Hang Seng Index, ASX 200, Nikkei 225: From Central Banks to Macroeconomics

Highlights

• On Wednesday, the Hang Seng Index led the Nikkei 225 and the ASX 200 into positive territory.
• US inflation figures and China/PBoC central bank moves fueled a Hang Seng Index rally.
• On Thursday, modest overnight gains from the US signal caution, with economic indicators from Japan and Australia in focus.

Overview of the Wednesday Session

On Wednesday, the Hang Seng Index led the ASX 200 and the Nikkei 225 into positive territory.

US CPI Report-Fueled Rally

US overnight economic indicators from Tuesday set the tone for the Wednesday Asian session. Softer-than-expected US consumer price inflation figures raised bets on the Fed ending its rate hike cycle.

On Tuesday, the rate-sensitive tech stocks sent the Nasdaq Composite Index rallied 2.37%. The Dow and S&P 500 ended the day up 1.43% and 1.91%, respectively. 10-year US Treasury yields responded to the numbers, sliding by 4.11% to end the session at 4.451%, the lowest close since September 22, 2023.

From the Asian economic calendar, economic indicators from Japan failed to spook investors. A more marked economic contraction than expected fueled bets on the Bank of Japan keeping monetary policy ultra-loose.

However, economic indicators from China supported the appetite for riskier assets. Better-than-expected retail sales and industrial production numbers suggested Beijing stimulus measures were taking effect.

US Retail Sales Support Bets on a Soft Landing

On Wednesday, the US equity markets had a positive session. US retail sales and producer prices supported the appetite for riskier assets. US retail sales fell less than expected while producer prices signaled easing demand-driven inflationary pressures.

The Fed ending its rate hike cycle amid falling inflationary pressures increases the chance of an H1 2024 Fed rate cut.

On Wednesday, the Nasdaq Composite Index and S&P 500 rose by 0.07% and 0.16%, with the Dow gaining 0.47%. An upswing in 10-year US Treasury yields capped the upside. Yields increased by 1.84% to 4.533%.

The modest US equity market gains may set a cautious tone for the Asian session. However, the Asian economic calendar warrants consideration.

This morning, machinery orders from Japan beat forecasts, suggesting a possibly improving demand environment. However, trade data sent mixed signals. Exports rose at a more modest pace, while import declined at a less marked rate.

For the ASX 200, Australian employment figures could influence sentiment toward RBA monetary policy.

Futures Market Signal a Cautious Thursday

The futures markets signaled a negative start to the Thursday session. The ASX 200 and the Nikkei were down 9 and 60 points, respectively.

ASX 200

The ASX 200 rose by 1.42% on Wednesday. Tech rallied on the overnight slide in yields. The S&P/ASX All Tech Index gained 1.92%. Mining stocks contributed to the gains.

BHP Group Ltd. (BHP) and Rio Tinto Ltd. (RIO) rallied 1.78% and 2.55%. Fortescue Metals Group Ltd. (FMG) jumped 3.45%. Gold stocks outmuscled mining stocks. Evolution Mining Ltd. (EVN) and Northern Star Resources Ltd. (NST) ended the session with gains of 4.42% and 4.24%.

Bank stocks had a mixed session. Australia and New Zealand Banking Group Ltd. (ANZ) gained 1.01%. Westpac Banking Corp. (WBC) and National Australia Bank Ltd. (NAB) rose by 0.67% and 0.39%, while the Commonwealth Bank of Australia (CBA) fell by 0.13%.

However, oil stocks had a negative session. Woodside Energy Group Ltd. (WDS) and Santos Ltd. (STO) declined by 0.71% and 1.10%.

Hang Seng Index

The Hang Seng Index rallied 3.92% on Wednesday. Hopes of improved US-China relations and central bank policy moves contributed to the session gains.

Alibaba (9988) and Tencent (0700) surged 5.05% and 4.81%, respectively.

Bank stocks climbed higher. HSBC (0005) rose by 2.66%. China Construction Bank (0939) and the Industrial and Commercial Bank (1398) ended the day up 3.12% and 3.21%, respectively.

The Nikkei 225

(Graph for reference purposes only)

The Nikkei 225 ended Wednesday up 2.52%.

Sumitomo Mitsui Financial Group (8316) and Mitsubishi UFJ Financial Group (8306) declined by 0.06% and 1.95%. However, it was a mixed session for the main components of the Nikkei 225.

Sony Corp (6758) and Softbank (9984) rallied 5.00% and 5.19%, respectively. Tokyo Electron (8035) and Fast Retailing (9983) gained 3.81% and 3.56%. KIDDI Corp. (9433) bucked the trend, falling 0.32%.

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