Hang Seng Index, ASX 200, Nikkei Index: Tencent Earnings Puts the Hang Seng in Focus

US Equity Markets: Consumer Sentiment and the Fed

On Friday (May 10), US consumer sentiment figures attracted investor attention amidst shifting investor expectations of a September Fed rate cut.

The Michigan Consumer Sentiment Index fell from 77.2 to 67.4 in May. Economists forecast a decline to 76.0. However, the inflation expectation numbers had a more significant impact on market sentiment regarding the Fed’s rate path. The Michigan Inflation Expectations Index unexpectedly increased from 3.2% to 3.5%, testing investor bets on a September Fed rate cut.

FOMC member commentary attracted investor interest before the US CPI Report (Tues, May 14). FOMC member Lorie Logan questioned whether monetary policy was restrictive enough to return inflation to the 2% target. Minneapolis Fed President Neel Kashkari also raised concerns about the current interest rate level, fueling speculation about a Fed rate hike.

On Friday, the Nasdaq Composite Index slipped by 0.03%. However, the Dow and S&P 500 saw gains of 0.32% and 0.16%, respectively.

The consumer sentiment, inflation expectation figures, FOMC member commentary, and US equity market movements from Friday will likely set the tone for the Monday (May 13) Asian session.

Asian Economic Calendar: Australian Business Confidence and Earnings

On Monday (May 13), business sentiment figures from Australia will draw investor interest. Economists forecast the NAB Business Confidence Index to increase from 1 to 2 in April. Upward trends in business confidence could boost job creation and wage growth, which could drive consumer spending. Consumer spending could fuel demand-driven inflation and influence the RBA rate path.

However, investors must also consider inflation figures from China over the weekend. The annual inflation rate rose from 0.1% to 0.3% in April, with producer prices falling at a less marked pace.

The numbers from China signaled an improving demand environment. Nevertheless, producer price trends remain a bugbear. Producer prices declined by 2.5% year-on-year in April after falling 2.8% in March.

Beyond the economic calendar, investors should also consider corporate earnings. Softbank Group Corp. (9984), Suzuki Motor Corp. (7269), Yamaha Motor Corp. Ltd. (7272), and Tencent Music Entertainment (HK: 1698) are among the marquee corporations to release earnings results.

Commodities: Crude Oil, Gold, and Iron Ore

On Friday (May 10), gold spot (XAU/USD) advanced by 0.60% to close the session at $2,360.50. WTI crude oil slid by 1.26%, ending the Friday session at $78.26.

On the Singapore Futures Exchange, iron ore prices were down 0.23% on Monday (May 13). Iron ore spot declined by 0.25% on Friday (May 10).

The USD/JPY and the Nikkei

The USD/JPY gained 0.22% on Friday (May 10), closing the session at 155.755. Investors should consider USD/JPY trends that could influence buyer demand for Nikkei Index-listed export stocks. Nevertheless, a weaker Yen could prompt the Japanese government to intervene, potentially impacting the Nikkei Index.

The Futures Markets

On Monday (May 13), the ASX 200 and the Nikkei Index were down by 15 points and 30 points, respectively.

ASX 200

The ASX 200 gained 0.35% on Friday (May 10). Bank, gold, oil, and tech-related stocks contributed to the gains. The S&P/ASX All Tech Index rose by 0.14%.

ANZ Group Holdings Ltd. (ANZ) and Westpac Banking Corp. (WBC) advanced by 1.04% and 1.29%, respectively. National Australia Bank Ltd. (NAB) gained 0.87%, with Commonwealth Bank of Australia (CBA) rising by 0.38%.

Gold-related stocks Northern Star Resources Ltd. (NST) and Evolution Mining Ltd (EVN) ended the Friday session up 1.17% and 1.32%, respectively.

Oil stocks Woodside Energy Group Ltd (WDS) and Santos Ltd (STO) rallied 1.89% and 2.08%, respectively.

However, iron ore price declines from Thursday dragged mining stocks into negative territory. BHP Group Ltd (BHP) and Rio Tinto Group Ltd. (RIO) saw losses of 0.35% and 0.16%, respectively. Fortescue Metals Group Ltd. (FMG) fell by 0.76%.

Hang Seng Index

The Hang Seng Index rallied 2.30% on Friday (May 10). Real estate stocks led the Index in positive territory. The Hang Seng Mainland Properties Index (HSMPI) surged 4.18%, with the Hang Seng Tech Index (HSTECH) advancing by 0.38%.

Property stocks advanced on plans to remove limits on home purchases in two Chinese cities, Hangzhou and Xian. News of authorities planning to cut dividend taxes on Hong Kong stocks available for mainland investors also influenced.

Alibaba (9988) and Tencent (0700) saw gains of 1.50% and 0.32%, respectively.

Bank stocks also had a positive session. HSBC (0005) rose by 0.44%. China Construction Bank (0939) and Industrial Commercial Bank (1398) surged 6.82% and 4.14%, respectively.

The Nikkei Index

(Graph for reference purposes only)

The Nikkei Index ended the Friday session up 0.41%.

Bank stocks had another positive session. Sumitomo Mitsui Financial Group Inc. (8316) and Mitsubishi UFJ Financial Group Inc. (8306) advanced by 0.98% and 0.60%, respectively.

However, it was another mixed session for the main components of the Nikkei Index.

Softbank Group Corp. (9984) rallied 1.82%. Fast Retailing Co. Ltd. (9983) and KDDI Corp. (9433) ended the Friday session up 0.22% and 0.63%, respectively.

Meanwhile, Tokyo Electron Ltd. (8035) and Sony Group Corporation (6758) saw losses of 0.60% and 1.35%, respectively.

For upcoming economic events, refer to our economic calendar.