China PMI, Japan tankan, US inflation

Gold prices extended their rally on Monday, scaling to a new record.

The optimism was helped by US interest rate cut expectations and bullion’s appeal as a safe haven asset.

Spot gold added 1.32% to trade at $2,265.53 per ounce. US gold futures rose more than 2% to trade at $2,286.39 per ounce.

“I think it’s a really exciting moment in gold,” said World Gold Council’s (WGC) Market Strategist Joseph Cavatoni. “What’s really driving it is, I think, many market speculators really getting that confidence and comfort [in] the Fed cuts,” he said.

Gold prices tend to share an inverse relationship with interest rates.

—Lee Ying Shan

The logo of the Tokyo Stock Exchange (TSE), operated by Japan Exchange Group Inc. (JPX), is displayed at the bourse in Tokyo, Japan, on Friday, Oct. 2, 2020.

Akio Kon | Bloomberg via Getty Images

Japan’s Nikkei 225 index fell 1.5% to last trade at 39,762.85, falling below the 40,000 mark for the first time in 12 days.

The index had rallied to 40,000 in early March and has hit multiple record highs since. It had even crossed 41,000 to hit an all-time high of 41,087.75 on March 22.

This comes after the Bank of Japan ended its negative interest rates regime in mid-March, along with other unconventional easing tools aimed at reflating Japan’s economy.

The Japanese yen traded at 151.29 to the US dollar after hitting a 34-year low of 151.97 last week.

— Shreyashi Sanyal

The logo of Japanese tech giant Rakuten logo seen at the Mobile World Congress 2019.

Paco Freire| SOPA Images | LightRocket via Getty Images

Rakuten Group confirmed it is considering a reorganization of its financial technology businesses.

Shares of the Japanese firm jumped 4%.

“As reported, it is true that Rakuten Group, Inc. is considering a reorganization of the FinTech businesses. We will promptly announce any matters requiring disclosure if they arise,” Rakuten said in a statement.

The statement confirms a Nikkei report, which also said that the company’s cards and securities units, including Rakuten Bank, will be merged by October.

— Shreyashi Sanyal

China’s factory activity expanded at its fastest rate in 13 months, according to the Caixin Global Manufacturing survey for March.

The country’s manufacturing purchasing managers index climbed to 51.1, topping the 51.0 expected by economists and higher than the 50.8 announced in official data.

Caixin wrote that the increase was “driven by greater inflows of new work, including from abroad.”

As such, Chinese manufacturers increased production, while also raising their purchasing levels amid improved optimism.

— Lim Hui Jie

South Korea’s factory activity slipped into contraction territory in March, following two straight months of expansion.

The country’s purchasing manager’s index came in at 49.8, down from 50.7 in February.

S&P Global wrote in its report that panel members largely attributed this to subdued demand and downgraded investment plans.

It also added that “a number of firms mentioned that sales remained muted amid weakness in the domestic economy in particular.”

— Lim Hui Jie

Japan’s manufacturing activity shrank for the 10th straight month in March, according to a private survey published Monday.

The S&P Global final au Jibun Bank Japan manufacturing purchasing managers’ index came in at 48.2 last month.

“The performance of the Japanese manufacturing sector remained downbeat at the end of the first quarter of 2023, though there were signs that the worst of the weakness had passed,” the survey read.

A PMI reading below 50 signifies a contraction, while above is an expansion.

— Shreyashi Sanyal

Business optimism among large Japanese manufacturers fell in the first quarter, according to the Bank of Japan’s Tankan survey, with the gauge at +11 compared with +12 in the last survey.

Economists polled by Reuters expected a +10 reading for large manufacturers.

However, optimism among non-manufacturers rose to its highest level since August 1991, with the Tankan gauge at +34 compared with +30 in the fourth quarter and beating Reuters expectations of +33.

The Tankan survey is also monitored by the BOJ when formulating monetary policy.

— Lim Hui Jie

China’s factory activity expanded in March, snapping a five-month streak in contraction territory and surprising expectations.

The country’s manufacturing purchasing manager’s index came in at 50.8, according to official data.

This compares with the 49.1 seen in February and the 49.9 expected by the Reuters poll, which represents a contractionary figure.

Separately, non-manufacturing PMI rose to 53.0, up from the 51.4 seen in January.

— Lim Hui Jie

The rapid rise in Nvidia’s share price amid the artificial intelligence hype has left some investors questioning the sustainability of the company’s valuation.

With the stock trading at a lofty 2.5% free cash flow (FCF) yield for next year, some investors are cautiously cautious. Historically, Nvidia traded at a 4% FCF yield before the pandemic.

Instead, Hannah Gooch-Peters, global equity investment analyst at Sanlam Investments, believes there are other stocks with a 60% operating profit margin, like Nvidia’s, that are more sustainable as investment opportunities.

CNBC Pro subscribers can read more here.

—Ganesh Rao

Many tech companies are rapidly developing infrastructure for artificial intelligence as they compete for dominance in this red-hot market.

AI is very power-intensive — and its power needs are only set to rise in the coming years.

Morgan Stanley Investment Management’s Aaron Dunn names one stock to play the trend.

CNBC Pro subscribers can read more here.

— Weizhen Tan