KGI Asia Commentary
Hang Seng Index fell 60 points on Wednesday
The Hang Seng Index closed at 17,113 points for the day, down 60 points or 0.4%. The Hang Seng Technology Index reported at 3,395 points, down 33 points or 1.0%. The HSCEI Index fell 24 points, or 0.4%, to 6,025 points. The market turnover was HK$68.0billion.
Dow closes above 40,000 as inflation continues to cool
The Dow closed above 40,000 on Wednesday as data showed a further slowdown in inflation, which is expected to bring the Federal Reserve closer to starting a rate-cutting cycle next month. The Dow Jones Industrial Average rose 242 points, or 0.6%, to close at 40,008.12 points. The S&P 500 rose 0.3% and the Nasdaq was flat. Intel sold 1.18 million shares of British chip company Arm Holdings in the second quarter, a regulatory filing showed on Tuesday, sending its shares down more than 2%. The chipmaker said earlier this month it would cut more than 15% of its workforce and suspend its dividend as spending on traditional data center semiconductors declines and it shifts toward artificial intelligence chips. Shares of packaged food maker Kellanova rose nearly 8% after the company agreed to be acquired by chocolate giant Mars for $83.50. Bloomberg quoted unnamed sources as saying that the U.S. Department of Justice is considering plans to control Google's dominance in online search, including spinning off Alphabet. The company's Class A shares fell 2%. In terms of financial reports, shares of healthcare company Cardinal Health rose nearly 4% after the company's fourth-quarter results exceeded analysts' expectations and raised its full-year forecast.
CPI data add further evidence of cooling inflation
The U.S. CPI annual growth rate slowed to 2.9%, down from 3.0% in June and below the 3% expected by economists. The core CPI rose 3.2% yoy in July, lower than the expected 3.3%. This report was released just a day after the lower-than-expected July PPI was announced, further confirming that U.S. inflation is gradually cooling. Following the data release, traders have reduced the probability of the Federal Reserve cutting rates by 50 basis points in September to around one-third, and they continue to estimate a reduction of over 100 basis points by the end of the year.
Hong Kong Stock Connect had a net outflow of HK1.04bn on Wednesday of which China Mobile (941) had the largest net inflow, reaching HK$0.52bn; followed by Wuxi Bio (2269). Tracker Fund (2800) recorded the largest net outflow at HK$1.47bn, followed by CSOP HS TECH (3033).
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