Asia Markets Rise as Oil Prices Surging After Surprising OPEC+ Cut; Investors are absorbing factory data

Indonesia’s core inflation rate for March slowed to 2.94% year-on-year in March, down from 3.09% recorded in February.

The core inflation rate – which was also lower than analysts’ expectations of 3.05% – excludes government-controlled prices and volatile food prices.

The headline inflation rate in Southeast Asia’s largest economy came in at 4.97% y/y, lower than February’s figure of 5.47% and below expectations of 5.2%.

Indonesia’s central bank has set a target for core inflation to “stay in check” in the “target corridor” between 2% and 4% in the first half of 2023.

– Lim Hwi Ji

The Reserve Bank of Australia is widely expected to raise its benchmark cash rate by 25 basis points on Tuesday to 3.85%, according to the Reuters poll of economists.

central bank in The March meeting raised the cash rate by a quarter point to 3.6%, He reiterated his goal to bring the economy’s inflation back to the target range of 2% to 3%.

Commonwealth Bank of Australia’s Gareth Aird expects the central bank to pause instead, citing conflicting views from the company.

“In what we think is a very close call, we expect the RBA to leave the cash rate hanging at 3.6%. We attribute a 55% chance of no change and a 45% chance of a 25bp rate hike to 3.85% (we considered the risk of any further move). immaterial.”

“The domestic economy is now showing sufficient signs of slowing and we expect the RBA Governing Council to decide that a pause in the tightening cycle is the appropriate move in April,” the CBA said.

– Jihe Lee

South Korea’s purchasing managers’ index fell in March to 47.6 compared to 48.5 in February, the sharpest contraction in six months.

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

According to a special survey by S&P Global, March data indicated the 11th consecutive monthly decline in output at manufacturers in Seoul.

South Korea also posted a decline in industrial production for the month of February, led mainly by semiconductor companies.

Surveyed members largely attributed the decline to domestic and overseas demand conditions, while S&P Global also noted that persistent economic weakness and weak customer confidence had put downward pressure on sales.

– Lim Hwi Ji

The Caixin/Markit China manufacturing PMI for March came in at 50, missing estimates from economists polled by Reuters of 51.7.

The reading for March was down from the 51.6 seen in February, which was above the 50 level that separates growth from contraction.

China’s official purchasing managers’ index for March held steady at 51.9, above expectations of 51.5 from a Reuters survey.

– Jihe Lee

Building approvals in Australia rose 4% month over month in February, Government data Show on Monday.

Private sector homes agreed to rise 11.3% in February, while private sector residences excluding homes fell 9.5%. The value of total buildings increased by 19.7% and the value of non-residential buildings increased by 39.8%.

On an annual basis, building approvals are down 31.1%.

– Jihe Lee

The ASEAN region posted its 18th consecutive month of growth in the manufacturing sector, according to a special survey by S&P Global.

The Manufacturing PMI settled in the region at 51, down slightly from February’s figure of 51.5.

S&P Global noted that this was due to further improvement in operating conditions in four of the ASEAN’s constituent nations, with Myanmar leading growth for the first time in 32 months. The country’s Purchasing Managers’ Index reached a record high of 55.5 in March.

Thailand and the Philippines round out the top three performers in the region with PMI numbers for March at 53.1 and 52.5 respectively. Vietnam was the worst performer with a PMI which came in at 47.7 in March.

– Lim Hwi Ji

Japan’s manufacturing PMI rose to 49.2% for March, higher than February’s figure of 47.7%. According to a private survey From Bank au Jibun.

Although it remained in contraction territory for the fifth consecutive month, the bank said this was a “slight deterioration in the overall health of Japan’s manufacturing sector. The negative reading was only moderate, the least weak in the current five-month sequence.”

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

One contributing factor to a PMI reading below 50 is a further contraction in output levels, the survey said, “The contraction was reported to be modest as a result of weaker customer demand.”

– Lim Hwi Ji

Oil futures rose 8% at the open after the OPEC+ members announce To cut a total of more than 1 million barrels per day to extend until the end of 2023.

Brent crude futures rose in their latest transactions by 5.98% to $84.67 a barrel, and US West Texas Intermediate crude futures jumped 6.04% to $80.24 a barrel.

This comes after oil prices rebounded last week and saw week-to-date gains of more than 9%.

The latest announcement is “an unwelcome start to a new week for risk markets and policymakers still grappling with flat inflation and the fallout from the latest banking crisis,” IG’s Tony Sycamore said in a note on Monday.

The National Australia Bank added that the unexpected announcement is likely to add pressure on European economies, as core inflation rose slightly last month.

New York Federal Reserve Chairman John Williams said Friday that the central bank is steadfast in its commitment to lowering inflation but is watching what happens in the financial world.

In a speech in Connecticut, Williams said that inflation “remains a major concern” and noted that the Fed should “use its monetary policy tools to bring down inflation.”

However, he noted some recent turmoil in the banking system and indicated that he would be watching the situation closely.

“I will focus particularly on assessing the evolution of credit conditions and their implications for growth, employment and inflation expectations,” he said.

– Jeff Cox

Gold is on its way to achieving monthly price gains not seen in more than two years.

With only the Friday session left in the trading month of March, gold is on track to finish with a 9% rally. This would be its best monthly performance since July 2020, when the metal rose 10.3%.

If Friday’s sell-off pushes its monthly advance below 7.8%, March will instead become the best month for the metal since May 2021.

Gold prices were flat early on Friday.

Alex Haring and Gina Francola

Futures got a boost after the Federal Reserve’s inflation measure came out softer than expected. The Commerce Department reported on Friday that the personal consumption expenditures (PCE) price index excluding food and energy rose 0.3% in the month. That was below the Dow Jones estimate of 0.4% and less than the January increase.

John Milloy, Jeff Cox

Emergency borrowing fell in the Fed’s discount window last week, raising some hope that the banking crisis could abate.

Primary credit lending totaled $88.2 billion, while banks took in $64.4 billion through the Fed’s new bank financing program, according to Fed data released Thursday that covered the March 22-29 period.

This total of $152.6 billion was down slightly from $164 billion in the previous week. The Fed put in place the BTFP and loosened rules on the discount window in the wake of the collapse of Silicon Valley and its signature bank in early March.

Banks generally do not like to use the discount window because it indicates that they are under pressure and cannot raise capital in the private market.

– Jeff Cox