Asian Equity Market Wrap: Hang Seng Index Gains on Brighter China Sentiment

US Equity Markets: Manufacturing Sector Woes

On Monday (June 3), the influential ISM Manufacturing PMI survey-based numbers influenced investor bets on a September Fed rate cut. The ISM Manufacturing PMI fell from 49.2 to 48.7 in May. Economists forecast a PMI of 49.6.

10-year US Treasury yields reacted to the numbers, sliding by 2.44%. However, the US equity markets had a mixed Monday session.

On Monday, the Nasdaq Composite Index and S&P 500 advanced by 0.56% and 0.11%, respectively. However, the Dow declined by 0.30%.

While the PMI numbers raised investor bets on a September Fed rate cut, the more marked contraction across the US manufacturing sector tested investor expectations of the US avoiding a hard US economic landing.

Asian Economic Calendar: Aussie Corporate Profits Sink

Economic data from Australia warranted investor attention on Tuesday. Company gross profits slid by 2.5% quarter-on-quarter in Q1 2024 after rising by 7.1% in Q4 2023. Economists forecast a decline of 0.9%. The larger-than-expected fall in profits signaled a deteriorating macroeconomic environment, which may attract the attention of the RBA.

Net Exports Contribution to GDP numbers also disappointed, deducting 0.9%. Economists expected a 0.7% contribution after contributing 0.6% in Q4 2023.

The weaker-than-expected numbers and pullback in iron ore and crude oil prices impacted buyer demand for ASX 200 listed stocks.

There were no economic indicators from China to consider, leaving Caixin Manufacturing PMI numbers from Monday (June 3) to resonate.

Commodities: Crude Oil, Gold, and Iron Ore

On Monday, gold spot (XAU/USD) rallied 1.01% to $2,350 on rising investor expectations of a September Fed rate cut. However, WTI crude oil tumbled on news of OPEC planning to increase output. Gold spot slipped by 0.07% to $2,349 early in the Tuesday session, with WTI Crude Oil falling 0.92% to $73.54 before the Asian market closing bell.

Iron ore spot fell by 1.34% on Monday, followed by a further 0.22% decline during the Tuesday Asian session.

The USD/JPY and the Nikkei

The USD/JPY impacted buyer demand for Nikkei Index-listed export stocks. On Monday, the USD/JPY slid by 0.77% to 156.030. However, the USD/JPY gained 0.18% during the Tuesday Asian session, limiting the impact on the Nikkei Index.

ASX 200

The ASX 200 declined by 0.31% on Tuesday. Tech, oil, and mining stocks contributed to the losses. The S&P/ASX All Tech Index fell by 0.87%.

BHP Group Ltd (BHP) and Rio Tinto Group Ltd. (RIO) fell by 1.18% and 0.82%, respectively. Fortescue Metals Group Ltd. (FMG) declined by 1.86%.

Oil stocks Woodside Energy Group Ltd (WDS) and Santos Ltd (STO) slid by 1.79% and 2.09%, respectively.

Falling crude oil and iron ore prices impacted buyer demand for mining and oil stocks.

However, bank and gold-related stocks limited the downside for the ASX 200.

Commonwealth Bank of Australia (CBA) advanced by 0.96%, with ANZ Group Holdings Ltd. (ANZ) rising by 0.03%. National Australia Bank Ltd. (NAB) and Westpac Banking Corp. (WBC) saw gains of 0.29% and 0.41%, respectively.

Gold-related stocks Northern Star Resources Ltd. (NST) and Evolution Mining Ltd (EVN) advanced by 0.98% and 0.26%, respectively.

Hang Seng Index

The Hang Seng Index advanced by 0.22% on Tuesday. Real estate and tech stocks extended their gains from Monday (June 3). The Hang Seng Mainland Properties Index (HSMPI) and the Hang Seng Tech Index (HSTECH) rose by 2.55% and 0.32%, respectively.

Tencent Holdings (0700) ended the session up 0.80%. However, Alibaba (9988) and Baidu (9888) saw losses of 0.26% and 0.84%, respectively.

Bank stocks had a negative session. HSBC (0005) fell by 0.72%. China Construction Bank (0939) and Industrial Commercial Bank (1398) declined by 0.18% and 0.67%, respectively.

The Nikkei Index

(Graph for reference purposes only)

The Nikkei Index joined the broader market in negative territory, falling by 0.22%.

Bank stocks had a negative session. Sumitomo Mitsui Financial Group Inc. (8316) and Mitsubishi UFJ Financial Group Inc. (8306) declined by 1.01% and 0.74%, respectively.

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

Softbank Group Corp. (9984) and Fast Retailing Co. Ltd. (9983) saw losses of 1.01% and 1.03%, respectively.

However, Sony Group Corporation (6758) rallied 1.95%, with Tokyo Electron Ltd. (8035) gaining 0.73%. KDDI Corp. (9433) ended the session up 0.41%.

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