Chinese Sentiment Lifted On Earnings; Australia Underperforms Ahead Of RBA Decision

Major Asia-Pac equity indices are mostly higher at typing, bucking a negative lead from Wall St. The positive performance comes despite the small beat in U.S. NFPs (fuelling hawkish Fed worry from some quarters), with optimism surrounding China’s well-documented post-COVID re-opening taking focus elsewhere.

• The CSI300 sits 1.5% higher at typing, a little under seven-week highs made earlier in the session. The Chinese equity benchmark broke above the 4,100 level following the release of May Caixin Services PMIs, the latter which missed expectations (41.4 vs. BBG median 46.0), but still pointed to an improvement over the previous month (Apr 36.2). Chinese tech names were amongst the best performers on the day, with the ChiNext and STAR50 indices adding 4.1% and 4.3% respectively at typing.
• Zooming out, a slew of BBG reports have pointed to equity analysts for Chinese stocks slowing/reversing their cuts to forward earnings estimates, coming as Chinese internet tech giants have generally reported better-than-expected Q1 earnings.
• Turning to the Hang Seng, the Hong Kong benchmark index has added 1.1% at writing, with China-based tech outperforming. The Hang Seng Tech Index accordingly deals 2.3% firmer at typing, with overall sentiment boosted by Meituan’s (+6.9%) after-hours earnings beat last Friday.
• The Nikkei 225 reversed earlier losses to trade 0.7% higher at writing, with the energy and utilities sub-indices leading gains. Major exporters mostly underperformed amidst JPY strength, with USD/JPY backing away from last-Friday’s one-month highs.
• The Australian ASX200 sits 0.3% worse off at typing, with high-beta tech names struggling ahead of the RBA’s MonPol decision on Tuesday, where the central bank is expected to raise rates for a second, consecutive time. The S&P/ASX All Technology Index trades 1.6% lower at typing, diving to worst levels soon after Monday’s open, led by underperformance in large-caps Block Inc, Xero Ltd, and REA Group. Magellan Financial Group was a notable loser as well, dealing 12.8% lower on typing after reporting a A$3.6bn decline in FUM.
• U.S. e-mini equity index futures are 0.4% to 0.7% better off to operate around session highs, extending a rise off of their respective troughs on Friday at typing.