KGI Asia Commentary

Hang Seng Index rose 39 points on Tuesday

The Hang Seng Index rose 39 points or 0.2% to 19,933 on Tuesday. HSTECH fell 2 points or 0.1% to 3,898 and HSCEI fell 21 points or 0.3% to 6,680. Daily market turnover was HK$75.4bn.

Dow plunges more than 300 points as concerns over banking sector reignite

U.S. stocks tumbled on Tuesday, as traders feared a contagion from the regional banking crisis reignite ahead of the Federal Reserve's interest rate decision. The Dow Jones Industrial Average fell 367.17 points, or 1.08%, to 33,684.53. The S&P 500 fell 1.16% to close at 4,119.58. The Nasdaq Composite fell 1.08% to close at 12,080.51. Shares of regional banks such as PacWest Bancorp and Western Alliance Bancorp fell sharply on concerns that smaller lenders that hold long-term assets such as Treasuries and commercial loans will face further pressure amid rising long-term interest rates. Energy stocks were also dragged down after oil prices slumped, as renewed fears that the U.S. could default on its debt as early as June 1 if Congress doesn't raise the debt ceiling added to worries about the economy. U.S. Treasury Secretary Janet Yellen warned on Monday that the U.S. could run out of cash and be unable to service its debt as early as June 1. Consumer discretionary stocks fared relatively better, with shares of Amazon up more than 1 percent and shares of Marriott International Inc. after reporting quarterly results that topped Wall Street expectations. Shares of Uber jumped 11% after the company reported a smaller-than-expected first-quarter loss and an upbeat outlook, with the chief executive saying the company is "poised to expand profitability” in the second quarter. Chegg shares fell 48% after the company warned that ChatGPT was threatening its growth. The Fed's two-day policy meeting began on Tuesday and is expected to announce another 25 basis point rate hike on Wednesday. Traders were pricing in about an 85 percent chance of a rate hike, according to the CME FedWatch tool. Investors will be looking for clues on whether the Fed will hold interest rates steady after the meeting, or tighten monetary policy further to fight inflation.

U.S. job openings drop to near two-year low of 9.59 million

Data showed U.S. payrolls fell for a third straight month in March, suggesting the labor market continued to cool after the Federal Reserve sharply raised interest rates. U.S. job vacancies fell to a near two-year low of 9.59 million in March, the lowest level since April 2021, the Labor Department said. The number of job openings is seen as a clue to the health of the labor market. Hiring has tapered off from record highs last spring amid a cooling economy and talk of a recession.

Hong Kong Stock Connect had a net inflow of HK$0.66bn on Tuesday, of which CNOOC (883) had the largest net inflow, reaching HK$0.47bn; followed by Kuaishou (1024). HSCEI ETF (2828) recorded the largest net outflow at HK$0.51bn, followed by HKEX (388).