Hang Seng Index, Nikkei Index, ASX 200: Overnight US CPI Report and HK Earnings

US Equity Markets: US CPI Report and Retail Sales

On Wednesday (May 15), US inflation and retail sales figures influenced investor expectations of a September Fed rate cut.

The annual inflation rate eased from 3.5% to 3.4% in April, with core inflation falling from 3.8% to 3.6%. The softer-than-expected inflation numbers raised investor bets on a September Fed rate cut.

US retail sales data signaled a softer inflation outlook, supporting investor expectations of a September rate cut. Retail sales stalled in April after rising by 0.6% in March.

With inflation and retail sales in focus, FOMC member commentary also garnered investor interest.

FOMC member Neel Kashkari maintained his stance on monetary policy, calling for rates to stay higher for longer. Nevertheless, the reduced risk of a Fed rate hike drove buyer demand for riskier assets.

The US equity markets responded to the data and the Fed commentary. On Wednesday (May 15), the Nasdaq Composite Index rallied 1.40%. The Dow and S&P 500 ended the session up 0.88% and 1.17%, respectively.

The US economic data, FOMC member chatter, and the US equity market session will set the tone for the Thursday (May 16) Asian session.

Asian Economic Calendar: The Japanese Economy and Aussie Labor Market in Focus

On Thursday (May 16), GDP numbers from Japan will influence investor sentiment toward the Bank of Japan rate path. Economists forecast the Japanese economy to contract by 0.4% in Q1 2024 after expanding by 0.1% in Q4 2023. An economic contraction could end investor expectations of a near-term BoJ interest rate hike.

Australian labor market data could impact investor bets on an RBA interest rate hike after softer-than-expected wage growth numbers for Q1 2024. Economists expect the Australian unemployment rate to increase from 3.8% to 3.9% in April. Moreover, economists predict the participation rate will hold steady at 66.6%.

Expectations of less hawkish BoJ and RBA rate paths could drive buyer demand for the Nikkei Index and ASX 200-listed stocks.

However, investors should also consider corporate earnings. Baidu (HK: 9888), Cisco (HK: 4333), Galaxy Entertainment (HK: 0027), and JD.com (HK: 9618) are among the big names to release earnings results after the Wednesday holiday.

Commodities: Crude Oil, Gold, and Iron Ore

On Wednesday (May 15), gold spot (XAU/USD) rallied 1.18% to close the session at $2,385.70. WTI crude oil increased by 0.78%, ending the day at $78.63.

Iron ore spot advanced by 0.33% on Wednesday (May 15).

The USD/JPY and the Nikkei

The USD/JPY slid by 0.98% on Wednesday (May 15), closing the session at 154.873.

A weaker USD/JPY could impact buyer demand for Nikkei Index-listed export stocks. GDP numbers from Japan will influence USD/JPY trends. However, the stronger Yen reduces the risk of an intervention to bolster the Yen, which eliminates market uncertainty.

The Futures Markets

On Thursday (May 16), the ASX 200 and the Nikkei Index were up by 50 and 340 points, respectively.

ASX 200

The ASX 200 gained 0.35% on Wednesday (May 15). Tech stocks contributed to the session gains, with the S&P/ASX All Tech Index advancing by 0.56%. Gold and mining stocks also moved higher.

Fortescue Metals Group Ltd. (FMG) and Rio Tinto Group Ltd. (RIO) saw gains of 0.85% and 1.06%, respectively. BHP Group Ltd (BHP) rallied 2.18%. Investors reacted to news of the Australian government assuring funding to the critical mining industry.

Gold-related stocks Northern Star Resources Ltd. (NST) rose by 0.41%, while Evolution Mining Ltd (EVN) ended the session flat.

However, bank and oil stocks limited the upside for the ASX 200.

ANZ Group Holdings Ltd. (ANZ) slid by 1.18%, with Westpac Banking Corp. (WBC) declining by 0.90%. National Australia Bank Ltd. (NAB) fell by 0.71%, while the Commonwealth Bank of Australia (CBA) bucked the trend, gaining 0.50%.

Oil stocks Woodside Energy Group Ltd (WDS) and Santos Ltd (STO) saw losses of 0.85% and 0.13%, respectively.

Hang Seng Index

There was no trading of Hang Seng Index-listed stocks on Wednesday. The Hong Kong markets were closed for Buddha’s birthday.

The Nikkei Index

(Graph for reference purposes only)

The Nikkei Index gained 0.08% on Wednesday (May 15).

Bank stocks had a mixed session. Sumitomo Mitsui Financial Group Inc. (8316) rose by 0.48%, while Mitsubishi UFJ Financial Group Inc. (8306) declined by 0.93%.

It was also a mixed session for the main components of the Nikkei Index.

Sony Group Corporation (6758) surged 8.23% as investors reacted to news of the company reconsidering its plan to purchase Paramount. Tokyo Electron Ltd. (8035) gained 1.85%. Fast Retailing Co. Ltd. (9983) and Softbank Group Corp. (9984) rose by 0.12% and 0.14%, respectively.

However, KDDI Corp. (9433) bucked the trend, falling by 2.06%.

For upcoming economic events, refer to our economic calendar.