China PMIs in Focus: Hang Seng Index, ASX 200, and Nikkei 225

Highlights:

• The ASX 200 and Nikkei closed the final session of 2023 in the red, while the Hang Seng Index defied the broader market trend.
• Losses from Friday’s trading will set the tone for the first trading session of 2024 in the US equity markets.
• The focus of Tuesday’s session will be on the private sector PMIs from China.

On Friday, the Hang Seng Index closed higher, while the ASX 200 and Nikkei experienced losses in the final session of 2023. The Nikkei was weighed down by a weaker USD/JPY, which affected export-oriented stocks.

The Friday Asian session was influenced by overnight US economic indicators from Thursday and a mixed US equity market session. The steady US labor market conditions signaled a resilient US economy, which tested bets on a Q1 2024 Fed rate cut. The 10-year US Treasury yields rose by 1.21%, closing the session at 3.844%. On Thursday, the Dow and the S&P 500 increased by 0.14% and 0.04%, respectively, while the Nasdaq Composite Index decreased by 0.03%.

On Tuesday, investors must consider US economic indicators from Friday, including a larger-than-expected fall in the Chicago PMI which raised concerns about the US economy. The Chicago PMI, a leading indicator for the ISM survey-based PMIs, slid from 55.8 to 46.9.

The US equity markets responded to the numbers. On Friday, the Dow and S&P 500 experienced losses of 0.05% and 0.28%, respectively. The Nasdaq Composite Index also fell, dropping by 0.56%. While Friday’s losses may set the tone for Tuesday’s session, it is important to consider economic indicators from China.

Private sector PMI numbers from China, released on Sunday, could fuel bets on more stimulus from Beijing. In December, the NBS Non-Manufacturing PMI increased from 50.2 to 50.4, while the NBS Manufacturing PMI fell from 49.4 to 49.0.On Tuesday, the China Caixin Manufacturing PMI is expected to impact market risk sentiment, bringing the Chinese economy into focus. It is important to maintain objectivity and avoid biased language.

In addition to the numbers, investors should also take into account any statements from Beijing.

Hang Seng Index

HSI 020124 Daily Chart

On Friday, the Hang Seng Index increased by 0.02%. The Hang Seng Tech Index (HSTECH) also saw a gain of 0.01%. However, the real estate sector outperformed the tech sector with the Hang Seng Mainland Properties Index (HSMPI) ending the day up 0.85%.

Alibaba (9988) experienced a decline of 0.33%, while Tencent (0700) saw an increase of 0.20%. NetEase (9999) also experienced a decline of 0.35%.

Bank stocks had a mixed session with HSBC (0005) ending the day down by 0.24%, while China Construction Bank (0939) and Industrial Commercial Bank (1398) saw gains of 0.43% and 1.06%, respectively.