Hang Seng Index Dips as US Futures Signal Negative Open; Mainland Markets Steady

US Futures Markets Signal a Negative Open

On Tuesday, September 3, the futures markets signaled a negative start to the US session. The Nasdaq mini and Dow mini were down 51 and 52 points, respectively, while the S&P 500 dropped by 7 points.

There was no overnight trading on US equity markets due to the Labor Day holiday.

US Economic Calendar: A Crucial Week for the Markets

It could be a pivotal week for the global financial markets. US private sector PMIs and labor market data could give investors further insights into the US economy.

On Tuesday and Thursday, the ISM Manufacturing and Services PMI may influence sentiment toward a soft US economic landing. Weaker-than-expected PMIs could retrigger investor fears of a hard landing, negatively impacting market risk sentiment.

US labor market data, culminating in Friday’s US Jobs Report will also be crucial. A deterioration in labor market conditions could fuel speculation about a US recession and a 50-basis point September Fed rate cut. While Fed rate cuts typically boost demand for riskier assets, cuts aimed at avoiding a hard landing may have the opposite effect on market risk sentiment.

Uncertainty toward the US economy set the tone for the Tuesday Asian session.

Aussie Net Exports Contribution to GDP Disappoint

On Tuesday, September 3, economic data from Australia signaled a weaker-than-expected performance in Q2 2024. The net exports contribution to GDP came in at 0.2% falling short of a forecasted 0.6%.

With a trade-to-GDP ratio of over 50%, weak trade data can adversely affect the Australian economy and trade-related stocks. While a weaker macroeconomic backdrop typically reduces the chances of an RBA rate hike, wage growth, and inflation figures could force the RBA to leave the cash rate higher for longer, possibly impacting rate-sensitive stocks.

Expert Views on the Aussie Economy

ABS Head of International Statistics Tom Lay commented on the export figures, stating,

“Iron ore and coal prices saw a second quarterly fall, which is reflected in goods export prices 5.4 percent lower compared to this time last year.”

Hang Seng and Mainland China Equities Diverge

The Hang Seng Index fell by 0.23% on Tuesday morning. However, the loss was modest, with real-estate and tech stocks steadying after Monday’s sell-off.

The Hang Seng Mainland Properties Index advanced by 1.73% despite New World Development Co. Ltd.’s (0017) falling another 3.81% following its forecast of a $2.6 billion loss for the 2024 financial year. On Monday, New World Development shares tumbled 12.99%.

The Hang Seng Tech (HSTECH) was up by 0.59%, with Baidu (9888) and Alibaba (9988) gaining 0.12% and 1.26%, respectively. Tencent (0700) remained flat.

The Mainland equity markets advanced, with the CSI 300 and the Shenzhen Composite Index rising by 0.34% and 1.13%, respectively. The better-than-expected Caixin Manufacturing PMI likely resonated, with investors hoping for a pickup in economic activity.

Nikkei Index Advances Alongside the USD/JPY

The Nikkei Index advanced by 0.22% on Tuesday morning. On Monday, the USD/JPY gained 0.50%, driving demand for Nikkei Index-listed stocks. A weaker Japanese Yen could boost overseas profits, in Yen terms, benefiting stock prices.

Nissan Corp. (7201) rallied by 1.19%, with Sony Corp. (6758) gaining 0.96%. However, tech stocks had a mixed morning ahead of the crucial US economic data. Tokyo Electron Ltd. (8035) declined by 0.65%, while Softbank Group Corp. (9984) was up 0.17%.

ASX 200 Drops as Mining Stocks Waver

The ASX 200 Index was down 0.10% on Tuesday morning, with gold and mining stocks leading the decline.

Northern Star Resources Ltd. (NST) was down by 0.93% after gold prices fell by 0.17% on Monday. Mining giants BHP Group Ltd. (BHP) and Fortescue Metals Group (FMG) saw declines of 0.25% and 0.52%, respectively. Iron ore spot extended its losses from Monday (-3.69%) and Tuesday (-1.95%), impacting demand for mining stocks.

Additionally, retailers also contributed to the loss. Woolworths (WOW) slid by 2.00% on plans to sell its stake in liquor stores.

Investors should remain alert, with central bank commentary pivotal as the US Personal Income and Outlays Report looms. 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.