PETER’S BUSINESS & FINANCE BRIEFING – Wednesday 11 June 2025, 06:00 Hong Kong

● Lutnick says US-China trade talks 'going really, really well' ● World Bank sharply cuts global growth outlook on trade turbulence ● TSMC’s May revenue surges 40% on solid AI demand

The World Bank has sharply cut its global growth outlook on trade turbulence

Wednesday’s Opening Call

Hang Seng (Hong Kong) Projected Open: 24,978 +815 points +3.4%

Nikkei 225 (Japan) Projected Open: 38,340 +128 points +0.3%

Quick Summary - 4 Things To Know Before Asian Markets Open

1. The US said talks with China were “going really, really well” as the two sides resumed efforts in London to end a trade war between the world’s largest economies. The delegations arrived at Lancaster House, a UK government building in the centre of the city, just after 10.30am on Tuesday, with US commerce secretary Howard Lutnick saying the discussions would go deep into the day. A top White House official has said Donald Trump would ease restrictions on selling chips to China if Beijing agreed to speed up the export of rare earths. It would mark a significant departure from Joe Biden’s administration, which introduced the measures to make it harder for China to obtain advanced US chip technology that could help its military.
   
   

2. The World Bank cut its forecast for global growth this year and warned that the 2020s are on track for the weakest performance for any decade since the 1960s due to trade tensions and policy uncertainty. The multilateral institution lowered its 2025 outlook to 2.3%, which would be the weakest in 17 years, and warned that global growth in the first seven years of this decade is on course to average 2.5%, the slowest for any decade since the 1960s. The World Bank lowered its growth forecasts for almost 70% of all economies, citing slower growth in developing economies, low-income countries, the US, the eurozone, and Japan, and warned of risks including trade restrictions, policy uncertainty, and financial stress.
   
   

3. Taiwan Semiconductor Manufacturing Co., the main chipmaker for Nvidia and Apple, reported a 40% jump in May revenue after companies stockpiled chips in response to mounting trade uncertainty. The company’s revenue reached NT$320.5 billion (US$10.7bn). That compares with a 48% gain during April. Analysts on average expect a 39% increase in TSMC’s second-quarter sales. While sales in May appeared to be relatively healthy, they dropped 8.3% from April. TSMC Chief Executive Officer C.C. Wei last week reaffirmed the company’s guidance for sales to grow in the mid-20% range in US dollar terms in 2025. AI chip demand still outstrips supply, he told shareholders.
   
   

4. South Korean equities are close to their highest level in almost 3 ½ years. The Kospi index rose 0.6% yesterday, climbing for the fifth straight session and heading towards its highest level since January 2022. The rally was fuelled largely by sustained foreign investor buying. Investor confidence has been bolstered by expectations of reform-oriented policies under President Lee. The Kospi is up nearly 20% since the start of the year.
   
   

Trump Eyes Trade Deal To Secure China’s Rare Earths

The US said talks with China were “going really, really well” as the two sides resumed efforts in London to end a trade war between the world’s largest economies. The delegations arrived at Lancaster House, a UK government building in the centre of the city, just after 10.30am on Tuesday, with US commerce secretary Howard Lutnick saying the discussions would go deep into the day. Treasury Secretary Scott Bessent said he is departing the ongoing talks to travel to Washington, D.C., to testify before Congress. The talks have been “productive,” Bessent said as he left Lancaster House. Commerce Secretary Howard Lutnick and US Trade Representative Jamieson Greer will continue the negotiations with Beijing.

A top White House official has said Donald Trump would ease restrictions on selling chips to China if Beijing agreed to speed up the export of rare earths, as the two countries resumed their high stakes trade talks in London. It would mark a significant departure from Joe Biden’s administration, which introduced the measures to make it harder for China to obtain advanced US chip technology that could help its military.

Kevin Hassett, director of the National Economic Council, said, “we want the rare earths, the magnets that are crucial for cell phones and everything else, to flow just as they did before the beginning of April. We don’t want any technical details slowing that down.” Hassett said the talks are likely to result in Beijing quickly releasing rare earths for export, and Washington easing China's access to semiconductors. "I expect this to be a short meeting with a big strong handshake," he told CNBC on Monday. His comments were the first suggestion that Trump was willing to put export controls on the negotiating table. Hassett did not specify which export controls would be eased but suggested that the administration would not loosen restrictions designed to prevent US chipmaker Nvidia from selling high-end chips to groups in China.

The trade war between Washington and Beijing has in recent weeks veered away from tariffs, focusing instead on each country’s restrictions on material or products the other side desperately needs. The US side is set to press Xi Jinping’s representatives to speed up exports of rare-earth minerals and magnets containing them as they agreed to in Geneva last month. The Chinese team, on the other hand, will push Washington to remove recent restrictions on the sale of jet engines and a variety of technology and other products to China. A key goal for China will be to ease US chip controls.

In a promising sign, Beijing said it’s already approved some rare-earth exports, a priority for Washington but didn’t elaborate on the products’ applications or destinations. Reuters reported on Friday that China has approved temporary export licenses to rare earth suppliers of top US automakers, including General Motors, Ford and Stellantis. It’s unclear what materials are covered by the licenses and at least some are valid for six months, Reuters said.

Separately, on Saturday, China’s Commerce Ministry said that it is willing to establish a green channel for qualified applicants looking to sell rare earths to EU companies, so those businesses don’t become collateral damage of US-China trade tensions.

World Bank Warns 2020s Face Weakest Global Growth Since 1960s

The US-driven global trade war will depress growth in almost two-thirds of developing economies this year, according to World Bank forecasts, as the lender warned the globalisation that drove an “economic miracle” in many countries had swung into reverse. The World Bank cut its forecast for global growth this year and warned that the 2020s are on track for the weakest performance for any decade since the 1960s due to trade tensions and policy uncertainty. The multilateral institution lowered its 2025 outlook to 2.3%, which would be the weakest in 17 years, and warned that global growth in the first seven years of this decade is on course to average 2.5%, the slowest for any decade since the 1960s. The World Bank lowered growth forecasts for almost 70% of all economies, citing slower growth in developing economies, low-income countries, the US, the eurozone, and Japan, and warned of risks including trade restrictions, policy uncertainty, and financial stress.

Emerging and developing countries will see 3.8% growth this year, down from 4.2% in 2024. Per capita income growth will be 2.9% in developing countries this year, also more than a percentage point below the average between 2000 and 2019. Global trade growth in goods and services is set to slow sharply in 2025 to 1.8% compared with 3.4% previously, the bank predicted. Per capita GDP in developing countries nearly quadrupled in the past half-century, lifting more than 1bn people out of extreme poverty. But that transformation is now in danger, as developing countries find themselves “on the frontline of a global trade conflict”, the bank said.

“The world economy today is once more running into turbulence. Without a swift course correction, the harm to living standards could be deep,” Indermit Gill, the World Bank’s chief economist, wrote in a foreword to the report. “International discord, about trade, in particular, has upended many of the policy certainties that helped shrink extreme poverty and expand prosperity after the end of World War II.” The institution pointed out that the global outlook would brighten if trade tensions de-escalated and if governments rein in borrowing and focus on job creation.

NZ's Finance Minister Urges RBNZ To Hold More Rate Meetings

New Zealand Finance Minister Nicola Willis has urged the Reserve Bank of New Zealand (RBNZ) to increase the frequency of its rate decisions and end its 12-week summer break, calling it “a long time to go between meetings.” She told Bloomberg News that “the central banks of England, Canada, Australia, and the US have shorter breaks and meet more frequently,” and said she believes the RBNZ should return to eight meetings a year. The central bank currently holds seven rate-setting meetings annually, fewer than its global peers. Since 2016, it has skipped a decision between November and February. Treasury advice released under the Official Information Act supported Willis’ concern, noting the RBNZ’s long break is unusual and that “more frequent decisions would allow the Bank to respond to changes in the economy.”

Australia Business Mood Rebounds

Australia’s NAB Business Confidence Index rose to 2 in May from -1 in April, turning positive for the first time since January and marking its highest level in four months. Sentiment strengthened in most sectors except manufacturing, mining, and wholesale. However, business conditions eased again (0 vs 2 in April), in a steady fall since late 2024. “Business conditions remain weak. If this continues in the coming months, it will be difficult for confidence to rise from current levels,” said NAB Chief Economist Sally Auld.

Australia Consumer Sentiment Softens

Australia’s Westpac-Melbourne Institute Consumer Sentiment Index rose 0.5% month-over-month to 92.6 in June, a sharp slowdown from the 2.2% gain in May, amid lingering uncertainty over global trade. Still, it marked the fourth increase this year, supported by the Reserve Bank’s May rate cut and signs of easing inflation. Sentiment toward economic conditions over the next 12 months declined 0.7% to 92.4, and the five-year outlook dropped 2.4% to 96.2. Mathew Hassan, Head of Australian Macro-Forecasting, noted that the overall mood remains broadly unchanged, with consumers stuck in a holding pattern of “cautious pessimism.”

Japan Machine Tool Orders Ease In May

Japan’s machine tool orders rose by 3.4% year-on-year in May, slowing from a 7.7% increase in the previous month. This marked the eight consecutive month of rising machine tool orders although the softest in the sequence. On a monthly basis, orders fell by 1.2% in May, easing from a 13.8% drop in the preceding period. Machine tool orders in Japan are regarded as a proxy for capital spending.

US Small Business Sentiment Rebounds In May

New data showed a modest recovery in sentiment at smaller US businesses, reflecting lessening concerns about tariffs and hopes for a boost from President Trump’s tax-and-spending megabill. The NFIB Small Business Optimism Index in the US increased to 98.8 in May, the highest in three months, compared to 95.8 in April and forecasts of 95.9. "Although optimism recovered slightly in May, uncertainty is still high among small business owners. While the economy will continue to stumble along until the major sources of uncertainty are resolved, owners reported more positive expectations on business conditions and sales growth", NFIB Chief Economist Bill Dunkelber said.

Panama Canal Boss Warns MSC Ports Deal Threatens Neutrality

The head of the operator of the Panama Canal has warned that a US$23bn global ports deal that includes two facilities in the Central American country could put the waterway’s neutrality mandate at risk, the Financial Times reported Tuesday. The planned sale of 43 ports by Hong Kong’s CK Hutchison to a consortium led by subsidiaries of the Mediterranean Shipping Company and BlackRock has raised fears among MSC’s rivals that the Swiss-Italian group’s control of a swath of the world’s port infrastructure would give it an unfair advantage. Ricaurte Vásquez, Panama Canal Authority administrator, said the concentration of ownership could disadvantage some shipping companies and upset the canal’s principle of neutrality between nations.

The comments come after repeated threats by Donald Trump to “take back” the canal, which was finished by American engineers more than a century ago but gradually handed back to Panama between 1977 and 1999 under a treaty that guaranteed its permanent neutrality. Trump has warned that Chinese influence in the canal, which includes Hutchison’s control of two of the five ports adjacent to it, poses a US national security risk. That has put tiny Panama in the middle of the US-China trade war, with a global consortium of investors launching a deal to buy the ports, in a move rejected by Chinese regulators. The consortium behind the deal has held talks with the Chinese antitrust regulator as it seeks ways to ensure its approval.

Huawei Plays Down Its Chipmaking Capabilities

Huawei’s founder said the US was exaggerating the Chinese chipmaker’s capabilities and played down his company’s technology amid trade talks between Beijing and Washington that include discussions of export controls. In a rare interview with China’s state-run People’s Daily on Tuesday, Ren Zhengfei said Huawei’s Ascend chip, the main rival to Nvidia’s products in China, “still lags behind the US by one generation”. He added that the “US has exaggerated Huawei’s capabilities — we’re not that strong yet”. Ren’s comments come as Nvidia chief executive Jensen Huang has sounded the alarm in recent weeks on Huawei’s progress with its artificial intelligence chips, saying Washington’s limits on the US chipmaker selling to China have given rise to a “formidable” competitor that threatens to undermine American dominance of AI technology.

Shein Boosts Indian Manufacturing

Fast fashion giant Shein is reportedly set to boost its manufacturing in India with a view to bolstering its international supply chains amid the ongoing US-China trade war, Reuters reported Tuesday. Shein and partner Reliance Retail plan to rapidly expand their Indian supplier base and start international sales of India-made Shein-branded clothes within six to 12 months, said two people with knowledge of the matter. The China-founded, Singapore-headquartered Shein has been discussing plans with the Indian retailer since before the US imposed tariffs on Chinese imports that intensified the need to diversify sourcing, the people said. The aim is to raise Indian suppliers to 1,000 from 150 within a year, they said.

Shein sells low-priced apparel such as US$5 dresses and US$10 jeans shipped directly from 7,000 suppliers in China to customers in around 150 countries. Its biggest market is the US where it is adjusting to tariffs on low-value e-commerce packages from China which could previously be imported duty free. The retailer launched in India in 2018, but its app was banned in 2020 as part of government action against China-linked firms amid border tension with its northeastern neighbour. It returned in February under a licensing deal with Reliance Industries which launched SheinIndia.in, selling Shein-branded clothes produced in local factories. In contrast, Shein's other websites mainly list goods from China.

TSMC’s May Revenue Surges 40%

Taiwan Semiconductor Manufacturing Co., the main chipmaker for Nvidia and Apple, reported a 40% jump in May revenue after companies stockpiled chips in response to mounting trade uncertainty. The company’s revenue reached NT$320.5 billion (US$10.7bn). That compares with a 48% gain during April. Analysts on average expect a 39% increase in TSMC’s second-quarter sales. While sales in May appeared to be relatively healthy, they dropped 8.3% from April. TSMC Chief Executive Officer C.C. Wei last week reaffirmed the company’s guidance for sales to grow in the mid-20% range in US dollar terms in 2025. AI chip demand still outstrips supply, he told shareholders. Taiwan’s overall exports and shipments to the US jumped to a record in May.

Asia-Pacific Stocks Climb As Investors Await Details of US-China Talks

Asia-Pacific markets ex-China climbed Tuesday as investors awaited further details on the US-China trade talks, which a White House official said would continue for a second day. “We are doing well with China,” Donald Trump told reporters at the White House, adding “China’s not easy.” Ed Yardeni of Yardeni Research said investors have become weary from Donald Trump’s tariff policy rollout that has sent stocks on a rollercoaster. “The market’s become very jaded about these tariffs, and rightly so,” Yardeni told CNBC. “The game changes all the time,” Yardeni said. “On balance, it’s in everybody’s interest to come up with some solution to this that doesn’t cause a recession in any country, or certainly not in the world economy.”

Japan’s Nikkei 225 climbed 0.3% to 38,212, edging towards a four-month high. Bank of Japan Governor Kazuo Ueda told parliament on Tuesday that the central bank stands ready to raise interest rates again if they "have enough confidence that underlying inflation nears 2% or moves around 2%."

Daimler Truck and Toyota Motor will merge their Japanese truck units in a move designed to increase efficiencies in development, procurement and production while boosting competitiveness. Daimler’s Mitsubishi Fuso and Toyota’s Hino Motors will be combined under a new holding company and listed on the Tokyo Stock Exchange’s prime market, the companies said in a joint statement. The tie-up was originally outlined two years ago, with the companies at the time highlighting plans to pool resources and ease the economic burden of developing new automotive technologies as the industry moves towards more sustainable transport. Hino Motors fell 0.6% in Tokyo.

Shares in Japanese hotel developer turned bitcoin investor Metaplanet have soared this week after it unveiled plans to raise about US$5.4bn to add to its large stockpile of the cryptocurrency. Metaplanet’s target of 210,000 bitcoin, or 1% of the total supply of the cryptocurrency, would make it the world’s second-largest corporate holder of the digital currency. Its shares are up almost 17% so far this week. The company has not only been steadily acquiring bitcoin for its corporate treasury for a year but has also been increasing the size of its purchases. The policy has helped raise its share price more than 8,850% in the past two years.

In South Korea, the Kospi index rose 0.6%, climbing for the fifth straight session and heading towards its highest level since January 2022. The rally was fuelled largely by sustained foreign investor buying. Investor confidence has been bolstered by expectations of reform-oriented policies under President Lee. The Kospi is up nearly 20% since the start of the year.

Taiwan’s Taiex surged 2.1% to its highest level since March 26. Taiwan Semiconductor, the world's largest contract chipmaker, reported a 40% rise in revenue in May compared to a year earlier. Shares climbed 4.0% in Taipei.

Australia’s S&P/ASX 200 benchmark advanced 0.8% to a record high. China is the top export destination for Australian goods, and investors are hoping that a positive outcome from the trade talks would spur economic activity down under.

In India, the BSE Sensex was almost unchanged at 82,392. The Sensex is close to its highest level since mid-May.

Chinese Stocks Decline After Negative Trade Talks Commentary

Hong Kong and mainland Chinese shares traded within a tight range but were ultimately lower Tuesday ahead of the second day of trade negotiations between China and the US. Stocks turned down after commentary on a social media account affiliated with state broadcaster CCTV, which said that “the US should realistically view the progress made and revoke negative measures against China.” Beijing is earnest about trade talks with the US but is at the same time principled, it added. “People seem to be speculating that the talks didn’t go well,” said Fu Shifeng, investment director at Cheng Zhou Investment. “The rally in gold prices as well as rare-earth stocks seems to suggest that.”

Mainland China’s CSI 300 index fell 0.5% to 3,865. Hong Kong’s Hang Seng Index was 19 points, or 0.1% lower at 24,163. The Hang Seng is up 20.5% so far this year. Losses were led by the technology and consumer-focused sectors. The Hang Seng Tech Index fell 0.8%, reversing course from sharp gains of 2.8% in the previous session. The worst performers in the index were Kingdee International Software (-3.2%), Hua Hong Semiconductor (-3.1%) and Li Auto (-2.8%). Meanwhile, the Hang Seng China Enterprises Index, which captures the performance of mainland China stocks listed in Hong Kong, lost 0.2%, reversing course from the gains in its previous session when it entered a bull market.

European Stocks Muted Ahead of Trade Talks Details

European shares closed in mixed territory Tuesday. The pan-European Stoxx 600 was flat, with the CAC 40 in Paris advancing 0.2% and Germany’s DAX index 0.8% lower. London’s FTSE 100 was up 0.2%, just shy of a record high. Autos and oil and gas were the top performers in Europe, with the sectors both up by around 1.8%, on hopes that the trade talks will break the tariff stalemate between the world’s largest economies, paving the way for more deals.

Blackstone plans to invest as much as US $500 billion in Europe over the next decade, Chief Executive Steve Schwarzman said in an interview with Bloomberg. The US private-markets giant expects growth rates to rise in the region, he said.

Novo Nordisk rose 6.0% in Copenhagen after a report that activist hedge fund Parvus Asset Management has built a stake in a bid to influence the appointment of its new CEO. The obesity drug maker last month ousted its longstanding CEO Lars Fruergaard Jørgensen as increased competition has weighed heavily on US sales of its blockbuster Wegovy drug.

German defence stocks fell as investors awaited news from the US-China trade talks. Renk was 11.7% lower. The company’s shares have surged in value since the beginning of the year, gaining around 282%. Other companies in the sector seeing steep losses on Tuesday include Saab (-9.5%), Hensoldt (-6.1%) and Rheinmetall (-5.8%).

British consumers reduced their non-essential spending in May, the British Retail Consortium said on Tuesday. In the four weeks to May 31, total retail sales in the UK were up 1% year on year, the BRC said, with non-food sales falling by 1.1% from a year earlier. The latest data on the UK labour market from the Office for National Statistics showed a notable slowdown in the jobs market. The UK’s unemployment rate moved up to 4.6%, the highest since August 2021. Average wage growth at 5.3% came in below the 5.5% expected by economists polled by Reuters. The data also showed a 7.9% decline in job openings in the three months to April, when compared to the previous three-month period. The yield on the benchmark 10-year gilt fell 7 bps to 4.55% after the data.

US Stocks Rise For Third Day

US stocks climbed Tuesday for a third day as investors awaited details from the US-China trade talks in London. The Dow added 105 points, or 0.3%, and closed at 42,867. The S&P 500 rose 0.6% to end at 6,039. The Nasdaq Composite gained 0.6% and settled at 19,715. The Nasdaq was boosted by a 5.7% pop in shares of Tesla.

Stocks have rallied so far in June as investors remain hopeful about ongoing global trade discussions and overall strength in the market. Gains have been powered by strong corporate earnings results and a revival in tech stocks, given the recent slew of artificial intelligence announcements. “Technically, shares have been on a nice run eclipsing key levels to get back on track. Longer term, they started the week right above its downtrend line going back to its annual highs,” said Jay Woods, chief global strategist of Freedom Capital Markets.

US Bond Yields Steady

The yield on the US 10-year Treasury note held steady at 4.47% on Tuesday, as investors assessed the first of this week’s key Treasury auctions. The US$58 billion sale of 3-year notes cleared at a high yield of 3.972% suggesting continued foreign support for shorter-term US debt despite rising geopolitical and fiscal concerns. Sales of 10- and 30-year debt are due later this week. US bond auctions have been in focus this year amid worries about government debt and spending.

Asian Currencies Lower

The US Dollar Index, which measures the currency against six major peers, gave up early gains to close unchanged at 99, after falling the day before. Asia-Pacific currencies mostly weakened against the greenback Tuesday as investors awaited updates on trade negotiations between the US and China. The Japanese yen depreciated 0.2% against the dollar to ¥144.86, after Finance Minister Katsunobu Kato said that the government will conduct appropriate debt management policies while having close communication with market participants. The South Korean won weakened 0.3% against the dollar. China’s offshore yuan was 0.1% lower around Rmb 7.19 per dollar.

Gold Drops Unchanged On US-China Trade Talk Optimism

Gold prices were almost unchanged on Tuesday, as optimism over easing US-China trade tensions dampened safe-haven demand. Spot gold settled 0.1% lower at 3,323 per troy ounce.

Twelve leading banks together made US$500 million in revenue from precious metals in the first quarter of 2025, the second highest figure in a decade of data compiled by Crisil Coalition Greenwich. That’s approximately twice the average earnings per quarter over the past ten years, the market intelligence firm’s data showed. Gold and silver prices on New York’s Comex exchange spiked above other international benchmarks in the first quarter, meaning traders could buy bullion in trading hubs like London, Switzerland or Hong Kong and transport it to the US to reap a profit before any tariffs came into effect.

Oil Gives Up Early Gains

US crude oil inventories fell by 0.37 million barrels in the week ending June 6, 2025, according to the American Petroleum Institute. The modest draw followed a 3.3 million-barrel decline the previous week and defied expectations for a 0.7-million-barrel build, marking the smallest inventory change since August 2024.

Brent crude slipped back below $67 per barrel after rising nearly 1% to its highest level since April 28 on Monday. On Tuesday, Brent futures were down 0.7% to $66.66 per barrel. China is the world’s largest importer of oil, so progress in trade negotiations between the world’s two largest economies could ease fears of weaker energy demand and a weaker global economic outlook.

Bitcoin Rallies

Bitcoin rose 1% over the past 24 hours to $109,860.

Peter Lewis’ Money Talk Podcast

On Wednesday’s “Peter Lewis’ Money Talk” podcast, I’ll be joined by Richard Harris, Chief Executive Officer at Port Shelter Investment Management, and Andrew Sullivan, founder of Asian Market Sense. With a view from Japan is Tokyo based journalist and author, William Pesek.

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