Hang Seng Index Rallies on Stimulus Hopes, Nikkei Slides on Yen Strength

US Equity Markets Send Pre-Fed Warning Signals

On Monday, September 16, the US equity markets had a mixed start to the week. The Dow and the S&P 500 saw gains of 0.55% and 0.13%, respectively, while the Nasdaq Composite Index declined by 0.52%.

Apple Inc. (AAPL) ended the session down 2.78% as investors reacted to a gloomy report on iPhone demand. The pullback affected the broader tech sector as the Fed interest rate decision loomed.

Rising Bets on a 50-basis Point Fed Rate Cut

Better-than-expected NY Empire State Manufacturing Index figures supported demand for riskier assets. The Index increased from -4.7 in August to +11.5 in September. While accounting for less than 30% of the US economy, a pickup in manufacturing sector activity could change the narrative about a hard landing.

Nevertheless, investors raised bets on a 50-basis point September Fed rate cut amid concerns about the US labor economy. According to the CME FedWatch Tool, the probability of a 50-basis point September Fed rate cut increased from 30% on September 6, to 62.0% on Monday, September 16.

USD/JPY Trends Lower Amid Policy Uncertainty

The USD/JPY was down 0.17% to 140.367 on Tuesday morning. While holding above the Monday low of 139.576, the USD/JPY faces a six-day losing streak as the Fed and Bank of Japan policy decisions loom. Uncertainty about the Fed rate path and hawkish comments from the BoJ continue to pressure the USD/JPY. The stronger Yen has impacted demand for Nikkei Index-listed export stocks.

Investors should consider Bank of Japan commentary and Japan’s Tertiary Industry Activity Index later this morning, which may influence the USD/JPY. Hawkish rhetoric and better-than-expected data could fuel Yen demand.

Stimulus Hopes Boost HK-Listed Chinese Stocks

Investor sentiment toward Saturday’s disappointing economic indicators from China shifted on Tuesday. Hopes of fiscal stimulus measures to bolster the Chinese economy drove demand for Hong Kong-listed Chinese stocks.

Last week, FICC Investor CN Wire discussed the increased focus on the Chinese economy, stating,

“Xi Jinping on Thursday urged the country’s central and local governments to properly implement economic policies for the 3rd and 4th quarter in order to achieve its full-year economic and social development goals, CCTV citing his remarks in a seminar. Xi’s comments came after a growing number of Wall Street economists, including UBS Group AG and JPMorgan Chase & Co., began predicting China may miss its economic growth goal of about 5% this year.”

Hang Seng Index Advances on Stimulus Hopes

The Hang Seng Index rallied 1.16% on Tuesday morning, with the real estate sector leading tech stocks into positive territory. The Hang Seng Mainland Properties Index gained 1.07%, while the Hang Seng Tech Index (HSTECH) advanced by 0.73%.

Notable movers included Alibaba (9988) and Tencent (0700), which were up 0.49% and 0.70%, respectively, while Baidu (9888) gained 0.18%.

The Mainland China equities markets remained closed for the Mid-Autumn Festival.

Nikkei Index Slides as Yen Strengthens

On Tuesday, the Nikkei Index was down 1.96% as the Yen strengthened, potentially impacting corporate profits dependent on overseas earnings.

Tokyo Electron (8035) tumbled 6.25%, while Softbank Group Corp. (9984) slid by 4.09%. Sony Corp. (6758) and Nissan Motor Corp. (7201) were down 4.69% and 2.99%, respectively.

ASX 200 Strikes New Intra-Day High

The ASX 200 Index rose by 0.19% on Tuesday morning. Notably, the ASX 200 struck a new intra-day high of 8,149. Mining, oil, and tech stocks contributed to the gains.

The S&P/ASX All Technology Index advanced by 0.41%. Moreover, rising oil prices drove demand for Woodside Energy Group Ltd., which gained 0.91%. Mining giants Rio Tinto Ltd. (RIO) and BHP Group Ltd. (BHP) rose by 0.46% and 0.32%, respectively. Expectations of stimulus measures from Beijing drove iron ore prices higher on Tuesday.

Amid speculation about stimulus measures from China, investors should remain alert and closely monitor news wires, real-time data, and expert commentary to adjust trading strategies accordingly. Stay informed with our latest news and analysis to manage positions across the Asian equity markets.