The People’s Bank of China (PBOC) surprised markets today by setting the midpoint fixing rate for the yuan at 7.0968 per U.S. dollar, which was 1,654 basis points stronger than the Reuters estimate. This significant difference marks the biggest discrepancy since Reuters began its estimations in 2018.
At 1:10 p.m. Shanghai time, the offshore yuan was trading at 7.2530, following China’s report of a lower-than-expected inflation rate for March. This data highlights the continued weakness in the world’s second-largest economy.
In other news, Apple supplier Foxconn is considering implementing a rotational chief executive system to nurture future talent. This move comes in response to calls from investors to boost corporate governance by separating the role of chief executive from the chairperson. Young Liu has held both the chairman and CEO roles at the Taiwanese company since 2019.
Additionally, China’s inflation missed estimates as price growth slowed to 0.1% in March. The consumer price index rose just 0.1% year on year, lower than the 0.4% expected by economists. The producer price index also slid 2.8% in March compared to the same period last year.
In the financial sector, real estate and utilities suffered as Treasury yields leapt above 4.5%. Real estate stocks slid 4.1%, with companies like SBA Communications and Extra Space Storage tumbling more than 6%. Utilities also slumped, dropping 1.7%.
Regional banks were hit hard by Wednesday’s market reaction to March inflation, with the S&P 1500 Regional Bank Index down 4.5%. Examples of the decline include New York Community Bancorp, Brookline Bancorp, and Western Alliance Bancorp.
Lastly, Vertex Pharmaceuticals announced the acquisition of Alpine Immune Sciences for $4.9 billion in cash. Shares of Vertex dipped 1% in extended trading, while Alpine shares surged more than 36%.
Overall, the market saw stock futures open lower on Wednesday evening, with futures linked to the S&P 500, Dow, and Nasdaq 100 all slipping. Investors will continue to monitor these developments closely as they navigate the evolving economic landscape.
