KGI Asia Commentary

Hang Seng Index rose 273 points on Thursday

The Hang Seng Index rose 273 points or 1.4% to 19,639 on Wednesday. HSTECH rose 122 points or 2.9% to 4,341 and HSCEI rose 121 points or 1.9% to 6,670. Daily market turnover was HK$113.6bn.

Dow snaps winning streak, financials, airlines under pressure

The Dow snapped a 13-day winning streak on Thursday as financial and airline stocks weakened amid disappointing quarterly results, offsetting gains in Meta. The Dow fell 0.7%, or 237 points, the Nasdaq fell 0.6% and the S&P 500 fell 0.6%. Shares of social media giant Meta Platforms rose more than 4 percent after the company reported second-quarter guidance and earnings that topped Wall Street expectations, driven by strong growth in its advertising business. Shares of eBay fell 10% after the company reported earnings expectations for the current quarter that fell short of analysts' expectations and overshadowed better-than-expected second-quarter results. Shares of financial information and analytics company S&P Global fell more than 7 percent, failing to impress on the earnings stage, after the company reported quarterly earnings that missed analysts' expectations. Southwest Airlines reported quarterly results that missed the bottom line and spooked investors with its guidance, warning that its revenue per available seat mile, a key metric for airlines, is expected to decline in the third quarter. The warning sparked concerns about falling demand for air travel, sending shares of several airlines, including American Airlines, Delta Air Lines and Alaska Air Group, tumbling. Separately, shares of McDonald's rose 1% after the company reported quarterly results, including comparable sales, that topped analysts' expectations. Intel Shares rose more than 6 percent after hours after it reported second-quarter results, with earnings of 13 cents a share, beating consensus estimates for a loss of 4 cents.

ECB raises interest rate by 0.25 percentage points

The European Central Bank announced another 0.25 percentage point hike on Thursday, bringing its key rate to 3.75%. “Inflation continues to decline but is still expected to remain too high for too long,” the BOJ said in a statement on Thursday. Headline inflation data showed inflation fell to 5.5% in June from 6.1% in May , still well above the ECB's 2% target. The central bank did not provide any forward guidance on upcoming moves, but did raise the possibility of a September rate hike pause. “Our assessment of data will tell us whether and how much ground we have to cover.” She said her team is “open-minded” about upcoming decisions and said the bank might hike or hold rates steady in September — but whatever it does it will not be definitive. “The Governing Council will continue to follow a data-dependent approach to determining the appropriate level and duration of restriction,” the ECB said in its statement.

U.S. economic growth accelerates to 2.4% in second quarter

The U.S. economy grew at a 2.4 percent annualized rate from April to June this year, preliminary data from the Commerce Department showed on Thursday. That was faster than the 2% pace in the first quarter and well above the 1.8% economists had forecast. Growth in consumer spending slowed, but the decline was more than offset by strong business investment in inventories and fixed assets.

Hong Kong Stock Connect had a net outflow of HK$3.68bn on Thursday, of which Li Ning (2331) had the largest net inflow, reaching HK$0.18bn; followed by China Telecom (728). Xpeng (9868) recorded the largest net outflow at HK$1.0bn, followed by HSCEI ETF (2828).