KGI Asia Commentary
Hang Seng Index fell 113 points on Wednesday
The Hang Seng Index fell 113 points or 0.6% to 19,408 on Wednesday. HSTECH rose 14 points or 0.4% to 4,052 and HSCEI fell 41 points or 0.6% to 6,576. Daily market turnover was HK$93.12bn.
Dow ends lower as Fed signals more rate hikes
The Dow ended lower on Wednesday after the Federal Reserve made its widely expected decision to pause interest rate hikes but expected further hikes amid persistently high inflation. The Dow Jones Industrial Average fell 0.7%, or 232 points, the Nasdaq rose 0.4%, and the S&P 500 rose 0.1%. Meanwhile, U.S. Treasury yields settled at session highs, reflecting the Federal Reserve's hawkish outlook, forcing tech shares to give up gains, although the tech selloff appeared to find buyers as technology was among the biggest gainers. Meanwhile, health care was the biggest drag on the market, with shares of UnitedHealth and Humana slid on concerns that a post-COVID-19 rebound in elective surgeries would drive up costs. Seniors are catching up on surgeries they put off during the pandemic, UnitedHealth Chief Executive Andrew Witty said Wednesday, warning that premiums spent on care in the second quarter were likely to be high or slightly higher than expected. Elsewhere, oil prices were under pressure, with energy prices falling more than 1% on concerns that further rate hikes by the Federal Reserve would hurt economic growth and oil demand.
Fed delays rate hike, but says two more hikes later this year
After two days of meetings, the Fed decided to keep interest rates unchanged. But while the Federal Open Market Committee decided to hold off on raising rates during its two-day meeting, it forecast another two rate hike, total with 0.5 percentage point increase by the end of the year. “Holding the target range steady at this meeting allows the Committee to assess additional information and its implications for monetary policy,” the Fed said in a post-meeting statement. The Fed now expects the final, or peak, rate to reach 5.6% in 2023, up from a forecast of 5.1% in March, suggesting two more hikes are still possible.
Hong Kong Stock Connect had a net inflow of HK$1.54bn on Wednesday, of which Tencent (700) had the largest net inflow, reaching HK$1.08bn; followed by SMIC (981). ICBC (1398) recorded the largest net outflow at HK$0.29bn, followed by CSOP HS TECH (3033).
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