Hang Seng Index, ASX 200, Nikkei 225: US CPI Angst to Test ASX 200 Return to 7,800

Overview of the Monday Session

On Monday, the ASX 200 and the Nikkei 225 kick-started the week in negative territory. The Hang Seng Index bucked the broader market trend.

The US Jobs Report supported bets on an H1 2024 Fed rate cut. In February, the US unemployment rate rose from 3.7% to 3.9%. Average hourly earnings were up 4.3% year-on-year versus 4.4% in January. Nonfarm payrolls jumped 275k in February. Despite the favorable numbers, the US equity markets succumbed to profit-taking.

On Friday, the Nasdaq Composite Index and S&P 500 saw losses of 1.16% and 0.65%, respectively. The Dow declined by 0.18%. The US equity market session set the tone for the Monday Asian session, with the ASX 200 and Nikkei futures signaling sharp losses before the opening bell.

The Asian economic calendar also influenced the Asian equity market trends. Inflation numbers from China raised hope of a shift in consumer demand. Consumer prices increased by 0.7% year-on-year in February after falling 0.8% in January.

However, producer prices fell at a more marked pace, suggesting Lunar New Year demand impacted consumer price trends. Producer prices declined by 2.7% year-on-year in February versus 2.5% in January.

Finalized Q4 GDP data from Japan fueled bets on a March Bank of Japan pivot from negative rates. According to finalized numbers, the Japanese economy expanded by 0.1% in Q4, upwardly revised from a preliminary contraction of 0.1%.

US Consumer Inflation Expectations, Japanese Inflation, and Aussie Stats

On Tuesday, investors must consider overnight US consumer inflation expectation figures. In February, consumer inflation expectations remained at 3.0%. Sticky inflation expectations could impact consumer confidence and spending. However, the numbers had a limited impact on Fed rate cut bets. Investors await official US inflation numbers out later today.

Nonetheless, the US equity markets reacted to the numbers. On Monday, the Nasdaq Composite Index and S&P 500 ended the session down 0.41% and 0.11%, respectively. The Dow gained 0.12%.

The US equity market moves will influence the Asian Tuesday market session, with investors mindful of the US CPI Report. Investors must also consider the Asian economic calendar.

Producer prices from Japan will draw investor interest before the wage negotiations report on Thursday. Higher producer prices would support bets on a March BoJ pivot from negative rates. Economists forecast producer prices to increase 0.5% year-on-year in February versus 0.2% in January. Rising bets on a BoJ pivot could pressure the USD/JPY and the Nikkei 225.

For the ASX 200, Australian business confidence and housing sector data need consideration.

Beyond the numbers, investors must monitor Bank of Japan commentary.

On Tuesday, the ASX 200 futures were up 3 points, while the Nikkei futures were down 230 points.

ASX 200

The ASX 200 slid by 1.81% on Monday. Losses were broad-based, with bank, gold, mining, oil, and tech stocks seeing red. The S&P ASX All Technology Index (XTX) declined by 0.78%.

Gold (XAU/USD) stocks Northern Star Resources Ltd. (NST) and Evolution Mining Ltd. saw losses of 4.02% and 3.30%, respectively.

For the big four banks, the Commonwealth Bank of Australia (CBA) and Westpac Banking Corp. (WBC) slid by 2.73% and 3.18%, respectively. ANZ Group Holdings Ltd (ANZ) and National Australia Bank Ltd. (NAB) declined by 1.91% and 3.08%, respectively.

Mining stocks also suffered heavy losses. Fortescue Metals Group Ltd. (FMG) and Rio Tinto Ltd. (RIO) tumbled 3.54% and 3.59%, respectively. BHP Group Ltd (BHP) ended the day down 2.57%.

Oil stocks ended the day with relatively modest losses. Woodside Energy Group Ltd (WDS) and Santos Ltd (STO) fell by 2.55% and 1.79%, respectively.

Hang Seng Index

On Monday, the Hang Seng Index gained 1.43%. Real estate and tech stocks contributed to the gains. The Hang Seng Mainland Properties Index (HSMPI) and Hang Seng Tech Index (HSTECH) ended the day up 1.81% and 2.86%, respectively.

Alibaba (9988) and Tencent (0700) rallied 2.18% and 3.19%, respectively.

However, bank stocks had a mixed session. HSBC (0005) declined by 0.77%. China Construction Bank (0939) ended the session flat, while Industrial Commercial Bank (1398) gained 0.25%.

The Nikkei 225

(Graph for reference purposes only)

The Nikkei tumbled 2.19% on Monday.

Bank stocks started the week with heavy losses. Sumitomo Mitsui Financial Group Inc. (8316) and Mitsubishi UFJ Financial Group Inc. (8306) slid by 3.77% and 3.92%, respectively.

The main components of the Nikkei also had a negative session.

Softbank Group Corp. (9948) and Tokyo Electron Ltd. (8035) saw losses of 6.04% and 3.15%, respectively.

KDDI Corp. (9433) and Sony Group Corporation (6758) declined by 1.76% and 1.73%, respectively. Fast Retailing Co. Ltd. (9983) fell by 1.29%.

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