Hang Seng Index, ASX 200, Nikkei: China PMIs and US Inflation Uncertainty in the Mix

Highlights

• The Hang Seng Index stumbled on Wednesday, with the Nikkei also struggling, while the ASX ended the session in positive territory.
• Concerns about the Chinese economy continued to test market risk appetite.
• On Thursday, overnight economic indicators from the US and the Asian economic calendar are focal points.

Overview of the Wednesday Session

On Wednesday, the Hang Seng Index and the Nikkei ended the day in negative territory. The ASX 200 bucked the trend, making gains mid-week.

Overnight US economic indicators from Tuesday and dovish Fed comments set the tone for the Wednesday Asian session. Softer consumer confidence signaled a possible pullback in consumption, supporting bets on an H1 2024 Fed rate cut.

FOMC voting member Christopher Waller discussed rate cuts if inflation continues softening. The comments fueled bets on a less hawkish Fed rate trajectory.

On Tuesday, the Nasdaq Composite Index gained 0.29%, with the Dow and S&P 500 rising by 0.24% and 0.10%. 10-year US Treasury yields signaled a more dovish rate path, falling 1.48% to 4.323%.

The Asian economic calendar drove demand for ASX 200-listed stocks. Softer-than-expected Australian inflation numbers for October eased bets on RBA rate hikes.

However, concerns over the Chinese economy weighed on the Hang Seng Index. A weaker USD/JPY left the Nikkei in negative territory.

US Stats and the Asian Economic Calendar in Focus

US GDP numbers for Q3 and Fed comments from Wednesday could set the tone for the Thursday session. Mixed views among FOMC members on inflation countered the GDP report, leaving investors cautious before US inflation numbers on Thursday.

The US equity markets responded to the stats and comments. On Wednesday, the Dow rose by 0.04%, while the S&P 500 and Nasdaq Composite Index fell by 0.09% and 0.16%, respectively.

However, investors must consider the Asian economic calendar on Thursday. Industrial production, retail sales, and consumer confidence numbers from Japan could influence bets on a Bank of Japan exit from negative rates. Housing sector data from Australia also needs consideration.

However, NBS private sector PMIs from China could significantly influence market risk sentiment. With the Chinese economy in focus, investors should monitor stimulus chatter from Beijing.

Uncertainty about the timing of the Bank of Japan exiting negative rates will also put BoJ Board Member Nakamura in focus. Support for a BoJ pivot could drive buying demand for the Yen and impact Nikkei-listed export stocks.

In the Asian futures, the ASX 200 and Nikkei were up 6 and 10 points, respectively, on Thursday.

ASX 200

The ASX 200 rose by 0.29% on Wednesday. Gold and tech stocks delivered gains for the session.

Gold stocks Evolution Mining Ltd. (EVN) and Northern Star Resources Ltd. (NST) rallied 5.44% and 4.37%. An overnight jump in gold prices fueled demand for gold stocks. The S&P ASX All Technology Index (XTX) gained 1.47%.

However, bank, mining, and oil stocks ended the Wednesday session with losses.

National Australia Bank Ltd. (NAB) and ANZ Group Holdings Ltd (ANZ) fell by 0.92% and 0.74%. Westpac Banking Corp. (WBC) and Commonwealth Bank of Australia (CBA) ended the day down 0.47% and 0.01%.

China’s economic woes left mining stocks in negative territory. BHP Group Ltd (BHP) and Rio Tinto Ltd. (RIO) declined by 0.52% and 0.24%. Fortescue Metals Group Ltd. (FMG) fell by 0.40%.

Woodside Energy Group Ltd (WDS) and Santos Ltd (STO) ended the day down 0.67% and 0.86%.

Hang Seng Index

The Hang Seng Index slid by 2.08% on Wednesday. A slowdown warning from Meituan sent the Index into negative territory. Meituan (3690) tumbled 12.18%.

Alibaba (9988) and Tencent (0700) fell by 2.22% and 0.81%.

Bank stocks also contributed to the losses. HSBC (0005) declined by 0.25%. Industrial and Commercial Bank (1398) and China Construction Bank (0939) ended the day down 1.06% and 1.54%.

The Nikkei 225

(Graph for reference purposes only)

The Nikkei 225 fell by 0.26% on Wednesday.

Bank stocks ended the Wednesday session in negative territory. Sumitomo Mitsui Financial Group Inc. (8316) and Mitsubishi UFJ Financial Group Inc. (8306) slid by 2.63% and 2.83%. However, it was a mixed session for the main components of the Nikkei.

Softbank Group Corp. (9948) declined by 1.48%, with Sony Group Corp. (6758) falling by 0.70%. Fast Retailing Co. Ltd. (9983) ended the session down 0.61%.

However, KDDI Corp. (9433) and Tokyo Electron Ltd. (8035) bucked the trend, gaining 0.52% and 0.27%.

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