Fed rate decision, South Korea Trade, Australia Unemployment, New Zealand GDP

Emerging markets are expected to face very strong disinflation in the first quarter of 2023 with the exception of Asia, said JPMorgan’s chief emerging markets economist Jahangir Aziz.

Asia, however, will not be seeing disinflation as the region’s inflation did not reach what he called “stratospheric levels” as it did in central Europe or Latin America.

The level of price inflation heading downward will be seen “strongly taking hold” in other emerging markets outside of Asia, Aziz said.

“I think that is going to be the big driver of how markets reprice emerging market assets,” he added.

— Charmaine Jacob

The Philippine central bank raised interest rates by 50 basis points to 5.5%, in line with analysts’ forecasts in a Reuters poll and lifting the key rate to the highest in 14 years.

The Bangko Sentral ng Pilipinas (BSP) is is likely to continue hiking rates in early 2023, following the U.S. Federal Reserve, said Mohamed Faiz Nagutha, ASEAN economist at Bank of America Global Research on CNBC’s “Squawk Box Asia.”

He added that the central bank will continue hiking its benchmark interest rate until 6%, or 50 basis points from the current rate.

— Charmaine Jacob

China’s economic reopening is belated, but is much needed to control inflationary pressures in the U.S., Jeremy Siegel, Wharton School of Business professor said on CNBC’s “Street Signs Asia.”

“For the U.S., we import so much from China, if those supply chains get normalized, that would bring down inflation, so I applaud China’s move,” he said. “It’s way too late, it should have been earlier, but it is needed,” he said.

Siegel added that he expects the U.S. Federal Reserve to hike rates once more in February’s meeting by 25 basis points before pivoting.

— Jihye Lee

China’s industrial production for November grew 2.2%, after seeing a growth of 5% in October, according to official data. That’s lower than expectations for growth of 3.6% in a Reuters survey.

Retail sales fell 5.9% on an annualized basis, further than expectations of a decline of 3.7% in a Reuters survey and a fall of 0.5% the previous month.

— Jihye Lee

China’s reopening will have both upside and downside risks for its economy, said Albert Park, chief economist at the Asian Development Bank. 

While the lifting of Covid restrictions will boost growth prospects for China and other economies, it could also lead to an increase in Covid-19 cases, he said. 

“The one area where there might be upside risk would be China’s reopening. And of course, there’s both downside and upside risks for the China case because as they reopen, we know cases are going to have to spread pretty quickly,” Park said.

Recurring lockdowns in China is one of the three big headwinds slowing down the region’s recovery from the pandemic, according to ADB. Monetary policy tightening by central banks around the world and the prolonged war in Ukraine are also factors contributing to slower growth, the bank said. 

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— Charmaine Jacob

JPMorgan expects markets in the Asia-Pacific region to end the week on a cautious tone following the Federal Reserve’s interest rate hike of 50 basis points.

“Given the U.S. market reaction after the FOMC meeting, we expect Asian markets to end the week with more cautious tone,” Tai Hui, the firm’s Asia-Pacific chief market strategist, said in a note.

Tai added that a weaker inflation print is needed before the Fed’s hawkishness fades, while the region may have more optimism on China’s expected reopening.

“The medium term prospects of China’s economic reopening and Asia’s domestic demand resilience could be a bright spot as the U.S. and Europe face more growth challenges,” Tai said. “We would need more weak inflation data in order for the Fed to tone down its hawkishness.”

— Jihye Lee

South Korea’s revised trade data for November was flat, official data from the Bank of Korea showed.

Imports grew by 2.7% while exports fell by 14%, in line with readings from the previous month, resulting in a trade deficit of $6.99 billion, slightly narrower than the previous month’s reading of $7.01 billion.

Prices for imports grew 14.2% compared with a year ago after seeing growth of 19.8% the previous month. Export prices grew 8.6% in November compared with a year ago, after growing 13.7% in October.

— Jihye Lee

Japan’s exports and imports for November grew more than expected on an annualized basis, official data showed.

Exports for the month rose 20%, beating expectations of 19.8% in a Reuters survey. Imports rose 30.3%, also higher than expectations of 27% in a Reuters poll.

This resulted in a wider-than-expected trade deficit of 2.02 trillion yen ($14.91 billion) after posting 2.16 trillion yen ($15.96 billion) in the previous month.

— Jihye Lee

Investors will have a second opportunity to take part in the stock market rally after China announced a relaxation of Covid-19 restrictions, according to Bank of America.

The bank named more than 10 stocks after having found “green shoots of recovery in high-frequency data” that point toward rising earnings at companies exporting to China.

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— Ganesh Rao

Australia’s unemployment rate for November remained at 3.5% on an annualized basis, in line with expectations from a Reuters poll and flat from the prior month.

Official data from the Australia Bureau of Statistics showed the labor participation rate also remained at 66.7%, and the employment to population ratio remained at 64.4%.

Monthly hours worked increased to 1.89 billion.

— Jihye Lee

The Fed announced it will raise interest rates by 50 basis points, marking an end to the pattern of 75 point hikes seen in recent months.

Before this move, the Fed had raised rates by 75 basis points at the last four meetings. A basis point is equivalent to 0.01%.

The 50 basis point hike was widely expected ahead of the meeting.

It’s the final policy decision expected from the central bank in 2022.

— Alex Harring

Federal Reserve Chairman Jerome Powell said Wednesday the recent positive signs for inflation aren’t enough for the central bank to ease back on interest rate increases.

“It will take substantially more evidence to have confidence that inflation is on a sustained downward” path, Powell said during his post-meeting news conference.

The comments came as the Fed raised its benchmark rate another half percentage point and indicated at least another three-quarters of a point in hikes are coming. The decision also occurs a day after November’s consumer price index reading was up just 0.1%, an indication that inflation may have peaked.

However, Powell said inflation remains a problem.

“Price pressures remain evident across a broad range of goods and services,” Powell added.

—Jeff Cox