Hang Seng Index Drops Amid Caution Ahead of Fed Minutes and US Jobs Data

US Equity Markets: Nasdaq Ends Eight-Day Winning Streak

The US equity markets succumbed to profit-taking on Tuesday, August 20, with the Nasdaq Composite ending its eight-day winning streak. The Nasdaq Composite Index declined by 0.33%, while the Dow and the S&P 500 recorded losses of 0.15% and 0.20%, respectively.

US Labor Market Jitters

Concerns about the US labor market likely triggered profit-taking as the Jackson Hole Symposium loomed. A deterioration in US labor conditions could rekindle fears of a hard US landing, possibly impacting the global economy and market risk sentiment.

Expert Views on the US Labor Market and Economy

Arch Capital Global Chief Economist Parker Ross remarked on US labor market indicators, saying,

“The New York Fed just released its latest Labor Market Survey with data through July ’24. Key Takeaway: There is growing concern about job loss and a corresponding decline in workers expecting to move to a new employer, […]. The results of this survey are yet another reflection of how concerned consumers are about the labor market, even as the Fed has only recently declared it “balanced.”

Ross concluded,

“The pace of the increase in the job loss rate is notable as we have not seen a sustained rise of this magnitude outside of recessions since the early 1990s.”

Concerns about the US labor market and the overnight losses in the US set a cautious tone for the Asian market session on Wednesday.

Trade Terms and the Japanese Yen

On Wednesday, August 21, trade data from Japan signaled an improving macroeconomic environment, possibly supporting a Q4 2024 Bank of Japan rate hike.

Exports increased by 10.3% year-on-year in July, up from 5.4% in June. Additionally, imports were up 16.6%, compared with 3.2% in June. Improving trade terms could bolster the Japanese economy and strengthen the Yen.

The USD/JPY declined by 0.90% on Tuesday, closing at 145.254. On Wednesday, the USD/JPY dropped to a low of 144.925 before steadying. A stronger Yen may negatively impact Nikkei Index-listed export stocks, which are sensitive to Yen trends. Upward Yen trends may affect overseas profits after converting into the Yen.

Hang Seng and Mainland China Drop Pre-Fed Minutes

The Hang Seng Index was down 0.63% on Wednesday morning. Investors turned cautious before the next set of US jobs data. News of Walmart (WMT) planning a block sale of 144.5 million shares left JD.com down 10.34% in the morning session, contributing to the broader Hang Seng Index losses.

The Hang Seng Mainland Properties Index (HSMPI) declined by 1.37%, while the Hang Seng Tech (HSTECH) slid by 1.94%. Alibaba (9988) and Baidu (9888) fell by 1.49% and 1.67%, respectively, while Tencent (0700) gained 0.81%.

Mainland equity markets also faced a negative morning session. The CSI 300 and the Shanghai Composite Index saw declines of 0.19% and 0.30%, respectively.

Nikkei Index Retreats on Yen Strength

The Nikkei Index was down 0.85% on Wednesday, with USD/JPY losses from Tuesday contributing.

Tokyo Electron Ltd. (8035) and Fast Retailing Co. Ltd (9983) fell by 1.58% and 1.47%, respectively. Nissan Motor Corp (7201) slid by 2.01%.

ASX 200 Follows the US Markets into Negative Territory

The ASX 200 Index declined by 0.49% on Wednesday morning, tracking overnight losses from the US markets. However, tech and gold-related stocks limited the downside.

Gold-related stock Northern Star Resources Ltd. (NST) advanced by 1.58% after gold hit fresh highs overnight. The S&P/ASX All Technology Index rallied 1.50%. WiseTech Global Ltd. (WTC) surged 16.5% after beating earnings estimates.

Investors should remain alert, with earnings and central bank commentary pivotal after the shifting sentiment toward the US economy. 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.