KGI Asia Commentary

Hang Seng Index fell 589 points on Wednesday

The Hang Seng Index fell 589 points or 3.7% to 15,276 on Wednesday. HSTECH fell 165 points or 5.0% to 3,160 and HSCEI fell 210 points or 3.9% to 5,132. Daily market turnover was HK$130.5bn.

Dow closes lower as solid retail sales undermine expectations for Fed rate cut in March

Stocks fell on Wednesday as U.S. Treasury yields rose after stronger-than-expected economic data. The Dow Jones Industrial Average fell 94.45 points, or 0.25%, to close at 37,266.67 points. This marked the third consecutive day of losses for the index. The S&P 500 fell 0.56% to close at 4,739.21 points, and the Nasdaq fell 0.59% to close at 14,855.62 points. Charles Schwab shares fell 1.3% after the company reported mixed quarterly results. Walgreens and Caterpillar both fell about 3%, leading the Dow lower. Meanwhile, Boeing Co. rose 1.3%, becoming one of the biggest gainers on the Dow, after the company's recent sharp losses. Tesla shares fell 2% after it slashed prices for its Model Y in Europe, raising new concerns about profit margin pressure after several price cuts last year.

Retail sales data for December came in stronger-than-expected

U.S. Treasury yields continued to climb higher, with the yield on the 10-year Treasury note rose further above 4% to hit highest level this year after U.S. retail sales rose 0.6% in the month of December, topping expectations for 0.4%. Signs of a stronger consumption, which makes up about two-thirds of economic growth, suggesting the economy remains in good share dented expectations for a rate cut as soon as March. So far, traders see a roughly 57% chance that the Fed will begin cutting interest rates in March, lower than earlier expectations.

Hong Kong Stock Connect had a net inflow of HK$5.93bn on Wednesday, of which Tracker Fund (2800) had the largest net inflow, reaching HK$1.15bn; followed by CCB (939). X-Peng (9868) recorded the largest net outflow at HK$0.33bn, followed by SMIC (981).