Hang Seng, ASX 200, Nikkei 225: Grappling with US Economic Indicators’ Whirlwind

Key Insights:

• Asian equity markets suffered: Nikkei, Hang Seng, and ASX 200 descended into negative territory.
• 10-year US Treasury yield spiked to 4.884% on Wednesday following an unexpected jump in US job openings.
• Overnight US indicators from Wednesday forecast a defining tone for the Thursday session.

Overview of the Wednesday Session

On Wednesday, the Asian equity markets continued to see heavy losses. The Nikkei led the Hang Seng Index and ASX 200 into negative territory.

Treasury yields battered the Asian markets, with investors also taking their cues from the overnight Tuesday US session.

The influential US JOLTs Job Openings Report fueled bets on a more hawkish Fed interest rate path. An unexpected rise in job openings sent 10-year US Treasury yields to a Tuesday session high of 4.810%.

The US equity markets reflected the impact of the job opening numbers on Treasury yields. On Tuesday, the S&P 500 and Dow saw losses of 1.37% and 1.29%, with the NASDAQ Composite Index sliding by 1.87%.

Service sector PMI numbers from Australia and Japan failed to cushion the downside despite better-than-expected figures. The Australian services PMI rose from 47.8 to 51.9 (prelim: 49.0), while the Japan services PMI slipped from 54.3 to 53.8 (prelim: 53.3).

The Thursday Session: ISM Non-Manufacturing and ADP Nonfarm to Set the Tone

Overnight US economic indicators from Wednesday will set the tone for the Thursday session. According to the ADP, nonfarm employment increased by 89k in September vs. 180k in August. Economists forecast the ADP to report a 160k increase.

The US ISM Non-Manufacturing PMI slipped from 54.5 to 53.6 in September, matching forecasts. ISM sub-components, including employment and prices, also need consideration.

The US equity markets responded to the latest round of US economic indicators and a fall in US Treasury yields. On Wednesday, the NASDAQ Composite Index gained by 1.35%. The Dow and S&P 500 ended the day up 0.39% and 0.81%.

On Thursday, Australian trade data will influence the appetite for ASX 200-listed stocks. Economists forecast the Australian trade surplus to widen from A$8.039 billion to A$8.725 billion in August.

In the Futures Markets, the ASX 200 and the Nikkei 225 were up 31 and 290 points, respectively.

ASX 200

The ASX 200 declined by 0.77% on Wednesday. Rising US Treasury yields weighed on rate-sensitive tech stocks. The S&P/ASX All Technology Index (XTX) fell by 0.68%. The big four banks contributed to the losses.

ANZ Group (ANZ) slid by 1.93%, with the National Australia Bank (NAB) and Westpac Banking Corp (WBC) declining by 1.67% and 1.60%. The Commonwealth Bank of Australia (CBA) ended the day with a 1.47% loss.

However, mining stocks had a mixed session. Rio Tinto (RIO) and Fortescue Metals Group (FMG) rose by 0.73% and 0.24%, with Newcrest Mining (NCM) up 0.67%. BHP Group Ltd (BHP) bucked the trend, falling 0.27%.

Woodside Energy Group (WDS) and Santos Ltd (STO) declined by 0.92% and 1.06%, respectively.

Hang Seng Index

The Hang Seng Index ended the Wednesday session with a 0.78% loss.

On Wednesday, the Hang Seng Mainland Properties Index (HSMPI) fell by 1.01%. China Evergrande tumbled by 12.20%.

Beyond the property sector, Alibaba Group Holding Ltd (HK:9988) and Tencent Holdings Ltd (HK:0700) declined by 1.62% and 1.00%, respectively.

Bank stocks had a mixed Wednesday session. China Construction Bank (HK:0939) and the Industrial and Commercial Bank of China (HK:1398) rose by 0.47% and 0.56%, respectively. HSBC Holdings PLC (HK:0005) slipped by 0.08%.

Nikkei 225

(Graph for reference purposes only)

The Nikkei 225 tumbled by 2.28% on Wednesday.

Bank stocks suffered heavy losses. Sumitomo Mitsui Financial Group (8316) and Mitsubishi UFJ Financial Group slid by 3.70% and 5.37%. The main components of the Nikkei also faced losses.

Tokyo Electron Limited (8035) declined by 3.08%, with SoftBank Group Corp. (9984) falling by 2.08%.

Fast Retailing Co (9983) and Sony Corp. (6758) ended the day down 1.94% and 1.22%, respectively.

KDDI Corp. (9433) fell by a more modest 0.72%.

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