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Markets in the Asia-Pacific traded mixed to commence the first trading week for the year.
In Australia, the S&P/ASX 200 fell 1.3% on its first trading session of 2023. South Korea's Kospi was flat after paring most of its earlier losses – the Kosdaq gained 0.4% in Asia's afternoon session.
Hong Kong's Hang Seng index traded 1.39% higher, leading gains in the region while the Shanghai Composite in mainland rose 0.67% and the Shenzhen Component gained 0.65%.
The Caixin purchasing managers' index showed further declines in factory activity on surging Covid infections. The survey also showed business confidence around the 12-month outlook for output improved to the highest since February.
The Bank of Japan is reportedly considering raising its inflation forecasts in January to inch closer to the central bank's target of 2% in fiscal 2023 and 2024, Nikkei reported over the weekend.
In the U.S., major indexes closed the 2022 year with their worst losses since 2008, each snapping a three-year win streak. The S&P 500 lost 19.4% for the year, the Nasdaq lost 33.1% and the Dow closed 8.8%.
The first half of 2023 is going to be a "tough setup" for tech stocks, Brent Thill, managing director and senior analyst of investment firm Jefferies, told CNBC's "Street Signs Asia" Tuesday.
"You still have the economic overhang that is going to be impacting earnings as we go into the beginning of this year. Companies have to lower numbers and expectations are still coming down," said Thill.
He projected things to turn around in the second half of 2023, as it "takes time" for effects from macro economic conditions such as rising interest rates to unravel and "investors start to look at 2024 numbers being reset."
"I think the worst-case scenario is that 2023 could be a total wash," said Thill, adding that Jefferies is expecting a recession to hit the third quarter, which is later than most expect.
- Sheila Chiang
The price of Brent oil will fall to the lower end of $70 a barrel by year's end, according to Citi's global head of commodities research, Ed Morse, adding volatility surrounding the oil markets will remain.
"We're expecting volatility to be about what it was last year," said Morse. "We're looking at Brent prices going down by the end of the year to the low 70s," he estimated.
A number of oil producing countries are facing extreme difficulties, Morse said. He also expects demand for oil to be kept low due to a prolonged recession in China.
Developments on Russia's war on Ukraine will also add onto volatility in prices, Morse added.
Brent crude dipped 0.43% to $85.57 a barrel. The U.S. West Texas Intermediate crude traded down 0.39% to $79.95.
—Lee Ying Shan
The Japanese yen hovered around its strongest levels since early June, Refinitiv data showed.
The currency last traded at 129.7 against the U.S. dollar after strengthening past the key technical level of 130.4 that it last saw in August. Late last year, the yen depreciated significantly and hit its weakest levels in 32 years.
The currency weakened past 151 against the greenback in mid-October as the Bank of Japan maintained its ultra-dovish monetary policy and yield curve control strategy. But the yen has since strengthened after the central bank widened its YCC band last month.
– Jihye Lee
China's factory activity slid further into contraction territory in December, a private sector survey showed.
The Caixin/Markit manufacturing purchasing managers' index fell further to 49 in December after recording 49.4 in November – remaining below the 50-point mark that separates growth and contraction.
The survey saw improved optimism among businesses, the release said, adding that firms expressed confidence in China's economic recovery following the relaxation of most of its stringent Covid measures.
Separately, China's National Bureau of Statistics said the official manufacturing PMI fell to 47 for the month, marking the biggest drop since the start of the Covid outbreak in January 2020.
– Jihye Lee
Singapore's economy saw full-year growth of 3.8% for 2022, according to data released by the Ministry of Trade and Industry on Tuesday.
The economy grew 2.2% in the fourth quarter compared with a year ago, the slowest pace since mid-2021 but beating expectations of 2.1% from a Reuters poll.
The latest figures reflected continued recovery in the service sector that followed lifting of domestic and border restrictions since April, the ministry said in a statement, adding that the accommodation sector expanded for the first time since mid-2021.
— Jihye Lee
Japan's central bank is reportedly considering boosting its inflation forecasts in January to reflect price growth that's closer to its 2% target in the 2024 fiscal year, according to a Dec. 30 report from Nikkei, citing sources familiar.
The move could be laying the groundwork for a shift toward tighter fiscal policy, according to the report.
The report arrives more than a week after the Bank of Japan changed its bond yield controls, allowing long-term interest rates to rise more. The rate on the 10-year bond will be allowed to fluctuate by half a percentage point above and below the nation's target of 0% – up from a quarter-percentage point range.
Retail sales have also ticked higher in Japan, rising for a ninth consecutive month in November.
—Darla Mercado
Key economic events in the Asia-Pacific next week will be dominated by Purchasing Managers' Index readings in the region.
China's National Bureau of Statistics is scheduled to release the official manufacturing and non-manufacturing PMI prints on Saturday. Reuters expects China's factory activity to show a contraction with a reading of 48.
South Korea is also slated to report its December trade data over the weekend, in which economists polled by Reuters predict will show a drop of 10.1% compared with a year ago.
Singapore is scheduled to release manufacturing PMI readings next week, while S&P Global is scheduled to release its PMI readings for South Korea, Indonesia and India on Monday.
Inflation prints for the Philippines and Indonesia will also be closely watched, with the releases scheduled for Tuesday and Monday, respectively.
Japan's PMI reading and China's private survey for services PMI will be released on Wednesday. Singapore will release November's retail sales on Thursday as well as South Korea's unemployment rate for December.
– Jihye Lee
2022 has marked the end of an era of cheap money, and that's bad news for companies with a "growth at all costs" approach, said David Trainer, CEO of investment research firm New Constructs.
In the year ahead, investors will need to exercise due diligence in distinguishing between good and bad firms, he told CNBC Pro.
That's because the U.S. Federal Reserve's interest rate hikes in 2022 have "ended the era of super easy money," and exposed many companies with bad business models. He calls those companies "zombie stocks" with heavy cash burn.
He highlights a list of such names to avoid and what to buy instead.
CNBC Pro subscribers can read more here.
— Weizhen Tan
Friday was the final trading day of the 2022, but also for the quarter, month and year. Here's how the major market averages fared over those time frames.
The Dow finished:
The S&P 500 finished:
The Nasdaq Composite finished:
The Russell 2000 small caps finished:
— Jesse Pound, Christopher Hayes
Markets have bottomed and things are looking up for stocks and bonds, which could rally more than 10% in 2023, according to one portfolio manager.
Jay Hatfield, CEO and portfolio manager at Infrastructure Capital Advisors, also highlighted the "conviction investment themes" he expects will be very attractive in 2023.
That includes one asset he said could beat its peers.
CNBC Pro subscribers can read more here.
— Weizhen Tan
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