KGI Asia Commentary
Hang Seng Index fell 218 points on Wednesday
The Hang Seng Index fell 218 points or 1.4% to 15,485 on Wednesday. HSTECH fell 93 points or 3.0% to 3,005 and HSCEI fell 81 points or 1.5% to 5,194. Daily market turnover was HK$98.8bn.
Nasdaq drops 2% after Fed indicates March rate cut unlikely
Stocks fell on Wednesday after Federal Reserve Chairman Jerome Powell said the central bank may not be ready to cut interest rates in March. The Dow Jones Industrial Average fell 317.01 points, or 0.82%, to close at 38,150.30 points. The S&P 500 fell 1.61% to 4,845.65 points. The Nasdaq fell 2.23% to close at 15,164.01 points. It was a terrible trading day for the major stock indexes on Wednesday. It was the Dow's worst performance since December. For the S&P 500 and Nasdaq, it was the worst day since September and October. Alphabet shares fell more than 7%, posting their worst day since Oct. 25, as disappointing advertising revenue overshadowed earnings and sales that beat expectations. Tech companies Microsoft and AMD each fell nearly 3% after their forward guidance fell short of expectations after reporting quarterly results. Boeing announced its quarterly financial report, with revenue and profits exceeding analysts' expectations, and its stock price rose by more than 5%. Meanwhile, ahead of the Fed's statement, the ADP national employment report showed private payrolls rose by 107,000 in January, slightly less than expected.
Powell says rate cut in March unlikely
Traders are closely watching the Federal Reserve's statement for signs of when the central bank will start cutting interest rates. The Fed's policy statement released on Wednesday included several adjustments, deleting the phrase " additional policy firming," but indicating that the Fed is not considering further interest rate increases but is not yet ready to cut interest rates. Powell appeared to temper market expectations for a rate cut in March, citing the need for more encouraging inflation data.“Based on the meeting today, I would tell you that I don’t think it’s likely that the committee will reach a level of confidence by the time of the March meeting to identify March as the time to do that. But that’s to be seen,” Powell said.
Hong Kong Stock Connect had a net outflow of HK$0.63bn on Wednesday, of which Meituan (3690) had the largest net inflow, reaching HK$0.25bn; followed by CCB (939). Tencent (700) recorded the largest net outflow at HK$0.35bn, followed by Xiaomi (1810).
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