Hong Kong shares surge 2% to lead gains in Asia markets; China posts mixed economic data

HSBC Global Private Banking projects a cumulative 75 basis points in Federal Reserve rate cuts for 2024 and an additional 75 basis points of cuts in 2025.

That comes after the Federal Reserve left interest rates unchanged on Wednesday, but indicated that there will be at least three cuts to come in 2024.

"It's a huge relief if the Fed does indeed embark on a easing cycle, that's good news for Asia. That should cap the strength of the dollar, which of course helps Asian currencies ... bring capital flows back into the region," Frederic Neumann, chief Asia economist and co-head of global research at HSBC, told CNBC's "Street Signs Asia."

Still, Neumann warns that "the market is putting in very aggressive assumptions about Fed rate cuts next year, and it's not clear that the Fed can really deliver the extent that's priced in."

Neumann said South Korea, India, China and Southeast Asia will be in a position to cut rates, if the Fed begins lowering interest rates in the second quarter of 2024.

— Quek Jie Ann

Hong Kong's Hang Seng index jumped 3.19% on Friday, leading gains among major Asian benchmarks even as China's November economic data showed an uneven recovery.

Basic materials stocks led the climb, but the top gainer on the index was e-commerce company JD.com, whose shares saw an almost 10% jump.

Other names on the top gainers list include property developer Longfor Group, Xinyi Solar Holdings, the largest solar cover glass producer in the world, and hotpot chain Haidilao.

— Lim Hui Jie

China reported that industrial output in November expanded at the fastest pace since February last year, but retail sales growth missed expectations — a sign the world's second-largest economy is still going through a patchy recovery.

Industrial output grew 6.6% in November from a year earlier, according to the National Bureau of Statistics Friday. This outpaced expectations for 5.6% in a Reuters poll and follows a 4.6% rise in October.

Retail sales climbed 10.1% in November from a year ago, the fastest pace of growth since May. Analysts had expected a 12.5% spike following a low base in 2022. Retail sales rose 7.6% in October.

Fixed asset investment in urban areas cumulatively grew 2.9% in the first 11 months of the year, compared with expectations for 3% growth. China's urban unemployment rate stayed at 5% in November.

For more, please read the full story.

— Clement Tan

China's central bank announced that it has conducted a reverse repurchase operation of 50 billion yuan ($7.06 billion) as well as injecting 1.45 trillion yuan of medium-term facility loans, so as to "maintain reasonable and sufficient liquidity in the banking system."

The rate on the medium-term facility loans were held at 2.5%, while the rate for the seven day reverse repurchases were also maintained at 1.8%.

Reuters reported that 650 billion yuan worth of MLF loans are set to expire this month, which means that the operation results in a net 800 billion yuan fresh fund injection into the banking system.

—Lim Hui Jie

Japan's manufacturing activity contracted in December for the seventh straight month, according to a private survey.

A flash reading of the au Jibun Bank Japan manufacturing purchasing managers' index shrank to 47.7 in December from 48.3 in November, signaling the quickest deterioration in manufacturing business conditions for ten months.

A reading below 50 indicates contraction.

The au Jibun Bank flash services PMI, however, was 52.0 in December versus 50.8 in November, the fastest gain in the three months.

The survey said services growth remained softer than the average seen over 2023 as a whole. Total new business expanded at a slightly quicker but mild pace in December, despite a slight drop in new export sales.

— Shreyashi Sanyal

Australia's private sector activity remained in contraction territory in December, but contracted at a softer pace, according to flash estimates from Judo Bank.

The composite purchasing managers' index for the country stood at 47.4, compared with the 27-month low of 46.2 in November.

Australia's manufacturing PMI was at 47.8, slightly higher than the 47.7 in the previous month, while services PMI came in 47.6, a slower rate of contraction compared with 46.0 in November.

The bank said that demand conditions remained under pressure in December, but inflation for input costs eased. Overall employment also continued to grow and companies' optimism improved from November.

— Lim Hui Jie

Macroeconomic uncertainty and rising interest rates may have put a dent on the performance of solar stocks this year – but one fund manager remains bullish on the long-term prospects of the sector.

"We like solar a lot because solar installations can be done anywhere – unlike wind plants. But they are an interest rate play at the moment; so, if interest rates go down – which they are at the moment – solar companies can do very well," Steven Glass managing director and investment analyst at the Australia-headquartered Pella Funds told CNBC Pro.

And one stock stands out to him as a long-term play.

CNBC Pro subscribers can read more here.

— Amala Balakrishner

Goldman Sachs recently added a number of stocks to its lists of top picks.

Called the "Conviction List - Directors' Cut," the lists encompass the United States, Europe and Asia-Pacific.

Here are four of the new additions.

CNBC Pro subscribers can read more here.

— Weizhen Tan

Federal Reserve Chair Jerome Powell's dovish tone Wednesday raises the likelihood of rate cuts coming sooner than some anticipated, and improves the chances of a soft landing if inflation continues to ease, Deutsche Bank said.

"While our baseline remains that the first rate cut is likely to come in June 2024 and that the Fed will reduce rates by 175bps next year, today's meeting points to dovish risks to this expectation," Matthew Luzzetti, chief U.S. economist, wrote Wednesday in a note titled, "December FOMC: Powell breaks out punchbowl early at the holiday party."

"We see heightened risks that rate cuts could come as early as March," Luzzetti continued. "Earlier policy easing in the presence of more substantial disinflation would improve soft landing prospects."

In fact, the CME FedWatch Tool shows markets are currently pricing in a roughly 72% probability the Fed will cut rates by 0.25 percentage points in March. That's up from 65% on Wednesday.

— Sarah Min, Michael Bloom

Mega cap tech names lagged behind the market, inching into negative territory amid broader market gains.

Microsoft and Netflix fell around 2.3% as of Thursday afternoon. Amazon and Alphabet declined 1.1% and 0.9%, respectively. Apple and Meta Platforms also saw their shares decline by 0.2% and 0.5%, respectively.

Meanwhile, the S&P 500 was up 0.2%, while the Nasdaq Composite inched up 0.1%.

— Hakyung Kim

Oil prices settled 3% higher on Thursday on a weaker dollar and slight upgrade to demand growth in 2024.

The West Texas Intermediate contract for January gained $2.11, or 3.04%, to settle at $71.58 a barrel, while the Brent contract for February rose $2.35, or 3.16%, to settle at $76.61 a barrel.

The U.S. dollar also dropped to a four-month low Thursday after the Federal Reserve indicated the rate hikes were over. A weaker dollar makes oil cheaper, which can lift demand.

And the International Energy Agency on Thursday said global oil demand would grow by 1.1 million barrels per day in 2024, up slightly from its previous forecast of 930,000 barrels per day.

— Spencer Kimball

The benchmark rate broke below 4% for the first time since August, as traders mounted bets on Fed rate cuts for 2024. The 10-year was last trading around 3.95%.

— Fred Imbert