Hang Seng Index, Nikkei 225, ASX 200: Futures Flash Red on Fed Jitters

By:

Bob Mason

Updated: Apr 30, 2024, 22:44 GMT+00:00

Key Points:

The Nikkei led the Asian equity markets into positive territory on Tuesday (April 30), with the Hang Seng Index extending its winning streak to seven sessions.
On Wednesday (May 1), US economic indicators and overnight equity market trends will set the tone amidst market angst over the Fed.
Finalized manufacturing PMI from Australia and Japan and corporate earnings from Asia also warrant investor attention.

US Equity Markets: Employment Cost, Consumer Confidence, and Earnings

On Tuesday (April 30), employment cost – wages and consumer confidence figures attracted investor attention.

Employment cost – wages advanced by 1.1% quarter-on-quarter in Q1 2024 after rising by 1.1% in Q4 2023.

The CB Consumer Confidence Index fell from 103.1 to 97.0 in April. Economists forecast a decline to 104.0.

While the numbers influenced investor expectations of a September Fed rate cut, corporate earnings also need consideration.

Amazon.com (AMZN), Coca-Cola (COKE), McDonald’s (MCD), PayPal (PYPL), and Starbucks (SBUX) were among the big names to release earnings results.

On Tuesday, the Nasdaq Composite Index slid by 2.04%. The Dow and the S&P 500 saw losses of 1.49% and 1.57%, respectively.

The US equity market session will set the tone for the Wednesday Asian session. Investors will likely consider the looming FOMC interest rate decision and press conference. Recent US economic indicators, including inflation numbers, have reduced investor expectations for multiple 2024 Fed rate cuts.

Asian Economic Calendar: Corporate Earnings in Focus

On Wednesday (May 1), finalized manufacturing sector PMIs from Australia and Japan will attract investor attention.

According to the preliminary surveys, the Australian Judo Bank Manufacturing PMI increased from 47.3 to 49.9 in April. Upward revisions could fuel speculation about an RBA rate hike.

The Jibun Bank Manufacturing PMI for Japan rose from 48.2 to 49.9.

However, recent economic indicators from Australia and China will likely resonate. Private sector PMI figures from China sent mixed signals on Tuesday, possibly indicating temporary improvements in manufacturing sector demand.

Corporate earnings results will also influence market risk sentiment. Mitsui (8031) is among the big names to release earnings results from Japan.

Commodities: Crude Oil, Gold, and Iron Ore

On Tuesday, gold spot (XAU/USD) slid by 2.12% to $2,286. WTI crude oil prices declined by 0.85%, ending the day at $81.93.

On the Singapore Futures Exchange, iron ore prices were down 1.19% on Wednesday (May 1). Iron Ore Spot ended Tuesday down 0.68%.

The USD/JPY and the Nikkei

The USD/JPY rose by 0.95% on Tuesday, ending the session at 157.789. The weaker Yen could drive buyer demand for Nikkei-listed export stocks. However, investor angst about the FOMC interest rate decision and press conference could overshadow the effects of a weaker Yen. A USD/JPY move toward 160 could reignite speculation about an intervention to bolster the Yen.

The Futures Markets

On Wednesday, the ASX 200 and the Nikkei 225 were down by 92 and 320 points, respectively. The Hong Kong markets are closed for the Labor Day holiday. While Fed jitters contributed to the pullback, a commodities sell-off pressured the ASX 200 further.

ASX 200

ASX200 010524 Daily Chart

The ASX 200 gained 0.35% on Tuesday (April 30). Bank, mining, and oil stocks contributed to the Tuesday gains.

Commonwealth Bank of Australia (CBA) rose by 0.75%, with National Australia Bank Ltd. (NAB) gaining 0.33%. ANZ Group Holdings Ltd. (ANZ) and Westpac Banking Corp. (WBC) advanced by 0.29% and 0.27%, respectively.

Woodside Energy Group Ltd (WDS) and Santos Ltd (STO) rose by 0.14% and 0.52%, respectively.

Mining stocks had another mixed session. Rio Tinto Ltd. (RIO) fell by 0.37%. However, BHP Group Ltd (BHP) and Fortescue Metals Group Ltd. (FMG) saw gains of 0.14% and 1.48%, respectively.

Furthermore, gold and tech stocks limited the upside. The S&P ASX All Technology Index (XTX) fell by 0.10%.

Gold-related stocks Northern Star Resources Ltd. (NST) and Evolution Mining Ltd (EVN) saw losses of 0.80% and 1.48%, respectively.

Hang Seng Index

HSI 010524 Daily Chart

On Tuesday, the Hang Seng Index rose by 0.09%, extending its winning streak to seven sessions. Real estate stocks contributed to the gains. The Hang Seng Mainland Properties Index (HSMPI) advanced by 0.53%, extending its winning streak to seven sessions. However, the Hang Seng Tech Index (HSTECH) fell by 0.34%.

Alibaba (9988) ended the session flat, while Tencent (0700) fell by 0.12%.

However, Bank stocks had another positive session. HSBC (0005) rallied 2.21%. China Construction Bank (0939) and Industrial Commercial Bank (1398) saw gains of 0.59% and 0.71%, respectively.

The Nikkei 225

Nikkei led the way on Tuesday, playing catch up after the Monday holiday.

Nikkei 010524 Daily Chart

(Graph for reference purposes only)

The Nikkei 225 rallied 1.24% on Tuesday, playing catch up after the Monday holiday.

Bank stocks had a positive start to the week. Sumitomo Mitsui Financial Group Inc. (8316) and Mitsubishi UFJ Financial Group Inc. (8306) advanced by 2.20% and 1.74%, respectively.

It was also a positive session for the main components of the Nikkei 225.

Tokyo Electron Ltd. (8035) and Sony Group Corporation (6758) saw gains of 2.60% and 2.47%, respectively. Softbank Group Corp. (9948) ended the session up 1.71%.

KDDI Corp. (9433) and Fast Retailing Co. Ltd. (9983) advanced by 0.46% and 0.39%, 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.