KGI Asia Commentary
Hang Seng Index rose 39 points on Thursday
The Hang Seng Index rose 39 points or 0.2% to 17,778 on Thursday. HSTECH fell 27 points or 0.8% to 3,613 and HSCEI rose 9 points or 0.1% to 6,306. Daily market turnover was HK$87.5bn.
S&P closes lower as tech stocks continue to lose momentum
The S&P 500 fell for a second day in a row on Thursday, pressured by sharp swings, as an early rebound in technology stocks faded and high-cap tech stocks continued to lose steam. The S&P 500 fell 0.8%, the Nasdaq fell 0.7%, and the Dow Jones Industrial Average fell 533 points, or 1.3%. The VIX index, the so-called fear index, surged 10% to its highest level since April last year, triggering a new round of volatility. However, Nvidia bucked the trend and rose 2% as investors appeared to buy into the stock, which has fallen recently despite concerns about a deeper U.S. chip ban. Shares of streaming media giant Netflix fell 1% in after-hours trading on Thursday after the company reported lower-than-expected third-quarter revenue guidance, eclipsing better-than-expected second-quarter results. Shares of DR Horton rose 10% after the homebuilder reported quarterly profit that beat estimates and approved new stock repurchase authorization totaling $4 billion. Domino's Pizza shares fell 13% after the pizza chain missed quarterly same-store sales estimates as concerns about inflation kept U.S. consumers away. United Airlines guided for third-quarter results below Wall Street expectations as it unveiled plans to reduce capacity despite strong summer travel demand, sending its shares down 1%. The airline's second-quarter earnings beat expectations. Warner Bros. Discovery shares rose 2% after the Financial Times reported that the company is considering spinning off its digital streaming and studio businesses from its traditional television business to deal with the company's $39 billion debt load. Thursday's sell-off appears to be beyond just tech stocks. All but one of the 11 S&P 500 sectors fell. Even the small-cap Russell 2000 index, which has risen on expectations of imminent rate cuts, fell about 1.9%.
Latest jobless claims show further signs of labor market slowdown
The U.S. Department of Labor announced on Thursday that the number of initial jobless claims increased by 20,000 in the week ended July 13, to a seasonally adjusted 243,000, higher than the 229,000 expected. That suggests the labor market is cooling as demand slows as the Federal Reserve raises interest rates in 2022 and 2023. According to CME's Fed watch, the market expects the probability of the Federal Reserve to cut interest rates by 25 basis points at the September meeting is more than 91%.
Hong Kong Stock Connect had a net outflow of HK2.39bn on Thursday of which Tencent (700) had the largest net inflow, reaching HK$1.4bn; followed by Xiaomi (1810). Tracker Fund (2800) recorded the largest net outflow at HK$0.58n, followed by CCB (939).
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