Asian markets are trading mixed as investors digest key China activity data from April

Microsoft’s acquisition of Activision Blizzard will help the tech giant diversify away from its legacy businesses like Office and Windows, said Jake Dollarhide, co-founder and CEO of Longbow Asset Management.

“Microsoft had $16.2 billion in gaming revenue and Activision Blizzard has $8.7 billion last year. So this comes to about $24.9 billion, increasing from 8% to 1[ads1]2% of Microsoft’s revenue. They want really trying to drive content on their [Microsoft] Game Pass, on the cloud. They want to be the Netflix of video games,” Dollarhide said on CNBC’s “Capital Connection” Tuesday.

European Union regulators on Monday approved Microsoft’s proposed $69 billion acquisition of gaming company Activision Blizzard, following a months-long investigation as regulators worried Microsoft could foreclose access to Activision’s console and PC video games, particularly globally successful games such as Call of Duty.

“This is going to be good for Microsoft as a whole. It’s going to allow them to continue to diversify away from their legacy businesses,” Dollarhide said.

“Over the next two years, this could easily become a $400 stock, especially with a resurgence in the stock market and another bull market for me,” he said. Microsoft’s shares rose 0.16 percent on Monday.

– Sheila Chiang

Global currencies largely weakened against the US dollar as investors further digested China’s economic data that largely missed expectations.

The Chinese onshore and offshore yuan were both trading at weaker levels at 6.9586 and 6.9662 respectively against the US dollar.

The Australian dollar eased 0.16% to 0.6688 against the greenback, while the New Zealand dollar pared most of its earlier gains and last traded marginally higher at 0.6247 against the US dollar.

The Canadian dollar also weakened to 1.3479 against the greenback, while the euro fell to a low of 1.8066 against the US dollar shortly after the data release.

– Jihye Lee

Minutes from the Reserve Bank of Australia showed that the central bank still sees interest rate increases “may still be necessary”, depending on how the economy and inflation in Australia develop.

The RBA unexpectedly raised interest rates by 25 basis points at its last meeting on May 2 to 3.85%, defying market expectations.

The minutes reveal that the RBA’s board members considered between a 25 basis point hike and holding interest rates, but ultimately decided on the interest rate hike.

This was because data from April showed that “the labor market remained tight and that inflationary pressures were significant,” the board said.

“If these risks materialized, they would further delay the return of inflation to target, with the prospect of a damaging shift in inflation expectations,” the minutes said.

While acknowledging “significant uncertainty” around the economic outlook and particularly for household consumption, the RBA’s board reiterated its commitment to price stability and the importance of ensuring that inflation expectations remain anchored.

— Lim Hui Jie

China’s April economic data largely missed expectations as the economy continued to show an uneven recovery path as it emerges from the impact of the strict Covid restrictions.

Retail sales increased by 18.4% – below the economists’ forecast for an increase of 21%.

Industrial production for April rose 5.6% from a year earlier, compared with the 10.9% expected by economists polled by Reuters. The figure was up 3.9% in March after a subdued start to the year.

Construction investment rose by 4.7%, against expectations of 5.5%. Meanwhile, youth unemployment reached a record high of 20.4%.

– Jihye Lee

Australia’s Westpac-Melbourne Institute consumer sentiment fell 7.9% from 85.8 in April to 79 in May.

The drop reflects “deep pessimism” over the Reserve Bank of Australia’s surprise 25 basis point interest rate hike after the break in the previous meeting – as well as a “mildly disappointing budget”, it said in a release.

“On the one hand, consumer sentiment is back near historic lows only seen on a sustained basis in the deep recession of the early 1990s,” Westpac Group chief economist Bill Evans wrote.

He added that the survey continues to reflect “resilience” around labor market conditions as well as confidence in the property market.”

The survey’s central view is that the weakness of the economy, combined with clear progress towards the Reserve Bank of Australia’s inflation target will see the current rate of 3.85% peak, but “risks remain evenly balanced,” Mr Evans said.

– Jihye Lee

Shares in Japanese financial stocks rose on Tuesday morning after major banks forecast they would post record profits in the current fiscal year ending in March 2024.

Mitsubishi UFJ Financial Group rose 2.6%, leading gains on the Topix, as it forecast a 16% jump in net profit to 1.3 trillion yen ($9.63 billion) for its current fiscal year, surpassing an earlier record set in March 2021.

This comes even as the bank posted a 14.3% drop in full-year net profit to 1.12 trillion yen. This is the second year in a row that MUFG’s net profit has exceeded one trillion yen.

Mizuho Financial Group shares rose 1.14% as the bank posted a 45.8% increase in revenue and a 4.7% rise in net profit.

In contrast, shares of Sumitomo Mitsui Financial Group fell 1.07%, even as the company reported a 49.4% year-on-year increase in revenue to 6.14 trillion Japanese yen, while net profit came in 14% higher to reach 805.4 billion yen.

SMFG forecasts a net profit of ¥820 billion for the current fiscal year.

— Lim Hui Jie

Gas will be front and center of discussions at the Group of Seven summit later this week, S&P Global Vice Chairman Daniel Yergin told CNBC’s “Squawk Box Asia.”

Yergin’s comments come as media reports say G-7 leaders are expected to target Russian energy trade with tougher sanctions when they meet in Japan later this week.

Russian President Vladimir Putin’s attempt to “use gas as a weapon” to break up the Western coalition “failed,” Yergin said.

“There’s another side to the gas story that’s going to be a big debate in the G-7, and that’s the future role of natural gas,” he said.

“What has happened now, fundamentally, is that Putin allowed his decisions to cut him off from the most important trading partner that Russia has, Europe, and the fact that the gas that is one of its foundations, that valve has been politically closed these days , is a big development,” he said.

– Jihye Lee

Big tech isn’t dead, according to portfolio manager Trent Masters, who identified his favorite stocks to play artificial intelligence and more.

“The bend is real,” he said of AI, citing stock picks to play it, including an initial “port of call” for investors.

CNBC Pro subscribers can read more here.

— Weizhen Tan

A US-based hedge fund is predicting a hard landing scenario for equity markets despite a steady decline in inflation, with the S&P 500 falling into a bear market.

Along with the bearish prediction, hedge fund manager David Neuhauser also identified three global stocks that he believes will perform well under this scenario.

CNBC Pro subscribers can read more here.

– Ganesh Rao

Atlanta Federal Reserve President Raphael Bostic on Tuesday cast doubt on the likelihood of interest rate cuts this year, even if a recession were to hit.

“Inflation is not going to come down very quickly. And in that regard, cutting interest rates does not fit into that scenario,” the central bank official told CNBC’s Steve Liesman during a “Squawk Box” interview.

“So the markets, I think, have been quite optimistic about how easily inflation will respond to our policy,” he added. “Honestly, I hope I’m wrong and they’re right, because that will mean the economy is balanced sooner rather than later. But that’s not my starting point at all.”

If anything, Bostic said his bias would be for a rate hike this year should inflation not fall as quickly as the Fed would like.

-Jeff Cox

Treasury Secretary Janet Yellen said at the weekend that negotiations were making progress with an agreement on the debt ceiling.

“I’m hopeful. I think the negotiations are very active. I’m told they’ve found some areas of agreement,” Yellen said in an interview with the Wall Street Journal on Saturday from Japan during a meeting of G-7 finance ministers. .

President Joe Biden and House Speaker Kevin McCarthy are expected to meet early this week, CNBC has reported. The Treasury Department said the United States may not be able to meet its financial obligations as early as June 1.

-John Melloy

The dollar hit a record high against the Turkish lira on Monday, hitting 19.6853.

Meanwhile, the iShares Turkey ETF ( TUR ) fell nearly 6% in premarket trading. If that performance holds for the session, it will mark the worst day for the fund since it lost 6.1% on February 7.

The measures follow news that the country will have an unprecedented run-off for its president on 28 May. A run-off is necessary because no candidate received 50% of the vote in Sunday’s election.

The dollar index, which measures the US dollar against a basket of other currencies, was last down 0.2% at 102.49.

—Alex Harring, Gina Francolla