Japanese market, FRB December minutes, China loss

Prime Minister Fumio Kishida announced that the Cabinet will approve the use of reserve funds to compensate for damage caused by the earthquake that hit Ishikawa Prefecture’s Noto Peninsula on New Year’s Day.

Reuters reported that the amount being considered at next Tuesday’s meeting will likely be doubled.
Approximately 2 billion yen ($13.95 million) was invested in similar disasters in the past.

The reserve fund is intended for the Japanese government to meet unexpected spending needs and requires Cabinet approval before it can be used.

— Lim Huijie, Reuters

Private sector business activity in Hong Kong improved at the fastest pace since April, according to S&P Global.

The city’s Purchasing Managers’ Index rose to 51.3 in December, higher than November’s 50.1.

S&P Global’s report noted that new business and production in Hong Kong have returned to growth, although the external demand situation remains weak.

“Nonetheless, improved overall sales supported accelerated employment growth, while businesses increased inventory holdings as cost pressures eased,” the report added.

— Lim Huijie

Japan Airlines shares fell as much as 2% on Thursday, but recovered slightly as Japanese markets resumed trading and reaction to the Jan. 2 crash of a JAL plane at Tokyo’s Haneda Airport.

In the accident, JAL Flight 516 collided with a Japan Coast Guard aircraft, resulting in the loss of five of the six crew members on board the Japan Coast Guard aircraft.

In a regulatory filing Thursday to the Japan Exchange, JAL said the estimated losses from the plane crash amounted to 15 billion yen (105 million yen) and would be covered by insurance.

Australian shares continued to fall after hitting a record high earlier this week, falling to a two-week low on Thursday.

The S&P/ASX 200 fell 0.53%, retreating from Tuesday’s all-time high of 7,632.70 and trading around 7,495, its lowest since December 19.

Minutes from the US Federal Reserve’s meeting in December showed a rate cut was likely in 2024, but there was little clarity on when the rate cut would occur. The Australian market fell in response to the gloomy global mood.

Speculation that the Reserve Bank of Australia will not raise interest rates in the future is buoying the country’s stock market, an expectation driven in part by the central bank’s dovish stance.

The Australian dollar rose 0.1% against the US dollar in early trading.

— Shreyashi Sanyal

Stocks soared in 2023 as investors were encouraged by the theory that interest rate hikes would end in 2024.

Tech stocks were the driving force behind the boom in trends such as artificial intelligence.

The S&P 500 index rose 24% and the tech-heavy Nasdaq Composite Index rose 43.4%, ending 2023 with its best year since 2020.

Still, some stocks trade at cheaper valuations than the broader S&P 500 index, and analysts expect them to deliver strong earnings growth in 2024.

CNBC Pro subscribers can read about them here.

— Tan Weizhen

Building the technology to power self-driving cars has proven extremely difficult for automakers.

Most recently, GM’s robotaxi service, Cruise, was shut down in San Francisco due to safety issues.

Against this backdrop, Deutsche Bank calls the stock a “rare long-term growth story” for the sector, as the company’s technology could find buyers among global automakers looking to add autonomous driving capabilities. listed.

CNBC Pro subscribers can read more here.

— Ganesh Rao

Oil prices rose more than 3% on Wednesday after the US warned Houthi militants against attacks in the Red Sea and OPEC pledged to stand together to help stabilize markets.

Libya’s Sharara oil field was also closed due to protests, two engineers told Reuters.

West Texas Intermediate February contract rose $2.32, or 3.29%, to settle at $72.70 per barrel. The March Brent contract added $2.36 (3.11%) to settle at $78.25 per barrel.

— Spencer Kimball

Minutes from the Federal Reserve’s December meeting show that while the central bank expects interest rates to fall in 2024, it believes its current policy stance is appropriate.

“In the forecasts submitted, nearly all participants indicated that the baseline forecast is appropriate to lower the target range for the federal funds rate by the end of 2024, reflecting the improved outlook for inflation,” the document said. He pointed out that he was doing so.”

“Participants generally emphasized the importance of maintaining a prudent and data-driven approach to monetary policy-making, and for some time to come until inflation is clearly and sustainably on target.” “We reaffirm that it is appropriate to maintain a restrictive policy stance,” he added. Purpose of the Committee. ”

— Jeff Cox

The benchmark 10-year U.S. Treasury yield rose above 4% on Wednesday, reversing a downward trend seen through the end of 2023.

The move put pressure on tech stocks and the S&P 500 real estate sector. The announcement was made ahead of the minutes of the Federal Reserve’s December meeting.

— Fred Imbert

A separate economic report on Wednesday showed job openings were broadly in line with expectations, but the manufacturing sector continued to contract.

According to the Department of Labor’s job openings and turnover rate survey, the number of job openings was 8.79 million, almost matching the Dow Jones forecast of 8.8 million. Total layoffs and hiring decreased.

Regarding manufacturing, the ISM Manufacturing Report measured 47.4 in December, slightly above expectations of 47.2 and better than November’s 46.7. This number represents the percentage of companies that reported expansion for the month, so anything less than 50 represents contraction.

—Jeff Cox