Hang Seng Index, ASX200, Nikkei 225: China Economy in Focus

Key Insights:

• It will likely be a choppy morning for the Asian equity markets.
• While investors respond to US banking sector earnings results, economic indicators from China also need consideration.
• A stimulus package from Beijing may need to materialize to limit the impact of the economic indicators on the Asian markets.

Market Overview

The Hang Seng Index and the broader Asian markets are set for a choppy start to the week after a mixed Friday session in the US.

This morning, there are no economic indicators from Australia or Japan to influence. However, Q2 GDP, industrial production, fixed asset investment, and retail sales numbers from China will move the dial.

Last week, hopes of a substantial stimulus package from Beijing supported riskier assets across the region, with trade data and inflation numbers sending gloomy signals. Today’s numbers could force Beijing to hit the stimulus button or hit market risk appetite.

From the US session on Friday, a sharp increase in the Michigan Consumer Sentiment Index was bullish but unlikely to trump the numbers from China. The Michigan Consumer Sentiment Index rose from 64.4 to 72.6 in July versus a prelim 65.5. Significantly, the inflation expectations component increased from 3.3% to 3.4%.

The US equity markets had a mixed end to the week, despite the better-than-expected consumer sentiment numbers. The NASDAQ Composite Index and S&P 500 fell by 0.18% and 0.10%, respectively, while the Dow gained 0.33% on bank earnings results.

From the Asian region, there were no economic indicators to influence the Friday session.

ASX 200

The ASX 200 gained 0.78% on Friday to wrap up a bullish week on a slump in hawkish Fed bets.

The big-4 had a bullish Friday. The National Australia Bank (NAB) gained 1.39%, with ANZ Group (ANZ) and The Commonwealth Bank of Australia (CBA) ending the day up by 0.33% and 0.71%, respectively. Westpac Banking Corp (WBC) ended the session flat.

Mining stocks had another bullish session. Rio Tinto (RIO) and BHP Group Ltd (BHP) ended the day with gains of 1.55% and 1.77%, respectively, with Fortescue Metals Group (FMG) gaining by 1.38%. Newcrest Mining (NCM) also found support, rising by 0.22%.

Oil stocks had a bullish session. Woodside Energy Group (WDS) and Santos Ltd (STO) ended the day up 1.54% and 0.39%, respectively.

Hang Seng Index

The Hang Seng extended the winning streak to five sessions, rising by 0.33%.

Considering the main Index components, Tencent Holdings Ltd (HK:0700) and Alibaba Group Holding Ltd (HK:9988) rose by 0.80% and 0.22%, respectively.

However, bank stocks had a mixed session. HSBC Holdings PLC and The Industrial and Commercial Bank of China (HK:1398) rose by 1.05% and 1.10%, respectively, while China Construction Bank (HK: 0939) ended the day flat.

CNOOC (HK: 0883) ended the day up 0.49%.

Nikkei 225

(For demonstrative purposes only)

The Nikkei 225 slipped by 0.09%, with the weaker USD/JPY a drag.

The banks had a bearish session. Sumitomo Mitsui Financial Group (8316) and Mitsubishi UFJ Financial Group fell by 0.10% and 0.38%, respectively.

Looking at the main components, Tokyo Electron Limited (8035) gained 1.76%, with KDDI Corp (9433) ending the day flat.

However, SoftBank Group Corp. (9984) and Fast Retailing Co (9983) saw losses of 2.01% and 2.09%, respectively, with Sony Corp (6758) ending the day down 1.08%.

Check out our economic calendar for economic events.