Hang Seng Index, ASX 200, Nikkei 225: China Manufacturing PMI in the Spotlight

Highlights

• The Asian equity markets ended the month on a high note, with the ASX 200 leading the Hang Seng Index and Nikkei into positive territory.
• Hopes of more stimulus measures from Beijing and a less hawkish Fed rate path fueled demand for riskier assets.
• On Friday, the Asian equity markets will respond to the overnight US economic indicators before the Caixin Manufacturing PMI from China.

Overview of the Thursday Session

On Thursday, the Asian equity markets ended the month on a high note. The Hang Seng Index, the Nikkei, and the ASX 200 ended the session in positive territory.

Overnight US economic indicators and resonating dovish Fed comments set the tone for the Thursday Asian session. Upward revisions to US GDP numbers for Q3 supported expectations of a US soft landing. FOMC voting member Christopher Waller raised bets on an H1 2024 Fed rate cut. Once hawkish, Waller favored a Fed rate cut if inflation continued to soften.

The comments countered mixed signals from FOMC members during the Wednesday session. However, the US markets were cautious before the US inflation numbers on Thursday.

On Wednesday, the Nasdaq Composite Index and S&P 500 declined by 0.16% and 0.09%, while the Dow gained 0.04%. 10-year US Treasury yields continued signaling a more dovish rate path, falling 1.48% to 4.259%. Yields stood at 5.021% on October 23, 2023.

The Asian economic calendar influenced risk appetite on Thursday. Weaker-than-expected private sector PMI numbers from China raised expectations of further stimulus from Beijing. Mixed numbers from Japan created more uncertainty about the Bank of Japan’s plan to exit negative rates.

However, a weaker USD/JPY failed to counter investor sentiment toward Fed interest rates and the economic outlook.

US Inflation and China in the Spotlight

On Friday, US inflation and personal income/spending figures from Thursday will draw investor interest. The stats reflected the effects of Fed policy measures to cool the economy and tame inflation.

However, the Nasdaq Composite Index fell by 0.23% on Thursday. Profit taking left the Nasdaq in negative territory, with an upswing in US Treasury yields contributing to the loss. The Dow and S&P 500 ended the day up 1.47% and 0.38%, respectively. The mixed session could test market risk appetite early in the Friday session.

The Asian economic calendar warrants investor attention on Friday. Unemployment figures from Japan could support a BoJ pivot from an ultra-loose monetary policy stance. The all-important China Caixin Manufacturing PMI numbers will influence the appetite for riskier assets.

Weaker-than-expected PMI numbers could pressure Beijing into delivering a more substantial stimulus package to bolster the economy. Economists forecast the Caixin Manufacturing PMI to fall from 49.5 to 49.3 in November.

In the Asian futures, the ASX 200 was up 15 points, while the Nikkei was down 80 points on Wednesday.

ASX 200

The ASX 200 gained 0.74% on Thursday. Bank, mining, gold, and tech stocks contributed to the positive end to November. The S&P ASX All Technology Index (XTX) rose by 1.00% on sentiment toward Fed monetary policy.

An overnight gain in gold supported another positive session for gold stocks. Evolution Mining Ltd. (EVN) and Northern Star Resources Ltd. (NST) rose by 0.49% and 0.47%.

Bank stocks were also on the rise. Commonwealth Bank of Australia (CBA) rallied 1.29%. National Australia Bank Ltd. (NAB) and Westpac Banking Corp. (WBC) ended the day up 1.07% and 1.04%. ANZ Group Holdings Ltd (ANZ) gained 0.79%.

Investor bets on more stimulus from Beijing contributed to gains for mining stocks. BHP Group Ltd (BHP) and Rio Tinto Ltd. (RIO) ended the day up 0.24% and 0.37%. Fortescue Metals Group Ltd. (FMG) rose by 0.85%.

However, oil stocks had a mixed session. Woodside Energy Group Ltd (WDS) ended the session flat, while Santos Ltd (STO) fell by 0.43%.

Hang Seng Index

The Hang Seng Index ended a four-day losing streak, rising by 0.29%. Stimulus hopes countered the weaker-than-expected PMI numbers from China.

Alibaba (9988) rose by 0.07%, with Tencent (0700) rallying 3.15%.

However, bank stocks had a mixed session. HSBC (0005) fell by 0.50%. Industrial and Commercial Bank (1398) and China Construction Bank (0939) ended the day up 0.54% and 0.89%.

The Nikkei 225

(Graph for reference purposes only)

The Nikkei 225 ended Thursday up 0.50%.

Bank stocks had a mixed end to the month. Sumitomo Mitsui Financial Group Inc. (8316) fell by 0.08%, while Mitsubishi UFJ Financial Group Inc. (8306) rose by 0.12%. It was also a mixed session for the main components of the Nikkei.

Softbank Group Corp. (9948) fell by 0.48%, with KDDI Corp. (9433) ending the day down 0.19%.

However, Sony Group Corp. (6758) rose by 0.67%. Fast Retailing Co. Ltd. (9983) and Tokyo Electron Ltd. (8035) ended the day up 0.27% and 0.29%, respectively.

For upcoming economic events, check out our economic calendar.