Hang Seng Index, ASX 200, Nikkei 225: US Equity Strength Sets Tone for Asian Markets
- The Hang Seng Index and ASX 200 kicked off the week with gains, while the Nikkei 225 ended the day in negative territory.
- Rising bets on central bank rate cuts in H1 2024 fueled demand for riskier assets.
- Monday gains from the US to set the tone for the Tuesday Asian equity market session.
Overview of the Monday Session
On Monday, the Hang Seng Index and the ASX 200 ended the session with gains. The Nikkei 225 bucked the trend by ending the session in negative territory.
Rising bets on the Fed cutting interest rates in H1 2024 fueled demand for riskier assets. According to the CME FedWatch Tool, the probability of a May rate hike increased from 29.6% to 62.0% in just one week.
10-year US Treasury yields increased by 0.05% on Friday after a 2.12% slide on Thursday. Yields reflected the shift in sentiment toward the Fed rate path.
A positive week for the US equity markets set the tone for the Monday Asian equity market session. On Friday, the Dow rose by 0.01%, with the Nasdaq Composite Index and S&P 500 seeing gains of 0.08% and 0.13%, respectively.
On Monday, the Asian economic calendar and chatter from Beijing drew interest.
The PBoC left 1-year and 5-year Loan Prime Rates unchanged at 3.45% and 4.20%, respectively. However, Beijing pledges to support the Chinese real estate sector supported gains for the ASX 200 and Hang Seng Index.
RBA Meeting Minutes to Test the ASX 200
On Tuesday, the RBA Meeting Minutes will influence buyer demand for ASX 200 listed stocks. Recent wage growth and employment figures suggest the need for a more hawkish RBA rate path. The RBA Meeting Minutes could reveal the appetite among board members to push interest rates higher.
While the RBA Meeting Minutes will draw investor interest, investors must consider central bank speeches.
However, overnight moves across the US equity markets will set the tone.
On Monday, the Nasdaq Composite Index rose by 1.13%, with the Dow and S&P 500 seeing gains of 0.58% and 0.74%, respectively. There were no overnight US economic indicators from Monday for investors to consider. 10-year US Treasury yields declined by 0.34% to 4.424%
In the futures markets on Tuesday, the ASX 200 and Nikkei were up 19 and 60 points, respectively.
The ASX 200 gained 0.13% on Monday. Tech stocks rose modestly, with the S&P/ASX 200 All Technology Index (XTX) gaining 0.06%. Oil stocks and bank stocks supported the upside.
Bank stocks had a positive Monday session. ANZ Group Holdings Ltd (ANZ) and Westpac Banking Corp. (WBC) rose by 0.75% and 0.57%. National Australia Bank Ltd. (NAB) gained 0.75%, with the Commonwealth Bank of Australia (CBA) up 0.68%.
Oil stocks also ended the Monday session in positive territory. Woodside Energy Group Ltd (WDS) and Santos Ltd (STO) saw gains of 1.27% and 1.14%, respectively.
However, mining and gold stocks had a mixed session. BHP Group Ltd (BHP) and Fortescue Metals Group Ltd. (FMG) gained 0.28% and 0.32%. Rio Tinto Ltd. (RIO) fell by 0.49%.
Gold stocks Evolution Mining Ltd. (EVN) and Northern Star Resources Ltd. (NST) ended the session down 0.80% and 2.55%.
Hang Seng Index
The Hang Seng Index gained 1.86% on Monday. Property stocks found support, with the Hang Seng Properties Index (HSMPI) rising by 1.49%.
Alibaba (9988) and Tencent (0700) ended the session up 1.64% and 3.62%, respectively.
Bank stocks also contributed to the session gains. HSCB (0005) rose by 1.95%. China Construction Bank (0939) and Industrial and Commercial Bank (1398) ended the session up 1.99% and 2.13%, respectively.
The Nikkei 225
The Nikkei 225 declined by 0.59% on Monday. A weaker USD/JPY contributed to the session loss.
(Graph for reference purposes only)
Sumitomo Mitsui Financial Group (8316) rose by 0.31%, with Mitsubishi UFJ Financial Group (8306) gaining 0.95%. However, it was a mixed start to the week for the main components of the Nikkei.
Sony Corp (6758) fell by 1.18%, with Tokyo Electron (8035) and KIDDI Corp. (9433) falling by 0.87% and 0.75%, respectively.
Softbank (9984) and Fast Retailing (9983) saw gains of 1.43% and 0.33%.
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