Asian markets were mixed as Wall Street posted a four-day losing streak due to banking problems

The RBA’s latest monetary policy statement indicated that the central bank had already reached its monetary peak of 3.85%, the Commonwealth Bank of Australia said in a note on Friday.

“Our position on this important forward guidance is that the Board is prepared to raise the cash rate again this cycle. But another rate hike requires that economic data, particularly on inflation, GDP, the unemployment rate and wages, become stronger than their updated forecasts.” , wrote the economists at CBA.

“In other words, we don’t think the RBA will raise the liquidity rate again if economic data is in line with or weaker than their expectations,” they wrote.

– Jihe Lee

HSBC shareholders are due to vote on proposals at the bank’s annual meeting on Friday, including whether to spin off its Asia business.

Resolutions 17 and 18 are on the agendaIntroduced by a group of investors led by Ken Lowe, the call for a “strategic review” of the company, including spin-offs and steady earnings.

These received support from HSBC’s largest shareholder, Ping An Insurance, but HSBC advised investors to reject the two decisions, a position endorsed by investor advisory firms. ISS and Glass Lewis.

Since these are considered “special resolutions,” Lowe’s proposals would need a 75% affirmative vote to pass.

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– Lim Hwi Ji

Core inflation in the Philippines eased for the third consecutive month to 6.6% y/y, down from 7.6% in March.

This was also below economists’ expectations for a 7% rise.

in a statement, The country’s statistics authority said the downward trend was mainly caused by a decrease in the inflation rate of food and non-alcoholic beverages, which recorded 7.9% compared to 9.3% in March.

Transport was the second biggest contributor to the downside, with inflation coming in at 2.6% in April compared to 5.3% in March.

Inflation in the Philippines hit a 15-year high in January at 8.7%, the highest level since October 2008.

– Lim Hwi Ji

The RBA said in May that the RBA still believes that “further monetary tightening” may be required to rein in inflation. monetary policy statement.

The central bank noted that this “will depend on how the economy and inflation develop.”

It comes as the Reserve Bank of Australia surprised the markets by raising interest rates by 25 basis points to 3.85% on Tuesday.

In its statement, the RBA lowered its near-term inflation and GDP forecasts, while saying that inflation is still not expected to return to the upper end of its 2-3% target range until mid-2025.

The central bank also expects commodity inflation to moderate further, while energy and services inflation is expected to remain high, as the services sector is expected to witness growth in labor costs and rents.

– Lim Hwi Ji

Indonesia’s gross domestic product It expanded 5.03% year over year In the first quarter of 2023.

Strong economic growth exceeded expectations of 4.95 percent in a Reuters poll and was higher than the 5.01 percent growth recorded in the first quarter of last year.

On a quarterly basis, Indonesia’s economy shrank by 0.92%, below expectations for a 1% decline. The economy grew by 0.36% in the fourth quarter of last year.

Based on production, the transportation and warehousing sector witnessed the largest growth at 15.93%, said the country’s statistical department. Based on expenditures, exports of goods and services recorded the highest growth of 11.68%.

– Lim Hwi Ji

China Caixin Global Services Purchasing Managers Index / S&P It fell to 56.4 in April from 57.8 in the previous month.

The reading marks the second highest on record since November 2020 and the fourth consecutive month above the 50 mark that separates growth from contraction.

The survey showed an expansion in services activity despite disappointing factory activity in mainland China earlier this week.

The reading indicates that services activity is still “going through a rapid recovery,” according to Wang Zhi, chief economist at Caixin Insight Group.

– Jihe Lee

Hong Kong’s largest listing to date in 2023 tumbled last week, suggesting the market still needs time to recover, despite hopes for a recovery.

Shares of Chinese spirits maker ZJLD Group fell nearly 18% on the first day of trading on April 27.

“Sentiment in the IPO markets hasn’t built yet. A lot of industries are still suffering,” said Ringo Choi, head of IPOs Asia Pacific at EY.

“The underlying economics is not working very well,” said Irene Zhu, partner at KPMG China. “There is still concern about the high interest rate environment, and a lot of interest in the Greater China region is related to the recovery of the economy,” Zhou said.

ZJLD Group’s share price has been relatively flat over the past week.

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– Sheila Chiang

A number of economic data is expected next week for the Asia-Pacific markets, including inflation data in China, Indian industrial production and the trade balance of the Philippines.

On Monday, Taiwan announced its trade data. Citi economists forecast that in April, Taiwan’s exports fell 21.4% year-on-year and imports fell 22.6% year-on-year.

“Non-technology exports to China have yet to recover (as trade data from China suggests) and lower commodity prices will depress exports,” Citi economists wrote in a note on Thursday.

China’s trade data for April will also be released on Tuesday along with Malaysia’s GDP.

On Wednesday, South Korea’s current account balance for March and the unemployment rate for April are expected.

China’s PPI and CPI are due to be released on Thursday. For the month of March, China’s CPI reading increased marginally by 0.7% year-on-year, while the PPI posted a decline of 2.5% year-on-year. The Philippines reported its Q1 GDP on this day as well.

Indian Industrial Output for March will be published on Friday after posting 5.6% annualized growth in February. Citi economists expect the headline inflation rate to decline around 4.8% year-on-year, marking the first reading below 5% since November 2021.

– Jihe Lee

Goldman Sachs has identified a number of energy stocks to own ahead of an expected shift in market sentiment towards the oil and gas sector.

The Wall Street bank said it has noted greater ownership of the energy sector due to a change in the way ESG investors — or those who take ESG factors into account — approach investing. Rather than getting rid of fossil fuels completely, they are focusing more on doing business with these companies to achieve better environmental outcomes, according to the bank.

Goldman added that ESG funds increased their exposure to the energy sector by 8 percentage points in the first three months of this year.

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– Ganesh Rao

In the event that markets avoid a recession, Goldman Sachs says interest rates are likely to rise next, putting downward pressure on valuations. In this case, the bank is asking investors to position themselves in markets outside the United States

“We continue to recommend overweighting non-US markets that are cheap with a similar growth profile. Returns for dollar-dependent investors should also get a boost from a gradual dollar decline,” several analysts wrote in a note on Thursday.

The company added that it favors the growth of quality and stability of companies with financial margins “along with some deep value – energy, natural resources and European banking”. Our strategists in the US and Asia favor high-quality and defensive stocks as well.

– Hakyung Kim

Trading in Western Alliance Bancorp shares was halted several times on Thursday, as the stock fell 58.2%. The move comes as regional banking peer Backwest Bancorp saw its shares lose 59% following news of a sale being explored. SPDR’s S&P Regional Banking ETF lost more than 9% on Thursday amid uncertainty.

A round of economic data Thursday morning was mostly worse than Wall Street expected.

Claims for unemployment benefits totaled 242,000 for the week ending April 29, higher than the Dow Jones estimate of 236,000. Labor productivity in the first quarter fell 2.7% versus estimates for a 1.9% decline, while labor costs, a measure of inflation, accelerated 6.3% in the first quarter, above expectations of 5.5%.

Finally, the trade deficit decreased to $64.2 billion, but it was higher than the estimate of $63.1 billion.

– Jeff Cox

The European Central Bank on Thursday raised interest rates by a quarter of a percentage point, in line with market expectations, noting that inflation remains very high and underlying pressures persist.

A day after the US Federal Reserve announced a similar hike, the European Central Bank raised its main borrowing rates to 3.75%, 4% and 3.25%, near their highest levels in 15 years. The Fed’s move raised the funds rate to a target range of 5%-5.25%.

The general inflation rate is around 7% in the eurozone, well above the European Central Bank’s target of 2%.

– Jeff Cox