Hang Seng Index, ASX 200, Nikkei Index: Retail Sales Put the BoJ and RBA in Focus

Overview of the Wednesday Session

On Wednesday, the Hang Seng Index led the ASX 200 and Nikkei 225 into negative territory. Weaker-than-expected US economic indicators from Tuesday failed to ease jitters before US inflation data on Thursday.

The CB Consumer Confidence Index fell from 110.9 to 106.7 in February. Economists expected an increase to 115.0. Durable goods orders ex-transport declined by 0.3% in January after falling by 0.1% in December. Economists forecast orders ex-transport to increase by 0.2%.

On Tuesday, the Dow declined by 0.25%. The Nasdaq Composite index and S&P 500 saw gains of 0.37% and 0.17%, respectively.

Sticky inflation numbers from Japan on Tuesday and Australia on Wednesday left investors focused on shifts in sentiment toward central bank rate paths. According to the Australian CPI Monthly Indicator, the annual inflation rate was unchanged at 3.4% in January. Economists expected an inflation rate of 3.6%.

The Hang Seng Index responded to the HK Administration’s budget. The Administration removed property sector curbs. However, news of a liquidation petition filed against Country Garden overshadowed the HK Administration announcements. Investors also looked ahead to the meeting in Beijing next week, where officials will discuss economic forecasts and policy measures.

The Fed and Private Consumption to Set the Tone

On Thursday, overnight US Fed speeches from Wednesday need consideration. US GDP numbers from Wednesday are unlikely to impact investor sentiment. The focus will likely remain on Core PCE Price Index numbers on Thursday.

According to 2d estimates, the US economy grew by 3.2% in Q4, down from the first estimate of 3.3%. Significantly, the GDP numbers supported expectations of the US soft landing.

FOMC members Raphael Bostic, Susan Collins, and Fed Vice Chair John Williams influenced market risk sentiment. Bostic reportedly expected a rate cut in the summer. Williams and Collins signaled rate cuts for later in the year, with all three noting that the timeline for a rate cut will hinge on incoming data.

On Wednesday, the Nasdaq Composite Index fell by 0.55%. The Dow and S&P 500 ended the session down 0.06% and 0.17%, respectively.

The Wednesday US market session will set the tone for the Thursday Asian session. However, retail sales figures for Australia and Japan also need consideration. Retail sales remain a consideration for central banks.

A spike in Australian retail sales could fuel demand-driven inflation and leave an RBA rate hike on the table. Economists expect retail sales to rise by 1.5% after sliding by 2.7% in December.

For the Bank of Japan, household spending has been lackluster. A pickup in retail sales could support bets on an April BoJ pivot from negative rates. Economists forecast retail sales to increase by 2.3% year-over-year in January compared with 2.1% year-over-year in December.

However, industrial production numbers could test expectations on an April pivot. Economists predict industrial production to tumble 7.3% in January. In December, industrial production increased by 1.4%.

Central Banks, Earnings, and the Futures Markets

Beyond the numbers, BoJ commentary warrants investor attention. Bank of Japan Board Member Hajime Takata is on the calendar to speak.

On the earnings calendar, Harvey Norman Holdings (ASX: HVN) and Nickel Mines earnings (ASX: NIC) need consideration.

On Thursday, the ASX 200 and the Nikkei futures were down 5 and 40 points, respectively. Investor jitters before US inflation figures on Thursday could limit the influence of the Asian economic calendar on the Asian markets.

ASX 200

The ASX 200 declined by 0.03% on Wednesday. Tech stocks offset losses across bank, gold, mining, and oil stocks. The S&P ASX All Technology Index (XTX) rallied 1.72%.

The big four banks had a negative Wednesday session. The Commonwealth Bank of Australia (CBA) and National Australia Bank Ltd. (NAB) fell by 0.99% and 0.59%, respectively. ANZ Group Holdings Ltd (ANZ) and Westpac Banking Corp. (WBC) ended the day down 0.11% and 0.19%, respectively.

Gold (XAU/USD) stocks also pressured the ASX 200. Northern Star Resources Ltd. (NST) and Evolution Mining Ltd. fell by 1.02% and 0.69%, respectively.

Mining and oil stocks had a mixed Wednesday session.

BHP Group Ltd (BHP) and Fortescue Metals Group Ltd. (FMG) declined by 0.20% and 1.66%, respectively. Rio Tinto Ltd. (RIO) gained 0.20%.

Woodside Energy Group Ltd (WDS) fell by 0.36%, while Santos Ltd (STO) ended the day up 1.43%.

Hang Seng Index

On Wednesday, the Hang Seng Index declined by 1.51%. Property and tech stocks contributed to the losses. The Hang Seng Tech Index (HSTECH) and Hang Seng Mainland Properties Index (HSMPI) slid by 2.19% and 3.69%, respectively. News of a liquidation petition filed against Country Garden impacted the property sector.

Alibaba (9988) and Tencent (0700) ended the session down 1.66% and 2.67%, respectively.

Bank stocks had another mixed session. HSBC (0005) gained 0.17%. China Construction Bank (0939) and Industrial Commercial Bank (1398) declined by 1.42% and 0.98%, respectively.

The Nikkei 225

(Graph for reference purposes only)

The Nikkei slipped by 0.08% on Wednesday. Rising bets on a Bank of Japan pivot from negative rates left the Nikkei in negative territory. A stronger USD/JPY limited the downside.

Bank stocks had a negative Wednesday session. Sumitomo Mitsui Financial Group Inc. (8316) and Mitsubishi UFJ Financial Group Inc. (8306) fell by 1.17% and 1.01%, respectively.

However, the main components of the Nikkei had a mixed session.

Softbank Group Corp. (9948) and Fast Retailing Co. Ltd. fell by 0.81% and 0.32%, respectively. Sony Group Corp. (6758) declined by 0.08%.

Tokyo Electron Ltd. (8035) and KDDI Corp. (9433) bucked the trend, gaining 0.63% and 0.49%, respectively.

For upcoming economic events, refer to our economic calendar.