Hang Seng Index, ASX 200, Nikkei 225 Index: The China Factor and Jackson Hole’s Shadows

Key Insights:

• Hang Seng and ASX 200 declined, while the Nikkei demonstrated resilience in Monday’s session.
• In the absence of regional indicators, the spotlight intensifies on the PBoC and Beijing’s moves.
• Jackson Hole Symposium looms, adding to the pressure, as market observers scrutinize Fed’s 2023 intentions.

Monday Overview

It was a mixed Monday session, with the Hang Seng Index and ASX 200 seeing red while the Nikkei bucked the broader market trend.

There were no regional economic indicators to shift investor focus from the Chinese economy. The lack of economic indicators left the PBoC and Beijing in the spotlight, with investors awaiting a more significant stimulus package to boost growth.

However, the PBoC weighed on investor sentiment by falling short of policy expectations. The PBoC held the 5-year LPR unchanged at 4.20% while reducing the one-year LPR by ten basis points to 3.45%. Economists expected the PBoC to cut the LPRs by 15 basis points to 4.05% and 3.40%, respectively.

The disappointing PBoC moves came despite a deepening real estate crisis, with investors expecting more from the PBoC to shore up confidence.

China and the Jackson Hole Symposium Remain Center Stage

It is another quiet Asian market session today, with no economic indicators for investors to consider. The lack of economic indicators will leave the Chinese economy and the Fed in focus.

After the latest PBoC policy easing moves to support the economy, investor optimism toward a sizeable stimulus package from Beijing may start wearing thin. The looming Jackson Hole Symposium added further pressure as investors remain divided on Fed policy intentions for the remainder of 2023.

From overnight, there were no US economic indicators to distract investors. The NASDAQ Composite Index jumped by 1.56%, with the S&P 500 gaining 0.69%. However, the Dow slipped by 0.11%

US tech stocks gained ahead of NVIDIA Corp. (NVDA) earnings release, with energy and mining stocks enjoying bullish sessions on uptrends in crude and metal prices. According to the futures market, the ASX 200 and the Nikkei will enjoy bullish opens.

Softer-than-expected Hong Kong inflation numbers should support the HSI.  The annual inflation rate softened from 1.90% to 1.80% in July. Economists forecast an inflation rate of 2.00%.

ASX 200

The ASX 200 declined by 0.46% on Monday, with risk aversion stemming from China and contagion weighing on the big-4 and mining stocks.

On Monday, Westpac Banking Corp (WBC) led the big-4 into the red, sliding by 3.06% on earnings results. While cash profits met expectations, the bank warned of higher expenses.

ANZ Group (ANZ) and The Commonwealth Bank of Australia (CBA) saw losses of 1.02% and 0.61%, respectively. The National Australia Bank (NAB) fell by a more modest 0.40%.

Mining stocks had a mixed session on China risk. Rio Tinto (RIO) and BHP Group Ltd (BHP) fell by 0.82% and 0.39%, respectively. Newcrest Mining (NCM) also saw red, declining by 0.80%, while Fortescue Metals Group (FMG) gained 0.44%.

However, oil stocks found support from a continued rise in crude oil prices. Woodside Energy Group (WDS) and Santos Ltd (STO) rose by 0.16% and 1.03%, respectively.

Hang Seng Index

The Hang Seng Index slid deeper into bear market territory on Monday, declining by 1.82%. The disappointing PBoC move to boost growth weighed on buyer appetite.

Considering the main Index components, Tencent Holdings Ltd (HK:0700) and Alibaba Group Holding Ltd (HK:9988) slid by 2.15% and 1.49%, respectively.

Bank stocks continued their bearish run. HSBC Holdings PLC declined by 0.26%. China Construction Bank (HK: 0939) and The Industrial and Commercial Bank of China (HK:1398) tracked each other, falling by 1.47%, respectively.

CNOOC (HK: 0883) fell by 0.47% despite rising crude oil prices.

However, logistics company Orient Overseas (HK: 0316) tumbled by 5.63% to lead the broader market into negative territory.

Nikkei 225

(For reference purposes only)

The Nikkei 225 bucked the broader market trend on Monday despite a weaker USD/JPY, gaining 0.37%.

The banks had another bearish session. Sumitomo Mitsui Financial Group (8316) and Mitsubishi UFJ Financial Group declined by 0.51% and 0.09%, respectively.

Looking at the main components, Fast Retailing Co (9983) and SoftBank Group Corp. (9984) saw gains of 1.32% and 1.16%, respectively. Tokyo Electron Limited (8035) also found support, rising by 0.90%. However, Sony Corp (6758) saw more losses, falling by 0.12%.

Tokyo Electric Power was among the front runners, rallying 4.15% as investors monitored meetings between the Japanese government and fishermen over plans to release radioactive water from the Fukushima nuclear disaster.

Check out our economic calendar for economic events.