Hang Seng Index, ASX 200, Nikkei Index: Futures Signal a Nikkei Breakout

By:

Bob Mason

Updated: Mar 12, 2024, 22:53 UTC

Key Points:

The Hang Seng Index led the ASX 200 into positive territory on Tuesday, while the Nikkei fell further back from the 40,000 level.
On Wednesday, the US equity market session from Tuesday will set the tone for the Asian session.
Updates from wage negotiations in Japan also warrant investor attention as rising bets on a BoJ pivot pressured the Nikkei early in the week.

Overview of the Tuesday Session

On Tuesday, the Hang Seng Index led the ASX 200 into positive territory, while the Nikkei 225 trended lower.

Overnight US economic indicators from Monday had a limited impact on market risk sentiment.

However, investor caution before US inflation numbers on Tuesday delivered a mixed session for the US equity markets. On Monday, the Nasdaq Composite Index and S&P 500 declined by 0.44% and 0.09%, respectively. The Dow rose by 0.09%.

The lack of influence from the US session gave more weightage to the Asian economic calendar on Tuesday.

Producer price numbers from Japan pressured the Nikkei 225. Producer prices increased by 0.6% year-on-year in February, supporting bets on a March BoJ pivot from negative rates. In January, producer prices were up 0.2% year-on-year.

Consumer price inflation numbers for China continued to fuel demand for Hang Seng-listed stocks. However, hopes of further government support for the real estate sector contributed to the gains.

Gold price levels offset the effects of falling iron ore prices on mining stocks, contributing to gains for the ASX 200.

The US CPI Report and Wage Negotiation Updates from Japan in Focus

On Wednesday, the overnight US CPI Report from Tuesday needs consideration. The US annual inflation rate picked up from 3.1% to 3.2% in February. The core inflation rate softened from 3.9% to 3.8%. Economists forecast an inflation rate of 3.2% and a core inflation rate of 3.7%.

10-year US Treasury yields responded to the inflation numbers, gaining by 1.29% to end the session at 4.153%. However, the US equity markets ignored the hotter-than-expected inflation figures. On Tuesday, the Nasdaq Composite Index rallied 1.54%. The Dow and S&P 500 ended the session up 0.61% and 1.12%, respectively.

While the US equity market session will set the tone, wage negotiation updates from Japan also need consideration. News of a marked hike in wages could cement bets on a March BoJ pivot from negative rates. A BoJ pivot and a stronger Yen could impact Nikkei-listed export stocks.

However, investors must also consider Bank of Japan commentary.

On Wednesday, the ASX 200 and Nikkei futures were up 14 and 380 points, respectively.

ASX 200

ASX200 130324 Daily Chart

The ASX 200 gained 0.11% on Tuesday. Gold and tech stocks contributed to the gains. The S&P ASX All Technology Index (XTX) rose by 0.68%.

Gold (XAU/USD) stocks Northern Star Resources Ltd. (NST) and Evolution Mining Ltd. ended the session up 1.23% and 1.24%, respectively.

However, mining and oil stocks limited the upside for the ASX 200.

Fortescue Metals Group Ltd. (FMG) and BHP Group Ltd. (BHP) saw losses of 1.12% and 0.86%, respectively. Rio Tinto Ltd. (RIO) declined by 0.29%.

Oil stocks Woodside Energy Group Ltd. (WDS) and Santos Ltd. (STO) fell by 1.19% and 1.26%, respectively.

The big four banks had a mixed Tuesday session. The Commonwealth Bank of Australia (CBA) and National Australia Bank Ltd. (NAB) fell by 0.41% and 0.71%, respectively. ANZ Group Holdings Ltd. (ANZ) and Westpac Banking Corp. (WBC) gained 0.21% and 0.37%, respectively.

Hang Seng Index

HSI 130324 Daily Chart

On Tuesday, the Hang Seng Index rallied 3.05%. Real estate and tech stocks were among the front runners. The Hang Seng Mainland Properties Index (HSMPI) and Hang Seng Tech Index (HSTECH) surged 7.95% and 4.64%, respectively.

Alibaba (9988) and Tencent (0700) saw gains of 2.82% and 4.38%, respectively.

Bank stocks also had a positive session. HSBC (0005) rose by 0.69%. China Construction Bank (0939) and Industrial Commercial Bank (1398) advanced by 1.44% and 1.23%, respectively.

The Nikkei 225

Nikkei struggled on Tuesday on rising bets on a BoJ Pivot.

Nikkei 130324 Daily Chart

(Graph for reference purposes only)

The Nikkei declined by 0.06% on Tuesday.

Bank stocks suffered another session of heavy losses. Sumitomo Mitsui Financial Group Inc. (8316) and Mitsubishi UFJ Financial Group Inc. (8306) fell by 2.10% and 2.14%, respectively.

However, it was a mixed Tuesday session for the main components of the Nikkei.

KDDI Corp. (9433) and Tokyo Electron Ltd. (8035) fell by 1.14% and 1.72%, respectively. Softbank Group Corp. (9948) ended the session down 0.66%.

Fast Retailing Co. Ltd. (9983) and Sony Group Corporation (6758) gained 1.42% and 1.45%, respectively.

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.