Australia PMI, Japan Jibun Flash PMI, Lunar New Year holidays

New Zealand’s Auckland Airport saw its total passenger volumes for November reach 74% of levels seen in the financial year to June 2019, or the last full-year not impacted by the pandemic, according to the airport’s monthly traffic update.

International passengers were at 67% of pre-pandemic levels, the release said, adding that a majority of the recovered overseas travel was short-haul flights from Australia and the Pacific Islands.

The demand for routes between New Zealand and North American regions has recovered to 86% of pre-pandemic levels, including two added destinations in Texas (Dallas/Fort Worth) and New York.

— Jihye Lee

Rising interest rates have major implications for companies with large amounts of debt, as they will likely experience higher costs from increased borrowing.

As interest rates continue to rise, analysts at Bernstein think that stocks with low debt exposure and a higher quality of debt should outperform.

The investment bank named a handful of global low-debt stocks with an investment-grade credit rating there likely to outperform.

CNBC Pro subscribers can read more here.

— Ganesh Rao

Australian “buy now, pay later” company Zip fell by more than 10% after a short-lived rally following its quarterly results.

Zip traded 15% lower, a sharp turnaround from its earlier gains of more than 10% after posting 12% revenue growth.

The company said underlying “monthly cash burn has continued to decrease and expected to further improve.” It said currently available cash and liquidity position is “sufficient to see the company through to generating positive cash flow” and expects to deliver positive cash EBITDA by the first half of fiscal 2024.

Here are some of the major economic events in the Asia-Pacific that investors will be closely watching this week.

Stock markets in mainland China and Taiwan will remain closed until they resume trade on Jan. 30.

On Tuesday, regional purchasing managers’ index readings for Japan and Australia will be in focus while most markets remain closed to observe the Lunar New Year — with the exception of Australia, Japan and Indonesia.

Inflation reports will be in focus on Wednesday as Australia and New Zealand release their consumer price index readings for the final quarter of 2022. Singapore will publish its inflation print for December.

Hong Kong’s market is scheduled to resume trade on Thursday.

Fourth-quarter gross domestic product for South Korea and Philippines will be published Thursday, while the Bank of Japan will release its summary of opinions from its latest monetary policy meeting in January. Japan also reports its services producer price index on Thursday.

Japan’s core CPI readings for capital Tokyo will be a barometer for where monetary policy is headed.

Australia’s producer price index and trade data will also be closely monitored indicators ahead of the Reserve Bank of Australia’s meeting in the first week of February.

— Jihye Lee

National Australia Bank’s monthly business survey showed worsened business conditions for December with a reading of 12 points, a decline from November’s print of 20 points.

The survey reflects deteriorated trading conditions, profitability, and employment, NAB said.

“The main message from the December monthly survey is that the growth momentum has slowed significantly in late 2022 while price and purchase cost pressures have probably peaked,” NAB chief economist Alan Oster said.

Meanwhile, business confidence in December rose by 3 points to -1, an improved reading from -4 points seen in November.

— Jihye Lee

The au Jibun Bank Flash Japan manufacturing purchasing managers’ index in January was unchanged for a second-straight month at 48.9, below the 50-mark that separates contraction and growth from the previous month.

The reading “signaled the joint-strongest deterioration in the health [of] the Japanese manufacturing sector since October 2020,” S&P Global said.

The au Jibun Bank flash composite output index rose to 50.8 in January, slightly higher than the reading of 49.7 seen in December.

Flash services business activity rose further with a print of 52.4, higher than December’s reading of 51.1.

— Jihye Lee

After more than 2 years of regulatory crackdowns and a pandemic-induced slump, Chinese tech names are back on Wall Street’s radar, with one stock in particular standing out as a top pick for many.

Pro subscribers can read more here.

— Zavier Ong

Federal Reserve officials next week are almost certain to approve another deceleration in interest rate hikes while also discussing when to stop the increases altogether, according to a Wall Street Journal report.

The rate-setting Federal Open Market Committee is set to convene Jan. 31-Feb. 1, with markets pricing in almost a 100% chance of a quarter-point increase in the central bank’s benchmark rate. Most prominently, Fed Governor Christopher Waller said Friday he sees a 0.25 percentage point increase as the preferred move for the upcoming meeting.

However, Waller said he doesn’t think the Fed is done tightening yet, and several other central bankers in recent days have backed up that notion.

The Journal report, citing public statements from policymakers, said slowing the pace of hikes could provide the chance to assess what impact the increases so far are having on the economy. A series of rate hikes begun in March 2022 has resulted in increases of 4.25 percentage points.

Market pricing is currently indicating quarter-point hikes at the next two meetings, a period of no action, and then up to a half-point reduction by the end of 2023, according to CME Group data.

However, several officials, including Governor Lael Brainard and New York Fed President John Williams, have used the expression “stay the course” to describe the future policy path.

— Jeff Cox

The Nasdaq Composite rallied more than 2.2% during midday trading Monday, lifted by shares of beaten-up technology stocks.

The move put the tech-heavy index on pace for a consecutive day of gains exceeding 2%. The index finished 2.66% higher on Friday.

Rising semiconductor stocks helped pushed the index higher. Tesla and Apple, meanwhile, surged 7.7% and 3.2%, respectively, as China reopening lifted hopes of a boost to their businesses. Western Digital and Advanced Micro Devices rose about 8% each, while Qualcomm and Nvidia jumped about 7%.

Information technology was the best-performing S&P 500 sector, gaining 2.7%. That was in part due to gains within chip sector. Communication services added 1.9%, boosted by the likes of Netflix, Meta Platforms, Alphabet and Match Group.

— Samantha Subin

Surging inflation may appear largely in the past, but a shift to a 25 basis point hike at the next Federal Reserve policy meeting is a “mistake,” according to Allianz Chief Economic Adviser Mohamed El-Erian.

“‘I’m in a very, very small camp who thinks that they should not downshift to 25 basis points, they should do 50,” he told CNBC’s “Squawk Box” on Monday. “They should take advantage of this growth window we’re in, they should take advantage of where the market is, and they should try to tighten financial conditions because I do think that we still have an inflation issue.”

Inflation, he said, has shifted from the goods to the services sector, but could very well resurge if energy prices rise as China reopens.

El-Erian expects inflation to plateau around 4%. This, he said, will put the Fed in a difficult position as to whether they should continue crushing the economy to reach 2%, or promise that level in the future and hope investors can tolerate a steady 3% to 4% nearer term.

“That’s probably the best outcome,” he said of the latter.

— Samantha Subin

An earnings recession is imminent this year, according to Morgan Stanley equity strategist Michael Wilson. 

“Our view has not changed as we expect the path of earnings in the US to disappoint both consensus expectations and current valuations,” he said in a note to clients Sunday.

Some positive developments have unfolded recent weeks — such as China’s ongoing reopening and falling natural gas prices in Europe — and contributed to some investors viewing market prospects more optimistically. 

However, Wilson advises investors to remain bearish on equities, citing price action as the main influence for this year’s rally. 

“The rally this year has been led by low-quality and heavily shorted stocks,” he said. “It’s also witnessed a strong move in cyclical stocks relative to defensives.”

Wilson has based his forecasts on margin disappointment, and he believes the case for this is growing. Many industries are already facing revenue slowdowns, as well as inventory bloating, less productive headcount. 

“It’s simply a matter of timing and magnitude,” said Wilson. “We…