Asian markets were mixed as investors digested key China activity data for April

Jake Dolarhyde, co-founder and CEO of Longbow Asset Management, said Microsoft’s acquisition of Activision Blizzard will help the tech giant diversify away from its legacy businesses like Office and Windows.

Microsoft had $16.2 billion in revenue for games and Activision Blizzard had $8.7 billion last year. So that comes to about $24.9 billion, up from 8% to 12% of Microsoft’s revenue. They really want to try to get more content on [Microsoft] Game Pass, on the cloud. They want to be the Netflix of video games, Dollarhide said on CNBC’s “Capital Connection” Tuesday.

European Union regulators on Monday approved Microsoft’s proposed $69 billion acquisition of gaming company Activision Blizzard, following a months-long investigation in which regulators were concerned Microsoft could block access to Activision’s console and PC video games, especially the globally successful ones. Like Call of Duty.

“This will be good for Microsoft as a whole,” Dollarhyde said. “It will allow them to continue to diversify away from the legacy business.”

“Within the next couple of years, this could easily be a $400 stock especially with the stock market rebounding and a new bull market for me,” he said. Microsoft shares rose 0.16 percent on Monday.

– Sheila Chiang

Global currencies fell broadly against the US dollar as investors digested Chinese economic data that was broadly different from expectations.

The Chinese onshore and offshore yuan traded at weaker levels, standing at 6.9586 and 6.9662 against the US dollar, respectively.

The Australian dollar fell 0.16% to 0.6688 against the US dollar while the New Zealand dollar pared most of its previous gains and traded marginally higher at 0.6247 against the US dollar.

The Canadian dollar also weakened to 1.3479 against the greenback, while the euro fell to a low of 1.8066 against the US dollar shortly after the data was released.

– Jihe Lee

Minutes from the Reserve Bank of Australia showed that the central bank still sees a rate hike “may still be needed,” depending on how the economy and inflation develop in Australia.

The Reserve Bank of Australia unexpectedly raised interest rates by 25 basis points at its last meeting on May 2 to 3.85%, defying market expectations.

The minutes reveal that RBA board members were considering raising interest rates by 25 basis points and keeping rates, but ultimately decided to raise the rate.

The council said this was because April data showed that “the labor market remained tight and inflationary pressures were significant”.

“If these risks materialize, they will delay the return of inflation to target, with the potential for a detrimental shift in inflation expectations,” the minutes said.

While acknowledging “significant uncertainties” surrounding the economic outlook, particularly with regard to household consumption, the RBA’s governing body reiterated its commitment to price stability and the importance of ensuring that inflation expectations remain firm.

– Lim Hwi Ji

Chinese economic data for April missed broadly expectations as the economy continued to show an uneven recovery path as it emerges from the impact of tough Covid restrictions.

Retail sales rose 18.4% – less than economists’ expectations of a 21% rise.

Industrial production for April rose 5.6% year-on-year, compared to the 10.9% expected by economists in a Reuters poll. The number rose 3.9% in March after a muted start to the year.

Fixed asset investment increased by 4.7% against expectations of 5.5%. Meanwhile, the youth unemployment rate hit a record 20.4%.

– Jihe Lee

Australian Westpac-Melbourne Institute Consumer Confidence fell 7.9% from 85.8 in April to 79 in May.

The drop reflects “deep pessimism” from the RBA’s surprise rate hike of 25 basis points after the previous meeting’s halt – as well as a “somewhat disappointing balance sheet”, it said in a statement.

“On the one hand, consumer confidence has returned to near historic lows seen only on a sustainable basis in the deep recession of the early 1990s,” wrote Bill Evans, chief economist at Westpac Group.

He added that the study still reflects “flexibility” about labor market conditions as well as confidence in the real estate market.

The central view of the survey is that weakness in the economy, along with clear progress towards the RBA’s inflation target, will see the current interest rate of 3.85% peak, but “the risks remain evenly balanced,” Evans said.

– Jihe Lee

Japanese financial shares rose on Tuesday morning after major banks expected record profits in the current fiscal year ending in March 2024.

Mitsubishi UFJ Financial Group rose 2.6%, leading gains on Topix as it forecast a 16% jump in net profit to 1.3 trillion yen ($9.63 billion) for the current fiscal year, surpassing the previous record set in March 2021.

It comes as the bank reported a 14.3% drop in full-year net profit to 1.12 trillion yen. This is the second year in a row that MUFG’s net profit has crossed the 1 trillion yen mark.

Shares of Mizuho Financial Group rose 1.14% as the bank reported a 45.8% increase in revenue and a 4.7% increase in net profit.

On the other hand, shares of Sumitomo Mitsui Financial Group fell by 1.07%, so that the company recorded an increase in revenue by 49.4% year-on-year, to reach 6.14 trillion Japanese yen, while net profit came by 14% higher, to 805.4 billion yen. .

SMFG expects a net profit of 820 billion yen for the current fiscal year.

– Lim Hwi Ji

Gas will be front and center in discussions at the G-7 summit meeting later this week, S&P Global Vice President Daniel Yergin told CNBC’s “Squawk Box Asia.”

Yergin’s comments come as media reports suggest that G7 leaders are expected to take aim at Russian energy, exchanging tougher sanctions when they meet in Japan later this week.

Yergin said that Russian President Vladimir Putin’s attempt to “use gas as a weapon” to dismantle the Western alliance “has failed.”

“Another aspect of the gas story that will be a big discussion in the G7 is the future role of natural gas,” he said.

“What has happened now, essentially, is that Putin has allowed his decisions to isolate himself from Russia’s most important trading partner, which is Europe, and the fact that gas, which is one of its foundations, this valve is now closed politically, is a major development.”

– Jihe Lee

Big tech isn’t finished, according to portfolio manager Trent Masters, who outlined his favorite stocks for playing AI and more.

“The reversal is real,” he said of AI, and chose the stocks to run it on, including the first “point of call” for investors.

CNBC Pro subscribers can read more here.

– Wizen tan

The US hedge fund is forecasting a tough bearish scenario for stock markets despite the continued decline in inflation, with the S&P 500 in a bear market.

Besides the pessimistic outlook, hedge fund manager David Neuhauser also identified three global stocks that he believes would do well under this scenario.

CNBC Pro subscribers can read more here.

– Ganesh Rao

Atlanta Federal Reserve President Rafael Bostick on Tuesday cast doubt on the prospect of lower interest rates this year, even if a recession hits.

“Inflation is not going to come down very quickly,” the central bank official told CNBC’s Steve Leizman during an interview on “Squawk Box. And in that regard, then, cutting interest rates doesn’t really fit into that scenario.”

“So I think the markets have been very optimistic about how easily inflation will respond to our policy,” he added. “Honestly, I hope I’m wrong and they’re right, because that would mean the economy is in equilibrium sooner rather than later. But it’s not my base case at all.”

If anything, Bostick said his bias would be to hike interest rates this year if inflation doesn’t fall as quickly as the Fed wants.

– Jeff Cox

Treasury Secretary Janet Yellen said over the weekend that negotiations were making progress on a debt ceiling agreement.

“I’m optimistic. I think the negotiations are very active. I’m told they’ve reached some areas of agreement,” Yellen said in an interview with The Wall Street Journal on Saturday from Japan during a meeting of G7 finance ministers. .

President Joe Biden and House Speaker Kevin McCarthy are expected to meet early this week, CNBC reported. The Treasury said that the United States may not be able to meet its financial obligations as early as June 1.

– John Milloy

The dollar set a record high against the Turkish lira today, Monday, reaching 19.6853.

Meanwhile, the iShares Turkey ETF (TUR) was down nearly 6% in pre-market trading. If this performance continues in the session, it will be the fund’s worst day since it lost 6.1% on Feb. 7.

The moves come on the heels of news that the country will hold an unprecedented run-off election for its president on May 28. A run-off is required because no candidate received 50% of the vote in Sunday’s election.

The dollar index, which tracks the greenback against a basket of other currencies, fell 0.2% to 102.49.

Alex Haring and Gina Francola