KGI Asia Commentary

Hang Seng Index rose 83 points on Thursday

The Hang Seng Index rose 83 points or 0.4% to 19,840 on Thursday. HSTECH fell 10 points or 0.3% to 3,861 and HSCEI rose 21 points or 0.3% to 6,675. Daily market turnover was HK$97.0bn.

Nasdaq up 2% as Big Tech rallies

Shares of social media giant Meta Platforms rose more than 13 percent after it reported quarterly results that topped revenue and profit expectations. The Dow Jones Industrial Average rose 524.29 points, or 1.57%, to 33,826.16. The Nasdaq Composite gained 2.43% to close at 12,142.24 and the S&P 500 gained 1.96% to close at 4,135.35. It was the best day for the Dow and S&P 500 since January and the Nasdaq since March. Meta's results continued a trend of better-than-expected quarterly earnings from big tech companies, improving sentiment on big tech companies, with Alphabet, Apple and Microsoft on the uptrend. On the earnings front, Caterpillar beat expectations in its quarterly results, but its guidance was a bit of a disappointment for the market, while Honeywell rose 4% on better-than-expected first-quarter earnings. Shares of toymakers Hasbro and Mattel also jumped after reporting better-than-expected quarterly results, rising about 14% and 6%, respectively. First Republic, which had fallen 30 percent the previous day, held steady overnight despite recent reports that the U.S. government was unwilling to rescue the beleaguered regional bank.

U.S 1Q PCE higher than expected

Inflation remains high. The Fed's closely watched inflation measure, the personal consumption expenditures price index, rose 4.2 percent, up from 3.9 percent in the fourth quarter of last year and ahead of the 3.7% estimate. Excluding food and energy, core personal consumption expenditures rose 4.9 percent, compared to the previous increase of 4.4%. In other economic news Thursday, as of the week of April 22, the number of initial jobless claims was 230,000, a decrease of 16,000, lower than the expected 249,000.

U.S. GDP shows economy is slowing

U.S. economic growth slowed in the first quarter amid persistently high inflation and rising interest rates, fueling fears of a possible recession later this year. The U.S. Commerce Department reported on Thursday that gross domestic product (GDP) grew at an annual rate of 1.1% in the first quarter, a marked slowdown from the 2.6% growth in the fourth quarter of last year. The Fed's efforts to cool the economy are having an effect. The real estate sector shrank for the eighth straight quarter and business investment in equipment fell for the second straight quarter. Both areas are heavily influenced by interest rates, which policymakers have raised several times over the past year to curb inflation. But those declines were offset by strong consumer spending, which rose 3.7%, the fastest pace since mid-2021, when the rollout of a coronavirus vaccine boosted the economy. A strong job market and rising wages have buoyed consumers, helping them weather a combination of higher prices and higher borrowing costs.

Hong Kong Stock Connect had a net inflow of HK$0.08bn on Thursday, of which Kuaishou (1024) had the largest net inflow, reaching HK$0.14bn; followed by China Shenhua (1088). HSCEI ETF (2828) recorded the largest net outflow at HK$1.3bn, followed by Hua Hong Semi (1347).