Hang Seng Index, ASX 200, Nikkei 225: Futures Flash Green after US Session Gains

Highlights

• On Thursday, the Hang Seng Index ended the day in positive territory, while the ASX extended its losing streak to five sessions.
• Concerns over China and reducing bets on a Fed rate cut continued to impact buyer demand for riskier assets.
• On Friday, Fed speakers from Thursday and the US equity market gains could set the tone ahead of inflation numbers from Japan.

Overview of the Thursday Session

On Thursday, the Hang Seng Index ended the day in positive territory. However, the ASX 200 extended the losing streak to five sessions. The Nikkei also ended the day in negative territory.

Overnight US economic indicators from Wednesday reduced bets on a March Fed rate cut. US retail sales increased by 0.6% in December after rising by 0.3% in November. The better-than-expected numbers pushed 10-year US Treasury yields higher, impacting the US equity markets.

On Wednesday, the Nasdaq Composite Index and S&P 500 declined by 0.59% and 0.56%, respectively. The Dow ended the session down 0.25%.

Economic indicators on Thursday highlighted the uncertainty surrounding the macroeconomic outlook. From Japan, machinery orders slid by 4.9% in November after rising by 0.7% in October. The weaker-than-expected data eased bets on a Bank of Japan pivot from negative rates.

Employment figures from Australia were also disappointing. Full-time employment declined by 106.6k in December after rising by 57k in November.

US Jobless Claims, Fed Speakers, and Japan Inflation in Focus

On Friday, the US equity market session from Thursday could set the tone for the Asian session. Investors ignored hotter-than-expected US economic indicators and an upswing in 10-year US Treasury yields.

US initial jobless claims declined from 203k to 187k, signaling a robust US economy. However, bets on a March Fed rate cut remained relatively steady. According to the CME FedWatch Tool, the probability of a March Fed rate cut increased from 53.8% to 55.7%.

FOMC member Raphael Bostic provided some market relief on Thursday. Bostic spoke about being open to rate cuts sooner than Q3 if inflation drops faster than expected.

The US equity markets responded to the numbers and Fed commentary. On Thursday, the Nasdaq Composite Index rallied 1.35%. The Dow and S&P 500 saw gains of 0.54% and 0.88%, respectively.

On Friday, the Asian economic calendar also needs consideration. Inflation numbers from Japan could influence sentiment toward a BoJ pivot from negative rates. Economists forecast the annual inflation rate to soften from 2.5% to 2.3% in December and core inflation to fall from 2.5% to 2.3%.

Beyond the numbers, investors should monitor stimulus chatter from Beijing, BoJ speeches, and geopolitical news.

On Friday, the ASX 200 and the Nikkei futures were up 72 and 480 points, respectively.

ASX 200

The ASX 200 fell by 0.63% on Thursday. Gold, oil, and tech stocks contributed to the losses. The S&P ASX All Technology Index (XTX) declined by 0.42%. However, bank and mining stocks had mixed sessions.

Gold (XAU/USD) and oil stocks ended the session in negative territory. Northern Star Resources Ltd. (NST) fell by 1.22%. Woodside Energy Group Ltd (WDS) and Santos Ltd (STO) declined by 0.98% and 0.79%, respectively.

Mining stocks had another mixed session. Fortescue Metals Group Ltd. (FMG) and Rio Tinto Ltd. (RIO) saw gains of 1.01% and 0.25%, respectively. However, BHP Group Ltd (BHP) slid by 1.80%. Investors reacted to news of a possible write-down on nickel.

Bank stocks also had a mixed Thursday session. Commonwealth Bank of Australia (CBA) and National Australia Bank Ltd. (NAB) ended the session up 0.13% and 0.46%, respectively. ANZ Group Holdings Ltd (ANZ) rose by 0.08%, while Westpac Banking Corp. (WBC) fell by 0.22%.

Hang Seng Index

The Hang Seng Index gained 0.75% on Thursday, ending a three-day losing streak. Tech and real estate stocks contributed to the gains. The Hang Seng Tech Index (HSTECH) ended the session up 0.51%. The Hang Seng Mainland Properties Index (HSMPI) gained 1.00%.

Alibaba (9988) and Tencent (0700) ended the session up 1.52% and 1.09%, respectively.

Bank stocks also ended the session in positive territory. HSBC (0005) rose by 1.04%. China Construction Bank (0939) and Industrial Commercial Bank (1398) gained 0.69% and 0.56%, respectively.

The Nikkei 225

(Graph for reference purposes only)

The Nikkei slipped by 0.03% on Thursday, giving up earlier gains for the second consecutive session.

Bank stocks had a mixed session. Sumitomo Mitsui Financial Group Inc. (8316) declined by 0.63%, while Mitsubishi UFJ Financial Group Inc. (8306) gained 0.46%.

It was also a mixed session for the main components of the Nikkei. Sony Group Corp. (6758) and Softbank Group Corp. (9948) ended the day down 1.21% and 0.74%. KDDI Corp. (9433) fell by 0.34%.

However, Tokyo Electron Ltd. (8035) and Fast Retailing Co. Ltd. (9983) ended the day up 0.89% and 0.10%, respectively.

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