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Japan stocks rise more than 2% as BoJ makes no change to yield range

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Bank of Japan’s Kuroda: No need to further expand bond target band

Bank of Japan’s governor Haruhiko Kuroda said in an afternoon press conference on Wednesday that there is no further need to expand its yield curve control range, according to a Reuters translation.

“We don’t need to further expand the band around our yield target,” Kuroda was quoted as saying.

“It’s been not long since we decided on our measures in December. It will likely take some more time for the measures to start having an effect in fixing market function,” he said.

The Bank of Japan held its interest rates at a dovish -0.1% rate and made no changes to its yield curve control band.

– Jihye Lee

China’s equity market will be 2023’s top performer, Morgan Stanley estimates

We're getting even more bullish on Chinese stocks, says Morgan Stanley

Morgan Stanley estimates that the Chinese equity market will emerge as the best performer in 2023.

The MSCI China index will reach 80 and the Hang Seng index will rise to 24,500 by the end of the year, Morgan Stanley’s Chief China Equity Strategist Laura Wang said. This would mark around a 15% upside from where the market is trading now.

“This actually implies that the Chinese equity market will actually top the global equity market performance for 2023, so this is the time to get back into China,” she noted.

Wang’s recommendation is to buy the stocks of large-cap and highly liquid internet names.

The internet sector has “very high correlation with the general momentum of consumption pickup in China,” especially in the country’s post Covid recovery journey, she said.

Wang added many global institutional investors are still quite significantly underweight on these large cap liquid names.

—Lee Ying Shan

CNBC Pro: ‘Absolutely unique’: Fund manager names 2 stocks to play the semiconductor sector

Semiconductor stocks are looking up after a rough 2022 — and fund manager Trent Masters says two stocks are well placed to ride out the volatility.

Pro subscribers can read more here.

— Zavier Ong

Oil prices climb on more China reopening optimism and demand rebound

Oil prices are supported on further China reopening optimism and fuel demand, with OPEC forecasting that Chinese oil demand is on track for a bounce.

Brent crude futures rose 0.85% to $86.65 a barrel, while the U.S. West Texas Intermediate futures gained 0.91% to $80.91 a barrel.

“Chinese oil demand is on course to rebound due to the recent relaxation of the country’s zero-Covid measures,” OPEC’s monthly oil report stated.

It added that China’s first quarter oil demand will rebound from an annual decline of 0.3 million barrels per day year-on-year in 2022’s fourth quarter to 0.2 million barrels per day annualized growth.

– Lee Ying Shan

Japanese yen weakens after BoJ announces no change to yield curve range

The Japanese yen weakened against the greenback after the Bank of Japan surprised markets by keeping its yield curve tolerance band unchanged.

The Japanese yen weakened 2.04% against the U.S. dollar after the announcement and last stood at 130.94.

“Japan’s economy is projected to continue growing at a pace above its potential growth rate,” the central bank said in a statement.

The Bank of Japan also left its interest rate unchanged at an ultra-dovish -0.1% – in line with expectations and maintaining the same rate it’s kept since 2016.

—Jihye Lee, Lee Ying Shan

Gaming shares jump after China grants license approvals

Hong Kong listed gaming stocks rose after China granted license approvals for 88 games, amongst which include NetEase, Tencent Holdings and miHoYo, marking a further easing of Beijing’s gaming crackdown.

Shares of NetEase jumped as high as 6.81% in early trade, notching its highest in more than four months. Tencent stocks added 0.11%.

–Lee Ying Shan

Bank of Japan likely to lift yield curve control another 50 basis points: UBS

Japan’s central bank is likely to broaden its 10-year treasury yield curve control range by another 50 basis points to a range of 1% below and above its 0% target, UBS Global Wealth Management executive director Tan Teck Leng said.

“The scenario of a completely abandonment of the YCC is unlikely,” he said on CNBC’s “Squawk Box Asia,” adding a move would be “uncharacteristic” of the central bank.

“I think the easiest for them to do is remove the cap, let it find fair value – but then again it comes to very big uncertainties, which is why we think that, as a middle ground, they have to at least raise it to a 1.0% cap,” he said.

The yield on the 10-year Japanese Government Bonds exceeded the upper ceiling of its band for a 5th straight session on Wednesday morning ahead of the BOJ’s monetary policy announcement.

Japan’s core manufacturing orders for November slump more than expected

Japan’s private-sector manufacturing orders for November fell 8.3% compared to the previous month, according to official data.

The drop was significantly larger than Reuters’ expectations of a 0.9% decline. On an annualized basis, manufacturing orders fell 3.7%.

The private-sector machinery figures exclude orders from volatile ones for ships and electric power companies.

—Lee Ying Shan

CNBC Pro: Thinking of jumping back into Big Tech? This investor is wary of 2 stocks in particular

CNBC Pro: Morgan Stanley says cheaper EVs are coming — and names the global stocks set to benefit

As electric cars become increasingly popular, a new manufacturing technique that could make them more affordable is garnering interest, according to Morgan Stanley.

Some automakers are outsourcing the process which could benefit three leading Asian parts suppliers, said the Wall Street bank.

CNBC Pro subscribers can read more here.

— Ganesh Rao

Stocks end the day mixed, Dow falls almost 400 points

The Dow Jones Industrial Average Index fell to end the day, as Goldman Sachs shares weighed on the stock index.

The Dow lost 391.76 points, or 1.14%, to close at 33,910.85. The S&P 500 fell 0.2% to 3,990.97. The Nasdaq Composite gained 0.14% to end the day at 11,095.11.

— Tanaya Macheel

Bank of America sees a later start to the recession

A recession probably won’t start now until later in 2023 as consumer spending has been stronger than expected and the Federal Reserve eases up on the intensify of its interest rate hikes, according to Bank of America.

“We push back the timing of our outlook for a mild recession in the US economy by about one quarter given durability in consumer spending on account of strong labor markets, excess saving, declining energy prices, and easier financial conditions,” the firm said in a client note. “That said, we think the headwinds will lead consumers to reduce spending and push the saving rate higher as the year progresses.”

That puts the recession into the second quarter, driven by a an investment-led slowdown leaking to consumer spending.

After pushing its benchmark borrowing rate up by 4.25 percentage points in 2022, the Fed is expected to ease back, with a 0.25 percentage point increase in February. That is forecast to be followed by additional quarter-point increases in March and May.

Rate cuts likely won’t come until 2024, the firm said.

—Jeff Cox

Goldman Sachs shares fall on earnings miss

Goldman Sachs shares declined 2.4% after the Wall Street investment bank shared fourth-quarter earnings results that missed analysts’ expectations on both the top and bottom lines.

The bank reported earnings of $3.32 per share on $10.59 billion in revenues. Consensus estimates called for earnings of $5.48 a share on revenues of $10.83 billion, according to analysts surveyed by Refinitiv.

Provisions for credit losses also came in slightly above expectations.

— Hugh Son, Samantha Subin

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