Asia Markets Rise After Biden Signs Debt Ceiling Bill; Oil rises due to OPEC+ cuts

Hong Kong’s Hang Seng Mainland Properties (HSMPI) fell 3% at the open and recently traded down 2.5% as markets corrected a rally on speculation that Chinese policymakers will roll out stimulus to boost the industry.

The HSMPI is down nearly 30% year-to-date and down 20% on a quarterly basis. Over the course of one year, the index has fallen by 53.03%, according to Refinitiv data.

Real estate stocks were among the main losers in the broader Hang Seng Index, along with basic materials stocks, in Monday morning trading.

Industries stocks ranked first in the index, along with utilities, financial services and technology.

– Jihe Lee

The Reserve Bank of Australia is expected to keep its benchmark interest rate at 3.85%, according to a poll of 32 economists by Reuters.

21 of 32 respondents expect the RBA to hold rates, while 11 expect a rise of 25 basis points to 4.1%.

The Reserve Bank of Australia raised interest rates last month after stalling in April, surprising investors and economists who had expected the central bank to hold up.

The country’s inflation rate for April came in at a faster pace of 6.8%, compared to 6.3% in the previous month and market expectations of 6.4%.

– Lim Hwi Ji

In May, Hong Kong’s private sector expanded at its slowest rate this year, according to a private survey by S&P Global. City Composite PMI decreased to 50.6 in May from 52.4 in April.

The PMI includes services and manufacturing, and is seen as a reliable measure of economic health. A reading above 50 indicates expansion, while a reading below 50 indicates contraction.

S&P Global said the recent boost to growth in Hong Kong, from the full resumption of travel between the city and mainland China, was “beginning to wear off”.

The survey pointed to signs — such as declining new sales, slowing new order growth, and rising input cost inflation — that are putting pressure on companies’ margins.

– Lim Hwi Ji

Japanese service sector It witnessed a record rate of expansion In May, according to special surveys conducted by Bank au Jibun.

The country’s Services PMI came in at 55.9, surpassing the previous record of 55.4 set last month and extending its streak to six consecutive months of rapid expansion.

The bank wrote that “anecdotal evidence suggests that the increase in customer demand has continued as the effects of the Covid-19 pandemic continue to fade.”

It added that companies’ business outlook remained “wildly optimistic” with “particular focus on the strength of the tourism sector”.

– Lim Hwi Ji

Oil prices rose after Saudi Arabia, the largest OPEC country, decided to cut production by another 1 million barrels per day.

Global benchmark Brent crude futures rose 2.4% to $78 a barrel Monday during early Asian trade, while US West Texas Intermediate futures rose 2.5% to $73.53 a barrel.

“The Saudi decision to unilaterally cut production by 1 million barrels per day was widely unanticipated by the market,” Rapidan Energy president Bob McNally told CNBC in an email following the decision.

“It showed once again that Saudi Arabia is willing to act unilaterally to stabilize oil prices,” McNally said.

– Lee Ying Chan

Wall Street analysts have recently been bullish on the metal, with Citi and Goldman predicting that prices are poised to rally.

For those looking to buy in this sector, CNBC Pro examined stocks in the Global X Copper Miners ETF, and the resulting stocks include one with a gain of nearly 100%.

CNBC Pro subscribers can read more here.

– Wizen tan

Two AI companies are underappreciated by the stock market, according to Frank Downing of Ark Investments.

Downing, director of research at the ARK Next Generation Internet ETF, believes that as the cost of artificial intelligence decreases, investors should look for companies with specialized use cases that can offer higher returns.

Downing points out that the stock he picked could be greatly enhanced by taking advantage of great language models like those made by OpenAI, the company behind ChatGPT.

CNBC Pro subscribers can read more here.

– Ganesh Rao

The US jobs report for May blew past expectations, buoyed by strong job gains in the professional and business services sector – as well as a jump in government hiring.

Professional and business services led job creation for the month with 64,000 new employees, following a similar increase in volume in April. The government added 56,000 jobs last month, higher than the average monthly gain of 42,000 over the previous 12 months.

Job gains were widespread last month with healthcare contributing 52,000 and leisure and hospitality services adding 48,000.

Major indices traded near session highs with just under 3 hours left in the trading day as investors maintained Friday’s advance.

The Dow Jones rose 640 points, near its high of 666 points.

Similarly, the S&P 500 and Nasdaq were both less than a tenth of a percentage point from their session highs. The S&P 500 was last up 1.42%, close to its session high of 1.5%. The Nasdaq Composite added 1.06%, retreating slightly from the session’s highest gain of 1.16%.

The US is not out of a financial bind with Fitch, with the ratings firm saying government debt remains on the cusp of a potential cut despite the debt ceiling deal.

“Achieving an agreement despite heated political partisanship while modestly reducing the fiscal deficit over the next two years is positive considerations,” Fitch said in a statement. “However, Fitch believes that frequent political confrontations over debt limits and last-minute suspensions ahead of schedule (when Treasury’s cash position and extraordinary measures are exhausted) reduce confidence in governance on financial and debt matters.”

The company cited “continued deterioration in governance over the past 15 years” as reasons for its pessimistic outlook and said it would “resolve” the case for credit control in the third quarter of 2023.

On Thursday, Moody’s said it was not considering downgrading the United States.

– Jeff Cox