Hang Seng Index, Nikkei 225, ASX 200: US Data, China Industrial Profits, and the Yen

US Equity Markets: Michigan Inflation Expectations

On Friday (May 24), the finalized University of Michigan Survey of Consumers warranted investor attention.

The Michigan Consumer Sentiment Index declined from 77.2 to 69.1 in May, up from a preliminary 67.5. More significantly, Inflation Expectations for the year ahead rose from 3.2% to 3.3%, down from 3.5%. The downward revision to Inflation Expectations drove buyer demand for riskier assets.

On Friday, the Dow rose by 0.01%. Moreover, the Nasdaq Composite Index and S&P 500 advanced by 1.10% and 0.70%, respectively.

The Michigan Inflation Expectations numbers and US equity market moves will likely set the tone for the Monday (May 27) Asian session.

Asian Economic Calendar: Chinese Industrial Profits

On Monday, industrial profit numbers from China will attract investor attention. Industrial profits were up 4.3% year-to-date (year-on-year) in March, down from 10.2% in February. Economists forecast industrial profits to advance by 3.5% year-to-date (year-on-year) in April.

Recent Manufacturing PMI numbers signaled an improving demand environment.

In April, manufacturers reported the most marked increase in input prices since October 2023. However, firms cited increased competition affecting factory gate prices. The net effect could be a further pullback in industrial profits. Downward trends in industrial profits could affect buyer demand for riskier assets.

Later in the morning session, economic data from Japan could influence buyer demand for the Yen and Nikkei-listed export stocks.

The Leading Index could give investors another Q1 2024 snapshot of the Japanese economy. According to the preliminary report, the Leading Index declined by 0.7% to 111.4 in March. Softer-than-expected numbers could reduce bets on a June BoJ rate hike and buyer demand for the Yen.

Beyond the numbers, investors should consider policy chatter from Beijing and the Bank of Japan. Bank of Japan Governor Kazuo Ueda is on the calendar to speak on Monday.

Commodities: Crude Oil, Gold, and Iron Ore

On Friday, gold spot (XAU/USD) gained 0.20% to close the session at $2,333.83. Furthermore, WTI crude oil rallied 1.11%, ending the Friday session at $77.72.

On the Singapore Futures Exchange, iron ore prices were down 0.14% on Monday. Additionally, iron ore spot gained 0.28% on Friday.

The USD/JPY and the Nikkei

The USD/JPY extended its winning streak to three sessions, advancing 0.05% on Friday to end the session at 156.959. A weaker Japanese Yen could drive buyer demand for Nikkei-listed export stocks. However, Bank of Japan chatter or intervention threats from the Japanese government need monitoring.

The Futures Markets

On Monday, the ASX 200 and the Nikkei Index were up 47 and 200 points, respectively.

ASX 200

The ASX 200 declined by 1.08% on Friday. Bank, mining, and tech stocks contributed to the losses. The S&P/ASX All Tech Index slid by 1.27% on falling expectations of a September Fed rate cut.

BHP Group Ltd (BHP) and Rio Tinto Group Ltd. (RIO) declined by 0.60% and 0.75%, respectively. Fortescue Metals Group Ltd. (FMG) fell by 0.82%.

Commonwealth Bank of Australia (CBA) slid by 1.54%. National Australia Bank Ltd. (NAB) and Westpac Banking Corp. (WBC) saw losses of 1.28% and 1.15%, respectively. ANZ Group Holdings Ltd. (ANZ) fell by 0.85%.

However, gold and oil stocks bucked the trend.

Gold-related stocks Northern Star Resources Ltd. (NST) and Evolution Mining Ltd (EVN) saw gains of 0.07% and 0.52%, respectively.

Oil stocks Woodside Energy Group Ltd (WDS) and Santos Ltd (STO) advanced by 0.65% and 0.13%, respectively.

Hang Seng Index

The Hang Seng Index slid by 1.38% on Friday. Real estate and tech stocks extended their losses from Thursday. The Hang Seng Mainland Properties Index (HSMPI) and the Hang Seng Tech Index (HSTECH) tumbled by 4.31% and 2.48%, respectively.

Alibaba (9988) slipped by 0.64%. Baidu (9888) and Tencent Holdings (0700) fell by 1.16% and 1.45%, respectively.

Bank stocks also had a negative session. HSBC (0005) fell by 0.72%. Additionally, China Construction Bank (0939) and Industrial Commercial Bank (1398) declined by 0.52% and 0.85%, respectively.

The Nikkei Index

(Graph for reference purposes only)

The Nikkei Index joined the broader market in negative territory, declining by 1.17%.

Bank stocks had a mixed session. Sumitomo Mitsui Financial Group Inc. (8316) slipped by 0.01%, while Mitsubishi UFJ Financial Group Inc. (8306) gained 0.48%.

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

Softbank Group Corp. (9984) and Tokyo Electron Ltd. (8035) slid by 2.82% and 2.46%, respectively. Fast Retailing Co. Ltd. (9983) fell by 1.97%, with Sony Group Corporation (6758) declining by 1.82%. Furthermore, KDDI Corp. (9433) ended the session down 0.60%.

For upcoming economic events, refer to our economic calendar.