Daily Investment Strategy
Hang Seng Index rose 21 points on Monday
The Hang Seng Index closed at 17,111 points for the day, up 21 points or 0.1%. The Hang Seng Technology Index reported at 3,429 points, down 6 points or 0.2%. The HSCEI Index rose 11 points, or 0.2%, to 6,029 points. The market turnover was HK$70.3billion.
S&P 500 edged higher ahead of key inflation data
The S&P 500 edged higher on Monday as investors awaited important inflation data this week. The S&P 500 fell 0.03%, the Dow Jones Industrial Average fell 140 points, or 0.3%, and the Nasdaq Composite rose 0.2%. JetBlue Airways shares fell nearly 21% as the airline unveiled detailed plans to sell $400 million in five-year convertible senior bonds. KeyCorp shares rose 9% after the Bank of Nova Scotia acquired a 14.9% stake in KeyCorp for $2.6 billion. Starbucks Corp. shares rose 2.6% after Bloomberg reported that the coffee chain is close to reaching an agreement with Elliott Management Co. to provide the latter with a board seat. Elliott has been pushing for changes at Starbucks to improve performance. Some companies will also report earnings this week, but the quarterly earnings season is basically over, with Home Depot and Cisco Systems due to report in the next few days. Data from Factset shows that the earnings season has been mostly positive. So far, 91% of S&P 500 companies have announced second-quarter financial reports, and about 78% of them have reported a positive EPS surprise.
CPI data awaited for more cues
The focus this week will be the Consumer Price Index (CPI) due out on Wednesday to get more clues about the economy and inflation. The index is expected to drop slightly in July from the previous month. The Federal Reserve is widely expected to begin cutting interest rates in September as there are growing signs that the U.S. economy is cooling, but investors are divided over whether the Fed will cut interest rates by 25 basis points or 50 basis points. Meanwhile, July retail sales data will also be released on Thursday, which will be another clue to the health of the U.S. economy.
Hong Kong Stock Connect had a net inflow of HK4.34bn on Monday of which Tracker Fund (2800) had the largest net inflow, reaching HK$0.88bn; followed by CSOP HS TECH (3033). China Unicom (762) recorded the largest net outflow at HK$0.31bn, followed by China Telecom (728).
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