The undersea cable connecting Penghu Island has been severed, the Taiwan Digital Ministry announced, raising concerns over communication disruptions. Meanwhile, the People's Bank of China (PBOC) has kept the 1-year Medium-Term Lending Facility (MLF) rate steady at 2.00%, as it conducted CNY300 billion in MLF and withdrew CNY200 billion in liquidity. Market reactions were observed globally, with the Hang Seng index opening at -2.7% and the Hong Kong Tech Index dipping by -4.3%, largely due to declines in US technology stocks. Notably, Alibaba experienced a substantial drop of nearly -8% at market open.
In commodity markets, gold prices fell slightly by -0.3%, settling at $2,954 per ounce. Meanwhile, crude oil prices rose by +0.7%, reaching $71.18 per barrel, while copper prices dipped by -0.4% to stand at $4.5418 per pound. In bond markets, Japanese 10-year bond yields decreased to 1.37%, and 2-year Japanese Government Bond (JGB) yields fell to 0.789%.
Amid these developments, the UK's Bank of England's dovish dissenter, Dhingra, commented on the high level of monetary policy restrictiveness currently observed in the UK. Additionally, the Philippines is set to observe a holiday on Tuesday, February 25th, while China will release its National Bureau of Statistics (NBS) Manufacturing PMI for February on Saturday, February 1st.
Japanese Finance Minister Kato emphasized the importance of analyzing the ramifications of former US President Trump's tariffs. In a related note, President Trump announced that federal employees would be given "another chance" to respond, with the potential consequence of termination for non-response.
In South Korea, Acting President Choi called upon the parliament to endorse the Chips Act along with an additional budget, emphasizing the need for legislative approval to bolster economic growth.
The unexpected breakdown of the undersea cable linking Penghu Island has raised alarms for potential communication and internet service disruptions. The Taiwan Digital Ministry is actively assessing the situation to implement corrective measures swiftly.
In China, the PBOC's decision to maintain the MLF rate at 2.00% reflects their intention to sustain monetary stability amidst volatile global economic conditions. The PBOC's liquidity management strategy involved conducting CNY300 billion in MLF operations while simultaneously draining CNY200 billion, showcasing a balanced approach towards liquidity provision.
The Hang Seng index's decline by -2.7% and the Hong Kong Tech Index's sharper fall by -4.3% can be attributed to the ripple effects of declining US technology stock values. Alibaba's significant drop of nearly -8% highlights investor concerns surrounding tech sector performance.
The commodity markets showed mixed signals with gold prices slightly down by -0.3%, indicating caution among investors seeking safe-haven assets. In contrast, crude oil prices rose by +0.7%, reflecting a recovery in global demand expectations. Copper prices experienced a marginal dip of -0.4%, indicating subdued industrial demand.
In Japan, bond yields experienced downward pressure with 10-year yields falling to 1.37% and 2-year JGB yields decreasing to 0.789%. This movement suggests investors are seeking safer investments amidst uncertain market conditions.
Bank of England's Dhingra expressed concerns regarding the UK's high level of monetary policy restrictiveness, hinting at potential challenges in balancing inflation control with economic growth objectives.
The upcoming holiday in the Philippines on February 25th and China's scheduled release of the NBS Manufacturing PMI for February on February 1st are key events that market participants will be closely monitoring for further insights into regional economic activities.
Japanese Finance Minister Kato reiterated the necessity of a comprehensive analysis on Trump-era tariffs and their impact on Japan's economy, emphasizing a strategic approach towards trade policy decisions.
President Trump's statement regarding federal employees underscores his administration's stance on accountability and adherence to procedural requirements within federal agencies.
South Korean Acting President Choi's push for parliamentary approval of the Chips Act and an extra budget highlights the administration's focus on fostering technological advancement and economic resilience through legislative support.