Hang Seng Index, ASX 200, Nikkei Index: Fed Comments and the Asian Market Outlook

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Updated: Mar 25, 2024, 00:36 UTC

Key Points:

The Hang Seng Index and ASX 200 ended Friday in negative territory, while the Nikkei 225 enjoyed a positive end to the week.
The Nikkei broke through the 41,000 barrier on Friday while the Chinese real estate sector contributed to losses for the Hang Seng Index.
Investors should consider Fed commentary from Friday and monitor central bank chatter on Monday.

Summary of the Friday Session

On Friday, the Hang Seng Index and ASX 200 ended the session in negative territory. The Nikkei found further support from the stronger USD/JPY and the outlook for the BoJ rate path.

Hopes of a soft US landing drove demand for riskier assets during the Thursday US market session.

US service sector activity slowed modestly, while manufacturing sector activity picked up, according to prelim PMI numbers for March. US labor market conditions remained tight, with initial Jobless Claims slipping from 212k to 210k in the week ending March 16. The Philly Fed Manufacturing Index declined from 5.2 to 3.2.

Investors also reacted to the Swiss National Bank (SNB) cutting interest rates by 25 basis points. The SNB move aligned with recent shifts in central bank forward guidance, with the Fed and the RBA taking less hawkish stances vis-à-vis interest rate trajectories.

On Thursday, the Nasdaq Composite Index gained 0.20%. The Dow and S&P 500 ended the session up 0.68% and 0.32%, respectively.

While the US market session set the tone, the Asian economic calendar also influenced the Asian equity market trends.

Inflation numbers from Japan limited the upside for the Nikkei, which retreated from the 41,000 handle. The annual core inflation rate accelerated from 2.0% to 2.8% in February. The RBA Financial Stability Review highlighted a likely increase in Australian Bank non-performing loans, pressuring bank stocks. Concerns about the Chinese economy impacted mining stocks.

Investor jitters ahead of earnings from Country Garden out this week left the Hang Seng Index in the red.

Fed Speakers and the Bank of Japan in Focus

On Monday, the Asian equity markets could take their cues from Friday’s US session. There were no US economic indicators to consider, leading to some profit-taking after another positive week.

On Friday, the Nasdaq Composite Index advanced by 0.16%. The Dow and S&P 500 saw losses of 0.77% and 0.14%, respectively.

However, FOMC member chatter warrants investor attention. Raphael Bostic turned less dovish on Friday, reportedly projecting a 25-basis point interest rate cut in 2024. Previously, Bostic anticipated two rate cuts.

The mixed US equity market session and falling gold and oil prices on Friday could set the tone for Monday. However, the US futures and the Asian economic calendar also need investor consideration. The Nasdaq mini and Dow Jones mini were down 11 and 39 points, respectively.

On the Asian economic calendar, the Bank of Japan Monetary Policy Meeting Minutes may draw investor interest. However, the minutes are for the January meeting, and investors may consider the minutes dated. The BoJ exited negative rates in March, hiking interest rates for the first time in 17 years.

Nonetheless, BoJ commentary and stimulus chatter from Beijing could move the dial.

On Monday, the ASX 200 futures were up 7 points, while the Nikkei futures were down by 210 points.

ASX 200

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The ASX 200 declined by 0.15% on Friday. Bank, gold (XAU/USD), mining, and oil stocks contributed to the losses. However, tech stocks limited the losses. The S&P ASX All Technology Index (XTX) rose by 0.02%.

Commonwealth Bank of Australia (CBA) and Westpac Banking Corp. (WBC) declined by 0.44% and 0.75%, respectively. National Australia Bank Ltd. (NAB) slipped by 0.06%. ANZ Group Holdings Ltd. (ANZ) bucked the trend, gaining 0.10%.

Gold (XAU/USD) stock Northern Star Resources Ltd. (NST) gained 0.07%, while Evolution Mining Ltd. slid by 2.02%.

Rio Tinto Ltd. (RIO) and BHP Group Ltd (BHP) saw losses of 0.48% and 0.82%, respectively. Fortescue Metals Group Ltd. (FMG) ended the session down 2.11%.

Woodside Energy Group Ltd (WDS) fell by 1.75%, while Santos Ltd (STO) ended the session flat.

Hang Seng Index

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On Friday, the Hang Seng Index slid by 2.16%.

Real estate and tech stocks contributed to the losses. The Hang Seng Mainland Properties Index (HSMPI) and the Hang Seng Tech Index (HSTECH) slid by 2.54% and 3.55%, respectively.

Alibaba (9988) and Tencent (0700) saw losses of 2.14% and 0.82%, respectively.

Bank stocks had a mixed Friday session. HSBC (0005) gained 0.08%. China Construction Bank (0939) and Industrial Commercial Bank (1398) declined by 1.03% and 0.50%, respectively.

The Nikkei 225

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(Graph for reference purposes only)

The Nikkei advanced by 0.18% on Friday.

Bank stocks saw gains, with Sumitomo Mitsui Financial Group Inc. (8316) and Mitsubishi UFJ Financial Group Inc. (8306) rising by 2.05% and 1.88%, respectively.

However, it was a mixed end to the week for the main components of the Nikkei.

Fast Retailing Co. Ltd. (9983) and KDDI Corp. (9433) saw gains of 1.17% and 0.99%, respectively. Sony Group Corporation (6758) gained 0.19%.

Softbank Group Corp. (9948) and Tokyo Electron Ltd. (8035) declined by 0.17% and 0.03%, 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.