Hang Seng Index, ASX200, Nikkei 225: Hang Seng Jumps on China PMI

• It was a bullish morning for the Asian markets, with the Asian markets brushing aside Fed Fear and a bearish US session.
• Economic data from China supported a bullish start to March, with manufacturing sector activity rebounding in February.
• However, the ASX 200 trailed on investor reaction to GDP and inflation figures.

Market Overview

It was a bullish Wednesday morning session for the Asian markets, with the Hang Seng Index leading the way. The Asian markets brushed aside bearish sessions for the Dow and the NASDAQ Composite Index. US economic indicators disappointed on Tuesday, with consumer confidence weakening for a second consecutive month and house price growth slowing.

The CB Consumer Confidence Index fell from 106.0 to 102.9 in February, with the S&P/CS HPI Composite n.s.a rising by 4.6% year-over-year in December. House prices were up 6.8% in November. Elevated US mortgage rates continue to impact buyer demand, with US mortgage rates bouncing back after a brief retreat.

On Tuesday, the NASDAQ Composite Index fell by 0.10%, with the Dow Jones and S&P 500 seeing losses of 0.71% and 0.30%, respectively. This morning, the US Futures reversed early losses. The Dow mini was up 16 points, with the NASDAQ mini flat.

Private sector PMI numbers from China delivered support to riskier assets this morning. After a China data void, today’s stats provided investors with much-needed relief. The all-important Caixin Manufacturing PMI increased from 49.2 to 51.6 in February. Economists forecast a PMI of 50.2. Significantly, the manufacturing sector expanded for the first time since July 2022.

ASX 200

The ASX 200 was up 0.08%. Disappointing Q4 GDP numbers overshadowed softer inflation figures. The Australian economy expanded by 0.5% in Q4, quarter-on-quarter, versus a forecasted 0.8%. In Q3, the economy grew by 0.6%. Significantly, the annual inflation rate softened from 8.4% to 7.4% versus a forecasted 8.1%. However, while softer, the RBA is unlikely to take its foot off the gas.

Mining stocks were on the rise as investors responded to the latest PMI numbers from China. Rio Tinto (RIO) and BHP Group Ltd (BHP) were up by 2.70% and 2.60%, respectively, with Fortescue Metals Group (FMG) gaining 2.97%. Newcrest Mining (NCM) led the way, rallying 3.37%.

Oil stocks were also on the move. Woodside Energy Group (WDS) and Santos Ltd (STO) saw gains of 2.34% and 1.00%, respectively. WTI Crude and Brent Crude were up 0.57% and 1.75%, respectively, this morning.

However, Bank stocks had a bearish morning. ANZ Group (ANZ) and Commonwealth Bank of Australia (CBA) were down by 1.26% and 1.25%, respectively, with Westpac Banking Corp (WBC) and National Australia Bank (NAB) seeing losses of 2.00% and 1.90%, respectively.

Hang Seng Index

The Hang Seng was up 3.30% this morning as investors responded to the impressive PMI numbers from China.

Tencent Holdings Ltd (HK:0700) was up 5.76%, with Alibaba Group Holding Ltd (HK:9988) gaining 5.14%.

It was also a bullish morning for banking stocks. HSBC Holdings PLC rose by 1.18%, with China Construction Bank (HK: 0939) and Industrial and Commercial Bank of China (HK:1398) seeing gains of 2.29% and 1.79%, respectively.

CNOOC (HK: 0883) found support from the upswing in crude oil prices, rising by 2.72%.

Nikkei 225

The Nikkei 225 was up 0.35% this morning, with weak manufacturing PMI numbers offsetting a stronger USD/JPY at 136.3 levels. In February, Japan’s manufacturing PMI fell from 48.9 to 47.7 versus a prelim 47.4. The latest PMI followed the disappointing industrial production numbers on Tuesday. Industrial production tumbled by 4.6% in January.

While the stats from Japan disappointed, central bank chatter and the China PMI numbers provided support. Bank of Japan Board Member Nakagawa spoke this morning. Nakagawa stated that the Bank of Japan must maintain an ultra-loose monetary policy over the near term. On inflation, Nakagawa said,

“There’s a chance inflation may come under downward pressure if wage hikes don’t spread as much as expected.”

Adding,

“It is necessary to support the economy with current monetary easing for the time being.”

SoftBank Group Corp. (9984) and KDDI Corp (9433) saw gains of 0.18% and 0.10%, respectively, with Tokyo Electron Ltd (8035) rising by 1.76%. However, Fast Retailing Co (9983) and Sony Corp (6758) saw losses of 0.56% and 0.26%, respectively.

It is a busy global economic calendar. US corporate earnings and the all-important US Jobs Report will be in focus today.