Australia, Japan higher while most Asian markets close for Labor Day

Shares in Japanese conglomerate Sony fell as much as 4.8% on Monday despite the company reporting a record annual operating profit of 1.21 trillion yen ($8.8 billion) for the fiscal year ending in March.

The stock has recovered somewhat, trading about 1.91% down in the early afternoon.

On Friday, Sony forecast operating profit to come in at 1[ads1].17 trillion yen, down 3% year-over-year and below analysts’ forecasts of 1.26 trillion yen.

Sales for the current fiscal year are forecast to come in at ¥11.5 trillion, roughly flat compared with last year. However, this is also lower than the 12.16 trillion yen that analysts have predicted.

— Lim Hui Jie

Australia’s central bank is expected to keep its benchmark interest rate at 3.6% when it announces its decision on Tuesday.

A Reuters poll of 34 economists revealed that 26 of them expect the Reserve Bank of Australia to keep interest rates at current levels, while the remaining eight forecast a 25 basis point increase.

If the RBA raises rates to 3.85%, it will be the highest level since April 2012.

Australia’s inflation – a key data point for the RBA – fell to 7% in the first quarter, lower than the 7.8% recorded at the end of 2022.

— Lim Hui Jie

Japan’s manufacturing activity remained in contraction territory for a sixth straight month, although April’s figure was the softest decline reported in that period.

According to au Jibun Bank, the country’s manufacturing purchasing managers’ index improved to 49.5, up from 49.2 in March.

The bank said the improvement came from a slower reduction in order intake. “Businesses recorded a tenth consecutive reduction, but the rate of contraction was the softest since November last year,” it observed.

Japanese manufacturers allocated resources to clear the backlog and hired more people to prepare for a possible recovery in demand. Employment levels rose for the twenty-fifth consecutive month and at the strongest pace since last October, the bank said.

– Lim Hui Jie

Australia’s factory activity has shrunk at its fastest pace in 35 months, according to private research by Juno Bank.

The manufacturing PMI for April was 48, down from March’s figure of 49.1, marking a second consecutive monthly decline.

A reading above 50 indicates expansion, while a reading below 50 indicates contraction.

In its release, the bank said this was due to weak demand for Australian goods, observing that new orders fell for the fifth consecutive month and at the fastest rate since August 2021.

It also noted that survey respondents commented on broad economic weakness, driven in part by high interest rates.

— Lim Hui Jie

China’s factory activity slowed in April, contrary to economists’ expectations for growth.

Data from the National Bureau of Statistics revealed that the country’s manufacturing purchasing managers’ index fell to 49.2 from 51.9 in March, below the 51.4 expected by economists.

A reading above 50 indicates expansion, while a reading below 50 indicates contraction.

This also marks the first contraction since December, when the official manufacturing PMI was at 47.

— Lim Hui Jie

The S&P 500 and MSCI World Index showed gains in April consistent with their historical patterns.

So where does the market go from here?

CNBC Pro subscribers can read more about how stocks tend to perform in May, according to the story.

– Ganesh Rao

Friday’s price index data for personal consumption expenditures could give the Federal Reserve a reason to raise interest rates again at its meeting next week, said Ryan Belanger, founder and managing principal of Claro Advisors.

The data, which was in line with economists’ expectations when looking at the month-over-month change in so-called “core” PCE, is a key gauge of inflation for the central bank. And it comes ahead of the Fed’s policy meeting scheduled for next week.

The Fed raised interest rates by 25 basis points, or a quarter of a percentage point, at its last meeting. Belanger said to expect that again to the chagrin of some market players.

“Friday’s inflation report gives the Federal Reserve an excuse to raise interest rates by 25 basis points at its May meeting, even as there is a growing chorus among investors for the Fed to pause rate hikes given concerns about the economy,” he said.

– Alex Harring

The core price index for personal consumption expenditures, a key measure of inflation for the Federal Reserve, rose as much as economists expected last month.

The core index rose 0.3% in March, which economists polled by Dow Jones expected.

-Jeff Cox

With 50% of S&P 500 companies now reporting their quarterly results, some stocks — especially consumer staples — have outperformed the market this week.

Those gains came as earnings rose, with several Big Tech names and industry giants releasing their latest numbers.

Investors were also looking forward to next week’s announcement from the Federal Reserve. As of Friday afternoon, there was an 86% chance the central bank would raise interest rates by 25 basis points, according to CME Group’s FedWatch tool.

CNBC Pro subscribers can read about this week’s top outperformers, and where analysts see them going, here.

—Hakyung Kim

First Republic is most likely headed for receivership, sources told CNBC’s David Faber.

The FDIC is talking to other financial firms about potential offers for First Republic in case the regulator seizes the regional bank, the sources said. However, there is still hope for a rescue deal that does not involve receivership.

The stock, which was largely flat in early trading, is now down more than 20%. It has lost more than 95% since 2023 started.

Energy and consumer staples have helped the S&P 500 advance this month.

With only Friday’s session remaining in the April trading month, both the consumer staples and energy sectors are slated for a monthly gain of 3.4%. Those jumps make them the best performers of the broad index’s 11 sectors this month.

Consumer staples have been led by up Molson Coors and Mondelez, which have gained more than 15% and 10%, respectively, since the month began. Hess and EQT have led the rally for energy, each up more than 9% on the month.

By comparison, the S&P 500 is poised to end April 1.3% higher. Discretionary and industrial stocks have weighed on the index as both sectors are on track to end the month down more than 1%.

– Alex Harring