Hang Seng Index, ASX 200, Nikkei 225: The China Evergrande Aftermath

Highlights

• The Hang Seng Index led the ASX 200 and the Nikkei into positive territory on Monday.
• Investors reacted to US economic indicators from Friday and fresh stimulus measures from Beijing.
• On Tuesday, overnight US economic indicators from Monday, central bank activity, corporate earnings, and the Asian economic calendar need consideration.

Overview of the Monday Session

On Monday, the Hang Seng Index led the ASX 200 and the Nikkei into positive territory. US economic indicators from Friday set the tone for the Monday Asian session.

Softer US inflation numbers for December drove buyer demand for riskier assets. Personal income and spending figures supported expectations of a soft landing, contributing to the gains.

On Friday, the Nasdaq Composite Index and S&P 500 declined by 0.36% and 0.07%, respectively. Corporate earnings left the Nasdaq Composite Index and S&P 500 in negative territory. Intel Corp. (INTC) released earnings results after the US market close on Thursday. A disappointing outlook for Q1 2024 fueled a sell-off, with Intel Corp. sliding by 11.91% on Friday. The Dow rose by 0.16%.

There were no Asian economic indicators to influence the Monday session. However, investors reacted to more policy measures from China.

US Data, Corporate Earnings, and the Asian Economic Calendar

On Tuesday, US economic indicators from Monday warrant investor consideration. A sharp decline in the Dallas Fed Manufacturing Index could test expectations of a soft landing. The Dallas Fed Manufacturing Index fell from -10.4 to -27.4 in January.

However, the weaker-than-expected numbers failed to impact the US equity markets. Tech and energy stocks led before major tech earnings results and the Fed interest rate decision.

On Monday, the Dow and S&P 500 ended the session up 0.59% and 0.76%, respectively. The Nasdaq Composite Index gained 1.12%.

However, investors must consider the Asian economic calendar. Jobs/applications and unemployment numbers from Japan could impact bets on a Bank of Japan pivot from negative rates. Rising bets on a Bank of Japan pivot could pressure Nikkei-listed export stocks.

From Australia, retail sales figures could influence the RBA interest rate path before Q4 inflation numbers on Wednesday. An unexpected increase in retail sales could fuel demand-driven inflationary pressures and raise the chances of an RBA rate hike. A more hawkish RBA rate path would impact ASX-listed stocks.

Beyond the economic calendar, corporate earnings and stimulus updates from Beijing, and fallout from the demise of China Evergrande Group (HK:3333) also need consideration.

On Tuesday, the ASX 200 and Nikkei futures were up 35 and 100 points, respectively.

ASX 200

The ASX 200 gained 0.31% on Monday. Tech stocks saw further losses, with Gold (XAU/USD) and mining stocks having mixed sessions. The S&P ASX All Technology Index declined by 0.31%. However, bank and oil stocks contributed to the gains.

Northern Star Resources Ltd. (NST) rose by 0.39% while Evolution Mining Ltd. ended the session down 0.95%.

BHP Group Ltd (BHP) and Rio Tinto Ltd. (RIO) declined by 1.41% and 0.61%, respectively. Fortescue Metals Group Ltd. (FMG) rose by 0.97%.

Rising tensions in the Middle East drove buyer demand for oil stocks. Woodside Energy Group Ltd (WDS) and Santos Ltd (STO) rallied 2.34% and 1.69%, respectively.

The big four banks enjoyed a positive start to the week. ANZ Group Holdings Ltd (ANZ) and Westpac Banking Corp. (WBC) ended the day up 0.67% and 0.97%, respectively. Commonwealth Bank of Australia (CBA) and National Australia Bank Ltd. (NAB) saw gains of 0.92% and 1.10%, respectively.

Hang Seng Index

The Hang Seng Index ended the Monday session up 0.78%. Tech and real estate stocks contributed to the gains. On Monday, the Hang Seng Mainland Properties Index (HSMPI) and the Hang Seng Tech Index (HSTECH) rose by 0.84% and 0.54%, respectively. China Evergrande Group (3333) tumbled 20.87% before trading suspended as investors responded to news of the HK courts issuing a winding up order.

Alibaba (9988) rallied 2.40%, while Tencent (0700) fell by 0.28%.

However, bank stocks had a positive session. HSBC (0005) rose by 1.07%. China Construction Bank (0939) and Industrial Commercial Bank (1398) ended the day up 0.64% and 1.05%, respectively.

The Nikkei 225

(Graph for reference purposes only)

The Nikkei gained 0.77% on Monday.

Bank stocks kick-started the week in positive territory. Sumitomo Mitsui Financial Group Inc. (8316) and Mitsubishi UFJ Financial Group Inc. (8306) rallied 1.94% and 2.01%, respectively.

The main components of the Nikkei also ended the session in positive territory.

Sony Group Corp. (6758) rallied 2.50%, with KDDI Corp. (9433) gaining 0.82%.

Fast Retailing Co. Ltd. (9983) rose by 0.59%, with Tokyo Electron Ltd. (8035) and Softbank Group Corp. (9948) gaining 0.14% and 0.38%, respectively.

For upcoming economic events, check out our economic calendar.