Hang Seng Index, Nikkei 225, ASX 200: ASX 200 Sinks on Rate Hike Fears, HSI Stalls

US Tech Sector Rebounds on Tuesday

The US equity markets had another mixed session on Tuesday, June 25. The Nasdaq Composite Index rallied 1.26%, with the S&P 500 gaining 0.39%. However, the Dow bucked the trend, falling by 0.76%.

NVIDIA Corp. (NVDA) reversed its losses from Monday, surging 6.76% to $126.09, ending its three-day losing streak.

The Kobeissi Letter reflected on the recent NVIDIA price trends, saying,

“Nvidia is making INSANE moves: From June 20th through June 24th, Nvidia lost $600 BILLION of market cap in 3 trading days. Today, the stock has added $250 BILLION in market cap from its pre-market low. That’s an $850 billion swing in market cap over just 4 trading days. To put this in perspective, that’s a swing of 1.5 TIMES the value of Tesla, $TSLA, in just 4 days. Nvidia is casually swinging almost $1 trillion of market cap in just 4 days with no news. Truly historic.”

US economic indicators reflected a modest weakening in consumer confidence in June. However, the modest decline in the CB Consumer Confidence Index had a limited impact on expectations of a September Fed rate cut. Avoiding a fall below 100 may have been pivotal.

US Consumer Confidence Keeps Fed Rate Path Uncertain

Conference Board Chief Economist Dana Peterson commented on the June survey, attributing the narrow movements in the Index to a robust US labor market.

The reference to the US labor market highlighted the uncertainty surrounding the outlook for wage growth, consumption, and inflation. Notably, the Index last fell below 90 in January 2021. The US unemployment rate stood at 6.3% in January 2021 compared with 4.0% in May 2024.

On Wednesday, June 26, US futures signaled another mixed session. The Dow mini was down 17 points, while the Nasdaq mini and S&P 500 mini were up by 28 and 3 points, respectively.

With the US futures signaling a testy session ahead, trade tensions impacted buyer demand for the Hang Seng Index and Mainland China-listed stocks.

Hang Seng Index and Mainland Markets See Red

The Hang Seng Index declined by 0.04% on Wednesday morning. Investor caution about trade talks between the EU and China on tariffs overshadowed tech sector gains.

This week, the EU and China will discuss EU tariffs on electric vehicle imports from China. According to China’s state media outlets, Beijing requested the EU to drop its plans to introduce the tariffs. Uncertainty about the two sides reaching an agreement pressured Mainland stocks in particular.

The Hang Seng Tech Index (HSTECH) advanced by 0.54%. Baidu (9888) was up by 0.81%, while Alibaba (9988) and Tencent (0700) saw gains of 0.28% and 0.26%, respectively.

The Mainland China equity markets extended their losses from Tuesday, with Shenzhen Composite and CSI 300 declining by 0.09% and 0.23%, respectively. Progress toward a trade agreement could drive buyer demand for Mainland China-listed stocks. However, negotiations could be lengthy.

Bruegel Senior Fellow Alicia Garcia Herrero considered the news of China asking the EU to scrap tariffs, saying,

“Nobody will dare to do this (remove the tariffs) now. Not before the elections in France. The Commission can’t change a decision it has been pondering for months on months on months. Yes, China is putting pressure on the member states, but they would need to vote with a qualified majority against the Commission.”

Nikkei Rallies on Tech Rebound and Yen Struggles

The Nikkei Index rallied 1.28% on Wednesday morning, with the USD/JPY driving buyer demand for export stocks at 159.8. On Wednesday, the USD/JPY was up 0.10% to 159.826. Overnight US tech sector gains contributed to gains for Nikkei 225-listed tech stocks.

Tokyo Electron Ltd. (8035) rallied 2.73%, with Softbank Group Corp (9984) gaining 1.28%.

ASX 200 Sinks on RBA Rate Hike Jitters and Commodity Price Trends

The ASX 200 was down 1.01% on Wednesday. Hotter-than-expected Australian inflation numbers fueled investor bets on an August RBA rate hike. The Monthly CPI Indicator increased from 3.6% to 4.0% in May. Economists forecast an inflation rate of 3.8%.

ABS Head of Price Statistics Michelle Marquardt commented on the May figures, saying,

“CPI inflation is often impacted by items with volatile price changes like Automotive fuel, Fruit and vegetables, and Holiday travel. It can be helpful to exclude these items from the headline CPI to provide a view of underlying inflation, which was 4.0 per cent in May, down from 4.1 per cent in April.”

The banking sector reacted to the prospects of higher interest rates that could affect non-performing loans. ANZ Group Holdings Ltd (ANZ) and Commonwealth Bank of Australia (CBA) fell by 1.23% and 1.10%, respectively.

Gold and mining stocks contributed to the losses. Northern Star Resources Ltd. (NST) slid by 3.50% as gold extended its losses from Tuesday.

BHP Group Ltd (BHP) and Rio Tinto Group Ltd. (RIO) fell by 1.32% and 1.54% as investors eye trade talks between the EU and China.

Oil-related stocks bucked the trend, with WTI Crude higher on Wednesday. Woodside Energy Group Ltd (WDS) was up 0.59%.

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