Asia-Pacific markets slide as recession fears mount, China vows to stabilize economy

Oil futures rise on hopes for China’s demand recovery

Oil futures rose in Asian morning trade as Optimism for the reopening of China leading to a recovery in demand outweighed recession fears.

futures of Brent Crude gained 1.16% to settle at $79.96 a barrel, while the US. West Texas Intermediate futures rose 1.18% to trade at $75.17 a barrel.

China recently issued plans to increase flights to accommodate a surge in travel for the upcoming Lunar New Year holiday, Caixin reported In the past week.

The report says officials have laid out plans to target nearly 90% of pre-pandemic levels by the end of January.

jihye lee

Hong Kong casino shares fall despite renewed licenses

Shares of Hong Kong-listed Macau casinos fell in Asian morning session despite win 10 year awards to operate its integrated resorts.

A concession is essentially an operating agreement with the government, which in turn licenses operators.

Wynn Macau fell 8%, while MGM China lost around 12%. Sands China also fell 4% and Galaxy Entertainment lost 3%.

The movements come as the media reported a rising number of deaths seen in Beijing and as Shanghai ordered schools to close, weakening investor confidence in China’s reopening path.

Jihye Lee, Countess Brewer

China to focus on stabilizing economy in 2023: Xinhua

China will prioritize stabilizing its economy and intensifying policy adjustments to meet key targets set for 2023, according to state media. The Xinhua news agency reported last week, marking the conclusion of the annual Central Economic Work Conference.

“Proactive fiscal policy should be intensified for its effectiveness, with a better mix of tools, including fiscal deficits, special purpose bonds and interest subsidies,” the report said.

Hao Hong of Grow Investment Group said that while he expects supportive policies such as interest rate cuts, he does not believe it will become his own version of quantitative easing. QE is a policy that the US Federal Reserve has previously adopted to stimulate economic activity by increasing cash.

“While some prominent economists advocate China’s quantitative easing, the recent Central Economic Work Conference suggests a more measured approach,” he said. “We believe the liquidity expansion will be structural and targeted, rather than a general easing.”

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CNBC Pro: Goldman Sachs Reveals Outlook for Greater China Tech, Names Top Picks for 2023

After a rough couple of years for Chinese tech stocks, investors are now hoping the worst is behind them.

What next for the affected sector? Goldman Sachs shares its outlook for Chinese technology and reveals how investors can trade in the sector in 2023.

Professional subscribers can read more here.

—Zavier Ong

Fed’s Daly Says ‘Nothing But Hope’ On Inflation Data ‘Far’ From Target

San Francisco Federal Reserve President Mary Daly said Friday that she sees the recent inflation news as welcome, but it’s not enough to change her mind about where policy should go.

The October and November readings of the consumer price index amounted to “good news,” but “we see nothing at this point but hope in the inflation data, and I am confident in the evidence, not hope. So I’m hopeful that I’m in a good truck, but I won’t be sure until I see repeated evidence that inflation has actually returned to the 2% path for years to come,” Daly said in a conversation hosted by the American Enterprise Institute. .

“We are very far from our price stability target,” he added.

Earlier this week, the Fed raised its benchmark interest rate by half a percentage point, the seventh hike this year that brought the level of funds to a target range of 4.25%-5%.

Daly, who does not vote on the rate-setting Federal Open Market Committee this year, said his own expectations of where rates are headed are likely to be higher than current market prices. Daly votes again in 2024.

—Jeff Cox

CNBC Pro: Analysts Love These 3 Renewable Energy Stocks That Offer Over 50% Upside

The expansion of renewable energy is projected to grow exponentially over the next five years, according to the International Energy Agency.

The The IEA forecast earlier this month that solar and wind energy would grow five times, which is equivalent to the clean energy capacity installed during the last 20 years combined.

Given this perspective for the energy transition to renewable sources, CNBC Pro evaluated actions that could offer opportunities to investors in the sector.

CNBC Pro subscribers can read more here.

—Ganesh Rao

The Fed is making a ‘terrible mistake’ by continuing to raise, says Wharton’s Siegel

The Federal Reserve’s plans to continue raising rates over the next year increase the chances of a very difficult recession ahead, according to Jeremy Siegel, a finance professor at the Wharton School of Business at the University of Pennsylvania.

“I think the Fed is making a terrible mistake,” he told CNBC’s “Squawk on the Street” on Friday. “His plan of his, his dot plot, is too tight. Inflation is basically over, despite the way the president [Jerome] Powell characterizes him.”

According to Siegel, the central bank should refrain from raising rates further or keep rates high next year.

“Talk about going higher and staying high in 2023, I think that would guarantee a very steep recession,” he said.

—Samantha Subin

UBS improves China’s growth outlook for 2023 and lowers forecast for 2022

UBS upgraded its outlook for China’s gross domestic product in 2023 to 4.9%, up from 4.5% previously, according to its chief China economist Wang Tao, citing an earlier and faster reopening in the nation.

Wang said the company expects weaker fourth-quarter GDP for 2022, lowering its full-year forecast to 2.7% from 3.1%, noting weakening November growth with a recent rise in cases of covid.

The firm added that the Central Economic Work Conference will likely prioritize stabilizing growth as well as supportive macro policies for the coming year.

“We expect fiscal policy to remain proactive with a small increase in the headline deficit and a new special LG [local government] bonds, monetary and credit policy to maintain support with continued ample liquidity, but further policy rate cut is unlikely,” Wang said in the note.

—Jihye Lee

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