Hang Seng Index, ASX200, Nikkei 225: Caution Turns to Fear

• It was a bearish Friday morning for the Asian markets, with the Hang Seng Index seeing the heaviest loss.
• US corporate earnings and economic indicators weighed on investor sentiment, with US stats showing the effects of the Fed.
• Economic indicators from Japan failed to distract investors ahead of another busy European and US session.

Market Overview

It was a bearish morning for the Asian markets. The Hang Seng Index led the way down, with the ASX 200 and Nikkei also struggling.

US corporate earnings and US economic indicators weighed on market risk sentiment, leading the Asian equity markets into negative territory.

An unexpected Philly Fed Manufacturing Index slide and rise in US jobless claims sounded the recessionary alarm bells. The Philly Fed Manufacturing Index fell from -23.2 to -31.3 versus a forecasted -19.2. Initial jobless claims increased from 240k to 245k. While jobless claims remained below the 300k levels, the upward trend reflected the impact of Fed interest rate hikes on labor market conditions.

Despite the stats, the markets continued to price in a May Fed interest rate hike.

According to the FedWatchTool, the probability of a 25-basis point May interest rate hike fell from 83.3% to 82.1% over 24 hours versus 67.0% one week ago.

US corporate earnings added to the bearish mood, with Tesla’s (TSLA) earnings sending autos deep into the red.

ASX 200

The ASX 200 was down 0.41% this morning, with bank and mining stocks hitting reverse on recession fears. Economic indicators from Australia failed to provide support, despite a jump in the services PMI.

The big-4 had a bearish morning. The National Australia Bank (NAB) and Westpac Banking Corp (WBC) led the way down, with losses of 1.15% and 1.17%, respectively. The Commonwealth Bank of Australia (CBA)and ANZ Group (ANZ) were down 0.88% and 0.67%, respectively.

Mining stocks also had a bearish morning. Rio Tinto (RIO) and BHP Group Ltd (BHP) were down by 3.03% and 2.28%, respectively, with Fortescue Metals Group (FMG) falling by 3.08%. Newcrest Mining (NCM) fell by 0.22%.

However, oil stocks bucked the trend. Woodside Energy Group (WDS) and Santos Ltd (STO) saw gains of 0.09% and 1.48%, respectively. Brent Crude was flat at $81.10 this morning.

Hang Seng Index

The Hang Seng was down 0.64% this morning. Sentiment toward the US economy and the Fed weighed.

Considering the main components, Tencent Holdings Ltd (HK:0700) and Alibaba Group Holding Ltd (HK:9988) were down by 1.40% and 3.05%, respectively.

However, it was a mixed morning for banking stocks. The Industrial and Commercial Bank of China (HK:1398) rose by 0.23%, while China Construction Bank (HK: 0939) and HSBC Holdings PLC were flat.

CNOOC (HK: 0883) was also flat.

Nikkei 225

The Nikkei 225 was down 0.24% this morning, with a weaker USD/JPY and elevated inflation weighing on buyer appetite. Private sector PMIs for April contributed to the bearish mood. The Jibun Bank Services PMI fell from 55.0 to 54.9, with the manufacturing PMI rising from 49.2 to 49.5. Economists forecast PMIs of 55.1 and 50.0, respectively.

Bank stocks struggled, with Sumitomo Mitsui Financial Group (8316) and Mitsubishi UFJ Financial Group seeing losses of 1.73% and 2.23%, respectively.

Looking at the main components, SoftBank Group Corp. (9984) slid by 2.02%, with Fast Retailing Co (9983) seeing a 1.35% loss.

KDDI Corp (9433) and Sony Corp (6758) saw losses of 0.17% and 0.41%, respectively, while Tokyo Electron Limited (8035) bucked the trend, rising by 1.20%.

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