Hang Seng Index, Nikkei 225, ASX 200: Flight to Safety After Iran Attack

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Updated: Apr 14, 2024, 06:42 UTC

Key Points:

It was a mixed end to the week for the Asian equity markets, with the Nikkei making gains to buck the broader market trend.
On Monday, the news of Iran attacking Israel could fuel a flight to safety. A flight to safety would impact the Hang Seng Index and broader Asian equity markets.
The Asian economic calendar and central bank commentary also warrant investor attention.

US Equity Markets: Friday Losses and the Middle East

On Friday, US consumer sentiment numbers garnered investor attention. The Michigan Consumer Sentiment Index fell from 79.4 to 77.9 in April. Significantly, inflation expectations for the year ahead further impacted expectations of a June Fed rate cut. The Michigan Inflation Expectations Index increased from 2.9% to 3.1%.

On Friday, the Nasdaq Composite Index slid by 1.62%. The Dow and the S&P 500 saw losses of 1.24% and 1.46%, respectively.

The extended losses from Friday and news of Iran attacking Israel will set the tone for the Monday Asian session. A flight to safety could adversely impact buyer demand for riskier assets.

Asian Economic Calendar: Japan in Focus

On Monday, machine order numbers from Japan will draw investor attention. Economists forecast machine orders to decline by 8.0% year-on-year in February after falling 10.9% in January. Weaker-than-expected numbers would signal a weakening demand environment and impact export-listed stocks.

Moreover, investors should consider trade data from China. The numbers were available after the ASX 200 and Nikkei sessions on Friday.

Exports declined by 7.5% year-on-year in March after rising 5.6% in February. Imports decreased by 1.9% year-on-year after declining by 8.2% in February. The US dollar trade surplus narrowed from $125.16 billion to $58.55 billion.

The weaker-than-expected trade data contrasted with improving manufacturing PMI numbers from China. Additionally, the numbers could raise expectations of a stimulus package from Beijing.

Commodities: Crude Oil, Gold, and Iron Ore

Investors should consider commodity prices. The news from the Middle East could spike crude oil and gold prices. Concerns over supply disruptions would drive crude oil prices higher. A flight to safety could fuel demand for gold.

On Friday, WTI ended the session up 0.75% to $85.66. Gold spot fell by 1.19% to $2,344. Iron ore futures ended the session down 0.18% on the Singapore exchange.

The USD/JPY, the Intervention Zone, and the Nikkei

The USD/JPY remained within the intervention zone at 153.210 on Friday. Risk aversion could drive buyer demand for the Japanese Yen, favored over the US dollar. A pullback in the USD/JPY could impact buyer demand for Nikkei-listed export stocks.

ASX 200

ASX200 150424 Daily Chart

The ASX 200 fell by 0.33% on Friday. Tech stocks cushioned the downside. The S&P ASX All Technology Index (XTX) gained 0.12%. However, bank, gold (XAU/USD), mining, and oil stocks contributed to the losses.

National Australia Bank Ltd. (NAB) and Commonwealth Bank of Australia (CBA) declined by 0.44% and 0.49%, respectively. ANZ Group Holdings Ltd. (ANZ) and Westpac Banking Corp. (WBC) fell by 0.03% and 0.31%, respectively.

Rio Tinto Ltd. (RIO) and BHP Group Ltd (BHP) saw losses of 0.27% and 0.91%, respectively. Fortescue Metals Group Ltd. (FMG) declined by 0.12%.

Woodside Energy Group Ltd (WDS) and Santos Ltd (STO) fell by 1.27% and 0.38%, respectively.

Gold stocks had a mixed session. Northern Star Resources Ltd. (NST) declined by 0.39. Evolution Mining Ltd (EVN) advanced by 0.51%.

Hang Seng Index

HSI 150424 Daily Chart

On Friday, the Hang Seng Index slid by 2.18%. Property stocks and tech stocks contributed to the losses. The Hang Seng Tech Index (HSTECH) and Hang Seng Mainland Properties Index (HSMPI) ended the session down 1.81% and 3.78%, respectively.

Tencent (0700) and Alibaba (9988) saw losses of 1.71% and 3.44%, respectively.

Bank stocks also had a negative session. HSBC (0005) declined by 1.62%. China Construction Bank (0939) and Industrial Commercial Bank (1398) slid by 1.84% and 1.97%, respectively.

The Nikkei 225

Nikkei 150424 Daily Chart

(Graph for reference purposes only)

The Nikkei advanced by 0.21% on Friday.

Bank stocks ended the session in negative territory. Sumitomo Mitsui Financial Group Inc. (8316) and Mitsubishi UFJ Financial Group Inc. (8306) fell by 0.88% and 0.80%, respectively.

However, it was a mixed session for the main components of the Nikkei.

Fast Retailing Co. Ltd. (9983) bucked the trend, tumbling 4.40%.

Sony Group Corporation (6758) and Tokyo Electron Ltd. (8035) rallied 1.44% and 1.49%, respectively. KDDI Corp. (9433) and Softbank Group Corp. (9948) gained 0.21% and 0.45%, respectively.

For upcoming economic events, refer to our economic calendar.

About the Author

Bob Masonauthor

With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.