China activity from reopening not yet reflected oil prices, says analyst
The demand from China’s reopening is not yet fully reflected in oil prices, said Paul Sankey, president and lead analyst at Sankey Research.
“China data is looking really lively from a mobility and activity standpoint, but it’s not really showing up in oil prices,” he said, adding that the oil prices are not acting as well as they expected it would right now.
Brent crude futures inched up 0.10% to $83.24 a barrel, while the U.S. West Texas Intermediate futures added 0.17% to $76.45 a barrel.
Sankey further said that OPEC member Saudi Arabia would want oil prices $10 above where they are at currently.
“I do think that Saudi Arabia will manage the market into summer and get us towards $100 per barrel,” he said.
—Lee Ying Shan
People’s Bank of China maintains moderately dovish tone in report
The People’s Bank of China maintained a moderately dovish tone in its quarterly report, reiterating its current stance was considered appropriate to support economic growth and stability.
The central bank reiterated its support for a cross-cyclical adjustment to boost demand and provide stronger support for the economy.
It also repeated its pledge to maintain sufficient liquidity and credit growth while keeping its money supply and social financing growth at a similar pace as its nominal gross domestic product.
The PBOC added its required reserve ratio cuts last year were one of the tools the central bank used to support lending, without elaborating further.
— Jihye Lee
CNBC Pro: Investor says tech has yet to bottom — and reveals the FAANG stocks to avoid
Bear market rally or a new bull market? Market pros are undecided about this year’s tech bounce, but investor Mark Hawtin thinks the worst could be yet to come.
And while FAANG stocks are popular among many investors, Hawtin believes some are riskier bets than others.
Pro subscribers can read more here.
— Zavier Ong
Chip stocks continue slide after U.S. reportedly mulls caps on South Korean chipmakers
Shares of South Korean chipmakers continued their slide on Monday.
Major chipmakers like Samsung and SK Hynix saw their shares fall by 1.63 and 1.54% respectively, while LG Electronics saw a smaller fall of 1.32%. The Kospi led losses in Asia overall, trading at 1.46% lower.
This comes after Reuters reported on Friday that the U.S. will likely impose a limit on the level of chips made by South Korean companies in China.
Reuters cited the U.S. Commerce Department’s undersecretary for industry and security Alan Estevez, who said that “What will likely be is a cap on the levels that they can grow to in China,” when asked what would happen after a waiver from the U.S. government-imposed rules on chipmakers in China expires.
Shares of other major chipmakers also saw losses on Monday, with Taiwanese chipmakers Hon Hai Precision Industry (also known as Foxconn) down 1.94% and Taiwan Semiconductor Manufacturing lower at 1.35%.
— Lim Hui Jie, Jihye Lee
CNBC Pro: ‘The market has gone too far:’ Chief global strategist predicts when the Fed will cut rates
Despite efforts by the U.S. central bank to tighten financial conditions, “the market has gone too far,” according to Seema Shah, the chief global strategist at Principal Global Investors,
The strategist told CNBC how the Federal Reserve might react and when it will cut interest rates that could boost stock markets.
Fed’s Mester says rates need to go above 5% to quell inflation
Interest rates need to go even higher for inflation to come down, Cleveland Federal Reserve President Loretta Mester said Friday.
“I see that we’re going to have to bring interest rates above 5%,” she told CNBC’s Steve Liesman during a “Squawk Box” interview. “We’ll figure out how much above. That’s going to depend on how the economy evolves over time. But I do think we have to be somewhat above 5% and hold there for a time in order to get inflation on a sustainable downward path to 2%.”
Mester made news recently when she revealed that she was among a small group of Fed officials who, at the Jan. 31-Feb. 1 Federal Open Market Committee, wanted a half percentage point rate hike rather than the quarter-point move the panel approved.
— Jeff Cox
China Renaissance says Bao Fan is cooperating with a government probe
Missing Chinese investment banker Bao Fan is cooperating with a government investigation, his firm China Renaissance said in a filing Sunday.
“The Board has become aware that Mr. Bao is currently cooperating in an investigation being carried out by certain authorities in the People’s Republic of China,” the company said, noting its business operations remain normal.
China Renaissance’s Hong Kong-listed shares have plunged 29% since the firm said on Feb. 16 it was unable to reach Bao. He is the company’s controlling shareholder, chief executive officer and founder, among other roles.
— Evelyn Cheng
Asia week ahead: Growth, inflation and purchasing managers’ index readings
Regional readings for purchasing managers’ index, Japan’s industrial production and Australia’s gross domestic product will be some of the major economic events taking place this week.
New Zealand is slated to report its fourth quarter retail sales on Monday while Taiwan observes Peace Memorial Day until Tuesday.
On Tuesday, Japan is scheduled to release its industrial output and retail sales while Australia will announce its current account for the fourth quarter.
India will also report its gross domestic product for its fourth quarter on Tuesday. Overnight, U.S. consumer confidence for February will be released as well.
South Korea’s market will be closed on March 1 to observe the Independence Movement Day.
On Wednesday, China’s National Bureau of Statistics will release its government reading of purchasing managers’ index after it showed a return to growth of 50.1 in January.
Australia will release its inflation reading and the gross domestic product for the fourth quarter. Economists polled by Reuters are expecting to see growth of a seasonally adjusted 2.8% on an annualized basis.
Indonesia will also announce its February consumer price index, which is expected to rise to 5.42% from a previous reading of 5.28%, according to a Reuters poll.
On Thursday, fourth quarter trade data from New Zealand will be released as well as South Korea’s industrial output and retail sales. S&P Global Manufacturing PMI for South Korea is also scheduled to be released.
On Friday, Japan’s unemployment rate for January is expected to come in at 2.5% for January, according to a Reuters poll. Tokyo’s consumer price index for all items except for fresh food is expected to have risen 3.3% for January.
— Jihye Lee
Investors need to ‘control what they can control,’ says Baird
The market is currently experiencing the effects of “too much good news at once,” according to Baird analyst Ross Mayfield. With inflation remaining hot and the Federal Reserve expected to continue rate hikes, Mayfield advises investors to “control what [they] can control.”
“First, automate things: dollar cost averaging (investing across regularly scheduled intervals) is a great avenue to find outperformance in volatile/sideways markets,” wrote Mayfield in a Friday note.
“Second, revisit your allocation to ensure you’re well diversified and on-plan.”
— Hakyung Kim
Stocks wrap up worst week of the year
U.S. stocks ended lower on Friday, wrapping up their worst week of 2023.
The Dow Jones Industrial Average fell by 336 points, or 1.0%. The S&P 500 and Nasdaq Composite slid 1.0% and 1.7%, respectively. The Dow fell as much as 510 points, or 1.54%, earlier in the trading session.
— Hakyung Kim