Daily Pulse

Canada

Canada and International Business Machines Corp. will publish a high-level agreement on expanding semiconductor cooperation on Friday, during U.S. President Joe Biden’s visit to Ottawa. The memorandum of understanding will seek to capitalize on the U.S. push for semiconductor investment with its CHIPS Act, according to a government official familiar with the matter. The agreement will lay out a plan to further build out the microchip ecosystem in the region, particularly when it comes to workforce development. It will also pledge to look at increasing Canada’s role in the semiconductor supply chain and integrating it with U.S. manufacturing. Canada’s ultimate goal, the official said, is to develop a cross-border trade corridor for chip manufacturing, patterned on the extensive automotive sector cooperation between the two countries.

Leaders in Canada’s auto sector will be listening closely to what U.S. President Joe Biden has to say about Canada-U.S. collaboration in the electric vehicle-manufacturing boom as he visits Ottawa for the first time during his presidency. There has been a shift in the relationship between the two countries in recent years as the U.S. has leaned towards more protectionist policies that favour domestic production for goods, including automobiles. Canada-made cars were nearly excluded from proposed U.S. tax credits for electric vehicles before last-minute changes were made to the American legislation last summer.

United States

The stock market saw a strong rebound on Thursday, with banks halting their selloff and traders piling into some of the world’s largest technology companies that are seen by many on Wall Street as a kind of shelter in times of stress and economic uncertainties. A rally in megacaps like Apple Inc. and Microsoft Corp. drove the Nasdaq 100 toward its highest level since August, with the gauge topping the threshold of a bull market after surging over 20% from its December low. In the wake of the banking turmoil that has rattled markets around the globe, the cohort of tech stalwarts that are flush with cash seems to be back in vogue. The tech-heavy gauge has largely outperformed other benchmarks this month.

Block Inc. shares tumbled after Hindenburg Research said it’s betting on a decline in the stock, saying the payments company led by Jack Dorsey facilitated fraudsters who took advantage of government stimulus programs during the pandemic. In response to a public-records request, the state of Massachusetts told the short seller that it sought to claw back over 69,000 unemployment payments from the bank behind Cash App accounts, an amount that exceeded those it sought to reverse from major banks like JPMorgan Chase & Co. and Wells Fargo & Co., which have far more customers. “In sum, we think Block has misled investors on key metrics, and embraced predatory offerings and compliance worst-practices in order to fuel growth and profit from facilitation of fraud against consumers and the government,” Hindenburg wrote. Block slumped up to 22%, the company’s biggest intraday decline in three years.

Europe

The Bank of England pushed ahead with another interest rate increase despite turmoil in the banking sector, predicting the UK economy will avoid a recession for now and that inflation remains a risk. The central bank raised its benchmark lending rate as expected by a quarter point to 4.25%, the highest since 2008, and left the door open to further increases if inflation persists. Policy makers voted 7-2 for the hike. Governor Andrew Bailey and his colleagues are seeking to keep a lid on soaring prices at a time when turmoil in financial markets is threatening to upend the outlook for the economy. The BOE brushed aside concerns about the banking system after the rescue of two major institutions abroad, suggesting policy makers see inflation as the main priority. “If there were to be evidence of more persistent pressures, then further tightening in monetary policy would be required,” minutes of the meeting released Thursday said, a guidance that’s in step with what the BOE said in February.

The UK government condemned tactics by power traders that the energy regulator says pushes up prices for consumers. An investigation by Bloomberg News on Thursday exposed tactics by power traders who say they’re stopping plants from generating before agreeing to keep them running at a higher power price. It’s often used on days when there’s limited supply available to the grid operator. Power traders racked up over £525 million ($647 million) using the maneuver in recent years, a cost that’s ultimately borne by consumers.

Asia

House lawmakers grilled TikTok’s CEO about potential Chinese government influence over the platform. Shou Zi Chew fielded questions stemming from Washington’s national-security concerns about the short-video app. The House Energy and Commerce Committee was skeptical about his assurances that U.S. users’ data would be protected and that Beijing couldn’t use TikTok or its Chinese owner, ByteDance, to manipulate the content Americans see. The Biden administration has threatened a possible TikTok ban in the U.S. if ByteDance doesn’t sell its stake in the platform. Hours before the House hearing, China said that it would oppose any forced sale and that a TikTok divestiture would involve exporting technology, which Beijing must OK.

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