Asia markets mixed after the US reached the debt ceiling agreement; Japanese stocks hit their highest level since July 1990

Chief investment officer for Asia-Pacific Stephanie Holtz-Jain said Deutsche Bank “remains optimistic” about China in the medium and long term despite the uneven economic recovery.

“Overall, it’s an uneven recovery. I think everyone understands that now,” Holtz-Gene said on CNBC’s “Squawk Box Asia” Monday. Chinese industrial companies saw profits decline at a slower pace in April while retail sales jumped 18.4% year-on-year.

“But they are parts of the economy that are going to get a lot of support, especially on the consumer side. And we’ve got a lot of pronouncements from the government on that,” said Holtz-Jain.

The Communist Party had said in April that it would continue to support the economy, with a focus on boosting domestic demand.

“We have seen that the data on the May Day holiday in China is very interesting,” she added. Over the Labor Day weekend, China’s tourism industry rebounded to pre-COVID 19 levels, with domestic flights up more than two-thirds from last year.

“The rest of Asia also benefits a lot from the China reopening story that will be with us for a while longer,” said Holtz Jain, noting that Thailand is reporting “very optimistic tourist inflows from China.”

“We remain very optimistic about the Asia complex, especially compared to the United States and Europe,” said Holtz-Jain.

– Sheila Chiang

SMBC said in a note on Monday that the dollar index could rise to 105 in the short term with the release of the US jobs report later this week as well as an imminent vote on the debt ceiling deal.

“Asian currencies are expected to weaken, but the decline may be limited as more market participants are also looking for opportunities to rally Asian currencies in preparation for risk sentiment after the Fed halted interest rate hikes,” Ryota Abe, an Asia-Pacific economist at Written by Sumitomo Mitsui Banking Corporation (SMBC).

The dollar index fell marginally to 104.164 in the morning Asian session. The Japanese yen rose slightly to 140.52 against the US dollar, while the offshore Chinese yuan weakened to 7.0791 against the dollar.

“Last week’s US economic data supports hawkish stances on raising interest rates,” Abe wrote in the note. “In combination with the Consumer Price Index released earlier this month, the data shows stronger-than-expected inflationary pressures, reigniting concerns about inflation in the United States,” he wrote.

– Jihe Lee

Jeremy Siegel, a professor at the Wharton School, said he worries that tougher lending standards could combine with the US Federal Reserve’s “massive tightening” to hurt small and medium-sized businesses later this year.

“I think the smart money has really settled in that there will be a (debt ceiling) deal, so it illustrates a little bit of uncertainty, but there are a lot of concerns going forward about the Fed’s massive tightening,” Siegel said. CNBC Monday.

He added that “the problems of banks will not lead to a crisis of bank deposits, but to tighten lending standards, especially for small and medium-sized companies.” “And I’m worried about the second half of the year and maybe what we might see now is a focus on those problems.”

– Clement Tan

Japanese trading and distribution services and technology stocks were the top gainers on Japan’s Nikkei 225 on Monday, with the index jumping 2% at the open and finally trading 1.32% higher.

Nikon optics and imaging was the biggest gainer on the index, advancing 4.51%, while semiconductor equipment manufacturer Advantest was the second biggest gainer, up 4.18%.

Other names on the list of gainers included trading companies Sumitomo Corporation and Mitsubishi, as well as Softbank Group.

Deloitte China told CNBC that the recent drop in industrial profits in China provides an argument for its central bank to cut interest rates.

“There is no inflation in China, so you need more loose monetary policy,” Deloitte’s chief China economist, Sitao Xu, told CNBC’s “Squawk Books Asia” Monday.

He noted that the PBOC’s daily USD/CNY reference rate, or fixed midpoint, works similarly to an interest rate cut.

“If you look at the recent change in the exchange rate, the effect is the same as the interest rate drop,” he told CNBC.

On Monday, the People’s Bank of China set the yuan to peg at 7.0575 compared to the previous session’s 7.0760 against the US dollar.

– Jihe Lee

Artificial intelligence has stormed the investment world since early this year — thanks in large part to the advent of ChatGPT, which has set off a wave of buying into AI-related stocks.

Is it here to stay or just hype?

Bull and Bear faced off on CNBC’s “Street Signs Asia,” telling investors how they can navigate the dilemma, as well as which stocks will play the trend.

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– Wizen tan

Singapore state-owned investor Temasek has cut compensation for senior management and the investment team responsible for recommending investments in failed cryptocurrency exchange FTX.

“Although there was no misconduct by the investment team in accessing their investment recommendations, the investment team and senior management, ultimately responsible for the investment decisions made, were collectively held liable and reduced their compensation,” President Lim Boon Heung he said in a statement.

The move by Temasek comes after it launched an internal review to look at its investment in FTX, which resulted in a $275 million writedown.

Lim added that there was fraudulent behavior by FTX that was “intentionally hidden from investors, including Temasek.” The statement did not specify the number of employees affected nor the severity of the pay cuts.

– Lim Hwi Ji

Cleveland Federal Reserve President Loretta Mester told CNBC on Friday that she expects more interest rate increases will be needed as inflation continues to rise.

“When I look at the data and look at what’s going on with the inflation numbers, I think we’re going to have to tighten up a little bit more,” Meester said on “Squawk on the Street.” “We’ve made progress. Now this is calibration training, and this is the hard one.”

Mester is a non-voting member this year of the Federal Open Market Committee, which sets interest rates.

– Jeff Cox

The core personal consumption expenditures index, the Fed’s preferred measure of inflation, rose 0.4% in April. That’s more than economists polled by Dow Jones expected. On a year over year basis, core personal consumption expenditures rose 4.7%, also more than expected.

– Fred Imbert

Markets raised bets on a June rate hike from the Federal Reserve after hotter-than-expected inflation data on Friday morning.

The odds of a quarter percentage point increase jumped to 56%, according to CME Group data. This came after a report showed that personal consumption expenditures prices rose 0.4% in April and 4.7% from a year ago.

The chances of an increase were only 17% a week ago. The probability of a price hike no later than July has increased to 75%.

– Jeff Cox

The final reading of consumer confidence in May was slightly above expectations. University of Michigan consumer confidence index It came in at 59.2, while economists polled by Dow Jones had expected a reading of 57.7.

This level is certainly much lower than the 63.5 in April.

“Consumer sentiment fell 7% amid concerns about the economy’s path, erasing nearly half of the gains made after an all-time historic low last June. The decline mirrors the 2011 debt-ceiling crisis, during which sentiment also slumped,” Surveys writes consumer director Joanne Hsu.

– Fred Imbert