KGI Asia Commentary
Hang Seng Index rose 11 points on Wednesday
The Hang Seng Index rose 11 points or 0.1% to 17,739 on Wednesday. HSTECH rose 18 points or 0.5% to 3,640 and HSCEI fell 19 points or 0.3% to 6,297. Daily market turnover was HK$104.9bn.
The Dow closed above 41,000 points for the first time, and sectors continued to rotate
The Dow Jones Industrial Average jumped on Wednesday, led by gains in the financial and energy sectors, as a pullback in technology stocks led by Nvidia accelerated amid geopolitical tensions. The Dow Jones Industrial Average rose 243 points, or 0.6%, to close at 41,198.08 points. The S&P 500 fell 1.4% and the Nasdaq fell 2.8%, which will still be its worst day since the end of 2022. Nvidia shares fell more than 6% on concerns that the United States is seeking to deepen its ban on exports of chip manufacturing equipment from China. According to Bloomberg, the Biden administration in the United States is considering restricting companies that export critical chip manufacturing equipment to China. In addition to Biden, Trump also said Taiwan should pay the United States for defense equipment because "it's not giving this country anything," raising geopolitical tensions over Taiwan's largest stock and the world's largest chip manufacturing Taiwan Semiconductor Manufacturing Co. fell nearly 8%. Fresh geopolitical tensions dampened sentiment for tech stocks, forcing Apple, Netflix and Meta Platforms lower, accelerating an ongoing sell-off in big tech stocks. Shares of Johnson & Johnson rose nearly 4% after the medical giant reported strong second-quarter results that beat Wall Street estimates on both profit and revenue, driven by strong drug sales. Spirit Airlines shares fell 11% after the airline lowered its second-quarter revenue forecast, saying non-ticket revenue was lower than expected.
Fed's Beige Book shows slight economic growth, inflation cooling
The Federal Reserve's Beige Book showed that the U.S. economy grew slightly entering the third quarter, although economic activity was flat or declining in many regions. Employment also grew only slightly, according to the report. Labor turnover decline, and respondents in several regions want to be more selective in hiring rather than filling every open position. In addition, consumer spending is stable but not growing, and consumers are more price sensitive. Overall economic activity remains positive but is showing signs of slowing.
Hong Kong Stock Connect had a net outflow of HK0.31bn on Wednesday of which Tencent (700) had the largest net inflow, reaching HK$1.22bn; followed by Ping An (2318). Tracker Fund (2800) recorded the largest net outflow at HK$1.18n, followed by CNOOC (883).
Wen Kit Kenny is a SFC licensed person accredited to KGI Group to carry on regulated activities (for details, please refer to:https://apps.sfc.hk/publicregWeb/indi/AJF244/details). He and/or his associate do not have any financial interest in the recommended issuer or new listing applicant.
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