Happy Thursday and welcome to your morning wrap of the latest political and business headlines from around the world.
First up, US President Donald Trump has arrived in Beijing ahead of a high-stakes summit with his Chinese counterpart, Xi Jinping.
Trump will be in China for two days, where the two superpowers are expected to discuss tariffs, competition, technology, the war in Iran, and America’s relationship with Taiwan, the BBC reported.
The trip was originally slated for March but was postponed because of the US-Israel war with Iran.
He was greeted with pomp and pageantry as he descended the steps of Air Force One, while a brass band and flag-wavers holding Chinese and American flags chanted, “welcome welcome, a warm welcome”.
Trump was accompanied by a number of tech titans, including Tesla’s Elon Musk and Nvidia’s Jensen Huang.
In a social media post, Trump said: “I will be asking President Xi, a Leader of extraordinary distinction, to 'open up' China so that these brilliant people can work their magic, and help bring the People's Republic to an even higher level.”
The conflict in the Middle East, which has disrupted the global economy, is also expected to factor into the discussions. China relies on Iran for oil, and those exports have effectively been cut off by ships not being able to navigate the Strait of Hormuz.
Shortly before departing for China, Trump told reporters he and Xi will have a “long talk” about Iran but said he doesn’t think the US needs any help in resolving the conflict.
US Federal Reserve building.
In other news, Kevin Warsh has been confirmed as the next chair of the Federal Reserve, CNBC reported.
In the most divisive vote ever for a Fed chair, the Senate voted 54 to 45 to confirm Warsh as Jerome Powell’s replacement. Powell’s term will expire on Friday, although he has said he plans to continue serving on the bank’s board.
Warsh joins the bank at a troubling time. Trump has made no secret of his desire for him and the Fed to lower interest rates, but the case for doing so is waning by the day, as another set of economic data points to a spike in inflation.
The latest producer price index – which tracks inflation before it hits consumers – rose a seasonally adjusted 1.4% in April. It was much higher than the 0.5% increase markets were expecting and marks the biggest monthly gain in more than four years.
On an annual basis, the index was up 6%, which is the biggest increase since December 2022.
Energy prices were at the heart of the jump, as they climbed 7.8% over the month and were close to 23% higher than a year ago.
Core producer price inflation, which excludes volatile food and energy prices, was 1% higher last month and 5.2% higher on an annual basis.
“This report will set off alarm bells at the Fed and add fuel to the political conversation about affordability,″ High Frequency Economics chief economist Carl Weinberg said in a note quoted by Associated Press. “The results are so far above expectations that this update will set off alarm bells in the financial markets, too.″
Markets were largely unfazed by the data, however, as surging tech stocks pushed the S&P 500 and the tech-heavy Nasdaq higher, while the Dow Jones Industrial Average was about 0.2% lower.
US 10-year bonds were also little changed, rising 0.8 basis points, while the shorter two-year Treasury fell slightly.
Moving on to the United Kingdom, where uncertainty abounds over the political future of Prime Minister Sir Keir Starmer.
The Guardian reports that UK Health Secretary Wes Streeting is preparing to stand down amid his frustration with Starmer’s leadership and could mount a formal challenge, citing allies of Streeting as sources.
Downing Street insiders suggested to the newspaper that Streeting did not yet have the required support from 81 MPs, which is needed to formally launch a leadership bid, after the prime minister issued a “put up or shut up” ultimatum to his cabinet.
A Streeting supporter was quoted as saying it was “laughable” to believe Starmer had seen off the coup.
Pressure has been mounting on Starmer and his government after last week’s local body elections, which saw Labour lose support to parties on both sides of the political spectrum.
The yields on UK government bonds saw double-digit gains earlier this week as investors feared a deterioration of fiscal discipline under new leadership, before retreating overnight.
UK Prime Minister Sir Keir Starmer.
In business news, OpenAI chief executive Sam Altman has testified in the Musk versus Altman trial, where he told the jury he did not steal a charity but that Elon Musk abandoned one, CNBC reported.
Altman was on the witness stand at the Federal Court in California for more than four hours. He said that Musk, who co-founded OpenAI alongside him in 2015, did not keep his promises and eventually deserted the startup as it was trying to chart an uncertain future.
“We were kind of left for dead,” Altman testified.
Musk is suing Altman and the company’s president, Greg Brockman, alleging they went back on their vow to keep the AI company a non-profit. He alleges the roughly US$38m he donated to OpenAI was used for commercial purposes.
