Hang Seng Index, ASX 200, Nikkei 225 Index: Divergent Fortunes and Market Forecasts

Key Insights:

• Hang Seng & CSI 300 wavered in negative waters; ASX 200 and Nikkei clinched gains on Monday.
• Noteworthy: A Bermudan court’s order rattled investors; China Oceanwide Holdings faces wind-up.
• On the horizon: US equity trends from Monday are likely to define Tuesday’s early trading sentiments.

Overview of the Monday Session

On Monday, the Hang Seng Index joined the CSI 300 in negative territory, while the ASX 200 and the Nikkei made gains.

US economic indicators from Friday failed to support riskier assets despite softer-than-expected US services PMI numbers for September. Losses across the US equity markets from Friday had sent the ASX 200 into the red before an afternoon tech stock rebound propelled the ASX 200 into positive territory on Monday.

The Nikkei benefitted from a USD/JPY breakout.

However, the Hang Seng Index succumbed to a slump in property stocks. News of a Bermudan court ordering real estate developer China Oceanwide Holdings (HK:0715) to wind up spooked investors. On Sunday, China Evergrande Group announced an inability to raise funds through new bond issuances, which set the stage for a choppy Monday session.

China Risk, a US Government Shutdown, and Central Bank Headaches

The US equity markets will set the tone for the Tuesday session. On Monday, the S&P 500 and the Dow saw gains of 0.40% and 0.13%, respectively. The NASDAQ Composite Index rose by 0.45%.

The increasing threat of a US government shutdown, cracks in the US economy, and higher-for-longer Fed policy goals remain headwinds.

A US government shutdown would come at the wrong time for the US economy. US service sector activity slowed to a crawl in September, suggesting the US economy could run out of steam.

This morning, investors should monitor economic reform news from Beijing. However, the renewed threat of a Chinese listed real estate company collapse will test buyer appetite.

Bank of Japan inflation numbers are unlikely to guide the Nikkei, with the Bank of Japan standing firm with negative rates.

Looking at the Futures Markets, the ASX 200 was down 7 points, while the Nikkei was up by 10 points.

ASX 200

The ASX 200 rose by 0.11% on Monday. Notably, the S&P/ASX All Technology Index (XTX) ended a five-day losing streak, rallying 1.19%. However, the big four banks and mining stocks limited the upside for the ASX 200.

Rio Tinto (RIO) and Fortescue Metals Group (FMG) declined by 1.21% and 1.30%, respectively. Newcrest Mining (NCM) and BHP Group Ltd (BHP) slipped by 0.04% and 0.43%, respectively.

ANZ Group (ANZ) and the Commonwealth Bank of Australia (CBA) declined by 0.20% and 0.18%, respectively. The National Australia Bank (NAB) and Westpac Banking Corp (WBC) ended the day with modest losses of 0.07% and 0.09%.

However, oil stocks made further gains. Woodside Energy Group (WDS) and Santos Ltd (STO) ended the day up 0.47% and 0.65%, respectively.

Hang Seng Index

The Hang Seng Index slid by 1.82%, with the Hang Seng Mainland Properties Index (HSMPI) tumbling by 4.24%.

China Evergrande Group (HK:3333) slumped by 21.82%. Country Garden Services (HK:6098) ended the session down 4.31%.

Beyond the property sector, Alibaba Group Holding Ltd (HK:9988) and Tencent Holdings Ltd (HK:0700) slid by 1.80% and 2.93%, respectively.

Bank stocks also struggled. China Construction Bank (HK:0939) and the Industrial and Commercial Bank of China (HK:1398) fell by 1.35% and 1.57%, respectively. HSBC Holdings PLC (HK:0005) declined by 0.57%.

Nikkei 225

(Graph for reference purposes only)

The Nikkei 225 gained 0.85% on Monday.

However, Sumitomo Mitsui Financial Group (8316) and Mitsubishi UFJ Financial Group tumbled by 3.27% and 2.52%, respectively.

The main components of the Nikkei had another mixed session.

Tokyo Electron Limited (8035) and SoftBank Group Corp. (9984) rallied 2.60% and 3.65%, respectively.

Sony Corp. (6758) and KDDI Corp. (9433) also found support, rising by 1.56% and 0.17%, respectively. However, China’s economic woes weighed on Fast Retailing Co (9983), which slipped by 0.06%.

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