Hang Seng Index, ASX 200, Nikkei 225: Futures Flash Green on US Market Rally

Highlights

• The Hang Seng Index and ASX 200 ended the Monday session with losses, while the Japanese markets were closed for Respect the Aged Day.
• Concerns about the Chinese economy impacted the appetite for riskier assets.
• On Tuesday, economic indicators from Japan and Australia could influence sentiment toward BoJ and RBA monetary policy goals.

Overview of the Monday Session

On Monday, the Hang Seng Index and ASX 200 ended the session in negative territory on China’s economic woes. The Japanese markets were closed for Respect the Aged Day.

US economic indicators from Friday set the tone for the Monday Asian session. The US Jobs Report reflected a tighter labor market. Wages accelerating and the unemployment rate remaining steady.

The ISM Services PMI offered modest relief for the US equity markets. Softer Price and Employment Index numbers eased fears of a more hawkish rate path projection.

On Friday, the Nasdaq Composite Index and the Dow rose by 0.09% and 0.07%, respectively. The S&P 500 gained 0.18%. 10-year US Treasury yields climbed 1.22% to 4.050%. However, the ISM Services PMI and sub-components led to a late pullback from a session high of $4.101%.

There were no Asian economic indicators to influence investor risk appetite on Monday. The lack of stats left investors to fret about the Chinese economy, impacting riskier assets.

US Consumer Inflation Expectations and Fed Chatter

On Tuesday, overnight US economic indicators from Monday could influence the Asian equity markets. US Consumer Inflation Expectation figures for December drove demand for riskier assets. US Consumer Expectations fell from 3.4% to 3.0% in December. Economists forecast a decline to 3.3%.

Fed chatter failed to distract investors. FOMC voting member Raphael Bostic reportedly favored a higher-for-longer rate path. The comments contrasted with the market bets on a Q1 Fed rate cut.

The US equity markets reacted to the inflation numbers. On Monday, the Nasdaq Composite Index and S&P 500 rallied 2.20% and 1.41%, respectively. The Dow gained 0.58%. 10-year US Treasury yields declined by 0.44%, ending the session at 4.032%.

The US equity market gains will set the tone for the Tuesday Asian session. However, the Asian economic calendar will draw investor interest on Tuesday.

For the ASX, Australian retail sales figures could influence sentiment toward RBA monetary policy goals. A jump in consumer spending could force the RBA to leave rates higher for longer. For the Nikkei, household spending and inflation numbers from Japan could influence bets on a BoJ pivot from negative rates.

In the futures markets, the ASX 200 were up 82 and 180 points respectively.

ASX 200

The ASX 200 declined by 0.50% on Monday. Tech, oil, mining, and gold stocks dragged the index into negative territory. The S&P ASX All Technology Index (XTX) declined by 0.75%.

Oil and gold (XAU/USD) stocks started the week in negative territory: Woodside Energy Group Ltd (WDS) and Santos Ltd (STO) fell by 0.35% and 0.65%, respectively. Evolution Mining Ltd. (EVN) and Northern Star Resources Ltd. (NST) ended the day down 0.26% and 0.93%, respectively.

Mining stocks continued to fall on concerns about the Chinese economy. Fortescue Metals Group Ltd. (FMG) fell by 1.56%. BHP Group Ltd (BHP) and Rio Tinto Ltd. (RIO) declined by 0.84% and 0.63%, respectively.

However, the big four banks had a mixed start to the week.

Commonwealth Bank of Australia (CBA) and National Australia Bank Ltd. (NAB) fell by 0.89% and 0.16%, respectively. Westpac Banking Corp. (WBC) and ANZ Group Holdings Ltd (ANZ) ended the day up 0.09% and 0.16%, respectively.

Hang Seng Index

The Hang Seng Index slid by 1.88% on Monday. The Hang Seng Tech Index (HSTECH) tumbled by 2.99%. Property stocks also saw heavy losses. The Hang Seng Mainland Properties Index (HSMPI) slid by 2.21%.

Alibaba (9988) and Tencent (0700) saw losses of 1.19% and 0.82%, respectively.

Bank stocks had another mixed session. HSBC (0005) gained 0.72%. However, China Construction Bank (0939) and Industrial Commercial Bank (1398) declined by 1.53% and 2.13%, respectively.

The Nikkei 225

(Graph for reference purposes only)

On Monday, the Japanese markets were closed for Respect the Aged Day.

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