Asia-Pacific markets mostly higher as Japanese stocks see second day of losses

Soegeefx AppsAsia MarketAsia-Pacific markets mostly higher as Japanese stocks see second day of losses

Jihye Lee

Markets in the Asia-Pacific traded mixed after Wall Street ended its four-day losing streak as global bonds rose after the Bank of Japan adjusted its yield curve control tolerance.

Japan continued its second day of losses, as the Nikkei 225 fell 0.98% and the Topix lost 0.65%. The Japanese yen stood at 131.62 against the U.S. dollar. The Kospi in South Korea erased earlier gains and was flat.

.N225 Nikkei 225 Index *NIKKEI 26550.84 -17.19 -0.06
.HSI Hang Seng Index *HSI 19181.15 86.35 0.45
.AXJO S&P/ASX 200 *ASX 200 7115.1 90.8 1.29
.SSEC Shanghai *SHANGHAI 3077.15 3.38 0.11
.KS11 KOSPI Index *KOSPI 2338.03 4.74 0.2
.FTFCNBCA CNBC 100 ASIA IDX *CNBC 100 7861.95 34.09 0.44

The S&P/ASX 200 in Australia rose 1.39% in its morning trade as the country’s foreign minister Penny Wong is slated to meet her Chinese counterpart Wang Yi in Beijing later in the day. Wong told reporters before departing for the trip that she will push China to lift trade sanctions and seek consular access to two detained Australians.

Hong Kong’s Hang Seng index gained 0.4% as Chief Executive John Lee is scheduled to travel to Beijing as part of his annual visit until Saturday to brief state leaders on the city’s economic, social and political situation.

In mainland China, the Shenzhen Component rose 0.24% and the Shanghai Composite rose 0.15%.

Japan’s 2-year yield briefly tops zero for first time since 2015

The yield on 2-year Japanese government bonds briefly rose above zero for the first time since 2015 in Wednesday morning trade. The note gained 2.7 basis points to stand just below the flatline.

The yield on the 10-year JGB jumped more than 3 basis points to stand at 0.451%, also reaching 2015 highs, while the yield on the 30-year JGB inched up 2 basis points to trade at 1.6%. Yields move inversely to price, and a basis point is equal to 0.01%.

— Jihye Lee

Bank stocks in Tokyo rise again as wider index falls

Japan-listed stocks of financial institutions and banks rose for a second day, as the wider Nikkei 225 index fell – continuing its gaining streak after the Bank of Japan’s announcement to widen its yield curve control band. Mitsubishi UFJ Financial Group

, or MUFG, rose more than 8% in Japan’s morning session. Sumitomo Mitsui Financial Group also rose more than 6% and Mizuho Financial Group

also gained more than 4%.

SMFG rises after Bank of Japan announcement Chart

– Jihye Lee

Japanese yen at strongest in more than four months

The Japanese yen strengthened further overnight, after the Bank of Japan announced to widen its yield curve control band.

The currency strengthened by more than 5% against the Australian dollar and the New Zealand dollar – while it strengthened past 3% against the U.S. dollar.

– Jihye Lee

CNBC Pro: Fund manager says a recession is ‘imminent’ — and names cheap stocks to play it

Market watchers are increasingly worried about a looming recession and fund manager Steven Glass is no exception.

Against this backdrop, he says he’s focusing on companies with earnings visibility that are trading at attractive valuations.

His picks include a Big Tech name that he said is “extremely cheap” with “huge margin potential.”

— Zavier Ong

Stocks hold onto gains, snap 4-day loss streak

Stocks eked out a gain Tuesday, snapping a four-day streak of losses.

The Dow Jones Industrial Average rose 92.47 points, or 0.28%, to close at 32,850.01. The S&P 500 gained 0.11% to 3,821.73, while the Nasdaq Composite ticked up 0.01% to close at 10,547.11.

—Carmen Reinicke

Bank of Japan is more hawkish sooner-than-expected, signals

The Bank of Japan’s surprise policy shift sent interest rates rising globally, as investors reacted to more evidence central bankers around the world will continue to pressure interest rates higher.

“It was definitely a surprise. I don’t think there was anyone out there who expected it,” said Ben Jeffrey, rate strategist at BMO. The Japanese central bank moved sooner-than-expected to tighten policy. The BOJ changed its yield curve policy to allow the yield on the 10-year Japanese government bond to move 50 basis poins either side of its zero target rate, up from 25 basis points.

The announcement drove rates higher around the world, as yields on Japanese government bonds (JGBs) rose to 7-year highs. Rates move opposite yield. The U.S. 10-year jumped o 3.68%.

“They were definitely the last one standing in terms of being dovish, and now they’re still dovish but less so,” said Jeffrey. “It’s obviously bearish JGBs and fixed income globally, but in the longer term it should help the yen which will make Treasurys more attractive to Japanese investors next year.”

–Patti Domm

Expect a more challenging environment ahead, says Atlantic Equities

Atlantic Equities analysts are anticipating a more challenging backdrop for the global consumer in 2023.

“Inflation may well have peaked on a headline basis but input costs still remain elevated and companies will be looking to at least hold if not take further pricing in some cases,” analyst Edward Lewis said in a note Tuesday. “That may become more challenging as levels of elasticity are beginning to normalize with U.S. retailers starting to push back against pricing, in line with where European peers have been all year.”

He highlighted Coca-Cola and Pepsi as some of his favorite consumer picks, citing “category momentum, ongoing investment and strong execution supporting elevated growth.”

— Tanaya Macheel

Stock market has shed $11.7 trillion so far this year

It’s been a rough year for stocks, which are currently in a bear market and down year to date.

From the market’s yearly high on January 3 to this morning, U.S. stocks have shed $11.7 trillion in market cap, according to data from Bespoke Group.

“The max drawdown was $13.6 trillion at the low on 9/30, so we’ve seen market cap increase by just under $2 trillion since then,” analysts wrote Tuesday. “In dollar terms, this drawdown has been more extreme than anything investors have ever experienced. That’s pretty deflationary if you ask us!”

Of the $11.7 trillion, more than $5 trillion in losses come from just five companies – Apple, Microsoft, Amazon, Alphabet, Meta and Tesla.

—Carmen Reinicke

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