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

Highlights

• The Nikkei 225 and ASX 200 enjoyed gains on Thursday, while the Hang Seng Index fell for the third consecutive session.
• Corporate earnings, Fed uncertainty, and the Chinese real estate market influenced market risk sentiment.
• On Friday, investors will likely react to the overnight Fed Chair Powell speech, with corporate earnings and the RBA also in focus.

Overview of the Thursday Session

On Wednesday, the ASX 200 and the Nikkei 225 ended the session in positive territory. However, the Hang Seng Index saw more losses.

Fed Uncertainty Lingered Going into Thursday

The hawkish commentary from certain FOMC members resonated on Wednesday. Fed Chair Powell avoided the topic of monetary policy in a heavily anticipated speech. The lack of commentary on policy left Fed uncertainty to linger through the US Wednesday session.

On Wednesday, the Dow ended the day with a 0.12% loss. However, the Nasdaq Composite Index and S&P 500 rose by 0.08% and 0.10%, respectively.

China Inflation, Ping An, and Fed Interest Rate Bets Influence Trends

Hopes of Ping An (HK:2318) acquiring beleaguered Country Garden (HK: 2007) faded, sinking the property sector. News hit the wires on Thursday of Ping An having no plans to take a controlling stake in Country Garden despite calls from Chinese authorities to step in.

Inflation figures from China also weighed on the Hang Seng Index. Consumer and producer prices from China reflected a weak demand environment. The October figures raised questions about the effectiveness of Beijing’s stimulus measures.

However, corporate earnings delivered positive ASX 200 and Nikkei 225 sessions.

Softbank Group Corp. (9984), Honda Motor (7267), Nissan Motor (7201), National Bank of Australia (NAB), and China Everbright (0165) were among the big names to release results on Thursday.

Fed Chair Powell and US Jobless Claims to Set the Tone

US jobless claims garnered investor interest after the recent unit labor cost numbers and the US Jobs Report. Initial jobless claims slipped from 220k to 217k in the week ending November 4. The modest decline had a limited impact on market risk sentiment.

During the FOMC press conference, Fed Chair Powell discussed the need for a softer labor market to support price stability.

However, Fed Chair Powell surprised the markets on Thursday. Fed Chair Powell reportedly said,

“The Federal Open Market Committee is committed to achieving a stance of monetary policy that is sufficiently restrictive to bring inflation down to 2 percent over time; we are not confident that we have achieved such a stance.”

The US equity markets responded to the Fed Chair. The Nasdaq Composite Index declined by 0.94%, with the Dow and S&P 500 ending the day down 0.65% and 0.81%, respectively.

The US Thursday session will set the tone for the Asian market session on Friday.

RBA Statement on Monetary Policy and Corporate Earnings in Focus

For the ASX 200, the RBA Statement on Monetary Policy will give investors an RBA view of the economy and interest rates. The RBA forecasts will garner interest after the RBA rate hike on Tuesday.

However, investors must consider corporate earnings results throughout the Friday session.

Futures Market and Closing Thoughts

In the futures markets on Friday, the ASX 200 and the Nikkei were down 12 and 90 points, respectively. While the fear of a more hawkish Fed will impact risk sentiment, corporate earnings could limit losses.

ASX 200

The ASX 200 gained 0.28% on Thursday. Bank and mining stocks made gains, while tech stocks were a drag. The S&P/ASX All Tech Index slid by 1.27%.

BHP Group Ltd. (BHP) and Rio Tinto Ltd. (RIO) saw gains of 0.56% and 0.63%, respectively. Fortescue Metals Group Ltd. (FMG) rallied 1.52%.

Westpac Banking Corp. (WBC) and the Commonwealth Bank of Australia (CBA) gained 1.24% and 1.41%. ANZ Group Holdings Ltd. rose by 0.98%, while the National Australia Bank Ltd. (NAB) fell by 0.79%.

Woodside Energy Group Ltd. (WDS) and Santos Ltd. (STO) fell by 1.77% and 0.41%.

Gold stocks had a mixed session before Fed Chair Powell’s speech. Evolution Mining Ltd. (EVN) gained 0.82%, while Northern Star Resources Ltd. (NST) fell by 0.34%. Gold Spot was in negative territory during the Asian session before ending the day up 0.43%.

Hang Seng Index

The Hang Seng Index ended the Thursday session down 0.33%.

Alibaba (9988) and Tencent (0700) ended the session with losses of 0.42% and 0.52%, respectively.

Bank stocks had a mixed Thursday session. HSBC (0005) slipped by 0.03%. China Construction Bank (0939) gained 0.45%, while the Industrial and Commercial Bank (1398) ended the day flat.

The Nikkei 225

(Graph for reference purposes only)

The Nikkei 225 rallied 1.49% on Thursday.

Sumitomo Mitsui Financial Group (8316) ended the day flat, while Mitsubishi UFJ Financial Group (8306) gained 1.24%. However, it was a mixed Thursday for the main components of the Nikkei 225.

Tokyo Electron (8035) and Fast Retailing (9983) rallied 2.75% and 2.87%, respectively.

Softbank (9984) gained by 1.07%, with KIDDI Corp. (9433) rising by 0.42%. However, Sony Corp (6758) ended the day down 0.79%.

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