Hang Seng Index, ASX200, Nikkei 225: China PMIs and Debt Jitters Weigh

Key Insights:

• It was a bearish Wednesday morning, with the Hang Seng Index leading the ASX 200 and Nikkei Index into the red.
• Investor jitters toward the debt ceiling vote tested buyer appetite going into the Wednesday session.
• Economic indicators from China added to the bearish mood, with private sector PMIs disappointing.

Market Overview

It was a bearish start to the Wednesday session for the Asian markets. The Hang Seng Index led the ASX 200 and the Nikkei into negative territory as investors tracked US debt ceiling-related news.

Better-than-expected consumer confidence numbers from the US failed to provide early support. Investors remained focused on Capitol Hill and the progress of the debt ceiling deal to a vote. A vote on the debt ceiling deal will take place later today.

On Tuesday, the NASDAQ Composite Index gained 0.32%, while the Dow declined by 0.15%. The S&P 500 ended the Tuesday session flat.

While investor jitters toward the vote were evident, economic indicators from the region contributed to the bearish sentiment. Private sector PMI numbers from China weighed on riskier assets.

NBS Manufacturing and Non-Manufacturing PMI figures for May gave investors a better view of the macroeconomic environment midway through the second quarter.

The NBS Manufacturing PMI declined from 49.2 to 48.8, with the Non-Manufacturing PMI falling from 56.4 to 54.5. Economists forecast the NBS Manufacturing PMI to rise from 49.2 to 49.4 and the Non-Manufacturing PMI to fall from 56.4 to 55.0.

The NBS numbers are a precursor to the Caixin Manufacturing PMI numbers that will have more impact on riskier assets.

ASX 200

The ASX 200 was down by 0.99%, with bank and mining stocks weighing. Australian inflation figures provided little comfort, with sticky inflation likely to keep pressure on the RBA. The annual inflation rate softened from 7.0% to 6.8% in April versus a forecasted 6.4%.

The big-4 had a bearish morning. The Commonwealth Bank of Australia (CBA) and ANZ Group (ANZ) saw losses of 1.31% and 1.28%, respectively. The National Australia Bank (NAB) and Westpac Banking Corp (WBC) were down by 0.89% and 1.09%, respectively.

Mining stocks also struggled. Rio Tinto (RIO) and BHP Group Ltd (BHP) were both down by 2.14%, respectively, with Fortescue Metals Group (FMG) sliding by 2.57%. Newcrest Mining (NCM) fell by 0.54%.

Oil stocks succumbed to the Wednesday fall in crude oil prices and today’s PMI numbers from China. Woodside Energy Group (WDS) and Santos Ltd (STO) declined by 1.91% and 1.40%, respectively. Brent Crude was down 0.11% to $73.46 this morning.

Hang Seng Index

The Hang Seng was down 1.61% this morning. The China PMI numbers weighed heavily.

Considering the main components, Tencent Holdings Ltd (HK:0700) and Alibaba Group Holding Ltd (HK:9988) saw losses of 1.08% and 1.90%, respectively.

Bank stocks also had a bearish morning session. HSBC Holdings PLC fell by 1.61%, with the Industrial and Commercial Bank of China (HK:1398) and China Construction Bank (HK: 0939) seeing losses of 0.71% and 0.79%, respectively.

CNOOC (HK: 0883) tumbled by 3.90%.

Nikkei 225

The Nikkei 225 was down 0.11% this morning, with industrial production and retail sales figures falling short of forecasts. According to prelim numbers, industrial production fell by 0.4% in April versus a forecasted 0.5% increase. Retail sales increased by 5.0% year-over-year versus forecasts of a 5.8% rise. In March, retail sales were up 6.9%.

Sumitomo Mitsui Financial Group (8316) and Mitsubishi UFJ Financial Group saw gains of 0.23% and 0.51%, respectively.

Looking at the main components, SoftBank Group Corp. (9984) bucked the trend, rising by 0.65%. However, Fast Retailing Co (9983) and Sony Corp (6758) saw losses of 1.14% and 1.09%, respectively, with Tokyo Electron Limited (8035) falling by 1.04%. KDDI Corp (9433) saw a more modest 0.60% loss.

Check out our economic calendar for economic events.