Hang Seng Index, ASX200, Nikkei 225: HSI Slides on Powell Angst

Key Insights:

• It was a mixed morning, with the Hang Seng Index and the Nikkei seeing early losses.
• US economic indicators and Fed chatter from Friday raised hawkish Fed bets to test buyer appetite ahead of Fed Chair Powell testimony on Tuesday.
• However, hopes of further PBoC moves to aid the economy and the talk of a Beijing stimulus package did the rounds.

Market Overview

It was a mixed Monday morning session for the Asian markets. The Hang Seng Index and Nikkei struggled, while the ASX 200 made early gains.

Hawkish Fed bets tested buyer appetite at the start of the week. Bets on July and September rate hikes were up in response to FOMC member support for further rate increases.

According to the CME FedWatch Tool, the probability of a 25-basis point July rate hike stood at 74.4%, up from 52.8% one week earlier. Significantly, the chances of a September 25-basis point interest rate hike rose from 50.0% to 67.1% over the week, while bets on a 50-basis point interest rate hike fell from 15.7% to 11.2%.

FOMC member Christopher Waller and Thomas Barkin supported further rate hikes on Friday. Fed Chair Powell will give testimony on Capitol Hill on Tuesday and Wednesday that could lead the markets to raise the peak Fed Funds Rate from 5.6%.

The NASDAQ Composite Index fell by 0.68% on Friday, with the Dow and S&P 500 seeing losses of 0.32% and 0.37%, respectively.

This morning, there were no economic indicators for investors to consider. However, talk of a Beijing stimulus package and further support from the PBoC did the rounds.

Beyond the economic calendar and monetary policy, geopolitics was in the spotlight. US Secretary of State Antony Blinken made the first Secretary of State visit to China in five years. Blinken met with Foreign Minister Qin Gang, with both sides reportedly keen to build stable and predictable relations. A meeting with China’s Premier Xi Jinping would send a positive signal to the markets.

ASX 200

The ASX 200 was up 0.70% this morning, with the big-4 bank delivering support.

The big-4 had a bullish morning. ANZ Group (ANZ) was up 1.63%, with The Commonwealth Bank of Australia (CBA) and The National Australia Bank (NAB) rising by 1.23% and 1.18%, respectively. Westpac Banking Corp (WBC) gained 1.00%.

However, mining stock had a bearish morning. Rio Tinto (RIO) and BHP Group Ltd (BHP) saw losses of 0.86% and 0.32%, respectively, with Fortescue Metals Group (FMG) down 0.80%. Newcrest Mining (NCM) gained 1.56%.

Oil stocks had a mixed morning. Woodside Energy Group (WDS) was up 0.34%, while Santos Ltd (STO) fell by 0.07%. Brent Crude was down 1.48% to $75.48 this morning.

Hang Seng Index

The Hang Seng was down 1.24% despite hopes of a Beijing stimulus package and further PBoC support.

Considering the main components, Tencent Holdings Ltd (HK:0700) and Alibaba Group Holding Ltd (HK:9988) saw losses of 2.59% and 2.73%, respectively.

However, bank stocks had a mixed morning session. HSBC Holdings PLC gained 0.57%, while The Industrial and Commercial Bank of China (HK:1398) fell by 0.71%. China Construction Bank (HK: 0939) was flat.

CNOOC (HK: 0883) rose by 1.25%.

Nikkei 225

The Nikkei 225 was down 0.23% this morning despite the USD/JPY targeting 143 on the BoJ ultra-loose monetary policy position.

From the banking sector, Sumitomo Mitsui Financial Group (8316) and Mitsubishi UFJ Financial Group rose by 1.83% and 0.90%, respectively.

Looking at the main components, SoftBank Group Corp. (9984) fell by 1.33%, with Tokyo Electron Limited (8035) down 0.98%. Sony Corp (6758) and KDDI Corp (9433) saw losses of 0.47% and 0.31%, respectively. Fast Retailing Co (9983) bucked the trend, rising by 0.46%.

Check out our economic calendar for economic events.