Asia-Pacific shares trade higher, BOJ makes no change to yield range

Bank of Japan’s Kuroda: There is no need to widen the bond target band

Bank of Japan governor Haruhiko Kuroda said at an afternoon press conference on Wednesday that there was no need to expand its yield curve control range, according to a Reuters translation.

“We don’t need to widen the band around our target yield,” Kuroda was quoted as saying.

“It has not been long since we decided on our measures in December. It will probably take some time for the measures to start having an effect on improving the function of the market,” he said.

The Bank of Japan kept its interest rates at a dovish -0.1% rate and made no changes to the yield curve control band.

– Jihye Lee

China’s equity market will be the top performer in 2023, Morgan Stanley estimates

We are still bullish on Chinese stocks, says Morgan Stanley

Morgan Stanley estimates that China’s equity market will emerge as the best performer in 2023.

The MSCI China index will reach 80 and the Hang Seng index will rise to 24,500 by the end of the year, Morgan Stanley’s Chief China Equity Strategist Laura Wang said. This would mark a 15% increase from where the market is currently trading.

“This actually means that China’s equity market will actually outperform the global equity market for 2023, so this is China’s comeback period,” he said.

Wang’s recommendation is to buy stocks of large caps and more liquid names on the internet.

The internet sector has a “very high correlation with the overall momentum of China’s consumption gathering,” especially in the country’s post Covid recovery journey, he said.

Wang added that many global institutional investors are still underweight large liquid cap names.

— Lee Ying Shan

CNBC Pro: ‘Absolutely amazing’: Fund manager names 2 stocks to play semiconductor sector

Oil prices rose as China reopened to optimism and called for a rebound

Oil prices were supported by China’s re-opening of optimism and fuel demand, with OPEC predicting that China’s oil demand is on track for a bounce.

Brent crude futures rose 0.85% to $86.65 a barrel, while US West Texas Intermediate futures gained 0.91% to $80.91 a barrel.

“Oil demand in China is on course to rise due to the recent relaxation of the country’s zero-Covid measures,” OPEC’s monthly oil report said.

It added that China’s first-quarter oil demand will rise from an annual decline of 0.3 million barrels per day year-on-year in the fourth quarter of 2022 to 0.2 million barrels per day. annual growth.

– Lee Ying Shan

The Japanese yen weakened after the BoJ announced that there would be no change in the yield curve range

The Japanese yen weakened against the greenback after the Bank of Japan surprised markets by keeping its yield curve tolerance band unchanged.

The Japanese yen weakened 2.04% against the US dollar after the announcement and last stood at 130.94.

“Japan’s economy is expected to continue growing at a pace above its growth potential,” the central bank said in a statement.

The Bank of Japan also left the interest rate unchanged at an ultra-dovish -0.1% – in line with expectations and maintaining the same rate it has kept since 2016.

—Jihye Lee, Lee Ying Shan

Game shares jumped after China granted licensing approvals

Hong Kong-listed game stocks rose after China granted license approvals for 88 games, including NetEase, Tencent Holdings and miHoYo, marking a further easing of Beijing’s gaming crackdown. .

Parts of NetEase jumped as much as 6.81% in early trade, targeting a more than four-month high. Tencent stocks added 0.11%.

– Lee Ying Shan

The Bank of Japan is likely to raise the yield curve control by another 50 basis points: UBS

Japan’s central bank is likely to widen its 10-year treasury yield curve control range by another 50 basis points to a range of 1% below and above the 0% target, UBS Global Wealth Management executive director Tan Teck Leng said.

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“The scenario of a complete departure from the YCC is unlikely,” he said on CNBC’s “Squawk Box Asia,” adding the move was “uncharacteristic” of the central bank.

“I think the easiest thing for them to do is to remove the cap, let them find the fair value – but again it comes with a lot of uncertainties, so we think that, as a middle ground, they should raise it to at least. a 1.0% cap,” he said.

The yield of 10-year Japanese Government Bonds breached the upper ceiling of its band for the 5th consecutive session on Wednesday morning ahead of the BOJ’s monetary policy announcement.

Japan’s core manufacturing orders for November fell 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 larger than Reuters had expected of a 0.9% decline. On an annual basis, manufacturing orders fell 3.7%.

The private sector machinery figures do not include orders from renewables for ships and 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 global stocks set to benefit

As electric cars become more popular, a new manufacturing technique that could make them more affordable is gaining interest, according to Morgan Stanley.

Some automakers are outsourcing the process to benefit the three leading suppliers of parts in Asia, said the Wall Street bank.

CNBC Pro subscribers can read more here.

— Ganesh Rao

Stocks ended the day mixed, with the Dow falling nearly 400 points

The Dow Jones Industrial Average Index fell at the end of the day, as shares of Goldman Sachs weighed on the stock index.

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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 saw a late start to the recession

A recession may not start now until as late as 2023 because consumer spending is stronger than expected and the Federal Reserve eases the pace of its interest rate hikes, according to Bank of America.

“We have revised down our outlook for a mild recession in the US economy in about a quarter given the strength in consumer spending due to strong labor markets, excess savings, lower energy prices, and easier financial conditions,” the company said in a note to clients. “That said, we think headwinds will lead consumers to reduce spending and push the saving rate higher as the year progresses.”

That puts the recession in the second quarter, driven by an investment-led slowdown that has dampened consumer spending.

After pushing the benchmark borrowing rate to 4.25 percentage points in 2022, the Fed is expected to ease, with a 0.25 percentage point increase in February. That is expected to be followed by further quarter-point increases in March and May.

Rate cuts likely won’t come until 2024, the company said.

—Jeff Cox

Shares of Goldman Sachs fell on the earnings miss

Shares of Goldman Sachs fell 2.4% after the Wall Street investment bank shared fourth-quarter earnings results that disappointed analysts on both the top and bottom lines.

The bank reported earnings of $3.32 per share on $10.59 billion in revenue. Consensus estimates called for earnings of $5.48 a share on revenues of $10.83 billion, according to analysts polled by Refinitiv.

Provisions for credit losses also came in lower than expected.

— Hugh Anak, Samantha Subin


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