Hang Seng Index, ASX200, Nikkei 225: Hang Seng Trails on Growth Targets

• It was a bullish start to the week for the Asian markets, with the ASX 200 leading the way.
• Market reaction to the bullish US session on Friday and hopes of a slow and steady rise in US interest rates delivered morning support.
• The morning gains came despite China delivering a 5% growth target, below expectations of 5.5%.

Market Overview

It was a bullish start to the week for the Asian markets, with the ASX 200 and Nikkei 225 on the move. However, the Hang Seng Index trailed the front runners, with revised growth targets from Beijing testing buyer appetite.

Economic indicators from the US and a shift in sentiment toward Fed monetary policy supported a bullish end to the week for the US markets. The ISM Non-Manufacturing PMI slipped from 55.2 to 55.1, indicating solid service sector activity and a sharp rise in hiring. In February, the ISM Non-Manufacturing Employment Index jumped from 50.0 to 54.0.

However, the numbers failed to fuel more aggressive Fed policy bets, with the talk of slow and steady rate hikes resonating.

Hawkish chatter from the weekend failed to weigh in risk sentiment this morning. On Saturday, FOMC Member Mary Daly spoke of lifting interest rates in 50-basis point increments to tackle inflation.

However, growth targets from Beijing pegged back the Hang Seng Index. China delivered a 5% growth target, below market expectations of 5.5%. The disappointing growth target weighed on the CSI 300, which fell by 0.56% this morning, bucking a bullish market trend.

There were no economic indicators from Asia to distract investors this morning. With US factory orders out later today, the focus will shift to the Fed and Fed Chair Powell’s testimony on Tuesday. A move to a more hawkish posture would catch the markets by surprise.

ASX 200

The ASX 200 was up 0.72%. Easing Fed Fear delivered a bullish session for the Dow Jones, supporting the morning gains.

Bank stocks were on the rise. ANZ Group (ANZ) and Westpac Banking Corp (WBC) rose by 2.14% and 2.07%, respectively. Commonwealth Bank of Australia (CBA) and National Australia Bank (NAB) saw gains of 1.23% and 1.80%, respectively.

However, oil stocks struggled. Woodside Energy Group (WDS) and Santos Ltd (STO) saw losses of 0.89% and 0.62%, respectively. WTI Crude and Brent Crude losses weighed, with Brent Crude down 0.72% to $85.21 this morning.

Mining stocks also had a bearish session. Rio Tinto (RIO) and BHP Group Ltd (BHP) were down by 1.12% and 0.27%, respectively, while Fortescue Metals Group (FMG) slid by 2.97%. Newcrest Mining (NCM) fell by 1.08%. The growth target from Beijing likely weighed on the mining stocks.

Hang Seng Index

The Hang Seng was up 0.04% this morning, with the latest growth targets from China capping the upside.

Looking at the main components of the Index, Tencent Holdings Ltd (HK:0700) was down 1.14%, with Alibaba Group Holding Ltd (HK:9988) falling by 1.19%.

However, it was a bullish morning for banking stocks. HSBC Holdings PLC rose by 0.17%, with China Construction Bank (HK: 0939) and Industrial and Commercial Bank of China (HK:1398) seeing gains of 0.20% and 0.73%, respectively.

CNOOC (HK: 0883) found further support, rallying 3.11% on Friday’s crude oil price gains.

Nikkei 225

The Nikkei 225 was up 0.28% this morning, with a weaker USD/JPY at sub-136 levels limiting the upside. There were no stats to consider, leaving the focus on the Bank of Japan and BoJ Governor Kuroda’s final policy decision. Incoming Governor Ueda delivered dovish comments in recent days, supporting the Nikkei.

Fast Retailing Co (9983) rose by 1.51%, with KDDI Corp (9433) gaining 0.37%. However, Sony Corp (6758), Tokyo Electron Ltd (8035), and SoftBank Group Corp. (9984) led the way. Tokyo Electron and Softbank rallied by 3.29% and 3.01%, respectively, with Sony rising by 2.64%.

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