KGI Asia Commentary
Hang Seng Index fell 287 points on Tuesday
HSI dropped 287 pts or 1.6% to 17,727. HSTI dropped 49 pts or 1.4% to 3,622. HSCEI fell 105 pts or 1.6% to 6,316. Market turnover reached $94.2 billion.
Dow records best day in more than a year
The Dow Jones Industrial Average had its best day in more than a year on Tuesday, closing at a record high, helped by better-than-expected retail sales data and a series of generally upbeat corporate quarterly earnings. The Dow Jones Industrial Average rose 742 points, or 1.9%, to close at 40954.48 points, its largest single-day gain since June 2023. The S&P 500 rose 0.6% to a record 5,666.98 points. The Nasdaq rose 0.2%. Wall Street banks continued to dominate earnings, with Bank of America soaring 5% after the bank reported second-quarter revenue and profit that beat estimates on rising investment banking and asset management fees. Morgan Stanley pared early losses, closing 1% higher on better-than-expected results, but Charles Schwab fell 10% after the brokerage said on an earnings call it may pause buybacks to pay down debt and reported lower-than-expected net interest margins. Shares of health insurance giant UnitedHealth Group rose 6% after the company reported second-quarter earnings that beat expectations on revenue and profit despite headwinds in its Medicaid business. Shares of Trump Media & Technology Group fell 9%, after closing up 31% a day earlier as the so-called "Trump trade" rebounded broadly across markets.
Retail sales better than expected, pointing to stronger consumption
U.S. retail sales in June were flat from the previous month, with the data stronger than the expected 0.3% decline. At the same time, the World Economic Outlook (WEO) predicts that global economic growth this year will be consistent with the forecast in April 2024, reaching 3.2%. Services inflation has hampered progress in lowering inflation and complicated the normalization of monetary policy. The chief economist of the IMF warned that progress in controlling inflation may still stall amid high service prices, dashing hopes of an early interest rate cut.
Hong Kong Stock Connect had a net inflow of HK6.12bn on Tuesday of which Tencent (700) had the largest net inflow, reaching HK$1.29bn; followed by Tracker Fund (2800). HKEX (388) recorded the largest net outflow at HK$0.32bn, followed by Kuaishou (1024).
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