Hang Seng Index Rallies on JD.Com Earnings: Asian Markets Track US Gains

US Equity Markets: From Caution to Optimism and Relief

The US equity markets had a breakout session on Thursday, August 15. The Nasdaq Composite Index rallied 2.34%, while the Dow and S&P 500 gained 1.39% and 1.61%, respectively.

Chip stocks fueled the Nasdaq rally as investors responded to better-than-expected US economic indicators. Walmart (WMT) advanced by 6.58% on earnings results and a brighter outlook.

US Economic Data Calm Fears of a Hard Landing

US retail sales increased by 1.0% month-on-month in July, reversing a 0.2% loss from June. The higher-than-expected numbers eased concerns about a hard US economic landing. Private consumption contributes over 60% to GDP.

Additionally, US jobless claims also drove buyer demand for riskier assets. Initial jobless claims fell from 234k in the week ending August 3 to 227k in the week ending August 10. Tighter labor market conditions could drive wage growth, disposable income, and spending.

The upbeat data and the US equity market gains will set the tone for Friday’s Asian session. Reducing risks of a US recession and bets on multiple 2024 Fed rate cuts could boost demand for riskier assets. Rate cuts could lower borrowing costs, increasing company profits and stock prices.

Expert Commentary

Wall Street Journal Chief Economics Correspondent Nick Timiraos commented on the jobless claims data, saying,

“Initial claims for unemployment benefits can be noisy but dropped to a seasonally adjusted 227,000 last week, easing worries that the U.S. labor market is imminently rolling over. Claims continue to run close to their year-earlier and the 2018-19 levels.”

Yen Carry Trade Unwind Risk Fades

The upbeat US figures could reduce the chances of an emergency Fed rate cut, lowering the expectations of a significant narrowing in interest rate differentials between Japan and the US.

Importantly, a less dovish Fed rate path and the BoJ’s plan to maintain interest rates at around 0.25% could reduce the risk of another Yen carry trade unwind. This could buoy demand for riskier assets.

The USD/JPY rallied 1.32% on Thursday, closing at 149.279. The USD/JPY return to 149 drove buyer demand for Nikkei Index-listed export stocks.

Hang Seng and Mainland China Gain in Early Trading

The Hang Seng Index advanced by 1.54% on Friday. Earnings results contributed, with JD.com (9618) surging 8.51% after beating earnings estimates.

The Hang Seng Mainland Properties Index (HSMPI) gained 0.29%, while the Hang Seng Tech (HSTECH) rallied 1.63%. Alibaba (9988) and Tencent (0700) advanced by 3.60% and 1.36%, respectively, with Baidu (9888) gaining 2.76%.

Mainland equity markets joined the Hang Seng in positive territory on stimulus hopes. The CSI 300 and the Shenzhen Composite Index were up 0.13% and 0.09%, respectively.

Nikkei Index Surges on Yen Relief

The Nikkei Index was up 2.92% on Friday morning, with the weaker Yen fueling demand for Nikkei Index-listed export stocks.

Tokyo Electron Ltd. (8035) and Softbank Group Corp. (9984) gained 3.84% and 2.31%, while Fast Retailing Co. Ltd (9983) was up 4.88%. Nissan Motor Corp. (7201) advanced by 1.26%.

ASX 200 Traces the US Markets Higher

The ASX 200 Index was up 1.26% on Friday morning, tracking the overnight gains from the US. While the gains were broad-based, mining, oil, and tech stocks were the primary contributors.

The S&P/ASX All Technology Index rose by 1.19%, with mining giants BHP Group Ltd (BHP) and Rio Tinto Ltd. (RIO) surging by 2.19% and 2.56%, respectively. Woodside Energy Group Ltd (WDS) gained 2.29%

Investors should remain alert with earnings and central bank commentary crucial after the shifting sentiment toward the US economy. 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.