Asia-Pacific markets mostly higher after Wall Street gains overnight

Abigail Ng

Shares in the Asia-Pacific were mostly up on Wednesday following a second day of gains in major U.S. indexes.

The Nikkei 225 in Japan added 0.75% and the Topix gained 0.48%. The Japanese yen remained above 149 against the U.S. dollar. South Korea’s Kospi ticked 0.65% higher.

In Australia, the S&P/ASX 200 rose 0.51. MSCI’s broadest index of Asia-Pacific shares outside Japan was fractionally lower.

The Hang Seng index in Hong Kong pared earlier losses and traded flat, with the Hang Seng Tech index slipping 0.82%. Mainland China’s Shanghai Composite shed 0.25% while the Shenzhen Component

was fractionally higher.

Hong Kong Exchanges and Clearing is set to report earnings today, while the city’s chief executive, John Lee, will give his first policy address. China was due to release home prices data Wednesday, but the release has been delayed.

Indonesia’s central bank starts a two-day board of governors meeting Wednesday.

TICKER	COMPANY	NAME	PRICE	CHANGE	%CHANGE
.N225	Nikkei 225 Index	*NIKKEI	27348.63	192.49	0.71
.HSI	Hang Seng Index	*HSI	16777.43	-137.15	-0.81
.AXJO	S&P/ASX 200	*ASX 200	6817.4	38.2	0.56
.SSEC	Shanghai	*SHANGHAI	3066.65	-14.31	-0.46
.KS11	KOSPI Index	*KOSPI	2263.95	14	0.62
.FTFCNBCA	CNBC 100 ASIA IDX	*CNBC 100	6933.33	-24.63	-0.35

Overnight in the U.S., strong earnings reports fueled stock gains for a second session. The Dow Jones Industrial Average added 337.98 points, or 1.12%, to close at 30,523.80. The S&P 500 advanced 1.14% to 3,719.98. The Nasdaq Composite gained 0.90%, finishing at 10,772.40.

“Equities rallied for a second day in a somewhat choppy session as investors weigh up the earnings outlook against rising interest rates,” ANZ Research analysts wrote in a note.

— CNBC’s Jesse Pound and Carmen Reinicke contributed to this report.

Shares of Apple suppliers fall on report of iPhone 14 Plus production cut

Shares of Apple suppliers in Asia slipped after the tech firm reportedly asked a manufacturer in China to halt the production of an iPhone 14 Plus component as Apple re-evaluates demand for the product.

The Information reported that two other suppliers that assemble modules from that component have also cut production dramatically.

LG Innotek and SK Hynix in South Korea lost around 2%, while Japan’s TDK Corporation and Murata Manufacturing shed more than 1% each.

Apple’s stock briefly lost $4 per share overnight, but closed the regular session 0.94% higher as major indexes gained.

— Abigail Ng

CNBC Pro: Goldman Sachs outlines four economic scenarios and predicts how gold will perform in each

It’s been a choppy year for gold, with the precious metal “torn between growth and inflation risks and higher real rates and the strong dollar,” Goldman analysts wrote in an Oct. 11 note.

“In our view, there remains a lot of uncertainty around the future path of U.S. inflation, growth, rates and the central bank (CB)’s reaction functions.”

Goldman ran four different economic scenarios, and predicted where gold prices could end up in each case.

Spot gold prices year-to-date Chart

— Weizhen Tan

U.S. crude futures move up $1 per barrel on expectations that Biden will release oil from Strategic Petroleum Reserve

Futures of West Texas Intermediate crude moved up around $1, or 1.33% and futures of Brent crude

rose $0.83, or 0.92% as the Biden administration is expected to release more oil from the U.S. Strategic Petroleum Reserve.

The plan could be announced as early as Wednesday, sources told CNBC.

The move aims to extend the current SPR delivery program, which began this spring, through December, the sources said.

–Kayla Tausche, Jihye Lee

RBNZ likely to deliver ‘jumbo hike’ of 75 basis points in November: ANZ

Economists at ANZ expect the Reserve Bank of New Zealand to deliver a hike of 75 basis points each at its upcoming meetings in November and February.

New Zealand’s central bank lifted interest rates by 50 basis points to 3.5% earlier this month, bringing the cash rate to a seven-year high.

ANZ said the Reserve Bank of Australia is likely to take a more conservative path than the RBNZ, which will result in a “much wider policy differential going forward in 2023.”

RBNZ’s next monetary policy meeting is slated to take place Nov. 23.

–Jihye Lee

Apple falls on report of a production cut

Shares of Apple declined and briefly turned negative after a report from The Information that the tech giant was cutting production of its new iPhone 14 Plus.

The move by Apple, the biggest U.S. stock, brought the major averages back near their lows of the day, though they have since recovered some of that ground.

Apple’s afternoon dip Chart

—Jesse Pound

How much higher can the Fed drive the 10-year yield?

The Fed is widely expected to hike by another three-quarters of a percentage point next month, but the central bank may be reaching its limit for dictating long-term interest rates, according to The Leuthold Group’s Jim Paulsen.

“There is considerable precedent in past tightening cycles for the Fed to be shut down by the bond market “blinking” first. The Fed may soon attempt to raise the funds rate to 4%, 4.5%, or even 5%. But at some point, longer-term bonds may simply stop rising and refuse to follow the Fed’s lead,” Paulsen wrote in a note to clients on Tuesday.

The 10-year Treasury yield has traded above 4% in recent days, reaching its highest levels in more than a decade. With growing concern about a recession in 2023, it may be close to a ceiling, Paulsen said.

“Each time the Fed further tightens monetary policy, recession fears are elevated relative to inflation fears. Ultimately, as the Fed becomes more and more aggressive, recession becomes a bigger worry than inflation, and bond buyers begin outnumbering bond sellers—that is, the bond market blinks,” Paulsen added.

— Jesse Pound

Source : CNBC