KGI Asia Commentary

Hang Seng Index rose 139 points on Wednesday

The Hang Seng Index rose 139 points or 0.7% to 19,757 on Wednesday. HSTECH rose 47 points or 1.3% to 3,872 and HSCEI rose 53 points or 0.8% to 6,654. Daily market turnover was HK$97.8bn.

Dow falls as panic over banking outweighs tech rally

The Dow Jones Industrial Average fell on Wednesday as fresh banking turmoil weighed on sentiment even as technology stocks surged after Microsoft Corp's better-than-expected quarterly results. The Dow Jones Industrial Average fell 0.7%, or 228 points, the S&P 500 lost 0.4%, and the Nasdaq rose 0.4%. Shares of Microsoft Corp rose 7% after the company reported third-quarter earnings that topped Wall Street expectations, as Microsoft's Azure cloud business performed better than expected at a time when many worried about the impact of slowing corporate spending. Shares of Amazon rose more than 2% as some market participants expressed hope that the e-commerce giant's cloud business may also show strong revenue growth. Alphabet shares closed down 0.1% after rising earlier in the day. It reported better-than-expected earnings on Tuesday, but revenue rose just 3% from a year earlier. Shares of Meta jumped 12% in after-hours trading on Wednesday after it reported an unexpected rise in first-quarter sales and better-than-expected guidance. Boeing Co closed slightly higher after the company reported better-than-expected quarterly revenue and detailed plans to ramp up production of the 737 jet. Meanwhile, shares of Chipotle Mexican Grill jumped 13% to a record high as investors cheered the Mexican fast-food chain's better-than-expected quarterly results, helped by higher selling prices. First Republic Bank once again sparked concerns about a banking crisis, with reports that U.S. regulators are considering whether to downgrade their private assessment of First Republic, a move that would limit the bank's access to the Federal Reserve's lending facilities. PacWest Bancorp shrugged off regional banks' doom to close higher after announcing a steady pace of deposit outflows in the first quarter. Energy stocks fell nearly 1% and oil prices continued to slide as recession fears outweighed data showing a much larger-than-expected weekly draw in U.S. crude stockpiles. In addition, Microsoft's $69 billion acquisition of Activision Blizzard was blocked by British regulators due to antitrust concerns. The deal was further questioned, and Activision Blizzard's stock price plummeted nearly 12%.

U.S. durable goods orders rose 3.2% in March, beating expectations of 0.8%

U.S. durable goods orders rose 3.2% to $276.4 billion in March, an increase of $8.6 billion, the U.S. Census Bureau announced Wednesday. This figure substantially beat consensus expectations for a 0.8% increase after a contraction of 1.2% (revised from -1%) in February. Elsewhere, the U.S. economy appeared to maintain solid growth last quarter, and other data from the Commerce Department on Wednesday showed a sharp narrowing of the goods trade deficit as exports rebounded. More economic data will be released this week, with the latest GDP figures on Thursday and the personal consumption expenditures (PCE) price index - the Fed’s favored inflation gauge - on Friday.

Hong Kong Stock Connect had a net inflow of HK$1.50bn on Wednesday, of which Tencent (700) had the largest net inflow, reaching HK$0.53bn; followed by Kuaishou (1024). SMIC (981) recorded the largest net outflow at HK$0.21bn, followed by CCB (939).