Asia markets mixed as U.S. midterm results roll in; China’s producer prices drop

Soegeefx AppsAsia MarketAsia markets mixed as U.S. midterm results roll in; China’s producer prices drop

Jihye Lee

Asia-Pacific stocks were mixed as investors digest incoming results of the United States midterm elections and China’s annualized producer prices fell for the first time in October since December 2020.

The Hang Seng index in Hong Kong lost 1.62% In mainland China, the Shanghai Composite shed 0.53% while the Shenzhen Component was 0.79% lower. The Chinese yuan weakened past 7.25-levels against the U.S. dollar after its latest economic data release.

The Nikkei 225 in Japan lost 0.56% to end the session at 27,716.43 and the Topix shed 0.41% to close at 1,949.49, while the Kospi in South Korea gained 1.06% to close at 2,424.41. In Australia, the S&P/ASX 200 rose 0.58% to end its session at 6,999.3.

.N225 Nikkei 225 Index *NIKKEI 27446.1 -270.33 -0.98
.HSI Hang Seng Index *HSI 16041.26 -317.26 -1.94
.AXJO S&P/ASX 200 *ASX 200 6964 -35.3 -0.5
.SSEC Shanghai *SHANGHAI 3036.13 -12.04 -0.39
.KS11 KOSPI Index *KOSPI 2402.23 -22.18 -0.91
.FTFCNBCA CNBC 100 ASIA IDX *CNBC 100 7018.55 -136.44 -1.91

Overnight on Wall Street, U.S. stocks are coming off three-straight days of gains. The bounce for equities may be partly due to the elections, where investors are expecting Republicans to gain ground and create gridlock in Washington.

— CNBC’s Yun Li, Jesse Pound contributed to this report

Hang Seng Tech index falls more than 2%; drags down wider index

The Hang Seng Tech index fell 2.6% in Hong Kong as investors digested incoming results of the U.S. midterm elections and brace for heightened scrutiny on Chinese tech firms.

Shares of technology companies listed in the city fell sharply in the afternoon, with Tencent falling 4.48% and Meituan losing 4.5%. Hong Kong-listed shares of Alibaba also fell 2.61% and Xiaomi also fell 2.07%. Electric vehicle makers also saw sharp losses, with BYD declining 6% and Xpeng dropped more than 7.2% and Nio fell 5.5%.

— Jihye Lee

Chip firms in Taiwan, Korea could benefit from a Republican win: Natixis

Semiconductor companies in Taiwan and South Korea may benefit from a Republican congressional sweep, according to Natixis.

A Republican win would lead to increased scrutiny for Chinese tech firms, especially in the high-end technology sector, said senior economist Gary Ng, who added that the pressure will only continue to grow.

“If there is more restriction on Chinese firms, it means there will be more room for growth for Taiwan or increasingly even from Korea and Japan as well,” Ng said.

Last month, the U.S. announced new export measures that require foreign companies to hold a license to use American equipment in producing high-end chips to be sold to China.

Samsung Electronics, SK Hynix, and TSMC have obtained one-year licenses, but ASML has told its U.S. employees to servicing Chinese customers.

— Lee Ying Shan

Cathay Pacific announces leadership changes, names new CEO

Cathay Pacific Airways announced Ronald Lam will be appointed as its new CEO, replacing Augustus Tang, who asuumed the role in August 2019.

Lam, the current chief customer and commercial officer, will take on the role on Jan. 1.

Shares of the airline gained 0.26% in the morning session, while the wider Hang Seng index dropped more than 1.5%.

— Jihye Lee

Chinese property stocks rally after regulator expands credit support

Hong Kong-listed Chinese property stocks surged after a regulator under the People’s Bank of China expanded a support program for indebted developers.

The National Association of Financial Market Institutional Investors said on Tuesday it will expand its credit program that supports debt sales for private enterprises including real estate companies.

Cifi Holdings jumped more than 41%, Country Garden rose 22%, and Logan Group jumped 38%. Longfor Group also rose 13.4% in the first hour of trade.

Chinese property stocks surgeChart

— Jihye Lee

China’s producer prices drop, inflation slows in October

China’s producer price index fell 1.3% in October on an annualized basis after rising 0.9% in September, beating estimates for a 1.5% contraction in a Reuters poll.

The nation’s October PPI marks the first decline since December 2020, according to FactSet data.

China’s consumer price index rose 2.1% in October compared to a year ago, easing after climbing 2.8% in September.

The onshore and offshore Chinese yuan hovered around 7.2500 levels shortly after the economic data release.

— Evelyn Cheng, Jihye Lee

Nintendo drops after cutting Switch sales forecast

Shares of Nintendo fell more than 6% in early trade in Japan after reporting earnings after Tuesday’s market close.

The company adjusted its full-year financial outlook and cut its projection for Nintendo Switch hardware sales by 9.5% from 21 million units to 19 million in its latest release.

Sales of the gaming consoles declined by 19.2% annually, the company said, adding that it’s been affected by “factors including the semiconductor shortage.”

— Jihye Lee

CNBC Pro: Want to play rising copper prices? Analysts give these 2 stocks more than 200% upside

Copper is having a good month, with both prices and mining stocks trading well in the green.

Against this backdrop, CNBC Pro screened the Global X Copper Miners ETF on FactSet for stocks that analysts expect to outperform.

Two names stand out as having target price upside of more than 200% and a buy rating from all of the analysts covering them, according to FactSet data.

— Weizhen Tan

Pennsylvania, Georgia and Nevada’s Senate races are in focus, Cowen says

Cowen Washington Research Group’s Chris Krueger said investors should focus on the big Senate races in Pennsylvania, Georgia and Nevada tonight, and the party that wins two-thirds of these states will likely take the majority.

The research firm’s base case is for the Republican party to seize control of both the House and Senate. Krueger said a divided government means no new taxes for the next two years, as well as no more fiscal stimulus.

Cowen believes that numerous races will take days to count mail-in ballots.

— Yun Li

South Korea’s October unemployment rate remains flat

South Korea’s seasonally adjusted October jobless rate came in at 2.8%, unchanged from September, according to the government statistics agency.

The nation added 677,000 jobs compared to a year ago, the release showed.

The jobless rate in South Korea hovered around levels comparatively lower than that of the U.S., which reported an unemployment rate of 3.8% last Friday.

—Jihye Lee

CNBC Pro: An investment bank is using AI to analyze Q3 earnings calls. Here’s what it found

Nomura, Japan’s largest investment bank, is using AI to analyze earnings calls transcripts to predict whether a stock will outperform.

Its research on third-quarter results also shows the sectors with the most positive and negative sentiment.

— Ganesh Rao

CNBC Pro: Pros name 3 picks in one top-performing sector, including a Warren Buffett favorite

This sector is among the top performers on the S&P 500 this month. Three market pros weigh in on their favorite names in the sector, including one that is loved by Warren Buffett.

— Zavier Ong

S&P 500 usually gains big in year after midterms — even in a recession

History shows the stock market typically rises the year after midterm elections — even with a recession.

The year following midterms has historically been a strong one for the S&P 500, with the benchmark gaining 20.1% on average, according to Citigroup data going back to 1960.

Even when there’s a recession the next year, returns are surprisingly robust, with the S&P 500 rising 24.4% on average during three instances in 1974, 1990 and 2006, Citi said. That’s especially pertinent now, with many economists expecting an economic downturn in 2023 in the wake of the Federal Reserve’s aggressive rate hikes to tame inflation.

— Yun Li

Source : CNBC

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