Hang Seng Index, ASX 200, Nikkei 225: China Industrial Profits and Financial Markets: What’s Ahead?

Highlights

• The Hang Seng Index stumbled on Friday, while the ASX 200 and Nikkei ended the Friday session in positive territory.
• A higher for longer Fed rate path outlook pressured tech stocks.
• Economic indicators from China could set the tone for the Monday session.

Overview of the Friday Session

On Friday, the ASX 200 and Nikkei ended the session in positive territory, while the Hang Seng Index stumbled.

The US equity markets were closed for Thanksgiving, leaving the Asian economic calendar to influence the appetite for riskier assets on Friday.

Fear of a China slowdown drag on HK corporate earnings left the Hang Seng Index in negative territory. However, softer-than-expected inflation numbers from Japan and a steady USD/JPY supported the Nikkei. The markets are betting on the Bank of Japan exiting negative rates in Q1 2024. Weaker-than-expected private sector PMIs tempered bets on a sooner pivot from ultra-loose monetary policy.

For the ASX 200, energy and mining stocks countered a pullback in tech stocks, delivering gains on Friday.

China Industrial Profits to Set the Tone

On Monday, industrial profit numbers could set the tone for the session. A larger-than-expected decline in profits could impact the appetite for riskier assets. Investors will be mindful of private sector PMI numbers for China, out later this week. Weaker industrial profit numbers could signal a waning Chinese economy and weak global demand.

However, stimulus chatter from Beijing could limit the impact of weaker numbers on the Asian equity markets.

On Friday, the US equity markets had a mixed session. The Nasdaq Composite Index fell by 0.11%, while the Dow and S&P 500 ended the session up 0.33% and 0.06%, respectively.

Better-than-expected US Services PMI numbers supported bets on a higher-for-longer Fed rate path.

10-year US Treasury yields gained 1.36% to 4.472%, pressuring tech stocks. A higher-for-longer Fed rate path could continue to test the appetite for tech stocks early in the week. Investors will likely take their cues from the US futures and yields.

In the futures markets, the ASX 200 and Nikkei were up 4 and 140 points on Monday.

ASX 200

The ASX 200 gained 0.16% on Friday. Mining and energy stocks offset a pullback in tech stocks. On Friday, the S&P ASX All Technology Index (XTX) declined by 0.25%. A higher-for-longer interest rate environment impacted tech stocks.

BHP Group Ltd (BHP) and Rio Tinto Ltd. (RIO) gained 0.13% and 0.24%, with Fortescue Metals Group Ltd. (FMG) rising by 0.32%.

Energy stocks contributed to the gains. Woodside Energy Group Ltd (WDS) and Santos Ltd (STO) increased by 1.37% and 1.00%.

However, gold stocks were a drag. Evolution Mining Ltd. (EVN) and Northern Star Resources Ltd. (NST) fell by 1.87% and 0.86%.

Bank stocks had a mixed session. Westpac Banking Corp. (WBC) and ANZ Group Holdings Ltd (ANZ) gained 0.09% and 0.37%, with Commonwealth Bank of Australia (CBA) rising by 0.71%. National Australia Bank Ltd. (NAB) bucked the trend, falling 0.07%.

Hang Seng Index

The Hang Seng Index slid by 1.96% on Friday. Property stocks weighed. The Hang Seng Properties Index (HSMPI) slid by 2.19% on Beijing stimulus uncertainty. Tech stocks struggled on sentiment toward the Fed rate path.

Alibaba (9988) and Tencent (0700) fell by 1.36% and 2.43%, respectively.

Bank stocks also ended the session in negative territory. HSCB (0005) declined by 0.75%. China Construction Bank (0939) and Industrial and Commercial Bank (1398) slid by 1.72% and 1.56%.

The Nikkei 225

(Graph for reference purposes only)

The Nikkei 225 gained 0.52% on Friday.

Bank stocks had a mixed session. Sumitomo Mitsui Financial Group Inc. (8316) fell by 0.77%, while Mitsubishi UFJ Financial Group Inc. (8306) gained 0.08%. It was also a mixed session for the main components of the Nikkei.

Softbank Group Corp. (9948) and KDDI Corp. (9433) rose by 0.48% and 0.32%. Fast Retailing Co. Ltd. (9983) and Tokyo Electron Ltd. (8035) ended the session up 0.03% and 0.25%, respectively.

However, Sony Group Corp. (6758) bucked the trend, falling 1.27%.

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