Australia’s central bank raises interest rates by 25 basis points; Asia-Pacific market mixed

4 hours ago

The Reserve Bank of Australia raises interest rates by 25 basis points

In a surprise move, the Reserve Bank of Australia raised its cash rate target by 25 basis points to 3.85%, saying inflation in the country “remains too high.”

Economists polled by Reuters largely expected the central bank to keep the benchmark interest rate stable at 3.6 percent.

“While the recent data showed a welcome slowdown in inflation, the central forecast remains that it will take a couple of years for inflation to return to the top of the target range; inflation is expected to be 4½ percent in 2023 and 3 percent in mid-2025,”[ads1]; said the central bank in its statement.

The RBA added that its priority “remains to return inflation to target” and left the door open to more hikes going forward.

“Some further tightening of monetary policy may be necessary to ensure that inflation returns to target within a reasonable timeframe, but that will depend on how the economy and inflation develop,” it said.

The yield on Australia’s 10-year government bond was at 3.472% shortly after the decision.

4 hours ago

HSBC reports that pre-tax profit rose to $13 billion in the first quarter

HSBC’s pre-tax profit rose by $8.7 billion to $12.9 billion in the first quarter, the bank said in a earnings release.

The bank said that included a reversal of a $2.1 billion impairment related to a planned sale of its retail banking business in France and a preliminary gain of $1.5 billion on the acquisition of Silicon Valley Bank’s UK arm.

“We remain focused on continuing to improve performance and maintain tight cost discipline, but we also saw an opportunity to invest in SVB UK to accelerate our growth plans,” CEO Noel Quinn said in the release, calling Silicon Valley Bank UK a “natural fit” for the bank.

Hong Kong-listed shares in HSBC rose 2.7 percent on Tuesday afternoon.

– Jihye Lee

5 hours ago

Asian currencies strengthen to a large extent, the Aussie rises ahead of the RBA meeting

Currencies in the Asia-Pacific strengthened mostly together with the Australian dollar, which strengthened marginally ahead of the central bank’s interest rate decision.

The Aussie was at 0.6632 against the US dollar, and the New Zealand dollar strengthened 0.2% to 0.6180 against the greenback.

The Japanese yen also strengthened slightly to 137.37 as the US dollar index fell 0.12% to 102.3.

The Korean won also strengthened 0.2% to 1,340.2 against the dollar.

6 hours ago

Hong Kong’s John Lee says the economy grew by 2.7 percent in the first quarter

Hong Kong recorded economic growth of 2.7 percent in the first quarter, Chief Executive John Lee said at a news conference on Tuesday.

The economy fell 4.2% in the last quarter of 2022 compared to a year ago.

“Although the first-quarter export figure is still declining, China’s economy is still growing rapidly and Hong Kong’s aviation capacity recovery is accelerating,” Lee said.

“I think HK’s Q2 economy will be better than Q1, and this year’s economy will be better than last year,” he said.

– Vivian Kam

6 hours ago

DBS reports record revenue and net profit for the first quarter

DBS Group Holdings has reported record revenue and net profit for the first quarter of 2023.

Revenue came in at SG$4.9 billion, up 34% year-on-year, while net profit was at SG$2.57 billion, a 43% jump compared to the same period last year.

In a release, DBS said this was due to “higher net interest margin, sustained business momentum and robust asset quality.”

Shares in DBS rose 0.55% on Tuesday.

6 hours ago

Factory activity expands largely across five ASEAN countries in April

Private surveys from S&P Global showed that factory activity in five ASEAN countries mostly rose in April.

Production expanded in Thailand, Indonesia, Myanmar and the Philippines, with Thailand leading the way

Thailand’s manufacturing sector grew the fastest in April, with the Purchasing Managers’ Index at 60.4.

However, Malaysia was the only outlier, with its manufacturing PMI at 48.1, marking the eighth consecutive month of contraction.

— Lim Hui Jie

6 hours ago

CNBC Pro: Analyst Mark Mahaney Shares His Top Two Tech Stock Picks, Giving 152% Upside

While other markets have been volatile this year, technology has picked up – the Nasdaq is up 16% year to date.

Top tech analyst Mark Mahaney of Evercore ISI gives a tech stock a further upside of nearly 50%, saying it has a “super attractive” valuation.

He gave his No. 2 pick an additional upside of 152%.

CNBC Pro subscribers can read more here.

— Weizhen Tan

7 hours ago

South Korea’s factory activity remains in contraction territory for 10 months: S&P Global

South Korea’s manufacturing purchasing managers’ index for April rose to 48.1, up from March’s figure of 47.6, a private survey showed on Tuesday.

Despite the improvement, this marked the tenth consecutive month that S&P Global’s PMI for South Korean manufacturers remained below the 50 mark that separates contraction from growth.

S&P Global Market Intelligence economist Usamah Bhatti said in the Tuesday release, “subdued customer demand both domestically and internationally was central to the recent deterioration and contributed to a solid reduction in new orders,” adding that

Bhatti also noted that, as such, South Korean manufacturing companies subsequently cut production levels, input purchases and employment.

— Lim Hui Jie

Sun Apr 30, 2023 11:59 PM EDT

Australia expected to keep rates steady at 3.6%

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

8 hours ago

South Korea’s inflation eases to 14-month low of 3.7%

South Korea’s inflation rate eased to 3.7% in April, lower than March’s figure of 4.2%.

This also marked the lowest rate of inflation in 14 months, and the third consecutive month of decline.

The figure of 3.7% was also largely in line with economists’ expectations of 3.75%.

In April, South Korea’s central bank continued to hold the benchmark interest rate at 3.5%.

— Lim Hui Jie

8 hours ago

ARM’s IPO raises speculation about acquisition by SoftBank

SoftBank’s chipmaker Arm filed confidentially for an initial public offering in the United States, sparking speculation of a management buyout by SoftBank, Nikkei reported.

The report added that SoftBank Group was raising billions of dollars using its equity holdings, including its stake in Alibaba as collateral – and that the Japanese firm could use shares in Arm instead, which would enable a renewed investment push from the Vision Fund.

Nikkei also reported that SoftBank could go private if it sells about half of its stock portfolio, and a high valuation for Arm would further widen the gap between SoftBank Group’s valuation and its assets, making a takeover look much more likely.

Shares in SoftBank rose 0.7% in Tuesday’s morning session in Tokyo.

18 hours ago

The dollar is increasing strongly against the yen

The dollar climbed against the Japanese yen on Monday, hitting a high of 136.98 per USD. The dollar is trading at its highest level against the yen since March 10, when the dollar-yen pair was at 136.99.

The dollar is also now within striking distance of a high not seen since March 9, when the greenback traded at 137.37 against the yen.

Elsewhere, the euro also rose against the yen, hitting 150.94, its highest trading level since September 30, 2008.

—Brian Evans, Gina Francolla

19 hours ago

Dimon calls “this part of the crisis” over after JPMorgan buys First Republic

JPMorgan Chase CEO Jamie Dimon sees the crisis that contributed to the collapse of three banks in recent weeks as largely over after the banking giant bought First Republic.

“There may be another minor one, but this pretty much solves all of them,” he said on a call with analysts after the deal was announced. “This part of the crisis is over.”

Dimon’s comments come after the Federal Deposit Insurance Corporation took over the bank, which has been the victim of deposit flight in recent weeks in the wake of Silicon Valley Bank’s collapse. JPMorgan will acquire most of the affected company’s assets and take control of its deposits.

—Hugh Son, Samantha Subin

21 hours ago

Regional bank stocks are calm after First Republic’s failure

The fiasco of First Republic over the weekend has so far not had a major impact on other regional bank stocks.

The SPDR S&P Regional Bank ETF ( KRE ) ticked down less than 0.4% in premarket trading. Shares of PacWest Bancorp fell 2.4%, but Western Alliance rose slightly. First Horizon and Zions Bancorp. each decreased around 0.2%.

First Republic fell sharply and is now trading below $2 per share, and the stock is likely to be written down to zero. However, First Republic had a weighting of less than 0.15% in KRE at Friday’s close.

See diagram…

Regional bank stocks

18 hours ago

The ISM Manufacturing gauge rose more than expected in April

U.S. manufacturing activity fell for a sixth straight month in April, but by less than expected, according to a report Monday from the Institute for Supply Management.

The ISM Manufacturing PMI came in at 47.1%, representing the share of companies that reported expansion for the month. That was higher than 46.3% in March and better than the estimate of 46.7% from Dow Jones.

However, the details may be troubling to Federal Reserve officials seeking to control inflation.

The price index rose 4 points to 53.2%, back into expansion territory, while the employment index increased 3.3 points to 50.2%. Inventories, a significant drag on growth in the first quarter, fell 1.2 points to 46.3%, while new orders rose 1.4 points to 45.7%.

-Jeff Cox

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