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

• It was a mixed morning for the Asian markets, with the Hang Seng and ASX 200 struggling.
• The Nikkei bucked a bearish trend,  supported by a jump in the USD/JPY to 137.
• Unexpectedly hawkish Fed Chair Powell testimony weighed on riskier assets, with a 50-basis point Fed rate hike on the table.

Market Overview

It was a mixed morning for the Asian markets, with the Hang Seng and the ASX 200 in negative territory, while Nikkei 225 bucked a bearish market trend. There were no US economic indicators to consider, leaving the markets to respond to Fed Chair Powell’s testimony.

On Tuesday, Fed Chair Powell spoke of the need for higher rates to combat inflation, noting that economic data was better than expected. In response to Powell’s testimony, the NASDAQ Composite Index ended the day with a 1.25% loss, with the Dow and S&P 500 falling by 1.72% and 1.53%, respectively.

There were no material economic indicators from the region to distract investors this morning. Investors will be mindful of a busier US economic calendar, with ADP nonfarm employment change and JOLTs Job Openings in focus. Hotter-than-expected numbers would fuel bets of a 50-basis point Fed rate hike, which will test investor sentiment this morning.

Fed Chair Powell will also deliver a second day of testimony. While the second day tends to have little fanfare, a sharp increase in nonfarm payrolls could fuel more hawkish comments from the Fed Chair.

ASX 200

The ASX 200 was down 0.98%. There were no stats to influence, leaving Fed Chair Powell’s hawkish comments to resonate. However, RBA Governor Philip Lowe delivered a less hawkish monetary policy outlook this morning, which cushioned the blow.

Addressing the Australian Financial Review’s Business Summit, Lowe echoed the RBA Rate Statement, stating that the Bank was closely watching economic indicators while mindful of the impact of interest rate hikes and elevated inflation on households.

Regarding pausing rate hikes, Lowe reportedly said,

“With monetary policy in restrictive territory, we are closer to the point where it will be appropriate to pause interest rates to allow more time to assess the state of the economy. At what point it will be appropriate to pause will be determined by the data and our assessment of the outlook.”

Bank stocks had a bearish morning. ANZ Group (ANZ) and Westpac Banking Corp (WBC) fell by 1.22 and 1.25%, respectively, with National Australia Bank (NAB) and Commonwealth Bank of Australia (CBA) seeing losses of 0.91% and 0.99%, respectively.

Oil stocks were in the red, with Woodside Energy Group (WDS) tumbling by 7.23% in response to the Powell-fueled slide in crude oil prices. Santos Ltd (STO) saw a more modest 0.20% loss. WTI Crude and Brent Crude were up today, with Brent Crude rising by 0.24% to $83.49 this morning.

Mining stocks also had a bearish session. Rio Tinto (RIO) and BHP Group Ltd (BHP) were down by 0.14% and 0.69%, respectively, with Fortescue Metals Group (FMG) falling by 1.15%. Newcrest Mining (NCM) slid by 3.50%.

Hang Seng Index

The Hang Seng was down 2.18% this morning, with Powell sending the Index into the deep red.

Looking at the main components of the Index, Tencent Holdings Ltd (HK:0700) was down 2.02%, with Alibaba Group Holding Ltd (HK:9988) falling by 2.31%.

It was also a bearish morning for banking stocks. HSBC Holdings PLC declined by 1.11%, with China Construction Bank (HK: 0939) and Industrial and Commercial Bank of China (HK:1398) seeing losses of 1.96% and 0.72%, respectively.

CNOOC (HK: 0883) responded to the overnight slide in crude oil prices, falling by 1.94%.

Nikkei 225

The Nikkei 225 was up 0.70% this morning, supported by the USD/JPY return to 137. Economic data from Japan had a muted impact on the Nikkei despite disappointing current account numbers. The current account balance fell from a ¥0.033 trillion surplus to a ¥1.977 trillion deficit in January. Economists forecast a deficit of ¥0.818 trillion.

Fast Retailing Co (9983) rose by 1.09%, with KDDI Corp (9433) up 0.96%. Sony Corp (6758) and Tokyo Electron saw more modest gains of 0.38% and 0.29%, respectively. However, SoftBank Group Corp. (9984) fell by 1.33%.

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