Hang Seng Index, Nikkei Index, ASX 200: Nikkei Futures Down 720 Points

Overview of the Friday Session

On Friday, the ASX 200 led the Hang Seng Index and the Nikkei into positive territory. Significantly, the ASX 200 hit an all-time high.

Overnight US economic indicators from Thursday influenced the Friday Asian session. US jobless claims remained at 217k in the week ending March 2. Fed Chair Powell reiterated the Fed would likely cut rates later in the year during testimony on Capitol Hill.

Recent labor market data and Fed Chair Powell supported bets on an H1 2024 Fed rate cut, driving demand for riskier assets. The US equity markets benefited from hopes of an H1 rate cut. On Thursday, the Nasdaq Composite Index rallied 1.51%. The Dow and S&P 500 saw gains of 0.34% and 1.03%, respectively.

ECB President Christine Lagarde raised hopes of inflationary pressures abating. Optimism toward inflation contributed to the demand for riskier assets.

The Thursday European and US market sessions set the tone for the Friday Asian session. However, economic indicators from Japan also influenced buyer demand for Nikkei-listed stocks. Household spending unexpectedly tumbled by 2.1% in January, testing bets on a BoJ pivot from negative rates.

US Jobs Report, the Japanese Economy, and the Bank of Japan

On Monday, investors must consider US economic indicators from Friday. Nonfarm payrolls jumped by 275k, while the US unemployment rate increased from 3.7% to 3.9% in February. Average hourly earnings eased from 4.4% year-on-year to 4.3% year-on-year in February. The US Jobs Report supported bets on an H1 2024 Fed rate cut.

However, the stats failed to deliver fresh record highs for the US equity markets. Investors took profits before US inflation numbers on Tuesday. On Friday, the Nasdaq Composite Index slid by 1.16%, with the S&P 500 ending the session down 0.65%. The Dow declined by 0.18%.

The US session will likely set the tone for the Monday Asian session. However, investors must consider the Asian economic calendar.

China inflation figures from the weekend sent mixed signals. Consumer prices increased by 0.7% year-on-year in February after falling by 0.8% in January. In contrast, producer prices declined by 2.7% year-on-year after falling 2.5% in January, signaling a weaker demand environment. The Lunar  New Year likely affected consumer price trends in February.

Finalized Q4 GDP data and machinery tool orders from Japan could influence bets on an April Bank of Japan pivot from negative rates. According to preliminary numbers, the Japanese economy contracted by 0.1% in Q4 after contracting by 0.7% in Q3. Economists expect machinery tool orders to decline by 10.0% year-on-year in February after falling 14.1% in January.

Later in the session, vehicle sales numbers from China also need consideration. Demand trends remain a focal point as the National People’s Congress enters its final day.

Beyond the numbers, investors must monitor National People’s Congress chatter and Bank of Japan commentary.

On Monday, the ASX 200 and Nikkei futures were down 47 and 720 points, respectively.

ASX 200

The ASX 200 rallied 1.07% on Friday. Banking, gold, and tech stocks sent the ASX 200 to an all-time high of 7,853.1. The S&P ASX All Technology Index (XTX) gained 0.95%.

For the big four banks, ANZ Group Holdings Ltd (ANZ) and Commonwealth Bank of Australia (CBA) saw gains of 1.74% and 1.84%, respectively. National Australia Bank Ltd. (NAB) and Westpac Banking Corp. (WBC) rallied 2.30% and 2.59%, respectively. Sentiment toward bad loans and mortgage margins drove buyer demand for bank stocks.

Gold (XAU/USD) stocks Northern Star Resources Ltd. (NST) and Evolution Mining Ltd. saw gains of 0.21% and 1.22%, respectively. Bets on an H1 Fed rate cut contributed to the gains.

Oil stocks also had a positive session. Woodside Energy Group Ltd (WDS) and Santos Ltd (STO) rose by 1.68% and 0.55%, respectively.

However, mining stocks had another mixed session. Fortescue Metals Group Ltd. (FMG) and Rio Tinto Ltd. (RIO) declined by 0.31% and 0.61%, respectively. BHP Group Ltd (BHP) gained 0.21%.

Hang Seng Index

On Friday, the Hang Seng Index ended the session up 0.76%. Property and tech stocks contributed to the gains. The Hang Seng Mainland Properties Index (HSMPI) and Hang Seng Tech Index (HSTECH) rose by 0.63% and 0.78%, respectively.

Alibaba (9988) ended the day up 0.78%, while Tencent (0700) fell by 0.37%.

However, bank stocks had a positive session. HSBC (0005) gained by 0.51%. China Construction Bank (0939) and Industrial Commercial Bank (1398) advanced by 0.83% and 0.50%, respectively.

The Nikkei 225

(Graph for reference purposes only)

The Nikkei rose by 0.23% on Friday.

Bank stocks enjoyed a positive end to the week. Sumitomo Mitsui Financial Group Inc. (8316) and Mitsubishi UFJ Financial Group Inc. (8306) rose by 2.22% and 0.96%, respectively.

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

Softbank Group Corp. (9948) rallied 1.83%, with Tokyo Electron Ltd. (8035) gaining 0.79%.

KDDI Corp. (9433) and Sony Group Corporation (6758) ended the session up 0.19% and 0.27%, respectively. However, Fast Retailing Co. Ltd. (9983) bucked the trend, falling by 0.02%.

For upcoming economic events, refer to our economic calendar.