KGI Asia Commentary
HSI fell 357 points on Tuesday
Hang Seng Index closed at 20,529, down 357 points or 1.7%. HSTECH closed at 4,158, down 153 points or 3.6%. HSCEI down 138 points, or 2.0%, to 6,925. Market turnover was HK$111.1bn.
U.S. stocks tumbles Tuesday due to disappointing U.S. retailers
Interest rates continued to rise, while a drop in retailers' shares triggered by Home Depot also dragged stocks lower on Tuesday. The Dow Jones Industrial Average fell 697.10 points, or 2.06%, to 33,129.59. The S&P 500 fell 2.00% to close at 3,997.34 and the Nasdaq Composite lost 2.5%. All sectors closed lower. Meanwhile, the consumer discretionary sector slumped after Home Depot and Walmart posted quarterly results. Shares of Home Depot fell more than 7% after reporting weaker-than-expected fourth-quarter profit and a bleak outlook for fiscal 2023, with sales growth expected to be largely flat as "demand for home improvement will moderate." Although Wal-Mart's performance guidance was lower than expected, the revenue and profit of the quarterly results were higher than expected, closed 0.6% higher. Meanwhile, surging interest rates continued to weigh on growth stocks including technology, with Apple, Alphabet and Microsoft closing more than 2% lower. Chip stocks fell after reports that Intel delayed ordering semiconductors from TSMC until next year, reflecting weak demand.
Treasury yield continue to climb
The benchmark 10-year Treasury yield climbed to 3.9%, while the yield on the 2-year U.S. Treasury note rose to 4.7%. Both rates also hit their highest levels since November. Markets worry that stubborn inflation will lead the Federal Reserve to keep interest rates high for longer, which could tip the economy into recession. With a March and May hike nearly priced in, the odds of a June hike is becoming more likely. Investors will look to the Fed’s minutes due Wednesday for further insight into the central bank's thinking on monetary policy measures.
Hong Kong Stock Connect had a net inflow of HK$0.47bn on Tuesday, of which Tracker Fund (2800) had the largest net inflow, reaching HK$0.40bn; followed by China Mobile (941). Tencent (700) recorded the largest net outflow at HK$1.1bn, followed by CCB (939).
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