Yen Weakens as Bank of Japan Holds Rates and Increases Flexibility on Yield Curve Control
The Japanese yen experienced a weakening after the Bank of Japan (BOJ) decided to keep interest rates stable and announced plans to introduce more flexibility into its yield curve control policy. According to the BOJ, the target level of the 10-year Japanese government bond yield will be maintained at 0%, but the upper bound of 1% will serve as a reference point. As a result, the yen dropped nearly 0.6% against the dollar, briefly breaking the 150 per dollar mark. In response to this news, the Nikkei 225 reversed its earlier declines and rose by 0.7%, while the Topix increased by 1.14%. Additionally, the BOJ revised its inflation forecast for the upcoming fiscal year, projecting a rise of 2.8% in the core consumer price index, surpassing its previous prediction of 1.9% made three months ago.
Japan Retail Sales Growth Rate Slows After Four Months of Acceleration
After experiencing four consecutive months of accelerated growth, Japan’s retail sales climbed only 5.8% in September compared to the 7% growth seen in August. This is the first month where the growth rate has softened, falling slightly below the 5.9% expected by economists polled by Reuters. In September, total commercial sales reached 50.35 trillion yen ($337.17 billion), the highest level since March.
HSBC Predicts Lower Growth as China’s “New Normal”
According to HSBC’s chief Asia economist and co-head of global research, Fred Neumann, China’s “new normal” will involve lower growth than before. Neumann stated that expectations for China’s growth need to be adjusted considering the ceiling for growth is lower now. HSBC now estimates China’s economy will grow by 4.9% this year, with a further decline to 4.6% predicted for 2024. Neumann believes these will be the growth rates for China in the coming years, especially if the property market continues to struggle. Despite this, there are signs of economic recovery and areas of growth, such as the electric vehicle sector, that investors can explore. Beijing has set a growth target of 5% for 2023. recent data revealed an unexpected contraction in China’s manufacturing activity in October.
CNBC Pro: Analysts Remain Bullish on Meta After Tech Sell-Off
While Meta Platforms’ shares were affected by the recent tech sell-off, several analysts maintain a bullish outlook for the company. Meta’s stock experienced a 3.86% decline last week but saw an increase of over 2% on Monday. Analyst Dan Ives of Wedbush Securities sees the sell-off as a golden opportunity rather than a reason for the company to enter a dormant phase. Other analysts also expressed their opinions on the stock’s outlook.
Apollo Global and KKR Still Expected to Join S&P 500, Barclays Says
A recent Barclays report suggests that both Apollo Global Management and KKR & Co. are still likely to join the S&P 500 Index eventually, despite the impact of higher interest rates on their GAAP-reported earnings. Following Blackstone’s inclusion in the S&P 500 in September, alternative asset managers like Apollo and KKR have been eyeing entry into the index. However, S&P requires earnings measured by Generally Accepted Accounting Principles (GAAP) over specific time frames. The report suggests that due to rising interest rates, these companies may experience unrealized losses on their fixed income investments, mainly related to their insurance businesses, which could impact their GAAP earnings.
Stocks Making Waves in Extended Trading
Arista Networks saw a 6% increase in after-hours trading. The cloud networking solutions company reported earnings per share of $1.83, excluding items, on revenue of $1.51 billion, surpassing FactSet’s estimates. Lattice Semiconductor, on the other hand, experienced a drop of approximately 16% in late trading. Its fourth-quarter revenue forecast of $166 million to $186 million fell short of analysts’ expectations. Wolfspeed, a chipmaker, saw its shares jump by over 11% following its fiscal first-quarter results. The company reported a better-than-expected loss of 53 cents per share, while revenue fell below estimates at $197 million.
Stock Futures Open Flat
Monday night saw little change in U.S. stock futures. The Dow Jones Industrial Average increased by just 2 points, or 0.01%, while futures tied to the S&P 500 decreased by 0.02%. Nasdaq 100 futures remained unchanged.
