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

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

New Zealand’s Auckland Airport saw its total passenger volumes 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 travel was short-haul flights from Australia and the Islands of the Pacific.

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

— Jihye Lee

CNBC Pro: These 6 global stocks with low debt should jump, says Bernstein

Rising interest rates have major implications for companies with large amounts of debt, as they will likely experience higher borrowing costs.

As interest rates continue to rise, Bernstein analysts think stocks with low debt exposure and higher debt quality should do better.

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

CNBC Pro subscribers can read more here.

— Ganesh Rao

Zip shares rise after initial rally

Australian “buy now, pay later” company. Zip fell more than 10% after a short-lived rally after quarterly results.

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

The company said that underlying “monthly cash burn has continued to decline and is expected to continue to improve.” He said the current cash and liquidity position is “sufficient to see the company generate positive cash flow” and expects to deliver positive cash EBITDA by the first half of fiscal 2024.

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

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

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

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

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

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

Australia’s producer price index and trade data will also be closely monitored indicators ahead of the Reserve Bank of Australia 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 worse business conditions for December with a reading of 12 points, down from November’s print of 20 points.

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

“The key message from the December monthly survey is that growth momentum has slowed significantly towards the end of 2022 while price and purchasing cost pressures probably peaked,” said NAB chief economist Alan Oster.

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

— Jihye Lee

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

The au Jibun Bank Flash Japan manufacturing purchasing managers’ index in January was unchanged for a second straight month at 48.9, below the 50 mark that separates contraction and growth from the month of the former.

The reading “indicated the strongest joint deterioration in health [of] the Japanese manufacturing sector from October 2020,” S&P Global said.

The flash composite production index au Jibun Bank rose to 50.8 in January, slightly higher than the reading of 49.7 that appeared 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 it likes one mega-cap stock

After more than two years of regulatory crackdowns and a pandemic-induced slump, 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

Fed likely to discuss next week when to halt hikes, Journal report says

Federal Reserve officials next week are almost certain to approve another deceleration in interest rate hikes while also debating when to stop hikes altogether, according to a Wall Street Journal report.

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

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

The Journal report, which cited public statements from policymakers, said slowing the pace of increases could provide a chance to assess what impact the increases so far are having on the economy. A series of rate hikes starting in March 2022 resulted in increases of 4.25 percentage points.

Market prices are currently pointing to increases of a quarter of a point in the next two meetings, a period of no action, and then to a decrease of half a point by the end of 2023, according to the Group’s data CME.

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

— Jeff Cox

Nasdaq is on course for back-to-back gains as tech stocks rise

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

The move put the tech-heavy index on pace for a consecutive day of gains topping 2%. The index finished 2.66% higher on Friday.

Rising semiconductor stocks helped push the index higher. Tesla and Apple, Meanwhile, rose by 7.7% and 3.2%, respectively, as China again lifted hopes of a boost to their businesses. Western Digital and Advanced Micro Devices rose about 8% each, while Qualcomm and Nvidia jumped around 7%.

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

— Samantha Boys

El-Erian says Fed should hike 50 basis points, calls smaller hike “mistake”

Inflation has moved from the goods sector to services, says Mohamed El-Erian
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Rising inflation may seem largely in the past, but a move to a 25 basis point hike at the next Federal Reserve policy meeting is a “mistake,” according to the Economic Adviser Head of Alliance Mohamed El-Erian.

“‘I’m in a very small, very camp that thinks they shouldn’t cut 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 are in, they should take advantage of where the market is, and they should try to tighten the financial conditions because I think we still have an inflation issue.”

He said inflation has shifted from the goods to the services sector, but could rise again if energy prices rise as China reopens.

El-Erian expects inflation to rise around 4%. This, he said, will put the Fed in a difficult position as to whether they should continue to squeeze the economy to reach 2%, or promise that level in the future and hope that investors can tolerate a steady term of 3% until 4% closer.

“This is probably the best result,” he said of the latter.

— Samantha Boys

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 is unchanged as we expect the earnings path in the US to disappoint both consensus expectations and current valuations,” he said in a note to clients on Sunday.

Some positive developments have occurred in recent weeks – such as the reopening of China and falling natural gas prices in Europe – and have contributed to some investors seeing the market outlook in a more optimistic way .

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

“The rally this year was driven by low-quality stocks and heavily shorted,” he said. “He also saw a strong move in cyclical stocks relative to the defensive.”

Wilson based his forecast on margin disappointment, and he believes the case for this is growing. Many industries are already facing declining revenues, as well as bloated inventory, a less productive count.

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

— Hakyung Kim

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