Hang Seng Index, ASX200, Nikkei 225: ASX 200 Breaks Out on CPI Numbers

Key Insights:

• It was a mixed start to the Wednesday session, with the ASX 200 and Nikkei finding support while the Hang Seng Index struggled.
• Better-than-expected US economic indicators from Tuesday supported hawkish Fed Chair Powell chatter later today.
• Australian inflation figures for May fueled an ASX breakout, with the May CPI Indicator shutting the door on further RBA rate hikes.

Market Overview

It was a mixed morning session for the Asian markets. The Hang Seng Index saw red, while the ASX 200 and the Nikkei found much-needed support.

Economic indicators from the US were bullish on Tuesday, supporting a more positive outlook on the US economy.

The CB Consumer Confidence Index increased from 102.5 to 109.7 in June versus a forecasted 104.0. US core durable goods orders were also bullish, rising by 0.6% in May versus a 0.6% decline in April. Economists forecast a 0.1% decline.

The US economic indicators supported a more hawkish Fed policy outlook and delivered gains for the US equity markets. On Tuesday, the NASDAQ Composite Index rose by 1.65%, with the Dow and S&P 500 seeing gains of 0.63% and 1.15%, respectively.

According to the CME FedWatch Tool, the probability of a 25-basis point July Fed rate hike stood at 76.9% versus 74.4% on Monday.

Significantly, the chances of the Fed lifting rates to 5.75% in September stood at 15.4%, up from 10.4% on Monday.

This morning, economic data from Australia supported a breakout session for the AS 200.

ASX 200

The ASX 200 was up 1.00%, with a slide in Australian inflation shutting the door on further RBA hikes providing support.

The big-4 had a bullish morning. The National Australia Bank (NAB) led the way, rising by 1.92%, with ANZ Group (ANZ) and Westpac Banking Corp (WBC) seeing gains of 1.34% and 1.52%, respectively. The Commonwealth Bank of Australia (CBA) also found support, gaining 1.17%.

Mining stock also had a bullish morning. Rio Tinto (RIO) and BHP Group Ltd (BHP) rose by 0.33% and 0.89%, respectively, with Fortescue Metals Group (FMG) up 0.55%. Newcrest Mining (NCM) bucked the trend, falling by 0.04%.

Oil stocks had a bullish morning. Woodside Energy Group (WDS) and Santos Ltd (STO) were up 1.12% and 1.71%, respectively. Brent Crude was up 0.47% to $72.60 this morning.

Hang Seng Index

The Hang Seng was down 0.08% this morning, with investors cautious ahead of Fed Chair Powell commentary later today.

Considering the main Index components, Tencent Holdings Ltd (HK:0700) and Alibaba Group Holding Ltd (HK:9988) were down 1.35% and 1.52%, respectively.

However, bank stocks found support. HSBC Holdings PLC was up 0.66%, with The Industrial and Commercial Bank of China (HK:1398) and China Construction Bank (HK: 0939) seeing gains of 0.24% and 0.99%, respectively.

CNOOC (HK: 0883) was up 2.36%.

Nikkei 225

The Nikkei 225 was up 0.46% this morning, with a USD/JPY return to 144 providing support. Fears of a Government intervention to prevent a further slide in the Yen failed to spook investors.

From the banking sector, Sumitomo Mitsui Financial Group (8316) and Mitsubishi UFJ Financial Group gained 1.45% and 1.52%, respectively.

Looking at the main components, Sony Corp (6758) and KDDI Corp (9433) led the way, gaining 1.44% and 1.62%, respectively. Tokyo Electron Limited (8035) rose by 1.27%, while SoftBank Group Corp. (9984) and Fast Retailing Co (9983) saw more modest gains of 0.58% and 0.34%, respectively.

Check out our economic calendar for economic events.