Hang Seng Index, ASX200, Nikkei 225: HSI Finds Support from China

Key Insights:

• It was a mixed start to the Tuesday session, with the Hang Seng Index in rebound mode while the Nikkei struggled.
• While hawkish Fed bets lingered, hopes of a Beijing stimulus package provided much-needed support.
• There were no overnight US economic indicators or from the region this morning to change the mood.

Market Overview

It was a mixed morning session for the Asian markets. The Hang Seng Index and ASX 200 found much-needed support, while the Nikkei struggled with a weaker USD/JPY and BoJ monetary policy uncertainty.

The Asian equity markets brushed aside the losses across the US equity markets from Monday. Gains across the US Futures Markets signaled a possible shift in mood, contributing to the bullish morning session.

While there were no US economic indicators to consider, bets on a July Fed rate hike were more hawkish this morning.

This morning, bets on a July Fed interest rate hike remained elevated despite manufacturing sector woes. According to the CME FedWatch Tool, the probability of a 25-basis point July Fed rate hike stood at 75.6% versus 71.9% on Friday.

Significantly, the chances of the Fed lifting rates to 5.75% in September stood at 11.3%, down from 11.5% on Friday, easing bets on a second Fed rate hike after the summer.

There were no Asian economic indicators to influence investor sentiment this morning.

ASX 200

The ASX 200 was up 0.53%, with bank and mining stocks delivering support.

The big-4 had a bullish morning. The ANZ Group (ANZ) and Westpac Banking Corp (WBC) led the way, rising by 1.58% and 1.84%, respectively. The Commonwealth Bank of Australia (CBA) and National Australia Bank (NAB) also found support, gaining 0.87% and 1.29%, respectively.

Mining stock also had a bullish morning. Rio Tinto (RIO) and BHP Group Ltd (BHP) rose by 1.56% and 1.01%, respectively, with Fortescue Metals Group (FMG) up 2.65%. Newcrest Mining (NCM) gained 1.79%.

Oil stocks had a bullish morning. Woodside Energy Group (WDS) and Santos Ltd (STO) were up 0.77% and 0.34%, respectively. Brent Crude was up 0.49% to $74.54 this morning.

Hang Seng Index

The Hang Seng was up 1.68% this morning, with the Chinese equity markets supporting a morning breakout.

Considering the main components, Tencent Holdings Ltd (HK:0700) and Alibaba Group Holding Ltd (HK:9988) were up 2.16% and 2.34%, respectively.

Bank stocks also found support. HSBC Holdings PLC was up 1.26%, with The Industrial and Commercial Bank of China (HK:1398) and China Construction Bank (HK: 0939) seeing gains of 0.73% and 1.40%, respectively.

CNOOC (HK: 0883) was up 2.36%.

Nikkei 225

The Nikkei 225 was down 0.81% this morning, with a weaker USD/JPY weighing.

From the banking sector, Sumitomo Mitsui Financial Group (8316) and Mitsubishi UFJ Financial Group gained 0.57% and 0.70%, respectively.

Looking at the main components, Sony Corp (6758) and SoftBank Group Corp. (9984) were down 2.04% and 2.08%, respectively. Tokyo Electron Limited (8035) and Fast Retailing Co (9983) also struggled, falling by 0.25% and 1.06%, respectively. However, KDDI Corp (9433) bucked the trend, rising by 0.52%.

Check out our economic calendar for economic events.