U.S. Debt Ceiling Deal Lifts Asian Markets
Asia-Pacific markets were largely higher on Friday after U.S. President Joe Biden signed into law a debt ceiling bill that allowed the U.S. to avert defaulting on its financial obligations.
The compromise bill passed the Senate by a 63-36 margin on Thursday evening, winning enough support from both parties to overcome the chamber’s 60-vote threshold to avoid a filibuster. On Wednesday, it moved through the House after about 72 hours, passing 314-117.
The Nikkei 225 in Japan surged 2.2% above the 32,000 mark for the first time since 1990 to close at 32,217.43. The Topix was 1.7% higher and closed at 2,219.97.
Oil futures also surged as the Organization of the Petroleum Exporting Countries (OPEC) kingpin Saudi Arabia’s decision to cut oil production by another million barrels per day.
Key Factors That Drove The Gains In Asian Markets
- The passage of the U.S. debt ceiling bill removed a major source of uncertainty from the markets and signaled that the U.S. government is committed to paying its debts.
- The decision by Saudi Arabia to cut oil production by another million barrels per day helped to boost oil prices, which in turn supported energy stocks.
- Positive economic data from China also helped to boost sentiment in the markets.
Looking ahead, investors will be closely watching the U.S. Federal Reserve’s monetary policy meeting next week for clues about the pace of interest rate hikes. Investors will also be watching the progress of the war in Ukraine and the ongoing COVID-19 pandemic.
|Nikkei 225 Index
|Hang Seng Index
South Korea’s Kospi index increased 0.54% to settle at 2,615.41, continuing its upward trend from Friday. The Kosdaq also increased by 0.26%, closing the day at 870.28.
The S&P/ASX 200 index in Australia rose 1% to 7,216.3, marking its third straight day of gains ahead of the central bank’s imminent interest rate decision.
In Hong Kong, the Hang Seng index jumped 0.69% on Monday, extending its previous session’s massive 4% gain. However, mainland Chinese markets followed a different pattern, with the Shanghai Composite rising marginally while the Shenzhen Component falling by 0.48%.
Shifting attention to the United States, all three major indices gained more than 1% on Friday. The Dow Jones Industrial Average stood out in particular, rising 2.12%, its best performance since January. During the trading session, the S&P 500 rose 1.45%, while the Nasdaq Composite rose 1.07%, reaching its highest level since April 2022.
India’s services sector sees strong growth, but also increasing inflation pressures
According to a private poll conducted by S&P Global, India’s services industry grew at the second-fastest rate since July 2010.
The country’s services purchasing managers index (PMI) was 61.2, slightly lower than the April number of 62.0.
S&P Global emphasized India’s “robust economic performance” in the service sector, which was led by steady growth in new business in the face of positive demand trends.
The poll did, however, uncover increased inflationary pressures, with noticeable rises in both input costs and output charges.
Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence, expressed reservations about the survey’s findings, particularly the survey’s joint-fastest increase in output charges in nearly six years.
She further noted that firms face the delicate task of balancing these cost increases while maintaining affordable prices for consumers. As a result, businesses chose to raise selling prices once again in May.
— Lim Hui Jie
Hong Kong’s China mainland property stocks fall 3% at open
The Hang Seng Mainland Properties index (HSMPI) in Hong Kong fell by 3% at the start of the market and later traded 2.5% lower. This correction occurs as markets adapt to predictions that Chinese policymakers may implement stimulus measures to support the industry.
The HSMPI has decreased by about 30% year to date, and it has decreased by 20% quarter to date. According to Refinitiv statistics, the index has declined by 53.03% over a one-year period.
Real estate equities, along with basic commodities sectors, were among the main decliners in the Hang Seng index on Monday morning. On the other hand, the index’s main sectors were industrials, utilities, financials, and technology.
— Jihye Lee
4 Hours Ago
China’s Caixin services purchasing mangers’ index climbs to 57.1 in May
The private Caixin Services Purchasing Managers’ Index (PMI) for China reached 57.1 in May, indicating a slight increase and reaching its second-highest level since November 2020.
In March, the PMI reached a recent peak of 57.8, rebounding from a low of 46.7 in November as the Chinese economy emerged from strict COVID-19 restrictions.
During this period of PMI growth, there was a significant rise in total new orders and sustained growth in new export business. Reports suggest stronger market conditions and an increase in customer turnout, as highlighted in a release by Caixin on Monday.
May’s services PMI marked the fifth consecutive month of expansion, surpassing the 50-mark that separates growth from contraction. Services have remained a positive aspect in China’s uneven economic recovery.
“Service providers remained optimistic partly because the market environment improved in the post-Covid era,” Wang Zhe, Senior Economist at Caixin Insight Group said.
— Jihye Lee
4 Hours Ago
Australia expected to leave rates unchanged in Tuesday meeting
According to a Reuters survey of 32 economists, the Reserve Bank of Australia (RBA) is expected to keep its benchmark interest rate at 3.85%.
The RBA will hold rates unchanged, according to 21 of the 32 experts polled, while 11 foresee a 25 basis point increase to 4.1%.
Following a halt in April, the RBA stunned investors and experts by hiking interest rates last month. This move departed from the expected rate hold.
Australia’s inflation rate increased to 6.8% in April, exceeding the previous month’s record of 6.3% and market predictions of 6.4%.
— Lim Hui Jie
5 Hours Ago
Hong Kong private sector expansion slows in May as reopening momentum wanes
According to S&P Global’s private survey, Hong Kong’s private sector expanded at its weakest rate this year in May. The city’s composite purchasing managers’ index (PMI) decreased from 52.4 in April to 50.6 in May.
The PMI index, which includes both the service and manufacturing sectors, is regarded as a trustworthy indication of economic health. A value of 50 or higher implies expansion, whereas a reading of 50 or lower indicates contraction.
The recent growth boost in Hong Kong, stemming from the full restoration of travel between the city and mainland China, was beginning to wane, according to S&P Global. The poll also identified symptoms of margin pressure, such as fewer new sales, slower new order growth, and higher input cost inflation.
— Lim Hui Jie
5 Hours Ago
Japan’s services sector activity expands at record pace in May
According to private surveys performed by the Jibun Bank, Japan’s service sector grew at an extraordinary rate in May.
The country’s services purchasing managers’ index (PMI) hit 55.9, breaking the previous month’s record of 55.4. This expansionary tendency has now lasted six months in a row.
According to the bank, there is anecdotal evidence of a persistent uptick in client demand as the impact of the Covid-19 outbreak fades.
Furthermore, the surveys found that businesses were extremely confident about future commercial activity, with a particular emphasis on the strength of the tourism sector.
— Lim Hui Jie
5 Hours Ago
Oil prices jump more than 2% after Saudi Arabia pledges more production cuts
Following Saudi Arabia’s announcement to reduce production by an additional one million barrels per day, oil prices experienced an increase.
During early Asia trade on Monday, global benchmark Brent futures rose by 2.4% to reach $78 per barrel. Similarly, U.S. West Texas Intermediate futures saw a 2.5% increase, reaching $73.53 per barrel.
Bob McNally, the president of Rapidan Energy, noted that the market was not anticipating Saudi Arabia’s unilateral decision to cut production by one million barrels per day. He shared this observation in an email to CNBC after the announcement.
“It once again demonstrated that Saudi Arabia is willing to act unilaterally to stabilize oil prices,” McNally said.
—Lee Ying Shan
5 Hours Ago
Goldman and others say copper prices are set to soar. Here are some stocks analysts love
Wall Street analysts have expressed a positive outlook on the metal, with Citi and Goldman Sachs predicting a significant rise in prices.
For investors interested in entering the sector, CNBC Pro conducted a screening process to identify stocks in the Global X Copper Miners ETF. As a result, they discovered a stock with an impressive upside potential of nearly 100%.
— Weizhen Tan
5 Hours Ago
Ark Invest: These 2 A.I. stocks are being overlooked by the market
Frank Downing of Ark Investments states thatFrank Downing of Ark Investments, the stock market is now undervaluing two artificial intelligence (AI) startups.
As AI technology costs fall, Downing, the ARK Next Generation Internet ETF research director, advises investors to seek out companies with specific and unique AI applications. These businesses have the potential to provide larger profits.
Downing emphasizes the potential significance of huge language models produced by OpenAI, the entity behind ChatGPT. He claims that leveraging these models can considerably increase the value of the stocks he has selected.
— Ganesh Rao
Fri, Jun 2 2023 12:12 PM EDT
Here’s where the jobs are for May
The May payrolls report for the United States beat forecasts, owing to strong job gains in the professional and business services sector as well as a significant increase in government employment.
Following a similar surge in April, the professional and business services sector led the way in job growth for the month, adding 64,000 new jobs. Government employment increased by 56,000 positions last month, above the previous year’s average monthly gain of 42,000 jobs.
|Health care + social assistance
|Professional + business services
|Leisure + hospitality
|Transportation + warehousing
|Mining + logging
May saw widespread job growth, with the healthcare sector adding 52,000 new jobs and the leisure and hospitality industry gaining 48,000.
Fri, Jun 2 2023 1:17 PM EDT
Indexes trade near session highs as rally keeps strength heading into afternoon
With just under 3 hours left in the trading day, the major indices were trading near session highs as investors maintained their Friday gains.
The Dow rose 640 points, closing in on its all-time high of 666 points.
Similarly, the S&P 500 and Nasdaq were both barely a tenth of a percentage point off their session highs. The S&P 500 was recently up 1.42%, barely shy of its session high of 1.5%. The Nasdaq Composite gained 1.06%, which was somewhat less than its biggest session gain of 1.16%.
Fri, Jun 2 2023 2:42 PM EDT
Fitch says it is not removing credit watch for U.S. despite deal
Fitch, the ratings firm, has expressed concerns that the United States is still facing fiscal uncertainty despite the debt ceiling deal. They are closely monitoring government debt for a potential downgrade.
While Fitch acknowledged the positive aspects of reaching an agreement amidst political partisanship and the modest reduction of fiscal deficits over the next two years, they raised concerns about repeated political standoffs surrounding the debt limit and last-minute suspensions prior to the depletion of the Treasury’s cash position. These factors have eroded confidence in governance regarding fiscal and debt-related matters.
Fitch attributed its pessimistic outlook to a continuous deterioration in governance over the past 15 years. They have plans to resolve the credit watch status in the third quarter of 2023.
In contrast, Moody’s stated on Thursday that they are not currently considering a downgrade for the United States.