Hang Seng Index, ASX200, Nikkei 225: ASX 200 in Breakout Mode

Key Insights:

• It was a bullish Monday morning, with the ASX 200 leading the Hang Seng and Nikkei Indexes.
• Market reaction to the US Jobs Report and the increasing bets on a Fed pause in June supported the bullish session.
• Economic indicators from China contributed to the bullish mood.

Market Overview

It was a bullish start to the Monday session for the Asian markets. The ASX 200 led the Hang Seng Index and the Nikkei as investors responded to the US Jobs Report from Friday and the increasing bets on a Fed pause in June.

Average hourly earnings fell short of expectations, rising by 0.3% versus a forecasted 0.4% in May. Softer wage growth came despite another sharp increase in nonfarm payrolls, which surged by 339k versus 294k in April. Economists forecast a 180k rise. The unemployment rate unexpectedly rose from 3.4% to 3.7% despite the surge in hiring.

The unexpected rise in the US unemployment rate followed Q1 unit labor costs from Thursday, supporting a June pause. Unit labor costs rose by 4.2% in Q1 versus 3.2% in Q4. Economists forecast a 6.3% increase.

On Friday, NASDAQ Composite Index rose by 1.07%, with the Dow and S&P 500 seeing gains of 2.12% and 1.45%, respectively.

This morning, China’s economic data also supported the Asian markets. The Caixin Services PMI increased from 56.4 to 57.1, with the Caixin Composite PMI up from 52.9 to 55.6 in May. The PMI numbers were in stark contrast to the NBS PMI numbers that painted a grim picture of the Chinese economy.

ASX 200

The ASX 200 was up by 1.19%, with bank and mining stocks providing support. Economic data from Australia disappointed, leaving China’s PMI numbers and Fed sentiment to support a breakout session.

The big-4 had a bullish morning. ANZ Group (ANZ) and Westpac Banking Corp (WBC) led the way, gaining 2.15% and 1.75%, respectively. The Commonwealth Bank of Australia (CBA) and The National Australia Bank (NAB) were up 1.02% and 1.67%, respectively.

Mining stocks also found support. Rio Tinto (RIO) and BHP Group Ltd (BHP) were up 1.48% and 1.51%, respectively, with Fortescue Metals Group (FMG) rising by 2.59%. Newcrest Mining (NCM) slid by 2.82%.

Oil stocks also had a bullish morning. Woodside Energy Group (WDS) and Santos Ltd (STO) gained 0.69% and 1.28%, respectively. Brent Crude was up 0.97% to $76.87 this morning, with the Saudi plan to cut output by one million barrels bullish.

Hang Seng Index

The Hang Seng was up 0.43% this morning.

Considering the main components, Tencent Holdings Ltd (HK:0700) and Alibaba Group Holding Ltd (HK:9988) saw modest gains of 0.12% and 0.05%, respectively.

Bank stocks also had a bullish morning session. HSBC Holdings PLC rose by 1.72%, with the Industrial and Commercial Bank of China (HK:1398) and China Construction Bank (HK: 0939) seeing gains of 1.19% and 1.39%, respectively.

CNOOC (HK: 0883) slipped by 0.82%.

Nikkei 225

The Nikkei 225 was up 0.40% this morning, with a stronger USD/JPY supporting the bullish session.

Sumitomo Mitsui Financial Group (8316) and Mitsubishi UFJ Financial Group rose by 1.00% and 0.52%, respectively.

Looking at the main components, Fast Retailing Co (9983) and Sony Corp (6758) were up 2.92% and 1.92%, respectively. Investor-preferred AI stock SoftBank Group Corp. (9984) rose by 1.64%, with Tokyo Electron Limited (8035) gaining 0.13%. However, KDDI Corp (9433) bucked the trend, falling by 0.07%.

Check out our economic calendar for economic events.