Hang Seng Index, ASX200, Nikkei 225: US CPI Report Weighs on Sentiment

Key Insights:

• It was a bearish morning session for the Asian markets, with the ASX200 and the Hang Seng Index seeing heavy losses.
• Market reaction to the US CPI Report, sentiment toward Fed monetary policy, and RBA chatter weighed on investor sentiment.
• There were no economic indicators to distract the markets this morning, leaving the Dow Jones mini and NASDAQ mini to send bearish signals on rising Treasury yields.

Market Overview

It was a bearish morning session for the Hang Seng Index and the broader Asian markets. The US CPI Report for January weighed on market risk sentiment this morning. While US inflation softened, investors would have hoped for softer-than-expected numbers to reduce the likelihood of the Fed pushing interest rates above 5%.

In January, the US annual inflation rate softened from 6.5% to 6.4% versus a forecasted 6.2%, supporting the hawkish outlook on interest rates.

On Monday, the NASDAQ Composite Index rose by 0.57%, while the Dow fell by 0.46%.

There were no economic indicators from the region to distract investors, with geopolitical tensions between the US and China adding to the bearish Hang Seng session.

ASX 200

The ASX 200 was down 1.22% this morning. There were no economic indicators from Australia to weigh on investor sentiment. However, RBA commentary weighed on the ASX 200 again.

Following the hawkish RBA Rate and Monetary Policy Statements from last week, RBA Governor Philip Lowe spoke before members of parliament, talking about the dire consequences of not containing inflation.

According to Reuters, Lowe said,

“Inflation at the moment, 7.8%, is way too high. It needs to come down. That’s our primary consideration.”

The hotter-than-expected US CPI Report and an RBA committed to tackling inflation were enough to send the ASX 200 into the red.

This morning, bank stocks had a bearish session. Commonwealth Bank of Australia (CBA) and Westpac Banking Corp (WBC) slid by 5.78% and 4.48%, respectively. National Australia Bank (NAB) and ANZ Group (ANZ) were down by 3.95% and 3.61%, respectively.

Mining stocks provided modest support. Rio Tinto (RIO) and BHP Group Ltd (BHP) saw gains of 1.05% and 0.11%, respectively, while Fortescue Metals Group (FMG) was down by 0.47%. Newcrest Mining (NCM) also saw red, falling by 1.11%.

A pullback in crude oil prices weighed on Woodside Energy Group (WDS) and Santos Ltd (STO), which were down 2.32% and 0.70%, respectively. WTI was down 0.52% to $78.65 this morning.

Hang Seng Index

The Hang Seng was down 1.28% this morning. Market reaction to the US CPI Report and deteriorating US-China relations weighed on the Hang Seng Index.

Tencent Holdings Ltd (HK:0700) was down 1.48%, with Alibaba Group Holding Ltd (HK:9988) sliding by 2.15%

Bank stocks also saw red, with Industrial and Commercial Bank of China (HK:9988) and China Construction Bank (HK: 0939) falling by 0.99% and 1.01%, respectively, with HSBC Holdings PLC down by 0.73%.

CNOOC (HK: 0883) responded to the pullback in crude oil prices, falling by 0.35%.

Nikkei 225

The Nikkei 225 was down 0.96% this morning, with a weaker USD/JPY at 132.886 (-0.16%), adding further pressure following Tuesday’s disappointing GDP numbers.

SoftBank Group Corp. (9984) fell by 2.00%, with Recruit Holdings Co (6098) sliding by 3.61%.

Fast Retailing Co (9984) rose by 0.16%, while Tokyo Electron Ltd (8035) and KDDI Corp (9433) saw losses of 0.47% and 0.05%, respectively. Sony Corp (6758) joined the broader market in the red, declining by 0.81%.