Hang Seng Index, ASX 200, Nikkei 225: Nikkei Set for Another Breakout

Highlights

• The ASX 200 and the Nikkei followed the US equity markets into positive territory on Thursday, while the Hang Seng slid on China economy jitters.
• On Friday, overnight US corporate earnings and labor market data will set the tone for the session.
• RBA and BoJ commentary also need consideration.

Overview of the Thursday Session

On Thursday, the Hang Seng Index ended the session in negative territory. However, the ASX 200 and the Nikkei followed the US equity markets into positive territory.

Overnight Fed speakers supported a more cautious stance toward cutting interest rates. FOMC members Adriana Kugler, Susan Collins, and Thomas Barkin voiced the need for patience. However, US corporate earnings sent the S&P 500 to a record high.

Upbeat US corporate earnings offset hawkish Fed comments and concerns about the banking sector. Moody’s downgraded New York Community Bankcorp (NYCB) to junk.

From the US economic calendar, Uber Technologies (UBER), CVS Health Corp. (CVS), Fox Corp. (FOX), The Walt Disney Co. (DIS), PayPal Holdings Inc. (PYPL), and Mattel Inc. (MAT) were among the big names to release earnings.

On Wednesday, the Nasdaq Composite Index and S&P 500 saw gains of 0.95% and 0.82%, respectively. The Dow ended the day up 0.41%.

However, the Asian economic and earnings calendar also influenced.

Inflation numbers from China overshadowed measures from Beijing to shore up the equity markets. Consumer prices were down at a more marked pace year-over-year in January, fueling concerns about demand. Consumer prices declined by 0.8% year-over-year in January after falling by 0.3% in December.

The inflation figures and lack of fiscal stimulus from Beijing impacted buyer demand for Hang Seng-listed stocks.

Corporate earnings from Japan and a stronger USD/JPY delivered gains for the Nikkei.

The Fed, Earnings, and the RBA in Focus

On Friday, overnight US economic indicators, Fed speeches, and corporate earnings warrant investor attention.

US initial jobless claims fell from 227k to 218k in the week ending February 3. The better-than-expected numbers supported the softer bets on a March Fed rate cut.

FOMC member commentary also garnered investor interest. FOMC Thomas Barkin spoke for the second successive day. Barkin reportedly attributed the better-than-expected US data to turn-of-the-year issues with seasonal adjustments.

Beyond the economic calendar, the earnings calendar influenced risk appetite. Better-than-expected US corporate earnings pushed the US equity markets higher.

Warner Music Group Corp. (WMG), Ralph Lauren Corp. (RL), and Thomson Reuters Co. (TRI) were among the big names to release earnings.

On Thursday, the Dow ended the day up 0.13%. The Nasdaq Composite Index and S&P 500 rose by 0.24% and 0.06%, respectively.

The US market session will set the tone for the Friday session. However, the Asian earnings and economic calendars also need consideration.

RBA Governor Michele Bullock is on the economic calendar to speak on Friday. A more hawkish-than-expected stance on interest rates could impact buyer demand for ASX 200-listed stocks.

Tokyo Electron (8035) and Mazda Motors (7261) earnings and Bank of Japan commentary could influence the Nikkei.

The ASX 200 futures were flat on Friday, while the Nikkei futures were 230 points, respectively.

ASX 200

The ASX 200 rose by 0.31% on Thursday. Banking and tech sector stocks contributed to the gains. On Thursday, the S&P ASX All Technology Index (XTX) gained 0.16%.

Commonwealth Bank of Australia (CBA) and National Australia Bank Ltd. (NAB) rallied 1.15% and 1.03%, respectively. Westpac Banking Corp. (WBC) and ANZ Group Holdings Ltd (ANZ) ended the day up 0.58% and 0.84%, respectively.

Mining stocks had a mixed session. BHP Group Ltd (BHP) and Rio Tinto Ltd. (RIO) declined by 0.04% and 0.25%, respectively. Fortescue Metals Group Ltd. (FMG) rose by 0.53%.

However, gold (XAU/USD) and oil stocks ended the session in negative territory.

Northern Star Resources Ltd. (NST) and Evolution Mining Ltd. ended the day down 0.08% and 0.96%, respectively. Woodside Energy Group Ltd (WDS) and Santos Ltd (STO) fell by 0.40% and 0.94%, respectively.

Hang Seng Index

The Hang Seng Index fell by 1.27% on Thursday. Real estate and tech stocks had a mixed session. The Hang Seng Mainland Properties Index (HSMPI) gained 1.52%. However, the Hang Seng Tech Index (HSTECH) declined by 0.69%.

Alibaba (9988) slid by 6.14%, with weaker-than-expected fourth-quarter revenue numbers resonating. Tencent (0700) ended the session down 1.71%.

Bank stocks also ended the day with losses. HSBC (0005) fell by 0.80%. China Construction Bank (0939) and Industrial Commercial Bank (1398) ended the day down 1.69% and 1.03%, respectively.

The Nikkei 225

(Graph for reference purposes only)

The Nikkei rallied 2.06% on Thursday. A stronger USD/JPY and corporate earnings contributed.

Softbank Group Corp. (9948) surged 11.06% on Arm earnings results. Fast Retailing Co. Ltd. and Tokyo Electron Ltd. (8035) gained 3.43% and 3.35%, respectively. Sony Group Corp. (6758) rose by 0.17%.

KDDI Corp. (9433) bucked the trend, falling by 1.89%.

Bank stocks ended the session in negative territory. Sumitomo Mitsui Financial Group Inc. (8316) and Mitsubishi UFJ Financial Group Inc. (8306) declined by 1.39% and 1.42%, respectively.

For upcoming economic events, refer to our economic calendar.