Hang Seng Index, ASX 200, Nikkei 225: Hang Seng Index Eyes 3-Day Winning Streak

Highlights

• On Wednesday, the Hang Seng Index enjoyed a two-day winning streak for the first time since December.
• Stimulus measures from Beijing and hopes of more measures drove demand for Hang Seng-listed stocks and ASX 200 mining stocks.
• On Thursday, US economic indicators and corporate earnings from Wednesday will set the tone for the Asian session.

Overview of the Wednesday Session

On Wednesday, the Hang Seng Index enjoyed a two-day winning streak for the first time since December. The ASX 200 also ended the day in positive territory, while the Nikkei ended the session in negative territory.

Overnight US corporate earnings from Tuesday and gains for the Nasdaq Composite Index and S&P 500 set the tone for the Wednesday Asian session.

Johnson & Johnson (JNJ), Procter & Gamble Company (PG), Verizon Communications Inc. (VZ), General Electric (GE), and Netflix (NFLX) released earnings results. Netflix beat Q4 subscriber estimates, supporting an 8.18% rally in after-hours trading.

Corporate earnings countered an unexpected fall in the Richmond Fed Manufacturing Index.

On Tuesday, the Nasdaq Composite Index and S&P 500 rose by 0.43% and 0.29%, respectively. However, the Dow ended the session down 0.25%.

The Asian economic calendar influenced market risk sentiment.

Australia’s private sector PMI numbers showed a better economic environment in January. The Manufacturing PMI increased from 47.6 to 50.3, and the Services PMI rose from 47.1 to 47.9.

However, numbers from Japan sent mixed signals. The trade balance rose from a ¥780.4 billion deficit to a ¥62.1 billion surplus. Exports increased by 9.8% year-over-year in December, while imports declined by 6.8%. Service sector activity picked up in the New Year. The Jibun Services PMI increased from 51.5 to 52.7, supporting bets on an April Bank of Japan pivot from negative rates.

Away from the economic calendar, stimulus measures from Beijing supported buyer appetite for Hang Seng-listed stocks and Australian mining stocks. On Wednesday, the PBoC stated it would cut the Reserve Requirement Ratio by 0.5 percentage points on February 5.

However, a weaker USD/JPY pressured the Nikkei Index.

US Earnings, China, and the RBA in Focus

On Thursday, overnight US corporate earnings, US private sector PMIs, and the US equity markets will likely influence the Asian session.

Tesla Inc. (TSLA) was among the big names to release earnings results on Wednesday. Tesla reported revenue and earnings misses but record deliveries. The missed revenue and earnings and governance issues left Tesla Inc. down 3.99% in after-hours trading.

US private sector PMIs beat forecasts, with the manufacturing sector returning to expansion. Significantly, the Services PMI unexpectedly increased from 51.4 to 52.9 in January.

On Wednesday, the Nasdaq Composite Index and S&P 500 gained 0.36% and 0.08%, respectively. The Dow declined by 0.26%.

However, the Asian economic calendar also warrants investor consideration. The RBA Bulletin will garner investor interest. The Bulletin could influence sentiment toward the RBA’s interest rate trajectory and the ASX 200. Beyond the economic calendar, BoJ chatter and stimulus updates from Beijing also need consideration.

On Thursday, the ASX 200 futures was up 18 points, while the Nikkei futures was down 20 points.

ASX 200

The ASX 200 gained 0.06% on Wednesday. Gold and mining contributed to the gains. However, bank, oil, and tech stocks limited the upside. On Wednesday. the S&P ASX All Technology Index (XTX) declined by 0.72%.

Gold (XAU/USD) and mining stocks ended the session in positive territory.

Northern Star Resources Ltd. (NST) and Evolution Mining Ltd. increased by 6.04% and 1.96%, respectively. Fortescue Metals Group Ltd. (FMG) rose by 1.21%. BHP Group Ltd (BHP) and Rio Tinto Ltd. (RIO) ended the day up 1.21% and 0.95%, respectively.

However, bank and oil stocks ended the session in negative territory.

Commonwealth Bank of Australia (CBA) and Westpac Banking Corp. (WBC) fell by 0.83% and 0.34%, respectively. ANZ Group Holdings Ltd (ANZ) and National Australia Bank Ltd. (NAB) declined by 0.11% and 0.19%, respectively.

Woodside Energy Group Ltd (WDS) and Santos Ltd (STO) ended the day down 0.39% and 0.52%, respectively.

Hang Seng Index

The Hang Seng Index rallied 3.56% on Wednesday. Real estate and tech contributed to the gains. The Hang Seng Mainland Properties Index (HSMPI) and the Hang Seng Tech Index (HSTECH) ended the day up 3.64% and 4.24%, respectively.

Alibaba (9988) surged 7.32% on news of co-founders Jack Ma and Joe Tsai acquiring over $200 million in shares. Tencent (0700) ended the day up 3.60%.

Bank stocks also ended the session in positive territory. HSBC (0005) gained 1.27%. China Construction Bank (0939) and Industrial Commercial Bank (1398) rallied 3.85% and 3.60%, respectively.

The Nikkei 225

(Graph for reference purposes only)

The Nikkei declined by 0.80% on Wednesday.

Bank stocks ended the session in positive territory. Sumitomo Mitsui Financial Group Inc. (8316) and Mitsubishi UFJ Financial Group Inc. (8306) rallied 4.01% and 5.25%, respectively.

However, the main components of the Nikkei had a mixed session. KDDI Corp. (9433) and Fast Retailing Co. Ltd. (9983) fell by 1.42% and 1.56%, respectively.

Sony Group Corp. (6758) declined by 1.09%, while Softbank Group Corp. (9948) and Tokyo Electron Ltd. (8035) bucked the trend, gaining 0.36% and 0.62%, respectively.

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