Australia pledges to raise defence spending by $32bn to ‘resist coercion’

UK inflation: March price growth figures are due. Economists polled by Reuters forecast annual inflation will ease to 3.1 per cent, down from 3.4 per cent in February and the lowest since mid-2021. Core inflation, which strips out energy and food prices, is expected to slow to 4.3 per cent from 4.5 per cent in the previous month

EU events: A special summit of EU heads of state focuses on improving the bloc’s competitiveness and how to deepen integration of the single market. Croatia holds parliamentary elections, while foreign ministers of G7 nations will gather on the Italian isle of Capri.

Central banks: European Central Bank board member Isabel Schnabel delivers the keynote speech on “Monetary Policy Challenges During Uncertain Times” at the International Research Forum on Monetary Policy in Frankfurt.

New Zealand’s annual inflation rate fell to its lowest level in nearly three years, official data showed on Wednesday.

The consumer price index rose 4 per cent in the year to March 31, its lowest annual level since June 2021, the Stats NZ agency said. Prices rose 0.6 per cent quarter on quarter.

The numbers exceeded the Reserve Bank of New Zealand’s forecast of an annual rate of 3.8 per cent and a 0.4 per cent quarterly rise. Inflation remains above the central bank’s target range of 1-3 per cent.

Rents, housing and energy were the principal drivers of inflation, offsetting cheaper transport.

Mainland Chinese stocks were the best performers in Asia during early trading on Wednesday following a stronger than expected gross domestic product reading for the first quarter.

China’s benchmark CSI 300 index edged up 0.3 per cent while Hong Kong’s Hang Seng index shed 0.4 per cent. Australia’s S&P/ASX 200 climbed 0.2 per cent. Australia’s economy is exposed to Chinese demand for its commodities exports.

An index of small-cap Chinese stocks, the CSI 2000, jumped 5.4 per cent, reversing heavy losses to start the week.

Investors were also heartened by a Chinese Securities Regulatory Commission statement on Tuesday that companies that do not respond to an official push to increase dividend payouts will not face mass delistings.

Shares in Australian rare earths developer Lynas gained on Wednesday after Gina Rinehart, the mining billionaire, bought a near 6 per cent stake in the company. 

Rinehart, and her iron ore vehicle Hancock Prospecting, acquired the stake less than a week after she built a 5 per cent holding in US listed MP Materials. Lynas shares rose 3 per cent in Wednesday trading.

Lynas and MP Materials held talks over a potential merger but pulled out of negotiations in February. Rinehart’s appearance on the share register of both companies has been seen as a potential move to position herself in the event of a future merger. 

Japan’s exports in March rose 7.3 per cent year-on-year, driven by increased demand from China and the US, official data released on Wednesday showed.

Overall exports for March totalled ¥9.5tn ($61.4bn), while those to China rose 12.6 per cent to ¥1.7tn and US exports climbed 8.5 per cent to ¥1.8tn.

The value of electrical machinery, which includes semiconductors and integrated exports, rose 9.9 per cent to ¥1.6tn. Exports of cars were 8 per cent higher at ¥1.3tn.

The yen is trading at 34-year lows, helping boost the competitiveness of exports, a boon as the economy has contracted for two consecutive quarters.

Events: Malaysia’s High Court is due to hear an application from imprisoned former prime minister Najib Razak, who is seeking to serve the rest of his term under house arrest. The Solomon Islands votes to choose its next parliament. India’s markets are closed for Rama Navami, a Hindu festival that celebrates the birth of Rama.

Diplomacy: Surinam’s President Chandrikapersad Santokhi concludes a two-day state visit to China, while Kyrgyzstan’s President Sadyr Japarov makes an official visit to neighbouring Kazakhstan.

Economic data: Japan publishes March trade figures and New Zealand releases first quarter inflation data.

Canada’s federal government wants its largest pension funds to invest more in domestic companies, and is hiring the former governor of the central bank to entice them.

Stephen Poloz, who led the Bank of Canada from 2013 to 2020, has been given the task of convincing Canada’s pension funds, which manage more than C$4tn (US$2.9tn), to allocate more capital at home.

The announcement comes after nearly 100 Canadian executives signed an open letter in March urging pension funds to raise their domestic investments.

Canada’s main stock index, the S&P/TSX Composite, has advanced 31 per cent since 2019, compared with a 74 per cent gain for the S&P 500.

Venezuela is cutting ties with Ecuador over its raid on the Mexican embassy in Quito earlier this month.

Venezuela’s strongman President Nicolás Maduro, an ally of Mexico’s leftist president Andrés Manuel López Obrador, made the announcement on Tuesday during a meeting of the Community of Latin American and Caribbean States, a regional bloc.

Mexico has cut ties and called for Ecuador to be expelled from the UN, while Nicaragua has broken off diplomatic relations with Quito. Honduras announced on Tuesday it was recalling its ambassador to Ecuador.

United Airlines blamed Boeing for a first-quarter loss, saying its results suffered from the grounding of the 737 Max 9 fleet after a door panel blew off during an Alaska Airlines flight three months ago.

The Chicago-based airline posted a pre-tax loss of $164mn, which the carrier said reflects “the approximately $200mn impact from the Boeing 737 Max 9 grounding, without which the company would have reported a quarterly profit”.

United also said it expects to receive fewer jets from Boeing this year. It originally planned to take delivery of 183 narrow-body planes, then 101. On Tuesday it said it now expects to receive just 61 jets.

US stocks closed lower for the third session in a row on Tuesday after Federal Reserve chair Jay Powell warned interest rates are likely to stay at current levels for “longer than expected” to tame inflation.

Wall Street’s S&P 500 fell 0.2 per cent, having shed 1.2 per cent and 1.5 per cent on Monday and Friday, respectively. The tech-dominated Nasdaq Composite lost 0.1 per cent.

Yields on US government debt pushed higher as prices fell. Yields on rate-sensitive two-year Treasuries added 0.04 percentage points to 4.97 per cent.

A measure of the dollar’s strength against a basket of six other currencies rose 0.1 per cent. Prices for Brent crude, the international oil benchmark, slipped 0.2 per cent to $89.95 a barrel.