Live news: Asian equities fall on US debt ceiling jitters

Alibaba’s cloud business is cutting 7 per cent of its workforce ahead of fundraising and a split from its parent.

Over the coming year Alibaba plans to seek private funding for the cloud business. It also plans to publicly list the unit and distribute its stake to existing shareholders. News of the job cuts was first reported by local media.

While long pegged as central to Alibaba’s future, management has grappled with turning the company around amid a downturn in demand from other Chinese internet groups, its main customers. Revenue fell 2 per cent year on year in the first quarter, the company’s first ever quarterly sales decline.

New Zealand’s central bank increased interest rates by 0.25 percentage points on Wednesday, maintaining its hawkish position even as regional peers slacken the pace of their monetary tightening cycles.

The Reserve Bank of New Zealand raised the official cash rate to 5.5 per cent, the highest since October 2008. It also warned that an economic contraction this year was possible.

The bank said high interest rates overall were still needed to cool demand in the economy, given a tight labour market and government spending on rebuilding areas hit by floods this year.

Asian equities fell on Wednesday as concerns grew over the ability of the US to raise its debt ceiling and avoid a default.

Japan’s Topix and South Korea’s Kospi both fell 0.3 per cent, while China’s CSI 300 and Hong Kong’s Hang Seng index declined 0.5 and 0.8 per cent, respectively.

US stocks fell on Tuesday as policymakers in Washington struggled to lock in a deal on the debt ceiling, with less than two weeks left until the government is due to default. The S&P 500 closed 1.1 per cent lower and the Nasdaq Composite lost 1.3 per cent.

Modi in Australia: Australian prime minister Anthony Albanese holds talks with his Indian counterpart Narendra Modi.

Monetary policy: The Reserve Bank of New Zealand makes an interest rate decision. The RBNZ has struck a hawkish note at its meetings in previous months and has continued to sharply increase interest rates. The bank is forecast by analysts polled by Reuters to increase rates by another 0.25 percentage points to 5.5 per cent.

Markets: Stocks declined in Japan while futures in Hong Kong pointed lower. On Tuesday, US stocks declined as policymakers in Washington struggled to lock in a deal to increase the country’s debt ceiling, with less than two weeks left until the government is due to default. The S&P 500 closed 1.1 per cent lower and the Nasdaq Composite lost 1.3 per cent.

Italy has announced a €2.2bn relief package for the flood-hit Emilia-Romagna region, where an estimated 23,000 people have lost their homes and thousands of hectares of fertile farmlands were damaged after the region received more than half of its annual average rainfall in the space of just 36 hours.

At least 15 people are known to have died in the floods, which drove tens of thousands of people from their homes, and damaged thousands of fruit-bearing trees in one of the country’s most fertile and productive agricultural areas.

The relief package includes direct support for affected businesses, and moratoriums on the collection of tax and social contributions for flood-hit companies.

The White House and Republicans in Congress struggled to make meaningful progress towards a deal to raise the US borrowing limit on Tuesday, leaving the economy and financial markets in a dangerous limbo little more than a week before a potential debt default.

President Joe Biden and Kevin McCarthy, the Republican House Speaker, met on Monday evening at the White House for direct talks they each called “productive”, raising hopes that they were moving closer to an agreement.

But staff-level negotiations that occurred late on Monday and on Tuesday yielded no signs of a breakthrough — just pledges to continue conversations.

Read more about the negotiations here.

Ron DeSantis will announce he is running for president in a conversation with Elon Musk on Wednesday, ending months of speculation about the Republican Florida governor’s 2024 ambitions and placing the billionaire Twitter boss front and centre in his bid for the White House.

DeSantis will launch his campaign on Wednesday evening with an event on Twitter Spaces, the social media platform’s format for audio conversations, according to a person familiar with the governor’s plans.

Musk also confirmed the event. “We’ll be interviewing Ron DeSantis, and he has quite an announcement to make,” he told a Wall Street Journal event on Tuesday afternoon.

Share moves to note on the New York Stock Exchange include PacWest Bancorp, BJ’s Wholesale Club and Yelp:

• Shares of regional bank PacWest Bancorp extended gains on Tuesday, increasing 15.8 per cent after the lender announced it would sell $2.6bn of its real estate loan portfolio. 

• Discount retailer BJ’s Wholesale Club shares plunged 7.1 per cent after the company reported revenue that missed analysts’ expectations and noted softer consumer demand. 

• Shares of restaurant review platform Yelp jumped 7.9 per cent after reports that activist investor TCS Capital Management is calling on the company to explore a sale.