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

Zip shares bounce back after initial rally

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

Zip traded 15% lower, a sharp turnaround from its previous gains of more than 10% after posting 12% revenue growth.

The company said that “monthly cash burn continues to decline and is expected to improve further.” It said the current cash and liquidity position “is sufficient to enable the company to generate positive cash flow” and expects to be EBITDA positive by the first half of 2024.

Next week: PMI, Australia and Singapore inflation reports, South Korea GDP

Here are some of the major economic events in the Asia-Pacific 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, local purchasing managers’ index readings for Japan and Australia will be in focus while most markets remain closed to observe the New Year. except for Australia, Japan and Indonesia.

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

The Hong Kong market is scheduled to resume trading on Thursday.

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

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

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

– Jihye Lee

Australian business conditions worsened last month: NAB survey

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

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NAB said, the survey undermines trading conditions, profitability and employment.

“The main message from the December monthly survey is that the pace of growth has slowed significantly in late 2022 when price pressures and purchasing costs are likely to be highest,” NAB chief economist Alan Oster said.

Meanwhile, business confidence rose 3 points to -1 in December, a better reading than the -4 points seen in November.

– Jihye Lee

Japan’s key factory data shows a second month of contraction

Japan’s au Jibun Bank Flash manufacturing purchasing managers’ index rose to 48.9 for a second straight month in January, below the 50-mark that separates contraction and growth from the previous month.

Reading “showed the strongest deterioration in health [of] the Japanese manufacturing sector since October 2020,” S&P Global said.

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

Flash services business activity rose to a reading of 52.4, higher than December’s reading of 51.1.

– Jihye Lee

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

After more than 2 years of regulatory pressures and a pandemic-induced collapse, 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, the Journal report says

According to a Wall Street Journal report, Federal Reserve officials next week are almost certain to approve another slowdown in interest rate hikes while debating when to stop raising them altogether.

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

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

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The Journal report, citing policymakers’ public statements, said the slowdown in inflation could provide an opportunity to assess how the current rate hikes are impacting the economy. A series of rate hikes that began in March 2022 increased to 4.25 percent.

According to data from the CME Group, the market value now shows a quarter-point rise in the next two meetings, a period of no movement, and then a half-point decline by the end of 2023.

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 direction.

– Jeff Cox

The Nasdaq is poised for recent gains as tech stocks soar

The Nasdaq Composite rose more than 2.2% in midday trading on Monday, lifted by falling tech stocks.

The move set the stage for a day of gains that sent the tech-heavy index up more than 2%. The index rose 2.66% on Friday.

A surge in semiconductor stocks helped push the index higher. Tesla and The nightMeanwhile, they rose 7.7% and 3.2%, respectively, as the opening of China lifted expectations of increased business. Western Digital and Advanced micro equipment about 8% each rose, while Qualcomm and Nvidia rose to 7%.

Information technology was the best-performing S&P 500 sector, gaining 2.7%. That was partly due to gains in the chip sector. Communication services increased by 1.9 percent, boosted by the likes Netflix, Meta Platforms, Alphabet and Match group.

– Samantha Subin

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

Mohamed El-Erian says inflation has shifted from goods to the services sector

Inflation may loom large in the future, but a move to a 25 basis point hike at the Federal Reserve’s next policy meeting is a “mistake,” according to Allianz Financial Advisor Mohamed El-Erian.

“‘I’m in a very, very small camp that thinks they shouldn’t do 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. there are.”

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

El-Erian predicts inflation to reach 4%. This, he said, will put the Fed in a difficult position as to whether it should continue to squeeze the economy to reach 2%, or promise that level in the future and hope that investors can get closer to 3% to 4%. Tolerate constant %.

“That’s probably the best outcome,” he said of the latter.

– Samantha Subin

According to Morgan Stanley, an earnings recession is imminent

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

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

Some positive developments have emerged in recent weeks — such as China’s continued opening up and falling natural gas prices in Europe — and have led some investors to view market prospects more optimistically.

However, Wilson advises investors to remain bullish on equities, citing price action as the main driver for this year’s rally.

“The rally this year has been driven by low quality and very short stocks,” he said. “At the same time, there was a strong movement in cyclical stocks compared to the defense.”

Wilson has based his predictions on marginal disillusionment, and he believes the case for this is growing. Many industries are already facing revenue slowdowns, as well as inventory gluts, low productive head count.

“It’s just a matter of time and size,” Wilson said. “We advise investors to stick to the fundamentals and ignore the false signals and misleading reflections in this bear market hall of mirrors.”

– Hakyung Kim

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