Hang Seng Index, ASX 200, Nikkei 225 Index: Asian Markets Grapple with Fed Policy and Inflation Figures

Key Insights:

• Asian equities tread uncertain waters; Hang Seng sees more losses on Alibaba news and Sun Hung Kai earnings.
• Eyes on Australia: Economic metrics set to gauge China’s ripple effect across the Asian region.
• US markets gain, but looming CPI reports create an air of unpredictability.

Overview

It was an uncertain start to the week for the Asian equity markets on Monday. The Hang Seng Index reopened after the Friday Black Rain Warning, with another day in the red. It was another day in negative territory for the Nikkei, while the ASX 200 bucked the trend.

Inflation figures from China provided the ASX 200 with support. The producer price index fell at a less marked pace in August, with consumer prices rising by 0.1% year-over-year (July: -0.3%). The producer price index declined by 3.0% year-over-year versus -4.4% in July.

Australian Economy and the ASX 200 in the Spotlight

While investors look for more convincing stimulus plans from Beijing, economic indicators from Australia will draw interest today.

Consumer and business sentiment figures will give investors a view of the effects of China’s economic woes on the Asian region.

Stimulus news from Beijing significantly influences market risk appetite. A convincing stimulus package could mitigate the impact of low consumer and business confidence on the ASX200 and broader Asian markets.

Fed Policy Uncertainty Likely to Test Buyer Appetite

On Monday, the S&P 500 and Dow saw gains of 0.67% and 0.25%, respectively The NASDAQ Composite Index ending the session up 1.14%.

Hopes of the Fed ending its rate hike tightening cycle drove demand for riskier assets.

On Wednesday, the all-important US CPI Report will likely dictate the tone of the September FOMC press conference. Economists forecast a pickup in inflationary pressures, which will test the appetite for riskier assets. However, investors are betting on a September pause before considering a November move.

The markets are calm despite inflation forecasts, with the Fed set to receive another round of economic indicators before the November 1 interest rate decision.

However, a high degree of policy uncertainty beyond September will likely leave the equity markets more sensitive to economic indicators.

ASX 200

The ASX 200 gained 0.50% on Monday. Mining stocks were in recovery, with the big banks also enjoying a positive session.

Fortescue Metals Group (FMG) rose by 1.19%. BHP Group Ltd (BHP) and Rio Tinto (RIO) ended the day with gains of 1.09% and 1.11%, respectively. Newcrest Mining (NCM) trailed the front runners, ending the day up 0.31%.

The big four banks had a positive session. ANZ Group (ANZ) and The National Australia Bank (NAB) saw gains of 1.40%. The Commonwealth Bank of Australia (CBA) and Westpac Banking Corp (WBC) rose by 1.22% and 1.79%, respectively.

Oil stocks also made gains. Woodside Energy Group (WDS) and Santos Ltd (STO) rose by 0.71% and 0.51%, respectively.

Hang Seng Index

The Hang Seng Index declined by 0.58% on Monday.

Alibaba Group Holding Ltd (HK:9988) recovered from heavier losses to end the session down 3.03%. Tencent Holdings Ltd (HK:0700) rose by 0.75%.

Alibaba shares tumbled on news that former CEO Daniel Zhang unexpectedly left his position in the cloud computing unit.

It was also a mixed session for bank stocks. The Industrial and Commercial Bank of China (HK:1398) fell by 0.53%. However, China Construction Bank (HK: 0939) and HSBC Holdings PLC ended the day with gains of 0.47% and 0.61%, respectively.

Sun Hung Kai (HK: 0016) ended the session down 9.46%. Real-estate listed companies suffered as investors responded to Sun Hung Kai’s earnings and weak profits.

Nikkei 225

(For reference purposes only)

On Monday, the Nikkei 225 fell by 0.43%. Bank of Japan monetary policy chatter fueled a weaker USD to JPY exchange rate. BoJ Governor Ueda reportedly spoke on the weekend of ending negative rates when the 2% inflation target is in sight. The markets responded bullishly despite wage growth and household spending moving in the wrong direction.

Bank stocks surged in response to the BoJ comments. Sumitomo Mitsui Financial Group (8316) and Mitsubishi UFJ Financial Group jumped by 5.34% and 4.29%, respectively.

Looking at the main components, it was also a mixed session.

Tokyo Electron Limited (8035) and Fast Retailing Co (9983) fell by 2.98% and 0.47%, respectively. However, SoftBank Group Corp. (9984) surged by 3.86% on Arm IPO updates.

Sony Corp. (6758) and KDDI Corp. (9433) ended the day up by 0.73% and 0.16%, respectively.

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