Hang Seng Index, ASX 200, Nikkei 225: Tokyo Inflation and China Stimulus

Highlights

• The Hang Seng Index extended its winning streak to three sessions on Thursday, with the ASX 200 and Nikkei in tow.
• On Friday, overnight US economic indicators and corporate earnings from Thursday will set the tone.
• The Bank of Japan and inflation numbers from Japan also warrant investor attention as investors consider stimulus plans from Beijing.

Overview of the Thursday Session

On Thursday, the Hang Seng Index extended its winning streak to three sessions. The ASX 200 extended its winning streak to five sessions, with the Nikkei also ending the session in positive territory.

Overnight US economic indicators from Wednesday set the tone for the Thursday Asian session. US private sector PMIs beat forecasts. The manufacturing sector returned to growth, with the Services PMI unexpectedly increasing from 51.4 to 52.9 in January.

The US equity markets had another mixed session. On Wednesday, the Nasdaq Composite Index and S&P 500 gained 0.36% and 0.08%, respectively. However, the Dow declined by 0.26%.

The Asian economic calendar and market sentiment toward stimulus pledges from Beijing continued to influence market risk sentiment. The RBA Bulletin signaled a softening in inflationary pressures in the coming quarters, easing bets on an RBA rate hike.

US Economy, Corporate Earnings, and the US Equity Markets

On Friday, overnight US economic indicators and corporate earnings from Thursday need consideration.

Q4 GDP and US labor market numbers influenced the appetite for riskier assets. The US Economy expanded by 3.3% in Q4 after growing by 4.9% in the previous quarter. US initial jobless claims increased from 189k to 214k in the week ending January 20. The numbers supported expectations of a soft landing.

Beyond the economic calendar, Intel Corp. (INTC) was among the big names to release earnings results. While beating EPS estimates, Q1 2024 forecasts disappointed, sending the stock price down 9.38% in after-hours trading.

On Thursday, the Nasdaq Composite Index rose by 0.18%, with the Dow and S&P 500 seeing gains of 0.64% and 0.53%, respectively.

Inflation Numbers from Japan to Influence BoJ Pivot Bets

On Friday, the Asian economic calendar warrants investor attention. Tokyo inflation figures for January could influence bets on a Bank of Japan pivot from negative rates. Economists forecast the annual inflation rate to ease from 2.4% to 2.2% in January. Significantly, economists expect the core inflation rate to soften from 2.1% to 1.9%.

Softer-than-expected numbers could ease bets on a BoJ pivot from negative rates and support buyer appetite for Nikkei-listed stocks.

Beyond the economic calendar, investors must monitor stimulus chatter from Beijing.

On Friday, the Nikkei futures was down 170 points. The Australian markets are closed for Australia Day.

ASX 200

The ASX 200 rose by 0.48% on Thursday. Tech stocks ended the session in negative territory. On Thursday. the S&P ASX All Technology Index (XTX) declined by 0.18%. However, bank, Gold (XAU/USD), mining, and oil stocks contributed to the gains.

Northern Star Resources Ltd. (NST) and Evolution Mining Ltd. saw gains of 0.70% and 1.60%, respectively. Rio Tinto Ltd. (RIO) rallied 2.80%, with Fortescue Metals Group Ltd. (FMG) and BHP Group Ltd (BHP) gaining 2.04% and 1.45%, respectively. Iron ore price gains drove demand for mining stocks.

Woodside Energy Group Ltd (WDS) and Santos Ltd (STO) rose by 0.68% and 0.79%, respectively.

The big four banks had a mixed session. ANZ Group Holdings Ltd (ANZ) and Westpac Banking Corp. (WBC) saw gains of 0.30% and 0.59%, respectively. Commonwealth Bank of Australia (CBA) rose by 0.14%, while National Australia Bank Ltd. (NAB) fell by 0.25%.

Hang Seng Index

The Hang Seng Index gained 1.96% on Thursday. Real estate stock gains contributed to the positive session. The Hang Seng Mainland Properties Index (HSMPI) rallied 4.36%, with the Hang Seng Tech Index (HSTECH) rising by 0.90%.

Alibaba (9988) and Tencent (0700) saw gains of 1.03% and 3.19%, respectively.

Bank stocks also ended the session in positive territory. HSBC (0005) rose by 0.75%. China Construction Bank (0939) and Industrial Commercial Bank (1398) gained 1.75% and 2.41%, respectively.

The Nikkei 225

(Graph for reference purposes only)

The Nikkei rose by 0.03% on Thursday.

Bank stocks ended the session in negative territory. Sumitomo Mitsui Financial Group Inc. (8316) and Mitsubishi UFJ Financial Group Inc. (8306) fell by 0.79% and 0.04%, respectively.

The main components of the Nikkei had another mixed session.

Tokyo Electron Ltd. (8035) gained 0.99%, However, Sony Group Corp. (6758) and Softbank Group Corp. (9948) ended the session down 1.24% and 0.88%, respectively. Fast Retailing Co. Ltd. (9983) and KDDI Corp. (9433) declined by 0.33% and 0.35%, respectively.

For upcoming economic events, check out our economic calendar.