Visitors on Central Street of the Taipa Village in Macau, China, on Wednesday, Jan. 25, 2023. Tourism and spending are reviving in Macau as the Lunar New Year holiday spurred a jump in visitors after pandemic travel restrictions were eased between the territory and mainland China.
Bloomberg | Bloomberg | Getty Images
Stocks in the Asia-Pacific traded mixed on Monday as mainland Chinese markets jumped on resuming trade after a week-long New Year break.
Chinese onshore equities are headed for a bull market — the CSI 300, which tracks the largest mainland-listed stocks, have gained more than 20% from its recent lows seen at the end of October last year.
The Shenzhen Component rose more than 2%, leading gains in the wider region. The Shanghai Composite rose 1.36% in its first hour of trade. Hong Kong’s Hang Seng index traded 0.6% lower.
In Japan, the Nikkei 225 rose 0.12% while the Topix also gained 0.03%. South Korea’s Kospi fell 0.24% while the Kosdaq rose 0.28%.
The S&P/ASX 200 in Australia shed 0.12%. Investors also digested trade data from New Zealand.
Stocks on Wall Street ended the week last Friday higher, fueled by gains in Tesla shares and a better-than-expected GDP report on Thursday. All major averages posted a positive week and are on pace for a month of gains.
— CNBC’s Samantha Subin, Carmen Reinicke contributed to this report
Adani shares plunge further for second straight day of losses
Shares of Adani Group companies continued to see sharp losses for a second consecutive trading session in India after short seller firm Hindenburg announced its short position in the conglomerate’s firms earlier this week.
Adani refuted the claims in two separate statements, adding that the group is “evaluating the relevant provisions under US and Indian laws for remedial and punitive action against Hidenburg Research,” Adani Group’s head of legal Jatin Jalundhwala said in a statement.
Mumbai-listed shares of Adani Enterprises fell more than 5% in India’s trading session on Friday. Adani Transmission fell 16.8%, Adani Green Energy shed 14.9% and Adani Power lost 8.4%. Adani Port’s share price also dropped 8.4%.
Hindenberg doubled down on its initial stance, emphasizing that Adani has not answered any of the questions raised in their claims.
“We fully stand by our report and believe any legal action taken against us would be meritless,” it said,” it said.
— Jihye Lee
Tokyo’s inflation stays above Bank of Japan’s target
Consumer prices in Japan’s capital Tokyo rose by 4.3% in January, higher than expected by economists polled by Reuters.
The reading also maintained levels higher than the Bank of Japan’s target of 2% inflation for an eighth consecutive month after rising 2.1% in June 2022.
The Japanese yen strengthened 0.3% after the data release and last traded at 129.82 against the US dollar.
CNBC Pro: These 6 global ETFs are the only ones to have posted gains every year for the past five years
Only six global stock ETFs have consistently posted yearly gains over the past five years, according to new analysis by CNBC Pro.
They are the only funds among 7,000 equities ETFs trading worldwide to:
Not have a single year of negative returns between Jan. 1, 2018, and Dec. 31, 2022;
And be in positive territory this year so far.
CNBC Pro subscribers can find out which ETFs they are here.
— Ganesh Rao
Singapore home prices rose less in final quarter of 2022
Private residential property prices in Singapore rose by 0.4% in the final quarter of 2022, a release by the Urban Redevelopment Authority showed.
The reading showed home prices rose less than the previous period’s increase of 3.8% and the slowest growth since the second quarter of 2020.
Home prices rose 8.6% in the full year of 2022, the release said, also less than then 10.6% increase seen in the full year of 2021.
— Jihye Lee
Australia producer price index rises 5.8% from year ago
The producer price index in Australia rose 5.8% for the final quarter of 2022 on an annualized basis, data from the Australian Bureau of Statistics showed.
The reading was slightly lower than the previous quarter’s print of 6.4%, a signal inflation may be easing in the nation.
On a quarterly basis, the index rose 0.7%, also slower than the previous period’s reading of 1.9%.
The Australian dollar strengthened slightly during Asia’s morning session and last traded at 0.7123 against the U.S. dollar.
— Jihye Lee
GDP, other fourth-quarter data shows economic challenges are ‘beginning to clear,’ economist says
Thursday’s GDP data adds to a broadening picture of economic growth in the fourth quarter, according to Curt Long, chief economist at the National Association of Federally-Insured Credit Unions. And that signals to him the economic outlook is improving.
“The big picture view of economic growth in the fourth quarter is a positive one. Much of that growth was concentrated in inventory build, which is unlikely to grow at a similar pace in 2023,” Long said. “Nevertheless, with resilient consumer spending, low unemployment claims, and receding inflation, some of the clouds that were forming over the economy several months ago are beginning to clear.”
— Alex Harring
CNBC Pro: Buy the dip? Top Morningstar strategist names 3 stocks trading at a steep discount
U.S. stocks are around 15% undervalued, according to Dave Sekera, chief U.S. market strategist for Morningstar, who says the extent of this undervalued territory is rare.
Since the end of 2010, the market has traded at or below the current discount only 5% of the time, he said.
He picks three stocks that he says are trading at steep discounts.
CNBC Pro subscribers can read more here.
— Weizhen Tan
Tesla’s strong orders and weak margins have Wall Street analysts conflicted
Wall Street analysts are divided on Tesla after the electric car company’s latest quarterly results.
Tesla reported a beat on both earnings and revenue for the fourth quarter, and assuaged investor fears of weaker growth at the company after recently issuing a round of price cuts. While the move triggered a drop in used Tesla prices, they also supported demand for the vehicles.
“Thus far in January we’ve seen the strongest orders year to date than ever in our history. We’re currently seeing orders of almost twice the rate of production,” Musk said during a call with analysts.
For Goldman Sachs’ Mark Delaney, that was the “most important takeaway from the call.”
“Importantly, Tesla commented that since it lowered prices it has seen the strongest orders year-to-date in its history, with orders running about 2X production. While we believe this rate of orders may not be sustained in light of the weak macroeconomic environment, it would suggest the company is tracking well to our 1.8 mn delivery estimate,” Delaney wrote.
Other analysts were more negative on the stock outlook, however, saying that Tesla’s automotive gross margins, which was the lowest figure in the last five quarters, spelled trouble ahead.
AllianceBernstein’s Toni Sacconaghi reiterated an underperform rating on Tesla, saying the automaker’s latest results and earnings call had “something for bulls and bears,” adding he remains “torn” on the company. While the strong orders are promising, the analyst said the auto gross margins were too weak to overlook.
“Despite raising our energy storage forecast materially, our FY EPS declines from $3.80 to $3.54 amid lower margins. Moreover, while no one (including Tesla) knows what demand elasticity is, we believe it is uncertain whether surging demand will be sustained, particularly in China, where we believe more price cuts will likely be needed before year end,” Sacconaghi wrote.
CNBC Pro subscribers can read the full story here.
— Sarah Min
CNBC Pro: Morgan Stanley has a ‘simple’ tech playbook, names TSMC and others as stocks to buy right now
A recession may be coming, and the semiconductor sector — widely seen as cyclical and volatile — could be an unlikely safe refuge for investors.
Morgan Stanley says chip stocks have historically done well in past recessions. The bank named its top Asia chip stocks — giving one 40% upside.
Pro subscribers can read more here.
— Zavier Ong
U.S. GDP rose slightly more than expected in the fourth quarter
The U.S. economy expanded at an annualized pace of 2.9% in the fourth quarter, slightly outperforming a Dow Jones estimate of 2.8%. The Commerce Department’s report comes even as inflation persists and the Federal Reserve continues to raise rates.
Consumer spending rose 2.1% for the period, down slightly from 2.3% in the previous period but still positive.
— Jeff Cox
Bitcoin heading toward best month since 2020
Bitcoin’s remains in rally mode despite pulling back the past two days and the cryptocurrency is on pace for its best month since 2020. Some investors see crypto prices as a leading indicator of investors’ risk appetite.
So far this month and year, bitcoin has risen almost 40% and is poised to post its best monthly performance since December 2020, when it gained 49.47% for the month.
Meanwhile, the S&P 500 has risen about 5% this month.
New Zealand’s Auckland airport passenger volumes hit 74% of pre-pandemic levels in November
New Zealand’s Auckland Airport saw its total passenger volumes for November reach 74% of levels seen in the financial year to June 2019, or the last full-year not impacted by the pandemic, according to the airport’s monthly traffic update.
International passengers were at 67% of pre-pandemic levels, the release said, adding that a majority of the recovered overseas travel was short-haul flights from Australia and the Pacific Islands.
The demand for routes between New Zealand and North American regions has recovered to 86% of pre-pandemic levels, including two added destinations in Texas (Dallas/Fort Worth) and New York.
— Jihye Lee
CNBC Pro: These 6 low-debt global stocks are set to outperform, Bernstein says
Rising interest rates have major implications for companies with large amounts of debt, as they will likely experience higher costs from increased borrowing.
As interest rates continue to rise, analysts at Bernstein think that stocks with low debt exposure and a higher quality of debt should outperform.
The investment bank named a handful of global low-debt stocks with an investment-grade credit rating there likely to outperform.
CNBC Pro subscribers can read more here.
— Ganesh Rao
Shares of Zip reverses after initial rally
Australian “buy now, pay later” company Zip fell by more than 10% after a short-lived rally following its quarterly results.
Zip traded 15% lower, a sharp turnaround from its earlier gains of more than 10% after posting 12% revenue growth.
The company said underlying “monthly cash burn has continued to decrease and expected to further improve.” It said currently available cash and liquidity position is “sufficient to see the company through to generating positive cash flow” and expects to deliver positive cash EBITDA by the first half of fiscal 2024.
Week ahead: PMIs, Australia and Singapore inflation reports, South Korea GDP
Here are some of the major economic events in the Asia-Pacific that investors will be closely watching this week.
Stock markets in mainland China and Taiwan will remain closed until they resume trade on Jan. 30.
On Tuesday, regional purchasing managers’ index readings for Japan and Australia will be in focus while most markets remain closed to observe the Lunar New Year — with the exception of Australia, Japan and Indonesia.
Inflation reports will be in focus on Wednesday as Australia and New Zealand release their consumer price index readings for the final quarter of 2022. Singapore will publish its inflation print for December.
Hong Kong’s market is scheduled to resume trade on Thursday.
Fourth-quarter gross domestic product for South Korea and Philippines will be published Thursday, while the Bank of Japan will release its summary of opinions from its latest monetary policy meeting in January. Japan also reports its services producer price index on Thursday.
Japan’s core CPI readings for capital Tokyo will be a barometer for where monetary policy is headed.
Australia’s producer price index and trade data will also be closely monitored indicators ahead of the Reserve Bank of Australia’s meeting in the first week of February.
— Jihye Lee
Australia’s business conditions worsened last month: NAB survey
National Australia Bank’s monthly business survey showed worsened business conditions for December with a reading of 12 points, a decline from November’s print of 20 points.
The survey reflects deteriorated trading conditions, profitability, and employment, NAB said.
“The main message from the December monthly survey is that the growth momentum has slowed significantly in late 2022 while price and purchase cost pressures have probably peaked,” NAB chief economist Alan Oster said.
Meanwhile, business confidence in December rose by 3 points to -1, an improved reading from -4 points seen in November.
— Jihye Lee
Japan’s headline factory data shows second month of contraction
The au Jibun Bank Flash Japan manufacturing purchasing managers’ index in January was unchanged for a second-straight month at 48.9, below the 50-mark that separates contraction and growth from the previous month.
The reading “signaled the joint-strongest deterioration in the health [of] the Japanese manufacturing sector since October 2020,” S&P Global said.
The au Jibun Bank flash composite output index rose to 50.8 in January, slightly higher than the reading of 49.7 seen in December.
Flash services business activity rose further with a print of 52.4, higher than December’s reading of 51.1.
— Jihye Lee
CNBC Pro: Wall Street is excited about Chinese tech — and loves one mega-cap stock
After more than 2 years of regulatory crackdowns and a pandemic-induced slump, Chinese tech names are back on Wall Street’s radar, with one stock in particular standing out as a top pick for many.
Pro subscribers can read more here.
— Zavier Ong
Fed likely to discuss next week when to halt hikes, Journal report says
Federal Reserve officials next week are almost certain to approve another deceleration in interest rate hikes while also discussing when to stop the increases altogether, according to a Wall Street Journal report.
The rate-setting Federal Open Market Committee is set to convene Jan. 31-Feb. 1, with markets pricing in almost a 100% chance of a quarter-point increase in the central bank’s benchmark rate. Most prominently, Fed Governor Christopher Waller said Friday he sees a 0.25 percentage point increase as the preferred move for the upcoming meeting.
However, Waller said he doesn’t think the Fed is done tightening yet, and several other central bankers in recent days have backed up that notion.
The Journal report, citing public statements from policymakers, said slowing the pace of hikes could provide the chance to assess what impact the increases so far are having on the economy. A series of rate hikes begun in March 2022 has resulted in increases of 4.25 percentage points.
Market pricing is currently indicating quarter-point hikes at the next two meetings, a period of no action, and then up to a half-point reduction by the end of 2023, according to CME Group data.
However, several officials, including Governor Lael Brainard and New York Fed President John Williams, have used the expression “stay the course” to describe the future policy path.
— Jeff Cox
Nasdaq on pace for back-to-back gains as tech shares rise
The Nasdaq Composite rallied more than 2.2% during midday trading Monday, lifted by shares of beaten-up technology stocks.
The move put the tech-heavy index on pace for a consecutive day of gains exceeding 2%. The index finished 2.66% higher on Friday.
Rising semiconductor stocks helped pushed the index higher. Tesla and Apple, meanwhile, surged 7.7% and 3.2%, respectively, as China reopening lifted hopes of a boost to their businesses. Western Digital and Advanced Micro Devices rose about 8% each, while Qualcomm and Nvidia jumped about 7%.
Information technology was the best-performing S&P 500 sector, gaining 2.7%. That was in part due to gains within chip sector. Communication services added 1.9%, boosted by the likes of Netflix, Meta Platforms, Alphabet and Match Group.
— Samantha Subin
El-Erian says Fed should hike by 50 basis points, calls smaller increase a ‘mistake’
Surging inflation may appear largely in the past, but a shift to a 25 basis point hike at the next Federal Reserve policy meeting is a “mistake,” according to Allianz Chief Economic Adviser Mohamed El-Erian.
“‘I’m in a very, very small camp who thinks that they should not downshift to 25 basis points, they should do 50,” he told CNBC’s “Squawk Box” on Monday. “They should take advantage of this growth window we’re in, they should take advantage of where the market is, and they should try to tighten financial conditions because I do think that we still have an inflation issue.”
Inflation, he said, has shifted from the goods to the services sector, but could very well resurge if energy prices rise as China reopens.
El-Erian expects inflation to plateau around 4%. This, he said, will put the Fed in a difficult position as to whether they should continue crushing the economy to reach 2%, or promise that level in the future and hope investors can tolerate a steady 3% to 4% nearer term.
“That’s probably the best outcome,” he said of the latter.
— Samantha Subin
An earnings recession is imminent, according to Morgan Stanley
An earnings recession is imminent this year, according to Morgan Stanley equity strategist Michael Wilson.
“Our view has not changed as we expect the path of earnings in the US to disappoint both consensus expectations and current valuations,” he said in a note to clients Sunday.
Some positive developments have unfolded recent weeks — such as China’s ongoing reopening and falling natural gas prices in Europe — and contributed to some investors viewing market prospects more optimistically.
However, Wilson advises investors to remain bearish on equities, citing price action as the main influence for this year’s rally.
“The rally this year has been led by low-quality and heavily shorted stocks,” he said. “It’s also witnessed a strong move in cyclical stocks relative to defensives.”
Wilson has based his forecasts on margin disappointment, and he believes the case for this is growing. Many industries are already facing revenue slowdowns, as well as inventory bloating, less productive headcount.
“It’s simply a matter of timing and magnitude,” said Wilson. “We advise investors to stay focused on fundamentals and ignore the false signals and misleading reflections in this bear market hall of mirrors.”
Morning commuters in front of the Bank of Japan (BOJ) headquarters in Tokyo, Japan, on Monday, Jan. 16, 2023. The Bank of Japan made no changes to its yield curve control policy on Wednesday.
Bloomberg | Bloomberg | Getty Images
The Japanese currency weakened against the U.S. dollar after the Bank of Japan surprised markets by keeping its yield curve tolerance band unchanged.
The Japanese yen weakened 2.6% against the U.S. dollar after the decision was announced and last stood at 131.47, hovering at its strongest levels since June, 2022.
“Japan’s economy is projected to continue growing at a pace above its potential growth rate,” the Bank of Japan said in a statement. The central bank left its interest rate unchanged at an ultra-dovish -0.1% – in line with expectations and maintaining the same rate it’s kept since 2016.
The decision to make no changes to its monetary policies comes after the central bank caught global markets off guard in its previous meeting by widening its tolerance range for the yield on its 10-year government bond from 25 basis points to 50 basis points in December.
Since the move last month, 10-year JGB yields have exceeded the upper ceiling several times.
The yield on the 10-year JGB exceeded the upper ceiling of its band for a fifth straight session on Wednesday morning before dropping to 0.385%.
‘Knee-jerk’ reaction
Nomura head of FX strategy Yujiro Goto said while the move would be a disappointing one for traders bullish on the Japanese yen, the weakening of the currency may be temporary.
“I think the initial reaction [for the yen reaching] 130 to 131, or potentially 132 is a knee-jerk reaction after the ‘no change’ today,” he said on CNBC’s “Street Signs Asia.”
“In the medium term, over the next 2-3 months, I think the trend for the yen should be still on the downside towards 125, even after the disappointment today,” he said,
Goto said the currency will strengthen on hopes of a policy shift in the near-term future, highlighting the nearing end of BOJ Governor Haruhiko Kuroda’s term.
“Markets should keep expecting [the BOJ] to tweak or change [its] monetary policy after some point, especially after Kuroda’s retirement,” he said.
Shigeto Nagai of Oxford Economics said the BOJ’s move to widen its band “fueled” expectations for more changes ahead.
“Today, the BOJ really wanted to calm down that speculation and anticipation for normalization,” he said, adding the central bank will continue to be pressed for change.
More pressure ahead
As inflation continues to rise in Japan, the central bank will face further pressure ahead of its leadership change.
“Inflation in Japan is doing something that it hasn’t done for 40 years,” Viraj Patel of Vanda Research said in a tweet, adding that the Bank of Japan risks “falling into” the same trap as the U.S. Federal Reserve in labeling inflation as “transitory.”
The Bank of Japan used wording that was similar to the Fed’s description of inflation before the U.S. central bank began continuously hiking rates to tame rising prices, describing it as “pass-through.”
“The year-on-year rate of increase in the consumer price index is likely to be relatively high in the short run due to the effects of a pass-through to consumer prices of cost increases led by a rise in import prices,” the central bank said in its latest statement.
The Bank of Japan revised its forecasts for 2023’s core inflation nationwide from 2.9% to 3%. Nationwide inflation data is expected Friday.
Japan’s core manufacturing orders for November slump more than expected
Japan’s private-sector manufacturing orders for November fell 8.3% compared to the previous month, according to official data.
The drop was significantly larger than Reuters’ expectations of a 0.9% decline. On an annualized basis, manufacturing orders fell 3.7%.
The private-sector machinery figures exclude orders from volatile ones for ships and electric power companies.
—Lee Ying Shan
CNBC Pro: Thinking of jumping back into Big Tech? This investor is wary of 2 stocks in particular
CNBC Pro: Morgan Stanley says cheaper EVs are coming — and names the global stocks set to benefit
As electric cars become increasingly popular, a new manufacturing technique that could make them more affordable is garnering interest, according to Morgan Stanley.
Some automakers are outsourcing the process which could benefit three leading Asian parts suppliers, said the Wall Street bank.
CNBC Pro subscribers can read more here.
— Ganesh Rao
Stocks end the day mixed, Dow falls almost 400 points
The Dow Jones Industrial Average Index fell to end the day, as Goldman Sachs shares weighed on the stock index.
The Dow lost 391.76 points, or 1.14%, to close at 33,910.85. The S&P 500 fell 0.2% to 3,990.97. The Nasdaq Composite gained 0.14% to end the day at 11,095.11.
— Tanaya Macheel
Bank of America sees a later start to the recession
A recession probably won’t start now until later in 2023 as consumer spending has been stronger than expected and the Federal Reserve eases up on the intensify of its interest rate hikes, according to Bank of America.
“We push back the timing of our outlook for a mild recession in the US economy by about one quarter given durability in consumer spending on account of strong labor markets, excess saving, declining energy prices, and easier financial conditions,” the firm said in a client note. “That said, we think the headwinds will lead consumers to reduce spending and push the saving rate higher as the year progresses.”
That puts the recession into the second quarter, driven by a an investment-led slowdown leaking to consumer spending.
After pushing its benchmark borrowing rate up by 4.25 percentage points in 2022, the Fed is expected to ease back, with a 0.25 percentage point increase in February. That is forecast to be followed by additional quarter-point increases in March and May.
Rate cuts likely won’t come until 2024, the firm said.
—Jeff Cox
Goldman Sachs shares fall on earnings miss
Goldman Sachs shares declined 2.4% after the Wall Street investment bank shared fourth-quarter earnings results that missed analysts’ expectations on both the top and bottom lines.
The bank reported earnings of $3.32 per share on $10.59 billion in revenues. Consensus estimates called for earnings of $5.48 a share on revenues of $10.83 billion, according to analysts surveyed by Refinitiv.
Provisions for credit losses also came in slightly above expectations.
Goldman Sachs: China’s ‘exit wave’ on reopening is taking a toll on economy
China’s “exit wave” during its reopening process has dragged down the economy significantly, Goldman Sachs economists said in a report.
“The ongoing ‘exit wave’ on the back of China’s faster-than-expected reopening has taken a heavy toll on economic activity in recent months, due to surging infections, a temporary labor shortage and supply chain disruptions,” it said in a report.
“It is very surprising in our view that the reported numbers for December were not worse,” the economists said.
– Jihye Lee
Credit Suisse says iron ore prices to peak at around $130 to $140 this year
Iron ore prices are forecast to be around $130 to $140 as traders keep China’s reopening in focus, said Credit Suisse’s Head of Energy and Resources Research, Saul Kavonic.
“We are expecting that $130 to $140 mark to be where prices kind of end up and top out this year,” he said.
While the last few weeks of iron ore demand strength is buoyed by speculative buying and holiday period purchases, he said the markets are currently watching how China’s reopening plays out and the rolling out of any infrastructure stimulus.
He said these measures will “sustain that demand for iron ore throughout the course of this year well into next year.”
Australia’s mining giant Rio Tinto posted their fourth quarter production results which slightly beat estimates.
“The real focus [of] Rio has been on iron ore, which is supportive the whole sector over the last few months which has been a call that’s finally come good at the end of last year and early this year,” he said.
Rio Tinto‘s shares last traded down 1.11%.
—Lee Ying Shan
China’s retail sales beat estimates, economy expands more than expected
China’s December retail sales beat estimates, falling only 1.8% on an annualized basis, significantly better than the decline of 8.6% projected in a Reuters poll.
Industrial output also grew 1.3% in December, higher than expectations for an increase of 0.2%.
In the fourth quarter, China’s economy expanded by 2.9% on an annualized basis, better than the expected 1.8% growth. While quarterly growth was flat, it still beat expectations for a 0.8% contraction.
Despite better-than-expected data, the Chinese offshore yuan weakened sharply from 6.7403 to 6.7563 against the U.S. dollar shortly after the release.
Alibaba stock inches up after Ryan Cohen reportedly takes stake in company
Shares of Alibaba rose after the Wall Street Journal reported that Ryan Cohen built a stake in the company “worth hundreds of millions of dollars.”
Cohen, who founded online pet retailer Chewy and is also chairman of GameStop, is privately pushing Alibaba to accelerate and further boost its share-repurchase program, the Journal report said.
Hong Kong-listed shares of Alibaba rose 2% in the first hour of trade. The stock has since pared its gains to trade roughly flat.
– Jihye Lee
China’s Liu He to meet with U.S. Treasury Secretary Janet Yellen
U.S. Treasury Secretary Janet Yellen is scheduled to hold a meeting with Chinese Vice Premier Liu He on the sidelines of the World Economic Forum, China’s commerce ministry said in a statement.
The two will hold a meeting to “strengthen macroeconomic and financial policy coordination,” the ministry said.
The meeting will take place in Zurich on Jan. 18, according to the statement, adding that the two will discuss the implementation of the agreements reached between U.S. President Joe Biden and Chinese President Xi Jinping late last year in Bali, Indonesia.
The sit-down will mark the first face-to-face meeting between Yellen and Liu.
Separately, Politico reported U.S. Secretary of State Antony Blinken will meet newly appointed Chinese foreign minister Qin Gang in Beijing on Feb. 5-6, citing Washington-based diplomats familiar with the matter.
– Jihye Lee
Singapore’s non-oil domestic exports fall by more than 20% in December
Singapore’s non-oil domestic exports fell 20.6% in December on an annualized basis, a further drop from a decline of 14.7% seen in November.
The steep decline was driven mainly by exports to China, Indonesia and Hong Kong, according to the government release. Exports to South Korea and Japan rose, it said.
The nation’s total trade declined 7.7% in the month of December compared with a year ago – with exports dropping 7.1% and imports also dropping 8.2%.
– Jihye Lee
CNBC Pro: This under-the-radar global carbon capture stock could soar by 65%, investment banks say
Shares of an under-the-radar carbon capture company are expected to rise by 65% due to increasing global demand for emissions reduction technology, according to investment banks analyzing the stock.
The company’s latest innovation, revealed last week, could cut the energy needed to capture carbon and improve the company’s profitability in the future, according to analysts at a German investment bank.
CNBC Pro subscribers can read more here.
— Ganesh Rao
Where the major indexes stand coming off the first two weeks of 2023 trading
With the first two weeks of 2023 trading done, the three major indexes are up so far for the year.
The Nasdaq Composite is leading the way, adding 5.9% as investors bought beaten-down technology stocks on rising hopes of an improving landscape for growth holdings. The S&P 500 and Dow followed, gaining 4.2% and 3.5%, respectively.
— Alex Harring
Stock futures open lower
Stock futures were lower despite the market coming off a winning week.
Futures tied to the Dow dipped 0.1%. S&P 500 and Nasdaq-100 futures fell 0.2% and 0.4%, respectively.
Chinese officials expect about twice the number of Lunar New Year trips this year as last year since many people can return to their hometowns without any Covid restrictions. Pictured here is the Jinan West Railway Station on Jan. 15, 2023.
Bloomberg | Bloomberg | Getty Images
BEIJING — China reported GDP growth for 2022 that beat expectations as December retail sales came in far better than projected.
GDP grew by 3% in 2022, the National Bureau of Statistics said Tuesday. That was better than the 2.8% forecast in a Reuters’ poll. The GDP growth number did miss the official target of around 5.5% set in March. In 2021, China’s growth had rebounded by 8.4% from just 2.2% growth in 2020.
Fourth-quarter GDP rose by 2.9%, beating expectations from the Reuters’ poll of 1.8% growth.
Retail sales fell by 0.2% for the year. But retail sales in December declined by 1.8% from a year ago, less than the expected 8.6% plunge predicted by a Reuters’ poll.
Within retail sales, those of catering fell by 6.3% in 2022. Sales of apparel, cosmetics and jewelry all declined for the year. Medicine was one of the bright spots, after sales surged by nearly 40% in December from a year ago.
Online retail sales of physical goods rose by 17.2% in December from a year ago, according to CNBC calculations of official data accessed through Wind. Those online sales accounted for 27.2% of total retail sales.
In 2022, the metropolis of Shanghai locked down for about two months in an attempt to control a Covid outbreak. China’s stringent zero-Covid policy restricted travel and business activity across the country.
Authorities abruptly relaxed most controls in early December, amid a surge in local infections. While far more people plan to travel around the upcoming Lunar New Year, analysts expect Chinese consumer sentiment will take a few months to recover.
Industrial production rose by 3.6% in 2022. The figure rose by 1.3% in December, well above the 0.2% predicted by the Reuters’ poll.
Fixed asset investment for 2022 rose by 5.1%, slightly above the 5% expected by Reuters. Infrastructure investment on a year-to-date basis grew faster in December than in November, while investment into manufacturing slowed its growth. Real estate investment fell by 10% in 2022, a steeper drop than recorded for the year through November.
The unemployment rate in cities was 5.5.% as of December, while that of younger people ages 16 to 24 remained far higher at 16.7%.
“The foundation of (the) domestic economic recovery is not solid as the international situation is still complicated and severe while the domestic triple pressure of demand contraction, supply shock and weakening expectations is still looming,” the statistics bureau said in a release.
China’s exports and imports tumbled less than expected for the month of December, according to the customs administration.
China’s exports fell 9.9% in December from a year ago, in U.S.-dollar terms, slightly better than the 10% drop forecast by a Reuters’ poll.
Imports fell by 7.5% in December compared with a year ago in U.S.-dollar terms, also performing better than the 9.8% slump predicted by Reuters.
The milder slump meant trade still grew for 2022.
—Evelyn Cheng, Lee Ying Shan
Bank of Korea raises rates, says 2022’s fourth-quarter GDP likely to be negative
The Bank of Korea raised interest rates by 25 basis points to 3.5%, marking the highest since December 2008. The move was in line with Reuters’ expectations.
“The Board judges that the additional 25 basis points hike is warranted to ensure price stability, as inflation still remains high and is projected to be above the target level for a considerable time,” the Bank of Korea wrote in a statement.
Governor Rhee Chang-yong said in a press conference that fourth-quarter GDP for 2022 is likely to be negative, but estimated that 2023’s first quarter GDP growth could be better.
“Today’s hike marks the end of the BoK’s current tightening cycle, but the hurdle for a pivot towards an easing bias remains high,” ANZ Research’s economist Krystal Tan wrote in a note.
— Lee Ying Shan
CNBC Pro: Want a recession-proof portfolio? Fund manager names two stocks that could fit the bill
Investors looking for recession-proof stocks may want to consider buying shares in a renewable energy producer and a cyber security firm, according to one outperforming fund manager.
Trent Masters of investment management firm Alphinity, who named the stocks, said that while the energy company can raise prices above inflation even during a recession, the cyber security firm will see increased demand for its services this year.
CNBC Pro subscribers can read more here.
— Ganesh Rao
Uniqlo-owner Fast Retailing drops more than 6% after announcing wage hike
Shares of Uniqlo-owner Fast Retailing dropped 6.68% a day after announcing it will raise wages by 40%.
“This war for talent is intensifying, that [Tadashi Yanai], the founder of Uniqlo, is fully recognizing,” Jesper Koll, expert director at Monex Group, told CNBC’s “Squawk Box Asia” regarding the wage hike move.
“Japanese workers have realized their value, have realized their worth… and as a result of that, if you want to retain that talent, you’re going to have to start to pay up.”
Fast Retailing is a heavyweight of Japan’s benchmark Nikkei 225, which declined 0.6%, bucking the overall positive trend of Asia-Pacific shares.
Koll added that while Fast Retailing is doing a “great job” in the physical space, its e-commerce presence still has room to improve.
“For now [that’s] not going to be a key growth driver,” he said.
—Lee Ying Shan
Cryptocurrencies inch higher even as SEC charges crypto firms
Cryptocurrencies rose even after the U.S. Securities and Exchange Commission charged crypto firms Genesis and Gemini with selling unregistered securities.
Bitcoin traded 4.81% higher at $18,838.66, according to data from Coin Metrics. The coin on Thursday jumped above $19,000, its highest in more than two months.
Ether rose 1.67% to stand at $1,414.65.
The SEC alleged Genesis loaned Gemini users’ crypto and sent a portion of the profits back to Gemini, which deducted an agent fee and returned the remaining profit to its users.
—Lee Ying Shan, Kate Rooney
CNBC Pro: Goldman Sachs says Asia tech is about to rebound — and reveals a chip stock to play it
After a tough year for Asia tech, Goldman Sachs believes the sector is headed for a “major bottom” — and subsequent upturn — in the first half of 2023.
Investors seeking to cash in should act early, the bank’s analysts said, with stock prices set to “rebound rapidly.”
They also named a key chip stock to play it.
Pro subscribers can read more here.
— Zavier Ong
Stocks close up
Stocks ended Thursday’s trading session in the green.
The Dow and Nasdaq Composite each ended up 0.6%. The S&P 500 gained 0.3%.
Close marked the fifth straight day of gains for the Nasdaq as investors bought beat-up technology stocks on hopes of an improving outlook for growth names. That’s the first time the index has posted a streak of that length since July.
— Alex Harring
Fed will be unfazed by CPI report
The slight decline in consumer prices in December will not change the path for the Federal Reserve, as it meets to raise rates Jan. 31 and Feb. 1.
CPI fell by 0.01%, as expected by economists, and was up 6.5% from a year ago. Core CPI rose 0.03%, also as expected.
“The Fed has made clear even as markets push back on the Goldilocks scenario in the employment report, the Fed was doubling down on their pledge to derail inflation because they see this as a marathon not a sprint,” said Diane Swonk, chief economist KPMG.
Stock futures were higher after the report while Treasury yields fell. Yields move opposite price.
“It was exactly in line. They ran up the S&P 500 by 50 points yesterday with everyone hoping for a weak number. It was as expected. It doesn’t change anything,” said Peter Boockvar, chief investment officer at Bleakley Financial. “They are almost done raising rates. Higher for longer is what people should be focused on.”
Swonk and other economists expect the Fed to raise rates by a half percentage point on Feb. 1. The futures market, however, has been pricing in a quarter point hike.
–Patti Domm
CPI shows shelter inflation still worrisome
Shelter costs, which includes rent, jumped more than expected in the December consumer price index, and that is an area economists are watching closely.
Shelter rose 0.8%, or 7.5% from a year ago. Some economists had expected a gain of 0.6% in shelter, which accounts for 40% of core CPI. The shelter costs in CPI are known to lag the actual market data on rentals.
“In this single month-over-month report, there is almost no inflation outside of shelter,” said Wilmington Trust chief economist Luke Tilley “Goods prices are collapsing mostly because of motor vehicles and computers and laptops and technology. Used vehicle prices are down 27.5% at annualized rate over the past three months, and they’re likely to keep falling.”
Tilley expects shelter inflation to slow in the next couple of months. As for overall CPI, it fell by 0.01% as expected.
Greg Peters, co-chief investment officer of PGIM Fixed income, said the increase in shelter inflation is something to watch. He said the market had expected a slightly larger decline in headline CPI.
“I still think it’s largely fine. I think numbers will continue to come down. The real question is where does it start to level out?” said Peters. “That’s the piece of it that should be the point of focus. It’s great that CPI mechanically is coming down, and there’s some good news in the report. But that doesn’t mean the Fed gets close enough to its target that they get comfortable.”
Tilley said he expects 2023 will be unlike 2022, where inflation surprised to the upside. “We very well could see in 2023 the reverse of what happened in 2022 with inflation surprising to the downside,” he said.
–Patti Domm
Consumer price index for December matches expectations
The consumer price index fell 0.1% in December, matching a Dow Jones estimate. That was the biggest monthly decline since April 2020. The so-called core CPI, which strips out volatile food and energy prices, also met expectations with a 0.3%. gain.
On a year-over-year basis, the index rose 6.5%, still well above the Fed’s 2% inflation target.
Cargo ships dock at the container terminal in Lianyungang Port, East China’s Jiangsu province, Dec 7, 2022.
CFOTO | Future Publishing | Getty Images
BEIJING — China’s exports and imports fell less than expected in December, the customs administration said Friday.
The milder slump meant trade still grew for all of 2022.
China’s exports fell by 9.9% in December from a year ago in U.S.-dollar terms, slightly better than the 10% decline forecast by a Reuters’ poll.
China’s imports fell by 7.5% year-on-year in December in U.S.-dollar terms, also better than the 9.8% decline predicted by Reuters.
Strong exports bolstered China’s economy in the last two years. But economists anticipate a slowdown in demand from the U.S. and Europe.
Read more about China from CNBC Pro
Already, China’s exports started to fall year-on-year in October — for the first time since May 2020, according to Wind Information.
For all of 2022, China’s exports grew by 7.7% and imports by 1.1%, the customs agency said.
Cross-border e-commerce between China and other countries grew by 9.8% in 2022 from a year ago to 2.11 trillion yuan ($301.42 billion), according to official figures. Such direct-to-consumer exports rose by 11.7% year-on-year.
However, that marked a slowdown from 2021, when China’s cross-border e-commerce rose by 15% to 1.98 trillion yuan ($311.5 billion), and exports surged by 24.5%.
China’s imports from the EU and the U.S. fell in 2022, while those from ASEAN grew slightly.
SHANGHAI, CHINA – MARCH 01: Skyscrapers stand at the Pudong Lujiazui Financial District on March 1, 2022 in Shanghai, China.
Xiao Yang | Visual China Group | Getty Images
Asia-Pacific shares were mostly higher as investors look ahead to the U.S. consumer price index report Thursday. Economists expect inflation to have cooled in December, which could signal to the Federal Reserve that previous interest rates hikes have had their intended effects.
Australia’s S&P/ASX 200 closed 1.18% up at 7,280.4 after the release of the country’s November trade balance.
The Nikkei 225 closed flat to stand at 26,449.82 while the Topix climbed 0.36% to 1,908.18. South Korea’s Kospi edged up 0.24% to 2,365.1 while the Kosdaq dipped 0.15% to 710.82.
Hong Kong’s Hang Seng index declined fractionally, reversing earlier gains. Mainland China’s Shanghai Composite added 0.051% to close at 3,163.45 and the Shenzhen Component was up 0.23% to 11,465.73. China’s consumer price index rose 1.8% in December from a year ago, in line with Reuters’ expectations.
India’s inflation data for December is also slated for release.
Overnight on Wall Street, major stock indexes closed higher. Economists surveyed by Dow Jones expect the inflation print to show that prices cooled by a modest 0.1% in December from November.