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Japan preliminary Q3 GDP -0.5% q/q (expected -0.1%)Japan preliminary Q3 GDP -0.5% q/q (expected -0.1%)

Overview of the Tuesday Session

On Tuesday, the Hang Seng Index ended the day in negative territory. However, the Nikkei 225 and the ASX 200 saw gains ahead of the heavily anticipated US CPI Report.

Pre-US CPI Report Caution

On Monday, the US equity markets showed caution ahead of Tuesday’s US CPI Report. 10-year US Treasury yields reflected the mood. Yields hit a session high of 4.694% before ending the day down 0.21% to 4.642%.

There were no US economic indicators for investors to consider at the start of the week. Fed speakers were also silent. The lack of market forces left the US equity markets flat-footed for the session.

On Monday, the Nasdaq Composite Index and S&P 500 declined by 0.22% and 0.08%. The Dow rose by 0.16%. The steady US session and pullback in US Treasury yields influenced the Tuesday Asian session.

Disappointing Australian consumer and business sentiment numbers failed to impact the ASX 200. Optimism toward improving US-China relations countered the weak numbers, with iron ore prices higher. Corporate earnings contributed to the Tuesday moves.

US CPI Report to Send the Asian Indexes into Orbit

On Tuesday, the US equity markets enjoyed a breakout session. Softer-than-expected US consumer price inflation fueled rallies across the US indexes.

Rate-sensitive tech stocks sent the Nasdaq Composite Index up 2.37%. The Dow and S&P 500 ended the Tuesday session with gains of 1.43% and 1.91%, respectively. 10-year US Treasury yields tumbled 4.11% to end the session at 4.451%, the lowest close since September 22, 2023.

The US equity market gains will set the tone for the Asian session on Wednesday. However, investors must also consider the Asian economic calendar.

Preliminary Q3 GDP numbers from Japan will draw interest ahead of economic indicators from China. Retail sales, industrial production, fixed asset investment, and unemployment figures from China warrant consideration.

Weaker-than-expected figures may influence market risk sentiment. However, the markets could forgive any weaker numbers on bets of better US-China ties.

Futures Market Signal an Early Jump

The futures markets signaled a positive start to the Wednesday session. The ASX 200 and the Nikkei were up 91 and 500 points, respectively.

ASX 200

ASX200 151123 Daily Chart
The ASX 200 gained 0.83% on Tuesday. Tech and mining stocks enjoyed positive sessions. The S&P/ASX All Tech Index ended the session up 0.78%. Rising commodity prices drove demand for energy and mining stocks.

BHP Group Ltd. (BHP) and Rio Tinto Ltd. (RIO) gained 1.37% and 1.96%. Fortescue Metals Group Ltd. (FMG) rallied 2.74%.

Oil stocks also enjoyed a positive session. Woodside Energy Group Ltd. (WDS) and Santos Ltd. (STO) ended the day up 2.55% and 2.54%.

Gold stocks failed to contribute to the ASX gains. Evolution Mining Ltd. (EVN) ended the session flat, while Northern Star Resources Ltd. (NST) fell by 0.18%.

Bank stocks had a mixed session. Westpac Banking Corp. (WBC) rallied 1.01%, with the Commonwealth Bank of Australia (CBA) gaining 0.96%. Australia and New Zealand Banking Group Ltd. (ANZ) rose by 0.24%, while National Australia Bank Ltd. (NAB) fell by 0.32%.

Hang Seng Index

HSI 151123 Daily Chart
The Hang Seng Index had a cautious Tuesday session, falling 0.17%.

Alibaba (9988) and Tencent (0700) ended the day with losses of 1.80% and 0.65%, respectively.

However, bank stocks continued to climb. HSBC (0005) gained 1.04%. China Construction Bank (0939) and the Industrial and Commercial Bank (1398) rose by 0.45% and 0.54%, respectively.

The Nikkei 225

Nikkei 151123 Daily Chart
(Graph for reference purposes only)

The Nikkei 225 rose by 0.34% on Tuesday.

Sumitomo Mitsui Financial Group (8316) and Mitsubishi UFJ Financial Group (8306) rallied 1.25% and 2.47%. Investors responded to earnings results on Tuesday, both reporting higher profits.

However, it was another mixed session for the main components of the Nikkei 225.

Sony Corp (6758) and Softbank (9984) ended the session with losses of 0.51% and 0.62%, respectively.

However, Tokyo Electron (8035) gained 2.90%, with KIDDI Corp. (9433) and Fast Retailing (9983) rising by 0.47% and 0.39%, respectively.

For upcoming economic events, check out our economic calendar.

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