Hang Seng Index and ASX 200 Climb on Stimulus Hopes and US Data

US Economic Data Boosts Risk Sentiment

Global markets navigated a mix of relief and anticipation as US economic data took center stage. Here’s how US equity markets performed on Monday, December 23.

US equity markets extended gains from Friday. The Nasdaq Composite Index and the S&P 500 advanced by 0.98% and 0.73%, respectively. The Dow edged 0.16% higher.

Softer-than-expected US economic indicators supported a less hawkish Fed rate stance, fueling market optimism.

US Consumer Confidence Dips in December

On Monday, the CB Consumer Confidence Index fell from 112.8 in November to 104.7 in December, missing a consensus estimate of 113.0.

Consumers were less optimistic about the present situation and the economic outlook. A pullback in consumer confidence may signal weaker consumer spending, potentially dampening demand-driven inflation. A softer inflation outlook could support a more dovish Fed rate path.

Lower borrowing rates may boost earnings and stock prices for capital-intensive companies.

Beijing Announces Fiscal Spending Plans

While the Fed rate path remains a crucial market driver, China’s economy and stimulus goals remain a focal point.

Beijing announced plans on Tuesday to boost fiscal spending, driving demand for Hong Kong and Mainland China-listed stocks. CN Wire reported the latest policy announcements from China’s National Fiscal Work Conference:

“Will step up fiscal spending, accelerating spending speed in 2025. Fiscal spending will focus more on people’s livelihood, boosting consumption.”

Fiscal measures to boost domestic demand may counter US tariffs, supporting Beijing’s 5% growth target for 2025. Optimism toward China’s economy would be a boon for regional stocks.

Hang Seng Index Advances on Stimulus News and US Data

In Asian markets, the Hang Seng Index advanced by 1.08% on Tuesday. US market gains from Monday and the latest stimulus news from Beijing drove demand for real estate and tech stocks.

The Hang Seng Mainland Properties Index rallied 2.16%, while the Hang Seng Tech Index gained 1.12%. Tech giants Baidu (9888) and Alibaba (9988) were up 1.30% and 2.65%, respectively.

Mainland China markets also benefited from Beijing’s latest announcement. The CSI 300 and the Shanghai Composite rose 0.75% and 0.68%, respectively.

Nikkei Index Dips on Yen Gains

In contrast, Japan’s Nikkei Index dropped by 0.29% on Tuesday morning. The USD/JPY declined by 0.13% to 156.956, weighing on demand for Japanese stocks. Japan Finance Minister Katsunobu Kato warned the government is prepared to intervene to ensure Yen stability, pressuring the USD/JPY pair.

Tech stocks had a mixed morning. Tokyo Electron (8035) gained 0.42%, while Softbank Group (9984) dropped by 1.43%. Sony Corp. (6758) also trended lower, falling 0.12%.

ASX 200 Gains on Banking Sector Strength

Meanwhile, Australia’s ASX 200 Index extended its Monday gains, rising 0.24%. Banking and oil stocks contributed to the gains, while gold and mining stock losses capped the upside.

Softer-than-expected US economic data drove demand for high-yielding Aussie bank stocks. Commonwealth Bank of Australia gained 0.28%, with National Australia Bank advancing by 0.67%. However, rising bets on a February RBA rate cut limited the gains. Lower interest rates may affect banks’ net interest margins (NIM) and earnings.

However, iron ore futures faced a six-day losing streak, pressuring mining stocks. BHP Group Ltd. (BHP) and Rio Tinto Ltd. (RIO) were down 0.43% and 0.84%, respectively.

Outlook

Volatility may persist as markets approach the holiday season. Crucial events, including the Bank of Japan’s Summary of Opinions, China’s stimulus updates, and US tariff developments, will likely influence sentiment. Traders should remain attuned to global economic trends and trade dynamics to navigate evolving market conditions.

For in-depth analysis of the Hang Seng Index and global market trends, click here.