Hang Seng Index, ASX 200, Nikkei 225 Index: Middle East and Central Banks in Focus

Key Insights:

• ASX 200 gained despite Middle East conflict concerns, driven by surging crude oil and gold prices.
• Monday saw light trading; Japan closed for National Sports Day, and Typhoon Koinu halted Hong Kong’s morning session.
• The Tuesday session hinges on updates from the Middle East, Australian economic indicators, and central bank speeches.

Overview of the Monday Session

On Monday, trading volumes were light. The Japanese markets closed for National Sports Day, while Typhoon Koinu shuttered the Hong Kong markets for the morning session.

Recapping last week, US labor market data from Friday and a positive Friday session for the US equity markets offered support. Softer-than-expected US wage growth numbers and a steady US unemployment rate eased fear of a more hawkish Fed rate path.

The US equity markets responded to the US Jobs Report and a late pullback in 10-year US Treasury yields. On Friday, the S&P 500 and Dow gained 1.18% and 0.87%, respectively. The NASDAQ Composite rallied 1.60%.

The ASX 200 ended the day with modest gains. Risk aversion stemming from the Middle East conflict failed to send the ASX 200 into negative territory despite losses across the US futures. A surge in crude oil prices and a flight to safety drove demand for oil and gold stocks.

The Hang Seng Index also made modest gains, with easing Fed rate hike bets providing support.

However, there were no economic indicators from the Asian region to influence market risk sentiment.

The Tuesday Session: Middle East, Consumer Sentiment, and the Fed

The Japanese market reopens on Tuesday. Investors will likely respond to news updates on the conflict in the Middle East.

From overnight, the US equity markets will set the tone. The NASDAQ Composite Index rose by 0.39%, with the Dow and S&P 500 seeing gains of 0.59% and 0.63%, respectively.

Dovish FOMC member speeches offset the impact of rising geopolitical tensions, supporting the buyer appetite for riskier assets. FOMC members Philip Jefferson and Lorie Logan leaned against more Fed rate hikes.

On Tuesday, Australian economic indicators need consideration. Business and consumer confidence will be in the spotlight. A pickup in business and consumer confidence would ease fears of a pullback in investments and consumption and support the demand for ASX 200-listed stocks.

However, real estate news from China and news updates from the Middle East will likely impact the Asian markets more than the economic indicators.

In the Futures Markets, the ASX 200 was up by 38 points and the Nikkei 225 by 250 points.

ASX 200

The ASX 200 rose by 0.23% on Monday. Risk aversion weighed on tech stocks, with the S&P/ASX All Technology Index (XTX) falling 0.21%. However, energy and gold stocks enjoyed positive sessions.

Oil stocks Woodside Energy Group (WDS) and Santos Ltd (STO) rallied 3.07% and 4.22%, respectively. Newcrest Mining (NCM) gained 4.74% on the jump in gold prices.

However, the broader mining sector and the big four banks had a mixed start to the week.

Rio Tinto (RIO) and BHP Group Ltd (BHP) rose by 0.01% and 0.14%, while Fortescue Metals Group (FMG) declined by 1.85%.

ANZ Group (ANZ) gained 0.43%, with the National Australia Bank (NAB) ending the day up 0.07%. However, Westpac Banking Corp (WBC) and the Commonwealth Bank of Australia (CBA) saw losses of 0.09% and 0.01%.

Hang Seng Index

The Hang Seng Index gained 0.18% on Monday. However, the Hang Seng Mainland Properties Index (HSMPI) weighed on the HSI, falling 1.70%.

Alibaba Group Holding Ltd (HK:9988) declined by 0.97%, while Tencent Holdings Ltd (HK:0700) gained 0.59%.

Bank stocks had a mixed session. China Construction Bank (HK:0939) and the Industrial and Commercial Bank of China (HK:1398) rose by 0.23% and 0.55%, respectively. HSBC Holdings PLC (HK:0005) ended the session down 0.08%.

CNOOC Limited (HK: 0883) rallied 2.29% on rising crude oil prices.

Nikkei 225

(Graph for reference purposes only)

The Japanese markets were closed for the National Sports Day holiday.

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