Hang Seng Index, Nikkei 225, ASX 200: HSI Eyes an 11-Day Streak on Tech Stocks

US Equity Markets: Fed Chatter in Focus

On Monday (May 6), FOMC member reactions to the recent US Jobs Report and ISM Services PMI influenced market risk sentiment.

Fed Vice Chair John Williams talked about interest rate cuts but favored current levels over the near term. FOMC member Thomas Barkin had a similar view, saying that the monetary policy stance would cool the economy to bring inflation to the 2% target. Hopes of rate cuts later in the year drove buyer demand for riskier assets.

On Monday (May 6), the Nasdaq Composite Index and the S&P 500 ended the session up by 1.19% and 1.03%, respectively. The Dow gained 0.46%.

Fed forward guidance on inflation, the economy, and the Fed rate path will likely set the tone for the Tuesday (May 7) Asian session.

Asian Economic Calendar: Aussie Retail Sales, Japan Services, and the RBA

On Tuesday (May 7), economic indicators from Australia and Japan may influence buyer appetite for ASX 200 and Nikkei 225-listed stocks.

Finalized Australian retail sales figures for March will draw investor attention. Upward revisions could fuel speculation about a more hawkish RBA rate path. According to the preliminary report, retail sales declined by 0.2% in March after rising by 0.2% in February.

The numbers precede the all-important RBA interest rate decision and press conference. Economists expect the RBA to leave interest rates at 4.35%. However, a more hawkish RBA press conference could raise bets on a near-term RBA rate hike and impact rate-sensitive ASX 200-listed stocks.

From Japan, finalized Services PMI numbers could draw the attention of the Bank of Japan. According to the preliminary survey, the Jibun Bank Services PMI increased from 54.1 to 54.6 in April. An upward revision could enable the Bank of Japan to begin discussing an interest rate hike. A stronger Japanese Yen would pressure Nikkei-listed export stocks.

Beyond the economic calendar, investors should also consider corporate earnings. Nintendo (7974), Commonwealth Bank of Australia (CBA), and ANZ Group Holdings Ltd. (ANZ) are among the big names to release earnings results.

Commodities: Crude Oil, Gold, and Iron Ore

On Monday (May 6), gold spot (XAU/USD) gained 0.97% to close the session at $2,323.97. WTI crude oil advanced by 0.47%, ending the session at $78.48.

On the Singapore Futures Exchange, iron ore prices were down 0.08% on Tuesday (May 7). Iron ore spot rallied 2.29% on Monday (May 6).

The USD/JPY and the Nikkei

The USD/JPY rose by 0.61% on Monday (May 6), closing the session at 153.866. The Nikkei was closed on Friday (May 3) and Monday (May 6). Investors may respond to the weaker Yen, with the Nikkei Index likely to play catch up after positive sessions for the US and Asian equity markets.

The Futures Markets

On Tuesday (May 7), the ASX 200 and the Nikkei 225 were up by 38 and 710 points, respectively.

ASX 200

The ASX 200 advanced by 0.70% on Monday (May 6). Gains were broad-based, with bank stocks leading the way. The S&P/ASX All Tech Index rose by 0.10%.

Westpac Banking Corp. (WBC) rallied 2.65% as investors responded to the earnings release, with ANZ Group Holdings Ltd. (ANZ) rising by 1.02%. Commonwealth Bank of Australia (CBA) and National Australia Bank Ltd. (NAB) advanced by 1.18% and 0.76%, respectively.

BHP Group Ltd (BHP) and Rio Tinto Group Ltd. (RIO) saw gains of 0.80% and 0.34%, respectively. Fortescue Metals Group Ltd. (FMG) rallied 2.57%.

However, gold-related and oil stocks had mixed sessions.

Gold-related stocks Northern Star Resources Ltd. (NST) advanced by 1.47%, while Evolution Mining Ltd (EVN) ended the session flat.

Woodside Energy Group Ltd (WDS) increased by 0.18%, while Santos Ltd (STO) closed the day flat.

Hang Seng Index

The Hang Seng Index ended the Monday (May 6) session up 0.55%. Tech stocks contributed to the gains, with Hang Seng Tech Index (HSTECH) advancing by 0.92%. However, real estate stocks limited the upside. The Hang Seng Mainland Properties Index (HSMPI) ended a nine-day winning streak, falling by 1.78%.

Alibaba (9988) and Tencent (0700) ended the session up 0.19% and 1.54%, respectively.

Bank stocks had a mixed session. HSBC (0005) declined by 0.36%. China Construction Bank (0939) gained 0.39%, while Industrial Commercial Bank (1398) ended the day flat.

The Nikkei 225

(Graph for reference purposes only)

There was no trading in the Japanese markets on Monday, with the markets closed for Children’s Day.

For upcoming economic events, refer to our economic calendar.