In the week ending November 29, Australia’s ASX 200 demonstrated a notable resilience, aligning itself with trends observed in the US equity markets. Closing at 8,436 after peaking at an all-time high of 8,477, the Index rose by 0.51%. The upward momentum was primarily driven by solid performances from the mining and technology sectors, which offset downturns experienced by banks and energy stocks. Leading the charge, the S&P/ASX All Technology Index surged by 3.21%, indicating a robust demand for tech shares, further highlighted by the advancements seen in major mining corporations such as BHP Group Ltd. and Rio Tinto Ltd., which recorded increases of 1.02% and 0.90%, respectively.
However, despite these gains, the banking sector struggled, with significant declines in shares of ANZ and National Australia Bank, falling by 3.38% and 2.42%. The bearish sentiment was largely attributed to comments made by RBA Governor Michele Bullock, which dampened expectations for immediate interest rate cuts. This uncertainty casts a shadow over the credit demand forecasts, raising potential concerns regarding future bank profitability.
Conversely, the Nikkei Index faced a slight dip of 0.20% during the same week. Influential Tokyo inflation data for November heightened speculation regarding a potential rate hike from the Bank of Japan in December, leading to an appreciation of the Japanese Yen. The USD/JPY exchange rate fell by 3.23%, closing at 149.707, which had a ripple effect on stocks listed on the Nikkei Index. The strengthening Yen can negatively impact export-driven companies’ profitability, creating headwinds for their stock performance.
Notably, Nissan Motor Corp. was severely affected by this fluctuation, experiencing a dramatic decline of 11.67% over the week. Other automotive giants, Toyota and Honda, also struggled, with weekly losses of 4.24% and 5.21%, respectively, exacerbated by the broader market conditions and a strong domestic currency.
Looking ahead, the upcoming week is anticipated to be crucial as investors keep a keen eye on US tariff developments, which may influence market dynamics. Furthermore, updates regarding stimulus measures from Beijing are expected to play a significant role in shaping investor sentiment, especially in light of the precarious economic situation in China.
Recent private sector PMI data from November showcased a mixed outlook for the Chinese economy, with the Manufacturing PMI slightly improving from 50.1 to 50.3, while the Non-Manufacturing PMI dipped to 50.0, suggesting stagnation within the services sector. Commentary from CN Wire pointed to an ongoing challenge, noting that the new export orders index remains entrenched in contraction territory, signaling the persistent weakness in overseas demand.
As the global economic landscape remains fluid, it is crucial for investors to remain vigilant. The interplay of internal economic indicators and external pressures, like potential US tariffs, could significantly affect equity markets both in Hong Kong and Mainland China. Staving off contractions could enable these markets to gain traction in the coming days, though uncertainties linger in the backdrop.