KGI Asia Commentary

Hang Seng Index fell 17 points on Thursday

The Hang Seng Index fell 17 points or 0.1% to 18,216 on Thursday. HSTECH rose 4 points or 0.1% to 3,630 and HSCEI fell 13 points or 0.2% to 6,149. Daily market turnover was HK$128.5bn.

Wall Street ends higher on optimism over debt ceiling bill

Stocks traded higher on Thursday after the U.S. House of Representatives passed a debt-ceiling bill, a key step toward avoiding a default, before it goes to the Senate. The Dow Jones Industrial Average rose 153.3 points, or 0.47%, to 33,061.57, even as Salesforce fell 4% a day after its earnings report. The S&P 500 gained 0.99% to close at 4,221.02 and the Nasdaq Composite gained 1.28% to close at 13,100.98. The S&P 500 and Nasdaq both closed at their highest levels since August 2022. The Fiscal Responsibility Act, which seeks to raise the debt ceiling and cut government spending, passed Wednesday night, paving the way for a Senate vote on the bill before it can be sent to President Joe Biden’s desk to be signed into law. Optimism that lawmakers could pass legislative measures before the June 5 deadline for U.S. money to run out boosted sentiment. The energy sector was the biggest gainer after the recent downturn, with oil prices up more than 3% ahead of this weekend's OPEC+ meeting, with major oil producers expected to keep output unchanged. Meanwhile, tech stocks resumed their gains, with Meta Platforms and Apple leading gains ahead of Apple's upcoming developer conference on Monday. Apple is expected to talk about the prospect of further integrating and monetizing artificial intelligence. Meanwhile, shares of Salesforce Inc fell more than 4% after reporting quarterly results that topped expectations, but signs of weakening demand raised concerns about the software company's ability to meet expectations. In other earnings, Macy's trimmed losses and closed up 1%, even as the company cut its full-year forecast, quarterly revenue fell short of Wall Street expectations and margin growth was held back by increased promotional activity. However, Nordstrom (JWN) unexpectedly posted a quarterly profit, sending shares up nearly 5%. Aside from the debt-ceiling battle, investors also saw the U.S. Federal Reserve's June 13-14 policy meeting as another possible market catalyst. Philadelphia Fed President Patrick Harker said on Thursday he believes the central bank is close to the point where it can stop raising interest rates. But he said earlier in the week that Friday's jobs report could change how he votes at an upcoming meeting.

Labor market remain resilient

ADP data showed private payrolls rose more than analysts expected in May, while initial jobless claims fell short of analysts' expectations last week. Private sector payrolls rose by 278,000 in May, well above expectations. Meanwhile, initial jobless claims for the week ended May 27 edged up 2,000 to 232,000, missing expectations for 235,000. The labor market has been a closely watched area of the economy amid concerns that continued strength could prompt the Federal Reserve to raise interest rates again at its policy meeting later this month.

Hong Kong Stock Connect had a net inflow of HK$3.66bn on Thursday, of which Tencent (700) had the largest net inflow, reaching HK$0.74bn; followed by Meituan (3690). Tracker Fund (2800) recorded the largest net outflow at HK$5bn, followed by HSCEI ETF (2828).