Reserve Bank of Australia says further hikes expected, but not on a fixed path
Australia’s central bank said it planned to continue raising interest rates, but was “not on a predefined path”, according to Governor Philip Lowe’s statement.
The council monitors factors such as the global economy and household spending in the country, Lowe said.
“The Board recognizes that monetary policy is operating with a lag and that the full effect of rising interest rates is yet to be felt on mortgage payments,” the statement said. “Household spending is expected to slow in the period ahead, although the timing and extent of this slowdown is uncertain.”
Jason Teh, chief investment officer at Vertium Asset Management, said rate hikes could hit the economy in early 2023 when mortgages move from fixed to variable rates.
“Many borrowers are going to feel a lot of pressure on how much they can spend in the local economy,” he told CNBC’s “Street Signs Asia.”
“Around the first quarter of next year, I think you will see some effect on the Australian economy,” he said.
CNBC Pro: Fund manager says a “turning point” for Big Tech is near. Here’s what he’s looking at
A fund manager said a “great week for a potential turn” in the Nasdaq Composite could be on the horizon.
The tech-heavy Nasdaq has fallen 26.2% this year as the Federal Reserve raised borrowing costs in a bid to keep inflation under control.
Julian Howard, director of multi-asset investments at GAM, told CNBC what catalyst to look for and when it might be a good time for tech investors to re-enter the market.
CNBC Pro subscribers can learn more here.
Australia’s central bank raises rates by 25 basis points as expected
The Reserve Bank of Australia on Tuesday raised interest rates by 25 basis points to 3.1%, in line with analysts’ forecasts in a Reuters poll.
It was the central bank’s third straight quarter-point hike and the eighth rate hike this year.
Inflation in Australia eased slightly in October to 6.9%, but is still well above the RBA’s target of 2-3%.
— Charmaine Jacob
CNBC Pro: Morgan Stanley Turns Bullish on Chinese Stocks, Giving Them Serious Upside Potential
Morgan Stanley has turned bullish on Chinese stocks for the first time in nearly two years as the country embarks on a “clear path to reopening”.
“We see a strong climb from here following the extreme underperformance of the past two years,” the bank said, although it warned that the road to recovery “will be bumpy”.
Morgan Stanley has highlighted a list of names it believes will benefit from the easing in China, two of which yielded a rise of around 130%.
CNBC Pro subscribers can learn more here.
Beijing announces new Covid easing measures
The city of Beijing has announced that negative Covid tests will no longer be required to enter most public spaces, shopping malls or residential areas, while bars and so-called KTV lounges, or karaoke bars.
Separately, Reuters reported on Monday that China could announce further easing of Covid restrictions as early as Wednesday, citing two sources with knowledge of the matter.
The report says there will be 10 new measures in addition to the 20 that were released in November.
Several cities in China have relaxed Covid testing rules in recent days.
—Evelyn Cheng, Abigail Ng
Foxconn announces lower revenue after Covid-related unrest at Chinese factory
Apple supplier Foxconn, also known as Hon Hai Precision Industry, said its monthly revenue for November fell more than 11% from the same period last year.
Revenue for the month totaled 551.1 billion New Taiwan dollars ($18 billion) and was down more than 29% from October.
The Taiwanese company said the drop was due to “production gradually entering off-peak seasonality and some shipments affected by the outbreak in Zhengzhou,” where the company operates the largest iPhone assembly plant. in the world.
Shares of the company fell 1.48% in the Asian morning.
Chinese markets to pause trade for 3 minutes on Tuesday as nation mourns former leader
Japanese household spending increases for fifth consecutive month
Japanese household spending rose 1.2% for the month of October from a year ago, marking the fifth consecutive month of growth since falling 0.5% in May.
The October reading is higher than expected, with analysts polled by Reuters predicting a 1% gain.
“The recovery in spending will need to slow as these households will be hit by real incomes,” Marcel Thieliant, senior Japan economist at Capital Economics, told CNBC’s “Squawk Box Asia.” The country’s real wages fell 2.6% a year in October, the biggest contraction in more than seven years.
“We believe the Japanese economy will enter a recession next year,” he said, adding that it would most likely be driven by lower exports, which could lead to increased caution in investments.
Japan is expected to release its revised gross domestic product data on Thursday.
CNBC Pro: Analysts Think These November Gainers Can Rally More – and Give 2 Over 160% Upside
These global stocks had a winning November, outperforming the MSCI World Index.
CNBC Pro reviewed FactSet for stocks that not only performed well last month, but could still see more upside.
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— Zavier Ong
Australia expected to hike rates by 25 basis points: Reuters poll
Australia’s central bank is expected to raise its key rate by 25 basis points to 3.1% on Tuesday, according to economists polled by Reuters.
It would be the Reserve Bank of Australia’s eighth hike this year and the third straight 25 basis point hike since October.
In a statement following its November meeting, the RBA said the “full effect” of the series of cash rate hikes is yet to come.
Meanwhile, Matt Simpson, senior market analyst at City Index, said there was potential for a pause in rate hikes further.
“The case for a break is definitely building,” he said. “Some measures of inflation expectations are down, and the monthly inflation figure suggests that inflation has peaked.”
Inflation in Australia remains well above the RBA’s target of between 2% and 3%, although it eased slightly in October, according to the central bank’s monthly consumer price indicator .
— Charmaine Jacob
Stocks end lower to start the week
Stocks ended lower on Monday as fears mounted that the Federal Reserve would continue to hike rates.
The Dow Jones Industrial Average slipped 482.78 points, or 1.4%, to end at 33,947.10. The S&P 500 fell 1.79% to 3,998.84, while the Nasdaq Composite fell 1.93% to close at 11,239.94.
— Samantha Subin