KGI Asia Commentary

2023.01.13 09:00

Hang Seng Index rose 78 points on Thursday

The Hang Seng Index rose 78 points or 0.4% to 21,514 on Thursday. HSTECH fell 60 points or 1.3% to 4,487 and HSCEI rose 1 points or 0.01% to 7,311. Daily market turnover was HK$159.58bn.

U.S. stocks rise as CPI report shows cooling inflation

U.S. stocks ended higher on Thursday after U.S. consumer prices for December showed that inflation cooled in the month, raising hopes that the Federal Reserve may slow down the pace of rate hikes again. The Dow Jones Industrial Average rose 216.96 points, or 0.64%, to end at 34,189.97. The S&P 500 gained 0.34% to close at 3,983.17. The Nasdaq Composite closed at 11,001.10, up 0.64%, marking its fifth straight day of gains. It's the first time the tech-heavy Nasdaq has seen such a prolonged rally since last July. Some 92% of traders expect the Fed to raise interest rates by 0.25% in February, according to the CME Fedwatch Tool. Fed officials including Philadelphia Fed President Patrick Harker backed a 0.25% rate hike next month, while St. Louis Fed President James Bullard said he preferred the Fed to raise rates "as soon as possible" and keep rates at 5% above. U.S. Treasury yields came under pressure as bets mounted on an earlier pause in rate hikes by the Federal Reserve, with the yield on the 10-year U.S. Treasury dipping below 3.5%. For stocks making the biggest move, American Airlines (AAL) rallied more than 8%, as the airline raised its forecast for fourth-quarter revenue and profit, citing higher airfares and reflecting pent-up travel demand. Bed Bath & Beyond (BBBY) closed up 50% on Thursday, as meme stocks remained in the spotlight for investors. Tesla shares fell after a report indicated that the plans for a major expansion of its Shanghai Gigafactory had been delayed. Banking stocks are set to dominate investor attention on the earnings front on Friday. Bank of America (BAC), Citigroup (C), JPMorgan (JPM), and Wells Fargo (WFC) are due to report quarterly results before the opening bell.

U.S. December CPI down 0.1% from November

The U.S. Department of Labor announced that the year-on-year increase in the U.S. consumer price index (CPI) slowed from 7.1% in November to 6.5% in December last year, the lowest growth rate since October 2021, in line with expectations, and the sixth consecutive month of growth while the monthly change changed from an increase of 0.1% in November to a decrease of 0.1%, which was also in line with expectations, mainly due to lower energy costs. At the same time, the year-on-year increase in the core CPI excluding food and energy slowed to 5.7% from 6% in November, and the month-on-month increase accelerated from 0.2% to 0.3%, both in line with expectations.

Hong Kong Stock Connect had a net outflow of HK$2.42bn on Thursday, of which BYD (1211) had the largest net inflow, reaching HK$0.56bn; followed by China Mobile (941). Tencent (700) recorded the largest net outflow at HK$2.34bn, followed by Kuaishou (1024).

Recommended Stocks

Capture the moment and trade with KGI Asia's insights

Stocks

Recommended

Stocks

Recommended

SPDR Gold
02840

Although the international situation became tense due to Russia-Ukraine relations last year, the performance of gold was not good. Because the Federal Reserve raised interest rates rapidly last year, gold had no yield (yield), so the interest rate can be regarded as the opportunity cost of holding gold. The sharp rise of interest rate has greatly reduced the attractiveness of gold. On the contrary, although the interest rate remains high this year, the Federal Reserve will slow down the pace of interest rate hike, and the cost of holding gold will increase at a slower rate. Coupled with the rising risk of global recession, gold will play a significant role as a safe haven. Investors who are optimistic about the price of gold may consider deploying through gold ETFs, including SPDR Gold ETF (2840.HK). The SPDR Gold Trust (GLD) adopted the LBMA Gold Price PM as the reference benchmark price of gold in calculating the Net Asset Value (NAV) of the Trust. By buying and selling physical gold to support the issuance of ETF shares, the ETF price movement match with the gold price movement. Target price: $1,510; Stop- Loss price: $1,330

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.