Hang Seng Index, ASX200, Nikkei 225: Stimulus Hopes Deliver HSI Support

Key Insights:

• It was a mixed start to the Tuesday session, with the Hang Seng Index bucking a bearish morning trend.
• US economic indicators from Monday weighed on the ASX 200 and the Nikkei, while hopes of fresh stimulus from Beijing provided early support to the Hang Seng Index.
• There were no economic indicators to provide direction, though the RBA is in action later this morning.

Market Overview

It was a mixed morning session for the Asian markets. The ASX 200 and the Nikkei saw early losses, while the Hang Seng Index looked to consolidate the 2.06% rally from Monday.

US economic indicators from Monday weighed on market risk sentiment. The preferred ISM Manufacturing PMI fell from 46.9 to 46.0 versus a forecasted 47.2. Notably, the ISM Manufacturing Prices Index fell from 44.2 to 41.8, with the Employment Index down from 51.4 to 48.1.

Investors responded to the latest PMI numbers, with market expectations of a September Fed rate hike easing back this morning. According to the CME FedWatch Tool, the probability of a 25-basis point July Fed rate hike stood at 89.9% versus 87.4% on Monday. Significantly, the chances of the Fed lifting rates to 5.75% in September stood at 19.8%, down from 21.5% on Monday.

Despite the bearish PMI numbers, the Fed remains set to lift rates further this month. While the US economic indicators weighed on riskier assets, the Caixin Manufacturing PMI from China raised expectations of more stimulus measures to support the economy.

However, there were no economic indicators from the Asian region to draw attention this morning.

ASX 200

The ASX 200 was down 0.05% this morning, with investors on the sidelines ahead of an RBA interest rate decision. Fear of an RBA-induced recession tested buyer appetite, with economists forecasting another 25-basis point interest rate hike.

The big-4 had a bearish morning. ANZ Group (ANZ) and Westpac Banking Corp (WBC) were down 0.44% and 0.47%, respectively. The Commonwealth Bank of Australia (CBA) and The National Australia Bank (NAB) also struggled, falling by 0.39% and 0.32%, respectively.

However, mining stock had a mixed morning. Rio Tinto (RIO) and Fortescue Metals Group (FMG) both fell by 0.58%, respectively. Newcrest Mining (NCM) and BHP Group Ltd (BHP) found support, rising by 0.33% and 0.09%, respectively.

Oil stocks also had a mixed morning. Woodside Energy Group (WDS) gained 0.81%, while Santos Ltd (STO) slipped 0.07%. Brent Crude was up 0.46% to $74.99 this morning.

Hang Seng Index

The Hang Seng was up 0.38% this morning on stimulus bets and easing fear of a September Fed rate hike.

Considering the main Index components, Tencent Holdings Ltd (HK:0700) and Alibaba Group Holding Ltd (HK:9988) were up 0.41% and 0.24%, respectively.

Bank stocks had a mixed morning. HSBC Holdings PLC and The Industrial and Commercial Bank of China (HK:1398) rose by 0.56% and 0.47%, respectively. China Construction Bank (HK: 0939) was flat.

CNOOC (HK: 0883) rose by 2.10%.

Nikkei 225

The Nikkei 225 was down 0.61% this morning, with profit-taking contributing to the modest pullback.

From the banking sector, Sumitomo Mitsui Financial Group (8316) and Mitsubishi UFJ Financial Group rose by 2.16% and 1.01%, respectively.

Looking at the main components, Fast Retailing Co (9983) and Sony Corp (6758) fell by 1.06% and 1.31%, respectively. SoftBank Group Corp. (9984) and KDDI Corp (9433) saw losses of 0.80% and 0.74%, respectively. Tokyo Electron Limited (8035) bucked the trend, gaining 0.09%.

Check out our economic calendar for economic events.