Hang Seng, ASX 200, Nikkei 225: Assessing Risks and Forecasts amidst Market Reopens

Key Insights:

• Q4 started with Nikkei and ASX 200 experiencing losses amid thinner trading volumes.
• Hang Seng’s market stance to test investor appetite today.
• Today, US Treasury yields and the RBA decision today will influence market risk sentiment.

Overview of the Monday Session

On Monday, the Asian equity markets started the fourth quarter with losses. The Nikkei and the ASX 200 ended the session in the red on thinner trading volumes. The Hong Kong and China markets were closed for the National Day holidays.

Softer US inflation figures from Friday and the US government averting a shutdown cushioned the downside.

However, a mixed US equity market session on Friday set the Asian markets for a bearish start to the quarter.

The NASDAQ Composite Index gained 0.14% on Friday, while the Dow and S&P 500 fell by 0.47% and 0.27%.

Private sector PMI numbers from China weighed on market risk sentiment. The Caixin Manufacturing PMI fell from 51.0 to 50.6, with the Services PMI down from 51.8 to 50.2.

Tankan survey-based figures from Japan and a weaker Yen offered early support to the Nikkei. However, rising US 10-year Treasury yields ahead of a Fed Chair Powell speech reversed the early gains.

The all-important Tankan Big Manufacturing Output Index increased from 5 to 9 in the third quarter. Economists forecast a modest increase to 6.

The Tuesday Session: Powell, the RBA, and the Hang Seng Reopen

Overnight US economic indicators and Fed commentary will set the tone for the morning session.

The ISM Manufacturing PMI increased from 47.6 to 49.0 vs. a forecast of 47.7. Fed Chair Powell steered clear of monetary policy on Monday. However, FOMC member Michelle Bowman spoke on Monday. Bowman reportedly said,

“Inflation continues to be too high, and I expect it will likely be appropriate for the Fed to raise rates further and hold them at a restrictive level for some time.”

The US equity markets had a mixed session. On Monday, the NASDAQ Composite Index and the S&P 500 gained 0.67% and 0.01%. However, the Dow declined by 0.22%.

This morning, Australian building approvals and home loan figures will draw interest. However, the RBA interest rate decision and Rate Statement will impact the ASX 200 more. Recent inflation figures support the higher-for-longer interest rate path. A hawkish Rate Statement would test buyer appetite for ASX 200-listed stocks.

However, the Hang Seng Index will influence market risk sentiment. Property sector woes and the latest PMI numbers from China will test investor risk appetite. The China markets are closed throughout the week for the National Day holidays.

In the Futures Markets, the ASX 200 and the Nikkei 225 were down 96 and 230 points, respectively.

ASX 200

The ASX 200 fell by 0.22%. Tech stocks saw losses for the third day in four sessions. The S&P/ASX All Technology Index (XTX) declined by 0.32%. Mining stocks cushioned the downside, while the big four banks contributed to the negative Monday session.

Rio Tinto (RIO) and BHP Group Ltd (BHP) rose by 1.14% and 0.79%, with Fortescue Metals Group (FMG) gaining 0.67%. Newcrest Mining (NCM) slipped by 0.08%.

ANZ Group (ANZ) and the National Australia Bank (NAB) saw losses of 0.66% and 0.38%. The Commonwealth Bank of Australia (CBA) and Westpac Banking Corp (WBC) ended the day down 0.12% and 0.09%, respectively.

Woodside Energy Group (WDS) and Santos Ltd (STO) fell by 0.66% and 0.38%, respectively.

Hang Seng Index

The Hong Kong markets were closed on Monday.

Nikkei 225

(Graph for reference purposes only)

The Nikkei 225 declined by 0.31%.

Bank stocks were in recovery following the Friday reversal. Sumitomo Mitsui Financial Group (8316) and Mitsubishi UFJ Financial Group ended the day with gains of 0.72% and 1.54%, while the main components struggled.

KDDI Corp. (9433) fell by 1.51%, with Tokyo Electron Limited (8035) and SoftBank Group Corp. (9984) seeing losses of 1.27% and 1.34%.

Fast Retailing Co (9983) and Sony Corp. (6758) ended the day down 0.37% and 0.29%.

For upcoming economic events, check out our economic calendar.