Daily Investment Strategy
Hang Seng Index rose 62 points on Tuesday
The Hang Seng Index closed at 17,174 points for the day, up 62 points or 0.4%. The Hang Seng Technology Index flat at 3,429 points. The HSCEI Index rose 19 points, or 0.3%, to 6,049 points. The market turnover was HK$70.8 billion.
S&P 500 jumps, yields fall as inflation cools
U.S. stocks rose on Tuesday on further signs that inflation is cooling, raising the possibility that the Federal Reserve will cut interest rates as early as next month, sending U.S. Treasury yields lower. The Dow Jones Industrial Average rose 389 points, or 1%, the S&P 500 rose 1.5% and the Nasdaq rose 2.3%. Despite the lowered forecast, Home Depot's stock price rose more than 1%. The retailer lowered its full-year forecast, citing weakening consumer demand for home improvement projects. Chipotle Mexican Grill shares fell 8% after Starbucks appointed Chipotle CEO Brian Niccol to replace Laxman Narasimhan, who was immediately fired, as the new CEO starting September 9. Starbucks Corp. has been the target of activist investors pushing for changes at the coffee chain, and its shares jumped 23% that day. Some on Wall Street remain unconvinced, pointing out that Chipotle has never engaged in menu innovation or marketing of any kind. Dell Technologies shares rose 5% after Barclays upgraded the stock to overweight from underweight, following a recent pullback. Alphabet Inc's Class A shares rose 1% as the company unveiled its artificial intelligence-based Pixel smartphone.
PPI inflation cooled in July
Data released on Tuesday showed that the producer price index (PPI) rose 0.1% in July from the previous month, lower than economists' expectations of 0.2%. The annual growth rate was 2.2%, compared with expectations of 2.3%. Excluding the volatile food and energy components, core PPI was unchanged from the previous month, while expectations were for a 0.2% rise. Annually was 2.4%, compared with the forecast of 2.7%. U.S. Treasury yields fell sharply as investors bet on a rate cut in September.
Hong Kong Stock Connect had a net inflow of HK1.91bn on Tuesday of which China Mobile (941) had the largest net inflow, reaching HK$0.52bn; followed by Tencent (700). Tracker Fund (2800) recorded the largest net outflow at HK$0.78bn, followed by HSCEI ETF (2828).
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