Hang Seng Index Climbs 1.01% as Tech Stocks Rally, Mainland China Markets Fall

US Equity Markets Surge Despite Inflation Concerns

On Wednesday, September 11, the US equity markets ended the session in positive territory. The Nasdaq Composite Index surged by 2.17%, while the Dow and the S&P 500 saw gains of 0.31% and 1.07%, respectively.

NVIDIA jumped by 8.15% on reports that the US government may allow the company to export chips to Saudi Arabia.

US CPI Data Dampens Hopes for a 50-basis Point Fed Rate Cut

On Wednesday, the US CPI Report sank investor bets on a 50-basis point September Fed rate cut. While headline inflation softened, the core inflation rate held steady at 3.2%, remaining above the Fed’s 2% target. Initially, the Nasdaq slid to a session low of 16,788 before closing at 17,396. The NVIDIA news drove demand for riskier assets.

According to the CME FedWatch Tool, the probability of a 50-basis point September Fed rate cut fell from 34.0% on Tuesday, September 10, to 15.0% on Wednesday, September 11.

Expert Views on US Inflation and the Fed Rate Path

Arch Capital Global Chief Economist Parker Ross remarked on the US CPI Report, stating,

“While nothing in this report is concerning or suggestive of a durable rebound in inflation, it effectively closes the door on any hopes of a 50bps rate cut next week.”

Japan’s Producer Prices Ease Fears of a Hawkish BoJ

On Thursday, September 12, Japan’s producer prices drew investor interest. Producer prices increased by 2.5% year-on-year in August, down from 3.0% in July.

Softer producer prices may signal a weakening demand environment as producers lower prices to remain competitive. As a leading inflation indicator, lower producer prices may soften headline inflation, possibly supporting a less hawkish Bank of Japan rate path.

The USD/JPY advanced by 0.09% to 142.488 on Thursday morning, recovering from a Wednesday low of 140.706 on hawkish BoJ comments. A weaker Yen may drive buyer demand for Nikkei Index-export stocks.

Hang Seng Index and Mainland China Markets Diverge

The Hang Seng Index was up 1.01% on Thursday morning, with tech stocks driving the Index higher.

The Hang Seng Tech Index (HSTECH) rallied 1.40%. Notable movers included Alibaba (9988), which advanced by 3.01%, while Baidu (9888) and Tencent (0700) were up 2.24% and 1.08%, respectively.

In contrast, Mainland China equities trended lower on concerns about the Chinese economy. The CSI 300 and the Shanghai Composite saw declines of 0.26% and 0.13%, respectively.

Nikkei Index Rallies on Tech and the USD/JPY Rebound

The Nikkei Index rallied 2.77% on Thursday morning, with a stronger USD/JPY and tech stocks delivering the morning gains.

Tokyo Electron Ltd. (8035) and Softbank Group Corp. (9984) jumped by 3.56% and 7.84%, respectively, while Nissan Motor Corp. (7201) gained 0.77%.

ASX 200 Rises on Higher Commodity Prices and Tech Strength

The ASX 200 Index was up by 0.62% on Thursday morning. Mining, oil, and tech-related stocks led the gains.

Woodside Energy Group Ltd advanced by 1.75% following Wednesday’s oil price rebound. Meanwhile, higher iron ore prices boosted mining stocks, with Rio Tinto Ltd. (RIO) and Fortescue Metals Group (FMG) up 1.01% and 1.23%, respectively. The S&P/ASX All Technology Index gained 1.66%.

Investors should remain alert, with central bank commentary pivotal amid shifting sentiment toward the Fed rate path. Closely monitor the news wires, real-time data, and expert commentary to manage trading strategies accordingly. Stay informed with our latest news and analysis to manage positions across the Asian equity markets.