Hang Seng Index, ASX 200, Nikkei 225 Index: Pre-US Jobs Report Caution?

Key Insights:

• Asian equity markets found relief on Thursday, navigating the bond rout’s aftershocks.
• Initial jobless claims set the stage for Friday, hinting at a robust US September Jobs Report.
• Friday morning’s spotlight: Australian retail sales and Japan’s household spending metrics.

Overview of the Thursday Relief Session

On Thursday, the Asian equity markets found respite from the bond rout that battered riskier assets. The Nikkei outperformed the Hang Seng Index and ASX 200, which saw relatively modest gains.

US economic indicators from Wednesday led to a pullback in US Treasury yields, driving demand for riskier assets. Weaker US ADP nonfarm employment and ISM Non-Manufacturing PMI numbers eased bets on further Fed interest rate hikes.

US 10-year Treasury yields hit an early high of 4.884% before responding to the US economic indicators, ending the session at 4.735%.

The US equity markets responded to the US economic indicators and the fall in US Treasury yields. On Wednesday, the S&P 500 and Dow ended the day up 0.81% and 0.39%, with the NASDAQ Composite Index gaining 1.35%.

On Thursday morning, US 10-year Treasury yields climbed again before easing back during the Asian session. The market focus remained on government bond yields. Better-than-expected Australian trade data failed to fuel an extended ASX 200 rally.

The Friday Session: Anticipation for the US Jobs Report

Overnight US initial jobless claims will set the tone early in the Asian session. Initial jobless claims increased from 205k to 207k versus a forecast of 210k. Discounting the disappointing ADP report, the jobless claims figures and JOLTs Job Openings Report suggest a solid US Jobs Report for September.

US 10-year Treasury yields surged to a Thursday high of 4.775% in response to the initial jobless claims before retreating.

The US equity markets ended the Thursday session in negative territory. The Dow slipped by 0.03%, with the NASDAQ Composite and S&P 500 ending the day down 0.12% and 0.13%, respectively. However, the US indexes parred heavier losses on a pullback in US 10-year Treasury yields. The US Jobs Report remained the focal point.

On Friday morning, Australian retail sales and Japanese household spending figures will need consideration. Consumer spending influences demand-driven inflation and monetary policy moves.

Economists forecast household spending across Japan to increase by 0.9% in August. In July, household spending unexpectedly tumbled, enabling the Bank of Japan (BoJ) to maintain an ultra-loose policy outlook.

In the Futures Markets, the ASX 200 was up by 2 points while the Nikkei 225 was flat.

ASX 200

The ASX 200 gained 0.51% on Thursday. The S&P/ASX All Technology Index (XTX) jumped 1.36% on falling US Treasury yields. The big four banks contributed to the gains.

Westpac Banking Corp (WBC) rallied 1.30%, with the Commonwealth Bank of Australia (CBA) gaining 0.91%. ANZ Group (ANZ) and the National Australia Bank (NAB) ended the session up 0.68% and 0.71%, respectively.

However, mining stocks had another mixed session. Rio Tinto (RIO) and BHP Group Ltd (BHP) fell by 1.51% and 0.66%, while Fortescue Metals Group (FMG) ended the day flat. Newcrest Mining (NCM) gained 1.76%.

A pullback in oil prices weighed on energy stocks. Woodside Energy Group (WDS) and Santos Ltd (STO) fell by 0.78% and 0.40%, respectively.

Hang Seng Index

The Hang Seng Index rose by 0.10% on Thursday. A late upswing in US 10-year Treasury yields led to a pullback from a session high.

Alibaba Group Holding Ltd (HK:9988) fell by 0.49%, while Tencent Holdings Ltd (HK:0700) gained 0.74%.

Bank stocks had another mixed session. China Construction Bank (HK:0939) and HSBC Holdings PLC (HK:0005) gained 0.23% and 0.16%. The Industrial and Commercial Bank of China (HK:1398) slipped by 0.28%.

Nikkei 225

(Graph for reference purposes only)

The Nikkei 225 rallied 1.80%, partially reversing a 2.28% tumble from Wednesday.

Bank stocks were on the rise. Sumitomo Mitsui Financial Group (8316) and Mitsubishi UFJ Financial Group ended the day up 3.49% and 4.02%. The main components of the Nikkei also made gains.

Tokyo Electron Limited (8035) rose by 2.04%. KDDI Corp. (9433) and Sony Corp. (6758) gained 1.67% and 1.73%, with Fast Retailing Co (9983) up 1.24%.

SoftBank Group Corp. (9984) saw a modest 0.13% increase.

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