Hang Seng Index, ASX 200, Nikkei 225: China Inflation and Corporate Earnings in Focus

Highlights

• The ASX 200 bucked a bearish Wednesday session for the Asian equity markets.
• Uncertainty toward the Fed interest rate path tested the appetite for riskier assets.
• On Wednesday, China inflation and corporate earnings will influence market risk sentiment.

Overview of the Wednesday Session

On Wednesday, the ASX 200 outperformed the Nikkei 225 and the Hang Seng Index as the broader Asian equity markets reversed course.

Fed Uncertainty and Hawkish Commentary

On Tuesday, the hawkish commentary from certain FOMC members tested the appetite for riskier assets. Uncertainty about whether the Fed would end its rate hike cycle continued to cap the upside for US equities. However, hopes of a soft landing kept the US majors in positive territory on Tuesday.

FOMC members Austan Goldsbee, Christopher Waller, Michelle Bowman, and Neel Kashkari delivered hawkish speeches.

On Tuesday. the Dow and S&P 500 rose by 017% and 0.28%, respectively, with the Nasdaq Composite Index gaining by 0.90%.

Asian Economic Calendar and Investor Caution

The Asian economic calendar had a relatively limited impact on the Asian markets on Wednesday. Despite the Reuters Tankan Index unexpectedly rising from 3 to 6 in November, the Nikkei 225 ended the session in negative territory.

Investor caution was evident on Wednesday as investors awaited a Fed Chair Powell speech.

China Inflation in the Spotlight

On Wednesday, the Dow ended the day with a 0.12% loss. However, the Nasdaq Composite Index and S&P 500 rose by 0.08% and 0.10%, respectively. Fed Chair Jerome Powell disappointed the markets on Wednesday by avoiding the topic of monetary policy, leaving investors awaiting his speech on Thursday.

The debate on whether the Fed will deliver one more rate hike before hitting the brakes remains ongoing.

The mixed US session and Fed uncertainty will influence investor sentiment on Thursday. However, the Asian economic calendar also warrants consideration. Inflation numbers from China will need investor attention.

While consumer price inflation remains the focal point, producer prices will also influence. Economists forecast producer prices to fall 2.7% year-over-year in October (Sep: -2.5%). A larger-than-expected fall in producer prices would signal a weakening demand environment.

Corporate Earnings

Corporate earnings will also provide direction to Asian markets. Notable companies reporting earnings include Softbank Group Corp. (9984), Honda Motor (7267), Nissan Motor (7201), National Bank of Australia (NAB), and China Everbright (0165).

Futures Market and Closing Thoughts

In the futures markets on Thursday, the ASX 200 and the Nikkei were up 28 and 200 points, respectively. While the futures markets point to a positive start to the session, investors may consider possible comments from Fed Chair Powell. Powell will speak during the US session.

ASX 200

The ASX 200 gained 0.26% on Wednesday. Mining stocks were a drag on falling commodity prices. However, the big four banks contributed to the ASX 200 gains.

BHP Group Ltd. (BHP) and Rio Tinto Ltd. (RIO) slid by 1.89% and 2.00%, respectively. Fortescue Metals Group Ltd. (FMG) fell by 1.11%.

Woodside Energy Group Ltd. (WDS) declined by 0.57%, while Santos Ltd. (STO) ended the session flat.

Gold stocks struggled with falling gold prices. Evolution Mining Ltd. (EVN) and Northern Star Resources Ltd. (NST) saw losses of 1.35 and 1.16%, respectively. Gold Spot was down 0.32% to $1,963 at the close of the Asian session.

Westpac Banking Corp. (WBC) gained 1.50%, with the Commonwealth Bank of Australia (CBA) rising by 0.68%. The National Australia Bank Ltd. (NAB) and ANZ Group Holdings Ltd. (ANZ) saw gains of 0.45% and 0.35%.

ANZ and NAB will also release earnings this week.

Hang Seng Index

The Hang Seng Index ended the Wednesday session down 0.58%.

Alibaba (9988) and Tencent (0700) ended the session with losses of 0.78% and 0.06%, respectively.

Bank stocks also ended the Wednesday session in negative territory. HSBC (0005) declined by 0.60%. China Construction Bank (0939) and the Industrial and Commercial Bank (1398) fell by 0.45% and 0.54%.

The Nikkei 225

(Graph for reference purposes only)

The Nikkei 225 fell by 0.33% on Wednesday.

Sumitomo Mitsui Financial Group (8316) and Mitsubishi UFJ Financial Group (8306) tumbled by 4.98% and 4.17%. However, it was another mixed day for the main components of the Nikkei 225.

Softbank (9984) slid by 2.94%. Anticipation of a sharp decline in Q2 net profits weighed. KIDDI Corp. (9433) ended the day down 0.55%. However, Sony Corp (6758) and Fast Retailing (9983) ended the session up 1.44% and 1.22%, respectively. Tokyo Electron (8035) rose by 0.21%.

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