Hang Seng Index, ASX 200, Nikkei 225: Alphabet Inc. Sets a Bearish Tone for Thursday

Key Insights:

• Australian inflation numbers left the ASX 200 in negative territory on Wednesday.
• Alphabet Inc. earnings and a jump in 10-year US Treasury yields sunk the Nasdaq on Wednesday, setting a bearish tone for the Thursday session.
• RBA commentary, 10-year US Treasury yields, and pre-US inflation jitters to test market risk appetite.

Overview of the Wednesday Session

On Wednesday, the Hang Seng Index and Nikkei ended the day in positive territory, while the ASX 200 saw a modest loss.

10-year US Treasury yields retreated on Tuesday, supporting demand for riskier assets. Better-than-expected US Services PMI numbers for October and corporate earnings were also Asian-market friendly.

Big names that released earnings on Tuesday include Coca-Cola (KO), General Electric (GE), General Motors (GM), Microsoft (MSFT), and Visa (V).

On Tuesday, the Dow and the S&P 500 gained by 0.62% and 0.73%, with the Nasdaq Composite Index ending the day up 0.93%.

The overnight gains across the US equity markets set the tone for the Wednesday session. However, hotter-than-expected Q3 Australian inflation figures weighed on the ASX 200. The inflation numbers raised the chances of an RBA rate hike, pressuring consumer-linked stocks.

The Thursday Session: Corporate Earnings and Central Banks in Focus

Overnight US economic indicators from Wednesday are unlikely to influence the Asian markets on Thursday. However, market reaction to corporate earnings and 10-year US Treasury yield trends warrant consideration.

The US markets responded to Alphabet’s (GOOGL) earnings results released after the Tuesday closing bell. Rising 10-year US Treasury yields added to the risk-off mood.

US Q3 GDP numbers on Thursday and US inflation numbers on Friday could materially shift Fed monetary policy bets. Investors may take a more cautious stance this morning.

On Wednesday, the Nasdaq Composite Index slid by 2.43%, with the Dow and S&P 500 ending the day down 0.32% and 1.43%, respectively.

The Asian economic calendar will put the ASX 200 in the spotlight after the hotter-than-expected Australian inflation figures. RBA Assistant Governors Michele Bullock and Christopher Kent are on the calendar to speak. Hawkish comments would likely pressure the ASX 200. Before the inflation numbers, Assistant Governor Bullock had warned the RBA would not hesitate to hike rates if inflationary pressures required a response.

Beyond the economic calendar, investors must monitor 10-year US Treasury yields, crude oil prices, and updates from the Middle East.

In the Futures Markets, the ASX 200 and the Nikkei 225 were down 18 points and 290 points, respectively.

ASX 200

The ASX 200 slipped by 0.04% on Wednesday. Rising bets on an RBA rate hike countered the influence of the Nasdaq, weighing on tech stocks. The S&P/ASX All Technology Index (XTX) fell by 0.28%.

Consumer-linked stocks saw heavy losses on the fear of an RBA-induced slump in consumer spending. Woolworths Group Ltd (WOW) slid by 1.98%. However, mining stocks cushioned the downside for the ASX 200.

Fortescue Metals Group (FMG) rallied 3.14%. Rio Tinto (RIO) and BHP Group Ltd (BHP) ended the day up 2.35% and 2.59%. Newcrest Mining (NCM) fell by 1.58%.

Woodside Energy Group (WDS) and Santos Ltd (STO) saw losses of 0.77% and 1.02%.

The big four banks had a mixed session. ANZ Group (ANZ) fell by 1.31%, with the National Australia Bank (NAB) falling 0.84%. The Commonwealth Bank of Australia (CBA) and Westpac Banking Corp (WBC) ended the day down 0.73% and 0.38%. The threat of rising interest rates on nonperforming loans and default rates weighed on bank stocks.

Hang Seng Index

The Hang Seng Index gained 0.55% on Wednesday.

Alibaba Group Holding Ltd (HK:9988) and Tencent Holdings Ltd (HK:0700) ended the day up 2.72% and 1.70%.

Bank stocks had a mixed session. HSBC Holdings PLC (HK:0005) fell by 0.26%. However, China Construction Bank (HK:0939) and Industrial and Commercial Bank of China (HK:1398) ended the day up 0.22% and 0.80%.

Nikkei 225

(Graph for reference purposes only)

The Nikkei gained 0.67% on Wednesday.

Bank stocks found much-needed support. Sumitomo Mitsui Financial Group (8316) and Mitsubishi UFJ Financial Group (8306) gained 1.54% and 1.89%. The main components of the Nikkei also had a positive Wednesday session.

SoftBank Group Corp. (9984) and Tokyo Electron Limited (8035) rose by 1.19% and 1.72%, with KDDI Corp. (9433) gaining 0.97%. Fast Retailing Co (9983) and Sony Corp. (6758) ended the day up 0.35% and 0.32%.

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