Hang Seng Index, ASX200, Nikkei 225: Powell Sinks the ASX 200

Key Insights:

• It was a bearish Thursday morning, with the Nikkei and the ASX 200 tracking the US equity markets into the red.
• Fed Chair Powell stuck to the script on Wednesday, delivering a hawkish tone, with the view of two further rate hikes this year testing buyer appetite.
• There were no economic indicators from the region to provide direction this morning, with the Hong Kong and China markets closed for the annual Dragon Boat Festival.

Market Overview

It was a bearish morning session for the Asian markets. The Nikkei and ASX 200 struggled, while the China and Hong Kong markets were closed for the Dragon Boat Festival.

There were no US economic indicators from overnight to influence market risk sentiment this morning. The lack of economic indicators left Fed Chair Powell’s first day of testimony to impact market risk sentiment.

Powell stuck to the FOMC press conference script to align the markets with a Fed Funds Rate peak of 5.6%. The testimony dashed the hopes of the Fed ending its monetary policy tightening cycle.

With no surprises from the first day of testimony, Fed interest rate bets showed little movement. According to the CME FedWatch Tool, the probability of a 25-basis point July rate hike stood at 71.9% on Wednesday versus 76.9% on Monday. The chances of the Fed lifting the Fed Funds Rate to 5.75% in September decreased from 12.3% to 10.1%.

There were no economic indicators from the Asian region to distract investors this morning, leaving the Nikkei and the ASX 200 on the back foot.

ASX 200

The ASX 200 was down 1.46%, with bank and mining stocks weighing on the broader index.

The big-4 had a bearish morning. ANZ Group (ANZ) and The National Australia Bank (NAB) saw losses of 1.52% and 1.32%, respectively. The Commonwealth Bank of Australia (CBA) and Westpac Banking Corp (WBC) were down 1.26% and 0.97%, respectively.

Mining stock had a bearish morning over China’s economic woes and a hawkish Fed. Rio Tinto (RIO) and BHP Group Ltd (BHP) fell by 1.27% and 2.01%, respectively, with Fortescue Metals Group (FMG) down 1.50%. Newcrest Mining (NCM) was down 1.21%.

Oil stocks also had a bearish morning on demand jitters. Woodside Energy Group (WDS) and Santos Ltd (STO) fell by 1.23% and 0.78%, respectively. Brent Crude was down 0.36% to $76.84 this morning.

Hang Seng Index

The Hong Kong markets are closed today. On Wednesday, Hang Seng ended the day with a 1.98% loss, with concerns over the Chinese economy and Fed Chair Powell jitters weighing.

Considering the main components, Tencent Holdings Ltd (HK:0700) and Alibaba Group Holding Ltd (HK:9988) saw losses of 2.74% and 4.13%, respectively.

Bank stocks also struggled. HSBC Holdings PLC fell by 0.33%, with The Industrial and Commercial Bank of China (HK:1398) and China Construction Bank (HK: 0939) seeing losses of 0.24% and 0.59%, respectively.

CNOOC (HK: 0883) fell by 0.71%.

Nikkei 225

The Nikkei 225 was down 0.11% this morning, with a weaker USD/JPY also weighing.

From the banking sector, Sumitomo Mitsui Financial Group (8316) and Mitsubishi UFJ Financial Group rose by 1.89% and 3.28%, respectively.

Looking at the main components, KDDI Corp (9433) and Fast Retailing Co (9983) saw gains of 1.61% and 0.64%, respectively.

However, Tokyo Electron Limited (8035) and SoftBank Group Corp. (9984) saw losses of 2.72% and 1.69%, respectively, with Sony Corp (6758) down 0.15%.

Check out our economic calendar for economic events.