Hang Seng Index, ASX200, Nikkei 225: Markets in Limbo as Deal Vote Looms

Key Insights:

• It was a bearish Tuesday morning, with the Nikkei leading the ASX 200 and Hang Seng Index into the red.
• The downside came despite optimism toward lawmakers voting in favor of the US debt ceiling deal.
• Economic indicators from Japan failed to support the Nikkei despite a fall in the unemployment rate.

Market Overview

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

There were no cues from Monday, with the US markets closed for Memorial Day. US futures delivered support this morning, with the NASDAQ and Dow up 52 and 53 points, respectively.

Economic indicators from Australia and Japan sent mixed signals. Japan’s unemployment rate fell from 2.8% to 2.6% in April versus a forecasted 2.7%. The latest numbers supported a possible Bank of Japan tweak to its monetary policy outlook.

However, Australian building approvals tumbled by 8.1% in April versus a forecasted 2.0% increase, reflecting the effects of RBA interest rate hikes on the real estate sector.

On Friday, the NASDAQ Composite Index rallied 2.19%, with the Dow and the S&P 500 seeing gains of 1.00% and 1.30%, respectively.

ASX 200

The ASX 200 was down by 0.05%, with bank stocks weighing.

The big-4 had a bearish morning. The Commonwealth Bank of Australia (CBA) and ANZ Group (ANZ) saw losses of 0.52% and 0.84%, respectively. The National Australia Bank (NAB) and Westpac Banking Corp (WBC) were down by 0.19% and 0.12%, respectively.

However, mining stocks had a bullish morning. Rio Tinto (RIO) and BHP Group Ltd (BHP) were up by 0.81% and 0.53%, respectively, with Fortescue Metals Group (FMG) gaining 0.45%. Newcrest Mining (NCM) rose by 0.10%.

Oil stocks also found support. Woodside Energy Group (WDS) and Santos Ltd (STO) rose by 0.03% and 0.27%, respectively. Brent Crude was up 0.42% to $77.39 this morning.

Hang Seng Index

The Hang Seng was down 0.34% this morning. Reports of several Republicans planning to vote against the debt ceiling deal likely tested buyer appetite, with concerns over the Chinese economy also a consideration.

Considering the main components, Tencent Holdings Ltd (HK:0700) fell by 0.13%, while Alibaba Group Holding Ltd (HK:9988) gained 0.84%.

Bank stocks had another mixed morning session. HSBC Holdings PLC rose by 0.17%, while the Industrial and Commercial Bank of China (HK:1398) was flat. China Construction Bank (HK: 0939) fell by 0.39%.

CNOOC (HK: 0883) was up 0.32%.

Nikkei 225

The Nikkei 225 was down 0.58% this morning, with a weaker USD/JPY contributing to the downside.

Sumitomo Mitsui Financial Group (8316) fell by 0.18%, while Mitsubishi UFJ Financial Group gained 0.38%.

Looking at the main components, SoftBank Group Corp. (9984) tumbled by 4.24%, with KDDI Corp (9433) falling by 0.64%. Tokyo Electron Limited (8035) and Sony Corp (6758) saw modest losses of 0.20% and 0.30%, respectively, while Fast Retailing Co (9983) gained 0.09%.

Check out our economic calendar for economic events.