Hang Seng Index, ASX 200, Nikkei 225 Index: Earnings, Inflation, and Yields in Focus

Key Insights:

• The ASX 200 and Nikkei made modest gains, while the Hang Seng Index ended the Tuesday session in negative territory.
• Overnight US economic indicators and corporate earnings will set the tone for the Wednesday session.
• On Wednesday, Australian inflation, yields, and updates from the Middle East warrant consideration.

Overview of the Tuesday Session

On Tuesday, the Hang Seng Index ended the session in negative territory, while the ASX 200 and the Nikkei 225 made modest gains.

The ASX 200 and the Nikkei found support from a recovery across the US equity markets on Monday. A sharp pullback in 10-year US Treasury yields from a Monday high of 5.021% drove demand for riskier assets.

However, the Hang Seng Index struggled following the Monday holiday. Investors had an opportunity to respond to the recent spike in yields and concerns about the Middle East conflict.

On Monday, the Dow and the S&P 500 declined by 0.58% and 0.17%, while the Nasdaq Composite Index gained 0.27%.

Asian economic indicators failed to weigh on the ASX 200 and Nikkei despite weaker-than-expected private sector PMIs from Australia and Japan. 10-year US Treasury yields continued to retreat during the Asian session, offsetting the effects of disappointing economic indicators.

The Wednesday Session: Corporate Earnings and Inflation in Focus

Overnight US economic indicators and US corporate earnings from Tuesday will set the tone for the Wednesday session.

US private sector PMI numbers for October eased fears of a US economic recession. The services sector avoided a contraction in October.

Investors will also consider overnight US corporate earnings. Big names released earnings, including Alphabet (GOOGL), Coca-Cola (KO), General Electric (GE), General Motors (GM), Microsoft (MSFT), and Visa (V).

On Tuesday, the Nasdaq Composite Index gained by 0.93%, with the Dow and S&P 500 ending the day up 0.62% and 0.73%, respectively.

The Asian economic calendar warrants consideration on Wednesday. Australian inflation figures for Q3 will influence market bets on an RBA rate hike. Economists forecast the Monthly CPI Indicator to rise from 5.2% to 5.4% in September. Sticky inflation may impact the appetite for ASX 200-listed stocks.

Beyond the economic calendar, investors should monitor 10-year US Treasury yields, crude oil prices, and news updates from the Middle East.

In the Futures Markets, the ASX 200 and the Nikkei 225 were up 28 points and 110 points, respectively.

ASX 200

The ASX 200 gained 0.19% on Tuesday. Falling US Treasury yields failed to fuel demand for tech stocks. The S&P/ASX All Technology Index (XTX) fell by 0.44%. However, mining stocks steadied after the Monday sell-off.

Fortescue Metals Group (FMG) rallied 2.59%. Rio Tinto (RIO) and BHP Group Ltd (BHP) saw gains of 1.56% and 0.53%. Newcrest Mining (NCM) fell by 1.15%.

Woodside Energy Group (WDS) slipped by 0.09%, while Santos Ltd (STO) rose by 0.64%.

The big four banks also had a mixed session. ANZ Group (ANZ) fell by 0.16%, with the National Australia Bank (NAB) ending the day flat. The Commonwealth Bank of Australia (CBA) and Westpac Banking Corp (WBC) ended the day up 0.26% and 0.19%.

Hang Seng Index

The Hang Seng Index fell by 1.05% on Tuesday.

Alibaba Group Holding Ltd (HK:9988) and Tencent Holdings Ltd (HK:0700) slid by 1.66% and 2.08%.

Bank stocks also ended the session in negative territory. HSBC Holdings PLC (HK:0005) and China Construction Bank (HK:0939) saw losses of 2.01% and 1.76%. The Industrial and Commercial Bank of China (HK:1398) ended the day down 0.53%.

Nikkei 225

(Graph for reference purposes only)

The Nikkei gained 0.20% on Tuesday.

Bank stocks saw more losses. Sumitomo Mitsui Financial Group (8316) and Mitsubishi UFJ Financial Group (8306) fell by 0.78% and 0.65%. The main components of the Nikkei had a mixed Tuesday session.

SoftBank Group Corp. (9984) and Fast Retailing Co (9983) gained 1.68% and 1.74%. Sony Corp. (6758) rose by 0.96%. However, Tokyo Electron Limited (8035) and KDDI Corp. (9433) ended the session down 0.22% and 0.25%, respectively.

For upcoming economic events, check out our economic calendar.