Hang Seng Index, Nikkei Index, ASX 200: Futures Flash Red on US Inflation Angst

Summary of the Thursday Session

The Hang Seng Index and ASX 200 ended the session in negative territory. The Nikkei bucked the broader market trend with a positive Thursday session.

Overnight US equity market trends from Wednesday set the tone for the Thursday Asian session. Inflation jitters resurfaced ahead of inflation numbers out on Thursday. 10-year US Treasury yields climbed by 0.94% to 4.192%, reflecting the market angst about inflation.

Higher Treasury yields pressured US tech stocks. On Wednesday, the Nasdaq Composite Index and S&P 500 saw losses of 0.54% and 0.19%, respectively. The Dow rose by 0.10%.

A stronger USD/JPY contributed to the gains for the Nikkei. Rising bets on a Bank of Japan pivot from negative rates pressured the Nikkei early in the Thursday session. Reports of decades-high wage hikes influenced sentiment toward BoJ monetary policy goals.

The Hang Seng and ASX 200 saw tech stocks contribute to the losses as investors awaited producer price numbers from the US.

US Producer Prices, China House Prices, and the Rengo Report in Focus

On Friday, overnight US economic indicators from Thursday need consideration. US producer prices impacted market risk sentiment. Producer prices increased by 1.6% year-on-year in February, up from 1.0% in January. Core producer prices rose by 2.0% year-on-year after increasing by 2.0% in January. The hotter-than-expected numbers reduced bets on an H1 2024 Fed rate cut.

10-year US Treasury yields and the US equity markets reacted to the heavily anticipated numbers. Yields rose by 2.39% to 4.292%. On Thursday, the Nasdaq Composite fell by 0.30%. The Dow and S&P 500 declined by 0.35% and 0.29%, respectively.

Investors must consider the overnight Thursday US session. However, the Asian economic calendar also warrants investor attention. Australian consumer inflation expectations could impact bets on an RBA rate cut and pressure the ASX 200. Economists forecast Consumer Inflation Expectations to fall from 4.5% to 4.4% in March.

House price figures from China will impact market risk sentiment. Economists forecast house prices to decline by 0.3% year-on-year in February after falling 0.7% in January. House price trends could impact iron ore prices and mining stocks.

The numbers could also influence the PBoC. The PBoC will announce the 1-year MLF rate. Economists expect the PBoC to cut the MLF rate from 2.5% to 2.4%. A larger-than-expected cut could fuel demand for riskier assets.

The Bank of Japan will also be in the spotlight. Rengo, the Japanese Trade Union Confederation (JTUC), will release the annual wages report. The wages report could influence board member discussions at the 2-day Bank of Japan monetary policy meeting commencing March 18.

On Friday, the ASX 200 and Nikkei futures were down by 56 and 260 points, respectively.

ASX 200

The ASX 200 declined by 0.20% on Thursday. Banking and technology sectors contributed to the ASX 200 ending in negative territory. The S&P ASX All Technology Index (XTX) fell by 0.84%.

ANZ Group Holdings Ltd. (ANZ) and Westpac Banking Corp. (WBC) tumbled by 3.76% and 3.75%, respectively. Commonwealth Bank of Australia (CBA) and National Australia Bank Ltd. (NAB) saw losses of 1.13% and 2.76%, respectively. Macquarie Bank downgraded the Aussie banks, leading to heavy losses.

However, gold, mining, and oil stocks limited the ASX 200 losses.

Gold (XAU/USD) stocks Northern Star Resources Ltd. (NST) and Evolution Mining Ltd. rallied by 1.89% and 5.96%, respectively.

Woodside Energy Group Ltd (WDS) and Santos Ltd (STO) saw gains of 0.87% and 0.28%, respectively.

Mining stocks led the way. Rio Tinto Ltd. (RIO) and BHP Group Ltd (BHP) rallied 1.92% and 2.65%, respectively. Fortescue Metals Group Ltd. (FMG) rose by 0.12%.

Hang Seng Index

On Thursday, the Hang Seng Index declined by 0.71%. Tech stocks were among the worst performers. The Hang Seng Tech Index (HSTECH) slid by 1.44%. Real estate stocks avoided heavy losses, with the Hang Seng Mainland Properties Index (HSMPI) rising by 0.67%.

Alibaba (9988) and Tencent (0700) declined by 0.74% and 0.48%, respectively.

Bank stocks also ended the day in negative territory. HSBC (0005) fell by 0.42%. China Construction Bank (0939) and Industrial Commercial Bank (1398) saw losses of 0.61% and 0.50%, respectively.

The Nikkei 225

(Graph for reference purposes only)

The Nikkei ended the Thursday session up 0.29%.

Bank stocks had a negative session. Sumitomo Mitsui Financial Group Inc. (8316) and Mitsubishi UFJ Financial Group Inc. (8306) declined by 0.28% and 0.69%, respectively.

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

Fast Retailing Co. Ltd. (9983) rallied 1.62%. Softbank Group Corp. (9948) and Sony Group Corporation (6758) saw gains of 0.46% and 0.42%, respectively.

KDDI Corp. (9433) rose by 0.04%, while Tokyo Electron Ltd. (8035) declined by 0.45%.

For upcoming economic events, refer to our economic calendar.