Daily Investment Strategy
Hang Seng Index rose 166 points on Thursday
The Hang Seng Index rose 166 points or 0.9% to 19,727 on Thursday. HSTECH rose 47 points or 1.2% to 3,917 and HSCEI rose 78 points or 1.2% to 6,715. Daily market turnover was HK$98.6bn.
The S&P 500 rose nearly 1% on Thursday
U.S. stocks rallied at the close on Thursday on optimism about talks to raise the U.S. debt ceiling. The Dow Jones Industrial Average closed up 115 points, or 0.3%, while the S&P 500 gained 0.9% and the Nasdaq Composite rose 1.5%. Shares of discount retail giant Walmart Inc. rose 1.3% on Thursday after the company reported better-than-expected first-quarter earnings and raised its full-year profit forecast, but its second-quarter earnings forecast fell short of Wall Street expectations. Networking hardware maker Cisco Systems Inc rose 1.1% after it reported a drop in orders. The debt ceiling is likely to be a topic of discussion as Biden is in Japan for a weekend G-7 meeting of world leaders, along with China and Russia and geopolitical tensions.
Initial jobless claims lower than expectations
On the economic front, initial jobless claims came in at a lower-than-expected 242,000 and were also lower than the previous week, another sign of a tightening labor market. Separately, existing home sales fell 3.4% in April from the previous month. The annualized number of unemployed people fell short of the 4.3 million expected by economists and was down 23.2% from a year earlier, according to Bloomberg.
Dallas Fed President Logan says current data is not strong enough to justify a pause in rate hikes
About two-thirds of futures traders expect the Fed to pause rate hikes at its June meeting, as officials need to assess how effective their actions have been in cooling inflation so far. While economic data in recent weeks have pointed to a slowing pace of price increases, a still-tight labor market could complicate the Fed's calculations. However. Dallas Federal Reserve President Lorie Logan said Thursday that the economic data doesn’t justify a pause. “After raising the target range for the federal funds rate at each of the last 10 FOMC meetings, we have made some progress,” she said in prepared remarks for a speech to bankers in San Antonio. “The data in coming weeks could yet show that it is appropriate to skip a meeting. As of today, though, we aren’t there yet.”
Hong Kong Stock Connect had a net inflow of HK$1.73bn on Thursday, of which Tencent (700) had the largest net inflow, reaching HK$1.55bn; followed by China Mobile (941). Tracker Fund (2800) recorded the largest net outflow at HK$0.75bn, followed by CCB (939).
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