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

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

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

With Asia̵[ads1]7;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 shares retreated on Wednesday morning as investors were spooked by hawkish comments from Federal Reserve Chairman Jay Powell.

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

Powell warned on Tuesday that the Fed was prepared to return to larger rate hikes to fight inflation. His comments sent the yield on the two-year US Treasury bond 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 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 announces earnings. Traffic at Hong Kong’s airport has recovered from the pandemic, but the number passing is still significantly lower than 2019 levels.

Markets: Shares fell in Japan and futures in Hong Kong pointed down. Wall Street stocks fell after Federal Reserve Chairman Jay Powell warned that the central bank could raise interest rates more aggressively if the economy grows too fast.

Elon Musk said Twitter could return to posting positive cash flow next quarter, as the CEO tries to cut costs, lure back advertisers and navigate the platform’s technical issues.

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

He said Twitter’s costs were projected to be about $3 billion a year, down from the $4.5 billion he said the company would otherwise have 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 chairman of the Intelligence Committee, announced the bill on Tuesday as part of an effort to create a more coordinated approach across the government to address threats from countries including China, Russia and Iran.

The Restrictions Act would require the Secretary of Commerce to establish a process to identify threats related to communications and information technology and create solutions to deal with them.

Read more about the bill here.

The two-year government 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 – following comments on Tuesday from Federal Reserve Chairman Jay Powell, who indicated that the US central bank may be prepared to increase the pace of rate hikes in response to warmer financial data than expected.

Investors now expect interest rates to peak at 5.6 percent 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 linking Russia and Western Europe, after media reports in the US and Germany suggested pro-Ukrainian operatives may have been behind the attacks.

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

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

Read more about the alleged perpetrators here.