Hang Seng Index, ASX200, Nikkei 225: ASX Struggles Ahead of the RBA

Key Insights:

• It was a mixed Tuesday morning, with the ASX 200 following the Dow Jones into the red.
• US ISM Non-Manufacturing PMI numbers for May eased bets on a June Fed rate hike, supporting the Hang Seng Index and the Nikkei.
• A weaker USD/JPY and disappointing household spending numbers from Japan failed to weigh on the Nikkei.

Market Overview

It was a mixed Tuesday session for the Asian markets. The ASX 200 tracked the Dow Jones into negative territory, while the Hang Seng Index and the Nikkei found modest support on easing bets on a June Fed interest hike.

The all-important ISM Non-Manufacturing PMI fell from 51.9 to 50.3 in May versus a forecasted 51.8. Notably, the ISM Non-Manufacturing Prices Index fell from 59.6 to 56.2, with the ISM Non-Manufacturing Employment Index down from 50.8 to 49.2.

Investors eased bets on a June interest rate hike in response to the ISM numbers. According to the CME FedWatch Tool, the probability of a 25-basis point June interest rate hike fell from 25.3% to 21.2% on Monday versus 64.2% one week earlier.

On Monday, NASDAQ Composite Index fell by 0.09%, with the Dow and S&P 500 seeing losses of 0.59% and 0.20%, respectively.

This morning, economic data from Australia and Japan failed to move the dial as investors await the RBA interest rate decision and Rate Statement.

ASX 200

The ASX 200 was down by 0.46%, with bank stocks weighing ahead of the RBA interest rate decision.

The big-4 had a bearish morning. ANZ Group (ANZ) and Westpac Banking Corp (WBC) fell by 0.69% and 0.77%, respectively. The Commonwealth Bank of Australia (CBA) and The National Australia Bank (NAB) were down 0.46% and 0.04%, respectively.

Oil stocks also had a bearish morning. Woodside Energy Group (WDS) and Santos Ltd (STO) declined by 0.34% and 0.13%, respectively. Brent Crude was down 0.27% to $76.50 this morning.

However, mining stocks found support. Rio Tinto (RIO) and BHP Group Ltd (BHP) were up 0.59% and 0.20%, respectively, with Fortescue Metals Group (FMG) rising by 1.37%. Newcrest Mining (NCM) slid by 1.95%.

Hang Seng Index

The Hang Seng was up 0.39% this morning.

Considering the main components, Tencent Holdings Ltd (HK:0700) fell by 0.71%, while Alibaba Group Holding Ltd (HK:9988) gained 0.66%.

Bank stocks also had a mixed morning session. HSBC Holdings PLC fell by 0.34%, while the Industrial and Commercial Bank of China (HK:1398) and China Construction Bank (HK: 0939) saw gains of 0.94% and 0.39%, respectively.

CNOOC (HK: 0883) rose by 1.31%.

Nikkei 225

The Nikkei 225 was up 0.52% this morning, despite a weaker USD/JPY and disappointing household spending numbers. Household spending fell by 1.3% in April versus a 0.8% decline in March. Year-over-year, household spending was down 4.4% versus a forecasted 0.4% increase. In March, household spending declined by 1.9% year-over-year.

Bank stocks struggled, with Sumitomo Mitsui Financial Group (8316) and Mitsubishi UFJ Financial Group falling by 1.16% and 1.21%, respectively.

Looking at the main components, Fast Retailing Co (9983) and SoftBank Group Corp. (9984) were up 1.38% and 1.00%, respectively. Tokyo Electron Limited (8035) and KDDI Corp (9433) also found support, rising by 0.75% and 0.34%, respectively. However, Sony Corp (6758) bucked the trend, falling by 0.69%.

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