Hang Seng Index, Nikkei 225, ASX 200: Fed Rate Cut Bets to Set the Tone

Overview of the Friday Session

On Friday, the Nikkei 225 led the ASX 200 and the Hang Seng Index into positive territory.

Overnight US economic indicators from Thursday set the tone for the Friday Asian session. The Personal Income and Outlay Report raised bets on an H1 2024 Fed rate cut.

The Core PCE Price Index increased by 2.8% year-on-year in January. In December, the Core PCE Price Index rose by 2.9% year-on-year. While personal income jumped by 1.0%, personal spending increased by 0.2%, suggesting a softer demand-driven inflation environment.

On Thursday, the Nasdaq Composite index rose by 0.90%. The Dow and S&P 500 saw gains of 0.12% and 0.52%, respectively.

However, the Asian economic calendar also warranted investor attention. Service sector PMI numbers from Australia and Japan had a limited impact on market risk sentiment. Investors also brushed aside labor market data from Japan.

Investors responded positively to private sector PMIs from China. The all-important Caixin Manufacturing PMI increased from 50.8 to 50.9 in February.

US Manufacturing PMI and Consumer Sentiment in Focus

On Monday, US economic data from Friday will influence market risk sentiment. The ISM Manufacturing PMI fell from 49.1 to 47.8 in February, with the ISM Manufacturing Prices Index down from 52.9 to 52.5.

Finalized Michigan Consumer Sentiment numbers also supported bets on an H1 2024 Fed rate cut.

The Michigan Consumer Sentiment Index fell from 79.0 to 76.9, down from a preliminary 79.6.

On Friday, the Nasdaq Composite Index and S&P 500 ended the session up 1.14% and 0.80%, respectively. The Dow gained 0.23%.

Asian Economic Calendar, Central Banks, and the Futures Markets

Investors must also consider the Asian economic calendar on Monday. Australian company gross profits and building profits need consideration for the ASX 200. Capital spending number from Japan will also draw investor attention.

However, central bank commentary and stimulus chatter from Beijing could have more impact. Recent economic indicators from Japan supported bets on a Bank of Japan pivot from negative rates. In contrast, the markets await a meaningful stimulus package from Beijing. The National’s People Congress begins on March 5.

On Monday, the ASX 200 and the Nikkei futures were up 11 and 190 points, respectively.

ASX 200

The ASX 200 ended the Friday session up 0.61%. Gains were broad-based, with bank, gold, mining, oil, and tech stocks contributing to the positive session. The S&P ASX All Technology Index (XTX) extended its winning streak to nine sessions, rising by 0.41%.

Mining and oil stocks led the way. BHP Group Ltd (BHP) rallied 2.25%, with Rio Tinto Ltd. (RIO) and Fortescue Metals Group Ltd. (FMG) gaining 0.88% and 1.08%, respectively.

Woodside Energy Group Ltd (WDS) and Santos Ltd (STO) ended the session up 1.61% and 1.69%, respectively.

Gold (XAU/USD) stocks Northern Star Resources Ltd. (NST) and Evolution Mining Ltd. saw gains of 0.31% and 0.34%, respectively.

ANZ Group Holdings Ltd (ANZ) and Commonwealth Bank of Australia (CBA) rose by 1.05% and 0.82%, respectively. National Australia Bank Ltd. (NAB) and Westpac Banking Corp. (WBC) ended the day up 0.59% and 0.23%, respectively.

Hang Seng Index

On Friday, the Hang Seng Index gained 0.47%. Tech and property stocks had a mixed end to the week. The Hang Seng Tech Index (HSTECH) gained 1.66%, while the Hang Seng Mainland Properties Index (HSMPI) slid by 2.19%.

Alibaba (9988) and Tencent (0700) rose by 0.21% and 0.07%, respectively.

However, bank stocks had a mixed session. HSBC (0005) and Industrial Commercial Bank (1398) ended the day up 1.58% and 0.25%, respectively. China Construction Bank (0939) ended the Friday session flat.

The Nikkei 225

(Graph for reference purposes only)

The Nikkei rallied 1.90% on Friday.

Bank stocks had another positive session. Sumitomo Mitsui Financial Group Inc. (8316) and Mitsubishi UFJ Financial Group Inc. (8306) ended the day up 1.27% and 1.85%, respectively.

However, the main components of the Nikkei had a mixed Friday session.

Tokyo Electron Ltd. (8035) surged 4.10%. Fast Retailing Co. Ltd. and Sony Group Corp. (6758) rallied 2.57% and 2.09%, respectively. Softbank Group Corp. (9948) rose by 1.33%.

However, KDDI Corp. (9433) bucked the trend, falling by 0.02%.

For upcoming economic events, refer to our economic calendar.