Hang Seng and Mainland China Stocks Gain on Stimulus Hopes, Nikkei Dips on Stronger Yen

US Equity Markets: A Positive Week

On Friday, August 16, the US equity markets extended their gains from Thursday, August 15. The Nasdaq Composite Index and the S&P 500 advanced by 0.21% and 0.20%, respectively, while the Dow gained 0.24%. Significantly, the Nasdaq ended the week up 5.29%

Consumer Sentiment Signals a Soft Landing

Better-than-expected consumer sentiment figures reinforced investor expectations of a soft US economic landing. The Michigan Consumer Sentiment Index increased from 66.4 in July to 67.8 in August.

Upward trends in consumer sentiment may signal a possible increase in consumer spending – a pivotal driver of the US economy. Private consumption contributes over 60% to the economy. The expectation of multiple 2024 Fed rate cuts and a soft landing drove demand for riskier assets and may set the tone for the Monday Asian session.

A soft landing and lower borrowing costs may boost company profits and buyer demand for stocks.

Expert Commentary

Michigan University Survey of Consumers Director Joanne Hsu commented on the survey results, stating,

“Overall, expectations strengthened for both personal finances and the five-year economic outlook, which reached its highest reading in four months.”

Speculation About a Beijing Fiscal Stimulus Package Intensifies

On Monday, speculation intensified about fresh policy measures from Beijing to bolster the Chinese economy.

China Daily reportedly cited three economists from government-backed think tanks, calling for Beijing to support consumers with cash or vouchers. Other measures included bringing forward the government’s bond issuance plans for 2025.

The Chinese economy expanded by 4.7% in Q2 2024, down from 5.3% in Q1 2024. Recent economic indicators for July raised concerns, with house prices in China falling at a faster pace and unemployment rising.

A meaningful fiscal stimulus package could boost buyer demand for the Hang Seng Index and Mainland China stocks.

Hang Seng and Mainland China Rise on Stimulus Hopes

The Hang Seng Index surged 1.39% on Monday morning. Beijing stimulus hopes, expectations of a soft US landing, and bets on multiple 2024 Fed rate cuts contributed.

The Hang Seng Mainland Properties Index (HSMPI) climbed 1.63%, while the Hang Seng Tech (HSTECH) surged by 2.73%. Alibaba (9988) and Baidu (9888) rose by 2.37% and 3.10%, respectively, while Tencent (0700) gained 0.81%.

Mainland equity markets also started the week positively on stimulus hopes. The CSI 300 and the Shenzhen Composite Index increased by 0.53% and 0.44%, respectively.

Nikkei Index Dips Due to Yen Strength

The Nikkei Index was down 0.45% on Monday, with a stronger Yen impacting demand for Nikkei Index-listed stocks. The USD/JPY extended its losses Friday (-1.17%), declining by 0.14% to 147.330.

Notable decliners included Tokyo Electron Ltd. (8035) and Fast Retailing Co. Ltd (9983), which fell by 0.88% and 0.46%, respectively.

ASX 200 Follows the US Markets Higher

The ASX 200 Index edged up by 0.04% on Monday morning, following the US market gains on the US. Banking, gold, and tech stocks contributed to the rise.

The S&P/ASX All Technology Index advanced by 0.58%, while gold-related stock Northern Star Resources Ltd. (NST) rallied 1.69%. Expectations of multiple 2024 Fed rate cuts and the weaker US dollar boosted gold demand.

Bank stocks also had a positive morning, with Westpac Banking Corp. (WBC) gaining 2.36% after reporting steady Q3 profits.

Investors should remain alert, with earnings and central bank commentary pivotal after the shifting sentiment toward the US economy. Closely monitor the news wires, real-time data, and expert commentary to manage trading strategies accordingly.

Stay informed with our latest news and analysis to manage positions across the Asian equity markets.