Japan stocks lead Asia markets higher ahead of Fed decision

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

Residential buildings in Hong Kong, China on October 23, 2023.
Vernon Yuen | Nurphoto | Getty Images

Japan stocks led gains in the Asia-Pacific region a day after it's central bank increased the flexibility around its yield curve control policy, while investors watched for a policy decision from the U.S. Federal Reserve.

The Fed will conclude its two-day monetary policy meeting later in the day, with markets expecting the central bank to stand pat on interest rates.

Data showed South Korea's October exports climbed 5.1% year-on-year, the first time in 13 months, while its factory activity saw a slightly deeper contraction.

Separately, China's Caixin/S&P Global manufacturing PMI fell to 49.5 in October from 50.6 in September, marking the first contraction since July and missing analysts' forecasts of 50.8 by a large margin. The reading mirrors the official figure released by the country's national bureau of statistics on Tuesday.

Japan's Nikkei 225 index closed 2.41% higher at 31,601.65, while the Topix added 2.53% at 2,310.68 to hit its highest level in nearly three weeks.

South Korea's Kospi ended up 1.03% at 2,301.56 and the Kosdaq climbed 0.43% to 739.23.

Hong Kong's Hang Seng index reversed earlier gains to fall slightly in its final hour of trade, while China's CSI 300 index slipped marginally to close at 3,571.03.

In Australia, the S&P/ASX 200 closed 0.85% higher at 6,838.30.

U.S. stocks closed higher on Tuesday, regaining some ground at the end of a dismal month that was defined by surging interest rates.

The S&P 500 climbed 0.65%, while the Nasdaq Composite added 0.48%. The Dow Jones Industrial Average advanced 0.38%.

Stocks posted their third-straight losing month. The Dow and the S&P 500 fell 1.4% and 2.2%, respectively. 

— CNBC's Pia Singh and Hakyung Kim contributed to this report

India manufacturing activity rises at slowest pace since February

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

China's consumers are cautious now: China Beige Book

Chinese consumers are 'very cautious' now, China Beige Book says
Chinese consumers are 'very cautious' now, China Beige Book says

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

Inflation to cool in India leading up to elections but rise soon after, DBS says

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 manufacturing contracts unexpectedly in October, private survey shows

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

Yen holds at over one-year lows

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 logs first rise in exports in 13 months; manufacturing activity remains in contraction

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