KGI Asia Commentary

HSI fell 69 points on Wednesday

The Hang Seng Index fell 69 points or 0.4% to 19,365 on Wednesday. HSTECH fell 38 points or 0.9% to 4,218 and HSCEI fell 55 points or 0.8% to 6,549. Daily market turnover was HK$87.4bn.

Dow rises for a 13th straight day, posting its best winning streak since 1987

The Dow ended higher on Wednesday, its 13th straight session of gains, as the index shrugged off the Federal Reserve's move to raise interest rates and a slide in technology stocks sparked by Microsoft. The Dow Jones Industrial Average rose 0.2%, or 82 points, the Nasdaq fell 0.1%, and the S&P 500 was flat. Shares of Microsoft fell nearly 4%, weighing on sentiment across the technology sector as the tech giant's guidance fell short of Wall Street's expectations, offsetting a better-than-expected quarterly performance. But at the same time, Alphabet's second-quarter earnings report showed that its revenue and profit beat Wall Street's expectations, and the stock price rose more than 5%. Snap faltered in its earnings phase, with third-quarter sales guidance falling short of Wall Street's expectations, sending shares down more than 14%. However, the social media company reported better-than-expected quarterly results. Shares of Boeing rose more than 8% after the company reported a smaller-than-expected second-quarter loss and detailed plans to raise expectations. Shares of Texas Instruments Inc fell more than 5% on concerns about weak demand for chips, with the company forecasting revenue for the September quarter that fell short of Wall Street expectations. Meta reported second-quarter profit and revenue that beat analysts' expectations and issued a better-than-expected forecast for the current period, reflecting a rebound in the digital advertising market. The stock was up about 6% in after-hours trading.

Fed delivers 11th hike to curb inflation

The Federal Reserve raised interest rates by 25 basis points on Wednesday and signaled it needs to see further signs of easing price pressures before declaring victory in curbing inflation. Recent economic data showing slowing inflation in June was welcomed, but it was "only one report in one month's data," Fed Chairman Jerome Powell said in a press conference that followed the rate decision. "We hope that inflation will follow a lower path, consistent with the June CPI reading," he added. "But we don't know that and we're going to need to see more data." I would say it’s certainly possible that we will raise funds again at the September meeting if the data warranted. And I would also say it’s possible that we would choose to hold steady and we’re going to be making careful assessments, as I said, meeting by meeting,” said Powell at a press conference following the decision.

Hong Kong Stock Connect had a net inflow of HK$7.7bn on Thursday, of which Tracker Fund (2800) had the largest net inflow, reaching HK$3.7bn; followed by HSCEI ETF (2828). Tencent (700) recorded the largest net outflow at HK$0.70bn, followed by HSBC (5).