Hang Seng Index, ASX200, Nikkei 225: Overnight US Losses to Test Appetite

Key Insights:

• It was a bearish Wednesday session for the Asian equity markets, with the Hang Seng Index and Nikkei leading the ASX 200 into the red.
• Investors reacted to Fitch Ratings downgrading the US sovereign rating from AAA to AA+, and a lack of meaningful stimulus to boost the ailing Chinese economy.
• This morning, Australian trade data and services PMI numbers from China will set the tone.

It was a bearish Wednesday for the Hang Seng Index and the broader Asian markets. The Hang Seng Index and the Nikkei led the ASX 200 into the red.

Euro area and US economic indicators from Tuesday reignited recessionary jitters, with weak demand weighing on manufacturing sector productivity. The US JOLTs job openings report revealed moderately softer labor market conditions.

There were no economic indicators from the Asian region to distract investors who also responded to news of the Fitch Ratings downgrade of the US to AA+.

Today, finalized services PMI numbers from Australia and Japan and the Caixin services PMI for China will move the dial alongside trade data from Australia. A greater reliance on the services sector to support economic growth will leave the equity markets sensitive to weaker numbers.

From the Wednesday US session, ADP nonfarm employment change numbers will also need consideration. According to the ADP, nonfarm employment increased by 324k in July versus 455k in June. Economists forecast an increase of 189k.

The US equity markets responded to the Fitch Ratings downgrade that overshadowed the ADP numbers. The Dow fell by 0.98%. On Wednesday, the NASDAQ Composite Index and the S&P 500 saw losses of 2.17% and 1.38%, respectively.

ASX 200

The ASX 200 declined by 1.29% on Wednesday, with the big-4 banks and mining stocks hitting reverse.

On Wednesday, The Commonwealth Bank of Australia (CBA) and ANZ Group (ANZ) saw losses of 2.26% and 2.05%, respectively. The National Australia Bank (NAB) and Westpac Banking Corp (WBC) declined by 1.64% and 2.01%, respectively.

Mining stocks also had a bearish session, with Fortescue Metals Group and BHP Group Ltd (BHP) falling by 1.96% and 1.12%, respectively. Newcrest Mining (NCM) and Rio Tinto saw relatively modest losses of 0.71% and 0.90%, respectively.

Oil stocks had a bearish session. Woodside Energy Group (WDS) and Santos Ltd (STO) declined by 0.79% and 1.62%, respectively.

Hang Seng Index

The Hang Seng Index slid by 2.47%, with disappointing stimulus from Beijing weighing adding to the bearish sentiment.

Considering the main Index components, Tencent Holdings Ltd (HK:0700) and Alibaba Group Holding Ltd (HK:9988) fell by 2.99% and 2.76%, respectively.

Bank stocks also had a bearish session. HSBC Holdings PLC slid by 3.17%. The Industrial and Commercial Bank of China (HK:1398) and China Construction Bank (HK: 0939) ended the day down 2.91% and 3.12%, respectively.

CNOOC (HK: 0883) tumbled by 2.67%.

Nikkei 225

(For reference purposes only)

The Nikkei 225 tumbled by 2.30% on Wednesday.

The banks had a bearish session. Sumitomo Mitsui Financial Group (8316) and Mitsubishi UFJ Financial Group declined by 1.01% and 0.44%, respectively.

Looking at the main components, Fast Retailing Co (9983) slid by 3.90%. SoftBank Group Corp. (9984) and Tokyo Electron Limited (8035) saw losses of 3.68% and 3.20%, respectively.

Sony Corp (6758) and KDDI Corp (9433) ended the day with relatively modest losses of 1.82% and 1.77%, respectively.

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