Japan markets, Fed December minutes, China losses

Japan’s cabinet will approve the use of its reserved funds to cover the damage from the earthquake that hit the Noto Peninsula in Ishikawa prefecture on New Year’s Day, Prime Minister Fumio Kishida said.

Reuters reported that the amount being considered at next Tuesday’s meeting would be likely be double the
near 2 billion yen ($13.95 million) deployed in similar past disasters.

The reserved funds are for Japan’s government to deal with unexpected spending needs, and require the cabinet’s approval before they can be utilized.

— Lim Hui Jie, Reuters

Business activity in Hong Kong’s private sector improved at the fastest pace since April, according to S&P Global.

The city’s purchasing managers’ index rose to 51.3 in December, higher than the 50.1 seen in November.

The S&P Global report noted that new business and output in Hong Kong returned to growth, though foreign demand conditions remained subdued.

“The improvement in overall sales nevertheless supported faster employment growth, while firms also raised their inventory holdings amid softening cost pressures,” the report added.

— Lim Hui Jie

Shares of Japan Airlines slid as much as 2% on Thursday, before recovering slightly as Japan’s markets resume trading and react to the collision of a JAL flight at Tokyo’s Haneda airport on Jan. 2.

The crash occurred when the JAL flight 516 collided with a Japan Coast Guard aircraft, and claimed the lives of five of the six crew members aboard the Coast Guard plane.

In a regulatory filing on Thursday to the Japan Exchange, JAL said that the estimated loss from the aircraft collision amounted to 15 billion yen (105 million), which will be covered by insurance.

Australia stocks continued to slide after hitting a record high earlier this week, falling to two-week lows on Thursday.

The S&P/ASX 200 fell 0.53% to trade near 7,495 — its lowest level since Dec. 19 — retreating from an all-time high of 7,632.70 hit on Tuesday.

Aussie markets fell, tracking a somber global mood after minutes of the U.S. Federal Reserve’s meeting in December showed interest rate cuts were likely in 2024, but provided little clarity on when that might happen.

Bets that the Reserve Bank of Australia will no longer be raising rates have buoyed the country’s stock market — but those hopes have been partly driven by the Fed’s dovish shift.

The Aussie dollar strengthened 0.1% against the U.S. dollar in early trading.

— Shreyashi Sanyal

Stocks soared in 2023, as investors have been buoyed by the narrative of an end to rate hikes in 2024.

Tech stocks led the charge as trends such as artificial intelligence boomed.

The S&P 500 rallied 24%, while the tech-heavy Nasdaq Composite ended 2023 up 43.4% in its best year since 2020.

Still, there are some stocks trading at cheaper valuations than the broader S&P 500, and which analysts expect will have strong earnings growth in 2024.

CNBC Pro subscribers can read about them here.

— Weizhen Tan

Building the technology that powers driverless cars is proving to be incredibly difficult for car markers.

Most recently, Cruise, GM’s robotaxi service, was shut down in San Francisco over safety issues.

Given such a backdrop, Deutsche Bank has named one stock as a “rare secular growth story” in the sector because the company’s technology can find buyers among any global automaker seeking to add self-driving capabilities.

CNBC Pro subscribers can read more here.

— Ganesh Rao

Oil prices rose more than 3% on Wednesday as the U.S. warned Houthi militants against attacks in the Red Sea and OPEC pledged unity to support market stability.

Libya’s Sharara oilfield was also shut down due to protests, two engineers told Reuters.

The West Texas Intermediate contract for February gained $2.32, or 3.29%, to settle at $72.70 a barrel. The Brent contract for March added $2.36, or 3.11%, to settle at $78.25 a barrel.

— Spencer Kimball

The minutes from the Federal Reserve’s December meeting showed that, while the central bank sees rates declining in 2024, but sees its current policy stance as appropriate.

“In their submitted projections, almost all participants indicated that, reflecting the improvements in their inflation outlooks, their baseline projections implied that a lower target range for the federal funds rate would be appropriate by the end of 2024,” the document stated.

It also added: “Participants generally stressed the importance of maintaining a careful and data-dependent approach to making monetary policy decisions and reaffirmed that it would be appropriate for policy to remain at a restrictive stance for some time until inflation was clearly moving down sustainably toward the Committee’s objective.”

— Jeff Cox

The benchmark 10-year Treasury yield ticked back above 4% on Wednesday, reversing a downtrend seen toward the end of 2023.

The move put pressure on tech stocks and the S&P 500 real estate sector. It also comes ahead of the minutes from the Federal Reserve’s December meeting.

— Fred Imbert

Job openings were about in line with expectations, while the manufacturing sector remained in contraction, according to separate economic reports Wednesday.

The Labor Department’s Job Openings and Labor Turnover Survey showed employment listings at 8.79 million, about in line with the Dow Jones estimate for 8.8 million. Layoffs and hiring totals moved lower.

On the manufacturing side, the ISM Manufacturing report registered a 47.4 reading for December, just above the 47.2 estimate and better than the 46.7 in November. The number represents the percentage of businesses reporting expansion for the month, so anything below 50 represents contraction.

—Jeff Cox