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Key Insights:
- It was a bearish Friday session, with the Hang Seng Index and the ASX 200 seeing red.
- This morning, we expect investors to respond to the producer price figures from the US, which weighed on riskier assets.
- While inflation will remain a focal point, corporate earnings will continue to influence despite Fed policy uncertainty and China’s real estate and economic woes.
It was a bearish Friday session for the Hang Seng Index and the broader Asian markets. The ASX 200 and Hang Seng Index succumbed to US inflation and Fed policy jitters.
There were no economic indicators from the Asian region on Friday to provide direction, leaving investors to consider the overnight US CPI Report and jobless claims.
While US inflation numbers came in softer-than-expected, sticky core inflation left the Asian markets in limbo ahead of the US producer price index figures on Friday.
The US annual inflation rate accelerated from 3.0% to 3.2%, while the core inflation rate softened from 4.8% to 4.7%. Significantly, the numbers were softer than expected. Economists forecast an annual and a core inflation rate of 3.3% and 4.7%, respectively.
Today, US economic indicators from the Friday session will impact market risk sentiment across the Asian markets.
The US producer and core producer prices increased by 0.3% in July. Economists forecast producer and core prices to rise by 0.2%.
US consumer sentiment figures could limit the impact of the US PPIs on softer inflation expectations. The Michigan Consumer Sentiment Index slipped from 71.6 to 71.2, while the inflation expectations eased from 3.4% to 3.3%.
The Dow rose by 0.30% on Friday. However, the NASDAQ Composite Index and the S&P 500 saw losses of 0.68% and 0.11%, respectively.
Today, there are no Asian economic indicators to influence, leaving investors to respond to overnight the US PPI Report.
ASX 200
The ASX 200 declined by 0.23% as investors reacted to the US CPI Report from Thursday. RBA Governor Philip Lowe added to the bearish mood, leaving the door open to more rate hikes.
The Commonwealth Bank of Australia (CBA) and The National Australia Bank (NAB) fell by 0.07% and 0.14%, respectively. ANZ Group (ANZ) ended the day down 0.20%. However, Westpac Banking Corp (WBC) bucked the trend, gaining 0.05%.
Mining stocks had a bearish session. Fortescue Metals Group (FMG) slid by 2.19%, with Rio Tinto (RIO) and BHP Group Ltd (BHP) falling by 0.59% and 0.11%, respectively. Newcrest Mining (NCM) declined by 0.39%.
Oil stocks also had a bearish session. Woodside Energy Group (WDS) and Santos Ltd (STO) declined by 2.00% and 1.61%, respectively.
Hang Seng Index
The Hang Seng Index ended the Friday session down 0.90% on US inflation jitters and China’s property sector and economic woes. Property company Country Garden Holdings Co Ltd. (HK2007) fell by 5.77% to HK$0.98 after warning of a possible $7.6 billion loss.
Considering the main Index components, Tencent Holdings Ltd (HK:0700) fell by 1.18%, while Alibaba Group Holding Ltd (HK:9988) gained 1.06%. Alibaba beat earnings estimates on Thursday, delivering support on Friday.
Bank stocks had a bearish session. The Industrial and Commercial Bank of China (HK:1398) and China Construction Bank (HK: 0939) fell by 0.83% and 0.70%, respectively. HSBC Holdings PLC ended the session flat.
CNOOC (HK: 0883) rose by 0.62%.
Nikkei 225
(For reference purposes only)
On Friday, the markets in Japan were closed for Mountain Day. The Nikkei 225 enjoyed a bullish end to the week on Thursday, gaining 0.84%, with corporate earnings providing support. Honda Motor Co. rallied by 5.87% on a surge in quarter profits.
The banks had a bullish session. Sumitomo Mitsui Financial Group (8316) and Mitsubishi UFJ Financial Group saw gains of 1.16% and 2.42%, respectively.
Looking at the main components, KDDI Corp (9433) and Fast Retailing Co (9983) rose by 1.26% and 1.83%, respectively. SoftBank Group Corp. (9984) also found support, gaining 0.37%.
However, Sony Corp (6758) slid by 3.23% on a slide in operating profit, with Tokyo Electron Limited (8035) falling by 1.49%.
Check out our economic calendar for economic events.
This article was originally posted on FX Empire
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