Japan stocks snap seven-day winning streak as HK sinks to 2-month low

The Shanghai Composite fell 1.52% on Tuesday, leading losses in Asia and dragged by financial stocks.

Refinitiv data showed banks led losses on the index, with the Industrial and Commercial Bank of China down by 2.76% and incurring the largest loss by index points.

Other top losers losses on the SSE included the A-share listings of China Life Insurance and the Agricultural Bank of China, which slid 4.13% and 3.05% respectively. The Bank of China also sank more than 3%.

This comes a day after China held its loan prime rates unchanged at 3.65%.

China’s e-commerce market is growing at a pace that can’t be ignored, said Dirk Hoerig, CEO of German cloud-based e-commerce solution Commercetools.

“I think what we can’t ignore is that the Chinese e-commerce market is growing and [is estimated to be worth as much as $3.3 trillion] by 2025,” said Hoerig.

His comments come as Commercetools looks to expanding into China despite geopolitical challenges. The customers are mostly European and U.S. brands and retailers and the Chinese market is critical to their business, he said.

“We’re living in a volatile economy, the consumer demands are constantly increasing and that means the pace of change is not going to slow down,” said Hoerig.

He added that overall spending for commerce technology is set to grow over 10% year over year within the next three years and “that gives us strong confidence looking forward.”

— Sheila Chiang

New Zealand’s central bank is expected to raise its benchmark policy rates to 5.5% when it meets Tuesday, according to a Reuters poll of 25 economists.

21 of the economists surveyed expected a hike, while the remainder expected a pause. In the same Reuters poll, the median expected rate hike is 25 basis points.

A rate hike Tuesday would be the Reserve Bank of New Zealand’s 12th since October 2021.

The RBNZ previously surprised investors with a 50 basis points hike to 5.25% in March, when most economists had expected a raise of 25 basis points.

— Lim Hui Jie

South Korea’s consumer sentiment has climbed in May to its highest level in a year. Data from the Bank of Korea showed a reading of 98, compared to 95.1 a month ago.

Inflation is expected to weaken to 3.5%, lower than the 3.7% the month before, the central bank said.

Reuters reported a BOK official as saying “It is too early to say inflation expectations are stabilising, with uncertainties remaining over public price increases and other factors.”

— Lim Hui Jie

Japan’s manufacturing sector recorded an expansion for the first time in seven months, according to flash estimates by the au Jibun Bank.

The manufacturing purchasing managers index came in at 50.8 in May, a reversal from the 49.5 recorded in April, “signalling the first improvement in operating conditions since October 2022,” the report showed. A PMI reading above 50 indicates expansion, while a reading below that level indicates contraction.

The bank noted there were renewed increases in both output and new orders, with both variables rising at the strongest rate for 13 months. Manufacturers indicated that supply chain issues were showing signs of improvement.

Japan’s services PMI was 56.3 in May, higher than the 55.4 seen in April and expanding at the strongest rate since the series began. Composite PMI climbed to 54.9, up from 52.9 in April.

— Lim Hui Jie

Hong Kong’s inflation climbed 2.1% in April from a year earlier, slightly above the 2% expected by economists polled by Reuters. April inflation was also higher than the 1.7% recorded in March.

A spokesman for the city’s government said that prices of energy-related items continued to increase sharply year-on-year, as well as costs of clothing and footwear.

The price of electricity, gas and water jumped 17.8%, while clothing and footwear prices climbed 6.4%.

The price of takeaway meals and eating out also rose 4.2%, while “price pressures on other major components remained broadly in check,” the spokesman said.

Moving forward, Hong Kong expects that domestic price pressures may increase alongside the economic recovery. Overall inflation will likely pick up in the rest of 2023, but will remain “largely moderate”.

— Lim Hui Jie

House Speaker Kevin McCarthy, R-Calif., says “decisions have to be made” at his meeting on the debt ceiling with President Joe Biden, scheduled to begin at 5:30 p.m. ET.

“We’ve got to have movement” on pieces of an eventual a deal to raise the debt ceiling, McCarthy told reporters in the Capitol, adding “I know where I think people should be able to get to.”

With only 10 days left until the earliest date Treasury Secretary Janet Yellen says the U.S. will risk default, Biden and McCarthy are under intense pressure to reach a compromise agreement. If and when they do, it will still require at least a week to turn their handshake deal into legislation and pass it through the House and Senate.

The House is currently scheduled to leave for Memorial Day recess this weekend, but McCarthy said he would postpone it if needed, in order to hold a vote to raise the debt ceiling. “We’re going to stay and do our job,” he said.

— Christina Wilkie

Shares of several global commercial property companies are set to decline further, according to chief investment officer Patrick Armstrong.

Armstrong, who manages equity strategy at wealth manager Plurimi, revealed that he is shorting four global commercial property companies.

“It’s an expensive company, in my opinion, that’s facing a pretty toxic environment,” he said about one of his shorts.

CNBC Pro subscribers can read more here.

— Ganesh Rao

Philip Ripman manages the $1 billion Storebrand Global Solutions fund, with a focus on sustainability. But as well as green energy stocks, he also invests in chipmakers, cybersecurity stocks, pharmaceuticals and more.

His strategy appears to have paid off over the long term: his fund ranks top for 10-year annualized returns (15%) on Morningstar’s list of global mega-cap equity funds.

Here are three tips on investing sustainably, including how to play the renewables theme, according to Ripman.

CNBC Pro subscribers can read more here.

— Weizhen Tan

Minneapolis Federal Reserve President Neel Kashkari noted Monday that a rate hike versus a pause in June is a “close call.” He added, though, that even if the central bank does decide against another hike, it shouldn’t be considered a sign about the future.

“Right now it’s a close call either way … If we were to skip in June, that does not mean we’re done with our tightening cycle, it means to me we’re getting more information,” he said on CNBC’s “Squawk Box.”

He called the economy “robust” and noted that “we may have to go north of 6%” for the fed funds rate from the current target range of 5%-5.25% if inflation doesn’t show more signs of coming down.

— Jeff Cox

Cryptocurrencies were flat to start the week as movements in stocks and bond yields continued to push and pull on crypto prices.

Bitcoin was down 8.7% for May and on pace for its worst month since November, according to Coin Metrics. Ether was lower for the month by nearly 5% and heading for its worst month since December.

“Crypto continues to remain the best performing asset this year relative to gold, equities, bonds and DXY,” said Bernstein analyst Gautam Chhugani said in a note Monday. “We continue to believe in our structural thesis on the ‘new crypto cycle’, but it is never a straight path up … These dull markets, we believe, offer the best long-term risk rewards.”

— Tanaya Macheel, Gina Francolla

Shares of Micron Technology fell more than 3% amid news that China will restrict some sales of the memory chipmakers’ products.

The country’s Cyberspace Administration barred operators of “critical information infrastructure” from purchasing products from the company after Micron’s products failed its network security review.

The firm poses a “major security risk” to China’s critical information infrastructure supply chain and affects [its] national security,” a statement said.

The news lifted Chinese chipmakers, including Hong Kong-listed Hua Hong Semiconductor and SMIC. Some chipmakers, including Qualcomm, Lam Research, Broadcom and Applied Materials were down nearly 1% each.

— Samantha Subin