Hang Seng Index, ASX200, Nikkei 225: PBoC and Aussie Stats in Focus

Key Insights:

• It was a mixed Wednesday for the Asian equity markets, with the Hang Seng seeing further losses while the ASX 200 and Nikkei tracked the US markets into positive territory.
• There were no Asian economic indicators to influence, leaving US corporate earnings and Fed sentiment to provide direction.
• However, it is a busier day ahead for the Asian markets, with trade data from Japan, Australian employment numbers, and the PBoC in focus.

It was a mixed Wednesday session for the Hang Seng Index and the broader Asian markets. Concerns over the China economy continued to weigh on the Hang Seng Index. However, there were no economic indicators from Asia on Wednesday to influence investor sentiment, leaving US economic indicators and corporate earnings from Tuesday to provide the ASX 200 and the Nikkei with support.

US retail sales increased by 0.2% in June versus 0.5% in May. Economists forecast retail sales to rise by 0.5%. While softer than expected, the numbers supported the bets on a US soft landing. Corporate earnings also provided market support.

Bank of America (BAC) beat earnings estimates on higher lending rates, with Morgan Stanley (MS) also beating analyst expectations despite a sharp fall in profits.

The Day Ahead

This morning, trade data from Japan, Australian employment numbers, and the PBoC will be in focus. Tighter labor market conditions in Australia would support a more hawkish RBA policy outlook. Trade data from Japan would need to reflect improving trade terms with China and the US to send bullish signals.

From overnight, US housing sector economic indicators are unlikely to provide direction this morning. However, corporate earnings will draw interest. Tesla (TSLA), Netflix (NFLX), and Goldman Sachs (GS) were among the big names releasing results on Wednesday.

The US equity markets responded to the earnings results and US soft-landing bets. The NASDAQ Composite Index gained 0.03%, with the Dow and the S&P 500 rising by 0.31% and 0.24%, respectively.

ASX 200

The ASX 200 gained 0.55% on Wednesday, with US economic indicators and corporate earnings from Tuesday providing support.

The big-4 had a bullish Wednesday session. Westpac Banking Corp (WBC) led the way, rallying 2.13%, with ANZ Group (ANZ) and The Commonwealth Bank of Australia (CBA) seeing gains of 2.04% and 2.03%, respectively. The National Australia Bank (NAB) ended the day up 1.12%.

Mining stocks had a bearish session. Rio Tinto (RIO) and BHP Group Ltd (BHP) ended the day with losses of 0.74% and 0.33%, respectively, with Fortescue Metals Group (FMG) falling by 1.85%. Newcrest Mining (NCM) bucked the trend, gaining 0.47%.

However, oil stocks found support, with Woodside Energy Group (WDS) and Santos Ltd (STO) rising by 1.41% and 1.59%, respectively.

Hang Seng Index

The Hang Seng Index consolidated the Tuesday loss, falling by 0.33% on China growth concerns.

Considering the main Index components, Tencent Holdings Ltd (HK:0700) fell by 1.01%, while Alibaba Group Holding Ltd (HK:9988) gained 0.72%.

However, bank stocks also had a mixed session. HSBC Holdings PLC and The Industrial and Commercial Bank of China (HK:1398) ended the day up 0.48% and 0.28%, respectively, while China Construction Bank (HK: 0939) ended the day flat.

CNOOC (HK: 0883) rose by 1.16%.

Nikkei 225

(For demonstrative purposes only)

The Nikkei 225 rallied 1.24% on Wednesday, with a stronger USD/JPY providing support.

The banks had a bullish session. Sumitomo Mitsui Financial Group (8316) and Mitsubishi UFJ Financial Group rose by 0.67% and 0.18%, respectively.

Looking at the main components, SoftBank Group Corp. (9984) gained 2.29%, with Fast Retailing Co (9983) and Tokyo Electron Limited (8035) ending the day up 1.40% and 1.64%, respectively. Sony Corp (6758) and KDDI Corp (9433) saw modest gains of 0.42% and 0.26%, respectively.

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