KGI Asia Commentary
HSI rose 61 points on Wednesday
The Hang Seng Index rose 61 points or 0.3% to 19,246 on Wednesday. HSTECH flat at 4,373 and HSCEI rose 25 points or 0.4% to 6,613. Daily market turnover was HK$85.0bn.
U.S. stocks fall, technology stocks remain weak
Technology stocks continued to slide on Wednesday, with chip stocks weak and investors remaining cautious on bullish bets ahead of Thursday's inflation report. The Dow Jones Industrial Average fell 0.5%, or 191 points, the Nasdaq lost 1.2% and the S&P 500 lost 0.7%. Shares of casino operator Penn Entertainment rose 10 percent after the gaming company said it will launch an online sportsbook called ESPN Bet this fall in partnership with ESPN. Roblox's second-quarter results fell short of Wall Street's expectations, and its stock plunged nearly 22%. More than 90% of S&P 500 companies had reported earnings through Wednesday, with about four-fifths of those companies beating Wall Street expectations, according to FactSet.
Focus on inflation data
U.S. mortgage rates jumped above 7% in a week after Fitch Ratings' surprise decision to downgrade the U.S.'s credit rating sent government bond yields soaring. The rate on a 30-year fixed mortgage contract rose 16 basis points to 7.09% in the week ended Aug. 4, data from the Mortgage Bankers Association showed on Wednesday. That was the highest level since November and also dragged down the association's gauge of home-buying applications to the lowest level since February. Meanwhile, investors are keeping a close eye on the consumer price index (CPI) for an indication of how the Federal Reserve will adjust interest rates in the future. Economists expect a gauge of inflation to rise 3.3% in July.
Hong Kong Stock Connect had a net outflow of HK$6.8bn on Wednesday, of which CNOOC (883) had the largest net inflow, reaching HK$0.22bn; followed by CansinoBio (6185). Tracker Fund (2800) recorded the largest net outflow at HK$3.5bn, followed by HSCEI ETF (2828).
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