US agency votes to bar Chinese labs deemed security risks from testing US electronics
May 22 (Reuters) - The Federal Communications Commission voted on Thursday to finalize rules barring Chinese labs deemed risks to U.S. national security from testing electronic devices like smartphones, cameras and computers for use in the United States.
All electronics used in the United States must go through the FCC's equipment authorization process before they can be imported.
The FCC says about 75% of all electronics are tested in labs located inside China.
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Reuters
2 hours ago
- Reuters
TRADING DAY London calling, stocks crawling higher
ORLANDO, Florida, June 9 (Reuters) - TRADING DAY Making sense of the forces driving global markets By Jamie McGeever, Markets Columnist I'm excited to announce that I'm now part of Reuters Open Interest (ROI), an essential new source for data-driven, expert commentary on market and economic trends. You can find ROI on the Reuters website, and you can follow us on LinkedIn and X. Trade tensions, policy uncertainty and shaky economic data continue to cloud the near-term outlook for world growth, but they remain on the back burner for now as investors kick off the week by pushing global stock markets higher. In my column today I look at why the dollar has depreciated significantly this year regardless of how U.S. stocks and bonds have performed. The main reason? Hedging. More on that below, but first, a roundup of the main market moves. If you have more time to read, here are a few articles I recommend to help you make sense of what happened in markets today. Today's Key Market Moves London calling, stocks crawling higher It was a fairly quiet start to the week across global markets on Monday, with strong equity gains in Asia followed by a grind higher on Wall Street which lifted the MSCI World index to a fresh record high. The main areas of focus for investors were China's economic 'data dump' for May, then the high-level U.S.-China trade talks in London. The two are connected - the U.S. is a less important market for China than it used to be, underscored in May's trade figures from Beijing and reflected in the lack of concrete progress from the negotiations in London. China's total exports rose 4.8% in May from a year earlier but this masks a huge split between the U.S. and the rest of the world. Exports to the U.S. plunged 34.4% year-on-year in value terms, the sharpest drop since February 2020 just before the pandemic, while exports to the rest of the world rose 11.4%. Monthly data are volatile, of course, and May's figures were also distorted by tariffs. Still, U.S.-bound shipments worth $28.8 billion last month were just 9% of the total $316 billion. Economist Phil Suttle notes that is less than half the average share in the decade leading up to President Donald Trump's first trade war. The London talks are expected to continue on Tuesday. But as was the case following Trump's telephone call with Chinese leader Xi Jinping on Thursday, there is little indication of a significant breakthrough, far less China bending to U.S. demands. "U.S. Treasury Secretaries who live in unbalanced economies might not want to throw barbs such as the 'most unbalanced in modern history' at China without first looking at some data," Suttle wrote on Monday. "The choice to fight an opponent should be conditioned on a clear-headed view of its strengths and weaknesses. The U.S. has done a marvelous job of (once again) deluding itself on this front," Suttle added. Still, divisions between the two countries and the threat to global supply chains are proving no barrier to rising stock markets. Japan's Nikkei and the MSCI emerging and Asia ex-Japan indexes rose around 1%, Hong Kong-listed tech stocks rose nearly 3%, and Wall Street closed in the green. Meanwhile, the dollar's trend this year of declining despite U.S. stocks and bonds rising was on full display on Monday. Wall Street closed slightly higher and Treasury yields fell as much as 5 basis points at the short end of the curve, yet the dollar slipped. Many analysts say one of the main reasons for this is non-U.S. investor hedging - more on that below. Dollar floored as investors seek that extra hedge All three major U.S. asset classes – stocks, bonds and the currency – have had a turbulent 2025 thus far, but only one has failed to weather the storm: the dollar. Hedging may be a major reason why. Wall Street's three main indices and the ICE BofA U.S. Treasury index are all slightly higher for the year to date, despite the post-'Liberation Day' volatility, while the dollar has steadily ground lower, losing around 10% of its value against a basket of major currencies and breaking long-standing correlations along the way. The dollar was perhaps primed for a fall. It's easy to forget, but only a few months ago the 'U.S. exceptionalism' narrative was alive and well, and the dollar scaling heights rarely seen in the past two decades. But that narrative has evaporated, as U.S. President Donald Trump's controversial economic policies and isolationist posture on the global stage have made investors reconsider their exposure to U.S. assets. But why is the dollar feeling the burn more than stocks or bonds? Non-U.S. investors often protect themselves against sharp currency fluctuations via the forward, futures or options markets. The difference now is that the risk premium being built into U.S. assets is pushing them – especially equity holders – to hedge their dollar exposure more than they have in the past. Foreign investors have long hedged their bond exposure, with dollar hedge ratios traditionally around 70% to 100%, according to Morgan Stanley, as currency moves can easily wipe out modest bond returns. But non-U.S. equity investors have been much more loath to pay for protection, with dollar hedge ratios averaging between 10% and 30%. This is partly because the dollar was traditionally seen as a 'natural' hedge against stock market exposure, as it would typically rise in 'risk off' periods when stocks fell. The dollar would also normally appreciate when the U.S. economy and markets were thriving – the so-called 'Dollar Smile' – giving an additional boost to U.S. equity returns in good times. A good barometer of global 'real money' investors' view on the dollar is how willing foreign pension and insurance funds are to hedge their dollar-denominated assets. Recent data on Danish funds' currency hedging is revealing. Danish funds' U.S. asset hedge ratio surged to around 75% from around 65% between February and April. According to Deutsche Bank analysts, that 10 percentage point rise is the largest two-month increase in over a decade. Anecdotal evidence suggests similar shifts are taking place across Scandinavia, the euro zone and Canada, regions where dollar exposure is also high. The $266 billion Ontario Teachers' Pension Plan reported a $6.9 billion foreign currency gain last year, mainly due to the stronger dollar. Unless the fund has increased its hedging ratio this year, it will be sitting on huge foreign currency losses. "Investors had embraced U.S. exceptionalism and were overweight U.S. assets. But now, investors are increasing their hedging," says Sophia Drossos, economist and strategist at the hedge fund Point72. And there is a lot of dollar exposure to hedge. At the end of March foreign investors held $33 trillion of U.S. securities, with $18.4 trillion in equities and $14.6 trillion in debt instruments. The dollar's malaise has upended its traditional relationships with stocks and bonds. Its generally negative correlation with stocks has reversed, as has the usually positive correlation with bonds. The divergence with Treasuries has gained more attention, with the dollar diving as yields have risen. But as Deutsche Bank's George Saravelos notes, the correlation breakdown with stocks is "very unusual". When Wall Street has fallen this year the dollar has fallen too, but at a much faster pace. And when Wall Street has risen the dollar has also bounced, but only slightly. This has led to the strongest positive correlation between the dollar and S&P 500 in years, though that's a bit deceptive, as the dollar is sharply down on the year while stocks are mildly stronger. Of course, what we could be seeing is simply a rebalancing. Saravelos estimates that global fixed income and equity managers' dollar exposure was at near record-high levels in the run-up to the recent trade war. This was a "cyclical" phenomenon over the last couple of years rather than a deep-rooted structural one based on fundamentals, meaning it could be reversed relatively quickly. But, regardless, the dollar's hedging headwind seems likely to persist. "Given the size of foreign holdings of both stocks and bonds, even a modest uptick in hedge ratios could prove a considerable FX flow," Morgan Stanley's FX strategy team wrote last month. "As long as uncertainty and volatility persist, we think that hedge ratios are likely to rise as investors ride out the storm." What could move markets tomorrow? Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, opens new tab, is committed to integrity, independence, and freedom from bias.
Leader Live
5 hours ago
- Leader Live
TikTok creating more than 500 new British jobs as UK users top 30 million
The Chinese-owned social media firm said its UK workforce would expand to 3,000 this year as part of its 'deep commitment' to the UK. It will also open a new 135,000sq ft office in London's Barbican, which is set to open early next year. The group already has its UK headquarters in Farringdon, London, which were opened in 2022. TikTok unveiled the plans as it said it now has more than 30 million regular users in the UK each month, which makes the market is biggest user community in Europe. Adam Presser, director of TikTok UK and global head of operations and trust and safety, said: 'Whether through direct investment in jobs and innovation, or the wider economic contribution from millions of British businesses on TikTok, we're pleased to be increasing our investment and presence here in the UK, an important hub for TikTok.' But it comes after Cabinet minister Pete Kyle signalled he was looking at measures to restrict the amount of time children spend on their phones, including through a possible 10pm curfew. Mr Kyle was asked on Sunday morning whether he would look at limiting the time children spend on social media to two hours per app after the Sunday People and Mirror reported the measure was being considered by ministers. The Online Safety Act has passed into law, and from this year will require tech platforms to follow new Ofcom-issued codes of practice to keep users safe online, particularly children. Hefty fines and site blockages are among the penalties for those caught breaking the rules, but many critics have argued the approach gives tech firms too much scope to regulate themselves. TikTok's Mr Presser said that, as well as its UK expansion plans, the group also invests 'significantly' in safety. He said: 'What underpins our continued growth is our deep commitment to safety and to creating an enjoyable and secure digital space to sustainably support creators, entrepreneurs and the wider economy, which is why we also invest significantly in safety.' TikTok first launched its UK operations in 2018 and is financially incorporated in Britain. The group was fined 530 million euro (£446 million) by the Irish data protection watchdog last month for breaching EU privacy rules around transferring user data to China. The video-sharing app was also sanctioned for not being transparent with users about where personal data was being sent and ordered the platform to comply with data protection rules within six months. TikTok said it would appeal against the decision. The social media giant, which is owned by China-based ByteDance, has been under scrutiny from regulators around the world over how it handles personal data, and is also facing a ban in the United States over its China links, which the US government has said is a national security issue.
Reuters
8 hours ago
- Reuters
US wholesale inventories in April revised higher
WASHINGTON, June 9 (Reuters) - U.S. wholesale inventories increased in April amid stockpiling of prescription medication in anticipation of tariffs from the Trump administration. Stocks at wholesalers rose 0.2% instead of being unchanged, as estimated last month, the Commerce Department's Census Bureau said on Monday. Economists polled by Reuters had expected last month's estimate would be unrevised. Inventories, a key part of gross domestic product, climbed 0.3% in March. They advanced 2.3% on a year-over-year basis in April. Wholesale stocks of prescription medication surged 1.3% in April. There were also increases in apparel, motor vehicle, groceries and professional equipment inventories. President Donald Trump has said he would impose tariffs on imports of pharmaceutical products that have long been spared from past trade disputes due to the potential for harm to patients. Apart from drugmakers, businesses front-loaded imports in the first quarter, seeking to avoid Trump's sweeping duties on foreign goods, resulting in a large trade deficit that subtracted a record 4.90 percentage points from GDP. The front-running faded in April, leading to a record decline in imports and the overall trade deficit. While the contraction in the deficit at face value suggests trade could significantly add to gross domestic product in the second quarter, economists say some of the boost could be offset by low inventories. Inventory accumulation increased at a rate of $163.0 billion in the first quarter. The economy contracted at a 0.2% annualized rate in the January-March period, the first GDP decline in three years. It grew at a 2.4% pace in the fourth quarter. Sales at wholesalers edged up 0.1% in April after jumping 0.8% in March. At April's sales pace it would take wholesalers 1.30 months to clear shelves, unchanged from March.
