KGI Asia Commentary
HSI fell 96 points on Thursday
The Hang Seng Index fell 96 points or 0.5% to 19,420 on Thursday. HSTECH rose 17 points or 0.4% to 4,406 and HSCEI fell 17 points or 0.3% to 6,652. Daily market turnover was HK$101.1bn.
S&P 500 ends lower for third day as rising bond yields weigh on stocks
The S&P fell for a third straight day as Wall Street assessed the latest corporate results and struggled to shake off pressure from rising bond yields. The S&P 500 fell 0.25% to 4,501.89; the Dow lost 66.63 points, or 0.19%, to 35,215.89. The Nasdaq edged down 0.1% to 13,959.72. Yields surged, with the benchmark 10-year U.S. Treasury yield trading around 4.18%, near its highest level since November 2022. Rising interest rates weighed on the real estate sector, which fell more than 1%, while the Cboe Volatility Index surged to its highest level since last June. Utilities fell 2.3%. A busy earnings week continued, with chipmaker Qualcomm (QCOM) shares down about 8.2%. It came a day after the company missed its fiscal third-quarter adjusted revenue expectations and issued disappointing guidance. PayPal reported better-than-expected quarterly results, but weak guidance and doubts about the possibility of improving margins weighed on the company's shares, which fell 12%. Expedia shares tumbled 16.4% as gross bookings fell short of expectations. Nearly 79% of S&P 500 companies have reported quarterly reports so far, with about 82% topping expectations, according to FactSet. Earnings are also expected to be down about 5% from a year earlier.
Unit labor costs rose 1.6% in the second quarter, above expectations for a 2.6% increase
U.S. labor productivity rebounded sharply in the second quarter, while labor costs slowed, adding to market optimism that the recent slowdown in inflation may continue. The Bureau of Labor Statistics reported that unit labor costs (ULC) rose 1.6% in the second quarter, missing market expectations of a 2.6% rise. ULC rose 3.3% in the first quarter (4.2% before revision). Non-farm productivity rose 3.7%, beating market expectations of 2%. The 2.1% decline in the first quarter was revised to -1.2%.
Hong Kong Stock Connect had a net inflow of HK$3.4bn on Thursday, of which Tencent (700) had the largest net inflow, reaching HK$0.48bn; followed by Kuaishou (1024). HSBC (5) recorded the largest net outflow at HK$0.29bn, 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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