Hang Seng Index, ASX200, Nikkei 225: Caution Hits the Markets

• It was a mixed Thursday morning for the Asian markets, with the Hang Seng Index and ASX 200 flat, while the Nikkei found modest support.
• Inflation figures from the UK and the euro area shifted focus away from the banking sector to put central banks back in the spotlight.
• A stronger USD/JPY and better-than-expected trade data from Japan supported the Nikkei.

Market Overview

It was a mixed morning for the Asian markets. The Hang Seng Index and ASX 200 struggled for direction, while the Nikkei found support.

There were no economic indicators from the US for investors to consider this morning. The lack of stats left inflation numbers from the UK and the euro area to resonate. With fears of a banking crisis subsiding, thanks to broadly upbeat earnings results, sticky inflation put monetary policy back in the spotlight.

Ahead of the Wednesday numbers, investors hoped that central banks were reaching the end of their monetary policy tightening cycle. The UK and euro area inflation figures suggest otherwise.

Following hawkish comments from FOMC members Christopher Waller and James Bullard, influential Federal Reserve Bank of New York President John Williams spoke this morning, reportedly saying that inflation remains problematic and that the Fed will take measures to bring inflation to target.

According to the FedWatchTool, the probability of a 25-basis point May interest rate hike rose from 81.9% to 86.0% this morning versus 70.4% one week earlier.

Fed Fear weighed on the US futures, with the NASDAQ and Dow Jones down 52.75 and 29.00 points, respectively. The S&P 500 mini fell by 10.25.

ASX 200

The ASX 200 was flat this morning, with gains across the big-4 banks offsetting losses across the mining stocks. There were no economic indicators to influence the morning session.

The big-4 had a bullish morning. The National Australia Bank (NAB) and The Commonwealth Bank of Australia (CBA) led the way, with gains of 1.57% and 1.50%, respectively. Westpac Banking Corp (WBC) and ANZ Group (ANZ) were up 1.35% and 1.37%, respectively.

Mining stocks had a bearish morning. Rio Tinto (RIO) and BHP Group Ltd (BHP) were down by 2.43% and 2.26%, respectively, with Fortescue Metals Group (FMG) falling by 0.60%. Newcrest Mining (NCM) fell by 0.38%.

Oil stocks also struggled. Woodside Energy Group (WDS) and Santos Ltd (STO) declined by 1.00% and 0.91%, respectively. Brent Crude was down 0.76% to $82.49 this morning.

Hang Seng Index

The Hang Seng was down 0.03% this morning. Sentiment toward inflation and monetary policy left the Hang Seng on the back foot.

Considering the main components, Tencent Holdings Ltd (HK:0700) and Alibaba Group Holding Ltd (HK:9988) were up by 0.22% and 0.60%, respectively.

However, it was a mixed morning for banking stocks. The Industrial and Commercial Bank of China (HK:1398) and China Construction Bank (HK: 0939) saw losses of 0.23% and 0.56%, respectively. HSBC Holdings PLC bucked the trend, rising by 0.63%.

CNOOC (HK: 0883) was down 0.79%.

Nikkei 225

The Nikkei 225 was up 0.36% this morning, supported by a stronger USD/JPY and better-than-expected trade data.

The trade deficit narrowed from ¥898.1 billion to ¥754.5 billion in March versus a forecasted deficit of ¥1,294.8 billion.

According to figures released by the Ministry of Finance,

• Exports increased by 4.3%, with exports to the US (+9.4%) and Western Europe (+4.8%) offsetting a 7.7% slide in exports to China.
• Imports jumped by 7.3% compared with March 2022, with imports from the US rising by 9.6%. Imports from China were up 12.3% compared with March 2022, while imports from Western Europe fell by 3.9%.

Bank stocks made further gains, with Sumitomo Mitsui Financial Group (8316) and Mitsubishi UFJ Financial Group seeing gains of 0.16% and 0.02%, respectively.

Looking at the main components, KDDI Corp (9433) and SoftBank Group Corp. (9984) saw losses of 0.77% and 1.53%, respectively.

However, Tokyo Electron Limited (8035) and Fast Retailing Co (9983) found support, rising by 1.09% and 1.25%, respectively, with Sony Corp (6758) up by 0.12%.

Check out our economic calendar for today’s economic events.