Hang Seng Index, ASX 200, Nikkei 225 Index: FOMC Speeches and Middle East Updates

Key Insights:

• Nikkei outperformed, leading the Hang Seng Index and ASX 200 in positive Tuesday trades.
• IMF Economic Outlook Report and FOMC speeches to set the market tone on Wednesday.
• Middle East and China realty news also needs consideration.

Overview of the Tuesday Session

On Tuesday, the Asian markets enjoyed a positive session. The Nikkei outperformed the Hang Seng Index and ASX 200.

FOMC member commentary from Monday fueled demand for riskier assets. FOMC voting members Lorie Logan and Philip Jefferson favored leaving interest rates unchanged. The probability of the Fed ending its rate hike cycle increased, supporting the appetite for riskier assets.

The US equity markets responded to the dovish forward guidance. On Monday, the S&P 500 and Dow rose by 0.63% and 0.59%, respectively. The Nasdaq Composite gained 0.39%.

Easing fear of a more widespread Middle East conflict added to the appetite for riskier assets. News of a blockade of the Gaza Strip raised hopes of a swift end to the Middle East conflict. A quick end to the conflict would likely reduce the chances of other Middle Eastern nations escalating the conflict.

Better-than-expected Australian business and consumer confidence numbers contributed to the gains for the ASX 200. However, real estate woes continued to peg back the Hang Seng Index.

The Wednesday Session: Middle East, the IMF, and the Fed

The IMF Global Economic Outlook Report, FOMC member speeches, and news updates from the Middle East will set the tone.

FOMC members Raphael Bostic and Neel Kashkari delivered speeches on Tuesday. FOMC members avoided spooking the markets, supporting an ending to the Fed monetary policy tightening cycle.

From overnight on Tuesday, the US equity markets will likely influence investor sentiment early in the session. The Nasdaq Composite Index rose by 0.58%, with the Dow and S&P 500 ending the day up 0.40% and 0.52%, respectively.

On Wednesday, news updates from the Middle East conflict and China real estate-related news will influence investor risk sentiment. However, the IMF Global Economic Outlook Report may also impact market risk appetite after revised growth figures for China.

In the Futures Markets, the ASX 200 was up by 30 points and the Nikkei 225 by 50 points. This morning, the Reuters Tankan Index from Japan remained unchanged at 4 vs. a forecasted 2. The Reuters Tankan covers 200 manufacturers and 200 non-manufacturers who score business indications for the Bank of Japan.

ASX 200

The ASX 200 gained 1.01% on Tuesday. Risk-on sentiment fueled demand for tech stocks, with the S&P/ASX All Technology Index (XTX) rallying 2.28%.

Oil stocks Woodside Energy Group (WDS) and Santos Ltd (STO) rose by 1.28% and 0.52%, respectively.

However, the broader mining sector had a mixed session, while the big four banks enjoyed solid gains.

Rio Tinto (RIO) declined by 0.88%, with Newcrest Mining (NCM) falling by 0.74% on retreating gold prices. BHP Group Ltd (BHP) and Fortescue Metals Group (FMG) ended the session up 0.27% and 0.77%.

The Commonwealth Bank of Australia (CBA) and the National Australia Bank (NAB) rose by 0.67% and 0.66%. ANZ Group (ANZ) and Westpac Banking Corp (WBC) saw gains of 0.55% and 0.28%.

Hang Seng Index

The Hang Seng Index gained 0.84% on Tuesday. However, the Hang Seng Mainland Properties Index (HSMPI) stumbled for a second session, falling 0.86%. Reports of a possible Country Garden Holdings (HK:2007) default on debt obligations weighed on the sector. A default would likely adversely affect the Chinese economy and the appetite for riskier assets.

Alibaba Group Holding Ltd (HK:9988) and Tencent Holdings Ltd (HK:0700) gained 1.58% and 0.39%.

Bank stocks had another positive session. China Construction Bank (HK:0939) and the Industrial and Commercial Bank of China (HK:1398) ended the day up 0.92% and 0.82%, respectively. HSBC Holdings PLC (HK:0005) rose by 0.32%.

Nikkei 225

(Graph for reference purposes only)

The Nikkei rallied 2.43% on Tuesday. Easing bets on further Fed rate hikes fueling a breakout session.

Bank stocks were on the rise. Sumitomo Mitsui Financial Group (8316) and Mitsubishi UFJ Financial Group gained 2.47% and 1.69%. The main components of the Nikkei also made gains.

Fast Retailing Co (9983) rallied 3.58%, with Tokyo Electron Limited (8035) and SoftBank Group Corp. (9984) rising by 3.40% and 3.47%.

Sony Corp. (6758) and KDDI Corp. (9433) ended the day up 2.81% and 1.74%, respectively.

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