KGI Asia Commentary
HSI rose 201 points on Wednesday
The Hang Seng Index rose 201 points or 1.1% to 18,860 on Wednesday. HSTECH rose 78 points or 2.0% to 4,081 and HSCEI rose 82 points or 1.3% to 6,377. Daily market turnover was HK$83.8bn.
S&P 500 and Nasdaq close at highest level since April 2022, boosted by cooler-than-expected inflation
U.S. stocks rallied on Wednesday as CPI fell short of expectations in June, easing fears that the Federal Reserve could drag the economy into recession. The Dow Jones Industrial Average was up 0.25%, or 86 points, the Nasdaq was up 1.2%, and the S&P 500 was up 0.74%. The consumer price index rose 0.2% in June after inching up 0.1% in May, and also slowed to 3% on an annualized basis from 4%, the slowest pace of price pressures since March 2021. While many still expect the Fed to resume raising interest rates later this month, future hikes would be less likely if incoming economic data showed a further slowdown in inflation. Economic data in the coming months includes employment figures due in July, followed by employment and inflation figures due in August. Big tech stocks shrugged off their recent slump, with shares of Google, Microsoft and the Meta platform gaining ground as U.S. Treasury yields fell sharply on bets the Fed is nearing an end to raising interest rates.
Inflation rose just 0.2% in June, below expectations
The consumer price index rose 0.2% in June and was up 3% from a year earlier, the lowest level since March 2021. After deducting food and energy, the core CPI rose 0.2% and 4.8%, respectively. Small increases in food prices and falls in used car and airline prices helped keep inflation in check, while shelter prices continued to rise. The shelter index rose 0.4% last month and was up 7.8% on an annual basis. Markets are now pricing in about a 92 percent chance the Fed will raise rates at its July meeting, according to the CME's FedWatch tool.
Hong Kong Stock Connect had a net outflow of HK$0.07bn on Thursday, of which CNOOC (883) had the largest net inflow, reaching HK$0.20bn; followed by Tencent (700). CCB (939) recorded the largest net outflow at HK$0.23bn, followed by BYD (1211).
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