Australia PMI, Japan Jibun Flash PMI, Lunar New Year holidays

Passenger volumes at New Zealand’s Auckland airport hit 74% of pre-pandemic levels in November

New Zealand’s Auckland Airport saw its total passenger volume for November reach 74% of levels seen in the financial year to June 2019, or the last full year unaffected by the pandemic, according to the airport’s monthly traffic update.

International passengers were at 67% of pre-pandemic levels, the release said, adding that the majority of recovered overseas journeys were short-haul flights from Australia and the Pacific Islands.

Demand for routes between New Zealand and the North American regions has increased to 86% of pre-pandemic levels, including two added destinations in Texas (Dallas/Fort Worth) and New York.

– Jihye Lee

CNBC Pro: These 6 low-debt global stocks are set to outperform, Bernstein says

Rising interest rates have major consequences for companies with large amounts of debt, as they are likely to experience higher costs of increased borrowing.

As interest rates continue to rise, analysts at Bernstein believe stocks with low debt exposure and higher debt quality should outperform.

The investment bank named a handful of low-debt global stocks with an investment-grade credit rating likely to outperform.

CNBC Pro subscribers can read more here.

– Ganesh Rao

Shares of Zip bounce back after initial rally

Australian “buy now pay later” company Zipper fell more than 10% after a brief rally following its quarterly results.

Zip traded 15% lower, a sharp reversal from earlier gains of more than 10% after growing 12%.

The company said the underlying “monthly cash burn has continued to decline and is expected to further improve.” It said the current available cash and liquidity position is “sufficient to see the business through to generate positive cash flows” and expects to deliver positive cash EBITDA in the first half of the 2024 financial year.

Week ahead: PMIs, Australia and Singapore inflation reports, South Korea GDP

Here are some of the major economic events in the Asia-Pacific region that investors will be watching closely this week.

Stock markets in mainland China and Taiwan will remain closed until they resume trading on January 30.

On Tuesday, regional purchasing managers’ index readings for Japan and Australia will be in focus, while most markets remain closed to observe the Lunar New Year with the exception of Australia, Japan and Indonesia.

Inflation reports will be in focus on Wednesday as Australia and New Zealand publish their consumer price index readings for the final quarter of 2022. Singapore will publish its inflation pressures for December.

Hong Kong’s market is scheduled to resume trading on Thursday.

Fourth-quarter gross domestic product for South Korea and the Philippines will be released on Thursday, while the Bank of Japan will release its summary of statements from its latest monetary policy meeting in January. Japan also reports its service producer price index on Thursday.

Japan’s key CPI readings for the capital Tokyo will be a barometer of where monetary policy is headed.

Australia’s producer price index and trade data will also be closely watched indicators ahead of the Reserve Bank of Australia’s meeting in the first week of February.

– Jihye Lee

Australia’s business conditions worsened last month: NAB survey

National Australia Bank’s monthly business survey showed worsening business conditions for December with a reading of 12 points, down from November’s print of 20 points.

The survey reflects deteriorating trading conditions, profitability and employment, NAB said.

“The main message from the December monthly survey is that growth momentum has slowed significantly in late 2022, while pressures on prices and purchases are likely to have peaked,” NAB chief economist Alan Oster said.

Meanwhile, December business confidence rose by 3 points to -1, an improved reading from -4 points seen in November.

– Jihye Lee

Japan’s headline factory data shows second month of contraction

au Jibun Bank Flash Japan’s January purchasing managers’ index was unchanged for the second straight month at 48.9, below the 50 mark that separates contraction and growth from the previous month.

The reading “signaled the joint strongest deterioration in the health (of) the Japanese manufacturing sector since October 2020,” S&P Global said.

au Jibun Bank’s flash composite output index rose to 50.8 in January, slightly higher than the reading of 49.7 seen in December.

Flash services business activity increased further with a print of 52.4, higher than December’s reading of 51.1.

– Jihye Lee

CNBC Pro: Wall Street is excited about Chinese tech — and loves a mega-cap stock

After more than 2 years of regulatory crackdowns and a pandemic-induced crisis, Chinese tech names are back on Wall Street’s radar, with one stock in particular standing out as a top pick for many.

Pro subscribers can read more here.

— Zavier Ong

The Fed is likely to discuss next week when to stop hikes, the Journal report says

Federal Reserve officials next week are all but certain to approve another slowdown in rate hikes, while also debating when to stop the hikes altogether, according to a Wall Street Journal report.

The rate-setting Federal Open Market Committee is set to meet Jan. 31-Feb. 1, where markets are pricing in an almost 100% chance of a quarter-point increase in the central bank’s benchmark interest rate. Most prominently, Fed Governor Christopher Waller said on Friday that he sees a 0.25 percentage point hike as the preferred move for the upcoming meeting.

However, Waller said he doesn’t think the Fed is done tightening yet, and several other central banks have backed that view in recent days.

The Journal report, citing public statements from policymakers, said slowing the pace of increases could provide an opportunity to assess the impact of the increases so far on the economy. A series of rate hikes starting in March 2022 have resulted in increases of 4.25 percentage points.

Market prices currently indicate quarter-point increases at the next two meetings, a period of no action and then up to a half-point reduction by the end of 2023, according to data from the CME Group.

However, several officials, including Governor Lael Brainard and New York Fed President John Williams, have used the phrase “stay the course” to describe the future policy path.

– Jeff Cox

Nasdaq on pace for back-to-back gains as tech stocks rise

The Nasdaq Composite rose more than 2.2% in midday trading Monday, lifted by shares of battered technology stocks.

The move sent the tech-heavy index into a straight day of gains of more than 2%. The index ended 2.66% higher on Friday.

Rising semiconductor stocks helped push the index higher. Tesla and Apple, meanwhile, rose 7.7% and 3.2%, respectively, as China’s reopening raised hopes of a boost to their businesses. Western Digital and Advanced micro-devices rose about 8% each, while Qualcomm and Nvidia jumped around 7 percent.

Information technology was the best performing S&P 500 sector with growth of 2.7%. This was partly due to progress in the chip sector. Communication services rose 1.9%, boosted by e.g Netflix, Meta platforms, Alphabet and Match group.

—Samantha Subin

El-Erian says Fed should hike by 50 basis points, calls smaller hike a ‘mistake’

Rising inflation may largely be in the past, but a move to a 25 basis point hike at the next Federal Reserve policy meeting is a “mistake,” according to Allianz Chief Economic Adviser Mohamed El-Erian.

“‘I’m in a very, very small camp that thinks they shouldn’t cut down to 25 basis points, they should do 50,'” he told CNBC’s “Squawk Box” on Monday. “They should take advantage of this growth window that we’re in, they should take advantage of where the market is, and they should try to tighten financial conditions because I think we still have an inflation problem.”

Inflation, he said, has shifted from the goods to services sector, but may well rise again if energy prices rise as China reopens.

El-Erian expects inflation to be around 4 per cent. This, he said, will put the Fed in a difficult position as to whether to continue crushing the economy to reach 2%, or promise that level in the future and hope that investors can tolerate a steady 3% to 4% nearer term.

“It’s probably the best result,” he said of the latter.

—Samantha Subin

An earnings recession is imminent, according to Morgan Stanley

An earnings recession is imminent this year, according to Morgan Stanley equity strategist Michael Wilson.

“Our view has not changed as we expect US earnings to disappoint both consensus expectations and current valuations,” he said in a note to clients on Sunday.

Some positive developments have unfolded in recent weeks – such as China’s ongoing reopening and falling natural gas prices in Europe – and have contributed to some investors taking a more optimistic view of the market outlook.

However, Wilson advises investors to remain bearish on stocks, citing price action as the main influence on this year’s rally.

“The rally this year has been led by low quality and heavily shorted stocks,” he said. “It has also witnessed strong movement in cyclical stocks relative to defensive ones.”

Wilson has based his forecasts on margin disappointment, and he believes the case for this is growing. Many industries are already facing declines in revenue, as well as bloated inventory, a less productive workforce.

“It’s simply a matter of timing and size,” Wilson said. “We advise investors to stay focused on fundamentals and ignore the false signals and misleading reflections in this bear market hall of mirrors.”

—Hakyung Kim

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