KGI Asia Commentary
HSI fell 68 points on Tuesday
Hang Seng Index closed at 20,534, down 68 points or 0.3%. HSTECH closed at 4,122, down 54 points or 1.3%. HSCEI down 25 points, or 0.4%, to 6,912. Market turnover was HK$127.7bn.
Dow closes down more than 570 points as Powell comments spark higher rate concerns
U.S. stocks fell sharply on Tuesday after Federal Reserve Chairman Jerome Powell said interest rates may need to rise for a longer period of time, adding to concerns that the central bank could raise rates more aggressively at its next meeting. The Dow Jones Industrial Average fell 574.98 points, or 1.72%, to 32,856.46. The S&P 500 fell 1.53% to close at 3,986.37, falling below 4,000. The Nasdaq Composite fell 1.25% to close at 11,530.33. Bank stocks led losses as investors worried that further rate hikes would tip the economy into recession. Wells Fargo fell 4.7%. Bank of America, Goldman Sachs and JPMorgan Chase each fell about 3%. Big tech stocks also fell sharply, with Apple, Alphabet and Microsoft all down at least 1%. However, Meta shares fell just 0.2 percent as investors continued to cheer further signs of the social media company's determination to make headway on profitability. The company plans to cut jobs as early as this week, following reports that it recently cut about 13 percent of its workforce.
Fed Chair Powell says interest rates ‘likely to be higher’ than previously anticipated
“The latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated,” Powell said in remarks to the Senate Banking, Housing and Urban Affairs Committee Tuesday morning. These comments have two implications: one is that the peak or terminal, level of the federal funds rate may be higher than Fed officials have previously signaled; and the other is that last month's switch to a small 25 basis point rate hike may be short-lived if inflation data continues to move higher.
Hong Kong Stock Connect had a net inflow of HK$0.78bn on Tuesday, of which Tencent (700) had the largest net inflow, reaching HK$0.32bn; followed by PetroChina (857). CCB (939) recorded the largest net outflow at HK$0.58bn, followed by Meituan (3690).
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