Hang Seng Index, ASX 200, Nikkei 225: US CPI Report Reaction and China Stats

Highlights

• The Nikkei led the ASX 200 and the Hang Seng Index into positive territory on Thursday.
• Overnight gains across the US equity markets on Wednesday and trade data from Australia set the tone for the Thursday Asian session.
• On Friday, the Asian equity markets will react to the US CPI Report and economic indicators from China.

Overview of the Thursday Session

On Thursday, the Nikkei led the ASX 200 and Hang Seng Index into positive territory. Gains across the US equity markets on Wednesday set the tone for the Thursday Asian session.

On Wednesday, the Nasdaq Composite Index ended the day up 0.75%. The Dow and S&P 500 rose by 0.45% and 0.57%, respectively. There were no overnight US economic indicators from Wednesday to influence market risk sentiment.

Investors bet on softer inflation numbers from the US, driving demand for riskier assets.

Trade data from Australia contributed to the ASX 200 gains on rising exports. However, a slide in imports capped the upside.

US CPI Report to Set the Tone for Friday

On Friday, the overnight US CPI Report from Thursday and the US equity market response will set the tone for the Asian session. The US annual inflation rate accelerated from 3.1% to 3.4% in December. Economists forecast an inflation rate of 3.2%. However, core inflation softened from 4.0% to 3.9%.

Initial jobless claims declined from 203k to 202k in the week ending January 6. Despite the inflation and labor market numbers, investors raised bets on a March Fed rate cut. According to the CME FedWatch Tool, the probability of a March rate cut increased from 64.7% to 71.8%.

On Thursday, the Nasdaq Composite Index ended the session flat. The Dow gained 0.04%, while the S&P 500 ended the day down 0.07%. 10-year US Treasury yields struck a session high of 4.068% before hitting the reverse. 10-year US Treasury yields ended the session down 1.54% to 3.968%.

Trade and Inflation Numbers from China in Focus

On Friday, the Chinese economy will be in the spotlight. Trade and inflation numbers from China will garner investor interest. Both reports need consideration as investors assess the domestic and overseas demand environment.

A pickup in inflationary pressures and better-than-forecast import and export numbers could drive demand for riskier assets.

Economists forecast producer prices to fall 2.6% in December after falling 3.0% in November. Consumer prices could fall further but at a less marked pace. Economists expect consumer prices to fall 0.4% year-over-year versus a 0.5% decline in November.

Forecasts for trade data signal an improving demand environment. Economists forecast exports to rise by 1.7% year-over-year in December and imports to rise by 0.3%. In November, imports fell by 0.6%, while exports increased by 0.5%.

Beyond the numbers, Bank of Japan commentary and stimulus chatter from Beijing could move the dial.

In the futures markets, the ASX 200 and the Nikkei were down 34 and 40 points, respectively.

ASX 200

The ASX 200 gained 0.50% on Thursday. Tech, gold, and bank stocks made gains, while oil and mining stocks limited the upside. The S&P ASX All Technology Index (XTX) rallied 1.13%.

Falling iron ore prices continued to impact mining stocks. Fortescue Metals Group Ltd. (FMG) slid by 1.89%. BHP Group Ltd (BHP) and Rio Tinto Ltd. (RIO) ended the session down 0.10% and 0.39%, respectively. It was a mixed session for oil stocks. Woodside Energy Group Ltd (WDS) gained 0.87%, while Santos Ltd (STO) declined by 0.80%.

However, Gold (XAU/USD) and bank stocks contributed to the gains. Northern Star Resources Ltd. (NST) and Evolution Mining Ltd. (EVN) rose by 1.18% and 1.34%, respectively.

Westpac Banking Corp. (WBC) and Commonwealth Bank of Australia (CBA) rallied 1.22% and 1.39%, respectively. National Australia Bank Ltd. (NAB) and ANZ Group Holdings Ltd (ANZ) rose by 0.81% and 0.89%, respectively.

Hang Seng Index

The Hang Seng Index saw green for the first time in eight sessions, gaining 1.27%. The Hang Seng Tech Index (HSTECH) jumped by 2.18%. Property stocks also ended the day in positive territory. The Hang Seng Mainland Properties Index (HSMPI) rose by 1.14%.

Alibaba (9988) and Tencent (0700) ended the day up 2.24% and 2.57%, respectively.

Bank stocks had a mixed session. HSBC (0005) and China Construction Bank (0939) saw gains of 0.16% and 0.44%, respectively. Industrial Commercial Bank (1398) ended the day flat.

The Nikkei 225

(Graph for reference purposes only)

The Nikkei gained 1.77% on Thursday, ending the day at 35,000 for the first time since 1990.

Bank stocks rallied on Thursday. Sumitomo Mitsui Financial Group Inc. (8316) and Mitsubishi UFJ Financial Group Inc. (8306) gained 1.59% and 1.67%, respectively. It was also a positive session for the main components of the Nikkei.

KDDI Corp. (9433) and Sony Group Corp. (6758) led the way, surging by 4.21% and 3.54%, respectively. Fast Retailing Co. Ltd. (9983) and Tokyo Electron Ltd. (8035) rallied 2.32% and 2.74%, respectively. Softbank Group Corp. (9948) gained 1.92%.

For upcoming economic events, check out our economic calendar.