Asia-Pacific markets slide as recession fears mount, China vows to stabilize economy

Oil futures rise on hopes of demand recovery in China

Oil futures rose during morning trading in Asia as optimism about China’s reopening leading to demand recovery outweighed recession fears.

Brent crude oil futures gained 1.16% to $79.96 a barrel, while US West Texas Intermediate futures rose 1.18% to $75.17 a barrel.

China recently announced plans to increase flights to accommodate an uptick in travel for the upcoming Lunar New Year holidays, Caixin reported last week.

The report said officials have set plans to reach nearly 90% of pre-pandemic levels by the end of January.

Jihy Lee

Hong Kong casino stocks fall despite renewed licenses

Macao’s Hong Kong-listed casino shares fell during the morning session in Asia despite winning 10-year concessions to operate their integrated resorts.

A concession is essentially an operating agreement with the government, which in turn grants licenses to the operators.

Wynn Macau lost 8%, while MGM China lost about 12%. Sands China also fell 4% and Galaxy Entertainment lost 3%.

The moves come after media reports of a rising death toll in Beijing and as Shanghai ordered schools to close, dampening investor sentiment over China’s reopening.

Jihye Lee, Contessa Brewer

China focuses on stabilizing the economy in 2023: Xinhua

China will prioritize stabilizing its economy and accelerating policy adjustments to meet key targets for 2023, state media Xinhua News Agency reported last week, concluding its annual Central Economic Work Conference.

“Proactive fiscal policy should be strengthened for its effectiveness, with a better mix of tools, including budget deficits, special bonds and interest rate subsidies,” the report said.

Grow Investment Group’s Hao Hong said that while he expects supportive policies such as rate cuts, he doesn’t think it will be his own version of quantitative easing. QE is a policy that the US Federal Reserve has previously taken to stimulate economic activity by raising cash.

“While some prominent economists advocate for Chinese QE, the recent Central Economic Work Conference suggests a more measured approach,” he said. “We believe liquidity expansion will be structural and targeted, rather than general easing.”

Jihy Lee

CNBC Pro: Goldman Sachs Unveils Technology Outlook in Greater China – and Names Top Picks for 2023

After a rough few years for Chinese tech stocks, investors are now hoping the worst is behind them.

What’s next for the downturned sector? Goldman Sachs shares its outlook for Chinese technology and reveals how investors can trade the sector in 2023.

Pro subscribers can read more here.

— Zavier Ong

Fed’s Daly says ‘nothing but hope’ in inflation data, ‘far away’ from target

San Francisco Federal Reserve President Mary Daly said Friday that she welcomes the recent inflation news, but that it is not enough to change her mind about where policy should go.

The October and November Consumer Price Index numbers came down to “good news,” but “we’re seeing nothing but hope in the inflation data right now, and I’m getting faith in evidence, not hope. So I’m hopeful that we I I’m on a good truck, but I won’t be confident until I see repeated evidence that inflation is really heading back to 2% in the next few years,” Daly said in a talk hosted by the American Enterprise Institute.

“We are a long way from our price stability target,” she added.

Earlier this week, the Fed raised its lending rate by half a percentage point, the seventh increase of the year that brought the fund level to a target range of 4.25%-5%.

Daly, a non-voter this year on the Federal Open Market Committee that sets rates, said her own expectations of where rates go are likely higher than current market prices. Daly votes again in 2024.

—Jeff Cox

CNBC Pro: Analysts love these 3 renewable energy stocks that offer over 50% gains

According to the International Energy Agency, the expansion of renewable energy will grow exponentially over the next five years.

The IEA predicted earlier this month that solar and wind power would grow five times, equaling the clean power capacity installed together in the past 20 years.

Given these prospects for the energy transition to renewable sources, CNBC Pro screened for stocks that could present opportunities for investors in the sector.

CNBC Pro subscribers can read more here.

— Ganesha Rao

Fed is making a “terrible mistake” by walking on, says Wharton’s Siegel

According to Jeremy Siegel, a professor of finance at the Wharton School of Business at the University of Pennsylvania, plans by the Federal Reserve to continue raising interest rates next year increase the likelihood of a very difficult downturn.

“I think the Fed is making a terrible mistake,” he told CNBC’s “Squawk on the Street” on Friday. “Their plan, their dotted line, is way too tight. Inflation is actually over, despite the way chairman [Jerome] Powell characterizes it.”

According to Siegel, the central bank should not hike further next year or keep interest rates high.

“If we talk about going higher and staying high in 2023, I think that would guarantee a very steep recession,” he said.

— Samantha Subin

UBS raises 2023 growth outlook for China, lowers 2022 forecast

UBS raised its outlook for China’s gross domestic product in 2023 to 4.9% from 4.5% previously, according to its Chinese chief economist Wang Tao, citing an earlier and faster reopening in the country.

Wang said the company expects weaker fourth-quarter GDP for 2022, lowering its full-year forecast from 3.1% to 2.7%, pointing to weakened growth in November with a recent increase in the number of Covid cases.

The company added that the Central Economic Work Conference is likely to prioritize stabilizing growth and supportive macro policies for the year ahead.

“We expect fiscal policy to remain proactive with a small increase in the headline deficit and a new special LG [local government] bonds, monetary and credit policy to remain supportive with continued ample liquidity, but further policy rate cuts are unlikely,” Wang said in the note.

— Jihye Lee