Currency check: Asa-Pacific currencies strengthen sharply, led by the Chinese yuan
Both the onshore and offshore Chinese yuan strengthened against the dollar in Asia’s session ahead of a press conference on Covid measures.
The greenback lost 1.09% against the offshore yuan and 0.65% against the onshore yuan, with both trading around 7.16-levels. The offshore yuan traded near 7.24 per dollar before it strengthened sharply.
Chinese indexes pop ahead of Covid briefing
Indexes in China jumped more than 2% as investors closely watched for developments in the nation’s zero-Covid policy after seeing losses in the previous session.
Local media reported that the Chinese State Council will hold a press conference on Covid measures at 3 p.m. local time, or 2 a.m. ET.
The nation saw a drop in the number of daily infections for the first time in more than a week.
– Evelyn Cheng, Jihye Lee
China’s Xi will likely continue to be ‘very pragmatic,’ including on Covid policy, strategist says
Chinese President Xi Jinping has been realistic and practical on Covid, domestic real estate issues and politics since the end of the Communist Party of China’s National Congress, said Andy Rothman, an investment strategist at Matthews Asia.
“He’s been pragmatic on Covid policy, announcing a change in direction more towards living with Covid rather than Covid zero,” he said on CNBC’s “Squawk Box Asia” when asked about how the government might respond to recent unrest in parts of China.
“He’s been pragmatic on property, he’s been very pragmatic on dealing with Joe Biden, so I expect that to continue,” Rothman said.
He added that he views the unrests related to the prolonged zero-Covid policies as largely in line with what is expected to come from the Chinese government.
“What the protesters seem to be asking for, are things Xi Jinping has already said he wants to deliver,” he said. “He wants to deliver a path out of zero tolerance for Covid, towards living with Covid like all the rest of the world.”
Rothman added that the latest announcements to ease quarantine measures for international travelers suggests that delivering shifts from the zero-Covid policy will be “relatively easier.”
“He’s not backing down, [or] giving in under pressure, he’s just delivering, on a more accelerated pace, what he’s already told these students that he wants to give them,” he said.
— Abigail Ng
Oil prices jump more than a dollar ahead of China briefing
Oil prices climbed ahead of a press conference which will be held by China’s State Council, as investors continue to monitor developments – paring some losses seen on Monday, when it reached the lowest levels in almost a year.
However, oil markets may be “misjudging news of China’s lockdown,” Rystad Energy wrote in a note.
“[The latest lockdowns’] likely effect on China’s short-term oil demand, particularly in transportation, is likely to be minor,” the note added, citing the company’s own research of real-traffic activity in China.
Even with daily Covid cases continuing to climb, cities like Shanghai have not shown a slowdown in road traffic activity, according to Rystad Energy’s own research.
— Lee Ying Shan
China likely won’t make sudden changes to its Covid policy: National University of Singapore
The Chinese government is unlikely to make sudden changes to its zero-Covid policy as that will bring chaos, National University of Singapore Professor Wang Gungwu said on CNBC’s “Squawk Box Asia.”
“If you change the policy suddenly, I think the damage and the consequences would be even worse — it’d be really chaotic because I think the spread of Covid will be absolutely unprecedented,” said Wang.
He added that he expects Chinese leader Xi Jinping to make adjustments on more local levels to ease public dissent.
Wang said Xi doesn’t want to officially admit the “policy has been wrong for quite a while,” but also cannot change it immediately.
– Jihye Lee
Hong Kong-listed property stocks rise after China amends fundraising rule
Equities related to Hong Kong-listed property developers jumped after China’s regulator announced it would lift a ban on equity fundraising for the sector.
The China Securities Regulatory Commission announced five measures of support for the real estate market, including the removal of a multi-year restriction on property developers selling stocks to raise funding.
— Jihye Lee
Hong Kong on pace for best month since April 1999
Hong Kong’s Hang Seng index is on pace to post its best month since April 1999, when the index gained 21.85%.
The index rose more than 3% as of Tuesday morning, and is up around 22% for the month of November, according to Refinitiv data.
The HSI closed 1.57% lower on Monday, the worst day in a week, when the Hang Seng lost 1.87% on Nov. 21.
–Gina Francolla, Jihye Lee
Japan’s unemployment rate unchanged, retail sales miss estimates
Japan’s unemployment rate for October was steady from September’s reading of 2.6%, according to official data. The figure is slightly higher than the mean expectation of 2.5% from economists polled by Reuters.
The jobs-to-applicant ratio, which measures active job openings per jobseeker, was at 1.35. That indicates that there are 135 jobs available for every 100 applicants, signaling a still tight labor market in Japan.
The nation’s retail sales rose 4.3% in October on an annualized basis, missing expectations of 5% increase predicted in a separate Reuters poll .
The latest reading marks the first softening in retail sales growth that it’s seen since June this year.
– Jihye Lee
Fed should keep hiking into next year, Bullard says
James Bullard at Jackson Hole, Wyoming.
David A. Grogan | CNBC
St. Louis Fed President James Bullard said Monday that the Fed should continue to raise its benchmark interest rate in the coming months and that the market may be underestimating the chance that the Fed has to get more aggressive.
“We’re going to have to continue pursue our interest rate increases into 2023, and there’s some risk that we’ve have to go even higher than [5%],” Bullard said at a Barron’s Live webinar.
Bullard made waves in financial markets earlier this month when he said the Fed’s hikes have had “only limited effects” on inflation so far and that the benchmark interest rate may need to rise to between 5% and 7%.
Bullard, who is a voting member of the FOMC, said that the Fed will need to hold off any rate cuts next year even if the inflation picture starts to show consistent improvement.
“I think we’ll probably have to stay there all through 2023 and into 2024, given the historical behavior of core PCE inflation or Dallas Fed trimmed mean inflation. They will come down, I think. That’s my baseline. But they probably won’t come down quite as fast as markets would like and probably the Fed would like,” Bullard said.
— Jesse Pound
CNBC Pro: Asset manager names 9 ‘cheap’ stocks to buy as recession fears grow
It’s “critical” for investors to be looking at valuations right now as a recession is looming and inflation looks likely to continue, said Steven Glass, managing director of Pella Funds Management.
In this environment, Glass selected a list of nine stocks that he said, “look particularly cheap given their growth outlook.”
— Weizhen Tan
Cryptocurrency prices drop but quickly recover after BlockFi declares bankruptcy
The price of bitcoin took a dip on Monday after BlockFi officially announced it has filed for Chapter 11 bankruptcy in the wake of FTX’s bankruptcy.
Bitcoin briefly dropped to as low as about $16,000 but has rebounded already. It was last lower by just 1% to above $16,300, according to Coin Metrics. The action in the ether price showed a similar bounce.
BlockFi has been in bad shape since the spring, following the blowup of the Terra project that led to the implosion of Three Arrows Capital. At that time, the company accepted a bailout from FTX that would help it stave off bankruptcy. Of course, FTX is now managing its own bankruptcy.
— Tanaya Macheel
CNBC Pro: Goldman Sachs names the global automakers exposed to a China slowdown
Many global companies are heavily exposed to China, including some of the world’s biggest automakers, which generate between 20% and 40% of their worldwide sales in the country, according to Goldman Sachs.
In a note to clients on Nov. 22 — before the latest protests — the investment bank mapped out the global auto industry’s exposure to Chinese consumers.
— Ganesh Rao
Stocks end Monday’s session lower
After a winning Thanksgiving week, the three major indexes ended Monday down as investors sold off amid mounting concerns over supply chain disruptions amid Covid-related protests in China.
— Alex Harring