Hang Seng Index, Nikkei 225, ASX 200: Markets Rebound Despite Weak China PMIs

Asian Markets React to US Economic Indicators

Overnight US economic indicators from Thursday (May 30) drove buyer demand for riskier assets early in the Friday (May 31) Asian session.

The US economy grew by 1.3% in Q1 2024, slowing from 3.4% in Q4 2023. Significantly, corporate profits fell by $21.1 billion after surging $133.5 billion in Q4 2023. Consumer spending also slowed, supporting investor bets on a September Fed rate cut.

10-Year US Treasury yields were down 0.22% to 4.540% in the Friday morning session.

The US economic indicators masked disappointing Manufacturing and Non-Manufacturing PMI numbers from China. Significantly, the NBS Manufacturing PMI unexpectedly fell from 50.4 to 49.5 in May.

However, the US futures signaled investor caution before the heavily anticipated US Personal Income and Outlays Report. Hotter-than-expected US inflation and personal income/spending numbers could sink bets on a September Fed rate cut.

On Friday (May 31), the Dow mini and S&P mini were down 30 and 8 points, respectively. The Nasdaq mini declined by 50 points.

On Thursday (May 30), the Nasdaq Composite Index slid by 1.08%. The Dow and the S&P 500 declined by 0.86% and 0.60%, respectively.

China Equity Markets on the Rise

On Friday (May 31), the CSI 300 and the Shenzhen Composite Index were up by 0.25% and 0.36%, respectively. The gains came despite the weaker-than-expected PMI numbers, with the Caixin Manufacturing PMI now a focal point for Monday (June 3).

The Hang Seng Index reversed losses from the Thursday session, gaining 1.15%.

Uptrends in real estate and tech stocks contributed to the early gains. The Hang Seng Mainland Properties Index (HSMPI) and Hang Seng Tech Index (HSTECH) were up 0.83% and 1.61% in the morning session.

Baidu (9888) and Tencent Holdings (0700) rallied by 1.79% and 1.91%, respectively, with Alibaba (9988) advancing by 1.38%.

Nikkei Index Sees Positive Territory on BoJ Sentiment

The Nikkei Index was up 0.43% in the morning session. A weaker USD/JPY had a limited impact on buyer demand for Nikkei Index-listed export stocks despite falling 0.06% to 156.716.

Economic indicators from Japan sent mixed signals, testing investor expectations of a 2024 Bank of Japan rate hike. The Tokyo annual inflation rate accelerated from 1.8% to 2.2% in May, with retail rising by 1.2% in April. However, the Jobs/applications ratio fell from 1.28 to 1.26 in April, with industrial production declining by 0.1%.

Softbank Group Corp. (9984) and Sony Group Corporation (6758) rallied 1.91% and 1.34%, respectively. Fast Retailing Co. Ltd. (9983) advanced 1.11%, with KDDI Corp. (9433) gaining 0.26%.

Tokyo Electron Ltd. (8035) bucked the broader market trend, sliding by 2.90%.

Bank, Gold, Oil, and Tech Stocks Deliver ASX 200 Support

The ASX 200 advanced by 0.49% through the Friday morning session. Bank, gold, oil, and tech contributed to the early gains. The S&P/ASX All Technology Index rose by 0.26%.

Investors brushed aside a pullback in WTI crude oil prices, while an upswing in gold spot (XAU/USD) drove buyer demand for gold-related stocks. Gold spot rose by 0.21% on Thursday, ending the session at $2,343. WTI crude oil slid by 1.67% to $77.91.

Gold-related stocks Northern Star Resources Ltd. (NST) and Evolution Mining Ltd (EVN) were up 2.72% and 1.96%, respectively.

Woodside Energy Group Ltd (WDS) advanced by 0.39%, with Santos Ltd (STO) gaining 0.67%.

Commonwealth Bank of Australia (CBA) was up 0.76%, with Westpac Banking Corp. (WBC) gaining 0.46%. ANZ Group Holdings Ltd. (ANZ) and National Australia Bank Ltd. (NAB) rose by 0.43% and 0.45%, respectively.

However, mining stocks had a mixed Friday morning after a pullback in iron ore prices on Thursday. Iron ore spot tumbled 3.63%.

BHP Group Ltd (BHP) and Fortescue Metals Group Ltd. (FMG) fell by 0.70% and 1.92%, respectively. Rio Tinto Group Ltd. (RIO) increased by 0.31%.

For upcoming economic events, refer to our economic calendar.