Hang Seng Index, ASX200, Nikkei 225: Markets Up on Fed Rate Cut Bets

• It was a bullish Friday morning session, with the Hang Seng Index leading.
• US economic indicators capped the upside, with the US labor market showing early signs of fatigue.
• This morning, economic indicators from Australia and China provided support.

Market Overview

It was a bullish Friday morning session for the Asian markets. The Hang Seng Index led the way, with the ASX 200 also finding support. The Japanese markets were closed today.

US economic indicators from Thursday, the US banking sector woes, and the ongoing political wrangling on Capitol Hill pegged the Asian markets back from more meaningful gains.

Initial jobless claims increased from 229k to 242k, with nonfarm productivity sliding by 2.7% in Q1. However, unit labor costs surged by 6.3%. Economists forecast nonfarm productivity to fall by 1.8% and unit labor costs to increase by 5.5%.

Significantly, the latest economic indicators wiped out bets of a June interest rate hike. According to the CME FedWatch Tool, the probability of a 25-basis point June interest rate hike fell from 16.3% to 0% over 24 hours. In contrast, the bets on a 25-basis point interest rate cut increased from 6.6% to 9.2%.

On Thursday, the NASDAQ Composite Index fell by 0.49%, with the Dow and S&P 500 seeing losses of 0.86% and 0.72%, respectively. However, the NASDAQ mini was up 57.75 points this morning, with the Dow gaining 65.

The banking sector crisis has fueled bets on a Fed rate cut, supporting riskier assets.

This morning, economic data from China and Australia delivered bullish signals. China’s Caixin Services PMI fell from 57.8 to 56.4% in April versus a forecasted 57.3. While falling short of forecasts, service sector activity continued to impress.

As investors considered the morning economic indicators, the markets were likely mindful of the US Jobs Report. Later today, the US Jobs Report will influence sentiment toward Fed monetary policy. A pickup in wage growth and a sizeable rise in nonfarm payrolls would refuel bets of a June Fed interest rate hike.

ASX 200

The ASX 200 was up 0.21%, with bank stocks delivering much-needed support. A surge in home loans and the RBA Statement on Monetary Policy supported the bullish session.

The big-4 had a mixed morning. The National Australia Bank (NAB) fell by 0.22% to buck the trend. However, ANZ Group (ANZ) and Westpac Banking Corp (WBC) saw gains of 1.92 and 1.13%, respectively. The Commonwealth Bank of Australia (CBA) also found support, rising by 0.57%.

However, mining stocks saw red on growth concerns. Rio Tinto (RIO) and BHP Group Ltd (BHP) fell by 1.03% and 0.75%, respectively, with Fortescue Metals Group (FMG) declining by 1.36%. Newcrest Mining (NCM) was up 2.37%.

Oil stocks were relatively flat. Woodside Energy Group (WDS) slipped by 0.09%, while Santos Ltd (STO) rose by 0.07%. Brent Crude was up 0.52% to $72.88 this morning.

Hang Seng Index

This morning, the Hang Seng was up 0.65%. Easing bets of a June Fed rate hike and China services PMI numbers provided morning support.

Considering the main components, Tencent Holdings Ltd (HK:0700) and Alibaba Group Holding Ltd (HK:9988) were up by 1.95% and 1.86%, respectively.

However, it was a mixed morning session for bank stocks. HSBC Holdings PLC fell by 1.11%, while the Industrial and Commercial Bank of China (HK:1398) and China Construction Bank (HK: 0939) were up 1.37% and 0.75%, respectively.

CNOOC (HK: 0883) declined by 0.32%.

Nikkei 225

The Japanese markets were closed today for Children’s Day. On Tuesday, the Nikkei 225 rose by 0.12%.

Sumitomo Mitsui Financial Group (8316) and Mitsubishi UFJ Financial Group saw losses of 0.62% and 0.77%, respectively.

Considering the main components, Tokyo Electron Limited (8035) and SoftBank Group Corp. (9984) bucked the trend, with gains of 1.48% and 0.14%, respectively.

However, Fast Retailing Co (9983) fell by 0.40%, with Sony Corp (6758) and KDDI Corp (9433) seeing modest losses of 0.08% and 0.07%, respectively.

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