Hang Seng Index, Nikkei 225, ASX 200: Futures Flash Red on a Hawkish Fed

US Equity Markets: Earnings, Jobless Claims, and the Fed

On Thursday, US jobless claims and Philly Fed Manufacturing Index numbers influenced market risk sentiment.

Initial jobless claims remained unchanged at 212k in the week ending April 13. In April, the Philly Fed Manufacturing Index increased from 3.2 to 15.5. The stats aligned with market expectations that the US economy will avoid an economic recession.

Better-than-expected economic data and hawkish Fed commentary pressured the appetite for riskier assets. FOMC member John Williams warned there was no justification to cut interest rates.

Overnight US corporate earnings results and US equity market trends from Thursday will set the tone for the Asian session. Netflix Inc. (NFLX) released earnings results, beating estimates.

On Thursday, the Dow gained 0.06%. The Nasdaq Composite Index and the S&P 500 declined by 0.52% and 0.22%, respectively.

Asian Economic Calendar: Japan Inflation and the Bank of Japan

On Friday, inflation numbers from Japan will draw investor attention. Economists forecast the annual and core inflation rates to ease from 2.8% to 2.7% in March. Hotter-than-expected numbers could fuel investor bets on a Bank of Japan exit from zero interest rates. The weaker Japanese Yen raises import costs that could fuel price pressures and curb household spending.

Rising bets on a Bank of Japan move away from zero rates could drive buyer demand for the Yen. A stronger Yen may pressure Nikkei-listed export stocks.

Beyond the numbers, investors should monitor Bank of Japan commentary. On Thursday, BoJ Board Member Asahi Noguchi warned that the BoJ would likely raise interest rates more slowly than other central banks. Nevertheless, Noguchi did not comment on whether the BoJ would hike rates again in 2024.

Away from the economic calendar, geopolitical tensions could also impact market risk sentiment.

Commodities: Crude Oil, Gold, and Iron Ore

On Thursday, WTI crude steadied after the Wednesday sell-off, ending the session up 0.05% to $82.73. Gold (XAU/USD) ended the Thursday session up 0.76% to $2.379.

Iron ore extended its price gains from Wednesday, rising by 0.69% on the Singapore Futures Exchange.

The USD/JPY, the Intervention Zone, and the Nikkei

The USD/JPY advanced by 0.17% on Thursday, ending the session at 154.643. A stronger USD/JPY could drive buyer demand for Nikkei-listed export stocks. However, a move toward 155 could retrigger Japanese government intervention jitters. The intervention goal post has shifted, with the markets expecting a more vocal Japanese government at 155.

The Futures Markets

On Friday, the ASX 200 and Nikkei were down 55 and 420 points, respectively.

ASX 200

The ASX 200 advanced by 0.48% on Thursday, ending a five-day losing streak. Bank, mining, and tech stocks contributed to the gains. The S&P ASX All Technology Index (XTX) gained 0.69%.

Commonwealth Bank of Australia (CBA) and National Australia Bank Ltd. (NAB) rose by 0.71% and 0.90%, respectively. ANZ Group Holdings Ltd. (ANZ) advanced by 0.67%, with Westpac Banking Corp. (WBC) gaining 0.15%.

BHP Group Ltd (BHP) and Rio Tinto Ltd. (RIO) rallied 1.46% and 1.68%, respectively. Fortescue Metals Group Ltd. (FMG) ended the session up 0.40%.

However, gold-related stocks had a mixed session, while oil stocks were a drag on the ASX 200.

Gold stocks Northern Star Resources Ltd. (NST) rose by 0.39%, while Evolution Mining Ltd (EVN) slid by 3.85%.

Woodside Energy Group Ltd (WDS) and Santos Ltd (STO) ended the session down 0.44% and 0.39%, respectively.

Hang Seng Index

On Thursday, the Hang Seng Index rose by 0.82%. Real estate and tech stocks extended their gains from Wednesday. The Hang Seng Tech Index (HSTECH) advanced by 0.50%, with the Hang Seng Mainland Properties Index (HSMPI) rising by 0.25%.

Tencent (0700) ended the session up 1.20%, while Alibaba (9988) declined by 0.16%.

However, bank stocks had a positive session. HSBC (0005) rose by 0.80%. China Construction Bank (0939) and Industrial Commercial Bank (1398) saw gains of 1.67% and 2.24%, respectively.

The Nikkei 225

(Graph for reference purposes only)

The Nikkei ended the Thursday session up 0.31%.

Bank stocks contributed to the gains. Sumitomo Mitsui Financial Group Inc. (8316) and Mitsubishi UFJ Financial Group Inc. (8306) rose by 0.73% and 1.64%, respectively.

However, it was a mixed session for the main components of the Nikkei.

Fast Retailing Co. Ltd. (9983) and Sony Group Corporation (6758) advanced by 0.64% and 0.75%, respectively. KDDI Corp. (9433) gained 0.33%.

However, Softbank Group Corp. (9948) and Tokyo Electron Ltd. (8035) declined by 1.55% and 1.47%, respectively.

For upcoming economic events, refer to our economic calendar.