Hang Seng Index, Nikkei 225, ASX 200: Futures Flash Green on Rate Cut Bets

Overview of the Thursday Session

On Thursday, the ASX 200 bucked the broader market trend, ending the session in positive territory. However, the Hang Seng Index and the Nikkei saw red.

Overnight US economic indicators from Wednesday set the tone for the Thursday Asian session. US labor market data signaled a weakening labor market environment. ADP employment numbers fell short of forecasts, while JOLTs Job Openings declined in January.

More significantly, Fed Chair Powell raised hope of an H1 2024 Fed rate cut during testimony on Capitol Hill. The US equity markets responded to the labor market data and testimony.

On Wednesday, the Dow gained 0.20%. The Nasdaq Composite Index and S&P 500 ended the session up 0.58% and 0.51%, respectively.

The Asian economic calendar also influenced the Thursday Asian equity market session. Better-than-expected trade data from Australia and China delivered gains for the ASX 200. However, wage data from Japan and BoJ chatter fueled demand for the Yen, pressuring the Nikkei.

A lack of fiscal stimulus measures from the National People’s Congress left the Hang Seng Index on the back foot.

US Labor Market Data, the Fed, and Japan Household Spending

On Friday, overnight US economic indicators from Thursday and Fed Chair Powell will set the tone for the session. US jobless claims remained at 217k in the week ending March 2. Nonetheless, recent labor market stats have raised bets on an H1 2024 Fed rate cut before the US Jobs Report (Fri).

On the second day of testimony, Fed Chair Powell stuck to the Wednesday script, highlighting likely rate cuts later in the year.

The US equity markets reacted to the stats and the testimony. On Thursday, the Nasdaq Composite Index gained 1.51%. The Dow and S&P 500 ended the session up 0.34% and 1.03%, respectively.

On Friday, investors must also consider the Asian economic calendar. Household spending numbers from Japan could influence bets on an April BoJ pivot from negative rates. Economists forecast household spending to increase by 0.4% month-on-month in January after sliding 0.9% in December.

Beyond the numbers, investors must monitor National People’s Congress chatter. Hopes of a meaningful stimulus package have faded.

On Fridays, the ASX 200 and Nikkei futures were up by 45 and 170 points, respectively.

ASX 200

The ASX 200 ended the Thursday session up 0.39%. Banking, gold, and tech stocks contributed to the gains. The S&P ASX All Technology Index (XTX) rose by 0.75%.

For the big four banks, ANZ Group Holdings Ltd (ANZ) and National Australia Bank Ltd. (NAB) saw gains of 0.86% and 0.62%, respectively. Commonwealth Bank of Australia (CBA) and Westpac Banking Corp. (WBC) ended the day up 0.54% and 0.15%, respectively.

Gold (XAU/USD) stocks Northern Star Resources Ltd. (NST) and Evolution Mining Ltd. rallied 2.60% and 2.50%, respectively.

However, oil stocks had a mixed session. Woodside Energy Group Ltd (WDS) slid by 2.70%, while Santos Ltd (STO) gained 1.11 %.

Mining stocks also had a mixed session. Fortescue Metals Group Ltd. (FMG) and Rio Tinto Ltd. (RIO) rose by 1.17% and 0.88%, respectively. BHP Group Ltd (BHP) bucked the trend, declining by 1.08%.

Hang Seng Index

On Thursday, the Hang Seng Index ended the session down 1.27%. Property and tech stocks contributed to the losses. The Hang Seng Mainland Properties Index (HSMPI) and Hang Seng Tech Index (HSTECH) declined by 1.86% and 1.56%, respectively.

Alibaba (9988) and Tencent (0700) fell by 1.60% and 1.31%, respectively.

However, bank stocks had a mixed session. HSBC (0005) rose by 0.73%. China Construction Bank (0939) declined by 0.41%, while Industrial Commercial Bank (1398) ended the session flat.

The Nikkei 225

(Graph for reference purposes only)

The Nikkei slid by 1.23% on Thursday on a weaker USD/JPY.

Bank stocks had a positive session. Sumitomo Mitsui Financial Group Inc. (8316) and Mitsubishi UFJ Financial Group Inc. (8306) gained 1.65% and 0.53%, respectively.

However, the main components of the Nikkei had a mixed session.

KDDI Corp. (9433) and Softbank Group Corp. (9948) rose by 2.14% and 1.58%, respectively.

However, Tokyo Electron Ltd. (8035) slid by 3.89%. Fast Retailing Co. Ltd. and Sony Group Corporation (6758) ended the session down 0.98% and 0.15%, respectively.

For upcoming economic events, refer to our economic calendar.