KGI Asia Commentary
Hang Seng Index fell 44 points on Tuesday
The Hang Seng Index fell 44 points or 0.2% to 17,733 on Tuesday. HSTECH fell 44 points or 0.2% to 4,037 and HSCEI fell 26 points or 0.4% to 6,076. Daily market turnover was HK$107.2bn.
Dow closes lower as Fed minutes point to higher for longer rates
Dow closed lower on Tuesday as minutes from the Federal Reserve's latest meeting showed members supported keeping interest rates high for some time. The Dow Jones Industrial Average fell 62.75 points, or 0.18%, to close at 35,088.29 points. The S&P 500 fell 0.20% to close at 4,538.19 points, and the Nasdaq fell 0.59% to close at 14,199.98 points. The Fed signaled that policy would need to remain "restrictive" amid concerns that inflation could be stubborn or slightly higher. Policymakers kept the benchmark interest rate at 5.25% to 5.5% at the end of the October 31-November meeting. Lowe's shares fell 3.1% after the company lowered its full-year sales forecast. American Eagle Apparel's stock price fell nearly 16% after the company released full-year operating income guidance that was lower than expected. Shares of fashion retailer Abercrombie & Fitch rose 2% after the company raised its annual performance forecast. Zoom Video Communications reported third-quarter results that exceeded analysts' estimates and ended flat after raising its full-year forecast. However, some Wall Street insiders pointed out that the macro economy still faces headwinds, which is worrying.
Minutes show Fed gave no indication of possible rate cuts
“In discussing the policy outlook, participants continued to judge that it was critical that the stance of monetary policy be kept sufficiently restrictive to return inflation to the Committee’s 2 percent objective over time,” the minutes stated. However, the minutes did not indicate that members even discussed when they might start lowering interest rates, which was reflected in Chairman Jerome Powell's post-meeting press conference. Fed funds futures prices show that the market is almost unanimous that the Federal Open Market Committee will keep interest rates unchanged at its upcoming December meeting and is expected to cut interest rates starting in May.
Hong Kong Stock Connect had a net inflow of HK$2.43bn on Tuesday, of which Xiaomi (1810) had the largest net inflow, reaching HK$0.20bn; followed by X-Peng (9868). Meituan (3690) recorded the largest net outflow at HK$0.76bn, followed by Tencent (700).
Wen Kit Kenny is a SFC licensed person accredited to KGI Group to carry on regulated activities (for details, please refer to:https://apps.sfc.hk/publicregWeb/indi/AJF244/details). He and/or his associate do not have any financial interest in the recommended issuer or new listing applicant.
The materials contained herein are provided by KGI Asia Limited ("KGI") for information only. While such materials are based on or derived from sources believed to be reliable, KGI makes no representation or warranty (express or implied) as to their accuracy or reliability. Neither the information nor the opinions expressed herein constitute, or are to be construed as, an offer or invitation or solicitation of an offer to buy or sell any securities or investments. KGI and its officers, employees, agents and affiliates may have interests in the securities or investments covered herein and accept no liability whatsoever for any loss or consequence whatsoever (whether direct or indirect) resulting from any use of or reliance by you on such materials.