Hang Seng, ASX 200, Nikkei 225: US Indicators Dictate Appetite Amid PBoC Rumors

Key Insights:

• Asian equity markets saw a second positive session on Tuesday, led by the Hang Seng Index, amidst rumors of a PBoC move.
• US economic indicators like consumer confidence and job openings impact investor sentiment towards Fed policy.
• Asian futures point to a positive session, spotlight on Beijing.

Tuesday Overview

The Asian equity markets enjoyed a second positive session on Tuesday. The Hang Seng Index led the Nikkei and ASX 200. Beijing measures to support the equity markets resonated, with rumors of an imminent PBoC move contributing to the upside.

According to media reports, the PBoC plans to cut the Reserve Ratio Requirement.

Overnight gains across the US equity markets set the tone, with a pullback in US Treasury yields driving demand for riskier assets. There were no Asian economic indicators to check the broad-based equity market recovery.

The S&P 500 and the Dow saw gains of 0.63% and 0.62%, respectively, on Monday, with the NASDAQ rising by 0.84%.

US Economic Indicators to Dictate Investor Appetite

Overnight US economic indicators will set the tone this morning. US consumer confidence and JOLTs job openings impacted investor sentiment toward Fed monetary policy.

The CB Consumer Confidence Index fell from 114.0 to 106.1 in August. Economists forecast a reading of 116.0. Job openings also delivered a blow to the Fed hawks, falling from 9.165 million to 8.827 million. Economists forecast a decline to 9.465 million.

Significantly, the numbers will likely ease bets on further Fed rate hikes but avoid reigniting fears of a US hard landing. However, investors will be mindful of other marquee stats later in the week. The US Core PCE Price Index, personal spending, and the US Jobs Report will likely have more effect on the Fed.

Overnight, the US equity markets responded to the US economic indicators. The NASDAQ rallied 1.74% on Tuesday, with the S&P 500 and the Dow seeing gains of 1.45% and 0.85%, respectively.

We expect investors to brush aside economic indicators from the region this morning. However, Beijing will remain in the spotlight, with investors hoping for a more substantial stimulus package to support the ailing economy. The Asian futures point to a positive session.

ASX 200

The ASX 200 continued recovering last week’s losses, gaining 0.71%. Fortescue Metals Group (FMG) defied gravity, supporting mining stocks, with hopes of more Beijing stimulus measures driving buyer appetite. While we don’t expect regional economic indicators to influence today, an unexpected jump in Australian inflation could test buyer appetite.

On Tuesday, Westpac Banking Corp (WBC) and ANZ Group (ANZ) saw gains of 0.80% and 0.90%, respectively. The National Australia Bank (NAB) and The Commonwealth Bank of Australia (CBA) trailed the front runners, rising by 0.53% and 0.25%, respectively.

Mining stocks had a bullish session. Rio Tinto (RIO) and BHP Group Ltd (BHP) gained 0.72% and 1.23%, respectively, while Newcrest Mining (NCM) ended the day flat. However, Fortescue Metals Group (FMG) led the way, rallying 3.17%. Dip buyers brushed aside a Goldman Sachs rating downgrade in response to the full-year earnings results.

Despite the gains, mining stocks will feel the heat this week. Private sector PMI numbers from China could fuel another sell-off.

Oil stocks had another mixed session. Woodside Energy Group (WDS) gained 0.37%, while Santos Ltd (STO) slipped by 0.26%.

Hang Seng Index

The Hang Seng Index enjoyed a breakout Tuesday, rallying 1.95%.

The main Index components contributed to the positive session. Alibaba Group Holding Ltd (HK:9988) and Tencent Holdings Ltd (HK:0700) rose by 2.25% and 1.29%, respectively.

Bank stocks had a mixed session. The Industrial and Commercial Bank of China (HK:1398) and China Construction Bank (HK: 0939) saw gains of 2.28% and 1.45%, respectively. HSBC Holdings PLC bucked the trend, falling by 0.43%.

Nikkei 225

(For reference purposes only)

The Nikkei 225 gained 0.18%, with a weaker USD/JPY and unemployment figures capping the upside. In July, the unemployment rate rose from 2.5% to 2.7%.

Bank stocks Sumitomo Mitsui Financial Group (8316) and Mitsubishi UFJ Financial Group ended the session flat.

Tokyo Electron Limited (8035) continued to lead the way, gaining 0.72%. Fast Retailing Co (9983) and SoftBank Group Corp. (9984) also found support, rising by 0.42% and 0.49%, respectively. However, Sony Corp. (6758) and KDDI Corp. (9433) bucked the trend, falling by 0.42% and 0.47%, respectively.

Check out our economic calendar for economic events.