Aurelia Butler

(Reuters) – A look at the day ahead in Asian markets from Jamie McGeever, financial markets columnist.Lingering concern over China’s slide into deflation and caution ahead of U.S. inflation data will keep markets in check on Thursday, as investors also eye India’s interest rate decision, wholesale inflation from Japan and Philippine GDP data.Renewed tension between the United States and China could be back on investors’ radar, with the White House detailing plans to prohibit some U.S. investments in Chinese technology, and requiring that the government be notified of other investments.Although Chinese stocks fell for a third day on Wednesday the rest of Asia shrugged off the Chinese deflation figures, and the MSCI Asia ex-Japan index rose 0.5% for its best performance so far this month. Perhaps there was some relief that the -0.3% annual rate of deflation was not quite as bad as the -0.4% economists had expected – it was certainly enough to lift China’s economic surprises index to its highest since June 26.In the same vein, a more benign reading of U.S. inflation on Thursday than consensus estimates could lift some of the gloom that has descended on markets since Fitch stripped the United States of its triple-A credit rating on Aug. 1.Wall Street could do with some relief as the S&P 500 fell on Wednesday for the sixth session out of seven, ahead of the July inflation report which is expected to show the annual rate of consumer price rises increasing to 3.3% from 3.0%.Keep an eye on oil prices though. Crude futures are the highest since January and are now down only 9% from a year ago – that’s a significantly weaker deflationary impulse than the 40% year-on-year decline registered as recently as June.Also on the inflation front, the annual rate of Japanese wholesale price inflation is expected to have fallen to 3.5% in July from 4.1% in June. That would be the lowest since March 2021 and the seventh straight decline from the peak of 10.2% in December. The Reserve Bank of India, meanwhile, is expected to keep its repo rate steady at 6.50% on Thursday but adopt a far more hawkish tone in the face of a recent rise in food prices which has been sharper than expected and seen lasting longer.Interest rate markets are pricing in a decent chance of a quarter-point hike, if not this week then certainly by the end of the year. Currency traders don’t seem to be expecting a hike – the rupee goes into the meeting bumping along October’s record low around 83 per dollar.Here are key developments that could provide more direction to markets on Thursday:- India interest rate decision – Japan wholesale price inflation (July)- Philippines GDP (Q2) (By Jamie McGeever) More

Good morning. The Biden administration has unveiled a ban on US investment into quantum computing, advanced chips and artificial intelligence sectors in China, as it ratchets up efforts to ensure that the Chinese military does not benefit from American technology and capital.President Joe Biden on Wednesday issued an executive order establishing the prohibitions, which will largely affect private equity and venture capital firms as well as US investors in joint ventures with Chinese groups.A senior US official said it would create a “very targeted” programme that would focus on the three sectors that the Biden administration has also marked out in a series of other technology-related measures aimed at China.The latest move threatens to hurt continuing efforts to resurrect top-level engagement between the US and China. Washington has said the rule, which will not take effect until next year, will protect US security. But Beijing has countered that previous US actions are designed to crimp its technological progress. Meanwhile, Republicans criticised the order for not tackling more kinds of investment. “To stop funding China’s military, we have to stop all US investment in China’s critical technology and military companies, period,” said Nikki Haley, one of the GOP presidential contenders. However, another US official said private equity and venture capital had been targeted because they could introduce Chinese groups to other technology companies and experts. “What we are trying to get at here is the intangible benefits,” the official said. “Ultimately, China doesn’t need our money.” Read the full story. More on the US-China tech war: China’s internet giants are rushing to acquire high-performance Nvidia chips vital for building generative artificial intelligence systems, making orders worth $5bn in a buying frenzy fuelled by fears the US will impose new export controls.Here’s what else I’m keeping tabs on today:Economic data: US inflation numbers released today are expected to show consumer prices rising to 3.3 per cent year on year in July, up from 3 per cent in June. Meanwhile, Opec issues its August Oil Market Report and the European Central Bank publishes its Economic Bulletin.Monetary policy: The Reserve Bank of India is expected to hold benchmark rates steady when it makes its monetary policy decision today. (Reuters)Results: Alibaba, Rakuten and Eneos Holdings report earnings. India: Prime minister Narendra Modi is expected to address a no-confidence motion over the continuing conflict in the north-eastern state of Manipur. While the motion is certain to be defeated, Modi will be compelled to speak on a security crisis that he has shown “brazen indifference” towards, according to India’s opposition.Five more top stories1. Consumer prices in China have declined for the first time since early 2021 as the world’s second-largest economy continues to buck the global trend of high inflation. The consumer price index fell 0.3 per cent year on year in July, according to official statistics released earlier today. Read more on the Chinese economy’s slide into deflation.More China news: AstraZeneca has signed a deal with Chinese pharmaceutical company CanSino Biologics to develop potential messenger RNA vaccines.2. European natural gas prices surged almost 40 per cent on Wednesday as the potential for disrupted global liquefied natural gas supply from Australia spooked traders betting on further price declines. The increase was triggered by reports that workers at important LNG plants in Australia were planning strike action. Here’s what a cut in Australian supply could mean for Asia.3. SoftBank is in talks to bring in Amazon as an anchor investor in Arm’s forthcoming initial public offering as part of a widening search to find customers willing to take a long-term stake in the UK-based chip designer. Discussions have also expanded to Google, Apple, Amazon and companies in other industries heavily dependent on semiconductors. Here are more details. 4. Elon Musk’s X, formerly known as Twitter, was fined $350,000 after missing a deadline for complying with a secret search warrant for Donald Trump’s account as part of the January 6 investigation. The US Department of Justice’s search warrant directed X to produce data and records related to Trump’s @realdonaldtrump Twitter account. Here’s how X responded. More Trump news: The former president admitted that he may be forced off the campaign trail to defend himself against what he called “bullshit” criminal charges and predicted that he could be facing a fourth indictment as early as next week.5. WeWork has warned for the first time that it faces “substantial doubt” about its ability to continue as a going concern. The US office space company, once valued at $47bn, said its outlook depended on a series of plans including further restructuring and a search for additional capital over the next 12 months. Read more on WeWork’s struggle to survive. The Big Read

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China dominates the supplies of many of the key building blocks for clean energy technology. Its control has drawn comparisons to the high level of influence that Saudi Arabia enjoys in the oil market — and potentially complicates the world’s transition to renewable energy. We’re also reading . . . TED talks draw Beijing’s ire: The group’s days of spreading ideas to China’s 1.4bn people are in question after crossing a Communist party “red line” on free speech.Biden’s Middle East push: The US plan to normalise relations between Israel and Saudi Arabia would remake the region, but it faces big obstacles.What Britain can learn from Taiwan: A difficult inheritance can be overcome by working on “social infrastructure”, writes Yuan Yang.Chart of the dayIndian equity exchange traded funds took in a net $1.5bn in July, according to BlackRock’s data, the second-highest monthly figure for India on record, beaten only by the $2.3bn witnessed in March this year. The inflows suggest investor enthusiasm for India, which is widely expected to take the baton from China as the world’s fastest-growing large economy in the decades to come. Take a break from the newsNew York’s West Village has become the centre of a dining revolution. Kyle Beechey traces the former counter-cultural hub’s journey back to fashionability after years of stagnation.

The dining room at Libertine © Evan Sung

Additional contributions from Tee Zhuo and Gordon Smith More

(Reuters) -The U.S. Supreme Court on Wednesday dealt a setback to Epic Games, maker of the popular video game “Fortnite,” in its legal battle against Apple (NASDAQ:AAPL), declining to let a federal judge’s injunction take effect that could force the iPhone maker to change payment practices in its lucrative App Store. Liberal Justice Elena Kagan, acting for the Supreme Court, denied Epic’s request to lift a decision by the San Francisco-based 9th U.S. Circuit Court of Appeals that effectively delayed implementing an injunction issued by U.S. District Judge Yvonne Gonzalez Rogers (NYSE:ROG) barring certain App Store rules, while Apple pursues a Supreme Court appeal. The 9th Circuit in April had upheld the injunction but in July put that decision on hold. Kagan handles emergency matters for the Supreme Court arising from a group of states including California. Epic filed an antitrust lawsuit in 2020, accusing Apple of acting as an illegal monopolist by requiring consumers to get apps through its App Store and buy digital content inside an app using its own system – for which it charges up to a 30% commission.Rogers in 2021 rejected Epic’s antitrust claims against Apple. But the judge found that Apple violated California’s unfair competition law by barring developers from “steering” users to make digital purchases that bypass Apple’s in-app system, which Epic could save them money with lower commissions. The judge’s injunction required Apple to let app developers provide links and buttons that direct consumers to other ways to pay for digital content that they use in their apps. In seeking to pause the injunction from taking effect while it readies an appeal to the Supreme Court, Apple told the 9th Circuit that Rogers had erred in prohibiting it from enforcing its rules against all app developers in the United States, rather than just Epic. “Apple will be required to change its business model to comply with the injunction before judicial review has been completed,” the company told the 9th Circuit. “The undisputed evidence establishes that the injunction will limit Apple’s ability to protect users from fraud, scams, malware, spyware, and objectionable content.”Epic told the Supreme Court that the 9th Circuit’s standard for putting cases on hold is “far too lenient.” More

The head of the United Nations has called for a bigger role in shaping global tax policy, setting up a potential clash with the OECD, the Paris-based organisation that has led discussions for decades. UN secretary-general António Guterres said in a draft report published yesterday: “Enhancing the UN’s role in setting and shaping global tax rules appears the most viable path for making international tax co-operation fully inclusive and more effective.”The remarks follow criticisms from several developing countries that the OECD, which in 2021 unveiled a global deal aimed at forcing companies to pay their fair share of tax where they do business, was designed with its member countries in mind. Most of the OECD’s members are prosperous advanced economies and leading developing countries, including India and Nigeria, have said elements of the deal risk having a negative impact on their economies. The draft report analysing existing global tax procedures backed those concerns, saying many non-OECD members “find that there are significant barriers to meaningful engagement in agenda-setting and decision making”. The draft report, the final version of which is set to appear in the coming weeks, noted that the OECD had introduced several initiatives to engage and include non-OECD members in its work. However, it said more ought to be done to address the needs of developing countries. “The substantive rules developed through these OECD initiatives often do not adequately address the needs and priorities of developing countries and/or are beyond their capacities to implement,” the report said. On specific concerns developing countries have about the impact of the global tax deal, the report noted that there was a perception among developing countries that “the expected benefit from the proposed reforms will be minimal, especially when compared to the cost of implementation”.Tax campaigners welcomed the news. “The OECD process has never been global,” said Tove Maria Ryding, tax co-ordinator at the European Network on Debt and Development. “Developing countries have not been able to participate on an equal footing and the negotiations have been deeply opaque and closed to the public. We need global tax negotiations to be transparent, fair and lead by a body where all countries participate as equals. The UN is the only place that can deliver that.”However, some business groups warned the development could risk destabilising the international tax system unless handled carefully. “For the business community certainty and stability of the international tax system is ultimately key,” said the International Chamber of Commerce. “It is vital that new initiatives are not developed in a vacuum. Rather, we encourage UN member states to examine carefully how each of the option can usefully fit into the broader global tax ecosystem — and ideally enhance better co-ordination among multilateral institutions working on tax policy issues”.Guterres proposed three potential options to beef up the UN’s existing work on tax including two legally binding instruments and one voluntary framework for international tax co-operation. Member states will discuss the options during the UN’s next assembly session in September. The report was commissioned following a resolution adopted by the UN general assembly, at the request of African nations.The OECD has been approached for comment. More