China inflation, China trade data, Nikkei high

The Bank of Japan stuck to its ultra-loose monetary policy last year, keeping interest rates at -0.1% and standing pat on its yield curve control policy that keeps the upper bound for 10-year Japanese government bond yield at 1% as a reference.

The central bank also remains wary of unwinding its policy stance, on fears that any premature move could jeopardize recent nascent economic improvements.

Richard Kaye, portfolio manager at Comgest says, “I think there’s even a possibility that we will not see fundamental change in monetary policy here.”

Kaye argues against what consensus expects will be a policy unwind from the BOJ soon, adding “there’s not that much pressure to change them. And again, on the inflation story, the idea is very much Japan is suddenly going to change its quantitative stance, I don’t think the data supports that.”

What investors will now be focusing on will be the annual spring wage negotiations in March, which is when the BOJ could likely make changes, if any, to its policy.

“But if we suddenly see a major change in wages, then we will see a major change in inflation readings, because so far wages are alright. There’s not that much pressure to change them,” Kaye says.

— Shreyashi Sanyal

Shares in mainland China and Hong Kong reversed losses after China’s consumer price index recorded a softer fall then expected in December.

The Hang Seng index rose 0.32%, while the CSI 300 was up 0.21%, after both opening in negative territory,

The country recorded an inflation rate of -0.3%, compared with -0.5% in November and also a softer fall compared with the 0.4% expected in a Reuters poll.

China’s producer price index — which measures the change in the price of goods sold by manufacturers — recorded a 2.7% fall year-on-year, softer than the 3% decline in November.

— Lim Hui Jie

Oil prices rose after Britain and the United States carried out military strikes against targets in Houthi-controlled areas of Yemen, U.S. officials said, as tensions in the Red Sea mounted.

Global benchmark Brent jumped 1.87% higher to $78.90 a barrel Friday Asia trading hours, while the U.S. West Texas Intermediate futures climbed 2.05% to $73.49 per barrel.

“These targeted strikes are a clear message that the United States and our partners will not tolerate attacks on our personnel or allow hostile actors to imperil freedom of navigation in one of the world’s most critical commercial routes,” U.S. President Joe Biden said in a statement Thursday evening.

– Lee Ying Shan

Shares of Japan retail holding company Fast Retailing spiked almost 7% after the company posted better than expected first quarter results. The company’s fiscal first quarter runs from September to November 2023.

The company is the largest stock on the Nikkei 225 index, making up 10.45% of its weightage.

Fast Retailing’s primary subsidiary is clothing chain Uniqlo, but also has other brands in its stable, such as discount casual wear retailer GU.

In an earnings release, the company said it has posted a net profit of 107.80 billion yen ($739.57 million), a 26.7% rise compared with the same period a year earlier. Total revenue was up 13.2% year on year to 810.83 billion yen, driven mainly by increased sales in Uniqlo.

Many investors have been bullish on technology stocks over the past few months, and Goldman Sachs is no exception.

The investment bank highlighted opportunities in the Asian tech hardware industry, citing “focal points” for 2024, such as cyclical recovery, artificial intelligence and the impact of geopolitical conditions, including changes in the semiconductor supply chain.

“While we expect a very modest cyclical recovery as a whole, we continue to look for opportunities among individual stocks,” Goldman Sachs’ analysts, led by Daiki Takayama, wrote in the note, naming buy-rated names, including four conviction list stocks to play the theme.

The bank’s conviction list comprises its top buy-rated stock ideas that are expected to beat the market.

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— Amala Balakrishner

Investors are eagerly looking forward to rate cuts this year — the U.S. Federal Reserve signaled at least three, which would end an aggressive interest rate-hiking campaign for the last couple of years.

The question is when the first of the rate cuts will come.

BofA created a screen of which global companies might outperform as rates fall, and have “not yet rallied as strongly” as the average historical performance following the initial cut of the cycles.

It also screened for companies under scenarios such as whether the Fed cuts at a faster or slower pace than the European Central Bank — and vice versa.

CNBC Pro subscribers can read more here.

— Weizhen Tan

Inflation rose at a greater-than-expected pace in December.

The consumer price index increased by 0.3% last month from November. Year over year, CPI was up 3.4%. Economists polled by Dow Jones expected CPI to have risen 0.2% month over month in December and 3.2% year over year.

However, So-called core CPI, which strips out food and energy prices, was in line pointing to a possible easing of pricing pressures.

— Fred Imbert

Slightly hotter than expected inflation data from December is unlikely to knock the Federal Reserve off course from cutting interest rates later this year, economist Paul McCulley said Thursday.

Even with the consumer price index showing that that inflation rose 3.4% from a year ago, McCulley contended that the Fed’s policy “pivot is unambiguously in.”

“The next move is a cut, and it’s going to be a series of cuts to take us back to neutral. That’s the theme the market is working on. I think it’s the right theme and the day’s data doesn’t change that really at all,” McCulley said during an interview on CNBC’s “Squawk on the Street.”

Nevertheless, stocks fell following the inflation news.

“It’s noisy in the data, it’s noisy in the market, but we’re fundamentally in a soft landing with a pivot already in rhetorically and we’re just waiting for it come in reality, timing, pace and magnitude,” McCulley added.

—Jeff Cox

Bitcoin miners gave back earlier gains as the price of the cryptocurrency retreated in volatile trading, after the Securities and Exchange Commission’s approval of the first U.S. spot bitcoin ETFs, which hit the market Thursday.

The two biggest mining stocks, Marathon Digital and Riot Platforms each lost more than 15%. Wall Street favorites Iris Energy and CleanSpark fell 9% and 7%, respectively. Investors were taking profits after the price of bitcoin briefly spiked to above $49,000 for the first time since December 2021. It has pulled back since to the $46,000 level.

Miners were some of the biggest gainers in the stock market in 2023. Marathon finished this year higher by almost 590%, while Riot rose more than 350%. CleanSpark and Iris Energy posted gains of more than 400%.  

— Tanaya Macheel

The Federal Aviation Administration said Thursday it has opened a probe on Boeing after a panel on the side of one of its Boeing 737 Max 9 planes blew off midflight on Saturday.

The investigation will dig into whether Boeing “failed to ensure completed products conformed to its approved design and were in a condition for safe operation in compliance with FAA regulations,” the FAA said.

Shares of Boeing slipped nearly 2% in midday trading.

— Leslie Josephs, Michelle Fox