Hang Seng Index, Nikkei Index, ASX 200: China Trade Data Mixed, but Forecast Brightens

US Equity Markets Rally as Investors Buy the Dip

On Tuesday, August 6, the US equity markets closed in positive territory. The Nasdaq Composite Index and the S&P 500 advanced by 1.03% and 1.04%, respectively, while the Dow gained 0.76%.

Dip buyers contributed to the gains as investors reacted to USD/JPY trends. The USD/JPY reached a Tuesday high of 146.364 before easing back to close at 144.291 (+0.11%). A steadying of the Yen eased investor fears of another Yen carry trade unwind fueled sell-off.

Expert Commentary

Bloomberg TV Asia Pacific Chief Markets Editor David Ingles commented on Tuesday’s market conditions, stating,

“Yes markets are calmer today but fact that VIX futures are still 25+ signals this flush and cleansing process in markets isn’t over.”

Bank of Japan Deputy Governor Uchida Shinichi eased fears of further rate hikes, impacting Yen demand. On Wednesday, Deputy Governor Uchida stated,

“I believe that the Bank needs to maintain monetary easing with the current policy interest rate for the time being, with developments in financial and capital markets at home and abroad being extremely volatile.”

The BoJ Deputy Governor also said it could continue to raise interest rates,

“If the outlook for economic activity and prices will be realized. On this point, the significant movements in stock prices and foreign exchange rates since last week would be relevant.”

The USD/JPY responded to the comments, rallying 1.58% to 146.568. Yen weakness eased fears of more Yen carry trade unwinds, supporting demand for riskier assets.

China Exports

China’s exports increased by 6.7% year-on-year in July, down from 8.6% in June. Softer export trends could signal a deteriorating demand environment. However, imports were up 5.4% year-on-year, suggesting a possible August surge in exports. Imports were down 2.3% in June.

The Hang Seng Index eased back from session highs in response to the trade data.

Hang Seng and Mainland China Markets Rise

On Wednesday morning, the Hang Seng Index was up 1.13%, with tech stocks contributing.

The Hang Seng Tech (HSTECH) Index advanced by 1.02%, with Alibaba (9988) and Baidu (9888) rallying by 2.59% and 1.69%, respectively. Tencent (0700) advanced by 1.55%.

Mainland China’s equity markets also trended higher. The CSI 300 and the Shenzhen Composite Index rose by 0.19% and 0.23%, respectively.

Nikkei Index Gains on Yen Pullback

The Nikkei Index advanced by 2.47% on Wednesday morning, extending its gains from Tuesday. BoJ Deputy Governor Uchida’s comments and a weaker Yen eased fears of market disruption from Yen carry trade unwinds.

Softbank Group Corp. (9984) rallied 5.87%, while Tokyo Electron Ltd. (8035) rose by 2.68%. Nissan Motor Corp. (7201) was up 3.64%.

ASX 200 Tracks Overnight US Market Gains

The ASX 200 Index was up 0.35% on Wednesday morning, tracking the overnight US equity market gains. Oil and tech stocks contributed to the gains, while bank, gold, and mining stocks were under pressure.

The S&P ASX All Technology Index (XTX) rose by 0.19%, with Woodside Energy Group Ltd (WDS) advancing by 1.69%. WTI crude was higher on Wednesday, extending its gains from Tuesday, while gold spot prices continued to trend lower.

Investors should remain alert amidst 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.