Hang Seng Index, ASX 200, Nikkei 225: China Data and the BoJ Put the Markets on Watch

Summary of the Friday Session

On Friday, the Hang Seng Index led the Nikkei and the ASX 200 into negative territory.

Overnight US economic indicators from Thursday set the tone for the Friday Asian session. Hotter-than-expected US producer prices followed the US CPI Report, reducing bets on an H1 2024 Fed rate cut.

US producer prices increased by 1.6% year-on-year in February after rising by 1.0% in January. Core producer prices increased by 2.0% year-on-year after advancing by 2.0% in January.

10-year US Treasury yields reacted to the figures, rising by 2.39% to 4.292%. Higher yields pressured rate-sensitive tech stocks. On Thursday, the Nasdaq Composite and S&P 500 declined by 0.54% and 0.19%, respectively. The Dow gained 0.10%.

The Asian economic calendar also impacted market risk sentiment. House prices in China declined by 1.4% year-on-year in February after declining by 0.7% in January. Economists expected a more modest 0.3% decline. The PBoC disappointed the markets, leaving the one-year MLF rate at 4.5%. Economists expected the PBoC to drop the one-year MLF to 4.4%.

Rising bets on a Bank of Japan pivot from negative rates pressured the Nikkei despite USD/JPY gains.

US Equities, the Bank of Japan, and China Data in Focus

On Monday, US economic indicators from the Friday session warrant investor attention. Consumer sentiment weakened in March, with the NY Empire State Manufacturing Index signaling a deterioration in manufacturing sector conditions.

US consumer and producer price trends continued to test buyer demand for riskier assets. Hotter-than-expected inflations from Tuesday and Thursday pressured rate-sensitive stocks further. 10-year US Treasury yields rose by 0.42%, ending the session at 4.310%.

On Friday, the Nasdaq Composite Index slid by 0.96%. The Dow and S&P 500 saw losses of 0.49% and 0.65%, respectively.

While the Asian markets may feel pressure from the US session, economic data from China and Japan need consideration.

Machinery orders from Japan could influence bets on a Bank of Japan pivot from negative rates. Despite the outcome of wage negotiations, the BoJ remained concerned about the economy. Weak figures could delay a BoJ pivot until April.

However, economic data from China could have more impact. Industrial production, fixed asset investment, retail sales, and employment figures will garner investor interest. Retail sales will face significant scrutiny because of the Lunar New Year holidays.

Beyond the numbers, investors must monitor Bank of Japan chatter and commentary from Beijing.

On Monday, the ASX 200 futures were down 13 points. The Nikkei futures were up 270 points.

ASX 200

The ASX 200 fell by 0.56% on Friday. Gold, mining, and tech stocks dragged the ASX 200 into negative territory. The S&P ASX All Technology Index (XTX) slid by 1.17%.

Gold (XAU/USD) stocks Northern Star Resources Ltd. (NST) and Evolution Mining Ltd. saw losses of 2.21% and 1.78%, respectively. Falling bets on an H1 2024 Fed rate cut pressured gold prices.

Housing sector data from China and PBoC inaction weighed on iron ore prices, sending mining stocks into the red. Rio Tinto Ltd. (RIO) and BHP Group Ltd (BHP) declined by 1.88% and 1.51%, respectively. Fortescue Metals Group Ltd. (FMG) slid by 2.32%.

The big four banks had a mixed end to the week after the Macquarie downgrades.

ANZ Group Holdings Ltd. (ANZ) and National Australia Bank Ltd. (NAB) saw gains of 0.03% and 0.93%, respectively. Commonwealth Bank of Australia (CBA) and Westpac Banking Corp. (WBC) declined by 0.59% and 1.06%, respectively.

However, oil stocks bucked the trend. Woodside Energy Group Ltd (WDS) and Santos Ltd (STO) rose by 2.47% and 2.37%, respectively.

Hang Seng Index

On Friday, the Hang Seng Index slid by 1.42%. Real estate and tech stocks were among the worst performers. The Hang Seng Tech Index (HSTECH) slid by 1.50%. House price data from China left real estate stocks in negative territory. The Hang Seng Mainland Properties Index (HSMPI) ended the session down by 1.94%.

Alibaba (9988) and Tencent (0700) saw losses of 2.11% and 1.87%, respectively.

Bank stocks also ended the day in negative territory. HSBC (0005) declined by 0.85%. China Construction Bank (0939) and Industrial Commercial Bank (1398) fell by 1.44% and 1.00%, respectively.

The Nikkei 225

(Graph for reference purposes only)

The Nikkei fell by 0.26% on Thursday.

Bank stocks extended losses from the Thursday session. Sumitomo Mitsui Financial Group Inc. (8316) and Mitsubishi UFJ Financial Group Inc. (8306) fell by 1.22% and 1.02%, respectively.

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

KDDI Corp. (9433) ended the day up 1.30%. Fast Retailing Co. Ltd. (9983) and Softbank Group Corp. (9948) gained 0.32% and 0.54%, respectively. Sony Group Corporation (6758) rose by 0.08%.

However, Tokyo Electron Ltd. (8035) slid by 4.86%.

For upcoming economic events, refer to our economic calendar.