Hang Seng Index, ASX 200, Nikkei 225: Friday Gains Expected – Key Takeaways

Highlights

• The Hang Seng Index, Nikkei, and ASX 200 enjoyed a positive Thursday session.
• US equity market gains from Wednesday drove demand for riskier assets during the Asian session.
• On Friday, overnight US economic data from Thursday will set the tone.

Overview of the Thursday Session

The Hang Seng Index and ASX 200 ended Thursday in positive territory. However, the Nikkei led the way.

Less hawkish Fed commentary raised bets on an H1 2024 Fed rate cut. Chicago Fed President Austan Goolsbee warned the Fed should not push back plans to cut interest rates. There were no US economic indicators to influence market risk sentiment.

10-year US Treasury yields fell by 1.37%, closing the session at 4.259%. The US equity markets also responded to the less hawkish Fed commentary. On Wednesday, the Nasdaq Composite Index and S&P 500 gained of 1.30% and 0.96%, respectively. The Dow ended the session up 0.40%.

Economic indicators from Australia and Japan failed to spook investors. Weaker-than-expected data eased bets on hawkish RBA and BoJ policy moves, supporting the appetite for ASX 200 and Nikkei-listed stocks.

The Japanese economy contracted for the second successive quarter, reducing bets on a Bank of Japan pivot from negative rates. Notably, the Nikkei moved closer to its December 1989 all-time high.

Weaker-than-expected labor market data from Australia could enable the RBA to begin discussions about cutting interest rates.

US Data, Fed Speakers, and Earnings in Focus

On Friday, overnight US economic indicators from Thursday need consideration. US retail sales and jobless claims figures influenced bets on an H1 2014 Fed interest rate cut. Retail sales declined by 0.8% in January, while initial jobless claims fell from 220k to 212k.

10-year US Treasury yields declined by 0.54% to 4.236%. The US equity markets also responded to the softer-than-expected US retail sales figures. On Thursday, the Nasdaq Composite Index gained 0.30%. The Dow and S&P 500 ended the session up 0.91% and 0.58%, respectively.

While the Thursday US session may set the tone, the Asian earnings calendar and central bank chatter also need consideration. The markets also need to monitor the USD/JPY, with intervention threats likely to impact the Nikkei.

Sands China (HK: 1928) will release earnings results and could impact market risk sentiment. Casino earnings are a barometer of the Chinese economy.

On Friday, the ASX 200 and Nikkei futures were up 72 and 430 points, respectively.

ASX 200

The ASX 200 gained 0.64% on Thursday. Tech stocks and the big four banks contributed to the gains. The S&P ASX All Technology Index (XTX) rallied 3.08%.

ANZ Group Holdings Ltd (ANZ) rallied 1.47%. Westpac Banking Corp. (WBC) and National Australia Bank Ltd. (NAB) gained 1.04% and 1.05%, respectively. Commonwealth Bank of Australia (CBA) rose by 0.05%.

Corporate earnings also fueled demand for ASX-listed stocks. Wesfarmers gained 5% on an earnings beat. However, gold (XAU/USD), mining, and oil stocks limited the upside.

BHP Group Ltd (BHP) slid by 1.70% as investors reacted to warnings of over $10 billion in writedowns because of nickel prices. Rio Tinto Ltd. (RIO) ended the session down 0.68%. However, Fortescue Metals Group Ltd. (FMG) gained 1.41%.

Gold stocks Northern Star Resources Ltd. (NST) and Evolution Mining Ltd. declined by 0.78% and 0.13%, respectively. Oil stocks Woodside Energy Group Ltd (WDS) and Santos Ltd (STO) fell by 3.01% and 0.81%, respectively.

Hang Seng Index

On Thursday, the Hang Seng Index ended the day up 0.41%. Real estate and tech stocks had a mixed session. The Hang Seng Mainland Properties Index (HSMPI) declined by 0.53%. However, the Hang Seng Tech Index (HSTECH) gained 0.79%.

Alibaba (9988) rose by 0.71%, while Tencent (0700) declined by 1.59%.

Bank stocks had a positive session. HSBC (0005) ended the day up 0.90%. China Construction Bank (0939) and Industrial Commercial Bank (1398) saw gains of 0.64% and 0.78%, respectively.

The Nikkei 225

(Graph for reference purposes only)

The Nikkei rallied 1.21% on Thursday.

Bank stocks had another mixed session. Sumitomo Mitsui Financial Group Inc. (8316) ended the day up 0.88%. Mitsubishi UFJ Financial Group Inc. (8306) fell by 0.35%.

The main components of the Nikkei also had another mixed session.

Softbank Group Corp. (9948) and Tokyo Electron Ltd. (8035) rallied 3.59% and 5.01%, respectively, on a tech stock breakout. Fast Retailing Co. Ltd. ended the day up 2.41%.

However, Sony Group Corp. (6758) slid by 6.48% on a cut to PlayStation 5 sales forecasts, with KDDI Corp. (9433) falling by 0.49%.

For upcoming economic events, refer to our economic calendar.