Skyrocketing: The Bloomberg Open, Asia Edition

Good morning. AI drives a tech rally. Differences are narrowing in US debt talks. And Chanel’s $10,000 handbags may become even pricier.

What’s Happening Now

AI frenzy. US equities jumped on a rally in companies linked to artificial intelligence. Nvidia soared 24%, propelling it to the cusp of a $1 trillion market value. The Nasdaq and the S&P 500 were up, while the Dow lost ground. Nikkei futures are higher; Hong Kong is closed for a holiday.

• Cathie Wood’s ARKK dumped its Nvidia stake in January.
• Morgan Stanley and BofA are turning more bullish on the stock market.

Debt limit latest: Republicans said differences with the White House are narrowing and President Biden expressed optimism, but there’s still no deal. The Treasury’s cash balance  $50 billion on Wednesday, down from from $76.5 billion a day earlier and the lowest since 2021.

Hike or pause? Susan Collins said the Fed may have reached or be approaching the point at which it can halt rate increases, citing “some promising signs of moderation” in prices. Markets aren’t convinced: Traders fully priced in another hike within the next two policy meetings.

Spotlight

An earlier move. China’s central bank may cut the reserve requirement ratio for major banks sooner than expected as the economic recovery loses steam, a Bloomberg survey shows.

• The PBOC may cut the RRR by 25 bps to 10.5% by the end of the third quarter, a survey showed.
• Economists had earlier predicted a cut in the final quarter of the year.
• Respondents saw the ratio likely to stay on hold through 2024 if cut. 

What to Watch

Banking news: First Republicdozens of employees more than $10 million each annually in the heyday before its collapse. Going forward it’s less sunny: JPMorgan told about 1,000 First Republic employees that they aren’t being given jobs takeover of Credit Suisse may not close until mid-June as talks with the government haven’t reached a deal

In other news:

• The BOJ’s Kazuo Ueda is staying vague to retain policy flexibility. Japan has become more optimistic about its economic prospects.
• Super Typhoon Mawar will probably strengthen after leaving Guam.
• EU officials are uneasy about a US push to curb investments in China.
• Carl Icahn’s company plunged again and has  $720 million.
• The super-richare seizing on the market’s wild swings, BlackRock said.

Nvidia has become the ultimate hype stock, Jonathan Levin writes. It’s benefited from multiple good stories: Gaming, the cloud, crypto mining and self-driving cars all sent investors its way. If generative AI doesn’t work out, the shares will wilt—until something else comes along.

AI is becoming crucial to continued progress in chipmaking, which is good news for Nvidia, Tim Culpan writes. The company is using its graphics processors and software it created to make semiconductor lithography more efficient for clients including TSMC.

By the Way

Chanel’s $10,000 handbags will likely cost morecome September. The luxury brand reviews prices twice a year, and already adjusted them by 8% in March. A medium-sized flap bag currently costs €9,700 in France, up €1,900 from 18 months ago. CFO Philippe Blondiaux says input costs, currency and regional price differentials all go into the decision.