The S&P 500 gained 28.81 points, or 0.4%, to close at 7,572.40, leaving the benchmark index within 0.5% of the record high it reached early last month. The Dow Jones Industrial Average rose 150.37 points, or 0.3%, to 52,658.64, while the Nasdaq Composite advanced 162.22 points, or 0.6%, to 26,269.23.

Strong earnings from major financial companies helped support the market, while new inflation data reinforced expectations that the Federal Reserve is becoming less likely to raise interest rates at its next policy meeting.

Corporate earnings lift market sentiment

BlackRock led gains among large-cap stocks, climbing 6.6% after reporting quarterly profit and revenue that exceeded analysts’ expectations.

The asset manager said its iShares exchange-traded funds surpassed $6 trillion in assets under management during the quarter. Chief Executive Laurence Fink said the milestone represents roughly a doubling of assets over the past three years.

Bank of New York Mellon rose 5.1% after reporting stronger-than-expected quarterly results, extending a series of positive earnings releases from major U.S. banks earlier in the week.

Cintas gained 4.4% after the provider of workplace uniforms, restroom supplies and business services also reported quarterly profit above analysts’ forecasts.

Not all earnings reactions were positive. Elevance Health fell 8.5% despite reporting stronger profit and revenue than analysts had expected.

Corporate earnings are receiving heightened attention as investors look for companies to justify elevated stock valuations with stronger financial performance.

Inflation data eases pressure on the Federal Reserve

Market sentiment also benefited from another inflation report indicating that price pressures continued to moderate.

Wholesale inflation slowed to 5.5% in June from 6% in May, according to the report, coming in below economists’ expectations for acceleration. The release followed consumer inflation data published a day earlier that also showed price increases were less severe than economists had anticipated.

The softer inflation readings reduced expectations that the Federal Reserve will raise interest rates at its upcoming meeting.

According to CME Group data, traders now assign about a 10% probability of a rate increase at the next Fed meeting, down sharply from nearly 42% on Monday before the latest inflation reports were released.

New York Federal Reserve President John Williams said there are “encouraging reasons to expect that inflation has peaked and should edge down in coming quarters.”

Federal Reserve Chair Kevin Warsh, however, offered little indication of the central bank’s next move during testimony before a Senate committee. While acknowledging that recent inflation figures were moving in a favorable direction, Warsh said “these are all imperfect measures of the state of underlying inflation.”

The yield on the benchmark 10-year U.S. Treasury note fell to 4.55%, down from 4.58% late Tuesday and 4.62% earlier in the week.

Oil prices remain elevated as Middle East tensions persist

Energy markets continued to reflect concerns over the conflict involving Iran after several days of reciprocal strikes between the United States and Iran across the Middle East.

Brent crude briefly traded above $86 per barrel before easing to settle at $84.95, still up 0.3% from the previous session.

Higher oil prices could complicate the inflation outlook if sustained, even as broader inflation indicators have recently improved.

Global markets show mixed performance

Outside the United States, South Korea’s Kospi index surged 6.2%, recovering after sharp volatility earlier this month driven largely by swings in technology shares tied to enthusiasm surrounding artificial intelligence.

The benchmark had previously recorded declines of 8.9%, 7.9%, and 5.3% during the month as investors reassessed valuations of major chipmakers including Samsung Electronics and SK Hynix.

In Europe, Dutch semiconductor equipment manufacturer ASML reported quarterly revenue growth above its own forecast. Chief Executive Christophe Fouquet said continued investment in artificial intelligence prompted customers to accelerate expansion plans.

Although ASML shares listed in Amsterdam slipped 0.4%, the company’s U.S.-listed shares rose 2.2% after it projected stronger-than-expected future revenue growth.

The outlook helped ease some investor concerns that AI-related stocks had become overheated following rapid gains over the past year.

Chinese markets ended mixed after government data showed the country’s economy expanded at an annualized 4.3% rate during the latest quarter, slowing from 5% growth in the previous quarter. Hong Kong’s market gained 1.4%, while Shanghai declined 0.3%.

This report is based on reporting by The Associated Press.

Article Topics: U.S. Stocks | Corporate Earnings | Inflation | Federal Reserve | Oil Prices | BlackRock | Global Markets | AI Industry

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Chinese regulators have put a sudden hold on a major deal involving two key ports in the Panama Canal zone, delaying what was expected to be a swift closing next week. The move comes as China’s State Administration for Market Regulation launches an antitrust investigation into the transaction, citing the need to protect fair competition and safeguard public interest.

The deal, spearheaded by US investment giant BlackRock, involves acquiring Hong Kong-based CK Hutchison’s controlling interest in 43 ports worldwide, spanning 199 berths across 23 countries. The acquisition was seen as a strategic move to ease tensions in the region, but China’s regulatory intervention has now cast uncertainty over its completion.

In response to the investigation, CK Hutchison has decided to postpone the official signing of the Panama ports agreement, according to a report from the South China Morning Post. Neither BlackRock nor CK Hutchison have issued immediate comments on the delay.

Former President Donald Trump has repeatedly and incorrectly claimed that China controls the Panama Canal—when in fact, Panama itself manages the waterway, while Chinese companies own ports on both ends. Trump has even suggested that the United States should retake control of the canal, adding another layer of geopolitical tension to the situation.

The timing of China’s regulatory move coincides with escalating economic tensions between Washington and Beijing. The Trump administration recently imposed a 20% tariff on all Chinese imports, prompting retaliatory pressure from China. Further tariff announcements are expected in the coming days, adding to the growing trade dispute.

The Panama Canal, a 51-mile passage connecting the Atlantic and Pacific Oceans, is an essential global trade artery. It handles roughly 4% of the world’s maritime trade and facilitates over 40% of US container traffic. Beyond commercial use, it also serves as a crucial route for military ships.

Originally built by the United States and completed in 1914, the canal was under US control for most of the 20th century. However, in a controversial treaty brokered by the Carter administration, control was transferred to Panama in 1999, despite opposition from many Republicans at the time. Today, the canal remains a cornerstone of Panama’s economy, generating nearly $5 billion in annual profits and contributing 23.6% of the country’s total income, according to a December 2024 study by IDB Invest.

Trump’s administration has been vocal about reducing Chinese influence in Panama. National Security Adviser Mike Waltz revealed last month that discussions were underway to address concerns over Chinese-controlled ports near the canal. Additionally, Trump has demanded that Panama waive fees for American vessels transiting the waterway, a request that has sparked controversy.

During a recent trip to Panama, Secretary of State Marco Rubio supported the idea, arguing that the US should not be required to pay fees to access a passage it would be responsible for defending in times of conflict. His remarks highlight the broader strategic importance of the canal and the ongoing geopolitical tug-of-war between global powers.

With China’s investigation now in motion, the future of the BlackRock-led deal remains uncertain. The delay underscores the growing complexity of US-China relations, where economic, strategic, and political interests continue to collide on the global stage. As tensions escalate, the fate of the Panama Canal’s ports will likely remain a focal point in broader discussions about trade, security, and geopolitical influence.

Source: CNN – Panama Canal ports sale has been put on hold by Chinese regulators

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Beijing’s Reaction to the Deal

Over the past week, China’s Hong Kong affairs offices have published critical commentaries from state-backed media outlets condemning the transaction. The controversy raises questions about the deal’s future and highlights the complex challenges Hong Kong businesses face in balancing Beijing’s political expectations with their own capitalist interests.

Who is Li Ka-shing?

Nicknamed “Superman,” Li Ka-shing, 96, is one of the world’s 50 richest people, with a net worth of $38 billion, according to Forbes. Although he retired as chairman of CK Hutchison in 2018, handing over leadership to his son Victor Li, he remains one of Hong Kong’s most influential business figures.

Li’s empire spans real estate, retail, telecommunications, and utilities. His global assets include the British drugstore chain Superdrug and European mobile network operator Three.

Li’s Relationship with Beijing

Li has long maintained close ties with China’s Communist Party leadership and previously served on the elite committee responsible for selecting Hong Kong’s chief executive. Beijing once valued Hong Kong’s business elite for their global networks and resources, which played a crucial role in China’s economic development.

However, Li has faced political backlash for his business decisions. In 2015, he was criticized for selling off mainland Chinese assets. During the 2019 pro-democracy protests, he was also attacked by pro-Beijing supporters for not taking a strong enough stance against the movement.

The Panama Canal Ports Deal

On March 4, CK Hutchison announced the sale of its global port assets—including the Balboa and Cristobal ports at the Panama Canal—to a consortium that includes:

• BlackRock’s Global Infrastructure Partners
• Terminal Investment Limited (chaired by Italian shipping magnate Diego Aponte)

The deal, valued at nearly $23 billion, includes $5 billion in debt but excludes ports in Hong Kong or mainland China. CK Hutchison insists the transaction is purely commercial.

Geopolitical Ramifications: U.S. vs. China

The deal has pleased the Trump administration but angered Beijing. A Beijing-backed newspaper described it as a “betrayal of all Chinese”, while another commentary suggested that true “great entrepreneurs” must be patriotic and not align with the U.S.

On Chinese social media platform Weibo, public sentiment has largely been critical of Li, with many condemning the move as disloyal to China.

Strategic Importance of Ports

Ports are highly strategic assets, and transactions involving them often attract political scrutiny. Some reports suggest Beijing was not consulted before the sale, which may have contributed to its frustration.

According to Wilson Chan, co-founder of the Pagoda Institute, canceling the deal now would be risky:

“You just let Trump take credit for it, then you later say ‘Sorry, I’m canceling the deal.’ Imagine Trump’s reaction—this would affect how the world views Hong Kong’s business autonomy.”

For now, CK Hutchison has remained silent, choosing not to address the controversy directly in its 2024 financial results announcement.

Long-Term Implications for Hong Kong

The controversy underscores ongoing tensions between Beijing and private businesses in Hong Kong.

• The Trump administration previously sanctioned Chinese and Hong Kong officials for undermining the city’s autonomy.
• Beijing has tightened its grip on Hong Kong since the 2019 pro-democracy protests.
• Some analysts suggest Li may attempt to appease critics by reinvesting proceeds from the deal into projects that align with Beijing’s policies.

According to George Chen of The Asia Group, the situation illustrates how Washington’s concerns over Hong Kong’s business autonomy are well-founded:

“This is bad for the defense of ‘one country, two systems.’”

As tensions escalate, all eyes will be on whether Beijing exerts more pressure on Li Ka-shing and whether Trump’s administration retaliates with new sanctions.

Source: AP News – Hong Kong’s richest man is in hot water over his company’s Panama Canal ports deal

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