Asia markets mixed ahead of Australia’s central bank interest rate decision

HSBC forecasts the Monetary Authority of Singapore to re-center the mid-point of the exchange rate policy band known as the Nominal Effective Exchange Rate, or S$NEER upwards to the “prevailing level” in its next meeting.

A team of economists led by Yun Liu wrote in a late Monday note that they expect MAS to also keep the slope unchanged at 1.50% at its the meeting as its final move, adding that the latest volatilities seen in markets make it a “tougher job to decide.”

The MAS is expected to hold its next monetary policy meeting no later than April 14, according to its advance release calendar on its website.

“We also acknowledge the risk of the MAS maintaining its monetary settings unchanged, if it feels the risk of moderating growth trumps inflation concerns,” HSBC said in its note.

The Singapore dollar stood at 1.3270 against the U.S. dollar on Tuesday morning.

The Australian dollar weakened slightly to 0.6783 against the U.S. dollar ahead of the Reserve Bank of Australia’s meeting later in the day.

The New Zealand dollar meanwhile traded at fractionally stronger levels at 0.6298 against the greenback as of Asia’s morning.

The Korean won also strengthened to 1,307.72 against the U.S. dollar as the nation’s inflation dropped to the lowest in a year. The Japanese yen weakened 0.16% to 132.61 against the greenback.

The dollar index meanwhile was flat at 102.107.

– Jihye Lee

South Korea’s consumer price index for March slowed to 4.2% on a year-on-year basis, just slightly lower than economists expectations of 4.3%

According to government data, this was lower than February’s figure of 4.8%. On a month-on-month basis, the CPI for March rose 0.2%, lower than February’s figure of 0.3%.

The South Korean won strengthened marginally against the U.S. dollar on Tuesday, trading at 1,308.6.

— Lim Hui Jie

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

The central bank in its March meeting increased its cash rate by a quarter-point to 3.6%, reiterating its aim to return the economy’s inflation back to its target range of 2% to 3%.

Commonwealth Bank of Australia’s Gareth Aird expects the central bank to pause instead, citing mixed opinions from the firm.

“In what we believe is a very close call, we expect the RBA to leave the cash rate on hold at 3.6%. We ascribe a 55% chance to no change and a 45% probability to a 25bp rate increase to 3.85% (we consider the risk of any other move immaterial),” Aird said in a Monday note.

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

— Jihye Lee

Tesla shares were down 7%, near the lows of the day, following the release of weaker-than-expected deliveries data for the first quarter. Tesla delivered 422,875 vehicles in the first quarter, while analysts polled by FactSet expected 432,000.

Warren Buffett’s two big energy stocks staged a strong rally Monday as the broader sector got a boost from surging oil prices.

Shares of Occidental Petroleum jumped nearly 6%. Berkshire Hathaway added to its already large stake in multiple occasions in March, now owning 23.5% of the Houston-based energy producer.

Meanwhile, Chevron, Berkshire’s third largest holding as of the end of 2022, rose over 4% on Monday. The conglomerate drastically hiked this stake to one of its biggest early last year.

The surprise output cut from OPEC+, which is pulling back production by 1.16 million barrels per day, has sent oil prices surging. West Texas Intermediate crude futures jumped 6% to roughly $80 per barrel, on track for their biggest one-day gain since April 12, 2022.

Brent futures, meanwhile, gained more than 6% to $84.79 per barrel.

WTI hit $81.69 per barrel at one point in the session, its highest since January of this year.

— Brian Evans, Nick Wells

Manufacturing activity in the U.S. slipped further into contraction territory in March, according a reading Monday.

The ISM Manufacturing Index, a closely watched barometer for the sector’s health, posted a reading of 46.3 for the month. That was down from 47.7 in February and below the Dow Jones estimate for a 47.3 reading.

Anything below 50 represents contraction for the index, which measures the percentage of companies that report expansion. The March reading was the worst in three years.

The prices index fell 2.1 points to 49.2, while employment dropped 2.2 percentage points to 46.9. None of the sub-indexes were above 50.

—Jeff Cox