Hang Seng Index and ASX 200 Retreat on China Data; Nikkei Holds Firm

US Markets Tread Water: Focus Turns to the Fed

Here’s what US equity markets revealed on Friday, December 13.

US equity markets had a mixed end to the week. The Nasdaq Composite Index advanced by 0.12%, extending its winning streak to four weeks. However, the S&P 500 closed flat, while the Dow extended its losing streak to seven sessions, dropping by 0.20%.

10-year US Treasury yields climbed for the fifth consecutive session, weighing on the Dow and the S&P 500. Markets are betting on a December Fed rate hike but a potential pause in Q1 2025.

Meanwhile, Broadcom Inc. (AVGO) surged by 24.43% on Friday on better-than-expected revenue forecasts. Friday’s breakout kept the Nasdaq’s weekly winning streak alive.

China Data Disappoints Again

On Monday, December 16, economic indicators from China weighed on market sentiment. Notably, retail sales increased by only 3.0% year-on-year in November, a steep decline from a 4.8% rise in October. This slowdown reflects weaker consumer spending trends despite government efforts to stimulate demand.

Fixed asset investment also slowed, while higher industrial production could stem from pre-US tariff front-loading.

China’s Statistics Bureau highlighted some ‘positive changes’ but acknowledged significant ongoing challenges, commenting:

“Positive changes in China’s economy further increased. However, it also noted that external environment has become more complex, domestic demand remains insufficient, some enterprises face operation difficulties, and the foundation for sustained economic recovery and improvement still needs to be strengthened.”

What Do the Experts Think of China’s Policy Measures

Experts remain skeptical about Beijing’s latest fiscal and monetary policy measures.

Brian Tycangco, editor/analyst at Stansberry Research, stated:

“China’s economy is weak but not catastrophically weak. Trying to figure out the minimum amount (of stimulus) needed to keep the economy going. Property is weak in large part because they (Beijing) want it to be weak. What should be soaring is consumption but not doing too well. You can’t incentivize consumption through one-off vouchers.”

Hang Seng Index Dips Amid China Economy Woes

In Asian markets, the Hang Seng Index declined by 0.44% on Monday, extending Friday’s losses. The Index gave up early gains as China’s economic data raised concerns about the effectiveness of Beijing’s policy measures to boost consumption.

The Hang Seng TECH Index dropped by 0.66%, with Alibaba (9988) and Tencent (0700) posting morning losses of 1.11% and 0.49%, respectively.

A less marked decline in China’s housing prices provided little support as the Hang Seng Mainland Properties Index slid by 1.04%.

Mainland China markets also reacted negatively, with the CSI 300 and the Shanghai Composite falling 0.50% and 0.09%, respectively.

Nikkei Finds Support on Japanese Yen Weakness

Japan’s Nikkei Index bucked the regional downtrend, gaining 0.18% on Monday morning. The USD/JPY advanced by 0.20% to 153.889 on Monday, potentially extending its winning streak to six sessions.

Expectations of the Bank of Japan leaving interest rates at 0.25% on Thursday weighed on Japanese Yen demand. A weaker Yen could boost demand for Japanese goods and overseas earnings, potentially raising earnings and stock prices.

Tech stocks contributed to the morning gains, with Tokyo Electron (8035) and Softbank Group (9984) advancing by 0.52% and 0.51%, respectively.

ASX 200 Falls as Mining Stocks Retreat

Meanwhile, Australia’s ASX 200 Index faces a five-day losing streak, dropping by 0.38% in morning trade. Losses were broad-based, with gold and mining stocks leading the declines for a second consecutive session.

Iron ore prices trended lower following China’s disappointing economic data. BHP Group Ltd. (BHP) and Rio Tinto Ltd. (Rio) tumbled by 1.89% and 1.78%, respectively.

Meanwhile, Northern Star Resources Ltd. (NST) declined by 1.34% as gold fell 1.21% to $2,648 on Friday.

Outlook

Global markets may remain volatile as traders await policy decisions from the Fed and the BoJ. Traders should also track policy-related chatter from Beijing. Equities, currencies, and commodities could face heightened volatility amid concerns about global trade protectionism.

For expert insights and detailed analysis of the Hang Seng Index and global markets, click here.