Hang Seng Index, ASX 200, Nikkei 225: Futures Signal Volatility on Powell’s Remarks

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Updated: Apr 16, 2024, 22:18 UTC

Key Points:

On Tuesday, the Hang Seng Index and the broader Asian equity markets extended their losses from Monday on geopolitical tensions and Fed rate-cut expectations.
On Wednesday, overnight comments from Fed Chair Powell and US equity market trends need investor consideration.
The Asian economic calendar also warrants investor attention, with trade data from Japan in the spotlight.

US Equity Markets: Fed Chair Powell in no Hurry

On Tuesday, Fed Chair Powell impacted market risk sentiment, saying the Fed could keep interest rates higher for longer. Powell stated the Fed needs to have confidence on inflation returning to target.

Weaker-than-expected US housing sector data failed to refuel investor bets on a June Fed rate cut. Housing starts tumbled 14.7% in March after surging 12.7% in February. Building permits fell by 4.3% after advancing by 2.3% in February. US industrial production increased by 0.4% after rising by 0.4% in February.

US Treasury yields responded to Fed Chair Powell. 10-year US Treasury yields rose 1.37%, ending the session at 4.669%.

On Tuesday, the Dow gained 0.17%. The Nasdaq Composite Index and the S&P 500 saw losses of 0.12% and 0.21%, respectively.

Asian Economic Calendar: Japan and Trade in Focus

On Wednesday, trade data from Japan warrants investor attention. Economists forecast the trade deficit to narrow from ¥379.4 billion to ¥280.0 billion in March. Moreover, investors should consider import and export trends to assess the global demand environment.

While the trade data will likely be the focal point, the Reuters Tankan Index numbers for April could also move the dial. Economists forecast the Index to decline from 10 to 9.

Both reports could influence the Bank of Japan rate path. An improving macroeconomic environment could raise investor bets on a BoJ move away from zero interest rates. A more hawkish rate path could drive buyer demand for the Japanese Yen and impact Nikkei-listed export stocks.

Commodities: Crude Oil, Gold, and Iron Ore

WTI crude and gold (XAU/USD) ended the Tuesday session with losses of 0.06% and 0.02%, respectively. Iron ore prices ended the session in negative territory, falling 1.28% on the Singapore Futures Exchange. The stats from China likely influenced iron ore price trends.

The USD/JPY, the Intervention Zone, and the Nikkei

The USD/JPY held onto the 154 handle, rising by 0.29% on Tuesday to close at 154.709. Yen weakness supports buyer demand for Nikkei-listed export stocks. However, geopolitical tensions and concerns about the Fed could overshadow the impact of a weaker USD/JPY.

The Futures Markets

On Wednesday, the ASX 200 was down 23 points, whereas the Nikkei was up 110 points.

ASX 200

ASX200 170424 Daily Chart

The ASX 200 slid by 1.81% on Tuesday. Losses were broad-based, with banking, gold-related stocks, oil, mining, and tech stocks contributing. The S&P ASX All Technology Index (XTX) slid by 1.55%.

Bank and mining stocks led the losses.

ANZ Group Holdings Ltd. (ANZ) and Westpac Banking Corp. (WBC) fell by 2.21% and 2.33%, respectively. National Australia Bank Ltd. (NAB) and Commonwealth Bank of Australia (CBA) ended the session down 1.68% and 2.13%, respectively.

Rio Tinto Ltd. (RIO) and Fortescue Metals Group Ltd. (FMG) tumbled by 2.90% and 2.76%, respectively. BHP Group Ltd (BHP) declined by 1.75%.

Woodside Energy Group Ltd (WDS) and Santos Ltd (STO) ended the day down 1.25% and 1.52%, respectively.

Gold stocks Northern Star Resources Ltd. (NST) and Evolution Mining Ltd (EVN) saw losses of 0.59% and 1.53%, respectively.

Hang Seng Index

HSI 170424 Daily Chart

On Tuesday, the Hang Seng Index slid by 2.12%. Tech stocks and real estate stocks contributed to the losses. The Hang Seng Tech Index (HSTECH) tumbled 3.04%, with the Hang Seng Mainland Properties Index (HSMPI) falling by 1.18%.

Tencent (0700) and Alibaba (9988) saw losses of 0.95% and 2.77%, respectively.

Bank stocks also had a negative session. HSBC (0005) fell by 2.27%. China Construction Bank (0939) and Industrial Commercial Bank (1398) declined by 1.24% and 0.74%, respectively.

The Nikkei 225

Bank and tech stocks sent the Nikkei south.

Nikkei 170424 Daily Chart

(Graph for reference purposes only)

The Nikkei declined by 1.94% on Tuesday.

Bank stocks extended their losses from Monday. Sumitomo Mitsui Financial Group Inc. (8316) and Mitsubishi UFJ Financial Group Inc. (8306) slid by 3.46% and 2.14%, respectively.

However, it was a mixed session for the main components of the Nikkei.

Tokyo Electron Ltd. (8035) and Softbank Group Corp. (9948) slid by 4.14% and 2.57%, respectively. Fast Retailing Co. Ltd. (9983) ended the session down 1.80%.

KDDI Corp. (9433) and Sony Group Corporation (6758) bucked the trend, advancing by 0.21% and 0.58%, respectively.

For upcoming economic events, refer to our economic calendar.

About the Author

Bob Masonauthor

With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.