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Asia-Pacific shares trade higher ahead of U.S. inflation report

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Thai baht to ‘recover the strongest’ among regional currencies on China reopening: Credit Suisse

The Thai baht will “recover the strongest” amongst other Southeast Asian currencies on China’s reopening, said Credit Suisse’s Asia FX strategist Max Lin.

Lin claimed Thailand has not implemented any sort of travel restrictions on Chinese tourists, and the government is “still very supportive” of the tourism freedom.

“It sounds like there still will be a lot of regional tourism demand,” he said, pointing to reports of Chinese outbound tourism activities on travel booking websites.

The Thai Baht has strengthened back to levels seen in April 2022 and last stood at 33.41 against the greenback.

—Lee Ying Shan

Apple’s Asia suppliers mostly fall after reports of in-house screen manufacturing

Shares of some Apple suppliers in Asia fell after Bloomberg reported that the company will begin making in-house screens in 2024.

South Korea listed stocks of LG Display fell 3.35% in its afternoon trade shortly after the report, while Samsung Electronics traded 0.17% higher. Taiwan Semiconductor Manufacturing Co. also traded 0.41% lower.

Separately, Shenzhen-listed shares of BOE Technology Group, or Jingdongfang, rose more than 1% as Reuters reported that the Apple supplier is planning invest a substantial sum to build new factories in Vietnam.

— Jihye Lee

Cryptocurrencies trade higher even as Coinbase announce layoffs

Cryptocurrencies inched higher after crypto company Coinbase announced plans to trim 20% of its workforce as it looks to preserve cash during the crypto market downturn.

Bitcoin last traded higher by 1.55% at $17,459.63 according to Coin Metrics. Ether gained 1% to $1,337.85.

Other digital coins like Cronos and Cardano also advanced gains.

CEO Brian Armstrong said there was “no way” to reduce expenses and increase its chances of “doing well in every scenario” without reducing head count.

—Lee Ying Shan, Kate Rooney

Philippines inflation will return to as low as 2% by 2024, says finance secretary

Inflation in the Philippines is expected to return to the government’s target range in two years, Finance Secretary Benjamin Diokno said.

Diokno said he is confident that average inflation for 2023 will be between 2.5% to 4.5% before easing to 2% to 4% by the next year, he told CNBC on the sidelines of the Asian Financial Forum in Hong Kong.

Headline inflation in the Philippines still remains high, increasing to 8.1% in December 2022 from 8% the month before, according to government data.

Bangko Sentral ng Pilipinas governor Felipe Medalla announced on Monday that interest rates will be raised by another 25 to 50 basis points in February. Diokno added he expects the central bank to pivot some time this year.

“There’s also the possibility that we will cut at some point in this year because we might be overshooting,” he said.

— Charmaine Jacob

Australia’s consumer prices rose 7.3% in November on back of higher housing and food prices

Australia consumer price index rose 7.3% year-on-year in November, according to data from the Australian Bureau of Statistics, a sign that inflationary pressures have yet to slow.

The figure is in line with Reuters’ expectations, and higher than last month’s reading of 6.9%.

Housing, food and transport were amongst the top components fueling the hike, the release said.

Separately, Australia reported an in crease in sales of 1.4% for November compared to a month ago, buoyed by Black Friday sales.

— Lee Ying Shan

CNBC Pro: This global ETF is the only fund that’s posted gains every year for the past decade

The only stock ETF to have had a positive return every year over the past decade has been revealed by CNBC Pro.

It is the sole fund of almost 7,000 equities ETFs worldwide screened by CNBC Pro not to have a single year of negative returns between Jan. 1, 2013, and Dec. 31, 2022.

It has also offered investors a 14% compounded annual growth rate over the same period, which is significantly more than broader index tracking funds, according to Koyfin data.

CNBC Pro subscribers can read more here.

— Ganesh Rao

South Korea’s unemployment rate climbs to 11-month high

South Korea’s unemployment rate for December climbed 3.3%, marking the highest in 11 months, government data showed.

The reading is higher compared to November’s figure of 2.9%

In spite the higher unemployment figure, the total number of employed people in 2022 came up to 28.089 million, up from 816,000 from a year ago.

– Lee Ying Shan, Jihye Lee

CNBC Pro: ‘An expensive mistake: Citi says stop hoarding cash — and reveals two areas to invest in

Investors endured a tough 2022, as stocks and bonds fell amid broader market turmoil.

While many sought refuge in the relative safety of cash, Citi says it’s now time to put it to work and named two ways to deploy it for higher returns.

Pro subscribers can read more here.

— Zavier Ong

Fed should stay politically independent while tackling inflation, Powell says

Fed Chairman Jerome Powell on Tuesday stressed the need for the central bank to be free of political influence while it tackles persistently high inflation.

In a speech delivered to Sweden’s Riksbank, Powell noted that stabilizing prices requires making tough decisions that can be unpopular politically.

“Price stability is the bedrock of a healthy economy and provides the public with immeasurable benefits over time. But restoring price stability when inflation is high can require measures that are not popular in the short term as we raise interest rates to slow the economy,” the chair said in prepared remarks.

“The absence of direct political control over our decisions allows us to take these necessary measures without considering short-term political factors,” he added.

— Jeff Cox

Copper hits highest price since June

Copper hit a high not seen since June.

The metal settled up just under 1.3% at $4.0775. It posted a high of $4.0835, which was its most expensive since it hit $4.1160 on June 17.

Copper has gained about 7% since 2023 began.

— Gina Francolla, Alex Harring

Coinbase to layoff 20% of workforce

Coinbase’s stock gained 6% after the crypto exchange operator announced plans to slash 20% of its workforce in an attempt to trim costs.

The layoffs will impact 950 jobs and marks the second round of cuts from the company in recent months. Coinbase laid off 18% of its workforce in June in preparation for a potential recession and crypto winter, saying that it had grown “too quickly” during the bull market.

Crypto markets have come under pressure following the collapse of FTX, one of the industry’s largest operators.

Coinbase said the new round of layoffs will bring down its operating expenses by 25% for the quarter ending in March, according to a new regulatory filing.

— Kate Rooney, Samantha Subin

Read original article here

Business

Asia-Pacific shares trade higher ahead of U.S. inflation report

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Thai baht to ‘recover the strongest’ among regional currencies on China reopening: Credit Suisse

The Thai baht will “recover the strongest” amongst other Southeast Asian currencies on China’s reopening, said Credit Suisse’s Asia FX strategist Max Lin.

Lin claimed Thailand has not implemented any sort of travel restrictions on Chinese tourists, and the government is “still very supportive” of the tourism freedom.

“It sounds like there still will be a lot of regional tourism demand,” he said, pointing to reports of Chinese outbound tourism activities on travel booking websites.

The Thai Baht has strengthened back to levels seen in April 2022 and last stood at 33.41 against the greenback.

—Lee Ying Shan

Apple’s Asia suppliers mostly fall after reports of in-house screen manufacturing

Shares of some Apple suppliers in Asia fell after Bloomberg reported that the company will begin making in-house screens in 2024.

South Korea listed stocks of LG Display fell 3.35% in its afternoon trade shortly after the report, while Samsung Electronics traded 0.17% higher. Taiwan Semiconductor Manufacturing Co. also traded 0.41% lower.

Separately, Shenzhen-listed shares of BOE Technology Group, or Jingdongfang, rose more than 1% as Reuters reported that the Apple supplier is planning invest a substantial sum to build new factories in Vietnam.

— Jihye Lee

Cryptocurrencies trade higher even as Coinbase announce layoffs

Cryptocurrencies inched higher after crypto company Coinbase announced plans to trim 20% of its workforce as it looks to preserve cash during the crypto market downturn.

Bitcoin last traded higher by 1.55% at $17,459.63 according to Coin Metrics. Ether gained 1% to $1,337.85.

Other digital coins like Cronos and Cardano also advanced gains.

CEO Brian Armstrong said there was “no way” to reduce expenses and increase its chances of “doing well in every scenario” without reducing head count.

—Lee Ying Shan, Kate Rooney

Philippines inflation will return to as low as 2% by 2024, says finance secretary

Inflation in the Philippines is expected to return to the government’s target range in two years, Finance Secretary Benjamin Diokno said.

Diokno said he is confident that average inflation for 2023 will be between 2.5% to 4.5% before easing to 2% to 4% by the next year, he told CNBC on the sidelines of the Asian Financial Forum in Hong Kong.

Headline inflation in the Philippines still remains high, increasing to 8.1% in December 2022 from 8% the month before, according to government data.

Bangko Sentral ng Pilipinas governor Felipe Medalla announced on Monday that interest rates will be raised by another 25 to 50 basis points in February. Diokno added he expects the central bank to pivot some time this year.

“There’s also the possibility that we will cut at some point in this year because we might be overshooting,” he said.

— Charmaine Jacob

Australia’s consumer prices rose 7.3% in November on back of higher housing and food prices

Australia consumer price index rose 7.3% year-on-year in November, according to data from the Australian Bureau of Statistics, a sign that inflationary pressures have yet to slow.

The figure is in line with Reuters’ expectations, and higher than last month’s reading of 6.9%.

Housing, food and transport were amongst the top components fueling the hike, the release said.

Separately, Australia reported an in crease in sales of 1.4% for November compared to a month ago, buoyed by Black Friday sales.

— Lee Ying Shan

CNBC Pro: This global ETF is the only fund that’s posted gains every year for the past decade

The only stock ETF to have had a positive return every year over the past decade has been revealed by CNBC Pro.

It is the sole fund of almost 7,000 equities ETFs worldwide screened by CNBC Pro not to have a single year of negative returns between Jan. 1, 2013, and Dec. 31, 2022.

It has also offered investors a 14% compounded annual growth rate over the same period, which is significantly more than broader index tracking funds, according to Koyfin data.

CNBC Pro subscribers can read more here.

— Ganesh Rao

South Korea’s unemployment rate climbs to 11-month high

South Korea’s unemployment rate for December climbed 3.3%, marking the highest in 11 months, government data showed.

The reading is higher compared to November’s figure of 2.9%

In spite the higher unemployment figure, the total number of employed people in 2022 came up to 28.089 million, up from 816,000 from a year ago.

– Lee Ying Shan, Jihye Lee

CNBC Pro: ‘An expensive mistake: Citi says stop hoarding cash — and reveals two areas to invest in

Investors endured a tough 2022, as stocks and bonds fell amid broader market turmoil.

While many sought refuge in the relative safety of cash, Citi says it’s now time to put it to work and named two ways to deploy it for higher returns.

Pro subscribers can read more here.

— Zavier Ong

Fed should stay politically independent while tackling inflation, Powell says

Fed Chairman Jerome Powell on Tuesday stressed the need for the central bank to be free of political influence while it tackles persistently high inflation.

In a speech delivered to Sweden’s Riksbank, Powell noted that stabilizing prices requires making tough decisions that can be unpopular politically.

“Price stability is the bedrock of a healthy economy and provides the public with immeasurable benefits over time. But restoring price stability when inflation is high can require measures that are not popular in the short term as we raise interest rates to slow the economy,” the chair said in prepared remarks.

“The absence of direct political control over our decisions allows us to take these necessary measures without considering short-term political factors,” he added.

— Jeff Cox

Copper hits highest price since June

Copper hit a high not seen since June.

The metal settled up just under 1.3% at $4.0775. It posted a high of $4.0835, which was its most expensive since it hit $4.1160 on June 17.

Copper has gained about 7% since 2023 began.

— Gina Francolla, Alex Harring

Coinbase to layoff 20% of workforce

Coinbase’s stock gained 6% after the crypto exchange operator announced plans to slash 20% of its workforce in an attempt to trim costs.

The layoffs will impact 950 jobs and marks the second round of cuts from the company in recent months. Coinbase laid off 18% of its workforce in June in preparation for a potential recession and crypto winter, saying that it had grown “too quickly” during the bull market.

Crypto markets have come under pressure following the collapse of FTX, one of the industry’s largest operators.

Coinbase said the new round of layoffs will bring down its operating expenses by 25% for the quarter ending in March, according to a new regulatory filing.

— Kate Rooney, Samantha Subin

Read original article here

Business

Powell stresses need for Fed’s political independence while tackling inflation

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U.S. Federal Reserve Chair Jerome Powell attends a press conference in Washington, D.C., on Dec. 14, 2022.

Liu Jie | Xinhua News Agency | Getty Images

Federal Reserve Chairman Jerome Powell on Tuesday stressed the need for the central bank to be free of political influence while it tackles persistently high inflation.

In a speech delivered to Sweden’s Riksbank, Powell noted that stabilizing prices requires making tough decisions that can be unpopular politically.

“Price stability is the bedrock of a healthy economy and provides the public with immeasurable benefits over time. But restoring price stability when inflation is high can require measures that are not popular in the short term as we raise interest rates to slow the economy,” the chair said in prepared remarks.

“The absence of direct political control over our decisions allows us to take these necessary measures without considering short-term political factors,” he added.

Powell’s remarks came at a forum to discuss central bank independence, and were to be followed by a question-and-answer session.

The speech did not contain any direct clues about where policy is ahead for a Fed that raised interest rates seven times in 2022, for a total of 4.25 percentage points, and has indicated that more increases likely are on the way this year.

While criticism of Fed actions by elected leaders is often done in quieter tones, the Powell Fed has faced vocal opposition from both sides of the political aisle.

Former President Donald Trump ripped the central bank when it was raising rates during his administration, while progressive leaders such as Sen. Elizabeth Warren (D-Mass.) have criticized the current round of hikes. President Joe Biden has largely resisted commenting on Fed moves while noting that it is primarily the central bank’s responsibility to tackle inflation.

Powell has repeatedly stressed that political factors have not weighed on his actions.

In another part of Tuesday’s speech, he addressed calls from some lawmakers for the Fed to use its regulatory powers to address climate change. Powell noted that the Fed should “stick to our knitting and not wander off to pursue perceived social benefits that are not tightly linked to our statutory goals and authorities.”

While the Fed has asked big banks to examine their financial readiness in case of major climate-related events such as hurricanes and floods, Powell said that’s as far as it should go.

“Decisions about policies to directly address climate change should be made by the elected branches of government and thus reflect the public’s will as expressed through elections,” he said. “But without explicit congressional legislation, it would be inappropriate for us to use our monetary policy or supervisory tools to promote a greener economy or to achieve other climate-based goals. We are not, and will not be, a ‘climate policymaker.'”

The Fed this year will, however, launch a pilot program that calls for the nation’s six biggest banks to take part in a “scenario analysis” aimed at testing institutions’ stability in the event of major climate events.

The exercise will take place apart from the so-called stress tests that the Fed uses to test how banks would fare under hypothetical economic downturns. Participating institutions are Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley, and Wells Fargo.

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Business

Stock futures are little changed as traders mull prospects of higher rates

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Stock futures were little changed Tuesday as concern over higher rates lingered among traders.

Futures tied to the Dow Jones Industrial Average shed 60 points, or 0.2%, while S&P 500 fell less than 0.1%. Nasdaq-100 futures hovered just above the flat line.

Atlanta Federal Reserve President Raphael Bostic said Monday that interest rates should rise above 5% and stay there for a “long time.” Meanwhile, San Francisco Fed President Mary Daly said the central bank should continue raising rates, albeit at a slower pace. Treasury yields rose slightly on Tuesday.

Those comments came ahead of a speech by Fed Chair Jerome Powell slated for 9 a.m. ET.

Investors came into the new year worried that higher Fed rates could tip the economy into a recession. However, many appear to be mounting bets that inflation is starting to ease.

The Nasdaq Composite on Wednesday posted a 0.6% gain, helped by a 6% rally in Tesla. Meanwhile, the Dow erased a 304-point gain and ended down almost 113 points, while the S&P fell 0.1%.

Monday also marked the end of the first five trading days of 2023, during which the S&P 500 gained 1.1%. According to a classic stock market indicator, that kind of early strength could bode well for the rest of the year.

Tom Lee of Fundstrat called it a “strong omen” and said the market is set up for a 20% rally this year.

The Fed wants financial conditions “to stay tight,” Lee said on CNBC’s “Closing Bell: Overtime.” “Dollar, stocks, bonds – everything’s kind of easing so they’re probably a little worried and they want to be sure inflation is in fact dead. But one of the changes especially since October is that inflation has been under shooting.”

Depending on how CPI data fares Thursday, the bond market could push the Fed to make February the last rate hike before cuts, Lee added.

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Business

Stock futures are flat as investors look ahead to Federal Reserve speakers

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Stock futures were flat Friday morning as investors responded to data that elevated concerns of a looming recession and looked ahead to a slew of Federal Reserve speakers scheduled for later in the day.

Futures tied to the Dow jones Industrial Average gained 3 points, trading near the flatline. S&P 500 futures were fractionally lower and Nasdaq-100 futures were slightly higher.

In a continuation of Wednesday’s sell off, the Dow dropped 764.13 points, or 2.25%, for its worse daily performance since September on Thursday. The S&P 500 and Nasdaq Composite fell 2.49% and 3.23%, respectively.

Thursday’s disappointing retail sales report suggested inflation is hitting consumers more than expected. This has investors concerned that consumer spending is slowing, a sign that the economy is weakening.

With these latest declines, the market is heading into Friday with all the indexes poised to notch a second consecutive week of losses.

Stocks have been falling in the wake of the Federal Reserve’s 50 basis point interest rate hike to a target range between 4.25% and 4.5% — the highest rate in 15 years. The central bank said it would continue hiking rates through 2023 to 5.1%, a larger figure than previously expected.

“After gouging themselves on hopes for a Fed pivot, equity traders are experiencing indigestion from yesterday’s FOMC statement, which reiterated Jerome Powell’s theme of ‘higher for longer,'” said John Lynch, chief investment officer for Comerica Wealth Management.

Investors will be watching Friday for before the bell earnings from Olive Garden parent Darden Restaurants, which could provide more insight into consumer spending patterns. They will also look for any hints on future Fed policy from speakers John Williams, Michelle Bowman and Mary Daly. Investors are trying to gauge the pace of future rate hikes and the central bank’s view of the economy.

There also will be data coming in the morning with December’s purchasing managers’ indexes within services and manufacturing. The indexes are seen as gauges of business conditions. Manufacturing is expected to come in at the same rate as November, while services is expected to increase by 0.3 points.

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Business

Stock futures mixed following Fed update and ahead of more economic data

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Stock futures were mixed Thursday morning following the Federal Reserve’s latest policy update.

Futures tied to the Dow Jones Industrial Average added 44 points. S&P 500 futures inched up 0.1% and Nasdaq 100 futures were fractionally lower.

In regular trading, the Dow fell 142 points, while the S&P 500 declined 0.61% and the Nasdaq Composite dropped 0.76%.

The major indexes reacted negatively as investors digested the Federal Reserve’s latest comments following a boost to its overnight borrowing rate. The central bank said it will continue hiking rates through 2023 and projected a higher-than-expected terminal rate of 5.1%. With Wednesday’s half a percentage point hike, the targeted range for rates is currently 4.25% to 4.5%, which is the highest in 15 years.

“The Fed just put a roadblock in front of Santa’s sleigh,” said Sylvia Jablonski, CEO and chief investment officer at Defiance ETFs.

She also noted the tone of Fed Chair Jerome Powell, who in speech Wednesday afternoon sounded “strict” and clear that he “doesn’t have a plan to pause or take a reversal path.”

“It’s going to be higher for longer and monetary policy is going to be more restrictive than thought,” Jablonski said. “The market is going to be handicapped by Fed policy for sometime longer. Though we like the news and like seeing CPI prints like the last one that led to a short-lived rally, this is going to give us some near-term volatility.”

Despite favorable improvements like modest growth, spending and production, Powell indicated he remains concerned job gains are too robust and the unemployment rate is too good for the Fed’s fight against inflation.

Investors will get another batch of economic data to digest Thursday. Retail sales, jobless claims and Philadelphia Fed manufacturing index are all due out at 8:30 a.m. ET.

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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

Stock futures rise as investors await Wednesday’s Federal Reserve rate decision

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Stock futures rose Wednesday morning as investors await the Federal Reserve’s latest interest rate hike decision in its effort to crush inflation, set to be delivered on Wednesday.

Dow Jones Industrial Average futures rose 112 points, or 0.33%. Futures tied to the S&P 500 and the Nasdaq 100 ticked up 0.35% and 0.38%, respectively.

Stocks rose for a second day during regular trading on Tuesday, fueled by a cooler-than-anticipated inflation report. The November consumer price index was 7.1% on the year, less than the 7.3% gain expected by economists surveyed by Dow Jones. The 0.1% increase from the previous month was also less than forecast.

The signal that inflation may have peaked was positive for stocks as it means the Fed may be one step closer to halting interest rate hikes or switching to cuts, which would fuel equities.

On Wednesday, the central bank will conclude its December meeting and deliver its latest rate hike. Investors largely expect a 50 basis point increase – or one half of a percentage point – a smaller bump after four consecutive 75 basis point hikes. A basis point is equal to one hundredth of one percent.

Chair Jerome Powell will also speak Wednesday, giving further clues about what’s coming from the Fed in 2023. In previous meetings this year, traders have been sensitive to Powell’s language, interpreting his tone as hawkish or dovish.

“The market obviously believes that there’s going to be a pivot or a pause, that’s what we saw today,” said Steve Grasso, CEO of Grasso Global, on CNBC’s “Fast Money.” “If [Powell] puts a wet blanket on that, the market’s going to sell off.”

The Fed meeting is the final one of the year. The next central bank meeting will run from Jan. 31 to Feb. 1, 2023.

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Business

Asia-Pacific markets, CPI data, Fed, Hang Seng Index

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Southeast Asian markets are in for a ‘bungee jump’ in 2023, according to JPMorgan

Southeast Asian markets will move in a trajectory resembling that of a “bungee jump” next year — taking a plummet before surging in the second half of 2023, JPMorgan wrote in a report.

That is likely to bee characterized by a “sharp fall followed by a rapid increase in altitude (bear market rally) followed by another decline until eventually markets come to rest at rock-bottom,” analysts led by Rajiv Batra wrote.

They attributed that to weakened purchasing power in light of monetary policy tightening, lower savings and the higher cost of borrowing.

Additionally, JPMorgan forecasts the MSCI ASEAN Index will “re-test this year’s lows and potentially move even lower” in the first half of 2023, on the back of tightening financial conditions and weaker external demand, among other factors.

The MSCI ASEAN index plunged 22% from February’s high to the year’s lowest in October, but rebounded 10%.

— Lee Ying Shan

Janet Yellen sees much lower inflation by end of 2023, but says recession risks remain

US Treasury Secretary Janet Yellen speaks at the Bureau of Engraving and Printing Western Currency Facility on December 8, 2022 in Fort Worth, Texas.

Andy Jacobsohn | Afp | Getty Images

U.S. Treasury Secretary Janet Yellen foresees a “substantial reduction in inflation” by the end of next year, provided there’s no “unanticipated shock.”

Yellen, speaking in an interview on CBS’ “60 Minutes,” premised her optimism on shipping costs and gas prices coming down.

She cautioned, however, that recession risks remain and that the economy is still prone to shocks. But she said this could be buffered by a “very healthy” banking system, as well as business and household sectors.

“There’s a risk of a recession. But it certainly isn’t, in my view, something that is necessary to bring inflation down.”

The latest reading for the U.S. consumer price index is expected Tuesday. Analysts polled by Reuters expect the index rose 0.3% in November. Before this, October’s consumer price index inched up less than expected. Even with the slowdown in the inflation rate, it still remains well above the Fed’s 2% target.

—Lee Ying Shan

Oil prices climb more than a dollar on Moscow’s threat to cut output

Oil prices rose more than a dollar on the back of further China reopening optimism and Moscow threatening to slash oil production in retaliation for price caps on Russian crude exports.

In early Asia hours, Brent crude futures rose 1.53%, or $1.11 to $72.13 a barrel, while U.S. marker West Texas Intermediate futures traded up 1.29%, or close to a dollar at $77.08 a barrel.

Russian President Vladimir Putin on Friday told reporters in the Kyrgyz capital of Bishkek that Russia “simply will not sell” to countries imposing the West’s price cap on Russian oil, Reuters reported.

– Lee Ying Shan

CNBC Pro: Shares of this under-the-radar global miner are set to rally 50%, analyst says

Shares in a little-known London-listed miner are set to rise by 50%, according to Ben Davis, a mining analyst at Liberum Capital.

The company, which extracts metals such as platinum, palladium, and chrome, also offers an 8% dividend yield.

CNBC Pro subscribers can read more here.

— Ganesh Rao

CNBC Pro: Dan Niles is betting the S&P 500 will hit a new low in 2023. Here’s how he is trading it

Dan Niles’ Satori Fund is beating the market this year. He shares what’s behind the outperformance and how he’s trading the market as recession looms.

Pro subscribers can read more here.

— Zavier Ong

Futures fall slightly

Stock futures have slowly declined throughout the first hour of trading. Dow futures are down about 50 points, or around 0.2%, while Nasdaq 100 futures have dipped about 0.3%.

— Jesse Pound

Wall Street coming off losing week

The major averages fell on Friday to clinch a losing week, snapping a two-week winning streak for Wall Street.

Here are the key stats from last week:

  • The Dow fell 2.77%, suffering its worst stretch since September.
  • The S&P 500 fell 3.37%, suffering its worst stretch since September.
  • The Nasdaq composite fell 3.99%, suffering its worst weekly stretch in a month.
  • The Russell 2000 fell 5.08%, marking the worst week since September for small caps.
  • All 11 sectors were negative for the week, led to the downside by energy.

—Jesse Pound, Christopher Hayes

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Business

Larry Summers predicts Fed will need to raise interest rates more than market anticipates

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Former Treasury Secretary Larry Summers said the Federal Reserve will likely need to raise interest rates more than the market anticipates as prices remain high but grew at slower rates in October. 

Summers told Bloomberg Television’s “Wall Street Week” with David Westin that the economy has a “long way to go” before inflation is under control. 

“My sense is that inflation is going to be a little more sustained than what people are looking for,” he said. 

The Fed has raised interest rates by 0.75 percentage points four times in a row in successive meetings, but Chairman Jerome Powell said it will likely raise it by a smaller amount at its meeting later this month. 

Still, he said the Fed needs “substantially more evidence to get comfort” that inflation is declining. Consumer prices rose at a slightly slower pace in October than expected despite Americans increasing their spending. 

Powell has said the Fed will continue to raise interest rates as much as necessary to get inflation under control. Officials are aiming for inflation to get back to a 2 percent annual rate. 

The stock market surged after Powell’s comments that the interest rate hikes will slow down. 

Some financial experts have expressed concerns about the Fed raising rates too much too quickly and causing an economic downturn. Reports have indicated the rising interest rate has not had a major effect on the overall economy, but Summers said the effects of the increases can happen suddenly. 

“At a certain point, consumers run out of their savings and then you have a Wile E. Coyote kind of moment,” he said, referring to the cartoon character who falls off cliffs while chasing Road Runner. 

Summers said a “real risk” for an “avalanche aspect” exists but added that the Fed should not change its target of 2 percent for inflation.

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