Good morning. Here's what happened overnight and what you need to know today.
1.
Software block: The Trump administration is considering a plan to restrict exports to China of goods made with or containing US software, Reuters reported citing a US official and three people briefed by US authorities. The measure, which may not move forward, is reportedly one of several options being weighed in response to China’s expanded rare earth export controls. If adopted, it would follow through on Donald Trump’s threat earlier this month to impose new export controls on “any and all critical software” and 100% tariffs on Chinese shipments by 1 November. One source told Reuters the measure could be announced to pressure China but not implemented, while narrower proposals are also under discussion. “Everything imaginable is made with US software,” one of the sources said, highlighting the wide scope of the potential move. US stock indexes fell on the news. The threat follows China’s new rare earth controls and comes ahead of a planned meeting with Xi Jinping in South Korea. (Reuters)
2.
Software spat: Wall Street slid Wednesday as tech stocks came under pressure, Netflix earnings disappointed and a report of potential US software export restrictions to China fuelled renewed trade tensions. The Nasdaq was trading 1.6% lower in the late afternoon, while the S&P 500 was 0.94% lower and the Dow down 0.85%. Investor jitters were amplified by reports the Trump administration is considering curbs on exports to China of a wide range of US-made software, including ERP, CRM and CAD systems, in response to Beijing’s rare earth restrictions and new port fees on US ships. Technology and communication services stocks led losses. Netflix tumbled 10% after a Brazilian tax dispute hit earnings. Texas Instruments fell as much as 9.8% on a downbeat forecast. Tesla, which will report after the bell (3Q profit is expected to fall 25% from a year ago), was down 1.5%. Gold continued its slide, falling 1.7% to USD4,054.34 after Tuesday’s 5.3% plunge, as traders booked profits following a 57% year-to-date rally and ahead of US inflation data. Beyond Meat swung wildly, ending lower after a sharp intraday surge in classic meme stock fashion. (Bloomberg)(Reuters)(WSJ)
