Hang Seng Index, ASX200, Nikkei 225: Bulls in the Driving Seat

Key Insights:

• It was a mixed Tuesday session for the Asian equity markets, with the Hang Seng Index rebounding while the Nikkei saw red.
• Politburo pledges to support the ailing Chinese economy fueled a Hang Seng Index rally, with the ASX 200 also finding support.
• However, it is a busier Wednesday session, with Australian inflation numbers to test investor resilience on the day of the Fed.

It was a mixed Tuesday for the Hang Seng Index and the broader Asian markets. The Hang Seng Index enjoyed a breakout session, with the ASX 200 also finding support. However, a weaker USD/JPY left the Nikkei in the red.

Disappointing private sector PMIs from Europe and the US failed to spook investors. The markets responded to Politburo pledges to support the ailing Chinese economy. The further easing of real-estate policies drove demand for riskier assets, with the markets expecting the latest round of pledges to fuel a pickup in economic activity through H2 2023.

There were no economic indicators from the Asian region to influence investor sentiment on Tuesday.

The Wednesday Session

For today’s session, inflation numbers from Australia will influence market sentiment toward RBA monetary policy and the ASX 200. However, investors must consider the overnight US consumer confidence numbers and today’s Fed interest rate decision. While investors are betting on a 25-basis point Fed rate hike, a hawkish monetary policy outlook would catch the markets by surprise.

The CB Consumer Confidence Index increased from 110.1 to 117.0 in July, signaling a pickup in consumption and service sector activity.

Despite the Fed interest rate decision looming, the NASDAQ Composite Index gained by 0.61%, with the Dow and S&P 500 rising by 0.08% and 0.28%, respectively. The gains came from market bets on the Fed ending the monetary policy tightening cycle. After the closing bell, upbeat earnings from Alphabet Inc. (GOOGL) and Microsoft (MSFT) will influence investor sentiment.

ASX 200

The ASX 200 gained 0.46% on Tuesday, with Politburo pledges offsetting hawkish RBA bets.

The big-4 had a bearish Tuesday session. Westpac Banking Corp (WBC) fell by 1.05%, with The National Australia Bank (NAB) declining by 0.29%. ANZ Group (ANZ) and The Commonwealth Bank of Australia (CBA) saw modest losses of 0.24% and 0.22%, respectively.

Mining stocks had a breakout session. Rio Tinto (RIO) and BHP Group Ltd (BHP) rallied by 3.41% and 3.34%, respectively, with Fortescue Metals Group (FMG) surging by 4.55%. However, Newcrest Mining (NCM) trailed the front runners, gaining 0.08%.

After the closing bell, Rio Tinto will release half-yearly results.

Oil stocks also had a bullish session. Woodside Energy Group (WDS) and Santos Ltd (STO) rose by 1.21% and 0.63%, respectively.

Hang Seng Index

The Hang Seng Index rallied by 4.10% on Tuesday.

Considering the main Index components, Tencent Holdings Ltd (HK:0700) and Alibaba Group Holding Ltd (HK:9988) saw gains of 6.15% and 6.25%, respectively.

Bank stocks also had a bullish session. HSBC Holdings PLC rose by 1.26%, with The Industrial and Commercial Bank of China (HK:1398) and China Construction Bank (HK: 0939) ending the day up by 2.79% and 3.75%, respectively.

CNOOC (HK: 0883) ended the day up 2.32%.

Nikkei 225

(For reference purposes only)

The Nikkei 225 bucked the broader market trend, falling by 0.08%, with a weaker USD/JPY weighing.

The banks had a bearish session. Sumitomo Mitsui Financial Group (8316) and Mitsubishi UFJ Financial Group saw gains of 0.87% and 1.71%, respectively.

However, looking at the main components, Fast Retailing Co (9983) and KDDI Corp (9433) saw losses of 1.27% and 1.31%, respectively. SoftBank Group Corp. (9984) and Sony Corp (6758) ended the day down 0.88% and 0.83%, respectively Tokyo Electron Limited (8035) fell by 0.51%.

Check out our economic calendar for economic events.