Fed decision, Japan Tankan, Australia PMI

Temu is ‘getting a lot of things right,’ King Lip, chief strategist at BakerAvenue Wealth Management said Thursday, after its parent PDD Holdings‘ quarterly revenue more than doubled.

PDD fourth-quarter revenue surged 123% to 88.88 billion yuan ($12.35 billion) from a year earlier.

Lip told CNBC’s “Street Signs Asia” that the e-commerce company’s “extremely impressive” growth in both China and the U.S. was driven by its timely business model that gels with both the Chinese and American consumers that have turned price-sensitive.

“Marketing its shopping site on so many platforms here in the U.S. is very impressive, including the Superbowl. So, I really think that’s really what has impressed consumers,” Lip said.

— Shreyashi Sanyal

China central bank deputy governor reportedly said on Thursday there was “still room” for cutting the banks’ reserve requirement ratio (RRR).

“China’s monetary policy has ample room and rich policy tool reserves, and there is still room for cutting the RRR,” Xuan Changneng, deputy governor of the People’s Bank of China (PBOC), told a press conference in Beijing, Reuters reported.

The PBOC left its one- and five-year loan prime rates unchanged at 3.45% and 3.95%, respectively, on Wednesday.

The one-year LPR is the peg for most household and corporate loans and the five year LPR is the benchmark for most property mortgages.

— Reuters, Shreyashi Sanyal

The Federal Reserve is unlikely to cut rates thrice this year, Matt Higgins, CEO and co-founder of RSE Ventures, said Thursday on CNBC’s “Street Signs Asia,” in a view at odds with Fed signals and market expectations.

No rate cuts were “definitely on the table,” with one cut most likely later in the year, he added.

The Federal Reserve signaled Wednesday that it would cut interest rate three times in 2024 while holding them steady at its latest meeting.

“If unemployment does not start to pick up, and you don’t see some more downward pressure on core inflation, I’m not sure there are going to be three rate cuts in the second half of this year,” Higgins said.

– Dylan Butts

Bank of Japan governor Kazuo Ueda has told the country’s parliament that the BOJ will continue to support the economy by “maintaining accommodative monetary conditions for the time being,” according to Reuters.

This comes after the BOJ raised interest rates for the first time in 17 years and ended is negative interest rate regime on Tuesday.

Ueda told the parliament that Japan’s medium- and long-term inflation expectations are heading toward the BOJ’s target of 2%.

In a separate Reuters report, Japan’s finance minister Shunichi Suzuki said the government was watching currency market moves with “a high sense of urgency,” but made no comment on currency intervention.

The yen had hit a four-month-low against the U.S. dollar, trading at above 151 yen against the greenback on Wednesday

— Lim Hui Jie, Reuters

Spot gold hit over $2,200 per ounce Thursday, notching a new high after the U.S. Federal Reserve reaffirmed plans for three rate cuts this year. And there’s more room for bullion to rally.

Prices could rise to $2,300 per ounce in the second half of 2024, especially against the backdrop of expectations that the U.S. Federal Reserve could cut rates in the second half of 2024, Aakash Doshi, Citi’s North America head of commodities research, told CNBC.

State Street’s APAC Gold Strategist Robin Tsui wrote in a March 21 note that he anticipates gold could hit $2,400 per ounce once the Fed starts to pivot.

—Lee Ying Shan

Japan’s business activity in March has expanded at its fastest pace since May 2023, according to the flash purchasing managers’ index from the au Jibun bank.

The country’s composite PMI climbed to 52.3 in March from 50.6. A PMI reading above 50 indicates expansion in the sector, while one below 50 indicates contraction.

Japan’s manufacturing PMI rose to 48.2, indicating a softer decline compared with 47.2 in February, while service sector PMI rose to 54.9, up from 52.9.

— Lim Hui Jie

Australia’s unemployment rate dropped to 3.7% in February, compared with 4.1% in the prior month and lower than the 4% estimated by economists in a Reuters poll.

The country’s bureau of statistics said that this was due to a larger-than-usual number of people who were waiting to start or to return to jobs from December and January.

Employment numbers also beat expectations in February, with the number of employed people increasing by 116,500, compared to the 40,000 increase expected in the Reuters poll and the revised 15,300 climb in January.

— Lim Hui Jie

Japan’s exports climbed 7.8% year on year in February, beating expectations for a 5.3% rise from economists polled by Reuters.

The 7.8% growth is lower than the 11.9% increase in the previous month.

Imports rose 0.5% in February, compared with Reuters’ estimates of 2.2% and a 9.8% fall seen in January.

Japan’s trade deficit narrowed more than expected to 379.4 billion yen, a smaller deficit compared with estimates of 810.2 billion yen and January’s 1.76 trillion.

— Lim Hui Jie

Business confidence at big Japanese firms jumped to a three-month high in March, according to the monthly Reuters Tankan survey released on Thursday.

The Reuters Tankan survey is a key gauge for the Bank of Japan’s quarterly Tankan survey that is scheduled to be released on April 1. Services-sector mood jumped to a seven-month high.

The Reuters survey showed manufacturers’ sentiment index was at +10 in March from -1 in the prior month, while the service sector index was at +32 compared with +26 in February.

The Bank of Japan raised interest rates for the first time since 2007 on Tuesday, ending the world’s only negative rates regime.

— Reuters, Shreyashi Sanyal

Japan’s Nikkei 225 index hit a new record on Wednesday, rising as much as 40,642.89 and surpassing its all-time closing high of 40,109.23.

The rally was powered by consumer cyclicals and industrial stocks, and also came on the back an improved business sentiment in Japan, as well as better exports data for February.

The top gainer on the index was semiconductor firm Sumco Corp which gained 5.42%, followed by financial technology firm Rakuten Group, which was up 3.65%.

A new class of highly effective weight loss medications could deal a blow to several major Swiss food companies while benefiting others, according to Vontobel.

The drugs, which imitate the effects of the GLP-1 hormone to reduce appetite and calorie intake dramatically, are showing remarkable efficacy in clinical trials. As a result, patients lose up to 25% of their body weight on average.

Vontobel said a baked goods maker and a chocolate giant could lose out on the rising trend, affecting their stock. Both are traded over the counter in the U.S.

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— Ganesh Rao

New Zealand slipped into a technical recession last year as the country’s gross domestic product contracted by 0.1% in the fourth quarter of 2023 compared to the quarter before.

This was a surprise contraction as economists polled by Reuters had expected 0.1% growth.

The contraction followed a 0.3% fall in GDP in the quarter ending September 2023, which meant that the country has experienced two successive quarters of contraction — the commonly accepted definition of a technical recession.

On a year-on-year basis, GDP in New Zealand expanded 0.6%, slowing from the 1.3% growth recorded in the third quarter.

— Lim Hui Jie

Stocks rallied this afternoon after the Federal Reserve announced it would keep rates steady in March but the Fed’s dot plot revealed plans for three rate cuts in 2024.

“The immediate market reaction is the relief we were expecting. Investors were worrying the Fed was going to pull back from rate cuts this year, so keeping three rate cuts on the table naturally pushes stocks higher and bonds yields lower,” said Bryce Doty, a portfolio manager at Sit Investment Associates.

Doty added that it’s a positive sign for investors to see that the Fed understands that it can still cut rates without compromising its tough stance on ifnlation.

— Lisa Kailai Han

Technology and small-cap stocks notably outperformed in afternoon trading as traders responded to the latest updates from the Federal Reserve.

The small-cap focused Russell 2000 climbed 1.5% shortly after 3 p.m. ET, while the technology-heavy Nasdaq Composite added around 1%. By comparison, the broad S&P 500 and blue-chip Dow rose just about 0.7% and 0.8%, respectively.

— Alex Harring