KGI Asia Commentary
HSI rose 269 points on Friday
The Hang Seng Index opened 336 points higher on Friday, at 18,543 points, and the day's gain narrowed to 269 points, at 18,476 points; the H-Share Index rose 110 points, or 1.7%, to 6,547 points; the Hang Seng Technology Index rose 106 points, or 2.7%, to 3,971 points. The total daily turnover of the market was HK$ 116.2 billion. Standard Chartered (2888) continued to rise after the results, rose another 2.8% last friday. As for technology stocks, Alibaba (9988)'s share price rose by 4.1%, leading the market upward. Taking advantage of golden week holiday, Macau gaming stocks rose, with Galaxy Entertainment (27) and Sands China (1928) rising 3.6% and 4.9% respectively.
U.S. labor force data shows signs of cooling in April
U.S. stocks closed higher on Friday. The Dow Jones index rose 450.02 points, or 1.18%, to 38675.68 points; the Nasdaq index rose 315.37 points, or 1.99%, to 16156.33 points; the S&P 500 index rose 63.59 points, or 1.26 %, reported 5127.79 points. All three major stock indexes recorded gains last week, with the Dow rising 1.14%, the Nasdaq rising 1.43%, and the S&P 500 rising 0.55%. All three major stock indexes recorded gains for the second consecutive week.
In terms of economic data, last Friday’s employment data sent a signal to the market that the U.S. labor market is cooling. Non-farm employment in April was far lower than the market expectation of 241,000, recorded at 175,000, which was also lower than the previous value of 315,000; with the unemployment rate increased; the MoM in average hourly earnings in April was also lower than market expectations, rose by 0.2%. The slowdown in monthly wage growth will ease the market's pressure on further rising inflation. This labor force data has once again aroused market optimism about the Federal Reserve's interest rate cut expectations. However, it is still difficult to determine the schedule of interest rates cut from a single series and single period data, and the market still needs more evidence to prove the effectiveness of the Fed’s policies.
It is worth paying attention to the resumption of capital flow in Hong Kong Stock Connect today
The Hang Seng Index has risen by nearly 2,250 points in the past two weeks and has closed at 18,476 points on Friday. The 14-day RSI has risen to 75 points, which is an overbought range. Since the beginning of this market rally, the transaction volume of the main board has remained above 100 billion for consecutive days, reaching a maximum of HK$163.4 billion in a day, this situation can still be maintained in the absence of southbound trading activities, which reflect the market have some global fund/investor to be part of the rally. However, whether this round of market momentum can be continued depends on whether the upcoming earnings period can give the market satisfactory result or not.
The Hong Kong Stock Connect was closed last Friday due to the Chinese Labor Day holiday and will re-open today.
Wen Kit Kenny is a SFC licensed person accredited to KGI Group to carry on regulated activities (for details, please refer to:https://apps.sfc.hk/publicregWeb/indi/AJF244/details). He and/or his associate do not have any financial interest in the recommended issuer or new listing applicant.
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