Hang Seng Index, Nikkei 225, ASX 200: ASX 200 Tracks US Gains; Hang Seng Index Falters

US Equity Markets: Positive End to a Volatile Week

The US equity markets closed the week on a positive footing. The Nasdaq Composite Index extended its gains from Thursday, rising by 0.51%, while the Dow and S&P 500 advanced by 0.13% and 0.47%, respectively.

Thursday’s US jobless claims data continued to ease fears of a significant deterioration in labor market conditions and a hard US economic landing. Initial jobless claims fell from 250k in the week ending July 27 to 233k in the week ending August 3.

Expert Commentary

FOMC voting member Michelle Bowman discussed inflation and the Fed rate path on Saturday, August 10, stating,

“Should the incoming data continue to show that inflation is moving sustainably toward our 2% goal, it will become appropriate to gradually lower the federal funds rate. But we need to be patient and avoid undermining continued progress on lowering inflation by overreacting to any single data point.”

Easing fears of a US economic recession and Fed rate cuts could boost buyer demand for riskier assets. Conversely, increasing risk of a hard US landing and Fed rate cuts to bolster the economy may adversely affect market risk appetite.

The Yen Carry Trade Unwind

On Monday, August 12, the USD/JPY was up 0.19% to 147.887 in the morning session. Easing fears of a US recession and Bank of Japan assurances supported a bounce back from Monday, August 5’s low of 141.684.

The weaker Yen reduced the risk of another Yen carry trade unwind, driving demand for riskier assets. Despite the Japanese markets closing for the Mountain Day holiday, the Nikkei 225 futures were up 250 points in early trading. Nevertheless, crucial US inflation and labor market data will test the markets again this coming week.

While concerns about the US economy abated, uncertainty lingers about the Chinese economy.

Hang Seng and Mainland China See Red

The Hang Seng Index declined by 0.14% on Monday morning, with investors remaining cautious ahead of crucial data releases from the US and China. The real estate and tech sectors contributed to the early losses.

The Hang Seng Mainland Properties Index (HSMPI) was down 0.95%, while the Hang Seng Tech (HSTECH) Index fell by 0.83%. Alibaba (9988) and Baidu (9888) saw losses of 0.64% and 1.50%, respectively.

Mainland China’s equity markets joined the Hang Seng in negative territory. The CSI 300 and the Shenzhen Composite Index were down 0.19% and 0.52%, respectively. On Thursday, August 15, crucial data releases for July could reflect China’s economic momentum at the start of Q3 2024. Weaker data could impact commodity prices and the appetite for riskier assets.

ASX 200 Tracks Friday’s US Market Gains

The ASX 200 Index advanced by 0.50% on Monday morning, tracking the US equity market gains from Friday, August 9. Bank, oil, gold, mining, and tech stocks had a positive start to the week.

The S&P ASX All Technology Index (XTX) rallied by 1.08%. Gold-related stock Northern Star Resources Ltd. (NST) gained 0.43%, while Woodside Energy Group Ltd (WDS) advanced by 0.29%, following Friday’s crude oil and gold price gains.

Investors should remain alert amidst China’s economic growth fears and shifting monetary policy expectations. 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.