Hang Seng Index, ASX200, Nikkei 225: Recession Fears Bite

• It was a mixed Thursday morning for the Asian markets, with the Nikkei and ASX 200 struggling.
• Disappointing ADP employment and ISM Non-Manufacturing PMI numbers fueled recession fears.
• The Hang Seng Index bucked the bearish trend, with service sector PMI numbers from China delivering support.

Market Overview

It was a mixed morning for the Asian markets. The ASX 200 and the Nikkei struggled, while the Hang Seng Index found modest support.

US economic indicators from Wednesday refueled recessionary fears, sending the ASX 200 and Nikkei into negative territory.

The ISM Non-Manufacturing PMI fell from 55.1 to 51.2 versus a forecasted 54.5. Notably, the employment index fell from 54.0 to 51.3. ADP numbers also weighed on riskier assets. In March, the ADP reported a 145k increase in employment, down from 261k in February. Economists forecast a rise of 200k.

After disappointing JOLTs job openings on Tuesday and ISM Manufacturing numbers on Monday, the alarm bells were ringing this morning.

On Wednesday, the NASDAQ Composite Index and the S&P 500 fell by 1.07% and 0.25%, respectively. The Dow eked out a 0.24% gain. However, the US futures flashed red this morning. The NASDAQ mini was down 50.5 points, with the Dow falling by 49.

ASX 200

The ASX 200 was down 0.42%, with bank and mining stocks a drag. However, better-than-expected trade data softened the blow. In February, Australia’s trade surplus widened from A$11.688 billion to A$13.870 billion. Economists forecast a narrowing to A$11.100 billion.

The RBA Financial Stability Review also drew interest, with the RBA noting,

‘A small cohort of borrowers with low savings, high levels of debt, and low incomes are most at risk of facing difficulties in servicing their debts.’

The review added,

“Banks expect the share of households and businesses falling behind on their loan payments to increase over the period ahead. That said, the share of non-performing loans (NPLs) are near historically low levels, and banks are well placed to manage an increase in non-performing loans while continuing to lend to households and businesses.”

The big-4 had a bearish morning session, with National Australia Bank (NAB) and ANZ Group (ANZ) seeing losses of 0.96% and 0.79%, respectively. The Commonwealth Bank of Australia (CBA) and Westpac Banking Corp (WBC) were down 0.62% and 0.48%, respectively.

Mining stocks also struggled. Rio Tinto (RIO) and BHP Group Ltd (BHP) were down by 0.47% and 0.48%, respectively, with Fortescue Metals Group (FMG) falling by 0.30%. Newcrest Mining (NCM) bucked the trend, rising by 0.77%.

Oil stocks had a mixed session. Woodside Energy Group (WDS) fell by 0.94%, while Santos Ltd (STO) was flat. This morning, Brent Crude was down 1.06% to $84.09.

Hang Seng Index

The Hang Seng bucked the bearish trend, rising by 0.16% this morning. Better-than-expected Caixin Services PMI numbers from China provided support. In March, the Caixin Services PMI rose from 55.0 to 57.8 versus a forecasted 54.8.

Considering the main components, Tencent Holdings Ltd (HK:0700) and Alibaba Group Holding Ltd (HK:9988) rose by 0.42% and 1.62%, respectively.

However, it was a mixed morning for banking stocks. HSBC Holdings PLC fell by 1.19 %, while the Industrial and Commercial Bank of China (HK:1398) and China Construction Bank (HK: 0939) rose by 0.48% and 0.78%, respectively.

CNOOC (HK: 0883) was down 0.65%.

Nikkei 225

The Nikkei 225 was down 0.73% this morning, with a weaker USD/JPY a drag.

Across the banking sector, Sumitomo Mitsui Financial Group (8316) and Mitsubishi UFJ Financial Group fell by 0.52% and 0.55%, respectively.

Looking at the main components, Tokyo Electron Limited (8035) slid by 4.94%, with Fast Retailing Co (9983) and Sony Corp (6758) seeing losses of 0.56% and 2.20%, respectively.

However, SoftBank Group Corp. (9984) and KDDI Corp (9433) bucked the trend, rising by 0.35% and 0.05%, respectively.

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