KGI Asia Commentary
HSI fell 40 points on Wednesday
The Hang Seng Index fell 40 points or 0.2% to 17,732 on Wednesday. HSTECH fell 64 points or 1.7% to 3,771 and HSCEI fell 16 points or 0.3% to 6,075. Daily market turnover was HK$88.8bn.
Dow closes more than 300 points lower as Treasury yield soars
U.S. Treasury yields climbed to multi-year highs and stocks fell on Wednesday. Wall Street also continues to assess the impact of the ongoing Israel-Hamas war. The Dow Jones Industrial Average fell 332.57 points, or 0.98%, to close at 33,665.08 points. The S&P 500 fell 1.34% to 4,314.60 points, and the Nasdaq fell 1.62% to 13,314.30 points. On Wednesday, the 10-year U.S. Treasury bond yield climbed, exceeding 4.9% for the first time since 2007. United Airlines shares fell 9.7% after the airline issued weak guidance. Morgan Stanley shares fell 6.8% to have their worst day since 2020, as a weak performance from the bank's wealth management arm disappointed. On the other hand, Procter & Gamble beat analysts' expectations for the quarter, sending its shares up 2.6%. Investors are now eyeing quarterly results from Netflix and Tesla after the close on Wednesday. FactSet data shows that only more than 10% of S&P 500 companies have announced results. About 78% of companies that have reported results have exceeded analysts' expectations. Chip stocks such as Nvidia and AMD fell for a second straight session as investors continued to sell off. This comes after the U.S. Department of Commerce announced on Tuesday plans to tighten restrictions on the sale of advanced artificial intelligence chips to China.
New York Fed Williams reiterates higher for longer ahead of Powell’s speech
New York Federal Reserve president John Williams said Wednesday that the Fed will likely keep rates higher for longer for “some time” to rein in inflation toward its 2% target. The remarks come just a day ahead of Fed chairman Jerome Powell’s speech at the Economic Club of New York on Thursday. Many are watching whether Jerome Powell will endorse recent remarks from fellow Fed members suggesting that the recent jump in Treasury yields could be substitute for rate hikes. Treasury yields continued to climb, with the yield on the 10-year Treasury topping 4.9% for the first time since 2007.
Hong Kong Stock Connect had a net outflow of HK$4.32bn on Wednesday, of which China Mobile (941) had the largest net inflow, reaching HK$0.25bn; followed by SMIC (981). Tracker Fund (2800) recorded the largest net outflow at HK$3.19bn, followed by CSOP HS TECH (3033).
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