Hang Seng Index, Nikkei 225, ASX 200: Trade Tensions Sink Tech Stocks

US Markets: Fed Support and a Soft Landing

On Wednesday, July 17, FOMC Members voiced increased support for a Fed interest rate cut. Significantly, FOMC voting Member Christopher Waller said the Fed is getting nearer to cutting interest rates. Waller also believed a soft landing remained possible.

Investors remained hopeful about a September Fed rate cut. According to the CME FedWatch Tool, the probability of a September rate cut slipped from 100% on Tuesday to 98.1% on Wednesday.

What the Experts Say

Wall Street Journal Chief Economics Correspondent Nick Timiraos commented on Waller’s speech, stating,

“His speech is a notable shift from two months ago, when he suggested the Fed need not cut rates until December. Now, he’s clearly open to a September cut.”

US Equity Market Trends

On Wednesday, the Dow gained 0.59%. However, the Nasdaq Composite Index and the S&P 500 saw losses of 2.77 % and 1.39%, respectively.

Investor fears of potentially greater US export controls on chipmaking equipment for China impacted the tech sector.

The Wednesday US tech sector sell-off will likely set the tone for the Thursday Asian session. However, investors should also monitor updates from China’s Third Plenum.

Asian Markets: Trade Tensions and the Third Plenum

The rising trade tensions between China and the US impacted demand for riskier assets in the Thursday morning session, overshadowing economic data from Australia and Japan.

Uncertainty about the steps Beijing is willing to take to bolster the Chinese economy also left investors on tenterhooks. The Communist Party’s Third Plenum ends on Thursday, July 18.

The markets will react to policy measures to bolster the Chinese economy. Moderate measures could impact market risk sentiment following China’s Q2 GDP numbers.

Natixis Bank Asia Pacific Chief Economist Alicia Garcia Herrero thinks Beijing is likely to disappoint, saying,

“The difficulty in simultaneously achieving both economic and fiscal targets is a key reason that only moderate policies will likely be announced.”

Hang Seng Index and Mainland China Stocks Under Pressure

Meanwhile, the Hang Seng Index was down 0.52% on Thursday morning. Tech stocks faced heavy losses.

The Hang Seng Tech (HSTECH) Index slid by 1.54%. Baidu (9888) tumbled 3.33%, while Alibaba (9988) and Tencent (0700) saw losses of 0.85% and 1.21%, respectively.

Mainland China’s equity markets also faced early selling pressure. The Shanghai SE Composite Index and CSI 300 fell by 0.46% and 0.37%, respectively.

Nikkei Index Slides on a Yen Surge

The Nikkei Index slid by 1.76% on Thursday morning as investors reacted to the USD/JPY briefly dropping below 156. A Wednesday jump in the Yen fueled speculation of more government interventions.

Tokyo Electron Ltd. (8035) tumbled 8.42%, while Softbank Group Corp. (9948) slid by 5.16%. Nissan Motor Corp. (7201) was down 1.54%.

ASX 200 Falls on Tech Sector Sell-Off

The ASX 200 Index was down 0.19% on Thursday morning. Tech stocks followed the Nasdaq into negative territory. The S&P ASX All Technology Index (XTX) slid by 2.16%.

However, mining stocks contributed to the losses, with Fortescue Metals Group (FMG) Ltd. declining by 1.30%. Iron ore spot slid by 2.72% on Wednesday and continued to fall on Thursday, impacting demand for mining stocks on demand woes.

Investors should remain alert, with the Communist Party’s Third Plenum on its final day. 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 trade the Asian equity markets.