ASX 200, Hang Seng, Nikkei 225: Fed Rate Speculations Drive Uneasy Forecasts

Key Insights:

• Wednesday saw brief relief for Hang Seng & Nikkei; ASX 200 bore losses amidst global shifts.
• Australian inflation surged in August, hinting at a more aggressive RBA rate stance.
• Fed uncertainty, the threat of a US government shutdown, and the Chinese real estate sector to counter dip buyers.

Overview of the Wednesday Session

On Wednesday, the Hang Seng Index and the Nikkei found brief relief, while the ASX 200 saw more losses.

US economic indicators from Tuesday pressured the Asian equity markets early in the session. An unexpected rise in US house prices countered a pullback in US consumer confidence to fuel bets on further Fed rate hikes.

On Tuesday, the S&P 500 and the Dow saw losses of 1.47% and 1.14%, respectively. The NASDAQ Composite Index slid by 1.57%.

However, market conditions improved through the Wednesday session, with falling government bond yields supporting modest gains for the Hang Seng and the Nikkei.

Economic indicators from the Asian region delivered mixed fortunes for the Hang Seng Index and the ASX 200.

The Australian annual inflation rate accelerated in August, pressuring the RBA to maintain a hawkish interest rate path.

Industrial profit figures from China fell at a less marked pace, offering the hope of an improving macroeconomic environment. However, the real estate sector struggled as investors grappled with the news of China Evergrande missing a bond payment.

Aussie Retail Sales, China Macro, and US Treasuries to Test Buyers

Overnight US economic indicators from Wednesday ended a run of weaker-than-expected numbers. US core durable goods orders beat forecasts, while orders ex-defense fell at a less marked pace in August.

On Wednesday, the US equity markets had a mixed session despite the better-than-expected economic indicators. The NASDAQ Composite Index and S&P 500 rose by 0.22% and 0.02%, respectively, while the Dow fell by 0.20%.

The ongoing threat of a US government shutdown and uncertainty about the Fed interest rate path capped the upside.

On Thursday, Australian retail sales figures will deliver another test for the ASX 200. Economists forecast a 0.5% increase in August versus a 0.8% decline in July. An uptrend in consumption would fuel demand-driven inflationary pressures, supporting a more hawkish RBA interest rate path.

Beyond the numbers, investors must monitor updates from China on the real estate sector. The risk of a big player collapse remains a headwind for the Hang Seng Index and the global financial markets.

In the Futures Markets, the ASX 200 and the Nikkei 225 were down 13 and 80 points, respectively.

ASX 200

The ASX 200 fell by 0.11%. Hawkish RBA bets weighed on the tech sector. The S&P/ASX All Technology Index (XTX) fell by 0.55%. However, mining stocks and the big four banks cushioned the downside.

Rio Tinto (RIO) and BHP Group Ltd (BHP) gained 0.14% and 0.44%, with Fortescue Metals Group (FMG) rising by 1.29%. Newcrest Mining (NCM) bucked the trend, sliding by 2.06%.

ANZ Group (ANZ) and the National Australia Bank (NAB) saw gains of 0.44% and 0.55%. The Commonwealth Bank of Australia (CBA) and Westpac Banking Corp (WBC) rose by 0.45% and 0.67%, respectively.

However, oil stocks had a mixed session. Woodside Energy Group (WDS) fell by 1.05%, while Santos Ltd (STO) rose by 0.13%.

Hang Seng Index

The Hang Seng Index found much-needed support, gaining 0.83%.

However, the Hang Seng Mainland Properties Index (HSMPI) fell by 0.22%. China Evergrande (HK: 3333) continued to pressure the broader sector, sliding by a further 18.99%.

Beyond the property sector, Alibaba Group Holding Ltd (HK:9988) and Tencent Holdings Ltd (HK:0700) rose by 0.66% and 0.67%, respectively.

Bank stocks also made gains. China Construction Bank (HK:0939) and the Industrial and Commercial Bank of China (HK:1398) ended the day up 0.92% and 1.08%, respectively. HSBC Holdings PLC (HK:0005) rose by 0.75%.

Nikkei 225

(Graph for reference purposes only)

The Nikkei 225 ended the day up 0.18%, partially reversing a 1.11% slide from Tuesday. A stronger USD/JPY at 149 provided support to export stocks.

Bank stocks had a mixed session. Sumitomo Mitsui Financial Group (8316) fell by 0.66%, while Mitsubishi UFJ Financial Group rose by 0.23%.

The main components also had a mixed session.

Sony Corp. (6758) gained 1.10%, with SoftBank Group Corp. (9984) rising by 0.77%.

Tokyo Electron Limited (8035) and KDDI Corp. (9433) ended the session up 0.67% and 0.69%, respectively. However, Fast Retailing Co (9983) bucked the trend, falling by 1.52%.

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