Asia Markets, Federal Reserve, China PMI, Indian PMI

Factory activity in India It rose at the slowest pace since February, according to private polling by S&P Global.

The country’s manufacturing PMI came in at 55.5, lower than September’s reading of 57.5.

This indicates an improvement in the sector’s health for the 28th straight month, with the latest reading still above its long-term average of 53.9, S&P Global wrote.

A PMI reading above 50 indicates expansion in the sector, while a reading below 50 indicates contraction.

– Lim Hui Ji

Past cycles show that inflation in India declines before the election season and then rises rapidly afterward, Radhika Rao, chief economist at DBS, said in a note to clients.

Supply-side dynamics will be key this election season, Rao says, noting that since the onset of the pandemic, the trend has shifted to the upside due to more pronounced supply gaps and weather fluctuations.

More recently, rising tomato prices pushed the headline CPI reading above 7% in July, later falling to 5% by September.

India is scheduled to hold the world’s largest general elections in May 2024.

Rao notes that India’s FY revenue spending is also facing pressure from erratic rainfall affecting farm production, and pressure to shore up purchasing power of households in the face of rising oil prices, rising pulses/cereals prices and broader inflation above target, while maintaining expenditure plans. Capitalism.

“We expect the central government to remain more committed to fiscal consolidation, and to resist pressure to turn to overt populism,” Rao said.

Data from DBS showed that Indian stock markets attracted strong foreign portfolio inflows worth $19.6 billion in the first five months of the year, pushing benchmark indices to a record high, supported by growth expectations, potential earnings and a bullish outlook on financials, coupled with rapid growth. Growing base of retail investors.

– Shreyashi Sanyal

China’s manufacturing activity registered a surprising contraction in October. A special survey showed that.

The Caixin/S&P Global Manufacturing PMI fell to 49.5 in October from 50.6 in September. This was the first contraction in four months. Economists polled by Reuters expected a reading of 50.8.

A Purchasing Managers’ Index (PMI) reading below 50 indicates contraction.

This poll reflects the official figure published by the country’s National Bureau of Statistics on Tuesday.

– Shreyashi Sanyal

The Japanese yen settled at its lowest level in more than a year against the US dollar a day after the country’s central bank maintained interest rates and said it would be more flexible with its yield curve control policy.

The yen fell 0.25%, crossing the 150 yen to the dollar threshold to trade at 151.29. The current level was the lowest since late October 2022.

The Bank of Japan said on Tuesday that the target level for the 10-year Japanese government bond yield will remain at 0%, but it will take the upper limit of 1% “as a reference.”

– Shreyashi Sanyal

South Korea saw The first increase in exports in 13 months, with exports in October rising by 5.1% year-on-year.

This was a reversal from the 4.4% decline seen in September, and the first time since September 2022 that the country recorded a year-on-year expansion in exports.

separately, Factory activity in South Korea October saw a slightly deeper contraction, with the PMI reaching 49.8, compared to 49.9 in September.

– Lim Hui Ji

Japanese markets saw a strong open, consolidating their gains since Tuesday when the Bank of Japan increased flexibility around its yield curve control policy.

The Nikkei 225 rose 2.05%, helped by gains in distribution services and consumer durable stocks.

Among the biggest gainers on the Nikkei index were automaker Subaru, investment brokerage firm Daiwa Securities, and Lasertec, which makes inspection equipment for semiconductor companies.

– Lim Hui Ji

Global markets may be suffering from stagflation and the possibility of world war, but many themes play well to “make money” in the short and medium term, says David Neuhauser, founder and chief investment officer of US-based Livermore Partners.

A hedge fund manager names two asset classes as well as one stock market theme that he is currently positive about.

CNBC Pro subscribers can read more here.

– Amala Balakrishner

Traders should “rethink” a technology stock tied to an old corner of the industry, according to one investor.

“This is one of my favorite names in years,” Philip Blancato, CEO of Ladenburg Thalmann Asset Management, told CNBC.

“They are becoming an AI company. They are becoming a cloud company… They are expanding into all aspects of network-based cloud services for all business improvements,” he said.

He added that it is now a technology company trading at valuations that are “much better” than its peers, and that “it will surprise you what they can do in the next couple of years.”

CNBC Pro subscribers can read more here.

-Weezin Tan

Investors should remain defensive heading into the end of the year, according to Dubravko Lakos Bojas, chief global equity strategist at JPMorgan.

The delayed effects of the Fed’s rate hikes will be more dramatic than traders currently expect, the strategist said, urging investors to hold on to cash and move to more resilient parts of the market. He favors facilities and health care, as well as the profits of aristocrats.

“I think there’s just a delayed effect,” he said Tuesday on CNBC’s “Halftime.” “And this time in this cycle, the spread may simply be longer than we’re used to seeing in previous cycles because of the unprecedented injection we’ve had during Covid, and because of the relatively healthy starting point for things like balance sheets.”

His year-end target of 4,200 points for the S&P 500 is just above where the S&P 500 closed on Monday, according to the CNBC Market Strategy Survey.

– Sarah Maine

Tesla stock fell 20.5% in October and 33.5% since its 52-week high in mid-July to lead this month’s declines in the stock market. Seven greats A group of megacap technology stocks. Nvidia shares fell more than 7% in October and are down nearly 20% since their high in late August. Alphabet stock is down 5.8% in October and 12.7% since its peak in mid-October. The three companies underperformed the S&P 500’s 2.5% decline.

Apple shares are down nearly 1% in October but are more than 14% below their mid-July high, while Meta platforms have not changed much this month but are more than 9% below their mid-October high reached Just two weeks ago.

Only two Mag 7 indexes rose significantly this month: Microsoft shares rose about 6.8%, limiting their loss since their mid-July high to about 8%. Amazon shares advanced 4.4% in October, reducing its losses since the highest level recorded in mid-September to about 9%.

The Federal Reserve is likely to face a “bumpy road” toward its 2% inflation target, even if it decides to hold interest rates steady at its November meeting, according to Joe Davis, chief global economist at Vanguard.

“Inflationary pressures and broader macro trends are heading in the right direction, but last week’s GDP report and a still-strong labor market highlight the bumpy path the Fed faces on the road to its 2% target,” Davis said in a written commentary. “We believe that another 1-3 times increase will be needed for them to confidently achieve their target over the next few years.”

In fact, the economist said interest rates are likely to be restricted for longer. He also said policymakers will settle on a higher neutral interest rate after interest rate cuts are closer to 3.5% than the expected 2.5%.

“The market is finally recognizing this, which has been one of the sources of some of the recent market volatility,” Davis wrote.

– Sarah Maine