Hang Seng Index, ASX200, Nikkei 225: HSI Sees Red on Powell Talk

Key Insights:

• It was a mixed start to the Thursday session, with the ASX 200 and Nikkei finding support while the Hang Seng Index saw red.
• Hawkish Fed Chair Powell from Wednesday chatter weighed on the Hang Seng Index.
• However, economic indicators from Australia and Japan provided early support to the ASX 200 and the Nikkei.

Market Overview

It was a mixed morning session for the Asian markets. The Hang Seng Index saw red, while the ASX 200 and the Nikkei were on the move.

There were no overnight US economic indicators to influence investor sentiment. However, hawkish Fed Chair Powell chatter from the ECB Central Bank Forum weighed on riskier assets on Wednesday.

Fed Chair Powell talked about consecutive rate hikes remaining on the table, which weighed on the Hang Seng Index this morning. The hawkish comments fueled bets on a July 25-basis point interest rate hike ahead of tomorrow’s US Core PCE Price Index figures that could influence the September meeting.

According to the CME FedWatch Tool, the probability of a 25-basis point July Fed rate hike stood at 81.8% versus 76.9% on Tuesday. Significantly, the chances of the Fed lifting rates to 5.75% in September stood at 16.4%, up from 15.4% on Tuesday.

This morning, economic data from Japan and Australia supported the Nikkei and the ASX 200, with sentiment toward BoJ and RBA monetary policy contributing to the bullish sessions.

ASX 200

The ASX 200 was up 0.16%, with better-than-expected Australian retail sales providing support. While the retail sales numbers came in hotter than expected, the slide in Australian inflation should leave the door closed to further RBA hikes.

The big-4 had a mixed morning. ANZ Group (ANZ) led the way, gaining 1.84%, with The National Australia Bank (NAB) and The Commonwealth Bank of Australia (CBA) rising by 0.46% and 0.64%, respectively. However, Westpac Banking Corp (WBC) bucked the trend, falling by 0.09%.

Mining stock also had a mixed morning. Rio Tinto (RIO) and BHP Group Ltd (BHP) saw losses of 0.48% and 0.26%, respectively, with Newcrest Mining (NCM) down 1.16%. Fortescue Metals Group (FMG) bucked the trend, rising by 0.41%.

Oil stocks had a mixed morning. Woodside Energy Group (WDS) fell by 0.09%, while Santos Ltd (STO) rose by 0.34%. Brent Crude was down 0.24% to $73.85 this morning.

Hang Seng Index

The Hang Seng was down 1.06% this morning, with Fed Chair Powell and Chinese economic woes weighing on investor sentiment.

Considering the main Index components, Tencent Holdings Ltd (HK:0700) and Alibaba Group Holding Ltd (HK:9988) were down 0.65% and 2.31%, respectively.

However, bank stocks had a mixed morning. HSBC Holdings PLC was down 0.58%, while The Industrial and Commercial Bank of China (HK:1398) and China Construction Bank (HK: 0939) were flat.

CNOOC (HK: 0883) fell by 1.07%.

Nikkei 225

The Nikkei 225 was up 0.36% this morning, with a USD/JPY return to 144 providing support. Upbeat retail sales figures provided further support, while fears of a government intervention to prevent a further slide in the Yen capped the upside. Retail sales increased 5.7% year-over-year in May versus 5.1% in April.

From the banking sector, Sumitomo Mitsui Financial Group (8316) and Mitsubishi UFJ Financial Group gained 0.97% and 2.32%, respectively.

Looking at the main components, Tokyo Electron Limited (8035) led the way, gaining 3.26%. SoftBank Group Corp. (9984) and Fast Retailing Co (9983) also found support, rising by 0.36% and 0.50%, respectively.

However, Sony Corp (6758) and KDDI Corp (9433) bucked the trend, falling by 0.49% and 0.81%, respectively.

Check out our economic calendar for economic events.