Hang Seng Index, ASX 200, Nikkei 225 Index: Economic Indicators Shape a Tumultuous Week

Key Insights:

• The Hang Seng and the ASX 200 ended Q3 positively; Nikkei stumbled on USD/JPY and US shutdown fears.
• 10-year US Treasury yields pullback fueled demand for Hang Seng listed stocks.
• Weaker-than-expected PMIs from China will likely impact riskier assets.

Overview of the Friday Session

On Friday, the Hang Seng Index and the ASX 200 enjoyed positive ends to the third quarter. The Nikkei slipped on a weaker USD/JPY pair during the session, the US auto strike, and fears of a US government shutdown.

A pullback in 10-year US Treasury yields and a softer inflation outlook drove demand for Hang Seng listed stocks.

Overnight US economic indicators from Thursday failed to spook investors despite better-than-expected jobless claims. Initial jobless claims increased from 202k to 204k, a level still reflective of tight labor market conditions. Finalized GDP numbers for the second quarter confirmed growth of 2.1%, supporting a pickup in US Treasury yields.

The US equity markets responded to the economic indicators. On Thursday, the S&P 500 and the Dow ended the day up 0.59% and 0.35%, respectively. The NASDAQ Composite Index gained 0.83%.

While the Hang Seng Index enjoyed a breakout session, investors were cautious. Private sector PMIs from China and the US Jobs Report will influence market risk sentiment.

The Monday Session: Private Sector PMIs and Tankan Survey Figures in Focus

On Friday, softer US inflation numbers eased pressure on the Fed to push rates higher. A below-expectation 0.4% increase in personal spending supported a positive end to the quarter for the NASDAQ Composite Index.

The NASDAQ Composite Index gained 0.14%, while the Dow and S&P 500 fell by 0.47% and 0.27%. While the US inflation figures were market-friendly, the lingering threat of a US government shutdown contributed to the mixed Friday session.

This morning, trading volumes will be lighter, with the Hong Kong and Chinese markets closed for the National Day Holidays.

However, private sector PMI numbers from China and the Tankan Survey figures from Japan will influence investor sentiment.

From China, the Caixin Manufacturing PMI fell from 51.0 to 50.6 in September, with the Services PMI down from 51.8 to 50.2. Economists forecast PMIs of 51.2 and 52.6, respectively.

The weaker-than-expected PMIs will likely impact riskier assets. However, Tankan survey-based numbers from Japan will provide the Nikkei with direction. Economists forecast the Tankan Large Manufacturers Index to increase from 5 to 6 in the third quarter.

While the numbers will influence investor sentiment, relief over the news of the US government averting a shutdown should cushion any downside.

In the Futures Markets, the ASX 200 and the Nikkei 225 were down 38 and 60 points, respectively.

ASX 200

The ASX 200 gained 0.34%. Tech stocks found much-needed support. The S&P/ASX All Technology Index (XTX) ended a three-day losing streak, gaining 0.42%. Mining stocks and the big four banks contributed to the positive Friday session.

Rio Tinto (RIO) and BHP Group Ltd (BHP) gained 1.02% and 1.19%, with Fortescue Metals Group (FMG) rising by 1.26%. Newcrest Mining (NCM) ended the session up 0.33%.

ANZ Group (ANZ) and the National Australia Bank (NAB) rose by 0.71% and 0.66%. The Commonwealth Bank of Australia (CBA) and Westpac Banking Corp (WBC) ended the day up 0.02% and 0.09%, respectively.

Woodside Energy Group (WDS) and Santos Ltd (STO) slipped by 0.55% and 0.63%, respectively.

Hang Seng Index

The Hang Seng Index jumped by 2.51%. On Friday, the Hang Seng Mainland Properties Index (HSMPI) rallied 3.48%.

Beyond the property sector, Alibaba Group Holding Ltd (HK:9988) and Tencent Holdings Ltd (HK:0700) surged by 3.13% and 2.96%, respectively.

Bank stocks also found support. China Construction Bank (HK:0939) and the Industrial and Commercial Bank of China (HK:1398) ended the day up 1.38% and 1.89%, respectively. HSBC Holdings PLC (HK:0005) rallied 1.82%.

Nikkei 225

(Graph for reference purposes only)

The Nikkei 225 slipped by 0.05% on Friday. Investors brushed aside softer Tokyo core inflation figures for September. The core annual inflation rate fell from 2.8% to 2.5% vs. a forecast of 2.6%.

However, disappointing labor market figures and consumer confidence weighed on investor appetite. The unemployment rate held steady at 2.7%, while the consumer confidence index slid from 36.2 to 35.2. Economists forecast an unemployment rate of 2.6% and improved consumer sentiment.

Bank stocks stumbled on softer inflation figures and investor caution. Sumitomo Mitsui Financial Group (8316) and Mitsubishi UFJ Financial Group slid by 1.99% and 2.24%, while the main components enjoyed a positive session.

Tokyo Electron Limited (8035) rallied 2.58%, with SoftBank Group Corp. (9984) gaining 0.59%.

Fast Retailing Co (9983) and Sony Corp. (6758) rose by 0.18% and 0.12%, while KDDI Corp. (9433) ended the day flat.

For upcoming economic events, check out our economic calendar.