Japan stocks lead Asia markets higher ahead of Fed decision

India's factory activity has risen at the slowest pace since February, according to private surveys by S&P Global.

The country's manufacturing purchasing managers index came in at 55.5, lower than September's reading of 57.5.

S&P Global wrote that this signaled an improvement in the health of the sector for the twenty-eighth month in a row, with the latest reading still above its long-run average of 53.9.

A PMI reading above 50 indicates expansion in the sector, while a reading below 50 indicates contraction.

— Lim Hui Jie

Chinese consumers are very cautious now, said Shehzad Qazi, managing director of China Beige Book.

Qazi notes consumers in China are pulling back from discretionary spending and really sticking to the staples, highlighting that industries like food and apparel fared better than luxury.  

"The bulk of revenge spending took place in the travel and leisure sector, maybe a little in luxury earlier in the year but the whole revenge spending thesis was wildly optimistic and wildly unrealistic," Qazi told CNBC's "Squawk Box Asia."

Qazi says policymakers in China appear to be confident in achieving the 5% growth target they've set for the year, and hence, there is not much pressure to inject additional stimulus into the economy.

"Unless Beijing does an about-face on its decision to do more household focused stimulus, there really isn't much option on the table for stimulus to be the driver of consumer spending," Qazi said.

— Shreyashi Sanyal

Past cycles show that inflation in India eases before election season and then rises quickly after, DBS' senior economist Radhika Rao said in a client note.

Rao says the supply side dynamics will be key this election season, noting that since the onset of the pandemic, the trend has shifted higher on more pronounced supply gaps and weather vagaries.

More recently, a surge in tomato prices sent the headline consumer prices reading above 7% in July which later pulled back to 5% by September.

India will hold the world's largest general elections in May 2024.

Rao notes fiscal year revenue expenditure in India also faces pressure from erratic rainfall affecting farm output, pressure to support households' purchasing power in the face of rising oil prices, uptick in pulses/cereals and broader above-target inflation, while maintaining capex plans.

"We expect the central government to stay more committed to fiscal consolidation, resisting the pressure to turn outright populist," Rao said.

Data from DBS showed Indian equity markets attracted a strong $19.6 billion in foreign portfolio inflows in the first five months of the year, pushing the benchmark indexes to record territory, helped by its growth outlook, earnings potential and bullish view on financials, besides a fast growing retail investor base.

— Shreyashi Sanyal

China's manufacturing activity logged a surprise contraction in October, a private survey showed.

The Caixin/S&P Global manufacturing PMI fell to 49.5 in October from 50.6 in September. This was the first contraction in four months. Economists polled by Reuters expected a reading of 50.8.

A PMI reading below 50 denotes a contraction.

The survey mirrors the official figure released by the country's national bureau of statistics on Tuesday.

— Shreyashi Sanyal

Japan's yen held at an over one-year low against the U.S. dollar a day after the country's central bank stood pat on interest rates and said it will be more flexible with its yield curve control policy.

The yen weakened 0.25%, falling past the 150 per dollar threshold to trade at 151.29. The current level was the lowest since late October 2022.

The Bank of Japan said on Tuesday 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."

— Shreyashi Sanyal

South Korea saw its first rise in exports in 13 months, with exports in October climbing 5.1% year-on-year.

This was a reversal from the 4.4% drop seen in September, and the first time since September 2022 that the country has posted a year-on-year expansion in exports.

Separately, South Korea's factory activity saw a slightly deeper contraction in October, with the purchasing managers index coming in at 49.8, compared with 49.9 in September.

— Lim Hui Jie

Japan's markets saw a strong open, extending gains from Tuesday when the Bank of Japan increased the flexibility around its yield curve control policy.

The Nikkei 225 was 2.05% higher, powered by gains in distribution services and consumer durable stocks.

Some of the top gainers on the Nikkei include automaker Subaru, investment broker Daiwa Securities, and Lasertec, which manufactures inspection equipment for semiconductor firms.

— Lim Hui Jie

Global markets may be plagued with stagflation and the possibility of a world war, but several themes make good plays to "make money" in the short and medium term, says David Neuhauser, founder and chief investment officer at the U.S. headquartered Livermore Partners.

The hedge fund manager names two asset classes as well as one theme in the equities market that he is positive on right now.

CNBC Pro subscribers can read more here.

— Amala Balakrishner

Traders should "rethink" one tech stock associated with an old corner of the industry, according to one investor.

"This is one of my favorite names in years," Philip Blancato, CEO of Ladenburg Thalmann Asset Management, told CNBC.

"They're becoming an AI company. They're becoming a cloud company ... They're expanding in all aspects of net based cloud services for all business enhancements," he said.

He added that it's now a tech company trading at valuations "significantly better" than its peers, and that "it's going to surprise you what they can do in the next couple of years."

CNBC Pro subscribers can read more here.

— Weizhen Tan

Investors should stay defensive as the year end approaches, according to Dubravko Lakos-Bujas, chief global equity strategist at JPMorgan.

The strategist said that the lagged effects of the Federal Reserve's interest rate hikes will be more dramatic than traders are currently expecting, and urged investors to hold cash and move into more resilient parts of the market. He favors utilities and health care, as well as dividend aristocrats.

"I think there's just a lag effect," he said Tuesday on CNBC's "Halftime Report." "And this time around in this cycle, the lag simply may be longer than what we're accustomed to sort of seeing in the prior cycles because of the unprecedented injection that we've got during Covid, and because of a relatively healthy starting point for things like balance sheets."

His 4,200 year-end target for the S&P 500 is just a little above where the S&P 500 closed Monday, according to the CNBC Market Strategist Survey.

— Sarah Min

Tesla is down 20.5% in the month of October and 33.5% since its 52-week high in mid-July to lead this month's declines in the Magnificent Seven group of megacap tech stocks. Nvidia has fallen more than 7% in October and is down roughly 20% since its late August high. Alphabet is off 5.8% in October and 12.7% since its mid-October peak. All three have underperformed the 2.5% decline in the S&P 500.

Apple is about 1% lower in October but more than 14% below its mid-July high, while Meta Platforms is little changed this month but more than 9% lower than its mid-October high reached just a couple of weeks ago.

Only two of the Mag 7 are significantly higher this month: Microsoft is up about 6.8%, limiting its loss since its mid-July high to about 8%. Amazon has advanced 4.4% in October, cutting its loss since its mid-September high to about 9%.

— Scott Schnipper

The Federal Reserve will likely face a "bumpy path" to its 2% inflation target, even if it decides to keep rates steady at its November meeting, according to Joe Davis, chief global economist at Vanguard.

"Inflationary pressures and broader macro trends are heading in the right direction, but last week's GDP report and a still strong labor market highlight the bumpy path the Fed faces on the road to their 2% target," Davis said in written commentary. "We believe 1-3 more hikes will be needed for them to confidently achieve their goal over the next few years."

In fact, the economist said rates will likely be restrictive for longer. He also said the higher neutral rate policymakers will land on after cutting rates will be closer to 3.5% than the anticipated 2.5%.

"The market is finally acknowledging this, which has been one source of some of the recent market volatility," Davis wrote.

— Sarah Min