KGI Asia Commentary
HSI rose 93 points on Wednesday
The Hang Seng Index rose 93 points or 0.6% to 17,085 on Wednesday. HSTECH rose 78 points or 2.2% to 3,700 and HSCEI rose 54 points or 0.9% to 5,853. Daily market turnover was HK$95.4bn.
U.S. markets pressured by rising Treasury yields and weakness led by Alphabet
The S&P 500 closed below key levels on Wednesday as Google parent Alphabet reported disappointing quarterly results and a rebound in interest rates. The S&P 500 fell 1.43% to close at 4,186.77, below the 4,200 level analysts are generally focusing on. This is the first time the S&P 500 has closed below this level since May. The Nasdaq index fell 2.43% to close at 12,821.22 points, its largest single-day decline since falling 2.5% on February 21. The Dow Jones Industrial Average fell 105.45 points, or 0.32%, to 33,035.93 points. Alphabet's shares plunged more than 9% as its cloud business failed to meet analysts' expectations, masking strong revenue growth and earnings. The S&P 500 communications services sector fell 5.9%. Microsoft shares rose 3% after the company reported better-than-expected first-quarter earnings and strong growth in its cloud business, Azure. Amazon will report third-quarter results after the market close on Thursday. Boeing Co shares fell more than 2% after the company reported a larger-than-expected loss and lowered its annual delivery guidance for its 737 Max aircraft due to manufacturing issues with the aircraft. Boeing said it now expects to deliver 375 to 400 737 aircraft this year, down from its previous forecast of 400 to 450. About 29% of S&P 500 companies have reported third-quarter results so far. Among these companies, 78% exceeded expectations.
U.S. Treasury bond yields rise again ahead of third-quarter GDP data
While corporate earnings remain the focus of investors this week, investors are also focused on bond yields, which are hovering near multi-year highs. U.S. Treasury yields resumed their climb after taking a breather in recent sessions ahead of Thursday's economic data that could show economic growth picked up in the third quarter. Federal Reserve Chairman Powell earlier emphasized that continued economic strength may exacerbate inflation, which has worried the market that strong economic data may force the Federal Reserve to raise interest rates again.
Hong Kong Stock Connect had a net outflow of HK$51mn on Wednesday, of which Meituan (3690) had the largest net inflow, reaching HK$0.32bn; followed by Li Auto (2015). China Mobile (941) recorded the largest net outflow at HK$0.59bn, followed by CNOOC (883).
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