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Hang Seng Index, ASX 200, Nikkei 225: Fed Minutes, Private Sector PMIs, and Earnings

By:
Bob Mason
Updated: Feb 21, 2024, 23:25 UTC

Key Points:

  • The Hang Seng bucked a bearish session, for the second consecutive session on Beijing support measures.
  • On Thursday, the overnight FOMC meeting minutes and NVIDIA earnings will set the tone.
  • Private sector PMIs for February and corporate earnings from Asia also warrant investor attention.
Hang Seng Index, ASX 200, Nikkei 225 Index

Overview of the Wednesday Session

On Wednesday, the Hang Seng Index bucked another bearish Asian session, closing the day in positive territory. The ASX 200 and Nikkei ended the day in negative territory.

An unexpected fall in the US CB Leading Economic Index and investor jitters about the Fed rate path impacted the US equity markets. Investors caution before NVIDIA (NVDA) earnings on Wednesday, and the Fed Meeting Minutes also pressured demand for riskier assets.

On Tuesday, the Nasdaq Composite Index ended the session down 0.92%. The Dow and S&P 500 declined by 0.17% and 0.60%, respectively.

The Tuesday US session set the tone for the Asian Wednesday session. However, the Asian economic calendar, Beijing, and corporate earnings also moved the dial.

Trade data from Japan signaled a weakening demand environment, with imports sliding in January. The weaker demand backdrop could influence the timeline for a Bank of Japan pivot from negative rates. The trade balance fell from a ¥68.9 billion surplus to a ¥1,758.3 billion deficit. Exports increased by 11.9% in January, while imports declined by 9.6%.

In contrast, hotter-than-expected Australian wage growth numbers could pressure the RBA to hike interest rates. Wages increased by 4.2% in Q4 compared with 4.1% in Q3.

Support measures from Chinese banks to bolster the real estate sector drove demand for Hang Seng-listed stocks.

FOMC Meeting Minutes and US Corporate Earnings

On Thursday, the Wednesday US session will likely set the tone for the Asian markets. The FOMC Meeting Minutes gave no surprises. Aligned with recent FOMC member guidance, the minutes highlighted the need for patience vis-à-vis rate cuts.

Beyond the economic calendar, NVIDIA Corp. earnings will influence Asian tech sector-listed stocks.

The US equity markets reacted to the FOMC Meeting Minutes. On Wednesday, the Nasdaq Composite Index ended the day down 0.32%. The S&P 500 and the Dow gained 0.13% and 0.13%, respectively. NVIDIA rose by 7.41% in after-hours trading after beating quarterly revenue forecasts.

While the Wednesday US session will set the tone, the Asian economic calendar, corporate earnings, and policy also need consideration.

On Thursday, preliminary private sector PMIs for Japan will influence sentiment toward BoJ policy intentions.

Economists forecast the Jibun Bank Services PMI to increase from 53.1 to 53.2 in February. The Bank of Japan has turned its attention to the services sector for wage growth to fuel demand-driven inflation. A pickup in prices and service sector activity could support bets on an April Bank of Japan pivot from negative rates.

Before the Asian market opening bell, PMI numbers from Australia signaled a pickup in service sector activity. The Judo Bank Manufacturing PMI declined from 50.1 to 47.7, while the Services PMI rose from 49.1 to 52.8 in February.

Beyond the economic calendar, corporate earnings will warrant investor attention. Lenovo Group (HK: 0992) and Fortescue Metals (ASX: FMG) are among the big names to release earnings. However, investors must also monitor stimulus chatter from Beijing and Bank of Japan comments about monetary policy.

On Thursday, the ASX 200 and Nikkei futures were up 1 and 120 points, respectively.

ASX 200

ASX 200 ended Wednesday in the red.
ASX200 220224 Daily Chart

The ASX 200 ended the Tuesday session down 0.77%. Mining stocks continued to pressure the ASX 200. Earnings and iron ore prices affected mining stocks. Bank, gold, and oil stocks had mixed sessions. Tech stocks ended the day in positive territory for the second consecutive session. The S&P ASX All Technology Index (XTX) gained 0.57%.

BHP Group Ltd (BHP) and Rio Tinto Ltd. (RIO) ended the session down 2.35% and 1.75%, respectively. Fortescue Metals Group Ltd. (FMG) slid by 3.40%. Rio Tinto earnings contributed to the losses.

The big four banks had another mixed session. Westpac Banking Corp. (WBC) and The Commonwealth Bank of Australia (CBA) declined by 0.04% and 0.16%, respectively. ANZ Group Holdings Ltd (ANZ) and National Australia Bank Ltd. (NAB) ended the day up 0.79% and 0.36%, respectively.

Gold (XAU/USD) and oil stocks also had another mixed session. Northern Star Resources Ltd. (NST) ended the session flat, while Evolution Mining Ltd. declined by 0.66%. Woodside Energy Group Ltd (WDS) rose by 0.20%, while Santos Ltd (STO) declined by 0.81%.

Hang Seng Index

Hang Seng Index rallied on Wednesday.
HSI 220224 Daily Chart

On Wednesday, the Hang Seng Index rose by 1.57%. Real estate and tech stocks enjoyed a positive Wednesday session. The Hang Seng Mainland Properties Index (HSMPI) rallied 3.82%. The Hang Seng Tech Index (HSTECH) ended the session up by 2.66%.

Alibaba (9988) and Tencent (0700) ended the day up 1.04% and 1.62%, respectively.

However, bank stocks had a mixed session. China Construction Bank (0939) and Industrial Commercial Bank (1398) saw gains of 1.46% and 2.26%, respectively. HSBC (0005) slid by 3.83% as investors reacted to an 80% slump in Q4 profits.

The Nikkei 225

Nikkei ended the Wednesday session in negative territory.
Nikkei 220224 Daily Chart

(Graph for reference purposes only)

The Nikkei declined by 0.26% on Wednesday.

Bank stocks ended the Wednesday session with losses. Sumitomo Mitsui Financial Group Inc. (8316) and Mitsubishi UFJ Financial Group Inc. (8306) fell by 0.83% and 0.81%, respectively.

However, the main components of the Nikkei had a mixed session.

Softbank Group Corp. (9948) and Sony Group Corp. (6758) declined by 1.98% and 0.98%, respectively. Tokyo Electron Ltd. (8035) ended the session down 0.38%.

KDDI Corp. (9433) and Fast Retailing Co. Ltd. bucked the trend, gaining 0.48% and 0.60%, respectively.

For upcoming economic events, refer to our economic calendar.

About the Author

Bob Masonauthor

With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.

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