KGI Asia Commentary
Hang Seng Index closed flat on Monday
HSI stayed still at 18,027. HSTI dropped 23 pts or 0.6% to 3,677. HSCEI gained 1 pts or 0.0% to 6,441. Market turnover reached $96.47 billion.
Dow closes more than 250 points higher as investors snap up energy and bank stocks
The Dow Jones industrial average rose on Monday as investors dumped large technology stocks and turned to other sectors such as banks and energy. The Dow Jones index rose 260.88 points to close at 39,411.21 points, an increase of 0.67%. The S&P 500 fell 0.31% to 5,447.87 points, while the tech-heavy Nasdaq fell 1.09% to 17,496.82 points. It was the Nasdaq's worst day since April. The information technology sector was the biggest decliner in the S&P 500 on the day, falling more than 2%. Meanwhile, energy stocks rose 2.7% and financial and utility stocks gained about 1%. Dow component JPMorgan Chase rose 1.3%, while Goldman Sachs and Chevron both rose more than 2%. Crude oil prices were steady on Monday. The previous week had seen a positive trend in crude oil prices amid signs of increased demand for refined products in the United States, the world's largest oil consumer. WTI and Brent both rose about 3% last week after data from the Energy Information Administration showed a sharp decline in U.S. crude inventories, suggesting demand remains healthy as the summer driving season enters its peak. The deteriorating geopolitical situation also provided support for oil prices.
PCE inflation due this week
This week the market is mainly focused on the PCE inflation data to be released on Friday. The data is the Fed's preferred measure of inflation. The data is expected to show inflation cooled slightly in May but remained well above the Fed's 2% annual target. At the same time, a Bloomberg survey showed that as many as 52% of respondents believed that S&P was overvalued. Additionally, 49% of respondents said they expect the next S&P 500 10% correction to start sometimes in 2024.
Hong Kong Stock Connect had a net inflow of HK2.11bn on Monday, of which CCB (939) had the largest net inflow, reaching HK$0.51bn; followed by ICBC (1398). Tracker Fund (2800) recorded the largest net outflow at HK$1.59bn, followed by Meituan (3690).
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