Rolling coverage of the latest economic and financial news Silvana Tenreyro , the IMF’s economic counsellor, tells CNBC that the world’s economic resilience is being tested. She said: We’ve seen rerouting of supplies from the Middle East, increased production outside the conflict region, drawdown of inventories, increases in energy efficiency, and switches to other sources of energy, including renewables-all that played out to contain the shock.
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But some of these margins are getting really thin, including inventories and efficiency gains. We are reaching those limits, so it’s very important to start replenishing that resilience, and that’s part of the message. We need to replenish supply-side resilience and also fiscal buffers because they have been used up to contain many of the shocks that we’ve had over the past six, seven years.
The sell-off drama has been concentrated in Asia, with South Korea’s Kospi plunging by around 6% and Japan’s Nikkei falling by more than 2% as semiconductor stocks sold off. The tech-heavy Nasdaq in the US also looks set for another slide as worries creep in about just how much tougher the landscape will be ahead, just as the Fed weighs whether further rate rises will be needed in the months to come.
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Advances by China’s CXMT have sent a shiver of apprehension through the market, after the company reported ‘key progress’ on a new cell architecture designed to bolster memory density, with plans for a product rollout. This is a highly competitive field, with rivals Samsung Electronics and SK Hynix also hard at work at this edge of innovation.
It’s raised big questions yet again about valuations based on bumper earnings projections and the scarcity of products, given the progress of rivals. Continue reading...
