KGI Asia Commentary
HSI fell 344 points on Wednesday
The Hang Seng Index fell 344 points or 1.8% to 18,477 on Wednesday. HSTECH fell 89 points or 2.3% to 3,765 and HSCEI fell 128 points or 1.9% to 6,557. Daily market turnover was HK$123.1bn.
Dow closes lower on rising yields
Airline stocks fell sharply on concerns about demand after American Airlines lowered its second-quarter profit forecast. The Dow Jones Industrial Average closed sharply lower on Wednesday, driven by rising Treasury yields and weakness in industrial stocks. The Dow Jones Industrial Average fell 411 points, or 1.1%, the S&P 500 fell 0.8% and the Nasdaq Composite fell 0.6%. American Airlines Group lowered its second-quarter profit forecast, causing its stock price to fall more than 13%. American Airlines' lower guidance prompted some on Wall Street to turn bearish, amid concerns that the airline will struggle to keep up with competition from low-cost and ultra-cost carriers. Delta Air Lines and Spirit Airlines also fell. Dick's Sporting Goods shares soared more than 15% as the company raised its full-year forecast as consumers spend more on new sneakers and gear at its large stores. Trading platform Robinhood announced a $1 billion stock buyback plan, sending its shares up 3%.
U.S. Treasury yields continue to climb ahead of PCE data
U.S. Treasury yields continued to climb after a series of lower-than-expected auction results that showed weak demand for government debt, including Wednesday's auction of $44 billion in seven-year notes. The move higher in U.S. Treasury yields comes ahead of key inflation data this week. PCE price index data will be released this Friday, and the data may influence the Federal Reserve's decision on interest rates. Signs of sticky inflation have led several officials in recent days to suggest they want to see more evidence of cooling before starting to cut interest rates.
Hong Kong Stock Connect had a net inflow of HK6.77bn on Wednesday, of which ABC (1288) had the largest net inflow, reaching HK$0.78bn; followed by CNOOC (883). Tracker Fund (2800) recorded the largest net outflow at HK$0.50bn, followed by China Mobile (941).
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