Asia Pacific markets edged lower as core inflation in Japan held steady

Japan’s central bank is “warming to the idea” of making changes to its yield curve control policy later this year, but it will remain unchanged at next week’s meeting. Reuters reported.

Bank of Japan Governor Kazuo Uede will chair his first policy meeting since taking over as governor next week.

Reuters cited sources “familiar with the BOJ’s thinking” who said the bank’s approach should be one of certainty and not make major immediate changes to the YCC and its poor policy guidance.

However, the sources also said there could be a “lively debate on the fate of the YCC” when the BOJ meets in June and July. Sources said there may be opportunities to discuss a change in the near future, as major companies have offered big pay raises in annual spring wage talks.

– Lim Hui Jee

Index of Japan Manufacturing Purchasing Managers It rose to 49.5 in April The sector’s slowest contraction in six months, down from 49.2 in March. This is according to flash estimates from au Jibun Bank.

PMI measures factory and manufacturing activity as viewed by purchasing managers. A number above 50 indicates expansion compared to the previous month, while a number below 50 indicates contraction.

The flash services PMI in April was little changed at 54.9 compared with 55 in March and was the second highest since October 2013.

“Japan’s private sector continued to expand solidly at the start of Q2 … a rebounding services economy is helping to offset weak manufacturing sector performance,” said Annabelle Fidesz, associate director of economics at S&P Global Market Intelligence.

The flash composite index reading fell to 52.5 in April from 52.9 in March.

– Yeo Boon Bing

Australia’s services sector expanded in April, with its Purchasing Managers’ Index hitting a 10-month high.

The country’s services PMI stood at 52.6, compared to March’s figure of 48.6. According to a private survey By Juno Bank.

The manufacturing PMI fell to 48.1 in April from 49.1 in March, marking the second straight monthly decline in business conditions in the manufacturing sector.

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

– Lim Hui Jee

Nothing can beat the human mind – don’t worry too much about ChatGPT for now, says Narayana Murthy, founder of Indian IT giant Infosys.

ChatGBT, an artificial intelligence-powered chatbot, has taken the world by storm as it is said to perform various tasks including writing articles, coding and conducting human-like conversations.

“If there was a competition between you and me, you’d use the ChatGPT release as your base, and then you’d add your own variation, your own ingenuity, your own tweaking,” Murthy told the CNBC conversation.

“So, I’m not too worried about ChatGPT,” Murthy said. “Ultimately, I’m a big believer in the theory that the human mind is the most powerful imagination, the machine. Nothing beats the human mind.”

Read the full story here.

– Sheila Chiang

Japan’s inflation rate March stood at 3.2%, slightly lower than February’s figure of 3.3%.

It was the second straight month of declining inflation after Japan’s inflation hit a 41-year high of 4.3% in January.

Core inflation, which strips out both food and energy costs, was steady at 3.1% from February.

– Lim Hui Jee

Artificial intelligence is not a futuristic fantasy, but a reality that will transform many industries. From chatbots to content creation, AI is making its presence felt in the digital space and beyond.

Ben Rogoff, portfolio manager at Polar Capital, told CNBC that the current investment climate seemed like an ‘iPhone moment for artificial intelligence technology’.

The technology fund manager told CNBC’s Pro Talks that four large-cap stocks are driving the biggest and most tangible advances in artificial intelligence.

CNBC Pro subscribers can read more here.

– Ganesh Rao

TSMC may be an obvious choice for investors with exposure to Asia’s semiconductor industry, but UBS prefers one of its lesser-known rivals.

Pro subscribers can read more here.

– Javier Ong

The first quarter earnings season has kicked into high gear. According to Refinitiv, of the 81 companies in the S&P 500, 76.5% reported earnings above analysts’ expectations.

Expectations are low for corporate America with stubborn inflation and recession fears. S&P 500 companies are expected to post a 6.8% decline in revenue this quarter, marking the biggest revenue decline since the second quarter of 2020, according to FactSet.

– Yun Li

Cleveland Federal Reserve President Loretta Mester indicated on Thursday that interest rates may rise a little more this year and stay there for a while.

“I expect monetary policy to move into restrained territory this year, with the fed funds rate moving above 5% and the real fed funds rate staying in positive territory for some time,” he said during a speech in Akron. Ohio

“How much higher the federal funds rate should go from here and how long policy should be restrained will depend on economic and fiscal developments,” Mester added.

With the benchmark federal funds rate currently targeted between 4.75%-5%, Mester’s comments indicated another hike could be on the horizon. This combines with the market price, which assigns an 83% probability of a 25 basis point increase in May. However, as the economy continues to slow, markets expect the Fed to taper before the end of the year.

Mester added that inflation has improved but remains “very high”.

“We are much closer to the end of the tightening journey than the beginning, and how much tightening is needed will depend on economic and financial developments and progress on our monetary policy goals,” he added.

– Jeff Cox

Tesla shares fell about 8% on Thursday as investors digested the earnings report that came after Bell on Wednesday. It was the worst post-revenue earnings for the electric vehicle maker since the pandemic began. Data from Bespoke Investment Group.

The stock has not seen a post-earnings open drop since the stock plunged 11.9% on July 24, 2019, company data shows.

The company posted a modest hit on revenue, while earnings per share were in line with analyst expectations. But both net income and GAAP earnings fell more than 20% from last year.

Thursday’s open was a stark contrast to when the company last reported earnings. Shares rose 10.8% on Jan. 25, the trading session following Tesla’s fourth-quarter report.

– Alex Haring

New York Fed President John Williams said on Wednesday that inflation remains an issue for the US economy, although he did not provide details on where he thinks policy should go.

“Inflation remains high, and we will use our monetary policy tools to restore price stability,” Williams said in a speech at New York University. According to Reuters. Markets widely expect the Fed to raise another quarter of a percentage point at its next meeting, and Williams didn’t dispute that view.

Along with his comments on inflation, Williams noted that the banking system has “stabilized” following the turmoil in March and said he did not expect the economy to tip into recession.

– Jeff Cox