas pipelines connecting Russia and western Europe, after media reports in the US and Germany suggested that pro-Ukrainian operatives may have been behind the attacks.

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

Podolyak was reacting to a report in The New York Times that said US officials had reviewed new intelligence suggesting a “pro-Ukrainian group” had carried out the underwater bombings hitting both the Nordstream 1 and 2 pipelines.

Read more about the alleged perpetrators here.