Hang Seng Index, ASX 200, Nikkei 225 Index: A Three-Day Streak, Yet Eyes Set on Powell’s Speech

Key Insights:

• Hang Seng Index shined on Thursday, leading both ASX 200 and Nikkei into a robust three-day winning streak.
• Japan’s inflation data puts the Bank of Japan on alert.
• Futures point towards a bearish outset for Asian markets as investors focus on the Fed Chair Powell speech.

Thursday Overview

The Hang Seng Index led the ASX 200 and Nikkei on Thursday, with a three-day winning streak.

Investors responded to the overnight (NVDA) earnings release, tracking the US equity markets into positive territory. Tech stocks were among the front runners on Thursday, with firms linked with chips and AI finding increased investor interest.

Market sentiment toward Fed monetary policy contributed to the session gains. Weaker-than-expected US private sector PMI numbers eased the market fear of hawkish Fed commentary from the Jackson Hole Symposium.

The NASDAQ responded to the economic calendar and earnings results, rallying by 1.59%. The S&P 500 and the Dow ended the day up 1.10% and 0.54%, respectively.

There were no economic indicators from Australia or Japan to influence. However, trade data from HK Kong drew interest late in the Thursday session.

The trade deficit narrowed from HK$56.6 billion to HK$30.0 billion In July. Exports fell by 9.1% (June: -11.4%), with imports declining by 7.9% (June: -12.3%). Economists forecast exports and imports to fall by -13.6% and 8.2%, respectively.

Japan Inflation and the Fed Chair Powell Speech in Focus

This morning, inflation figures from Japan could force the Bank of Japan to move away from ultra-loose. Economists forecast the core annual inflation rate to soften from 3.0% to 2.9% in August.

However, investors need to consider the Fed Chair Powell speech later in the day. While US economic indicators from Wednesday eased bets on a September Fed rate hike, US wage growth and a tight labor market remain challenges for the Fed to bring inflation to target.

Overnight US jobless claims and core durable goods orders influenced investor appetite. Initial jobless claims fell from 240k to 230k, affirming tight labor market conditions, with core durable goods orders rising by 0.5%. Economists forecast jobless claims to hold at 240k and for core durable goods orders to increase by 0.2%.

Tight labor market conditions and wage growth remain a bugbear for the Fed. Considering elevated inflation levels and labor market conditions, investor angst about the heavily anticipated Fed Chair Powell speech sent the US equity markets into the red.

The S&P 500 and the Dow saw losses of 1.35% and 1.08%, respectively, with the NASDAQ sliding by 1.87%. For the Asian session, the futures market signals a bearish start to the day, with the Asian markets likely to track their US peers.

ASX 200

The ASX 200 tracked the US equity markets on Thursday, gaining 0.47%, with the big four banks on the move.

On Thursday, Westpac Banking Corp (WBC) and The National Australia Bank (NAB) led the way, gaining 1.37% and 1.25%, respectively. ANZ Group (ANZ) and The Commonwealth Bank of Australia (CBA) rose by 0.45% and 1.17%, respectively.

However, mining stocks had a mixed session. Rio Tinto (RIO) and Fortescue Metals Group (FMG) ended the day up 0.92% and 0.19%, respectively. Newcrest Mining (NCM) gained 1.79%. However, BHP Group Ltd (BHP) continued to struggle after the profit miss and smaller dividend payout, falling by 0.57%.

Oil stocks made gains despite the retreat in crude oil prices. Woodside Energy Group (WDS) and Santos Ltd (STO) rose by 1.54% and 1.03%, respectively.

Hang Seng Index

The Hang Seng Index enjoyed a breakout session, rallying 2.05% on Thursday.

The main Index components contributed to the HSI gains. Alibaba Group Holding Ltd (HK:9988) and Tencent Holdings Ltd (HK:0700) ended the day up 2.58% and 2.26%, respectively. Investors responded to easing bets on the Fed lifting interest rates higher.

Bank stocks also had a positive session on the upbeat sentiment. HSBC Holdings PLC and The Industrial and Commercial Bank of China (HK:1398) saw gains of 0.77% and 0.88%, respectively. China Construction Bank (HK: 0939) rose by 0.49%.

Nikkei 225

(For reference purposes only)

The Nikkei 225 gained 0.87%. A stronger USD/JPY contributed to the positive session.

Banks ended the day in positive territory. Sumitomo Mitsui Financial Group (8316) and Mitsubishi UFJ Financial Group rose by 0.28% and 1.06%, respectively.

Eying the main components, Tokyo Electron Limited (8035) and SoftBank Group Corp. (9984) responded to the NVDA earnings, with gains of 3.25% and 2.68%, respectively.

Fast Retailing Co (9983) and KDDI Corp. (9433) rose by 1.02% and 1.55%, respectively, while Sony Corp. (6758) slipped by 0.29%.

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