Hang Seng Index, ASX 200, Nikkei 225: Hang Seng in the Hands of China Data

US Equity Markets: US Jobless Claims and the Fed

On Thursday (May 16), US jobless claims attracted investor interest after the US inflation numbers. Initial jobless claims fell from 232k to 222k in the week ending May 11. Tight labor market conditions created uncertainty about the timing of a Fed rate cut amid a sticky inflation environment.

FOMC member speeches also influenced market risk sentiment. Loretta Mester reportedly said rates should remain higher for longer to shore confidence that inflation will return to the 2% target. FOMC member Raphael Bostic was reportedly pleased about progress on inflation but said the Fed was not there yet.

However, other stats included the Philly Fed Manufacturing PMI, housing sector data, and industrial production figures. The weaker-than-expected numbers supported expectations of a September Fed rate cut. The Philly Fed Manufacturing Index fell from 15.5 to 4.5 in May, with industrial production flat in April.

The US equity markets reacted to the stats and FOMC member speeches. On Thursday (May 16), the Dow fell by 0.10%. The Nasdaq Composite Index and S&P 500 ended the session down 0.26% and 0.21%, respectively.

US equity market trends from Thursday will set the tone for the Friday (May 17) Asian session.

Asian Economic Calendar: China in Focus

On Friday (May 17), the Chinese economy will be under the spotlight, with industrial production, fixed asset investment, retail sales, and unemployment numbers in focus.

Economists forecast fixed asset investments to increase 4.6% year-to-date, year-on-year in April, after rising 4.5% in March. Furthermore, economists expect the unemployment rate to hold steady at 5.2%.

However, the industrial production and retail sales figures may impact market risk sentiment more, with investors eyeing the demand environment. Economists predict retail sales to increase 3.7% year-on-year in April after rising 3.1% in March. Moreover, economists expect industrial production to advance 5.4% year-on-year after rising 4.5% in March.

Upbeat figures will likely drive demand for riskier assets amid rising investor expectations of a September Fed rate cut.

Commodities: Crude Oil, Gold, and Iron Ore

On Thursday (May 16), gold spot (XAU/USD) declined 0.38% to close the session at $2,376.65. WTI crude oil advanced by 0.76%, ending the day at $79.23.

On the Singapore Futures Exchange, iron ore prices were up 0.17% on Friday (May 17). Iron ore spot rallied 2.60% on Thursday (May 16).

The USD/JPY and the Nikkei

The USD/JPY rose by 0.33% on Thursday (May 16), closing the session at 155.388. A stronger USD/JPY could support buyer demand for Nikkei Index-listed export stocks.

The Futures Markets

On Friday (May 17), the ASX 200 and the Nikkei Index were down by 44 and 360 points, respectively.

ASX 200

The ASX 200 rallied 1.65% on Thursday (May 16). Bank, gold, mining, and Tech stocks contributed to the gains. The S&P/ASX All Tech Index ended the session up 1.94%.

BHP Group Ltd (BHP) and Rio Tinto Group Ltd. (RIO) advanced by 1.02% and 0.70%, respectively. Fortescue Metals Group Ltd. (FMG) rallied 2.23%.

Gold-related stocks Northern Star Resources Ltd. (NST) and Evolution Mining Ltd (EVN) ended the session up 2.12% and 2.61%, respectively.

ANZ Group Holdings Ltd. (ANZ) and National Australia Bank Ltd. (NAB) rallied 2.10% and 2.40%, respectively. Commonwealth Bank of Australia (CBA) gained 1.94%, with Westpac Banking Corp. (WBC) rising by 1.40%.

However, oil stocks had a mixed session. Woodside Energy Group Ltd (WDS) rose by 0.04%, while Santos Ltd (STO) declined by 0.52%.

Hang Seng Index

The Hang Seng Index ended the Thursday (May 16) session up 1.59%. Property stocks were among the front runners, with the Hang Seng Mainland Properties Index (HSMPI) surging 4.92%. Tech stocks contributed to the gains. The Hang Seng Tech Index (HSTECH) gained 0.76%.

Alibaba (9988) slid by 3.57%, while Tencent Holdings (0700) rallied 3.98%.

However, bank stocks had a positive session. HSBC (0005) advanced by 1.67%. China Construction Bank (0939) and Industrial Commercial Bank (1398) ended the session up 6.12% and 5.37%, respectively.

The Nikkei Index

(Graph for reference purposes only)

The Nikkei Index rose by 1.39% on Thursday (May 16).

Bank stocks had another mixed session. Sumitomo Mitsui Financial Group Inc. (8316) rallied 2.14%, while Mitsubishi UFJ Financial Group Inc. (8306) slid by 4.28%.

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

Softbank Group Corp. (9984) and Tokyo Electron Ltd. (8035) saw gains of 2.15% and 4.51%, respectively. Fast Retailing Co. Ltd. (9983) and Sony Group Corporation (6758) rose by 1.55% and 0.50%, respectively. KDDI Corp. (9433) advanced by 0.09%.

For upcoming economic events, refer to our economic calendar.