Hang Seng Index, ASX200, Nikkei 225: Nikkei Leads on Fed Pause Bets

Key Insights:

• It was a bullish morning, with the Nikkei and AX 200 leading the Hang Seng Index.
• The Nikkei was in breakout mode ahead of the Fed and the BoJ policy decisions, with Fed pause bets supporting the ASX 200.
• However, there were no economic indicators from the region to influence the session.

Market Overview

It was a bullish Wednesday morning session for the Asian markets. The Nikkei and the ASX 200 led the Hang Seng Index.

Overnight, the US CPI Report fueled bets of a Fed pause, with the US annual inflation rate softening from 4.9% to 4.0%. The softer headline inflation figure supported a bullish US session, with the Asian markets tracking the US equity markets this morning.

The NASDAQ Composite Index rose by 0.83% on Tuesday, with the Dow and S&P 500 seeing gains of 0.43% and 0.69%, respectively.

According to the CME FedWatch Tool, bets on the Fed hiking rates by 25 basis points in June tumbled in response to the inflation numbers. The probability of a June 25-basis point interest rate hike fell from 20.9% to 4.6%, with the chances of a July 50-basis point interest rate hike falling from 14.0% to 2.9%.

However, the probability of a 25-basis point July hike increased from 59.9% to 60.9%. Bets on a July rate hike pegged the Hang Seng Index back through the morning session.

There were no Asian economic indicators for investors to consider this morning, leaving the Fed in the spotlight.

ASX 200

The ASX 200 was up 0.29% this morning, with bank and mining stocks providing support.

The big-4 had a bullish morning. Westpac Banking Corp (WBC) and The National Australia Bank (NAB) led the way, with gains of 1.11% and 1.17%, respectively. The Commonwealth Bank of Australia (CBA)and ANZ Group (ANZ) were up 0.78% and 0.57%, respectively.

Mining stock also had a bullish morning. Rio Tinto (RIO) and BHP Group Ltd (BHP) were up 2.86% and 2.98%, respectively, with Fortescue Metals Group (FMG) surging by 4.57%. Newcrest Mining (NCM) bucked the trend, falling by 0.08%.

PBoC policy moves supported mining stocks and a rebound in crude oil prices.

Oil stocks had a bullish morning. Woodside Energy Group (WDS) and Santos Ltd (STO) rose by 0.67% and 0.41%, respectively. Brent Crude was up 0.09% to $74.36 this morning.

Hang Seng Index

The Hang Seng was flat this morning.

Considering the main components, Tencent Holdings Ltd (HK:0700) and Alibaba Group Holding Ltd (HK:9988) saw gains of 1.33% and 0.18%, respectively.

However, bank stocks had a bearish morning session. HSBC Holdings PLC slipped by 0.08%, with China Construction Bank (HK: 0939) and The Industrial and Commercial Bank of China (HK:1398) seeing losses of 0.79% and 1.88%, respectively.

CNOOC (HK: 0883) fell by 0.18%.

Nikkei 225

The Nikkei 225 was up 0.87% this morning, with the market bets on a Fed pause and ultra-loose BoJ monetary policy delivering another breakout session.

Sumitomo Mitsui Financial Group (8316) and Mitsubishi UFJ Financial Group rose by 1.94% and 2.21%, respectively.

Looking at the main components, SoftBank Group Corp. (9984) surged by 4.12%, with Fast Retailing Co (9983) up 2.01%.

Sony Corp (6758) and KDDI Corp (9433) saw gains of 0.61% and 0.24, respectively. However, Tokyo Electron Limited (8035) bucked the trend, falling by 0.63%.

Check out our economic calendar for economic events.