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

Highlights

• The Asian equity markets found a footing on Wednesday, with the Nikkei leading the Hang Seng Index and ASX 200 into positive territory.
• Falling Treasury yields drove demand for riskier assets on Wednesday.
• On Thursday, US labor market numbers from Wednesday and trade data from China will influence risk appetite.

Overview of the Wednesday Session

On Wednesday, the Asian equity markets found a firmer footing. The Nikkei 225 led the Hang Seng Index and the ASX200 into positive territory.

A larger-than-expected fall in US job openings raised bets on a Q1 2024 Fed rate cut. JOLTS Job Openings fell from 9.350 million to 8.733 million in October. However, a pickup in US service sector activity drove expectations of a US soft landing. The ISM Non-Manufacturing Index increased from 51.8 to 52.7 in November.

On Tuesday, the Nasdaq Composite Index ended the session up 0.31%. A 2.11% fall in 10-year US Treasury yields supported tech stocks. However, the Dow and the S&P 500 fell by 0.22% and 0.06%, respectively.

The Asian economic calendar and ratings news failed to affect the appetite for riskier assets. In the third quarter, the Australian economy expanded by just 0.2% vs. 0.4% in the previous quarter.

On Thursday, Moody’s affirmed China’s A1 rating but downgraded the outlook from stable to negative.

However, 10-year JGB yields pulled back, driving demand for Nikkei-listed stocks.

ADP Labor Market Stats and Yields to Set the Tone

US economic indicators from Wednesday will set the tone for the Thursday Asian session. The ADP reported a 103k increase in employment in November after a 113k rise in October. US Treasury yields reflected the rising bets on a Q1 2024 Fed rate cut. However, the US equity markets ended the session in negative territory.

10-year US Treasury yields declined by 1.46% to 4.106%. The Nasdaq Composite Index declined by 0.56%, with the Dow and S&P 500 falling by 0.19% and 0.39%, respectively.

China Trade Data to Influence Market Risk Sentiment

On Thursday, the Asian economic calendar also warrants consideration. Trade data from Australia will draw investor interest early in the session. Better trade terms could signal an improving demand environment. Economists forecast the Australian trade surplus to widen from A$6.786 billion to A$7.500 billion in October.

However, trade data from China will be the focal point. A pickup in exports could support demand for riskier assets. Economists forecast exports to decline by 0.8% year-over-year in November. Exports were down 6.4% in October. Imports also need consideration, with an unexpected fall in imports likely to signal a weakening demand outlook.

Beyond the economic calendar, stimulus chatter from Beijing and government bond yields will also influence.

ASX 200

The ASX 200 rallied 1.65% on Wednesday. Bets on a December 2024 RBA rate cut drove demand for tech, mining, and bank stocks. The S&P ASX All Technology Index (XTX) gained 1.67%.

Mining stocks had a positive session. BHP Group Ltd (BHP) and Rio Tinto Ltd. (RIO) gained 1.53% and 0.68% on higher iron ore prices. Fortescue Metals Group Ltd. (FMG) ended the day up 0.04%.

Bank stocks made solid gains. National Australia Bank Ltd. (NAB) and Westpac Banking Corp. (WBC) rallied 1.91% and 1.73%. Commonwealth Bank of Australia (CBA) and ANZ Group Holdings Ltd (ANZ) rose by 1.56% and 1.27%.

Energy stocks had a mixed session. Woodside Energy Group Ltd (WDS) gained 1.05%, while Santos Ltd (STO) ended the session flat.

A pickup in spot Gold (XAU/USD) supported Northern Star Resources Ltd. (NST), which rose by 1.05%. However, Evolution Mining Ltd. (EVN) tumbled by 13.04%. The company issued 138.2 million new shares at an 8.2% discounted price of $3.80. Evolution Mining Ltd. will use the funds to acquire an 80% stake in the Northparkes Copper-Gold Mine.

Hang Seng Index

The Hang Seng Index rose by 0.83% on Wednesday. However, the gains were more modest, with Moody’s rating action capping the upside.

Alibaba (9988) declined by 0.50%, while Tencent (0700) rose by 0.91%.

However, bank stocks had a positive session. HSBC (0005) increased by 0.59%. China Construction Bank (0939) and Industrial and Commercial Bank (1398) ended the day with gains of 0.45% and 0.28%, respectively.

The Nikkei 225

(Graph for reference purposes only)

The Nikkei 225 rallied 2.04% on Wednesday.

Bank stocks found much-needed support. Sumitomo Mitsui Financial Group Inc. (8316) and Mitsubishi UFJ Financial Group Inc. (8306) gained 0.69% and 0.61%. It was also a positive session for the main components of the Nikkei.

Sony Group Corp. (6758) rallied 3.96%. Tokyo Electron Ltd. (8035) and Fast Retailing Co. Ltd. (9983) ended the session up 2.20% and 2.01%. Softbank Group Corp. (9948) and KDDI Corp. (9433) increased by 0.61% and 1.48%, respectively.

For upcoming economic events, check out our economic calendar.