Hang Seng Index, ASX200, Nikkei 225: Hang Seng Stumbles Early

Key Insights:

• It was a choppy morning session for the Asian markets, with the Hang Seng Index seeing deep red.
• Market reaction to Friday’s US jobs report and ISM Non-Manufacturing PMI sent the Asian markets into the red. However, a stronger USD/JPY delivered Nikkei support.
• Fears of a more hawkish Fed will test sentiment ahead of the US CPI report for January, which is due on February 14.

Market Overview

It was a mixed morning session. US economic indicators from Friday weighed on market risk sentiment this morning, with the Hang Seng Index hitting reverse.

The sharp rise in nonfarm payrolls and fall in the US unemployment rate to 3.4% raised fears of a more hawkish Fed move in March. ISM Non-Manufacturing PMI numbers removed immediate jitters of a US economic recession, giving the Fed further reason to continue front-loading to tackle inflation.

Investors also responded to disappointing Apple Inc. (AAPL) and Alphabet Inc. (GOOGL) earnings and gloomy outlooks that contributed to the NASDAQ Index’s 1.59% fall on Friday.

This morning, there were no stats or geopolitical events to dictate broader market risk sentiment. Following last week’s US economic indicators, the markets will need FOMC member chatter to restore order. Bets are for a 25-basis point Fed interest rate hike to take the Fed Funds Rate to 5%. Any talk of a more aggressive move would be bearish.

ASX 200

The ASX 200 was down 0.22% this morning, weighed by the Dow Jones loss on Friday. This mornnig, economic indicators from Australia failed to impress. Retail sales tumbled by 3.9% in December, while the MI Inflation Gauge increased from 0.2% to 0.9% in Q4. The Melbourne Institute (MI) Inflation Gauge is an inflation indicator that mirrors the official quarterly CPI numbers.

Today, bank stocks saw red. ANZ Group (ANZ) was down 0.66%, with National Australia Bank (NAB) and Westpac Banking Corp (WBC) seeing losses of 0.35% and 0.98%, respectively. Commonwealth Bank of Australia (CBA) fell by 0.0.41%.

However, mining stocks delivered support. BHP Group Ltd (BHP) and Rio Tinto (RIO) were up 1.15% and 0.97%, respectively, with Fortescue Metals Group (FMG) rising by 0.73%. Newcrest Mining (NCM) jumped by 11.60% on takeover talks. US mining company Newmont Corp has reportedly bid $17 billion, which would be the biggest in Australian history.

Hang Seng Index

It was back into negative territory for the Hang Seng, which was down 2.59% this morning. It was a sea of red on the Hang Seng Index board.

Tencent Holdings Ltd (HK:0700) was down 3.01%, with Alibaba Group Holding Ltd (HK:9988) sliding by 3.88% through the morning.

CNOOC (HK: 0883) and ENN Energy Holdings (2688) also saw red despite steadying oil prices. CNOOC was down 1.78%, with ENN Energy Holdings falling by 0.26%.

Bank stocks joined the broader market in the red, with Industrial and Commercial Bank of China (HK:9988) and China Construction Bank (HK: 0939) down by 1.47% and 1.00%, respectively.

Nikkei 225

The Nikkei 225 was up 1.06% this morning, with a jump in the USD/JPY from sub-129 levels on Friday to 131.867 this morning, delivering morning support. There were no stats from China or Japan to provide direction.

Fast Retailing Co (9984) was among the front-runners, rallying by 3.03%, with Softbank Group Corp (9434) and KDDI Corp (9433) seeing gains of 0.52% and 1.56%, respectively. Fast Retailing Co has a 10.17% weighting. However, Tokyo Electron Ltd (8035) was down 1.68%, which has a 4.73% weighting. Sony Corp (6758) also struggled, falling by 1.11%.

Check out our economic calendar for today’s economic events.