Yesterday was another gloomy session for the Hang Seng Index and the broader Asian markets. For the London session, the ASX 200 led the Hang Seng Index and the Nikkei 225 into negative territory.
There were no economic measures from China to influence, but statistics from Japan and Australia garnered attention as markets responded to the FOMC meeting minutes from Wednesday. The FOMC meeting minutes and higher-than-expected US retail sales numbers on Tuesday heightened the prospect of more Fed interest rate rises to manage inflation. Riskier assets were weighed down by the Fed’s more hawkish policy outlook. However, prospects for a more substantial stimulus package from Beijing mitigated the loss.
Overnight US economic figures included unemployment claims and the Philly Fed Manufacturing Index, both of which have exceeded expectations. Significantly, compared to 240k expected, unemployment claims declined from 250k to 239k. The latest figures put the weaker US labour market theory to the test while supporting the Fed’s more hawkish monetary policy outlook.
In August, the Philly Fed Manufacturing Index rose to 12.0 from -13.5, above expectations of -10.0. The devil, though, was in the details. While the Philly Fed Employment Index fell to -6.0 from -1.0, the Price Paid Index increased from 9.50 to 20.80. This indicates that additional policy manoeuvre to combat inflation are needed. The shift in perception towards Fed monetary policy was reflected in the US equities markets. The NASDAQ Composite fell 1.17% while the Dow and S&P 500 both fell 0.77% and 0.84% yesterday.
As of this morning, Japanese economic statistics will impact public perception of the Bank of Japan and its ultra-easy monetary policy. The July inflation data are being scrutinized. However, the lack of Australian and Chinese economic statistics will force investors to keep an eye out for Beijing stimulus-related news.
As hawkish Fed bets and China’s economic woes dampened market optimism, the ASX 200 fell 0.68%. Australia’s disappointing employment data were equally negative, despite the RBA ruling out a rate rise. The National Australia Bank (NAB) and Westpac Banking Corp (WBC) both lost 2.08% and 1.93% on Thursday. The Commonwealth Bank of Australia (CBA) and the ANZ Group (ANZ) both fell by 0.14% and 0.93%. On the other hand, mining stocks experienced a mixed session on expectations of a stimulus package from Beijing. Rio Tinto (RIO) rose 1.08%, while BHP Group Ltd (BHP) closed flat. The shares of Fortescue Metals Group (FMG) and Newcrest Mining (NCM) declined 0.30% and 1.66%. As for oil, Woodside Energy Group (WDS) rose by 0.44%, while Santos Ltd (STO) ended the day flat.
On Thursday, the Hang Seng Index fell 0.01%, continuing a five-session losing trend. While market sentiment towards the Chinese economy pulled the HSI down, prospects of a stimulus package from Beijing boosted the index in the afternoon session. Among the key index components, Tencent Holdings Ltd and Alibaba Group Holding Ltd concluded the day with gains of 1.22% and 0.95%. Throughout the day, bank stocks fell. HSBC Holdings PLC and China Construction Bank both lost 1.08% and 0.49% of their value. The Industrial and Commercial Bank of China closed flat on the day.
On Thursday, the Nikkei 225 fell by 0.44%. Disappointing Japanese economic statistics dampened enthusiasm of buyers. While core equipment orders fell short of expectations, Japanese trade statistics offered a bleak picture. In July, Japan’s trade balance shifted from a 43.1 billion surplus to a 78.7 billion deficit. Exports to China, in particular, plummeted 13.4%. The decrease was aided by a lower USD/JPY. The banks enjoyed a bullish session, Sumitomo Mitsui Financial Group and Mitsubishi UFJ Financial Group both gained 0.95% and 0.96%. Sony Corp increased by 1.00%, while SoftBank Group Corp. and Tokyo Electron Limited increased by 0.20% and 0.44%.
Please note that this article does not offer any instructions or suggestions regarding investment decisions. It is important for you to conduct your own research or seek professional advice from a qualified professional before conducting an investment decision.