Hang Seng Index, ASX 200, Nikkei 225: US Labor Market Stats Send Favorable Signals

Highlights

• The Hang Seng, ASX 200, and the Nikkei enjoyed a positive Thursday session.
• Investors reacted to the Fed interest rate decision and the Fed Chair Powell press conference.
• On Friday, overnight US economic indicators from Thursday and the Chinese economy will influence risk appetite.

Overview of the Thursday Session

On Thursday, the Nikkei led the Hang Seng Index and the ASX 200 into positive territory. Asian market investors reacted to the Fed interest rate decision and press conference.

Before the Fed interest rate decision, US economic indicators were market-friendly. The ADP reported a lower-than-expected increase in employment, with the ISM Manufacturing PMI also reflecting a softer labor market.

The US equity markets responded to stats and the Fed, with the Nasdaq Composite Index rallying 1.64%. On Wednesday, the Dow and S&P 500 ended the Wednesday session up 0.67% and 1.05%, respectively.

From the Asian economic calendar on Thursday, weaker-than-expected Australian housing and trade data failed to spook investors,

The Services Sector in Focus with One Eye on China

Overnight US economic indicators from Thursday and the US equity markets will set the tone. The US labor market was in focus. Weaker-than-expected jobless claims and unit labor costs supported bets on the Fed ending its rate hike cycle. Corporate earnings were also in the spotlight, with Apple Inc. (AAPL) among the big names releasing results.

On Thursday, the S&P 500 rallied 1.89%, with the Nasdaq Composite Index and Dow gaining 1.78% and 1.70%, respectively.

However, the Asian economic calendar also needs consideration on Friday. Service sector PMI numbers from Australia and China will garner investor interest. An unexpected contraction in China’s services sector would impact market risk sentiment. Economists forecast the China Caixin Services PMI to increase from 50.2 to 50.4 in October.

Finalized figures revealed that the Australian Judo Bank Services PMI tumbled from 51.8 to 47.9 in October.

Away from the economic calendar, earnings will also be in the spotlight, with Alibaba (9988) releasing earnings results.

In the futures markets on Friday, the ASX 200 was up 85 points. The Japanese markets are closed for Culture Day.

ASX 200

The ASX 200 rallied by 0.90% on Thursday. Tech stocks led the way, with the S&P/ASX 200 Information Technology Index (XIJ) rallying 3.71%. The S&P/ASX 200 All Technology Index (XTX) surged by 3.81%.

Bank stocks also enjoyed a positive session. ANZ Group Holdings Ltd (ANZ) and Westpac Banking Corp. (WBC) ended the day up 2.01% and 2.07%. The Commonwealth Bank of Australia (CBA) and National Australia Bank Ltd. (NAB) rose by 1.61% and 1.46%.

Mining stocks contributed to the positive session. BHP Group Ltd (BHP) and Rio Tinto Ltd. (RIO) saw gains of 0.42% and 1.10%. Fortescue Metals Group Ltd. (FMG) gained 1.71%.

However, oil stocks bucked the broader market trend. Woodside Energy Group Ltd (WDS) and Santos Ltd (STO) ended the day with losses of 2.48% and 2.97%, respectively. On Thursday, the Federal Court suspended work on the Barossa Gas Project pipeline until November 13.

Hang Seng Index

The Hang Seng Index gained 0.78% on Thursday as investors responded to the HKMA holding interest rates unchanged.

Alibaba (9988) and Tencent (0700) ended the day up 1.13% and 0.56%, respectively.

However, bank stocks had a mixed session. HSCB (0005) and China Construction Bank (0939) ended the day up 0.18% and 0.45%. Industrial and Commercial Bank (1398) ended the day down 0.53%.

The Nikkei 225

(Graph for reference purposes only)

The Nikkei rallied 1.10% on Thursday. New stimulus measures to boost wages and demand contributed to the gains. The Japanese government rolled out a ¥17 trillion stimulus package on Thursday.

Sumitomo Mitsui Financial Group (8316) and Mitsubishi UFJ Financial Group (8306) rose by 0.50% and 0.12%.

Tokyo Electron (8035) surged by 3.29%, with Softbank (9984) and Fast Retailing (9983) seeing gains of 1.50% and 1.09%. Sony Corp rose by 0.43%, while KIDDI Corp. (9433) declined by 1.74%.

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