Asia-Pacific markets mixed, Hang Seng index at lowest levels in 11 years; oil rises

Asia-Pacific markets mixed, Hang Seng index at lowest levels in 11 years; oil rises

Pedestrians cross a road in front of the Tokyo Stock Exchange (TSE), operated by Japan Exchange Group Inc. (JPX), in Tokyo, Japan, on Thursday, Oct. 29, 2020.

Kiyoshi Ota | Bloomberg via Getty Images

Shares in the Asia-Pacific were mixed on Monday as markets enter the last quarter of the year.

Hong Kong’s Hang Seng index was 0.97% down in the final hour of trade, after reaching the lowest levels since October 2011, according to Refinitiv Eikon data. In Australia, the S&P/ASX 200 gave up early gains and closed 0.27% lower at 6,456.90.

The Nikkei 225 in Japan gained 1.07% to 26,215.79, while the Topix index was 0.63% higher at 1,847.58. MSCI’s broadest index of Asia-Pacific shares outside Japan slipped 0.8%.

Brent crude futures and West Texas Intermediate futures jumped on reports of a possible OPEC supply cut.

Later in the week, Australia’s central bank will announce its interest rate decision, while several countries in Asia will report inflation data.

China markets are closed for the Golden Week holiday, and South Korea’s market is also closed.

Australia’s central bank expected to hike rates by 50 basis points: Reuters poll

A Reuters poll of economists expects the Reserve Bank of Australia to hike its benchmark interest rate by 50 basis points to 2.85%.

RBA’s board members said the case for a slower pace of rate hikes was growing, according to minutes from its Sept. 6 meeting, when it raised its interest rate by 50 basis points.

Analysts at Nomura are expecting the central bank to raise rates by 40 basis points, “to convey the view of RBA nearing the end of upsized hikes.”

Economists at Commonwealth Bank Australia see a higher chance for a 25-basis-point hike than a 50-basis-point hike.

–Jihye Lee

British pound jumps on reports UK government will U-turn on cut to top tax rate

The British pound jumped on Monday morning on reports that the U.K. government will reverse plans to scrap the top rate of income tax.

Sterling gained 0.8% against the dollar to trade at around $1.1250 shortly after 7 a.m. London time, taking the pound back to the level seen before Finance Minister Kwasi Kwarteng’s announcement of a raft of widely criticized tax cuts on Sept. 23.

– Elliot Smith

ANZ sees significant chance of an OPEC cut as large as 1 million barrels per day

Ahead of an OPEC meeting on Oct. 5, ANZ sees a “significant chance of a cut” as large as 1 million barrels per day, analysts at the firm said in a note.

That move is likely to be made “to counteract the excessive bearishness in the market.”

The note added that any production cuts below 500,000 barrels per day, however, would be “shrugged off by the market.”

–Jihye Lee

CNBC Pro: Investment pro says ETFs are a $10 trillion opportunity — and reveals areas of ‘tremendous’ value

Exchange-traded funds offer the benefit of diversification, says Jon Maier, chief investment officer at Global X ETFs. He said the ETF market is “growing exponentially” and estimates it to be worth $10 trillion.

He names several opportunities for ETF investors in this volatile market.

Pro subscribers can read more here.

— Zavier Ong

Business confidence of Japan’s large manufacturers worsens

Sentiment of Japan’s large manufacturers worsened in the July-to-September quarter, according to the Bank of Japan’s latest quarterly tankan business sentiment survey.

The headline index for large manufacturers’ sentiment came in at 8, a decline from the previous quarter’s reading of 9. Economists polled by Reuters expected a print of 11.

“Our expectation and market expectations were for the manufacturing reading to pick up — supply conditions had improved, you’ve seen fading supply impact from zero-Covid policies in China, commodity prices came down a little bit,” said Stefan Angrick, a senior economist at Moody’s Analytics.

“The fact that the manufacturing side of the economy isn’t doing so well certainly isn’t great for the outlook,” he told CNBC’s “Squawk Box Asia.”

But the non-manufacturing index ticked up slightly, which could mean Japan’s late Covid recovery is getting underway, he added.

— Abigail Ng

CNBC Pro: The five global stocks experiencing the de-globalisation trend, according to HSBC

New research from HSBC says supply chains, geopolitical tensions, and worsening financial conditions have forced many global companies to “substantially” turn inward in search of resilient revenue and growth.

In a tough economic environment with recessionary pressures, the bank said turning inwards is “probably helpful” for these stocks.

The report titled ‘A de-globalisation wave?’ said European firms’ foreign sales dipped below 50% in 2021, the lowest level in the last five years.

Oil prices jump on reports of OPEC mulling production cut

CNBC Pro: Should investors flee stocks? Strategists give their take — and reveal how to trade the volatility

With monetary policy set to tighten further in the months ahead, and Wall Street mired in the depths of a bear market abyss, many investors are beginning to wonder if now’s the time to exit the stock market and put their money in other asset classes.

CNBC Pro spoke to market watchers and scoured through research from investment banks to find out what the pros think.

Pro subscribers can read more here.

— Zavier Ong

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