Daily Investment Strategy

Hang Seng Index rose 230 points on Wednesday

The Hang Seng Index closed at 16,877 points for the day, rose 230 points or 1.4%. The Hang Seng Technology Index reported at 3,382 points, rose 39 points or 1.2%. The HSCEI Index rose 80 points, or 1.4%, to 5,933 points. The market turnover was HK$95.6 billion.

S&P 500 ends lower as rally fades

The S&P 500 ended Wednesday's session giving up early gains as a plunge in shares of Super Micro Computer weighed on chip stocks and weighed on the broader market. The Dow Jones Industrial Average fell 234 points, or 0.60%, the S&P 500 fell 0.7%, and the Nasdaq Composite fell 1%. Super Micro Computer's June quarter earnings fell short of expectations and the company's shares fell 20%, raising concerns about how much demand the artificial intelligence industry is generating. Concerns about slowing momentum in artificial intelligence spurred selling pressure on chip stocks, which fell 2%, with Nvidia Corp., Broadcom and Wolfspeed leading the decline. Walt Disney shares fell 4% as the entertainment giant reported a drop in profit at its experiences division, which includes parks and consumer products, which accounts for more than half of its profit, even as its entertainment unit, which includes Disney+, Hulu and ESPN+’s streaming business) turned a profit for the first time. Shares of e-commerce platform Shopify surged nearly 18% after the company beat quarterly revenue estimates as its artificial intelligence-powered tools helped attract more merchants to its e-commerce services. Shares of home rental company Airbnb fell 13% after it forecast lower-than-expected third-quarter revenue and warned of a shortened booking window, a sign that travelers are waiting until the last minute to book due to economic uncertainty. Energy stocks led the market higher, supported by a jump in oil prices as data showed U.S. crude inventories fell more than expected in the week ended August 2. The U.S. Energy Information Administration reported on Wednesday that U.S. crude oil inventories fell by 3.7 million barrels in the week ended August 2. This compares with a projected decrease of 1.6 million barrels. Meanwhile, the U.S. government sold $42 billion in 10-year Treasuries on Wednesday at a higher-than-expected yield as demand slowed. The bonds' yield of 3.960% is 3.1 basis points higher than the expected yield (i.e., the rate at the time of issuance) of 3.929%, but below the high of 4.276% in the last auction. Weak auctions pushed U.S. Treasury yields higher, with the 10-year U.S. Treasury yield at 3.951%, up 6 basis points.

Market stress remains

The Bank of Japan's deputy governor said on Wednesday that the central bank will not raise interest rates while markets are unstable, downplaying the possibility of another recent rise in borrowing costs. The Cboe Volatility Index, known as Wall Street's "fear gauge," fell to 22 earlier on Wednesday and was last at nearly 28. The index fell sharply from about 65 points on Monday, showing investors' concerns are easing, but remains above levels seen earlier this month.

Hong Kong Stock Connect had a net inflow of HK11.6bn on Thursday of which Tracker Fund (2800) had the largest net inflow, reaching HK$5.65bn; followed by Tencent (700). China Telcom (728) recorded the largest net outflow at HK$0.22bn, followed by ICBC (1398).