Japan stocks end higher after Bank of Japan allows greater flexibility on yield

This is CNBC's live blog covering Asia-Pacific markets.

The Bank of Japan headquarters in Tokyo.
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Japan stocks ended the session higher after the Bank of Japan's monetary policy decision, while other Asia-Pacific markets fell as manufacturing activity unexpectedly contracted in China.

The Bank of Japan left its short-term lending rate unchanged and said it has made its yield curve control policy more flexible.

Elsewhere Tuesday, China manufacturing purchasing manager's index data for October came in at 49.5 against a Reuters poll expectation of 50.2. A PMI reading below 50 signifies a contraction.

Japan's Nikkei 225 reversed earlier declines to end 0.53% higher at 30,858.85, while the Topix ended 1.01% up at 2,253.72.

South Korea's Kospi fell 1.41% to 2,277.99 and the Kosdaq dropped 2.78% to 736.10.

Hong Kong's Hang Seng index dropped 1.69% in its final hour of trade, while mainland China's CSI 300 index shed 0.31% and snapped a five-day winning streak, ending at 3,572.5.

In Australia, the S&P/ASX 200 ended the day up 0.12% at 6,780.7, rebounding off its year low.

U.S. stocks rallied on Monday, with the S&P 500 ending the day out of correction territory, as traders started a big week filled with a Federal Reserve rate decision, employment report and Apple's earnings.

The Dow Jones Industrial Average gained 1.58%, clocking its best day since June 2.

The S&P 500 jumped 1.2%, its best performance since late August. The Nasdaq Composite rose 1.16%.

— CNBC's Sarah Min and John Melloy contributed to this report

Yen weakens after Bank of Japan holds rates, increases flexibility on yield curve control

Japan's yen weakened after the country's central bank kept interest rates steady and said it will allow more flexibility in its yield curve control policy.

The Bank of Japan said the target level of the 10-year Japanese government bond yield will be held at 0%, but will take the upper bound of 1% "as a reference."

The news sent the yen down nearly 0.6% against the dollar, briefly breaching the 150 per dollar threshold.

The benchmark Nikkei 225 reversed earlier falls to rise 0.7%, while the Topix added 1.14%.

The BOJ also raised its inflation forecast for the next fiscal year, it now sees the core consumer price index rising 2.8%, above the 1.9% it predicted three months ago.

— Shreyashi Sanyal

Lower growth is new normal for China, HSBC says

China's new normal is going to be lower growth than before, said Fred Neumann, HSBC's chief Asia economist & co-head of global research.  

"We probably need to adjust our expectations in terms of what the upper ceiling is for China's growth," Neumann told CNBC's "Squawk Box Asia."

HSBC now sees China's economy growing 4.9% this year and 4.6% in 2024. Neumann said that will likely be the range of growth for China for the next couple of years and "that's probably as good as it gets as long as the property market continues to struggle."

Neumann said even though projections for China's growth are more modest than they were before the pandemic, there are still some signs of economic recovery underway and growing areas of investments including the electric vehicle space.

Beijing's current growth target is at 5% for 2023. Data earlier in the day showed China's manufacturing activity logged an unexpected contraction in October.

— Shreyashi Sanyal

China manufacturing records surprise contraction in October

China's manufacturing activity logged an unexpected contraction in October, according to official data.

China's purchasing manager's index came in at 49.5 during the month against a Reuters poll estimate of 50.2. A PMI reading below 50 signifies a contraction.

The data arrives as recent economic readings have pointed to small signs of recovery in the world's largest emerging economy.

China's government and central bank have so far kept measures in place to boost growth, in order to meet Beijing's annual growth forecast of about 5%.

— Shreyashi Sanyal

CNBC Pro: Forget Big Tech. Bernstein likes these global stocks from an 'unloved' part of tech — and more

High interest rates are usually bad for tech stocks, and they're now a key macroeconomic risk for "expensive" ones in particular — but two parts of the sector are in a good position, according to Bernstein.

One of them is "the cheapest sector in terms of [price-to-sales ratio]," it said.

It also named its top picks and refreshed its screens of global tech stocks.

CNBC Pro subscribers can read more here.

— Weizhen Tan

CNBC Pro: Is Meta a buy after the brutal tech sell-off? Here's what the pros are saying

Meta Platforms saw its shares caught up in a broad tech sell-off last week — but several analysts remain bullish.

Meta's stock fell 3.86% last week, although was trading over 2% higher Monday.

"I believe this tech sell off here, [when] we look back three, six months, I view this as more of a golden opportunity, not the time [for it] to head into hibernation mode," Dan Ives from Wedbush Securities told CNBC's "" on Thursday, in the midst of the market downturn.

Other analysts also weighed in on the outlook for the stock.

CNBC Pro subscribers can read more here.

— Amala Balakrishner

Japan retail sales growth rate falls after four straight months of acceleration

Japan's retail sales climbed 5.8% in September from a year ago, a slower expansion compared with the 7% growth seen in August.

This is the first month that the growth rate softened after four straight months of accelerating growth, and was slightly lower than the 5.9% expected by economists polled by Reuters.

Total commercial sales came up to 50.35 trillion yen ($337.17 billion) in September, its highest level since March.

— Lim Hui Jie

Japan October industrial output sharply misses expectations

Japan's industrial production climbed just 0.2% in September compared to the previous month, according to preliminary figures from the country's ministry of economy, trade and industry.

While this was a reversal from the 0.7% fall seen in August, the growth rate was sharply lower than the 2.5% month-on-month growth expected by economists polled by Reuters.

Industrial output fell 3.7% year on year in September, a softer contraction than the 4.4% drop in August.

— Lim Hui Jie

Oil prices slide as investors eye war, Fed

Oil prices fell on Monday as investors closely followed the Israel-Hamas war while readying for the Federal Reserve policy meeting later this week.

Brent fell 2.9% at $87.88 per barrel. The U.S. West Texas Intermediate futures declined 3.5% to $82.59 per barrel.

— Alex Harring, Lee Ying Shan

Morgan Stanley's top strategist says fourth-quarterly rally unlikely

The likelihood of a fourth-quarter rally has "fallen considerably" over the past month, according to Morgan Stanley chief U.S. equity strategist Mike Wilson. 

Wilson has been forecasting the S&P 500 ending the year at 3900, making him among the most bearish strategists on Wall Street according to CNBC's Market Strategist Survey. While he noted in a Sunday note to clients that initial bullish sentiments waned in September — before picking up again this month on expectations of better third-quarter earnings and seasonal strength into the year-end — his lower estimate for the broad market index remains. 

To read more about his call, click here.

— Hakyung Kim

Bank of Japan to consider allowing yields to rise above 1%, report says

Bank of Japan officials on Tuesday are expected to consider allowing longer-term bond yields to rise above a 1% cap amid a run-up in rates the central bank is trying to stave off, according to a report Monday.

Rising U.S. bond yields have spread globally and are pressuring their global counterparts, particularly since Federal Reserve Chairman Jerome Powell recently emphasized his commitment to fighting inflation. Allowing flexibility on previous yield curve caps could provide BoJ officials some breathing room, NikkeiAsia reported, citing sources familiar with the talks.

Rising U.S. bond rates have resulted in money flowing to the dollar, putting downward pressure on the yen and exacerbating inflation. Allowing some flexibility on the caps chases away speculators while helping Japan manage its own inflation issue.

The yen rose against the U.S. dollar following the Nikkei report, most recently trading at 149.21.

—Jeff Cox