Hang Seng Index and Nikkei 225: Divergent Paths Amid US Tariffs and BoJ Rate Uncertainty

Can the Nasdaq Sustain Its Five-Day Rally Amid Political Shifts?

On Monday, November 11, US equity markets kickstarted the week in positive territory. The Dow gained 0.69%, while the S&P 500 and the Nasdaq Composite Index advanced by 0.10% and 0.06%, respectively. Significantly, the Nasdaq extended its winning streak to five sessions.

Tesla Inc. (TSLA) led gains, rallying 8.96% on expectations of Elon Musk joining the Trump administration. Speculation about Trump deregulating the US banking sector drove demand for US bank stocks. Goldman Sachs (GS) rose 2.22%, while Morgan Stanley (MS) rallied 3.08%.

Aussie Consumer Confidence Jumps, Testing December RBA Rate Cut Expectations

On Tuesday, November 12, the Westpac Consumer Confidence Index unexpectedly jumped 5.3% to 94.6 in November, up from 89.8 in October. The surge in consumer confidence stemmed from improving optimism about the outlook for the economy and finances.

Easing fears about higher interest rates boosted consumer sentiment. However, consumers reacted negatively to Trump’s US election win, suggesting a possible pullback from November’s spike. Nevertheless, rising consumer confidence may signal a boost in consumer spending. A pickup in consumer spending might drive inflationary pressures, potentially reducing December RBA rate cut bets.

China Remains in Focus Amid Trump Tariffs Jitters

Recent economic indicators from China suggest recent stimulus measures are delivering results. However, uncertainty about the long-lasting effects of the current stimulus measures lingers. Trump’s tariffs threats remain headwinds for Hong Kong and Mainland China-listed stocks. The absence of stimulus measures targeting domestic consumer spending has disappointed investors.

After the weekend’s inflation report, the focus will likely remain on Beijing’s plans to bolster consumer consumption.

Natixis Asia Pacific Chief Economist Alicia Garcia Herrero remarked on China’s stimulus, Trump’s re-election, and consumer demand, stating,

“I don’t expect the announcement to address the underlying issues or boost anemic consumer demand. An insufficient stimulus package, coming on the heels of Trump’s re-election, will constitute ‘a very bad day’ for China. They need to find other sources of growth, because trade will not make it.”

Expert Views on China’s Stimulus Measures

AsiaMoney Strategist and Economist Hao Hong remarked on China’s latet stimulus measures and markets’ reactions, saying,

“The market is nevertheless disappointed. Also there is mention about consumption stimulus. The market always wants it ALL AND NOW. This is a classic case study for expectation management.”

Hang Seng and Mainland China Equities Diverge Amid Headwinds

In Asian markets, the Hang Seng Index declined by 0.58% on Tuesday morning. Real estate and tech stocks extended their losses from Monday as headwinds lingered. Trump’s tariff threats and weak consumer demand remained concerns for the markets.

The Hang Seng Mainland Properties Index and the Hang Seng Tech Index dropped 0.36% and 0.56%, respectively. Tech giants Alibaba (9988) and Baidu (9888) were down 0.48% and 1.32%.

Conversely, Mainland China’s equity markets made ground amidst hopes for stimulus measures focused on consumer consumption. The CSI 300 and the Shanghai Composite saw gains of 0.66% and 0.51%, respectively.

Nikkei Climbs as BoJ Rate Path Uncertainty Dampens Yen Demand

In Japan, the Nikkei Index gained 0.59% on Tuesday morning, with a weaker Japanese Yen boosting demand for Japanese export stocks. Following the BoJ’s Summary of Opinions, uncertainty about the Bank’s rate path dampened buyer appetite for the Japanese Yen. The USD/JPY advanced by 0.08% in the morning, consolidating Monday’s 0.75% gain.

Softbank Group Corp. (9984) advanced by 1.41%, while Nissan Motor Corp. (7201) rallied by 3.40%, contributing to the gains. Nissan Motor Corp. had fallen to its lowest level since the COVID-19 pandemic after lowering its profit outlook, abandoning its midterm plan, and cutting jobs. Dip buyers likely contributed to the morning rally.

ASX 200 Drops as Mining Stocks Extend Losses

The ASX 200 Index fell 0.53% on Tuesday morning. Mining and gold-related stocks pressured the Index lower.

Mining giants Rio Tinto Ltd. (RIO) and BHP Group Ltd. (BHP) extended their losses from Monday, declining by 2.05% and 2.78%, respectively. Iron ore spot trended lower on Tuesday morning, dampening buyer appetite for mining stocks. Sentiment toward China’s demand outlook left iron ore spot prices under pressure.

Northern Star Resources Ltd. (NST) slid by 2.14% in the morning session, following gold’s overnight 2.41% tumble to $2,619.

Looking Ahead

Investors should track stimulus-related news from Beijing. Fresh stimulus measures focusing on consumer demand could boost market risk sentiment. Additionally, the Bank of Japan’s insights into its interest rate trajectory also need consideration. Stay informed with our latest updates for market insights.