Asia-Pacific shares trade mostly higher following cooler U.S. inflation print
This is CNBC's live blog covering Asia-Pacific markets.
Asia-Pacific shares traded mostly higher after the U.S. consumer price index showed inflation cooled in December, raising investors' hopes that the Federal Reserve can return to slower interest rate hikes.
Hong Kong's Hang Seng index added 0.93%. Mainland China's Shanghai Composite added 1.01% to close at 3,195.31 and the Shenzhen Component rose 1.19% to end at 11,602.30 after China's December exports and imports slumped less than expected.
Australia's S&P/ASX 200 closed 0.66% up at 7,328.1. The Kospi rose 0.89% to 2,386.09 and the Kosdaq inched up 0.14% to 711.82. The MSCI's broadest index of Asia-Pacific shares outside Japan gained 1.09%.
Bucking the overall trend is Japan's Nikkei 225, which closed 1.25% lower at 26,119.52. The Topix declined 0.27% to 1,903.08.
Overnight in the U.S., major stock indexes closed higher after the latest U.S. consumer price index reading. The index fell 0.1% in December, marking the largest month-over-month decrease since April 2020.
China's December exports fell less than expected
China's exports and imports tumbled less than expected for the month of December, according to the customs administration.
China's exports fell 9.9% in December from a year ago, in U.S.-dollar terms, slightly better than the 10% drop forecast by a Reuters' poll.
Imports fell by 7.5% in December compared with a year ago in U.S.-dollar terms, also performing better than the 9.8% slump predicted by Reuters.
The milder slump meant trade still grew for 2022.
—Evelyn Cheng, Lee Ying Shan
Bank of Korea raises rates, says 2022's fourth-quarter GDP likely to be negative
The Bank of Korea raised interest rates by 25 basis points to 3.5%, marking the highest since December 2008. The move was in line with Reuters' expectations.
"The Board judges that the additional 25 basis points hike is warranted to ensure price stability, as inflation still remains high and is projected to be above the target level for a considerable time," the Bank of Korea wrote in a statement.
Governor Rhee Chang-yong said in a press conference that fourth-quarter GDP for 2022 is likely to be negative, but estimated that 2023's first quarter GDP growth could be better.
"Today's hike marks the end of the BoK's current tightening cycle, but the hurdle for a pivot towards an easing bias remains high," ANZ Research's economist Krystal Tan wrote in a note.
— Lee Ying Shan
CNBC Pro: Want a recession-proof portfolio? Fund manager names two stocks that could fit the bill
Investors looking for recession-proof stocks may want to consider buying shares in a renewable energy producer and a cyber security firm, according to one outperforming fund manager.
Trent Masters of investment management firm Alphinity, who named the stocks, said that while the energy company can raise prices above inflation even during a recession, the cyber security firm will see increased demand for its services this year.
CNBC Pro subscribers can read more here.
— Ganesh Rao
Uniqlo-owner Fast Retailing drops more than 6% after announcing wage hike
Shares of Uniqlo-owner Fast Retailing dropped 6.68% a day after announcing it will raise wages by 40%.
"This war for talent is intensifying, that [Tadashi Yanai], the founder of Uniqlo, is fully recognizing," Jesper Koll, expert director at Monex Group, told CNBC's "Squawk Box Asia" regarding the wage hike move.
"Japanese workers have realized their value, have realized their worth... and as a result of that, if you want to retain that talent, you're going to have to start to pay up."
Fast Retailing is a heavyweight of Japan's benchmark Nikkei 225, which declined 0.6%, bucking the overall positive trend of Asia-Pacific shares.
Koll added that while Fast Retailing is doing a "great job" in the physical space, its e-commerce presence still has room to improve.
"For now [that's] not going to be a key growth driver," he said.
—Lee Ying Shan
Cryptocurrencies inch higher even as SEC charges crypto firms
Cryptocurrencies rose even after the U.S. Securities and Exchange Commission charged crypto firms Genesis and Gemini with selling unregistered securities.
Bitcoin traded 4.81% higher at $18,838.66, according to data from Coin Metrics. The coin on Thursday jumped above $19,000, its highest in more than two months.
Ether rose 1.67% to stand at $1,414.65.
The SEC alleged Genesis loaned Gemini users' crypto and sent a portion of the profits back to Gemini, which deducted an agent fee and returned the remaining profit to its users.
—Lee Ying Shan, Kate Rooney
CNBC Pro: Goldman Sachs says Asia tech is about to rebound — and reveals a chip stock to play it
After a tough year for Asia tech, Goldman Sachs believes the sector is headed for a "major bottom" — and subsequent upturn — in the first half of 2023.
Investors seeking to cash in should act early, the bank's analysts said, with stock prices set to "rebound rapidly."
They also named a key chip stock to play it.
Pro subscribers can read more here.
— Zavier Ong
Stocks close up
Stocks ended Thursday's trading session in the green.
The Dow and Nasdaq Composite each ended up 0.6%. The S&P 500 gained 0.3%.
Close marked the fifth straight day of gains for the Nasdaq as investors bought beat-up technology stocks on hopes of an improving outlook for growth names. That's the first time the index has posted a streak of that length since July.
— Alex Harring
Fed will be unfazed by CPI report
The slight decline in consumer prices in December will not change the path for the Federal Reserve, as it meets to raise rates Jan. 31 and Feb. 1.
CPI fell by 0.01%, as expected by economists, and was up 6.5% from a year ago. Core CPI rose 0.03%, also as expected.
"The Fed has made clear even as markets push back on the Goldilocks scenario in the employment report, the Fed was doubling down on their pledge to derail inflation because they see this as a marathon not a sprint," said Diane Swonk, chief economist KPMG.
Stock futures were higher after the report while Treasury yields fell. Yields move opposite price.
"It was exactly in line. They ran up the S&P 500 by 50 points yesterday with everyone hoping for a weak number. It was as expected. It doesn't change anything," said Peter Boockvar, chief investment officer at Bleakley Financial. "They are almost done raising rates. Higher for longer is what people should be focused on."
Swonk and other economists expect the Fed to raise rates by a half percentage point on Feb. 1. The futures market, however, has been pricing in a quarter point hike.
CPI shows shelter inflation still worrisome
Shelter costs, which includes rent, jumped more than expected in the December consumer price index, and that is an area economists are watching closely.
Shelter rose 0.8%, or 7.5% from a year ago. Some economists had expected a gain of 0.6% in shelter, which accounts for 40% of core CPI. The shelter costs in CPI are known to lag the actual market data on rentals.
"In this single month-over-month report, there is almost no inflation outside of shelter," said Wilmington Trust chief economist Luke Tilley "Goods prices are collapsing mostly because of motor vehicles and computers and laptops and technology. Used vehicle prices are down 27.5% at annualized rate over the past three months, and they're likely to keep falling."
Tilley expects shelter inflation to slow in the next couple of months. As for overall CPI, it fell by 0.01% as expected.
Greg Peters, co-chief investment officer of PGIM Fixed income, said the increase in shelter inflation is something to watch. He said the market had expected a slightly larger decline in headline CPI.
"I still think it's largely fine. I think numbers will continue to come down. The real question is where does it start to level out?" said Peters. "That's the piece of it that should be the point of focus. It's great that CPI mechanically is coming down, and there's some good news in the report. But that doesn't mean the Fed gets close enough to its target that they get comfortable."
Tilley said he expects 2023 will be unlike 2022, where inflation surprised to the upside. "We very well could see in 2023 the reverse of what happened in 2022 with inflation surprising to the downside," he said.
Consumer price index for December matches expectations
The consumer price index fell 0.1% in December, matching a Dow Jones estimate. That was the biggest monthly decline since April 2020. The so-called core CPI, which strips out volatile food and energy prices, also met expectations with a 0.3%. gain.
On a year-over-year basis, the index rose 6.5%, still well above the Fed's 2% inflation target.
— Fred Imbert