Hang Seng Index, ASX 200, Nikkei 225: Nikkei Futures Signal New High

Overview of the Wednesday Session

On Wednesday, the Hang Seng Index led the ASX 200 into positive territory, while the Nikkei ended the session in negative territory. Despite the second session in the red, the Nikkei held onto the 40,000 handle.

The ISM Services PMI pressured the US equity markets on Tuesday, falling from 53.4 to 52.6 in February. A marked fall in the ISM Services Employment Index spooked investors. The sub-index fell from 50.5 to 48.0. The ISM Services Prices Index supported bets on an H1 2024 Fed rate cut, declining from 64.0 to 58.6.

On Tuesday, the Dow and S&P 500 saw losses of 1.04% and 1.02%, respectively. The Nasdaq Composite Index ended the session down 1.65%.

The US equity markets set the tone for the Wednesday session. However, the Asian economic and earnings calendars also influenced the Asian session.

Q4 GDP numbers from Australia eased fears of an RBA rate hike. The Australian economy grew by 0.2% quarter-on-quarter in Q4 after expanding by 0.3% in Q3. Lackluster household spending in Q4 could raise bets on an H1 2024 RBA rate cut.

US Labor Market Data and Fed Chair Powell to Set the Tone

On Thursday, investors will likely react to overnight US economic data from Wednesday and Fed Chair Powell testimony.

Labor market data signaled a change in momentum before the US Jobs Report (Fri). The ADP reported a 140k increase in employment in February, falling short of forecasts (150k). Job openings fell from 8.889 million to 8.863 million in January, coming up short of expectations (8.900 million).

The labor market data supported bets on an H1 2024 Fed rate cut. Fed Chair Powell also fueled bets on an H1 2024 rate cut during testimony on Capitol Hill. Powell reportedly suggested a less restrictive monetary policy environment later in the year. However, the Fed Chair also pointed out that policy decisions were data-dependent.

The US equity markets responded positively to the US data and Powell testimony. On Wednesday, the Nasdaq Composite Index and S&P 500 gained 0.58% and 0.51%, respectively. The Dow ended the session up 0.20%.

On Thursday, the US session from Wednesday will set the tone. However, the Asian economic calendar also warrants investor attention. Trade data from Australia and China will influence trends for the ASX 200 and the Hang Seng Index.

Economists forecast the Australian trade surplus to widen from A$10.959 billion to A$11.500 billion in January. Importantly, economists expect China’s US dollar trade surplus to widen from $75.34 billion to $103.7 billion. While the headline figures need consideration, import and export numbers will also move the dial.

Beyond the numbers, the National People’s Congress needs monitoring. Hopes of a meaningful stimulus package linger.

On Thursday, the ASX 200 and Nikkei futures were up by 37 and 270 points, respectively.

ASX 200

The ASX 200 gained 0.12% on Wednesday. Bank stocks were among the front-runners. However, mining and tech stocks capped the upside. The S&P ASX All Technology Index (XTX) slid by 0.99%.

For the big four banks, the Commonwealth Bank of Australia (CBA) and Westpac Banking Corp. (WBC) saw gains of 1.17% and 1.09%, respectively. ANZ Group Holdings Ltd (ANZ) and National Australia Bank Ltd. (NAB) ended the session up 1.01% and 1.01%, respectively.

Gold XAU/USD) and Oil stocks had mixed sessions. Northern Star Resources Ltd. (NST) rose by 0.43%, while Evolution Mining Ltd. ended the session flat. Woodside Energy Group Ltd (WDS) gained 0.83%, while Santos Ltd (STO) fell by 0.55%.

Mining stocks ended the session in negative territory over demand worries. Fortescue Metals Group Ltd. (FMG) fell by 0.35%. BHP Group Ltd (BHP) and Rio Tinto Ltd. (RIO) saw losses of 0.63% and 0.91%, respectively.

Hang Seng Index

On Wednesday, the Hang Seng Index rallied 1.70%. JD.com beat Q4 earnings forecasts, rallying 7.79%. Property and tech stocks contributed to the gains. The Hang Seng Mainland Properties Index (HSMPI) and Hang Seng Tech Index (HSTECH) rose by 0.57% and 2.67%, respectively.

Alibaba (9988) and Tencent (0700) rallied 3.08% and 2.39%, respectively.

Bank stocks also had a positive session. HSBC (0005) gained 0.75%. China Construction Bank (0939) and Industrial Commercial Bank (1398) rose by 0.83% and 1.00%, respectively.

The Nikkei 225

(Graph for reference purposes only)

The Nikkei declined by 0.02% on Wednesday. Despite the loss, the Nikkei held onto the 40,000 handle for the third consecutive day.

Bank stocks had another positive session. Sumitomo Mitsui Financial Group Inc. (8316) and Mitsubishi UFJ Financial Group Inc. (8306) rose by 1.74% and 0.72%, respectively.

However, the main components of the Nikkei had a mixed session.

Softbank Group Corp. (9948) slid by 1.49%, with Fast Retailing Co. Ltd. declining by 0.93%.

KDDI Corp. (9433) gained 0.78%. Tokyo Electron Ltd. (8035) and Sony Group Corporation (6758) ended the day up 0.38% and 0.04%, respectively.

For upcoming economic events, refer to our economic calendar.