KGI Asia Commentary

HSI rose 49 points on Thursday

The Hang Seng Index rose 49 points or 0.3% to 17,042 on Thursday. HSTECH fell 10 points or 0.3% to 3,899 and HSCEI rose 38 points or 0.7% to 5,857. Daily market turnover was HK$139.1bn.

Dow closes strong with stunning 520-point gain

The Dow Jones Industrial Average had a strong performance in November, rising sharply on Thursday as investors cheered a further slowdown in inflation and corporate earnings that were mostly better than expected. The Dow Jones index rose 520 points to close at 35,950.89 points, an increase of 1.47%, surpassing the yearly high set in August. The S&P 500 rose 0.4% to 4,567.80. However, the Nasdaq fell about 0.2% to 14,226.22 as investors took profits in the large technology stocks that led November's rebound. The Dow Jones closed up 8.9% in November, ending three consecutive months of declines. The S&P 500 rose 8.9% in November and the Nasdaq gained 10.7%. Both indexes posted their best monthly performances since July 2022 and are currently trading about 1% lower than their respective 2023 highs. On Thursday, cloud software company Salesforce led the Dow Jones Industrial Average higher after the company's third-quarter earnings and revenue beat expectations. The stock rose 9.4%. Salesforce's cloud data business revenue increased by 22% over last year, and its artificial intelligence product Einstein GPT is the driving force behind this positive report. Healthcare companies UnitedHealth Group, Johnson & Johnson, Merck & Co. and Amgen also led the index higher.

Fed speak continues ahead of Powell speech 

New York Fed President Williams said on Thursday that the Fed's rate-raising cycle may be over, but he warned that if deflation does not persist, the Fed may resume raising interest rates. "Based on what I know now, my assessment is that we are at, or near, the peak level of the target range of the federal funds rate," Williams said, though added that "if price pressures and imbalances persist more than I expect, additional policy firming may be needed." Fed Chairman Jerome Powell will speak on Friday.

Weekly initial jobless claims in the United States rose to 218k, compared with expectations of 220k

Weekly data released by the U.S. Department of Labor (DOL) on Thursday showed that 218,000 people filed initial claims for unemployment benefits in the week ended November 25. This data follows the previous week's data of 211,000 (revised from 209,000), which is better than market expectations of 220,000.

Inflation continues to slow, U.S. Treasury yields climb

The Fed's preferred measure of inflation, the personal consumption expenditures (PCE) price index, fell to 0% in October from 0.4% the previous month, compared with a previous forecast of 0.1%. The core personal consumption expenditures deflator (Core PCE) fell to 3.5% from 3.7% in the previous month. The job market performed stronger than expected amid slowing inflation, with initial jobless claims rising less than expected.

Hong Kong Stock Connect had a net inflow of HK$1.72bn on Thursday, of which Tracker Fund (2800) had the largest net inflow, reaching HK$0.85bn; followed by Meituan (3690). Tencent (700) recorded the largest net outflow at HK$0.27bn, followed by Wuxi Bio (2269).