Asia-Pacific markets trade lower as recession fears grow

UBS has raised its 2023 gross home product (GDP) forecast to 4.9% from 4.5% beforehand, stated UBS chief China economist Wang Tao.

Wang stated he expects GDP to weaken within the fourth quarter of 2022, reducing his full-year forecast to 2.7% from 3.1%, pointing to weaker development in November because of the current spike in Covid instances. did.

The firm added that the central financial working council is more likely to prioritize stabilizing development and supportive macro insurance policies subsequent 12 months.

“Fiscal policy is expected to remain aggressive with a modest increase in the budget deficit and a new special LG. [local government] Fixed income, monetary and credit policies will continue to maintain ample liquidity, but further policy rate cuts are unlikely.”

— Lee Ji-hye

The latest trade data from Singapore suggests that exports may continue to face headwinds in the short term, according to Oxford Economics.

“The bad news is that worse is to come,” it said in a note on Friday. Stated.

Oxford Economics added that Singapore’s sharp drop in non-oil exports in November showed the external sector “graduating from a slowdown to a slump”.

It added that the rebound in growth from China’s early reopening would not be enough to fully offset weakening global demand.

— Lee Ji-hye

Citi has announced that it will exit its consumer banking business in China. The move affects about 1,200 employees in China.

According to Citi, the departure will also affect consumer goods and channels such as deposits, insurance, mortgages, investments, loans and cards. However, he said the withdrawal does not include corporate operations in China.

The company said it will begin the process of winding down its consumer banking business while working with regulators.

The bank first announced plans to exit China in April 2021, as part of a broader plan to exit a series of markets in Asia, Europe, the Middle East, Africa and Mexico.

— Lee Ji-hye

Singapore’s non-petroleum exports A Reuters poll showed a drop of 9.2% compared to a month ago, much lower than the expected 3%.

This was after a 3.7% month-on-month decline in October.

On an annualized basis, non-oil exports fell 14.6% in November. Year-on-year in October he fell 5.6%.

— Lee Ji-hye

au Jibun Bank Flash Japan Manufacturing Purchasing Managers Index It fell from a final 49.0 in November to a seasonally adjusted 48.8 in December, the lowest since October 2020.

“Manufacturing continues to struggle in the face of subdued demand conditions and severe inflationary pressures,” S&P Global said in its latest release.

Numbers below 50 indicate contraction from the previous month, numbers above 50 indicate expansion.

The significant increase in service output in December was reflected in the Services Business Activity Index, which rose to 51.7 in December from 50.3 in November.

— Lee Ji-hye

Retail and food service sales fell 0.6% in November after rising 1.3% in the previous month, according to the Department of Commerce. This is below the Dow Jones forecast of his 0.3% decline.

Excluding autos, retail sales fell 0.2%, below Dow Jones’ forecast of a 0.2% increase in spending.

— Sara Min

Investor fears are growing on Wall Street that the Federal Reserve’s aggressive rate hike campaign will push the economy into recession.

“The Fed has been very stable all year,” stated Hugh Roberts, head of analytics at Quant Insights. Let’s go,” he stated.

But he stated the U.S. inventory market has develop into extra delicate to precise financial knowledge than monetary situations heading into subsequent 12 months.

“Increasingly, the principle story in 2023 will probably be about the actual financial system. In different phrases, how deep recession can the Fed engineer a smooth touchdown?” Roberts added.

— Sara Min

Morgan Stanley’s Mike Wilson stated the story for the inventory market subsequent 12 months is all about income and can drop considerably. Its quickly decelerating development has not but been priced into the market, he stated in an interview.squawk box” Thursday.

“People assume earnings are going to fall, however it’s the dimensions of the autumn and how briskly it occurs. We assume there is a shock there,” stated Wilson, U.S. fairness strategist on the agency. ‘ stated. “The negative operating leverage seen from lower inflation … hurts margins, whether there is a recession or not.”

He forecasts an 11% decline in year-over-year development. S&P 500 firm subsequent 12 months. The index’s year-end goal is 3,900 for him, and he expects it to be. Decrease between 3,000 and 3,300 within the first quarter.

Wilson expects quite a lot of causes to drive the earnings pullback, together with an overstimulated financial system, demand destruction from larger inflation, and the Federal Reserve’s rate of interest hike this 12 months. There can even be responses from corporations.

“At some level, belief is misplaced and firms cease sending as a result of ‘we have to harden the hatch a bit,'” he stated.

— Michelle Fox