Hang Seng Index Drops as Tech Stocks Falter, Mainland China Markets Recover

US Equity Markets End Mixed on Wednesday

On Wednesday, September 4, the US equity markets had a mixed session after Tuesday’s market rout. The Nasdaq Composite Index and the S&P 500 saw losses of 0.30% and 0.16%, respectively, while the Dow gained 0.09%. NVIDIA (NVDA) followed Tuesday’s 9.53% tumble, with a 1.66% loss.

US Labor Market Weakness Boosts Fed Rate Cut Bets

On Wednesday, weaker-than-expected US labor market data fueled investor bets about a possible 50-basis point September Fed rate cut. According to the JOLTs Report, job openings fell from 7.910 million in June to 7.673 in July. In response, the chances of a 50-basis point Fed rate cut increased from 38.0% to 45.0% on Wednesday.

Concerns about the US labor market intensified on Wednesday. FOMC voting member Raphael Bostic highlighted concerns about the labor market’s vulnerability, hinting that the Fed may need to take action.

Weaker labor market conditions may impact wage growth and consumer spending. Downward trends in consumer spending could affect the US economy as it contributes over 60% to GDP.

Expert Views on the US Labor Market

In response to the weaker US labor market data, Arch Capital Global Chief Economist Parker Ross stated,

“Altogether, today’s JOLTS report doesn’t provide a lot of new information and merely confirms the deterioration we’ve seen already in the July jobs report and other labor market indicators.”

Aussie Trade Surplus Widens as Imports Drop

Australia’s trade surplus unexpectedly widened from A$5.425 billion in June to A$6.009 billion in July. While exports increased by 0.7%, imports fell by 0.8%, signaling an uncertain economic outlook. Despite rising exports, falling imports could indicate a weaker demand environment.

RBA Governor Michele Bullock Signals Higher for Longer

On Thursday, RBA Governor Michele Bullock warned that interest rate cuts were unlikely in 2024. Governor Bullock also stated that the Board remains vigilant to potential upside risks to inflation. Despite concerns about inflation, the tone was less hawkish than previous statements, where she had warned the Board would not hesitate to hike rates if inflation did not cool.

Hang Seng and Mainland China Diverge on Stimulus Hopes

The Hang Seng Index fell by 0.27% on Thursday morning, tracking the Nasdaq’s overnight losses. Tech stocks contributed to the losses.

The Hang Seng Tech Index (HSTECH) was down 0.17%. Notable movers included Baidu (9888), which slid by 1.18%, while Alibaba (9988) and Tencent (0700) were down by 0.37% and 0.13%, respectively.

The Mainland equity markets recovered slightly, with the CSI 300 and the Shenzhen Composite Index up 0.16% and 0.73%, respectively. Speculation about a fiscal stimulus package from Beijing intensified after China’s mixed private sector PMIs. The recent economic data from China highlighted the need for stimulus to meet its 5% growth target.

Nikkei Index Steadies Despite the USD/JPY Drop

The Nikkei Index edged 0.03% higher on Thursday morning, as the USD/JPY steadied from Wednesday’s 1.20% slide to 143.728. A stronger Yen impacts overseas profits, in Yen terms, and buyer demand for Nikkei Index-listed stocks.

Nissan Corp. (7201) advanced by 1.64%, while Softbank Group Corp. gained 1.12%. However, Tokyo Electron Ltd. (8035) extended its losses from Wednesday, falling by 2.54%.

ASX 200 Tracks the Dow Jones Higher

The ASX 200 Index rose by 0.16% on Thursday morning. Bank and tech stocks countered losses across gold, mining, and oil, stocks. The S&P/ASX All Tech Index was up 1.25%, with ANZ Group Holdings Ltd. advancing by 1.74%.

Meanwhile, Northern Star Resources Ltd. (NST) was down 0.21% after gold prices dipped to a $2,472 low on Wednesday. Woodside Energy Group declined by 6.90% (ex-dividend) on the overnight pullback in crude oil prices and news of a Citi downgrade to Sell.

Investors should remain alert, with central bank commentary pivotal as the US Jobs 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.