KGI Asia Commentary

Hang Seng Index fell 436 points on Thursday

The Hang Seng Index fell 436 points or 2.5% to 17,295 on Thursday. HSTECH fell 71 points or 1.9% to 3,700 and HSCEI fell 151 points or 2.5% to 5,924. Daily market turnover was HK$91.1bn.

Wall St ends lower as 10-year Treasury yield near 5%

The Dow closed lower on Thursday as investors were reeling from a surge in 10-year Treasury yields, mixed quarterly results and comments from Federal Reserve Chairman Jerome Powell. Powell acknowledged there have been recent signs of cooling inflation but said on Thursday the central bank was "resolute" in achieving its 2% target.“Inflation is still too high, and a few months of good data are only the beginning of what it will take to build confidence that inflation is moving down sustainably toward our goal,” Powell said in prepared remarks. “We cannot yet know how long these lower readings will persist, or where inflation will settle over coming quarters.” The Dow Jones Industrial Average fell 251.04 points, or 0.75%, to 33,414.04 points; the S&P 500 fell 36.61 points, to 4,277.99 points, or 0.85% ; the Nasdaq index fell 128.13 points to 13,186.18 points, a decrease of 0.96%. Streaming media giant Netflix reported third-quarter earnings that beat analysts’ expectations, sending the company’s stock price up more than 16% and recording its best user growth since the second quarter of 2020. The company also announced price increases in the U.S., U.K. and France, a move expected to support expected average revenue per user (ARPU). Tesla's third-quarter revenue and profit fell short of Wall Street estimates as recent price cuts hurt profit margins, sending the company's shares tumbling 9%. Taiwan Semiconductor Manufacturing Co. rose more than 3%, shrugging off a broader decline in semiconductor stocks, as the chipmaker reported better-than-expected quarterly results that drew praise from Wall Street.

Powell says Fed will ‘proceeding carefully’ on future interest rate hikes

Powell said the Fed would be ‘proceeding carefully’ in raising interest rates in the future after a surge in U.S. Treasury yields "significantly" tightened financial conditions, but he said continued economic growth could force the Fed to tighten policy further. In addition, data released by the United States showed that the job market remains strong, demonstrating the resilience of the U.S. economy. The number of initial jobless claims for the week ended October 14 was a seasonally adjusted 198,000, a decrease of 13,000 from the previous week and below the estimate of 210,000. The 10-year Treasury yield is close to 5% for the first time since 2007.

Hong Kong Stock Connect had a net outflow of HK$1.79bn on Thursday, of which Tracker Fund (2800) had the largest net inflow, reaching HK$0.54bn; followed by CSOP HS TECH (3033). CNOOC (883) recorded the largest net outflow at HK$0.23bn, followed by Tencent (700).