Hang Seng Index, ASX 200, Nikkei Index: A Fed Chair Powell Boost

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Updated: Apr 3, 2024, 22:58 UTC

Key Points:

Shifting investor sentiment toward the Fed rate path sent the Hang Seng Index and broader Asian markets into negative territory on Wednesday.
On Thursday, the overnight US labor market numbers, service sector data, and Fed Chair Powell commentary will influence market risk sentiment.
The Asian economic calendar will put the ASX 200 in focus while Japanese government intervention threats could continue to influence the Nikkei 225.

US Equity Markets: ADP Employment, ISM Services PMI, and Fed Chair Powell

On Thursday, overnight US economic data and Fed speeches will influence investor appetite for the Asian equity markets.

According to the ADP, nonfarm payrolls surged 184k in March after a 155k increase in February. However, the services sector expanded at a less marked pace. The all-important US ISM Services PMI fell from 52.6 to 51.4 in March.

Fed Chair Powell offered market relief from the ADP Report, stating that inflation figures from last week didn’t materially alter the Fed’s view. Powell stuck to the FOMC press conference script, adding that the Fed would begin cutting rates this year.

10-year US Treasury yields pulled back from a Wednesday session high of 4.429%, ending the session down 0.09% to 4.349%. On Wednesday, the Dow declined by 0.11%. The Nasdaq Composite Index and the S&P 500 saw gains of 0.23% and 0.11%, respectively.

Asia Economic Calendar: The Aussie Economy in the Spotlight

On Thursday, the Australian economy will be in focus. Building permits and finalized retail sales figures could support bets on the RBA shifting toward a more dovish rate path.

The numbers will unlikely influence buyer appetite for Nikkei-listed stocks. Nikkei-listed export stocks will likely remain in the hands of the Japanese government and intervention chatter.

Commodities: Crude Oil, Gold, and Iron Ore Price Trends

Commodity price trends can influence both market risk appetite and the ASX 200.

Crude oil and gold prices were higher on Wednesday. However, SGX TSI Iron ore saw losses and could pressure mining stocks.

The USD/JPY, the Intervention Zone, and the Nikkei

On Thursday, there will be no escaping the impact of USD/JPY trends on the Nikkei. On Wednesday, the USD/JPY ended the session at 151.688. Investors expect a break above the 152 barrier to force the Japanese government to intervene. The threat of a stronger Yen will continue to influence Nikkei-listed stocks.

The Futures Markets

On Thursday, the ASX 200 and the Nikkei were up 26 and 470 points, respectively. There is no trading of Hang Seng Index-listed stocks. The HK Markets are closed for the Ching Ming Festival.

ASX 200

ASX200 040424 Daily Chart

The ASX 200 slid by 1.34% on Wednesday, following the US equity markets into negative territory.

Tech stocks tumbled on shifting sentiment toward a June Fed rate cut. The S&P ASX All Technology Index (XTX) ended the session down 2.81%. Bank, gold (XAU/USD), and mining stocks contributed to the losses. Oil stocks had a mixed session despite the overnight gains in crude oil prices.

ANZ Group Holdings Ltd. (ANZ) and Commonwealth Bank of Australia (CBA) slid by 1.53% and 1.88%, respectively. National Australia Bank Ltd. (NAB)and Westpac Banking Corp. (WBC) saw losses of 1.12% and 1.07%, respectively.

BHP Group Ltd (BHP) and Fortescue Metals Group Ltd. (FMG) declined by 0.60% and 0.90%, respectively. Iron ore prices retreated on the Singapore futures exchange, impacting buyer demand for mining stocks. However, Rio Tinto Ltd. (RIO) bucked the trend, gaining 0.38%.

Gold (XAU/USD) stocks Northern Star Resources Ltd. (NST) and Evolution Mining Ltd (EVN) fell by 1.15% and 0.53%, respectively.

Woodside Energy Group Ltd (WDS) gained 0.03%, while Santos Ltd (STO) slipped by 0.13%.

Hang Seng Index

HSI 040424 Daily Chart

On Wednesday, the Hang Seng Index fell by 1.22%. Property and tech stocks contributed to the losses. The Hang Seng Tech Index (HSTECH) and Hang Seng Mainland Properties Index (HSMPI) declined by 2.32% and 1.56%, respectively.

Tencent (0700) and Alibaba (9988) fell by 0.26% and 0.92%, respectively.

Bank stocks also had a negative session. HSBC (0005) declined by 0.81%. China Construction Bank (0939) and Industrial Commercial Bank (1398) saw losses of 0.62% and 0.51%, respectively.

The Nikkei 225

The Nikkei tracked the broader market into the red.

Nikkei 040424 Daily Chart

(Graph for reference purposes only)

The Nikkei ended the Wednesday session down 0.97%. The USD/JPY hovered below the 152 level, testing buyer appetite for Nikkei-listed export stocks. Intervention threats remained.

Bank stocks steadied after heavy losses at the start of the week. Sumitomo Mitsui Financial Group Inc. (8316) and Mitsubishi UFJ Financial Group Inc. (8306) saw gains of 1.92% and 1.07%, respectively.

It was a mixed session for the main components of the Nikkei.

Fast Retailing Co. Ltd. (9983) slid by 3.34%, with Softbank Group Corp. (9948) declining by 1.24%.

Sony Group Corporation (6758) and KDDI Corp. (9433) saw losses of 0.19% and 0.65%, respectively.

Tokyo Electron Ltd. (8035) bucked the trend, advancing by 0.03%.

For upcoming economic events, refer to our economic calendar.

About the Author

Bob Masonauthor

With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.