Hong Kong stocks jump 4%; China’s factory activity reading hits highest level since 2012

India’s manufacturing purchasing managers index for February came in at 55.3, according to a private survey by S&P Global.

This was slightly lower than January’s figure of 55.4, but it beat economists expectations for a PMI reading at 54.3.

A PMI reading above 50 indicates expansion in the sector, while a reading below 50 signals contraction.

On Tuesday, India released its gross domestic product numbers for the period of October – December 2022, which saw a 4.4% expansion compared to 5.2% in the same period a year ago.

India’s government still maintains a 7% GDP growth estimate for its fiscal year ending Mar. 31, 2023, and is expected to surpass China’s 2022 figure of 3%.

—Lim Hui Jie

Moody’s expects China’s economy to grow by 5% for 2023, it said in a macro outlook report.

“We have raised our forecast for China’s real GDP growth to 5.0% for both 2023 and 2024, up from our previous projections of 4.0%,” it said in a note.

“We expect pent-up demand for non-traded services to support a consumption rebound starting this spring,” it added.

Still, Moody’s highlighted growth will likely decline over the medium-term.

– Jihye Lee

The Reserve Bank of Australia is likely to hike rates once more in March meeting before pausing for the rest of the year, AMP said in a note.

“We think the RBA is closer to pausing its rate hiking cycle than the market is expecting,” AMP senior economist Diana Mousina said in a note.

“We expect just one more rate hike from the Reserve Bank at the March board meeting and a pause for the rest of the year (with the risk of rate cuts later in 2023),” she said, citing the “disappointing” run of economic data seen in the previous months,

Mousina pointed to negative jobs growth between November and December, a less-than-expected wage hike in the final quarter of last year, and how monthly consumer prices are showing signs of slowing in early 2023.

She added a weaker employment print in February will increase the risk of a pause at the RBA’s meeting in March. Australia will release its jobless rate for February on Mar. 16, after seeing a 0.2 percentage point rise in unemployment in February.

The Australian dollar weakened 0.31% against the U.S. dollar on Wednesday, trading at 0.6573.

— Lim Hui Jie

Technology and consumers related to reopening led gains in Hong Kong during Wednesday’s morning trade.

Tencent gained 5.53%, NetEase gained 6.94% and Alibaba rose 4.74%.

EV makers also saw gains, with Xpeng gaining 8.73%, Li Auto jumping 7.32%, and Baidu rising 5.56%.

Reopening-related consumer names also rose, with Budweiser Brewing Company up 6.38%, Anta Sports gaining 5% and Li Ning up 4.64%.

– Jihye Lee

China’s official manufacturing purchasing managers’ index rose to 52.6 in February, above the 50-point mark that separates growth from contraction, data from the National Bureau of Statistics showed.

That’s compared to January’s reading of 50.1 and above expectations of 50.5, according to economists surveyed by Reuters.

Non-manufacturing PMI rose to 56.3 – also above January’s reading of 54.4, the highest level since June 2022.

– Jihye Lee

Japan’s factory activity slowed at the fastest pace in two and a half years in February, a private survey by au Jibun Bank showed.

The manufacturing purchasing managers’ index fell to 47.7, down from 48.9 in January. This also marked the fourth straight month that Japan’s factory activity has stayed in contraction territory.

A PMI reading above 50 indicates expansion, while a reading below 50 signals contraction in growth.

On Tuesday, Japan’s industrial production fell 4.6% compared to a month ago in January, the biggest decline the economy has seen in eight months.

— Lim Hui Jie

Australia’s economy grew 2.7% for the whole of 2022, in line with economists expectations, but lower than 2021’s figure of 5.9%.

On a quarterly basis, gross domestic product grew 0.5%, according to the country’s bureau of statistics data. Australia has now recorded five consecutive rises in quarterly GDP, but growth slowed for the last two quarters.

The Australian dollar strengthened 0.36% against the U.S. dollar, while the S&P/ASX 200 dipped 0.22% lower.

— Lim Hui Jie

The success of ChatGPT has captured the imagination of the public — and the attention of investors. But HSBC says the chatbot could be the tip of the artificial intelligence iceberg.

So what’s next for AI? Wall Street analysts reveal its potential and name several stocks to play the emerging space.

Pro subscribers can read more here.

— Zavier Ong

South Korea’s trade deficit narrowed to $5.3 billion in February after marking a deficit of $12.65 billion in January, preliminary data showed.

The latest reading is a smaller deficit than expectations to see a $6.06 billion deficit, according to economists surveyed by Reuters.

Exports declined by 7.5%, dropping less than expectations to see a decline of 8.7% – while imports grew 3.6%.

– Jihye Lee

March is most often a positive month for the stock market, but this year it may bring more of the same turbulence that rattled investors in February.

Stocks are set to exit February with steep losses, with the S&P 500 down 2.3% for the month through Monday. The index is still up 3.7% for the year so far.

“February is the second worst month of the year, posting an average decline of 0.21%, which is the second worst after September,” said Sam Stovall, chief investment strategist at CFRA. “However, March on average posts a gain of 1.1%, rising 64% of the time.” March is the fifth-best month for the S&P 500, according to CFRA data going back to 1945.

For more, read the full story on CNBC Pro.

— Patti Domm, Tanaya Macheel

The yield on the 10-year U.S. Treasury note hit a high of 3.983% on Tuesday, its highest level since Nov. 10, when the note yielded as high as 4.117%. It was last higher by about 3 basis points at 3.955.

Treasury yields added to their sharp February gains as traders continued weighing the prospects of higher tighter monetary policy for longer than expected.

— Gina Francolla, Tanaya Macheel

The U.S. Federal Reserve’s rate hikes have weighed on equity markets, according to UBS Financial Services. 

“We judge that the economy is in late-cycle, with the Fed continuing to hike rates and growth likely to slow. Tighter policy creates downside risks for markets,” UBS senior U.S. economist Brian Rose wrote in a note to clients on Monday. 

The firm anticipates the S&P 500 will finish the year close to current levels, with better upside potential in cyclical markets outside of the U.S., specifically in emerging markets and Germany. 

“We prefer value over growth,” Rose wrote. 

According to Rose, financial conditions have not tightened in line with the Fed’s rate hikes. The Fed raised interest rates by 25 basis points on February 1, and suggested there will be further rate hikes in the months ahead.

— Pia Singh