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Asia-Pacific shares higher on cooler inflation pressures

China’s exports in December fell less than expected

China’s exports and imports fell less than expected for the month of December, according to the customs service.

China’s exports fell 9.9% in December from a year ago, in US dollar terms, slightly better than the 10% decline forecast in a Reuters poll.

Imports fell 7.5% in December from a year ago in US dollar terms, also outperforming the 9.8% decline forecast by Reuters.

The milder decline meant that trade was still growing for 2022.

—Evelyn Cheng, Lee Ying Shan

Bank of Korea raises interest rates, says 2022̵[ads1]7;s fourth-quarter GDP likely to be negative

The Bank of Korea raised interest rates by 25 basis points to 3.5%, the highest since December 2008. The move was in line with Reuters expectations.

“The board considers that the additional 25 basis point increase is justified to ensure price stability, as inflation remains high and is projected to be above the target level for a long time,” the Bank of Korea wrote in a statement.

Governor Rhee Chang-yong told a news conference that fourth-quarter GDP for 2022 is likely to be negative, but estimated that 2023’s first-quarter GDP growth could be better.

“Today’s hike marks the end of the BoK’s current tightening cycle, but the hurdle for a pivot to an easing bias remains high,” ANZ Research economist Krystal Tan wrote in a note.

– Lee Ying Shan

CNBC Pro: Want a recession-proof portfolio? The fund manager mentions two stocks that could fit the bill

Investors looking for recession-proof stocks may want to consider buying shares in a renewable energy producer and a cybersecurity firm, according to an outperforming fund manager.

Trent Masters of investment management firm Alphinity, which named the shares, said that while the energy company can raise prices above inflation even during a recession, the cyber security firm will see increased demand for its services this year.

CNBC Pro subscribers can read more here.

– Ganesh Rao

Uniqlo owner Fast Retailing falls more than 6% after announcing pay rise

Shares to Uniqlo owner Fast retail fell 6.68% on the day after announcing it would raise wages by 40%.

“This war for talent is intensifying, that [Tadashi Yanai]the founder of Uniqlo, is fully aware of that,” Jesper Koll, expert director of Monex Group, told CNBC’s “Squawk Box Asia” regarding the pay increase.

“Japanese workers have realized their worth, have realized their value … and as a result, if you want to keep that talent, you have to start paying.”

Fast Retailing is a heavyweight of Japan’s benchmark Nikkei 225which fell 0.6%, bucking the overall positive trend in Asia-Pacific shares.

Koll added that while Fast Retailing is doing a “good job” in the brick-and-mortar space, e-commerce still has room for improvement.

“For now [that’s] is not going to be a key growth driver,” he said.

– Lee Ying Shan

Cryptocurrencies inch higher even as SEC charges crypto firms

Cryptocurrencies even rose after the US Securities and Exchange Commission accused crypto firms Genesis and Gemini of selling unregistered securities.

Bitcoin traded 4.81% higher at $18,838.66, according to data from Coin Metrics. The coin on Thursday jumped above $19,000, the highest in more than two months.

Ether rose 1.67% to $1,414.65.

The SEC alleged that Genesis borrowed Gemini users’ crypto and sent a portion of the profits back to Gemini, which deducted an agency fee and returned the remaining profits to the users.

– Lee Ying Shan, Kate Rooney

CNBC Pro: Goldman Sachs says Asia tech is on a rebound — and reveals a chip to play it

After a tough year for Asia tech, Goldman Sachs believes the sector is heading for a “big bottom” – and subsequent recovery – in the first half of 2023.

Investors looking to cash in should act early, the bank’s analysts said, with share prices set to “reverse quickly.”

They also called a key chip to play it.

Pro subscribers can read more here.

— Zavier Ong

Shares up close

Shares ended Thursday’s trading in the green.

The Dow and Nasdaq Composite each ended up 0.6%. The S&P 500 increased by 0.3 percent.

The close marked the fifth straight day of gains for the Nasdaq as investors bought beaten-up technology stocks in hopes of a better outlook for growth names. It is the first time the index has posted a series of that length since July.

– Alex Harring

The Fed will be unfazed by the CPI report

The slight decline in consumer prices in December will not change the path for the Federal Reserve, when it meets to raise interest rates on January 31 and February 1.

CPI fell 0.01%, as expected by economists, and was up 6.5% from a year ago. The core CPI rose 0.03%, also as expected.

“The Fed has made it clear, even as markets push back on the Goldilocks scenario of the jobs report, that the Fed is doubling down on its pledge to derail inflation because it sees this as a marathon, not a sprint,” said Diane Swonk, chief economist at KPMG.

Equity futures were higher after the report, while government yields fell. Interest rates move opposite to price.

“It was exactly in line. They ran up the S&P 500 by 50 points yesterday with everyone hoping for a weak number. It was as expected. It doesn’t change anything,” said Peter Boockvar, chief investment officer at Bleakley Financial. “They are almost done raising interest rates. Higher for longer is what people should focus on.”

Swonk and other economists expect the Fed to raise interest rates by half a percentage point on February 1. However, the futures market has priced in a quarter of a point increase.

–Patti Domm

The CPI shows that the rise in prices is still worrying

Housing costs, which include rent, rose more than expected in December’s consumer price index, an area economists are watching closely.

Le rose 0.8%, or 7.5% from a year ago. Some economists had expected a 0.6% rise in shelter, which accounts for 40% of the core CPI. Shelter costs in the CPI are known to lag behind the actual rental market data.

“In this single month-over-month report, there is almost no inflation outside of shelter,” Wilmington Trust Chief Economist Luke Tilley said. “Commodity prices are collapsing mainly due to motor vehicles and computers and laptops and technology. 27.5% year-on-year in the last three months and they are likely to continue to fall.

Tilley expects shelter inflation to moderate over the next couple of months. As for the overall CPI, it fell by 0.01% as expected.

Greg Peters, co-chief investment officer at PGIM Fixed income, said the rise in shelter inflation is something to watch. He said that the market had expected a slightly larger decline in the overall CPI.

“I still think it’s mostly fine. I think the numbers will continue to fall. The real question is where does it start to level off?” said Peters. “That’s the part of it that should be the focal point. It’s great that the CPI is mechanically falling, and there’s some good news in the report. But that doesn’t mean the Fed is getting close enough to the target for them to be comfortable.”

Tilley said he expects 2023 to be unlike 2022, where inflation surprised to the upside. “We could very well see in 2023 the opposite of what happened in 2022 with inflation surprisingly to the downside,” he said.

–Patti Domm

The consumer price index for December is in line with expectations

The consumer price index fell 0.1% in December, in line with a Dow Jones estimate. It was the biggest monthly decline since April 2020. The so-called core CPI, which strips out volatile food and energy prices, also met expectations by 0.3%. gain.

On an annual basis, the index rose 6.5%, still well above the Fed’s inflation target of 2%.

— Fred Imbert

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