Hang Seng Index Leads Asian Markets as Nikkei 225 Stumbles on Rate Jitters

US Markets Slide on Fading Fed Rate Cut Bets

On Friday, November 15, US equity markets extended their losses from Thursday, with the Nasdaq Composite Index dropping by 2.24%. The Dow and the S&P 500 saw declines of 0.70% and 1.32%, respectively.

US economic indicators continued dampening investor bets on a December Fed rate cut, weighing on riskier assets.

US Retail Sales Lower Fed Rate Cut Expectations

On Friday, US retail sales figures further lowered investor expectations for a December Fed rate cut. Retail sales were up by 2.8% year-on-year in October after September’s 2.0% increase.

Upward trends in retail sales could fuel demand-driven inflation, potentially delaying Fed rate cuts.

The CME FedWatch Tool reflected the influence of the data and Powell’s recent comments on market sentiment toward the Fed rate. The probability of a 25-basis point Fed rate cut slipped from 64.6% on November 8 to 61.9% on November 15.

Chinese Regulator Fuels HK and Mainland China Market Rallies

On Friday, November 15, China’s Securities Regulatory Commission guided listed companies on market value management, reportedly urging listed companies to reflect company value via share buybacks and other methods.

The prospect of share buybacks and other methods to boost share prices drove buyer demand for Hong Kong and Mainland China-listed stocks on Monday, November 18.

Bank of Japan Governor Ueda Impacts Nikkei Index on Rate Hike Chatter

On Monday, Bank of Japan Governor Kazuo Ueda supported a further adjustment to monetary policy, weighing on Nikkei Index-listed stocks. The BoJ Governor reportedly said,

“We expect wage-driven inflationary pressure to heighten, as the economy continues to improve and companies keep hiking pay.”

Nevertheless, the USD/JPY advanced during the morning session on fading expectations for a December Fed rate cut. The weaker Japanese Yen limited the Nikkei Index’s losses.

Hang Seng Index Aims to End Seven-Day Losing Streak

In Asian markets, the Hang Seng Index rallied 1.50% in the Monday morning session. Investors reacted to the prospect of share buybacks, with real estate and tech stocks seeing solid gains.

The Hang Seng Mainland Properties Index jumped 2.40%, while the Hang Seng Tech Index advanced by 1.45%. Among the tech giants, Tencent (0700) and JD.com (9618) saw gains of 2.50% and 3.92%, respectively.

Mainland China’s equity markets also advanced in the morning session, with the CSI 300 up 1.34%, while the Shanghai Composite gained 1.33%.

Nikkei Index Dips on BoJ Rate Hike Jitters

Japan’s Nikkei Index declined by 0.76% on Monday morning, bucking the broader Asian market trend. The prospects of a BoJ rate hike and potential delay to a Fed rate cut weighed on the Index.

Softbank Group Corp. (9984) and Tokyo Electron (8035) saw losses of 0.96% and 2.40%, respectively, dragging the Index into the red.

ASX 200 Edges Higher as Mining Stocks Climb

In Australia, the ASX 200 Index edged 0.01% higher on Monday morning, eying a three-day winning streak. Gold, mining, and oil stocks contributed to the gains.

Mining giants Rio Tinto Ltd. (RIO) and BHP Group Ltd. (BHP) rallied 1.77% and 1.06%, respectively. Investors reacted to iron ore spot prices jumping by 3.77% on Monday. Iron ore spot prices surged on news of China cutting export tax benefits driving commodities exports, potentially curbing supply.

Northern Star Resources Ltd. (NST) gained 1.22%, as gold rose by 1.03% in the morning session.

However, banking and tech stock losses limited the Index’s gains.

Looking Ahead

Investors should monitor key central bank commentary from the Bank of Japan and the Reserve Bank of Australia this week. Developments in Beijing’s stimulus measures and economic data releases could also shape market sentiment.