Hang Seng Index, ASX 200, Nikkei 225: China PMIs in Focus

Highlights

• The ASX 200 and Nikkei ended the final session of 2023 in negative territory, while the Hang Seng Index bucked the broader market trend.
• Losses across the US equity markets from Friday will set the tone for the first trading session of 2024.
• Private sector PMIs from China will be the focal points for the Tuesday session.

Overview of the Friday Session

On Friday, the Hang Seng Index ended the session in positive territory. However, the ASX 200 and Nikkei saw losses in the final session of 2023. A weaker USD/JPY weighed on export-orientated stocks on the Nikkei.

Overnight US economic indicators from Thursday and a mixed US equity market session influenced the Friday Asian session. Steady US labor market conditions signaled a resilient US economy, testing bets on a Q1 2024 Fed rate cut. 10-year US Treasury yields climbed 1.21%, ending the session at 3.844%. On Thursday, the Dow and the S&P 500 gained 0.14% and 0.04%, respectively. The Nasdaq Composite Index slipped by 0.03%.

There were no economic indicators from the Asian region to influence investor sentiment on Friday.

The Chinese Economy in the Spotlight

On Tuesday, investors must consider US economic indicators from Friday. A larger-than-expected fall in the Chicago PMI raised concerns about the US economy. The Chicago PMI slid from 55.8 to 46.9. Notably, Chicago ranks third in the US by gross metropolitan product (GMP), and the PMI is a leading indicator for the ISM survey-based PMIs.

The US equity markets responded to the numbers. On Friday, the Dow and S&P 500 saw losses of 0.05% and 0.28%. The Nasdaq Composite Index fell by 0.56%. While the losses from Friday will set the tone for the Tuesday session, economic indicators from China also warrant consideration.

On Sunday, private sector PMI numbers from China could fuel bets on more stimulus from Beijing. The NBS Non-Manufacturing PMI increased from 50.2 to 50.4 in December. However, the NBS Manufacturing PMI fell from 49.4 to 49.0.

The Chinese economy will also be in the spotlight on Tuesday, with the China Caixin Manufacturing PMI likely to influence market risk sentiment.

Beyond the numbers, investors must also consider chatter from Beijing.

ASX 200

The ASX 200 declined by 0.31% on Friday, December 29. Losses were broad-based, with gold, oil, mining, and bank stocks ending the day in negative territory. Tech stocks also saw losses. The S&P ASX All Technology Index (XTX) fell by 0.04%.

Gold (XAU/USD) stocks: Evolution Mining Ltd. (EVN) and Northern Star Resources Ltd. (NST) fell by 0.75% and 1.44%, respectively. Oil stocks: Woodside Energy Group Ltd (WDS) and Santos Ltd (STO) declined by 1.08% and 0.91%, respectively.

Fortescue Metals Group Ltd. (FMG) fell by 0.41%. BHP Group Ltd (BHP) and Rio Tinto Ltd. (RIO) ended the day down 0.61% and 0.46%, respectively.

The big four banks contributed to the losses. Commonwealth Bank of Australia (CBA) and ANZ Group Holdings Ltd (ANZ) saw losses of 0.44% and 0.23%, respectively. The National Australia Bank Ltd. (NAB) and Westpac Banking Corp. (WBC) declined by 0.10% and 0.48%, respectively.

Hang Seng Index

The Hang Seng Index rose by 0.02% on Friday. The Hang Seng Tech Index (HSTECH) gained 0.01%. However, the real estate sector outperformed the tech sector. The Hang Seng Mainland Properties Index (HSMPI) ended the day up 0.85%.

Alibaba (9988) fell by 0.33%, while Tencent (0700) gained 0.20. NetEase (9999) fell by 0.35%.

Bank stocks also had a mixed session. HSBC (0005) ended the day down by 0.24%. China Construction Bank (0939) and Industrial Commercial Bank (1398) saw gains of 0.43% and 1.06%, respectively.

The Nikkei 225

(Graph for reference purposes only)

The Nikkei declined by 0.22% on Friday.

Bank stocks ended 2023 on a positive footing. Sumitomo Mitsui Financial Group Inc. (8316) and Mitsubishi UFJ Financial Group Inc. (8306) rose by 0.76% and 0.66%, respectively. However, it was a mixed session for the main components of the Nikkei.

Fast Retailing Co. Ltd. (9983) slid by 1.52%. Softbank Group Corp. (9948) and Tokyo Electron Ltd. (8035) declined by 0.49% and 0.82%, respectively.

However, KDDI Corp. (9433) and Sony Group Corp. (6758) saw gains of 0.29% and 0.26%, respectively.

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