Hang Seng Index, ASX 200, Nikkei 225: Netflix Earnings and the Japanese Economy

Highlights

• On Tuesday, the Hang Seng Index recouped losses from Monday, with the ASX 200 in tow, while the Nikkei ended the session in negative territory.
• News reports of Beijing planning to roll out fresh stimulus measures drove demand for Hang Seng-listed stocks.
• On Wednesday, preliminary trade data from Japan and private sector PMIs for January warrant investor consideration.

Overview of the Tuesday Session

On Tuesday, the Hang Seng Index recouped losses from Monday, with the ASX 200 in tow. However, the Nikkei bucked the broader market trend, ending the session in negative territory.

Overnight US economic indicators from Monday and a positive session for the US equity markets set the tone for the Tuesday Asian session.

The US CB Leading Index declined by 0.1% in December after falling by 0.5% in November. A weaker manufacturing sector, waning consumer confidence, and the interest rate environment influenced. Economists forecast the Index to fall by 0.3%.

Investors responded favorably to the better-than-expected numbers. On Monday, the Dow ended the session up 0.36%. The Nasdaq Composite Index and S&P 500 saw gains of 0.32% and 0.22%, respectively.

The Asian economic calendar and stimulus chatter from Beijing also influenced the session. A pickup in Australian business confidence contributed to gains for the ASX 200. The NAB Business Confidence Index increased from -8 to -1 in January. Economists forecast the Index to rise to -7.

Reports of Beijing planning to roll out fresh stimulus measures drove buyer demand for Hang Seng-list stocks. Bloomberg reported that Chinese authorities are weighing options to support the stock market. Regulators also reversed course on plans to regulate the video game space, contributing to the gains.

However, the Bank of Japan left interest rates in negative territory and cited concerns about the economic outlook. BoJ concerns about the economic outlook likely pressured the Nikkei, which gave up gains stemming from the monetary policy decision.

US Earnings, China, Private Sector PMIs, and Trade Data

On Wednesday, the US earnings calendar and the US equity markets trends from Tuesday will likely set the tone for the Asians session.

Johnson & Johnson (JNJ), Procter & Gamble Company (PG), Verizon Communications Inc. (VZ), General Electric (GE), and Netflix (NFLX) were among the big names releasing earnings results. Significantly, Netflix beat Q4 subscriber estimates, supporting an 8.18% rally in after-hours trading.

US economic indicators played second fiddle to the corporate earnings calendar.

On Tuesday, the Nasdaq Composite Index and the S&P 500 rose by 0.43% and 0.29%, respectively. The Dow declined by 0.25%.

On Wednesday, investors must also consider the Asian economic calendar. Preliminary private sector PMIs from Australia signaled a marginally improving macroeconomic environment. The Judo Bank Manufacturing PMI increased from 47.6 to 50.3, with the Services PMI up from 47.1 to 47.9 in January.

Later in the session, trade data and private sector PMIs from Japan also warrant investor attention. Improving trade terms would drive the appetite for export-related stocks. Better-than-expected PMI numbers could also influence market risk sentiment. Economists forecast Japanese exports to increase by 9.1% year-over-year in December after declining by 0.2% in November.

However, economists expect the Jibun Bank Services PMI to fall from 51.5 to 51.0 in January. Economists predict the Jibun Bank Manufacturing PMI to increase from 47.9 to 48.2.

Beyond the numbers, further details on stimulus plans from Beijing also need consideration.

On Wednesday, the ASX 200 futures was up 13 points, while the Nikkei futures was down 70 points.

ASX 200

The ASX 200 gained 0.51% on Tuesday. Tech, mining, and bank stocks contributed to the gains. On Tuesday. the S&P ASX All Technology Index (XTX) rose by 0.69%.

Bank stocks had a positive session. Westpac Banking Corp. (WBC) and National Australia Bank Ltd. (NAB) rose by 0.81% and 0.95%, respectively. ANZ Group Holdings Ltd (ANZ) and Commonwealth Bank of Australia (CBA) ended the day up 0.45% and 0.75%, respectively.

Mining stocks had a mixed session. Fortescue Metals Group Ltd. (FMG) and BHP Group Ltd (BHP) rose by 0.79% and 0.98%, respectively. Rio Tinto Ltd. (RIO) declined by 0.18%.

However, Gold (XAU/USD) and oil stocks limited the gains. Northern Star Resources Ltd. (NST) and Evolution Mining Ltd. fell by 1.95% and 2.24%, respectively. Woodside Energy Group Ltd (WDS) and Santos Ltd (STO) declined by 0.16% and 0.13%, respectively.

Hang Seng Index

The Hang Seng Index rallied 2.63% on Tuesday. Tech and property stocks rebounded on stimulus chatter. The Hang Seng Mainland Properties Index (HSMPI) and the Hang Seng Tech Index (HSTECH) saw gains of 5.08% and 3.70%, respectively.

Alibaba (9988) and Tencent (0700) ended the day up 3.36% and 3.74%, respectively.

Bank stocks also ended the session with gains. HSBC (0005) rose by 1.20%. China Construction Bank (0939) and Industrial Commercial Bank (1398) ended the day up 2.08% and 1.98%, respectively.

The Nikkei 225

(Graph for reference purposes only)

The Nikkei slipped by 0.08% on Tuesday.

Bank stocks ended the session in positive territory. Sumitomo Mitsui Financial Group Inc. (8316) and Mitsubishi UFJ Financial Group Inc. (8306) rose by 0.49% and 0.54%, respectively.

However, it was a mixed session for the main components of the Nikkei. Tokyo Electron Ltd. (8035) and KDDI Corp. (9433) slid by 1.74% and 1.56%, respectively. Softbank Group Corp. (9948) and Sony Group Corp. (6758) fell by 0.31% and 0.71%, respectively.

Fast Retailing Co. Ltd. (9983) bucked the trend, gaining 0.25% on reports of Beijing planning stimulus measures.

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