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Hang Seng Index, ASX 200, Nikkei 225: FOMC Meeting Minutes to Shape Asian Markets’ Direction

By:
Bob Mason

FOMC Meeting Minutes to guide markets, with a focus on May rate cut prospects. The Chinese economy also remains a consideration.

Hang Seng Index, ASX 200, Nikkei 225 Index

Highlights

  • The Hang Seng Index and Nikkei ended the Tuesday session in negative territory, while the ASX 200 saw green for a second session.
  • Investor jitters about the Chinese economy reversed Hang Seng Index gains from earlier in the day.
  • On Wednesday, the overnight FOMC Meeting Minutes will set the tone.

Overview of the Tuesday Session

On Tuesday, the Hang Seng Index and the Nikkei 225 ended the session in negative territory. Investor jitters about the Chinese economy fueled a reversal of earlier gains for Hang Seng Index. A weaker USD/JPY weighed on the Nikkei, while rising iron ore prices supported the ASX 200.

A positive start to the week for the US equity markets set the tone for the Asian equity markets on Tuesday. On Monday, the Nasdaq Composite Index rallied 1.13%, with the Dow and S&P 500 gaining 0.58% and 0.74%, respectively.

There were no US economic indicators from Monday to influence market risk sentiment. Bets on a May Fed rate cut continued supporting the appetite for riskier assets.

On the Asian economic calendar, the RBA Meeting Minutes could not overshadow rising iron ore prices. News of more stimulus from Beijing sent mining stocks higher.

FOMC Meeting Minutes to Set the Tone

On Wednesday, the overnight FOMC Meeting Minutes could set the tone for the Asian session. The minutes revealed a willingness to hike rates if inflation reaccelerated, aligning with previous guidance. However, there were no surprises, with the recent inflation and retail sales figures supporting an H1 2024 rate cut.

According to the CME FedWatch Tool, the probability of a May Fed rate cut eased from 46.2% to 45.5% in response to the Minutes.

The Nasdaq Composite Index declined by 0.59%, with the Dow and S&P 500 falling by 0.18% and 0.20%, respectively. However, profit-taking ahead of the holidays likely contributed to the losses. 10-year US Treasury yields pulled back in response to the minutes, ending the session down 0.66%.

On the Asian economic calendar, there are no economic data for investors to consider on Wednesday. Central bank chatter, stimulus news from Beijing, and US Treasury yields could influence the markets.

In the futures markets on Wednesday, the ASX 200 and Nikkei were down 6 and 150 points, respectively.

ASX 200

ASX 200 enjoyed a positive Tuesday session.
ASX200 221123 Daily Chart

The ASX 200 rose by 0.28% on Tuesday. Mining stocks delivered gains as investors reacted to rising iron ore prices.

BHP Group Ltd (BHP) and Rio Tinto Ltd. (RIO) rose by 1.41% and 1.90%, with Fortescue Metals Group Ltd. (FMG) up 0.67%.

Gold stocks also enjoyed a positive session. Evolution Mining Ltd. (EVN) and Northern Star Resources Ltd. (NST) rallied 2.42% and 3.49% on rising gold prices.

Bank stocks and oil stocks saw relatively modest gains. Westpac Banking Corp. (WBC) and Commonwealth Bank of Australia (CBA) ended the day up 0.33% and 0.51%. ANZ Group Holdings Ltd (ANZ) and National Australia Bank Ltd. (NAB) rose by 0.16% and 0.07%.

Woodside Energy Group Ltd (WDS) gained 0.47%, while Santos Ltd (STO) ended the session flat.

Hang Seng Index

The Hang Seng Index ended the Tuesday session in negative territory.
HSI 221123 Daily Chart

The Hang Seng Index declined by 0.25% on Tuesday. Property stocks saw gains, with the Hang Seng Properties Index (HSMPI) rallying 2.10%. News of Sunac China Holdings meeting conditions for a debt restructuring deal drove demand for property stocks.

Alibaba (9988) rallied 2.08%, while Tencent (0700) declined by 0.55%.

Bank stocks also contributed to the losses. HSCB (0005) fell by 0.42%. China Construction Bank (0939) and Industrial and Commercial Bank (1398) ended the session down 0.87% and 1.04%, respectively.

The Nikkei 225

The Nikkei ended the Tuesday session in the red.
Nikkei 221123 Daily Chart

The Nikkei 225 slipped by 0.10% on Tuesday. A weaker USD/JPY weighed, with bets on the Bank of Japan exiting negative rates contributing to the losses.

(Graph for reference purposes only)

Sumitomo Mitsui Financial Group (8316) and Mitsubishi UFJ Financial Group (8306) declined by 1.17% and 1.65%. However, it was a mixed session for the main components of the Nikkei.

Fast Retailing (9983) fell by 0.73%, with Sony Corp (6758) and KIDDI Corp. (9433) declining by 0.27% and 0.39%, respectively.

Tokyo Electron (8035) and Softbank (9984) saw gains of 1.11% and 0.89%.

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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