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

Highlights

• The Year of the Dragon, Yen intervention threats, and the US CPI Report delivered a mixed Wednesday Asian session.
• On Thursday, Fed commentary and US equity market gains from Wednesday will set the tone.
• Economic indicators from Australia and Japan and corporate earnings also need consideration.

Overview of the Wednesday Session

On Wednesday, the ASX 200 and the Nikkei ended the session in negative territory. The Hang Seng Index recovered from early losses, closing the day in positive territory.

The US CPI Report and US equity market session from the Tuesday US session set the tone for the Wednesday Asian session. US inflation numbers reduced bets on Fed interest rate cuts in March and May, impacting buyer demand for riskier assets.

10-year US Treasury yields jumped 3.28% to 4.318%, pressuring the US equity markets. On Tuesday, the Nasdaq Composite Index slid by 1.80%. The Dow and S&P 500 ended the session down 1.35% and 1.37%, respectively.

There were no Asian economic indicators for investors to consider on Wednesday. However, reports of Japan warning against a sharp, speculative-fueled fall in the Yen impacted the USD/JPY and the Nikkei.

However, Hong Kong Financial Secretary Paul Chan incentivized investors, highlighting market trends during the Years of the Dragon. The Financial Secretary also reportedly discussed an improving Chinese economy and the possibility of rate cuts.

The Fed, Asian Economic Indicators, and Earnings

On Thursday, investors must consider overnight FOMC member reactions to the hotter-than-expected US CPI Report.

FOMC member Austan Goolsbee was on the calendar to speak. The Chicago Fed President warned about waiting too long to cut rates, providing post-CPI Report relief. There were no US economic indicators to change the narrative.

However, corporate earnings results also need consideration. Cisco Systems (CSCO) was among the big names to release earnings results on Wednesday.

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

While investors may take their cues from the US session, the Asian economic calendar needs consideration.

Employment numbers from Australia and Q4 GDP numbers for Japan could influence RBA and BoJ monetary policy plans. Beyond the economic calendar, more Japanese Government threats to bolster a weaker Yen and corporate earnings could also move the dial.

Wesfarmers (ASX 200), Telstra Group (ASX 200), and ASX (ASX 200) earnings are among the big names to release earnings.

On Thursday, the ASX 200 and Nikkei futures were up 52 and 330 points, respectively.

ASX 200

The ASX 200 declined by 0.74% on Wednesday. Reaction to the overnight US CPI Report pressured gold, mining, and tech stocks. The S&P ASX All Technology Index (XTX) fell by 0.70%.

BHP Group Ltd (BHP) and Rio Tinto Ltd. (RIO) declined by 0.80% and 0.57%, respectively. Fortescue Metals Group Ltd. (FMG) tumbled by 2.09%.

Gold (XAU/USD) stocks Northern Star Resources Ltd. (NST) and Evolution Mining Ltd. ended the session down 3.31% and 1.32%. The US CPI Report sent gold below the $2,000 handle.

The big four banks joined the broader market in negative territory. Westpac Banking Corp. (WBC) and Commonwealth Bank of Australia (CBA) fell by 1.75% and 1.66%, respectively. ANZ Group Holdings Ltd (ANZ) and National Australia Bank Ltd. (NAB) declined by 1.42% and 1.28%, respectively.

Commonwealth Bank of Australia released earnings results on Wednesday. A cash profits miss and warnings about rising downside risks impacted the big four.

However, oil stocks bucked the trend on rising oil prices from Tuesday. Woodside Energy Group Ltd (WDS) and Santos Ltd (STO) gained 0.16% and 0.14%, respectively.

Hang Seng Index

On Wednesday, the Hang Seng Index gained 0.84%. Real estate and tech stocks contributed to the gains. The Hang Seng Mainland Properties Index (HSMPI) gained by 0.94%. The Hang Seng Tech Index (HSTECH) rallied 2.26%.

Alibaba (9988) and Tencent (0700) ended the day up 2.16% and 0.97%, respectively.

However, bank stocks had a mixed session. HSBC (0005) declined by 0.90%. China Construction Bank (0939) and Industrial Commercial Bank (1398) gained 1.08% and 0.78%, respectively.

The Nikkei 225

(Graph for reference purposes only)

The Nikkei fell by 0.69% on Wednesday.

Bank stocks had a mixed session. Sumitomo Mitsui Financial Group Inc. (8316) gained 0.26%. Mitsubishi UFJ Financial Group Inc. (8306) declined by 0.11%.

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

Softbank Group Corp. (9948) slid by 3.36% as investors locked in Arm Holdings-fueled gains. Sony Group Corp. (6758) and Tokyo Electron Ltd. (8035) declined by 0.51% and 0.56%, respectively. KDDI Corp. (9433) ended the day down 0.33%.

However, Fast Retailing Co. Ltd. bucked the trend, gaining 1.22%.

For upcoming economic events, refer to our economic calendar.