KGI Asia Commentary
Hang Seng Index fell 306 points on Thursday
The Hang Seng Index fell 306 points or 1.8% to 17,004 on Thursday. HSTECH fell 69 points or 2.0% to 3,421 and HSCEI fell 125 points or 2.0% to 6,016. Daily market turnover was HK$105.7bn.
S&P 500 closes lower as tech stocks rally weakens
The S&P 500 ended lower on Thursday, giving up gains. Alphabet's decline dampened a rally in technology stocks despite growing expectations that the Federal Reserve could cut interest rates multiple times this year. The Dow Jones Industrial Average rose 81 points, or 0.20%, while the S&P 500 fell 0.5% and the Nasdaq Composite fell 0.9%. Alphabet's stock price fell more than 3%, suppressing a rebound in technology stocks due to market concerns that Alphabet's search business will face fierce competition from OpenAI's search engine GPT. OpenAI said Thursday it is testing an artificial intelligence search engine as the maker of artificial intelligence software hopes to compete with Google. Shares of International Business Machines Corp rose more than 4% after the company said growing demand for its artificial intelligence products and raised its annual cash flow guidance. Late Wednesday, software maker ServiceNow reported quarterly results that beat Wall Street and raised its annual forecast. The company's shares rose 13%. American Airlines shares rose more than 4% even as the airline cut its annual profit forecast due to uneven demand trends and weakening pricing power due to overcapacity in some markets. Hasbro shares rose 3% after the company reported a smaller-than-expected second-quarter drop as solid demand for digital games offset declining toy sales and cost-control strategies helped the company beat profit expectations. Ford's shares fell more than 18% after disappointing earnings amid lower consumer spending and a sharp slowdown in auto sales.
U.S. second-quarter GDP data shows strength
U.S. gross domestic product (GDP) grew by 2.8% in the second quarter, above expectations of 2% and an improvement from the 1.4% growth in the first quarter of this year. At the same time, the core personal consumption expenditures deflator (Core PCE), which the Fed focuses on, rose 2.9%, down from 3.7% in the first quarter. Further signs of slowing inflation have boosted hopes that the Federal Reserve may cut interest rates more than once this year, starting in September.
Hong Kong Stock Connect had a net inflow of HK4.66bn on Thursday of which Tencent (700) had the largest net inflow, reaching HK$0.55bn; followed by CCB (939). Tracker Fund (2800) recorded the largest net outflow at HK$2.12bn, followed by CSOP HS TECH (3033).
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