Hang Seng Index, ASX 200, Nikkei 225: Futures Signal a Positive Monday Open

Highlights

• The Hang Seng Index, ASX 200, and the Nikkei 225 ended the Friday session in negative territory.
• On Thursday, Fed Chair Powell surprised the global markets with a hawkish speech, sending the Asian equity markets into the red on Friday.
• US equity market gains from Friday to set the tone for the Monday Asian session.

Overview of the Friday Session

On Friday, the Hang Seng Index led the ASX 200 and the Nikkei 225 into negative territory.

Fed Chair Powell Fuels Hawkish Fed Bets

On Thursday, Fed Chair Powell surprised the US equity markets, threatening a more restrictive policy environment. The Fed Chair said,

“The Federal Open Market Committee is committed to achieving a stance of monetary policy that is sufficiently restrictive to bring inflation down to 2 percent over time; we are not confident that we have achieved such a stance.”

10-year US Treasury yields surged 2.96% to end the Thursday session at 4.628%.

The US equity markets reacted to the speech. On Thursday, the Nasdaq Composite Index declined by 0.94%. The Dow and S&P 500 ended the session down 0.65% and 0.81%, respectively, setting the tone for the Friday Asian session.

There were no stats from the Friday session to garner investor interest. However, the RBA Statement of Monetary Policy contributed to the losses for the ASX 200. The Statement of Monetary Policy signaled economic uncertainty and the need for a hawkish RBA rate path to bring inflation to target.

The Friday Rebound to Support the Asian Markets

On Friday, the US equity markets reversed losses from Thursday, with the Nasdaq Composite Index rallying 2.05%. The Dow and S&P 500 saw gains of 1.15% and 1.56%, respectively.

10-year US Treasury yields steadied on Friday, with falling crude oil prices supporting the appetite for riskier assets. Despite the rise in oil prices on Friday, crude oil prices ended the week in negative territory, easing fears of oil supply disruption from the Middle East conflict.

Michigan consumer sentiment and inflation expectation figures for November failed to dampen the mood. Consumer sentiment waned while inflation expectations increased, suggesting a weaker consumption outlook.

The US equity market gains from Friday will likely set the tone for the Monday Asian session. There are no economic indicators on the Asian economic calendar to influence market risk appetite during the session.

On Friday, Q3 GDP numbers for Hong Kong beat forecasts after the closing bell. However, the government revised growth for FY 2023 down to 3.2%, which may limit the support for the Hang Seng Index.

However, corporate earnings warrant consideration. Australia and New Zealand Banking Group Ltd. and Mizuho Financial (8411) are among the big names to release results on Monday.

Futures Market Flashes Green

On Monday, the futures markets signaled a positive start to the week. The ASX 200 and the Nikkei were up  24 and 300 points, respectively.

ASX 200

The ASX 200 declined by 0.55% on Friday. The S&P/ASX All Tech Index fell by 0.86% in reaction to the Thursday spike in Treasury yields. The big four banks contributed to the Friday loss, while mining stocks cushioned the downside.

BHP Group Ltd. (BHP) and Rio Tinto Ltd. (RIO) ended the day up 0.71% and 0.25%, respectively. Fortescue Metals Group Ltd. (FMG) gained 1.28%.

The National Australia Bank Ltd. (NAB) slid by 1.66%, with Westpac Banking Corp. (WBC) falling by 1.56%. Australia and New Zealand Banking Group Ltd. and the Commonwealth Bank of Australia (CBA) saw losses of 1.32% and 0.77%. A slowdown in home loan growth weighed on NAB.

Woodside Energy Group Ltd. (WDS) and Santos Ltd. (STO) declined by 2.23% and 1.10%. Falling crude oil prices before the Friday session weighed on oil stocks.

Gold stocks also ended the day in negative territory. Investors responded to falling gold prices. Evolution Mining Ltd. (EVN) and Northern Star Resources Ltd. (NST) fell by 0.27% and 1.85%, respectively. Gold Spot ended the Friday session down 0.94% to $1,940.20.

Hang Seng Index

The Hang Seng Index slid by 1.76% on Friday.

Alibaba (9988) tumbled by 3.10%, with Tencent (0700) falling by 1.30%.

Bank stocks also ended the Friday session in negative territory. HSBC (0005) declined by 0.35%. China Construction Bank (0939) and the Industrial and Commercial Bank (1398) ended the session with losses of 1.12% and 0.81%, respectively.

The Nikkei 225

(Graph for reference purposes only)

The Nikkei 225 fell by 0.24% on Friday.

Sumitomo Mitsui Financial Group (8316) and Mitsubishi UFJ Financial Group (8306) rose by 1.53% and 1.80%. However, it was a mixed Friday for the main components of the Nikkei 225.

Softbank (9984) tumbled 8.17%. A $6.2 billion quarterly loss attributable to WeWork sank Softbank.

Sony Corp (6758) and Fast Retailing (9983) declined by 2.04% and 0.67%, respectively. However, Tokyo Electron (8035) and KIDDI Corp. (9433) bucked the trend, gaining 1.58% and 0.92%, respectively.

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