Hang Seng Index, ASX 200, Nikkei 225: Inflation Numbers Put the Nikkei in the Spotlight

Highlights

• Falling commodity prices left the ASX 200 in negative territory, while property stocks supported the Hang Seng Index.
• Central bank monetary policy remains the focal point for investors.
• On Friday, inflation and private sector PMI numbers from Japan will influence bets on a Bank of Japan pivot from negative rates.

Overview of the Thursday Session

On Thursday, the ASX 200 ended the session in negative territory, while the Hang Seng Index made gains. The Japanese markets were closed for the Labor Thanksgiving Day holiday.

Overnight US economic indicators from Wednesday set the mood for the Asian session on Thursday. Labor market and consumer sentiment eased bets on a May Fed rate cut, albeit modestly. US labor market conditions remain tight, supporting wage growth and consumer spending.

An upward trend in consumer spending would fuel demand-driven inflation, forcing the Fed to keep a hawkish rate path. The FOMC Meeting Minutes from Tuesday signaled a higher for longer rate path. The US stats supported the Fed’s outlook. 10-year US Treasury yields ended the Wednesday session up 0.30%.

Australian economic indicators pressured the ASX 200. Private sector PMIs pointed to a more marked contraction. Significantly, input and output inflationary pressures accelerated, suggesting a more hawkish RBA rate path. Falling iron ore and oil prices contributed to the losses.

In contrast, hopes of more stimulus from Beijing contributed to gains for the Hang Seng Index.

The Bank of Japan and Economic Indicators from Japan in Focus

On Thursday, the US equity markets were closed for the Thanksgiving holiday. However, 10-year US Treasury yields held steady, suggesting a positive start to the Friday Asian session.

However, the Nikkei could face selling pressure. Inflation and private sector PMIs from Japan will set the tone. A pickup in inflationary pressures would support bets on a Bank of Japan exit from negative rates. Significantly, a more hawkish policy outlook would fuel demand for the Yen and impact Japanese export stocks.

Following the US holidays, Treasury yields and US futures will also influence the Asian markets.

In the futures markets, the ASX 200 and Nikkei were up 12 and 270 points on Friday.

ASX 200

The ASX 200 declined by 0.62% on Thursday. Mining and bank stocks dragged the index into negative territory, while tech stocks cushioned the downside. The S&P ASX All Technology Index (XTX) gained 0.21%.

BHP Group Ltd (BHP) and Rio Tinto Ltd. (RIO) fell by 1.44% and 0.99%, with Fortescue Metals Group Ltd. (FMG) sliding by 1.93%.

Gold and energy stocks also hit the reverse. Evolution Mining Ltd. (EVN) and Northern Star Resources Ltd. (NST) ended the day down 1.32% and 2.10%. Woodside Energy Group Ltd (WDS) and Santos Ltd (STO) saw losses of 1.69% and 1.69%.

Bank stocks had a mixed Thursday session. ANZ Group Holdings Ltd (ANZ) and Commonwealth Bank of Australia (CBA) fell by 0.12% and 0.81%. Westpac Banking Corp. (WBC) gained 0.38%, while National Australia Bank Ltd. (NAB) ended the session flat.

Hang Seng Index

The Hang Seng Index rose by 0.99% on Thursday. Property stocks contributed to the session’s gains. The Hang Seng Properties Index (HSMPI) surged 6.40% on stimulus hopes, countering uncertainty toward Fed policy goals.

Alibaba (9988) and Tencent (0700) ended the day up 0.52% and 1.48%, respectively.

Bank stocks also enjoyed a positive session. HSCB (0005) rose by 0.25%. China Construction Bank (0939) and Industrial and Commercial Bank (1398) gained 1.09% and 1.32%.

The Nikkei 225

(Graph for reference purposes only)

The Nikkei 225 was closed for the Labor Thanksgiving Day holiday.

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