ASX 200 Sinks on US Inflation and China Woes
On Friday, the ASX 200 was down 1.37% to 7,608. Housing sector data from China impacted market risk sentiment. House prices declined by 1.4% year-on-year in February after declining by 0.7% in January. Economists forecast a 0.3% fall.
PBoC inaction contributed to the morning losses. The PBoC left the one-year MLF rate at 4.50%. Economists expected the PBoC to cut the one-year MLF rate from 4.5% to 4.4%.
Mining stocks reacted to the house price figures and PBoC policy decision. Rio Tinto Ltd. (RIO) and BHP Group Ltd (BHP) were down 2.33% and 1.51%, respectively. Fortescue Metals Group Ltd. (FMG) declined by 2.38%. A deteriorating housing sector impacts iron ore prices.
However, overnight US inflation numbers set the tone for the Friday session. Gold (XAU/USD) stocks Northern Star Resources Ltd. (NST) and Evolution Mining Ltd. slid by 2.46% and 2.51%, respectively. US producer prices increased by 1.6% year-on-year in February after rising by 1.0% in January.
The hotter-than-expected numbers reduced bets on an H1 2024 Fed rate cut, also pressuring tech stocks. The S&P ASX All Technology Index (XTX) declined by 1.26%.
Hang Seng Index Joins the ASX 200 Deep in Negative Territory
On Friday, the Hang Seng Index was down 1.62% in the morning session. Rate-sensitive tech stocks reacted to the US inflation numbers. The Hang Seng Tech Index (HSTECH) was down 2.33%. Moreover, real estate stocks also stumbled in response to the house price figures from China. The Hang Seng Mainland Properties Index (HSMPI) declined by 1.95%.
Alibaba (9988) and Tencent (0700) saw losses of 3.2% and 2.01%, respectively. Chinese banks also struggled, with the slump in house prices likely to fuel mortgage defaults. China Construction Bank (0939) and Industrial Commercial Bank (1398) fell by 0.83% and 1.49%, respectively.
Nikkei and the USD/JPY Await the Rengo Wage Report
On Friday, the Nikkei joined the ASX 200 and Hang Seng Index in negative territory, falling by 0.21%.
The Nikkei remained under pressure due to increasing speculation about a Bank of Japan pivot from negative rates. Sentiment toward monetary policy overshadowed the positive effects of a stronger USD/JPY.
The unexpectedly high US producer prices affected tech stocks and boosted demand for the USD/JPY. Although the markets had anticipated a BoJ pivot, investors adjusted their bets on an H1 2024 Fed rate cut, resulting in morning gains.
The USD/JPY was up 0.18% to 148.563. Later today, the Rengo wage report will impact the USD/JPY. Rengo will reportedly hold a press conference at 1615 local time.
