KGI Asia Commentary
Hang Seng Index fell 417 points on Wednesday
The Hang Seng Index fell 417 points or 2.1% to 19,560 on Wednesday. HSTECH fell 88 points or 2.2% to 3,870 and HSCEI fell 152 points or 2.2% to 6,636. Daily market turnover was HK$101.6bn.
U.S. stocks soar Wednesday on optimism over debt ceiling talks
U.S. stocks rose on Wednesday as investors hoped congressional leaders and President Joe Biden could reach an agreement on the U.S. debt ceiling and avoid a catastrophic default. The Dow Jones Industrial Average rose 408.63 points, or 1.24%, to 33,420.77. The S&P 500 rose 1.19% to 4,158.77. The Nasdaq Composite rose 1.28% to 12,500.57. Target Corporation, which was the first to report earnings from major retailers, closed up 2.6%. The company reported better-than-expected first-quarter results but a disappointing second-quarter profit outlook. As inflation forced consumers to spend more on household essentials, they delayed some non-essential purchases. Shares of Western Alliance Bancorporation rose 14%, leading gains among other regional banks, after it released its latest deposit data. The company's deposits continued to rise in May after banking turmoil rocked the sector in March and April. Shares of other regional banks such as PacWest Bancorp and Zions bancorcorporation rose 18.4 percent and 12 percent, respectively. Tesla rose 4.4% after its annual shareholder meeting the day before. CEO Musk announced that the company will deliver the first Cybertrucks later this year. Musk said that while he expects a downturn in the economy over the next 12 months, Tesla is well positioned for the long term, with earnings reports due on Thursday including those from Walmart, Alibaba and Bath & Body Works.
Biden and McCarthy don't think U.S. will default, due to progress in debt talks
At the end of Tuesday's meeting between the president and congressional leaders, House Speaker McCarthy said there was now a "better process" for further negotiations, saying it was “possible to get a deal by the end of the week.” “Now we have a structure to find a way to come to a conclusion,” “I think at the end of the day we do not have a debt default. I think we finally got the president to agree to negotiate.” he said. President Joe Biden echoed that sentiment later in a speech at the White House. “We’re going to come together because these is no alternative,” he said. “Every leader in the room understands the consequences of failure.” Questions remain and he will cut short the remainder of his Asia trip.
Hong Kong Stock Connect had a net inflow of HK$6.77bn on Wednesday, of which Tracker Fund (2800) had the largest net inflow, reaching HK$3.49bn; followed by HSCEI ETF (2828). CCB (939) recorded the largest net outflow at HK$0.30bn, followed by China Telecom (728).
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