KGI Asia Commentary
HSI rose 302 points on Thursday
The Hang Seng Index rose 302 points or 1.6% to 19,376 on Thursday. HSTECH rose 30 points or 0.8% to 4,072 and HSCEI rose 129 points or 1.9% to 6,871. Daily market turnover was HK$204.8bn.
The Dow closed lower on Thursday, after briefly breaching 40,000
The Dow closed slightly lower on Thursday, with the index briefly breaking through 40,000 points for the first time. The index was close to the 40,000-point mark earlier this year, but retreated slightly in April on worries about higher interest rates. The rally reignited in May on the back of strong earnings and cooling inflation data. The Dow Jones index fell 38.62 points to close at 39,869.38 points, a decrease of 0.1%. The S&P 500 fell 0.21% to close at 5,297.10 points. The Nasdaq index fell 0.26% on the day and closed at 16,698.32 points. Walmart shares rose 7% after the company reported first-quarter earnings that beat Wall Street expectations for revenue and profit. Shares of Canada Goose Holdings surged more than 15% after the apparel maker reported better-than-expected fourth-quarter results and expressed optimism about the prospect of improved annual profit margins. Meanwhile, Cisco Systems shares fell more than 2% as the company lowered its annual earnings forecast, masking an increase in its revenue forecast and better-than-expected quarterly results. Meta platform's stock price fell nearly 2%. The European Commission launched an investigation into Facebook's parent company, saying that the company violated the EU's strict online content law to do with child safety risks.
Rate cut expectations continue
Bets for a rate cut in September continued to provide support for the stock market, with a lower-than-expected consumer price index (CPI) on Wednesday followed by data showing the job market was cooling. Initial jobless claims in the U.S. fell to 222,000 in week ended on May 11, down from the upwardly revised 232,000 the previous week. Economists had expected a reading of 219,000. However, U.S. Treasury yields rebounded from weakness a day earlier as a Fed speaker remained cautious. Cleveland Fed President Loretta Mester believes it will take longer than previously thought to reach the 2% target and said incoming data will need to be further monitored.
Hong Kong Stock Connect had a net inflow of HK3.9bn on Thursday, of which BOC (3988) had the largest net inflow, reaching HK$2.2bn; followed by Tencent (700). Tracker Fund (2800) recorded the largest net outflow at HK$1.7bn, followed by HSCEI ETF (2828).
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