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Hang Seng Index, ASX 200, Nikkei 225: Fed Rate Path Bets and Beijing to Dictate Trends

By:
Bob Mason

Bets on the Fed ending its rate hike cycle and pivoting to rate cuts in H1 2024 will influence trends ahead of Australian inflation numbers.

Hang Seng Index, ASX 200, Nikkei 225 Index

In this article:

Highlights

  • The Hang Seng and Nikkei ended the Tuesday session in negative territory, while gold and bank stocks delivered a positive session for the ASX 200.
  • On Wednesday, overnight US economic indicators and Fed speakers from Tuesday will set the tone.
  • Australian inflation figures and Beijing will also be focal points.

Overview of the Tuesday Session

On Tuesday, the ASX 200 ended the day with gains, while the Hang Seng Index and the Nikkei ended the session in negative territory.

Investors responded favorably to overnight US economic indicators from Monday. A larger-than-expected fall in new home sales signaled a shift in US economic momentum despite home sales surging 8.6% in the previous month. An unexpected fall in the Dallas Fed Manufacturing Index added to bets on the Fed ending its rate hike cycle.

10-year US Treasury yields responded to the numbers, ending the session down 1.88% to 4.388%. Despite the pullback in Treasury yields, the Nasdaq Composite Index fell by 0.07% on Monday. The Dow and S&P 500 declined by 0.16% and 0.20%, respectively. Investors remained cautious before US inflation numbers and the Fed Chair Powell speech.

On Tuesday, the Asian economic calendar contributed to the bets on central banks ending rate hike cycles. Australian retail sales figures unexpectedly fell in October. However, concerns about the Chinese economy left the Hang Seng Index in negative territory.

US Consumer Confidence and the Fed to Set the Tone

On Wednesday, overnight US economic indicators from Tuesday will influence the Asian markets. US consumer confidence and dovish Fed comments delivered gains for the US equity markets. The Dow and S&P 500 ended the day up 0.24% and 0.10%, with the Nasdaq Composite rising 0.29%.

However, the Asian economic calendar also warrants consideration on Wednesday. Australian inflation numbers will be the focal point. Softer inflation numbers would further support bets on the RBA ending its rate hike cycle. Consumer-related stocks would likely respond favorably to weaker-than-expected numbers.

Beyond the numbers, investors should monitor central bank chatter and stimulus commentary from Beijing.

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

ASX 200

ASX 200 bucked the trend on Tuesday.
ASX200 291123 Daily Chart

The ASX 200 gained 0.39% on Tuesday. Gold and banking stocks contributed to the session gains.

Gold stocks Evolution Mining Ltd. (EVN) and Northern Star Resources Ltd. (NST) gained 2.93% and 3.50%.

Bank stocks also had a positive session. National Australia Bank Ltd. (NAB) ended the day up 1.21%. ANZ Group Holdings Ltd (ANZ) and Westpac Banking Corp. (WBC) rose by 0.95% and 0.71%. Commonwealth Bank of Australia (CBA) gained 0.71%.

However, concerns about the Chinese economy delivered a mixed session for mining stocks. BHP Group Ltd (BHP) and Rio Tinto Ltd. (RIO) fell by 0.19% and 0.25%. Fortescue Metals Group Ltd. (FMG) bucked the trend, rising by 1.51%.

Energy stocks saw more losses. Woodside Energy Group Ltd (WDS) and Santos Ltd (STO) declined by 1.58% and 0.43%.

The S&P ASX All Technology Index (XTX) declined by 0.14%.

Hang Seng Index

Hang Seng Index saw red on China's economic woes.
HSI 291123 Daily Chart

The Hang Seng Index fell by 0.98% on Tuesday.

Alibaba (9988) and Tencent (0700) declined by 2.30% and 0.99%.

Bank stocks also ended the session in negative territory. HSBC (0005) fell by 0.33%. Industrial and Commercial Bank (1398) and China Construction Bank (0939) ended the day down 0.53% and 0.22%.

The Nikkei 225

Nikkei ended the Tuesday session in negative territory.
Nikkei 291123 Daily Chart

(Graph for reference purposes only)

The Nikkei 225 ended the Tuesday session down 0.12%. A weaker USD/JPY is impacting export stocks.

Bank stocks contributed to the losses. Sumitomo Mitsui Financial Group Inc. (8316) and Mitsubishi UFJ Financial Group Inc. (8306) fell by 0.45% and 0.35%. However, it was another mixed session for the main components of the Nikkei.

Fast Retailing Co. Ltd. (9983) rallied 1.57%. Positive updates on Uniqlo Australia store sales contributed to the gains. Softbank Group Corp. (9948) and Sony Group Corp. (6758) gained 0.28% and 0.12%.

However, KDDI Corp. (9433) and Tokyo Electron Ltd. (8035) ended the session down 0.60% and 0.23%.

For upcoming economic events, check out 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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