Japan’s major banks lead losses on Topic
Japanese banks and financials led losses on the Topix on Thursday, following the moves of regional banks in the U.S. after Treasury Secretary Janet Yellen said the FDIC was not considering expanding bank deposit guarantees beyond its current limit.
Mitsubishi UFJ Financial was the largest loser among Japan’s major banks, with its share price falling 2.66%, while counterparts Sumitomo Mitsui Financial and Mizuho Financial were down 1.78% and 1.96% respectively.
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JPMorgan emphasizes “defensive” approach for Asia markets
JPMorgan emphasized the need to take a “defensive” approach for Asia markets following the Federal Reserve’s latest decision to raise interest rates by 25 basis points alongside the recent volatility seen in the banking sector.
“For APAC investors, the latest Fed decision and banking sector stress in the past weeks reinforces our view of taking a more defensive approach in asset allocation, focusing on high quality fixed income,” APAC Chief market strategist Tai Hui said in a Thursday note.
He added that China’s economy will outperform in the months ahead and will lead to a “window of opportunity” for less export-dependent companies in the region. He expects currencies in Asia and emerging markets to benefit from a weakening dollar as well.
– Jihye Lee
Tencent posts quarterly revenue beat thanks to ad sales
Chinese tech giant Tencent reported better-than-expected quarterly revenue, helped by growth in ads within its growing “video accounts” business.
“This advertising unit allowed them to unlock revenue coming from e-commerce, which has done pretty well,” James Lee, U.S. and China internet analyst at Mizuho Securities, said on CNBC’s “Squawk Box Asia.”
Lee has a neutral rating on Tencent and a price target of 400 Hong Kong dollars.
Online advertising revenue grew by 15% in the fourth quarter from a year ago to 24.7 billion yuan ($3.59 billion), bringing overall revenue for the quarter to 144.95 billion yuan. That’s above the 143.89 billion yuan forecast by FactSet.
– Evelyn Cheng
Bill Ackman warns bank deposit outflows could accelerate
Billionaire investor and CEO of Pershing Square Bill Ackman warned in a tweet bank deposit outflows could accelerate after Treasury Secretary Janet Yellen said the FDIC was not considering expanding bank deposit guarantees beyond its current limit of $250,000.
Yellen’s comments led to a drop in regional bank shares in the U.S.
“I would be surprised if deposit outflows don’t accelerate effective immediately,” Ackman wrote in his tweet.
In a separate tweet, Ackman said that he fears markets are “heading for another train wreck,” adding that he hopes regulators will “get this right.”
“The longer this banking crisis is allowed to continue, the greater the damage to smaller banks and their ability to access low-cost capital,” he said.
– Jihye Lee
Yellen says not considering blanket insurance’ for deposits
Treasury Secretary Janet Yellen said Wednesday that the FDIC was not considering providing “blanket insurance” for banking deposits, according to Reuters. Yellen made the remarks at a hearing of a U.S. Senate appropriations subcommittee.
Yellen said the administration was not considering expanding bank deposit guarantees beyond the current limit of $250,000, Reuters reported. Some investors was hoping such an expansion would help prevent the crisis from spreading further.
— Yun Li
Fed raises interest rates 25 basis points
The Federal Reserve hiked its benchmark interest rate by another 25 basis points, in line with Wall Street’s predictions.
This marks the central bank’s ninth hike since it began raising rates in March 2022, as well as its first announcement following the recent fallout in the banking sector. The increase takes the benchmark federal funds rate to a target range between 4.75%-5%.
The Federal Open Market Committee said in a post-meeting statement that it “will closely monitor incoming information and assess the implications for monetary policy.” Fed projections call for just one more hike this year.
— Hakyung Kim
Financial conditions have tightened more than the market shows, Powell says
Financial conditions seem to have tightened more than the U.S. benchmark indexes indicate, Federal Reserve Chair Jerome Powell said during Wednesday’s press conference.
“The traditional indexes are focused a lot on rates and equities, and they don’t necessarily capture lending conditions,” Powell said when asked what financial situation would warrant an interest rate cut, especially if credit conditions were to further tighten. Concerns of a credit crunch, which occurs when banks significantly tighten their lending standards, have grown amid the banking crisis.
If tighter lending conditions are sustained, Powell acknowledged that could easily have a significant macroeconomic impact which would be factored into the Fed’s policy decisions.
“The question for us though is how significant will that be and what would be the extent of it and what would be the duration of it,” he said, adding that “rate cuts are not in our base case.”
— Pia Singh
Cryptocurrencies rise ahead of Federal Reserve rate decision
Bitcoin hit a high of $28,790 on Wednesday, continuing the recent rally in cryptocurrency prices as investors awaited the conclusion of the Federal Reserve’s policy meeting this afternoon. That level is the highest since June 11, 2022, when bitcoin traded as high as $29,405, according to Coin Metrics. Ether also gained 0.7% to $1,813.52.
Shares of crypto exchange Coinbase Global were earlier up 0.4%, on pace for its 8th straight positive day after the stock has gained 37% so far this month. It recently edged lower, down by 0.2%, to $83.80. The rally marks a reversal from Coinbase’s underperformance throughout 2022, when its shares dropped 86%.
— Pia Singh
CNBC Pro: Morgan Stanley just upgraded a global energy stock it says has ‘significant’ potential for growth
Morgan Stanley upgraded the shares of a European energy firm — and also raised its price target for the stock.
According to the bank, it has “one of the strongest balance sheets” and is “close to debt-free.”
CNBC Pro subscribers can read more here.
— Weizhen Tan
CNBC Pro: This e-commerce stock has a whopping 300% upside, according to Morgan Stanley
E-commerce growth is back, and Morgan Stanley has several stock picks for investors to cash in, including a less obvious name it says has huge upside.
Pro subscribers can read more here.
— Zavier Ong
Source link: https://www.cnbc.com/2023/03/23/asia-markets-fall-as-fed-raises-rates.html