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In Tokyo, bank shares rose again as the broader index fell

The Japanese yen is at its strongest in more than four months

The Japanese yen strengthened further overnight after the Bank of Japan announced it would widen the scope of its yield curve controls.

The currency strengthened by more than 5% against the Australian dollar and New Zealand dollar, while it strengthened by more than 3% against the US dollar.

The yen strengthened after the Bank of Japan announced it would widen the scope of its yield curve controls

CNBC Pro. A fund manager says a recession is “just around the corner” and names cheap stocks to play it

Market watchers are increasingly worried about an impending recession, and fund manager Stephen Glass is no exception.

Against this backdrop, he says he focuses on companies with earnings visibility that trade at attractive valuations.

His picks include a Big Tech name he says is “extremely cheap” with “huge margin potential.”

Pro subscribers can read more here.

— Zavier Ong

Stocks hold on to gains, 4-day losing streak

Stocks rallied on Tuesday, snapping a four-day losing streak.

The Dow Jones Industrial Average rose 92.47 points, or 0.28%, to close at 32,850.01. The S&P 500 rose 0.11% to 3,821.73 and the Nasdaq Composite rose 0.01% to close at 10,547.11.

– Carmen Reinike

The Bank of Japan is signaling earlier than expected

The Bank of Japan’s surprise policy shift helped raise interest rates globally as investors reacted to more evidence that central banks around the world will continue to pressure interest rates.

“It was definitely a surprise. I don’t think there was anyone out there who expected that,” said BMO ratings strategist Ben Jeffrey. Japan’s central bank tightened policy earlier than expected. The BOJ changed its yield curve policy, allowing the yield on Japan’s 10-year government bond to move 50 basis points from its zero target rate of 25 basis points.

The announcement raised interest rates around the world as yields on Japanese government bonds (JGBs) rose to a 7-year high. Prices move inversely with yield. US 10-year jumped by 3.68%.

“They were definitely the last one standing in terms of being a pigeon, and now they’re still distorted, but less so,” Jeffrey said. “It’s obviously bearish JGBs and fixed income around the world, but in the long run it should help the yen, making Treasuries more attractive to Japanese investors next year.”

– Patti Dome

Expect a more challenging environment ahead, says Atlantic Equities

Analysts at Atlantic Equities expect a more challenging backdrop for global consumers in 2023.

“Inflation may have peaked on a headline basis, but input costs still remain high and companies will try to at least maintain, if not in some cases take on, further pricing,” analyst Edward Lewis said in a note on Tuesday. “That could become more difficult as elasticity levels begin to normalize as US retailers begin to push back on pricing in line with how their European counterparts have been all year.”

He highlighted Coca-Cola and Pepsi as some of his favorite consumer picks, noting that “category momentum, continued investment and strong execution are driving high growth.”

— Tanaya Machel

The stock market is down $11.7 trillion this year

It’s been a tough year for stocks, which are currently in a bear market and down year-over-year.

From a market high on Jan. 3 to this morning, U.S. stocks have lost $11.7 trillion in market capitalization, according to data from the Bespoke Group.

“The maximum decline was $13.6 trillion from the 9/30 low, so we saw just $2 trillion less in market cap growth,” analysts wrote on Tuesday. “In dollar terms, this decline has been more extreme than investors have ever experienced. That’s quite a deflation if you ask us.”

Of the $11.7 trillion, more than $5 trillion in losses are accounted for by just five companies: Apple, Microsoft, Amazon, Alphabet, Meta, and Tesla.

– Carmen Reinike

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