KGI Asia Commentary

HSI rose 144 points on Wednesday

The Hang Seng Index rose 144 points or 0.8% to 17,611 on Wednesday. HSTECH rose 16 points or 0.4% to 3,833 and HSCEI rose 39 points or 0.6% to 6,069. Daily market turnover was HK$75.9bn.

Dow closes lower as yields rise

The Dow closed lower on Wednesday as rising U.S. interest rates continued to weigh on the stock market. The Dow Jones Industrial Average fell 0.2% to 68 points. The S&P 500 index edged up 0.02% to close at 4,274.51 points, and the Nasdaq index rose 0.22% to close at 13,092.85 points. The 10-year U.S. Treasury bond yield rose to 4.63%, a 15-year high. Since then, U.S. Treasury bond yields have continued to influence market trends. Apple recouped some of its losses, closing at 0.9%, as big tech companies attempted a comeback but were ultimately stymied by rising interest rates. However, Alphabet shares remained above the flat line, closing up more than 1%. Meta Platforms Inc. closed down less than 1% after releasing its third virtual reality headset, the Quest 3. The VR device starts at $499 and is expected to be available on October 10. Costco Wholesale shares rose nearly 2% after the company announced fourth-quarter financial results, with improved profits and both revenue and net profit exceeding expectations. Analysts are confident the giant retailer can maintain growth momentum despite an intensifying consumer squeeze from inflation and interest rates. September is a seasonally weak month for stocks. In fact, the S&P 500 is down 5% so far this month, while the Dow is down more than 3%. The Nasdaq is the worse performer among the three indexes, down more than 6% for the month.

Fed's Neel Kashkari sees half chance of lowering inflation by raising rates significantly

U.S. Treasury yields continue to dictate market direction, with renewed concerns that the Federal Reserve may be forced to raise interest rates again later this year as signs of economic recovery could keep inflation elevated. The U.S. Commerce Department said on Wednesday that core durable goods orders grew 0.5% last month, well above the 0.1% growth forecast. Orders for non-defense capital goods (excluding aircraft), a closely watched measure of business spending plans, rose 0.9% last month, while market expectations were for a steady 0% increase. Meanwhile, Minneapolis Federal Reserve President Neel Kashkari believes there is about half chance that interest rates will need to rise significantly to curb inflation.

Hong Kong Stock Connect had a net inflow of HK$3.68bn on Wednesday, of which Meituan (3690) had the largest net inflow, reaching HK$0.60bn; followed by Tencent (700). CNOOC (883) recorded the largest net outflow at HK$0.13bn, followed by Sinopec (386).