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Japanese yen strengthens as central bank widens yield target range, Asia markets fall

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Bank of Japan holds rates steady, widens yield curve control band

The Bank of Japan held its benchmark interest rates steady and announced it will modify its yield curve control band, the central bank said in a statement.

The BOJ will expand the range of 10-year Japan government bond yield fluctuations from its current plus and minus 0.25 percentage points to plus and minus 0.5 percentage points, it said.

The adjustment is intended to “improve market functioning and encourage a smoother formation of the entire yield curve, while maintaining accommodative financial conditions,” the BOJ said.

The Japanese yen strengthened nearly 2% to stand at 134.33 against the U.S. dollar shortly after the announcement.

– Jihye Lee

Reserve Bank of Australia minutes show range of options were considered in December

Minutes from the Reserve Bank of Australia’s December meeting showed that the central bank had considered a number of options for its cash rate decision, including a complete pause in hikes.

“The Board considered several options for the cash rate decision at the December meeting: a 50 basis point increase; a 25 basis point increase; or no change in the cash rate,” the minutes said.

RBA board members also noted the importance of “acting consistently,” adding that the central bank will continue to consider a range of options for the upcoming year as well.

– Jihye Lee

China keeps key lending rates unchanged

The People’s Bank of China kept its one-year and five-year loan prime rates unchanged in December, according to an announcement.

The central bank maintained its one-year loan prime rate at 3.65% and its five-year loan prime rate at 4.30%, in line with expectations in a Reuters poll.

The offshore and onshore Chinese yuan were relatively flat at 6.9808 and 6.9783 against the U.S. dollar, respectively.

– Jihye Lee

CNBC Pro: Is China set for a rebound in 2023? Wall Street pros weigh in — and reveal how to trade it

What’s next for China after it rolled back a slew of Covid-19 measures?

Market pros weigh in on the prospect of a rebound in the world’s second-largest economy and reveal opportunities for investors.

CNBC Pro subscribers can read more here.

— Zavier Ong

Bank of Japan expected to hold rates steady

The Bank of Japan is expected to keep its interest rates steady at -0.10%, according to survey of economists by Reuters.

The rate decision is expected after the central bank’s two-day monetary policy concludes Tuesday.

Separately, Japan’s government and the BOJ are reportedly aiming revise a statement committing to a 2% inflation target at the earliest possible date, according to Kyodo News, citing government sources.

— Jihye Lee

The Fed is overdoing rate hikes, Evercore ISI says

The Federal Reserve is likely overdoing it’s rate hikes to tame inflation and could end up tipping the U.S. economy into a recession, Ed Hyman of Evercore ISI wrote in a Sunday note.

The Federal Funds rate is now 6.5% versus a core PCE of 4.7% on the year and bond yields at 3.5%, Hyman wrote.

“And it’s not just the Fed tightening: ECB, BoE, Mexico, Switzerland, and Norway also tightened last week,” he said. “Perhaps more profoundly, the money supply is contracting.”

In addition, Evercore’s economic diffusion index is approaching recession territory along with other indicators such as company surveys, inflation data and layoff announcements. And, wage gains have started to slow and high rents are showing early signs of easing, signaling that inflation has likely run its course.

“In any event, 87 percent of American voters are concerned about a recession,” said Hyman.

—Carmen Reinicke

S&P 500 headed for worst December in four years

The S&P 500 has dropped more than 6% this month, as Wall Street struggles heading into year-end. That puts in on track for its worst monthly performance since September. It would also be its biggest December decline since 2018, when it slid 9.18%.

Stocks close lower for fourth day in a row

Recession fears and dashed hopes of a year-end rally weighed on stocks Monday, sending them to the fourth consecutive negative close.

The Dow Jones Industrial Average shed 163.85 points, or 0.50%, to close at 32,756.61. The S&P 500 fell 0.91% to 3,817.47, and the Nasdaq Composite shed 1.49%to 10,546.03 weighed down by shares of Amazon, which slipped 3%.

—Carmen Reinicke

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Business

Fed rate decision, South Korea Trade, Australia Unemployment, New Zealand GDP

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China’s November retail sales see significant miss

China’s industrial production for November grew 2.2%, after seeing a growth of 5% in October, according to official data. That’s lower than expectations for growth of 3.6% in a Reuters survey.

Retail sales fell 5.9% on an annualized basis, further than expectations of a decline of 3.7% in a Reuters survey and a fall of 0.5% the previous month.

— Jihye Lee

JPMorgan expects Asian markets to end week with cautious tone after Fed hike

JPMorgan expects markets in the Asia-Pacific region to end the week on a cautious tone following the Federal Reserve’s interest rate hike of 50 basis points.

“Given the U.S. market reaction after the FOMC meeting, we expect Asian markets to end the week with more cautious tone,” Tai Hui, the firm’s Asia-Pacific chief market strategist, said in a note.

Tai added that a weaker inflation print is needed before the Fed’s hawkishness fades, while the region may have more optimism on China’s expected reopening.

“The medium term prospects of China’s economic reopening and Asia’s domestic demand resilience could be a bright spot as the U.S. and Europe face more growth challenges,” Tai said. “We would need more weak inflation data in order for the Fed to tone down its hawkishness.”

— Jihye Lee

South Korea’s revised trade data shows slightly narrower trade deficit

South Korea’s revised trade data for November was flat, official data from the Bank of Korea showed.

Imports grew by 2.7% while exports fell by 14%, in line with readings from the previous month, resulting in a trade deficit of $6.99 billion, slightly narrower than the previous month’s reading of $7.01 billion.

Prices for imports grew 14.2% compared with a year ago after seeing growth of 19.8% the previous month. Export prices grew 8.6% in November compared with a year ago, after growing 13.7% in October.

— Jihye Lee

Japan’s trade data beat estimates, reports wider-than-expected trade deficit

Japan’s exports and imports for November grew more than expected on an annualized basis, official data showed.

Exports for the month rose 20%, beating expectations of 19.8% in a Reuters survey. Imports rose 30.3%, also higher than expectations of 27% in a Reuters poll.

This resulted in a wider-than-expected trade deficit of 2.02 trillion yen ($14.91 billion) after posting 2.16 trillion yen ($15.96 billion) in the previous month.

— Jihye Lee

CNBC Pro: Missed China’s reopening rally? Bank of America names global stocks to ride the second-leg

Investors will have a second opportunity to take part in the stock market rally after China announced a relaxation of Covid-19 restrictions, according to Bank of America.

The bank named more than 10 stocks after having found “green shoots of recovery in high-frequency data” that point toward rising earnings at companies exporting to China.

CNBC Pro subscribers can read more here.

— Ganesh Rao

Australia unemployment rate in line with expectations

Australia’s unemployment rate for November remained at 3.5% on an annualized basis, in line with expectations from a Reuters poll and flat from the prior month.

Official data from the Australia Bureau of Statistics showed the labor participation rate also remained at 66.7%, and the employment to population ratio remained at 64.4%.

Monthly hours worked increased to 1.89 billion.

— Jihye Lee

Fed announces 50 point rate hike

The Fed announced it will raise interest rates by 50 basis points, marking an end to the pattern of 75 point hikes seen in recent months.

Before this move, the Fed had raised rates by 75 basis points at the last four meetings. A basis point is equivalent to 0.01%.

The 50 basis point hike was widely expected ahead of the meeting.

It’s the final policy decision expected from the central bank in 2022.

— Alex Harring

Powell wants ‘substantially more evidence’ that inflation is cooling

Federal Reserve Chairman Jerome Powell said Wednesday the recent positive signs for inflation aren’t enough for the central bank to ease back on interest rate increases.

“It will take substantially more evidence to have confidence that inflation is on a sustained downward” path, Powell said during his post-meeting news conference.

The comments came as the Fed raised its benchmark rate another half percentage point and indicated at least another three-quarters of a point in hikes are coming. The decision also occurs a day after November’s consumer price index reading was up just 0.1%, an indication that inflation may have peaked.

However, Powell said inflation remains a problem.

“Price pressures remain evident across a broad range of goods and services,” Powell added.

—Jeff Cox

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Business

Hong Kong stocks rise 2% after local media report that city is considering dropping outdoor mask rule

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Hong Kong mulls dropping outdoor mask rules: Report

Fitch expects home prices in Australia and China to decline in 2023

Fitch Ratings expects home prices in Australia to see a significant drop of between 7% to 10% next year, it said in its latest outlook report.

The agency also predicts that China’s home prices will fall by 1% to 3% next year.

“We expect prices to decline further in 2023 before bottoming out but mortgage performance to only modestly deteriorate, in the face of economic headwinds,” Tracy Wan of Fitch Ratings said in the report.

However, home prices in Japan could buck the trend to rise by 2% to 4% in 2023, the report said. Australia’s prices are forecast to rise in 2024.

– Jihye Lee

Japan’s economy contracted less than expected in third quarter

Japan’s economy saw an annualized quarterly contraction of 0.8% in the third quarter, with the revised gross domestic product reading beating expectations in a Reuters survey for a 1.1% contraction.

The government’s first preliminary estimate released in November was a 1.2% decline.

The nation also reported a 64.1 billion yen ($469.3 million) deficit in its unadjusted current account balance, government data showed. The reading significantly missed estimates for a surplus of 623.4 billion yen in a separate Reuters poll.

– Jihye Lee

Australia’s trade surplus larger than expected in October

Australia’s trade surplus for October came in at 12.2 billion Australian dollars ($8.19 billion), slightly larger than expected, official data showed.

Economists polled by Reuters predicted a print of 12.1 billion Australian dollars, expecting a further drop than reported – after the economy saw a trade surplus of 12.4 billion Australian dollars.

Exports fell 0.9%, and imports declined 0.7%.

— Abigail Ng

Stocks close mostly lower

Stocks closed mostly lower Wednesday, with the S&P 500 slipping 0.19% to close at 3,933.92.

The Dow Jones Industrial Average closed flat, or 1.58 points higher, to finish the session at 33,597.92. The Nasdaq Composite fell 0.51% to end at 10,958.55.

— Samantha Subin

CNBC Pro: Bank of America says these two global chip stocks could rise by 75% on EV car sales

A shortage of semiconductors during a boom in electric-vehicle sales could help raise profits at a handful of chip makers, according to Bank of America.

The Wall Street bank predicted that two chip stocks could see their share prices rise by more than 75% on the back of that trend.

CNBC Pro subscribers can read more here.

— Ganesh Rao

Pending economic data could launch a rally into next year, says Morgan Stanley’s Slimmon

Don’t be surprised if economic data coming out over the next week kicks off a rally into the end of the year and potentially 2023, according to Andrew Slimmon, Morgan Stanley Investment Management’s senior portfolio manager.

The key period of data releases begins Friday with the producer price index, followed by November’s consumer price index and another likely rate hike from the Federal Reserve next week.

“The last time those were released they all led to rallies in the stock market because we had better inflation prints,” he said.

Like many investors, Slimmon expects a downturn ahead, given the inverted yield curve, but does not anticipate the “big earnings collapse,” or downturn, many people are predicting in the first quarter.

This is in part due to the fact that many consumers have beefed up savings in recent years given the proximity of the most recent recession.

“The message of this year is that the economy has proven far more resilient than many people expect and I don’t think next quarter is going to be the end of that,” he said.

— Samantha Subin

CNBC Pro: Is Apple a stock to buy or avoid? Two investors face off

It’s been a tumultuous year for tech companies, as investors flee growth stocks in the face of rising interest rates, and other headwinds.

Apple has held up better amid the tech carnage, although there have been some headwinds.

Two investors faced off on CNBC’s “Street Signs Asia” on Wednesday to make a case for and against buying the stock.

CNBC Pro subscribers can read more here.

— Weizhen Tan

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Business

Asia markets trade mixed amid recession fears; China to report trade data

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TSMC shares rise after Apple says it will use chips made in the U.S. by the Taiwan firm

China expected to see a further drop in exports and imports

China’s trade data for November is expected to show a further drop in both exports and imports, according to a Reuters poll of economists.

Average forecasts predict exports will drop 3.5% in November on an annualized basis after declining 0.3% in October, and imports are forecasted to fall 6% after slipping 0.7% the previous month.

The trade balance in U.S. dollars is predicted to narrow to $78.1 billion — smaller than the previous month’s $85.15 billion.

— Jihye Lee

CNBC Pro: ‘A gift to investors’: BlackRock says it’s time to rethink bonds

It’s time to rethink bonds, according to the BlackRock Investment Institute, which said “the lure of fixed income is strong” right now.

“Higher yields are a gift to investors who have long been starved for income. And investors don’t have to go far up the risk spectrum to receive it,” Philipp Hildebrand, vice chairman of BlackRock, and Jean Boivin, head of the BlackRock Investment Institute, wrote in a note last week.

They outlined their top ways to cash in.

Pro subscribers can read more here.

— Zavier Ong

Australia’s economy saw slower growth in the third quarter

Australia’s economy grew by 0.6% from the previous quarter, official data showed – missing estimates expecting a 0.7% quarterly growth predicted in a Reuters poll.

The latest gross domestic product showed subdued growth from the second quarter’s expansion of 0.9% from the first three months of the year.

On an annualized basis, GDP in the third quarter added 5.9%, which the Australian Bureau of Statistics said reflects “sustained economic growth since the effects of the Delta outbreak in September quarter 2021.”

“Growth was largely driven by strength in household spending,” it added.

The annualized figure also missed expectations in a separate Reuters poll for a 6.2% gain.

Australia’s dollar was little changed after the report and the S&P/ASX 200 maintained 0.7% lower.

— Abigail Ng

CNBC Pro: UBS says shares in this global airline are set to soar by 55%

Shares of a global airline are set to soar by 55% over the next year, according to UBS.

The investment bank raised its price target after the pan-European airline said it expects to see bumper demand during Christmas.

CNBC Pro subscribers can read more here.

— Ganesh Rao

Stocks finish lower, build on Monday’s losses

Stocks tumbled Tuesday, building on losses from the previous session.

The S&P 500 shed 1.44% to close at 3,941.26, while the Nasdaq Composite sank 2% to finish at 11,014.89. The Dow Jones Industrial Average dropped 350.76 points, or 1.03%, to settle at 33,596.34.

— Samantha Subin

Oil falls to lowest level since Dec. 27, 2021

Oil prices slumped Tuesday, weighed down by economic uncertainty even amid a Russian oil price cap and potential demand uptick thanks to China’s reopening.

U.S. West Texas Intermediate crude for January delivery fell more than 4% to $73.85 in the afternoon Tuesday. Brent crude for February delivery slipped 4.34% to $79.09 per barrel.

The U.S. also said it sees oil production increasing next year, reversing its future outlook after five months of cuts. A monthly report from the Energy Information Administration said production is forecast to hit 12.34 million barrels a day in 2023, more than the daily record of 12.315 million barrels a day in 2019.

—Carmen Reinicke

Inflation is eroding consumer wealth and may bring 2023 recession, Dimon says

Dimon said in June that he was preparing the bank for an economic “hurricane” caused by the Federal Reserve and Russia’s war in Ukraine.

Al Drago | Bloomberg | Getty Images

American consumers are still doing well and supporting the U.S. economy, but that may change next year, according to JPMorgan Chase CEO Jamie Dimon.

Consumers have $1.5 trillion in excess savings from pandemic stimulus programs and are spending 10% more than in 2021, he said Tuesday on CNBC’s “Squawk Box.”

“Inflation is eroding everything I just said, and that trillion and a half dollars will run out sometime mid-year next year,” Dimon said. “When you’re looking out forward, those things may very well derail the economy and cause a mild or hard recession that people worry about.”

Dimon also opined on cryptocurrencies, the necessity of fossil fuels and other topics during the wide-ranging interview.

— Hugh Son

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World

Wall Street, Reserve Bank of Australia, interest rates

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Beijing announces further Covid easing measures

Beijing city announced negative Covid tests will no longer be required to enter most public areas, malls or residential areas, while bars and so-called KTV lounges, or karaoke bars.

Separately, Reuters reported on Monday that China could announce a further relaxation of Covid curbs as early as Wednesday, citing two sources with knowledge of the matter.

The report said there would be 10 new measures in addition to the 20 that were put out in November.

Several cities in China relaxed Covid testing rules in recent days.

— Evelyn Cheng, Abigail Ng

Foxconn reports slump in revenue after Covid-related unrest at China plant

Apple supplier Foxconn, also known as Hon Hai Precision Industry, reported its monthly revenue for November fell over 11% compared to the same period last year.

Revenue for the month totaled 551.1 billion new Taiwan dollars ($18 billion), and was down more than 29% versus October.

The Taiwanese firm said the fall was due to “production gradually entering off-peak seasonality and a portion of shipments being impacted by the epidemic in Zhengzhou,” where the company runs the world’s largest iPhone assembly plant.

Shares of the company dropped 1.48% in Asia’s morning.

– Arjun Kharpal

Chinese markets to pause trade for 3 minutes on Tuesday as nation mourns for former leader

Australia expected to raise rates by 25 basis points: Reuters poll

Australia’s central bank is expected to raise its cash rate by 25 basis points to 3.1% on Tuesday, according to economists polled by Reuters.

That would be the Reserve Bank of Australia’s eighth hike this year, and the third consecutive hike of 25 basis points since October.

In a statement following its November meeting, the RBA said “the full effect” of the series of cash rate hikes lie ahead.

Meanwhile, Matt Simpson, senior market analyst at City Index, said there’s potential for a pause in rate hikes further ahead.

“The case for a pause is certainly building,” he said. “Some measures of inflation expectations are moving lower, and the monthly inflation print suggests inflation has peaked.”

Inflation in Australia remains well above the RBA’s target of between 2% and 3%, though it saw slight easing in October, according to the central bank’s monthly consumer price indicator.

— Charmaine Jacob

Stocks finish lower to start the week

Stocks finished lower Monday as fears mounted that the Federal Reserve will continue hiking rates.

The Dow Jones Industrial Average slid 482.78 points, or 1.4%, to finish at 33,947.10. The S&P 500 shed 1.79% to settle at 3,998.84, while the Nasdaq Composite tumbled 1.93% to close at 11,239.94.

— Samantha Subin

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Technology

Carl Pei’s Nothing plans to launch smartphone in US to take on iPhone

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The Nothing Phone (1).

Nothing

U.K.-based consumer tech company Nothing is setting its sights on the U.S., with ambitions of taking on Apple’s iPhone.

The startup, the hardware venture of Carl Pei — co-founder of Chinese mobile phone maker OnePlus — is in early conversations with American carriers about launching a new smartphone in the U.S., Pei told CNBC, without naming any of the carriers.

related investing news

Goldman Sachs upgrades this global tech giant, saying the stock could rise up to 90%

In July, Nothing launched Phone (1), a mid-range device with a design, price and specs similar to Apple’s entry-level iPhone SE.

The company, which is backed by iPod creator Tony Fadell and Alphabet’s VC arm GV, has only launched its smartphone in Europe, the Middle East and Asia so far — not the U.S. or Canada.

“The reason why we didn’t launch in the U.S. is because you need a lot of additional technical support, to support all the carriers and their unique customizations that they need to make on top of Android,” Pei explained in an interview with CNBC. “We felt that we weren’t ready before.”

“Now we are in discussions with some carriers in the U.S. to potentially launch a future product there,” said the Chinese-Swedish entrepreneur.

The likes of Apple and Samsung already have established relationships with large U.S. carriers, making it harder for smaller firms to compete.

But a third of the sales of its recently launched Ear (stick) headphones currently come from the U.S., Pei added.

“It’s definitely a market where there’s already a lot of interest for our products. And if we launch our smartphones there, I’m sure we could obtain significant growth,” he said.

The company expects its revenues to jump more than tenfold in 2022 — from about $20 million in 2021 to an estimated $250 million this year, according to figures shared with CNBC exclusively. It has also more than doubled its employees to more than 400. However, the firm is still losing money.

“The goal is to be profitable in 2024,” Pei said. “We are not profitable right now. And this year was made even harder due to the foreign currency exchange. We pay a lot of our COGS [cost of goods sold] in USD but we make money in pounds, in euros, in Indian rupees — so everything devalued against the USD.”

The U.S. dollar has rallied this year; the dollar index — which measures the greenback against a basket of major currencies — is up over 8.5% year-to-date.

Taking on Apple

Pei wants to challenge Apple’s iPhone in the U.S. But it’s a steep hill to climb.

“There’s a challenge with Android where iOS is just becoming more and more dominant. They have very strong lock-in with iMessage, with AirDrop, especially among Gen Z. So that’s a rising concern for me,” he said.

“There might be a time where Apple is like 80% of the overall market and that just does not leave enough space for Android-based manufacturers to keep playing,” he said.

Apple was not immediately available for comment when contacted by CNBC.

Pei says he sympathized with Elon Musk, who as Twitter’s new CEO has put pressure on Apple over its App Store restrictions and 30% fee imposed on in-app purchases.

He added that, in a couple of years’ time, Nothing may have to “have a serious think about this problem and how we tackle it.”

“It’s going to create a ceiling to our growth,” Pei said.

David vs. Goliath

Pei said his firm has faced a plethora of challenges in bringing its products to market. One of the major setbacks it faced was when it approached Foxconn, Apple’s largest iPhone supplier, to manufacture its phones.

According to Pei, Foxconn refused to do business with Nothing, citing past failures in the smartphone industry.

“Every startup manufacturer has worked with Foxconn,” Pei said. “But when it was our turn, they said no because every startup that worked with them failed. And every time a startup failed, Foxconn lost money on it, they were not able to recoup their costs.”

Foxconn was not immediately available for comment when contacted by CNBC.

Covid restrictions around the globe also presented a significant hurdle for the company. In India, where Nothing produces its phones, the company was unable to fly out engineers due to travel restrictions, with Pei saying the company had to manage its factory on the ground remotely.

“We really had to hustle to create this,” he said of Nothing’s smartphone.

In Shenzhen, China, where officials have imposed strict lockdowns, Nothing’s engineers had to discuss component designs and mechanics during mandated 45-minute periods when it was acceptable for people to go outside to buy groceries.

Nothing has sold over 1 million products to date globally, with its Ear (1) earbuds selling 600,000 units and the Phone (1) reaching 500,000 shipments.

Still, the startup is a tiny player, and it faces a bleak economic outlook where people are being forced to limit their spending drastically.

In Europe, smartphone shipments sank 16% in the third quarter year-over-year, although they were up slightly from the previous quarter on the back of the iPhone 14’s strong launch.

Samsung is Europe’s largest smartphone maker with 35% market share, followed by China’s Xiaomi’s 23% and Apple’s 21%.

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World

China Covid relaxation, Hong Kong stocks rise

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Morgan Stanley upgrades China stocks to overweight

Strategists at Morgan Stanley have raised its recommendation for Chinese stocks to overweight, according to a Sunday note.

The upgrade marks the end of the firm’s equal-weight stance on Chinese equities that it has held for close to two years, strategists led by Laura Wang said.

Morgan Stanley noted multiple factors seeing “meaningful positive development” since November, including what the firm views as “a confirmed path towards final post-Covid reopening.”

— Michael Bloom, Jihye Lee

Hong Kong movers: Chinese tech firms and reopening stocks jump

Chinese technology, consumer and travel-related firms listed in Hong Kong saw sharp gains in early trade after some cities in China saw some easing in Covid restrictions.

Tech heavyweights Tencent gained 5.5% and Meituan rose 3.5%, while Alibaba jumped 4.72% and Xiaomi added 7.31%. EV stocks such as Li Auto jumped 9.19% and Nio climbed 11.5%.

Meanwhile, Hong Kong-listed casino stocks also jumped, with MGM China rising 12.44%, Wynn Macau climbing 12.35% and Sands China adding 7.5%. Galaxy Entertainment rose 3.61% and SJM Holdings rose 4.82%.

Hotpot restaurant operator Haidilao soared 15%, and shares of airlines also popped. China Southern Airlines and China Eastern Airlines each rose more than 5%, while Air China gained 4%.

The broader Hang Seng index was up 3.21%.

— Abigail Ng, Jihye Lee

China’s services activity index at lowest in six months, private survey shows

The Caixin/S&P Global services Purchasing Managers’ Index for November came in at 46.7, representing the lowest reading in six months.

The print also marks the third consecutive month of contraction in output and new work, after October’s reading came in at 48.4, while September’s print was 49.3.

PMI readings are sequential and represent month-on-month changes in factory activity. The 50-point mark separates growth from contraction.

“The rate of decline was solid overall, but remained weaker than the falls seen during the previous major wave of Covid-19 cases from March to May,” Caixin said in a release.

“Efforts to curb the spread of Covid-19 amid a notable rise in case numbers in recent weeks, weighed on service sector business operations and customer demand across China during November,” it added.

China’s official non-manufacturing PMI released last week stood at 46.7, the lowest since April 2022.

— Abigail Ng

Chinese yuan strengthens on reopening hopes

The Chinese currency strengthened to around 7 against the U.S. dollar following the latest reports that signaled further loosening of China’s Covid policies.

The offshore yuan traded at 6.9861 against the greenback, strengthening past 7-levels for the first time since mid-September.

Beijing and Shenzhen are taking steps to loosen testing requirements and quarantine rules despite the daily case count hovering near all-time highs.

The latest moves come about a week after public unrest erupted over the strict measures in various parts of the country.

— Jihye Lee

Oil futures up 2% after OPEC+ holds steady and China reportedly eases some Covid restrictions

Chinese markets to pause trade for 3 minutes on Tuesday as nation mourns for former leader

CNBC Pro: Fund manager names two global retailers that are about to ‘dominate’

A veteran Schroders fund manager has named two global retailers that are about to ‘dominate’ their sector.

Andrew Brough, who runs the Schroder UK Mid Cap Fund, said the two conservatively run companies are taking market share ahead of a recession by silently acquiring failing competitors cheaply.

One of those stocks has already risen by 30% this year while its benchmark index has declined by 29%.

CNBC Pro subscribers can read more here.

— Ganesh Rao

Stock futures tumble, bond yields rise on back of hotter-than-anticipated jobs data

Stock futures dropped while bond yields rose in response to the 8:30 a.m. jobs data that came in stronger than expected by economists.

Here’s how each major futures index and the notable bond yields moved over the course of the 30 minutes leading up to and following the release of the data:

CNBC Pro: Goldman Sachs upgrades this global tech giant, saying the stock could rise up to 90%

Goldman Sachs sees one opportunity in electric vehicles that’s on an “upward trend.”

This trend will gain pace as EVs become “ever more technology driven” and simpler to build, said Goldman analysts in a Dec. 1 report.

That’s set to benefit one global stock, said Goldman, which gives the stock up to 90% upside in its bull case for the firm.

CNBC’s Pro subscribers can read more here.

— Weizhen Tan

U.S. payrolls jumped by 263,000 in November

Job growth was stronger than expected in November despite the Federal Reserve’s efforts to cool the labor market.

Nonfarm payrolls grew by 263,000 last month while the unemployment rate was unchanged at 3.7%, according to the Labor Department on Friday.

Payroll numbers were expected to jump by 200,000 more jobs, according to consensus estimates from the Dow Jones. The unemployment rate was expected to remain at 3.7%.

Stock futures dropped following the payrolls release.

— Sarah Min

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Business

South Korea inflation, U.S. jobs report, China Covid-zero

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Singapore, New York ranked the most expensive cities to live in: EIU

Singapore and New York have been ranked as the most expensive cities to live in this year, according to the Economist Intelligence Unit (EIU).

EIU’s survey showed the average price of goods in 172 major cities globally rose 8.1% in local currency terms this year, citing a poll that the organization conducted between Aug. 16th and Sept. 16th.

The reading marks a significant increase from a 3.5% rise in prices seen in the same survey that the organization conducted last year.

— Charmaine Jacob

India poised to become third largest economy by 2030

India is projected to overtake Japan and Germany to become the world’s third-largest economy, S&P Global and Morgan Stanley forecasted in a report.

S&P’s prediction is premised upon the projection that India’s annual nominal GDP growth will average 6.3% through 2030. Similarly, Morgan Stanley estimates that India’s GDP is likely to more than double from current levels by 2031.

On Wednesday, India recorded a year-on-year GDP growth of 6.3% for the July to September quarter, fractionally beating Reuters poll estimates of 6.2%.

— Lee Ying Shan

CNBC Pro: Citi names 6 global stocks that capture both ‘defensive growth and value’

Citi says investors don’t need to give up entirely on growth by pivoting to a defensive portfolio of stocks ahead of a potential recession.

The investment bank named six global stocks which offer “low risk, quality and growth” combined.

CNBC Pro subscribers can read more here.

— Ganesh Rao

South Korea’s November inflation misses expectations

South Korea’s annualized inflation for November came in at 5%, lower than estimates of 5.1% surveyed in a Reuters poll.

The latest reading marks slight easing from 5.7% in October and off an all-time peak of 6.3% seen in July.

– Jihye Lee

CNBC Pro: BlackRock unit says it’s time for a new portfolio playbook, and reveals how to position

BlackRock’s ETF division says the investing environment has fundamentally changed, which has “profound implications” for portfolios looking ahead.

In its 2023 investor guide, Blackrock’s iShares, one of the largest providers of exchange-traded-funds in the world, said the shift brings with it “profound implications for portfolio construction.”

CNBC Pro subscribers can read more here.

— Weizhen Tan

‘No one wants to be aggressively bullish’ before new labor data coming Friday, analyst says

Stocks were unable to continue Wednesday’s rally because investors were awaiting a key jobs report coming Friday, said Edward Moya, senior market analyst at Oanda.

He said investors were purposefully pulling back ahead of non-farm payroll data coming in the morning. Investors will also be watching for data on hourly pay and the unemployment rate.

“US stocks were unable to hold onto earlier gains as Wall Street digested a swathe of economic data that showed inflation is easing and the labor market is cooling,” Moya said. “It’s been a nice rally but no one wants to be aggressively bullish heading into the NFP report.”

Investors will be looking for the right, middle-ground data, said Megan Horneman, chief investing officer at Verdence Capital Advisors. That means it’s weak enough to show interest rate hikes are having the intended impact of economic contracting, while being strong enough to signal a recession could be avoided.

“A big number will spook the markets further that the Fed’s not going to be able to slow down their pace of rate hikes,” said Megan Horneman, chief investing officer at Verdence Capital Advisors, of Friday’s jobs data.

With “a so-so number, I think the markets can maybe rally on that,” she added. “But if you get a really weak number, it’s just going to spook investors after such a strong rally we’ve seen in November.”

— Alex Harring

Indexes are coming off winning month

Thursday marked the first day of a new trading month as the market came off a winning November.

The S&P 500 and Dow each had the second straight month of gains, rising 5.38% and 5.67%, respectively. That monthly streak was the first for each since August 2021.

The Nasdaq Composite gained 4.37%, which was its second positive month in a row. That was the first time the tech-heavy index started a streak since it saw three straight months of wins ending with December 2021.

— Alex Harring

Key inflation indicator rose less than expected in October

The Bureau of Economic Analysts reported that the Core Personal Consumption Expenditures Index, a key gauge of inflation, rose 0.2% in October. That’s less than the Dow Jones expected increase of 0.3%.

Following the report, Treasury yields declined amid optimism over inflation easing.

— Fred Imbert

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South Korea GDP, Caixin Manufacturing PMI, Japan Consumer Confidence

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Japanese yen strengthens after Powell commentary on smaller hikes

Temasek’s $245 million FTX loss ’caused reputational damage’ to Singapore, says deputy prime minister

Singapore’s Deputy Prime Minister Lawrence Wong said the state sovereign wealth fund’s investment loss of $275 million in collapsed crypto exchange FTX is “disappointing and has caused reputational damage” to the city-state.

But the investment loss does not mean the governance system is not working, Wong said, adding that an internal review is being conducted.

“Rather, it is the nature of investment and risk-taking,” he said.

The FTX loss will not impact the net investment returns of Singapore’s reserves, which are “tied to the overall expected long term returns of our investment entities and not to individual investments,” he said.

Going forward, Singapore plans to require crypto service providers to implement basic investor protection measures, but “no amount of regulation can remove this risk,” he warned.

– Sheila Chiang

China’s Caixin manufacturing PMI marks fourth straight month of contraction

China’s Caixin/Markit Manufacturing Purchasing Managers’ Index for November came in at 49.4, higher than expectations of 48.9 in a Reuters survey of economists.

The reading marks a fourth consecutive month of contraction, after a reading of 49.2 from October and dipping to 48.1 in September — below the 50-point mark which separates growth from contraction.

Separately, the official PMI print from China’s National Bureau of Statistics reported Wednesday came in at 48, showing a second consecutive month of contraction in factory activity.

– Jihye Lee

Oil prices little changed as White House weighs additional oil reserves

The White House is considering building additional oil reserves against the backdrop of the upcoming winter and uncertainty surrounding the market, sources familiar with the matter told CNBC.

The Biden administration is weighing whether to call on Congress to raise the storage limit, potentially doubling it, to build additional reserves the administration could release if supply tightens or prices rise again, the people said.

The U.S. currently holds about 1 million barrels of heating oil in New York and Connecticut.

The White House is bracing for a potential price spike, as Europe’s oil embargo and G-7’s price cap on Russian oil looms ahead, potentially disrupting supply.

Oil prices are little changed in early Asia hours. The West Texas Intermediate futures dipped fractionally to stand at $80.53 per barrel, while the Brent crude futures shed 0.06% to stand at $86.92 per barrel.

— Kayla Tausche, Lee Ying Shan

CNBC Pro: Forget Amazon. Here’s what top tech investor Paul Meeks is buying

Investor confidence in the tech sector has been shaken this year amid a flight to safety, but top tech investor Paul Meeks said he is now “more bullish” on the sector than in recent months, though he remains selective within the sector.

He tells CNBC the stocks he favors.

Pro subscribers can read more here.

— Zavier Ong

South Korea’s revised GDP confirms growth in the third quarter

South Korea’s revised gross domestic product for the third quarter confirmed growth of 3.1% compared to the same period a year ago – higher than a 2.9% expansion seen in the second quarter.

The economy saw slower quarterly growth of 0.3% in the third quarter, following a growth of 0.7% in the previous period.

Separately, South Korea reported a trade deficit of $7.01 billion for November, exceeding expectations of $4.42 billion — marking the third consecutive month of rising trade deficit driven by sluggish exports.

Exports shrank by 14%, lower than forecasts of a drop of 11% — while imports grew more than expected by 2.7%, according to preliminary data from the customs agency.

– Jihye Lee

CNBC Pro: UBS reveals 15 global stocks sensitive to China’s reopening plans

Chinese stocks have risen this week after the nation’s health authorities reported a recent uptick in vaccination rates, which experts regard as crucial to reopening the country.

The impact of Beijing’s change in tack toward dealing with the outbreak of Covid-19 is being felt not only in China but also around the world.

The Swiss bank UBS has identified 15 stocks in the MSCI Europe index that will outperform “in an environment where China’s growth rebounds and the country reopens its borders.”

CNBC Pro subscribers can read more here.

— Ganesh Rao

Powell continues to believe in a path to a soft-ish landing

Federal Reserve Chair Jerome Powell says he continues to believe in a path to a “soft-ish” landing — even if the path has narrowed over the past year.

“I would like to continue to believe that there’s a path to a soft or soft-ish landing” Powell said at the Brookings Institution.

“Our job is to try to achieve that, and I think it’s still achievable,” Powell said. “If you look at the history, it’s not a likely outcome, but I would just say this is a different set of circumstances.”

— Sarah Min

Indexes jump on Powell comments

Fed Chair Jerome Powell’s comments indicating the central bank will slow future interest rate hikes as soon as December put upward pressure on the three major indexes.

The S&P 500 jumped up 0.6% from the red on the news.

The Dow was near flat after trading down for most of the day.

The Nasdaq Composite gained steam to 1.3% up.

— Alex Harring

Powell says Fed can “moderate the pace” of future rate increases due to lagged effect of past hikes

Federal Reserve chairman Jerome Powell told an audience at the Brookings Institution Wednesday that the central bank can afford to ease back on its tighter monetary policy at its December meeting (due to wrap up Dec. 14).

The lagged effect of higher rates already taken in 2022, plus the drawing down of the size of the Fed’s balance sheet through quantitative tightening, mean “it makes sense to moderate the pace of our rate increases as we approach the level of restraint that will be sufficient to bring inflation down,” Powell said.

“The time for moderating the pace of rate increases may come as soon as the December meeting,” said the 69-year-old Fed chair.

In response to Powell’s remarks, the S&P 500 quickly gained to about 3970 vs about 3950 before the address.

— Scott Schnipper, Jeff Cox

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Business

China’s factory activity at lowest reading since April; Asia markets largely higher

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China’s factory activity misses expectations, contracts for a second straight month

China’s official manufacturing Purchasing Managers’ Index for November came in at 48, below the 50-point mark that separates growth from contraction.

That’s lower than the expectations of analysts polled by Reuters, who predicted a reading of 49. October’s PMI was 49.2.

PMI readings are sequential and represent month-on-month changes in factory activity.

— Abigail Ng

Australia’s monthly inflation indicator shows slight slowing

Australia’s consumer price index for October slowed to 6.9% on an annualized basis, from 7.3% in September, according to a monthly indicator by the Australian Bureau of Statistics.

The rise in prices for housing, food and non-alcoholic beverages, as well as transport led the overall CPI indicator higher.

Bilibili shares pop in Asia morning session

Hong Kong-listed shares of Bilibili popped as much as 12.7% in Asia’s morning after the company beat revenue estimates for the third quarter of the year.

Net revenue came in at 5.79 billion Chinese yuan ($809.8 million), 11% higher than the same period in 2021. Estimates from Refinitiv Eikon predicted revenue of 5.52 billion yuan.

Net losses narrowed to 1.7 billion yuan, and average monthly active users grew 25% on an annualized basis.

U.S.-listed shares of the company soared 22% overnight, while the Hong Kong shares were last up 8.47%.

— Abigail Ng

South Korea, Japan industrial production data comes in worse than expected

South Korea and Japan’s industrial production each saw declines for the month of October.

Japan’s preliminary industrial production for October declined 2.6% compared to a month ago, more than expectations of a decline of 1.5%, according to a Reuters poll.

The reading marks the second consecutive decline after seeing a fall of 1.7% the previous month.

South Korea’s industrial production also fell by 3.5% compared with a month ago, also lower than expectations of a decline of 1%. The reading marked the lowest since May 2020, when output declined 6.7%.

– Jihye Lee

China’s factory activity expected to contract for a second straight month

China’s official manufacturing Purchasing Managers’ Index for November is expected to come in at 49, below the 50-point mark that separates growth from contraction, according to analysts polled by Reuters.

That’s slightly lower than the reading of 49.2 reported in October.

PMI readings are sequential and represent month-on-month changes in activity.

— Abigail Ng

China says it is ‘closely watching’ virus developments when asked about shift in policy

Chinese health authorities said that officials are “closely watching” the developments of Covid when asked if protests in the region would lead to shifts in its zero-Covid policy.

“China has been following and closely watching the virus as it evolves and mutates,” officials said, according to a translation of Tuesday’s briefing.

– Christine Wang, Evelyn Cheng

CNBC Pro: Goldman Sachs’ Currie says oil stocks are trading ‘far below’ their long-term trend

Goldman Sachs’ Global Head of Commodities Research Jeff Currie told CNBC that historically, oil stocks have traded at a much higher premium to crude oil prices compared to current price levels.

For instance, the price gap between SPDR Oil & Gas ETF and ICE Brent Crude futures contract was about $66.60 on Tuesday. That’s significantly lower than the $104 gap recorded at the start of January 2017, according to Koyfin data, as the chart below shows.

China announces measures to boost elderly vaccination

China’s health authorities released a plan to boost elderly vaccination, according to a notice on the National Health Commission’s website.

Hong Kong-listed shares of CanSino Biologics extended gains in the afternoon session and rose as much as 18% shortly after the announcement was posted.

The notice said authorities should use multiple data points to accurately identify target groups for vaccination for the elderly.

CNBC Pro: As Wall Street gets bearish, these stocks with margin growth could be safe bets

Wall Street pros are worried about the outlook for stocks, and are urging investors to stay defensive. These stocks with margin growth could be safe bets.

Pro subscribers can read more here.

— Zavier Ong

Nasdaq and S&P 500 post third day down

The Dow Jones Industrial Average closed 3.07 points, or 0.01%, higher after trading down for much of the day. The index ended the day at 33,852.53.

Meanwhile, the Nasdaq Composite finished lower by 0.59%, to close at 10,983.78. The S&P 500 slipped by 0.16% to close at 3,957.63.

— Alex Harring

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