KGI Asia Commentary

HSI rose 311 points on Wednesday

The Hang Seng Index rose 311 points or 1.8% to 17,139 on Wednesday. HSTECH rose 73 points or 2.1% to 3,552 and HSCEI rose 121 points or 2.1% to 6,016. Daily market turnover was HK$107.2bn.

U.S. stocks end lower as rising inflation dampens hopes of rate cut

U.S. stocks ended lower on Wednesday after higher-than-expected inflation data poured cold water on hopes that the Federal Reserve would begin cutting interest rates as early as June. The Consumer Price Index (CPI) released by the U.S. Department of Labor was lower than consensus market expectations, reminding people that it will still be a long and winding road for inflation to fall back to the Federal Reserve's 2% target. Since then, the three major U.S. stock indexes opened sharply lower. The minutes of the Fed's March meeting reflected concerns that progress toward inflation may have stalled and that restrictive monetary policy may need to be maintained for longer than expected. The Dow Jones Industrial Average fell 422.16 points, or 1.09%, to 38,461.51 points; the S&P 500 Index fell 49.27 points, to 5,160.64 points, or 0.95%; the S&P 500 Index fell 49.27 points, to 5,160.649; the Nasdaq Composite Index dropped 136.28 points, or 0.84%, to 16,170.36. Among the 11 major sectors of the S&P 500 Index, all except the energy sector closed higher, with the real estate sector suffering the largest decline. Investors will now look to Thursday's producer price data for a clearer picture of inflation in March, as well as the unofficial start of the first-quarter earnings season. On Friday, three major banks - JPMorgan Chase, Citigroup and Wells Fargo - will report results.

Consumer prices rose 3.5% from a year ago in March, more than expected

U.S. CPI increased by 3.5% yoy in March, higher than the expected 3.4%, and also higher than the previous value of 3.2%. On monthly basis, CPI increased by 0.4% in March, exceeding expectations of 0.3%. The core CPI increased by 3.8% yoy in March, higher than the expected 3.7%. On monthly basis, core CPI increased by 0.4% in March, higher than the 0.3% expected. Meanwhile, meeting minutes indicate Fed wants more confidence that inflation is moving toward 2% target. 

Hong Kong Stock Connect had a net inflow of HK2.3bn on Wednesday, of which China Mobile (941) had the largest net inflow, reaching HK$0.35bn; followed by BOC (11). Tencent (700) recorded the largest net outflow at HK$0.36bn, followed by HSBC (5).