Hang Seng Index, ASX 200, Nikkei 225: The ASX 200 and Corporate Earnings in Focus

Highlights

• The Hang Seng Index closed out a shortened Friday session in negative territory, while the Nikkei moved higher.
• On Monday, US corporate earnings and the US equity market session from Friday will set the tone.
• Central bank commentary and corporate earnings need consideration.

Overview of the Friday Session

On Friday, the Hang Seng Index ended a shortened session in negative territory. Significantly, the Hang Seng Index extended its losing streak to three sessions. However, the Nikkei moved higher, with the ASX 200 ending the day in positive territory.

Overnight US economic indicators and Fed speeches from Thursday reduced bets on a March Fed rate cut. US initial jobless claims slipped from 227k to 218k in the week ending February 3.

FOMC Thomas Barkin reiterated his comments from Wednesday, calling for patience toward inflation and interest rate cuts.

However, corporate earnings contributed to gains across the US equity markets. Warner Music Group Corp. (WMG), Ralph Lauren Corp. (RL), and Thomson Reuters Co. (TRI) were among the big names to release earnings.

On Thursday, the Dow ended the day up 0.13%. The Nasdaq Composite Index and S&P 500 rose by 0.24% and 0.04%, respectively.

While the numbers set the tone, China, the RBA, and the Bank of Japan also needed consideration.

A continued lack of a meaningful fiscal stimulus package pressured the Hang Seng Index. Investors continued to take money off the table despite efforts to support the equity markets. Recent inflation numbers from China reflected a weakening demand environment.

The RBA and the Bank of Japan

However, RBA Governor Michele Bullock provided Australian consumers relief. The RBG Governor reportedly said the RBA could cut rates before inflation falls to within the 2-3% target range. This was a deviation from the Tuesday press conference when Governor Bullock said inflation would need to fall within range before the RBA would consider cutting rates.

On Friday, Bank of Japan Governor Kazuo Ueda said the BoJ would maintain an accommodative monetary policy after exiting negative rates. The comments aligned with Deputy Governor Shinichi Uchida who said the Bank would not rapidly hike interest rates after pivoting from negative rates. The less hawkish outlook weakened the Yen, driving demand for export stocks.

The Fed, Corporate Earnings, and China in Focus

On Monday, US corporate earnings and Fed commentary from Friday could set the tone. PepsiCo (PEP) was among the big names to release earnings on Friday. However, Fed speakers also drew interest before US inflation figures next week. Dallas Federal Reserve Bank President Lorie Logan said there was no pressing need to cut interest rates.

10-year US Treasury yields increased by 0.55% to end the session at 4.177%. The US equity markets responded to the earnings and Fed commentary. On Friday, the Nasdaq Composite Index and the S&P 500 gained 1.25% and 0.57%, respectively. However, the Dow ended the session down 0.14%.

While the US market moves from Friday will set the tone, the Asian earnings calendar also needs consideration.

ANZ Holdings and Beach Energy put the ASX 200 under the spotlight.

Beyond the earnings, central bank commentary needs consideration. There are no Asian economic indicators for the markets to consider on Monday. Hints of a meaningful stimulus package from Beijing could be a boon for the ASX 200.

On Monday, the Hong Kong markets are closed for the Chinese New Year, with the Japanese markets closed for National Day.

ASX 200

The ASX 200 gained 0.05% on Friday. Tech sector stocks led the way, with the S&P ASX All Technology Index (XTX) rallying 1.51%.

However, it was a mixed Friday session for banking and mining stocks.

Commonwealth Bank of Australia (CBA) and ANZ Group Holdings Ltd (ANZ) rose by 0.24% and 0.25%, respectively. National Australia Bank Ltd. (NAB) and Westpac Banking Corp. (WBC) fell by 0.46% and 0.45%, respectively.

BHP Group Ltd (BHP) and Fortescue Metals Group Ltd. (FMG) fell by 0.28% and 0.63%, respectively. Rio Tinto Ltd. (RIO) bucked the trend, gaining 0.65%.

However, gold (XAU/USD) and oil stocks ended another session in negative territory.

Northern Star Resources Ltd. (NST) and Evolution Mining Ltd. declined by 0.83% and 0.97%, respectively. Woodside Energy Group Ltd (WDS) and Santos Ltd (STO) ended the day down 1.42% and 0.48%, respectively.

Hang Seng Index

The Hang Seng Index declined by 0.83% on Friday. Real estate and tech stocks contributed to the losses. The Hang Seng Mainland Properties Index (HSMPI) and Hang Seng Tech Index (HSTECH) fell by 3.15% and 1.30%, respectively.

Alibaba (9988) declined by 1.42%, while Tencent (0700) ended the session flat. Investors continued to exit Alibaba after disappointing earnings results.

Bank stocks ended another session in negative territory. HSBC (0005) declined by 0.49%. China Construction Bank (0939) and Industrial Commercial Bank (1398) fell by 0.65% and 0.52%, respectively.

The Nikkei 225

(Graph for reference purposes only)

The Nikkei gained 0.09% on Friday. Softbank drove the Nikkei higher for the second successive session.

Softbank Group Corp. (9948) jumped 8.72% as the Arm earnings results resonated. Tokyo Electron Ltd. (8035) gained 1.09% on better-than-expected earnings.

However, KDDI Corp. (9433) fell by 1.00%. Fast Retailing Co. Ltd. and Sony Group Corp. (6758) declined by 0.92% and 0.63%, respectively.

Bank stocks also had a mixed session. Sumitomo Mitsui Financial Group Inc. (8316) fell by 0.20%, while Mitsubishi UFJ Financial Group Inc. (8306) gained 0.14%.

For upcoming economic events, refer to our economic calendar.