Australia’s central bank raised rates by 25 basis points; Asia-Pacific markets were mixed

In a surprise move, the Reserve Bank of Australia raised its cash rate target by 25 basis points to 3.85%.

Economists polled by Reuters expect the central bank to keep its key rate steady at 3.6%.

“Although recent data show a welcome decline in inflation, the central bank forecasts that it will take some years for inflation to return above the target range; inflation is expected to be 4½ percent in 2023 and 3 percent in mid-2025,” the central bank said in its statement.

The RBA has left the door open for further hikes, saying its priority is to “bring inflation back to target”.

“Some further tightening of monetary policy may be needed to ensure that inflation returns to target in a reasonable timeframe, but that will depend on how the economy and inflation develop,” it said.

Australia’s 10-year government bond yield was at 3.472% shortly after the close.

Asia-Pacific currencies mostly strengthened along with the Australian dollar, which strengthened slightly ahead of the central bank’s interest rate decision.

The Aussie was at 0.6632 against the US dollar, while the New Zealand dollar rose 0.2% to 0.6180 against the greenback.

The Japanese yen also strengthened slightly to 137.37 as the US dollar index fell 0.12% to 102.3.

Korean won also strengthened 0.2% to 1,340.2.

Hong Kong recorded economic growth of 2.7% in the first quarter, Chief Executive John Lee told a press conference on Tuesday.

The economy contracted 4.2% in the final quarter of 2022 from a year earlier.

“Although the first quarter’s export numbers are still declining, China’s economy continues to grow rapidly and Hong Kong’s aviation capacity recovery is accelerating,” Lee said.

“I believe HK’s Q2 economy will be better than Q1, and this year’s economy will be better than last year,” he said.

– Vivian Com

DBS Group Holdings has reported record revenue and net profit for the first quarter of 2023.

Revenue came in at SG$4.9 billion, up 34% year-on-year, while net profit came in at SG$2.57 billion, up 43% compared to the same period last year.

In a release, DBS attributed this to “higher net interest margin, sustained business momentum and resilient asset quality”.

DBS shares rose 0.55% on Tuesday.

Private surveys by S&P Global showed that factory activity in the five ASEAN countries mostly rose in April.

Production expanded in Thailand, Indonesia, Myanmar and the Philippines, with Thailand leading gains.

Thailand’s manufacturing sector expanded at the fastest pace in April, with its purchasing manager’s index at 60.4.

However, Malaysia was the only country where its manufacturing PMI stood at 48.1, marking the eighth straight month of contraction.

– Lim Hui Jee

While other markets have been volatile this year, tech has rallied — the Nasdaq is up 16% year to date.

Mark Mahaney, chief technology analyst at Evercore ISI, has raised a tech stock nearly 50% higher and says it has a “super attractive” rating.

He boosted his No. 2 pick by another 152%.

CNBC Pro subscribers can read more here.

– Weissen Don

South Korea’s manufacturing purchasing managers’ index for April rose to 48.1 from 47.6 in March, a private survey showed on Tuesday.

Despite the improvement, it marked the tenth month in a row S&P Global’s PMI for South Korean manufacturers The dividing line between contraction and growth was below 50.

“Weakened customer demand both domestically and internationally was central to the recent deterioration and contributed to a firm reduction in new orders,” S&P Global Market Intelligence economist Usama Bhatti said in a statement on Tuesday.

Patty also noted that South Korean manufacturing companies have reduced production levels, input purchases and employment.

– Lim Hui Jee

Australia’s central bank is expected to keep its key policy rate at 3.6% when it announces its decision on Tuesday.

A Reuters poll of 34 economists found 26 of them expected the Reserve Bank of Australia to keep rates at current levels, while the remaining eight forecast a 25-basis-point hike.

If the RBA raises rates to 3.85%, it will be the highest since April 2012.

Australia’s inflation – a key data point for the RBA – fell to 7% in the first quarter, lower than the 7.8% recorded at the end of 2022.

– Lim Hui Jee

South Korea’s inflation rate fell to 3.7% in April, down from March’s figure of 4.2%.

This marks the slowest pace of inflation in 14 months and the third straight decline.

The 3.7% figure was in line with economists’ expectations of 3.75%.

In April, South Korea’s central bank kept its key policy rate steady at 3.5%.

– Lim Hui Jee

SoftBank’s chipmaker arm secretly filed for a US stock exchange listing, rekindling speculation about a management buyout by SoftBank, Nikkei. reported.

SoftBank Group has raised billions of dollars using its stake in Alibaba as collateral — and the Japanese company could use Arm’s stake, enabling a renewed investment by the Vision Fund.

The Nikkei also reported that SoftBank could go private if it sold half of its stake, and a higher valuation for Arm would further widen the gap between SoftBank Group’s value and its assets.

Shares of SoftBank rose 0.7% in the morning session on Tuesday in Tokyo.

The dollar rose against the Japanese yen on Monday, hitting 136.98 per US dollar. The greenback is trading at its highest level against the yen since March 10, when the dollar-yen pair hit 136.99.

The dollar is now at a high not seen since March 9, when the yen traded at 137.37.

Elsewhere, the euro also rallied against the yen, hitting 150.94, its highest level since September 30, 2008.

– Brian Evans, Gina Francola

JPMorgan Chase CEO Jamie Dimon believes the crisis that contributed to the collapse of three banks in recent weeks is largely over after the takeover of banking giant First Republic.

“There might be one more little thing, but this solves it all,” he said during a call with analysts after the deal was announced. “This part of the crisis is over.”

Dimon’s comments came after the Federal Deposit Insurance Corp. took over a bank that had fallen victim to deposit flight in recent weeks in the wake of the collapse of Silicon Valley banks. JP Morgan will acquire most of the troubled company’s assets and take control of its deposits.

– Hugh Son, Samantha Subin

First Republic’s defeat over the weekend has not had a major impact on other regional bank stocks so far.

The SPDR S&P Regional Bank ETF ( KRE ) was down less than 0.4% in premarket trading. Shares of PacWest Bancorp fell 2.4%, but Western Alliance rose slightly. First Horizon and Zions Bancorp. Each was down about 0.2%.

First Republic has fallen sharply and is now trading below $2 a share, and the stock will be written down to zero. However, First Republic had less than 0.15% weightage in KRE at Friday’s close.

Manufacturing activity in the U.S. contracted for the sixth straight month in April, according to a report from the Institute for Supply Management on Monday.

The ISM manufacturing PMI came in at 47.1%, indicating the share of firms reporting an expansion for the month. That was higher than March’s 46.3% and better than Dow Jones’ estimate of 46.7%.

However, the details can be confusing for Federal Reserve officials who want to control inflation.

The price index rose 4 points to 53.2%, returning to expansion territory, while the employment index rose 3.3 points to 50.2%. Inventory, a significant drag on first-quarter growth, fell 1.2 points to 46.3%, while new orders rose 1.4 points to 45.7%.

– Jeff Cox