Hang Seng Index, ASX200, Nikkei 225: US Recession Angst Weighs

• It was a bearish Thursday morning for the Asian markets, with the Hang Seng Index, ASX 200, and the Nikkei seeing red.
• Banking sector and recession jitters weighed on the Hang Seng and the ASX 200, while overnight earnings results and economic indicators limited the damage.
• A quiet economic calendar left investors to consider the day ahead, with US GDP and corporate earnings in focus.

Market Overview

It was a bearish Thursday morning for the Asian markets. The Hang Seng Index, ASX 200, and the Nikkei struggled.

Banking sector woes continued to grip the global financial markets, with First Republic Bank (FRC) falling by 29.8% on Wednesday. Fears of another US bank collapse grew as news hit the wires of customers withdrawing more than $100 billion from accounts.

However, upbeat Meta Platforms (META) earnings, following better-than-expected earnings from Microsoft (MSFT) and Alphabet Inc. (GOOGL), cushioned the downside.

While the morning losses were modest, recessionary fears continued to test the appetite for riskier assets. On Wednesday, US Goods Orders Non-Defense Ex-Air fell by 0.4% in March, following a 0.7% decline in February. Later today, US Q1 GDP numbers and jobless claims figures may give investors a better lay of the land.

Economists forecast the US economy growth to slow in Q1, down from 2.6% to 2.0% in Q1. Weaker-than-expected GDP numbers and a spike in US jobless claims would deliver more recession signals. However, sentiment toward Fed monetary policy remains steady.

According to the CME FedWatch Tool, there is a 70.7% probability of a 25-basis point May interest rate hike, down from 83.3% one week ago.

Beyond the economic calendar, US corporate earnings will also be a consideration. Big names on the US earnings calendar include Amazon.com (AMZN), Mastercard (MA), Intel (INTC), and Caterpillar (CAT).

After a mixed Wednesday session, the US futures were in the green this morning. The NASDAQ and Dow Jones were up 66 and 20 points, respectively. The S&P 500 mini gained 9.

ASX 200

The ASX 200 was down 0.41% this morning, with bank and oil stocks a drag. Recessionary fears drove demand concerns, weighing on investor sentiment. However, banking sector jitters overshadowed recession talk.

The big-4 had a bearish morning. The National Australia Bank (NAB) and The Commonwealth Bank of Australia (CBA) fell by 0.62% and 0.60%, respectively, with Westpac Banking Corp (WBC) seeing a 0.29% loss. ANZ Group (ANZ) was down by 0.25%.

Mining stocks had a mixed morning. Rio Tinto (RIO) fell by 0.38%, while BHP Group Ltd (BHP) and Fortescue Metals Group (FMG) were up by 0.15% and 0.63%, respectively. Newcrest Mining (NCM) slid by 1.55%.

However, oil stocks struggled. Woodside Energy Group (WDS) and Santos Ltd (STO) saw losses of 0.59% and 0.91%, respectively. Brent Crude was up 0.28% to $77.91 this morning, partially reversing losses from Wednesday.

Hang Seng Index

The Hang Seng was down 0.13% this morning, with the US Government putting Hua Wei Cloud and Alibaba Cloud in the spotlight, adding to the bearish mood. On Wednesday, US Commerce Secretary Gina Raimondo reportedly said Huawei Cloud and Alibaba Cloud could threaten US security.

Considering the main components, Tencent Holdings Ltd (HK:0700) and Alibaba Group Holding Ltd (HK:9988) fell by 1.09% and 2.28%, respectively.

However, it was a mixed morning for banking stocks. The Industrial and Commercial Bank of China (HK:1398) and HSBC Holdings PLC saw gains of 0.48% and 1.72%, respectively, while China Construction Bank (HK: 0939) fell by 0.57%.

CNOOC (HK: 0883) was down by 0.64%.

Nikkei 225

The Nikkei 225 was down 0.23% this morning. A weaker USD/JPY weighed ahead of the Friday Bank of Japan monetary policy decision.

Despite investor jitters over First Republic Bank, bank stocks found support. Sumitomo Mitsui Financial Group (8316) and Mitsubishi UFJ Financial Group saw gains of 0.91% and 1.28%, respectively.

Looking at the main components, Sony Corp (6758) led the way, rising by 2.84%, with Fast Retailing Co (9983) up by 0.41%.

However, Tokyo Electron Limited (8035) was down 1.41%, with SoftBank Group Corp. (9984) and KDDI Corp (9433) seeing losses of 0.75% and 0.05%, respectively.

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