Australia's central bank hikes rates by 25 basis points; Asia-Pacific markets mixed

In a surprise move, the Reserve Bank of Australia raised its cash rate target by 25 basis points to 3.85%, stating that inflation in the nation is "still too high."

Economists polled by Reuters were largely expecting the central bank to hold its benchmark rate steady at 3.6%.

"While the recent data showed a welcome decline in inflation, the central forecast remains that it takes a couple of years before inflation returns to the top of the target range; inflation is expected to be 4½ per cent in 2023 and 3 per cent in mid-2025," the central bank said in its statement.

The RBA added that its priority "remains to return inflation to target" and left the door open for more hikes ahead.

"Some further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable timeframe, but that will depend upon how the economy and inflation evolve," it said.

The yield on Australia's 10-year government bond stood at 3.472% shortly after the decision.

– Jihye Lee

HSBC's pre-tax profit jumped by $8.7 billion to $12.9 billion in the first quarter, the bank said in an earnings release.

The bank said that included a $2.1 billion reversal of an impairment related to a planned sale of its retail banking operations in France and a provisional gain of $1.5 billion on its acquisition of Silicon Valley Bank's U.K. arm.

"We remain focused on continuing to improve our performance and maintaining tight cost discipline, but we also saw an opportunity to invest in SVB UK to accelerate our growth plans," CEO Noel Quinn said in the release, calling Silicon Valley Bank UK a "natural fit" for the bank.

Hong Kong-listed shares of HSBC rose 2.7% Tuesday afternoon.

– Jihye Lee

Currencies in the Asia-Pacific largely strengthened alongside the Australian dollar that strengthened marginally ahead of the central bank's interest rate decision.

The Aussie stood at 0.6632 against the U.S. dollar, and the New Zealand dollar strengthened 0.2% to 0.6180 against the greenback.

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

The Korean won also strengthened 0.2% to 1,340.2 against the greenback.

– Jihye Lee

Hong Kong recorded a 2.7% economic growth in the first quarter, chief executive John Lee said in a press conference on Tuesday.

The economy contracted 4.2% in the final quarter of 2022 compared to a year ago.

"Although the first quarter's exports number is still dropping, China's economy is constantly growing fast 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 Kam

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

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

In a release, DBS said this was due to "higher net interest margin, sustained business momentum and resilient asset quality."

Shares of DBS climbed 0.55% on Tuesday.

— Lim Hui Jie

Private surveys from S&P Global showed that factory activity across five Asean countries mostly rose in April.

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

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

However, Malaysia was the only outlier, with its manufacturing PMI at 48.1, marking the eighth straight month of contraction.

— Lim Hui Jie

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

Top tech analyst Mark Mahaney of Evercore ISI is giving one tech stock further upside of almost 50%, saying it has a "super attractive" valuation.

He gave his No. 2 pick further upside of 152%.

CNBC Pro subscribers can read more here.

— Weizhen Tan

South Korea's manufacturing purchasing managers index for April rose to 48.1, up from March's figure of 47.6, a private survey showed on Tuesday.

Despite the improvement, this marked the tenth straight month that the S&P Global's PMI for South Korean manufacturers remained below the 50-mark that separates contraction and growth.

S&P Global Market Intelligence economist Usamah Bhatti said in the Tuesday release, "subdued client demand both domestically and internationally were central to the latest deterioration and contributed to a solid reduction in new orders," adding that

Bhatti also noted that as such, South Korean manufacturing firms subsequently cut back production levels, input purchases and employment.

— Lim Hui Jie

Australia's central bank is expected to hold its benchmark policy rate at 3.6% when it announces its decision Tuesday.

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

If the RBA hikes rates to 3.85%, that would be the highest level since April 2012.

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

— Lim Hui Jie

South Korea's inflation rate softened to 3.7% in April, lower than March's figure of 4.2%.

This also marked the slowest pace of inflation in 14 months, and the third-straight month of decline.

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

In April, South Korea's central bank continued to hold its benchmark policy rate at 3.5%.

— Lim Hui Jie

SoftBank's chipmaker Arm confidentially filed for a U.S. stock market listing, rekindling speculation about a management buyout of SoftBank, Nikkei reported.

The report added that SoftBank Group raised billions of dollars using its shareholdings, including its stake in Alibaba as collateral – and that the Japanese firm could use shares of Arm instead, which would enable a renewed investment push by the Vision Fund.

Nikkei also reported that SoftBank could go private if it sells about half of its stock portfolio, and a high valuation for Arm would further widen the gap between SoftBank Group's valuation and that of its assets, making a buyout look that much more likely.

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

– Jihye Lee

The dollar climbed against the Japanese yen on Monday, hitting a high of 136.98 per USD. The greenback is trading at the highest level against the yen since March 10, when the dollar-yen pair was 136.99.

The dollar is now also within striking distance of a high not seen since March 9, when the greenback traded at 137.37 against the yen.

Elsewhere, the euro also rallied against the yen, hitting 150.94, which is the highest trading level since Sept. 30 of 2008.

— Brian Evans, Gina Francolla

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

"There may be another smaller one, but this pretty much resolves them all," he said during a call with analysts after the deal was announced. "This part of the crisis is over."

The comments from Dimon come after the Federal Deposit Insurance Corporation took over the bank that's fallen victim to deposit flight in recent weeks in the wake of Silicon Valley Banks' collapse. JPMorgan will acquire most of the embattled company's assets and assume control of its deposits.

— Hugh Son, Samantha Subin

The failure of First Republic over the weekend has not made much of an impact so far for other regional bank stocks.

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

First Republic fell sharply and is now trading below $2 a share, and the stock will likely be written down to zero. However, First Republic had a weighting of less than 0.15% in the KRE as of Friday's close.

— Jesse Pound

Manufacturing activity in the U.S. contracted for a sixth straight month in April, though by less than expected, according to a report Monday from the Institute for Supply Management.

The ISM Manufacturing PMI came in at 47.1%, representing the share of companies reporting expansion for the month. That was higher than the 46.3% in March and better than the 46.7% estimate from Dow Jones.

However, the details might be unsettling for Federal Reserve officials looking to control inflation.

The prices index rose 4 points to 53.2%, back into expansion territory, while the employment index increased 3.3 points to 50.2%. Inventories, which were 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