KGI Asia Commentary

HSI rose 372 points on Wednesday

The Hang Seng Index rose 372 points or 2.2% to 17,201 on Wednesday. HSTECH rose 124 points or 3.6% to 3,573 and HSCEI rose 145 points or 2.4% to 6,100. Daily market turnover was HK$129.5bn.

Stock futures fall after Meta platform reports quarterly results

U.S. stock index futures fell after the close on Wednesday after technology giant Meta Platform announced its latest quarterly results. Traders are also waiting to see key economic data due later this week. Nasdaq 100 futures fell more than 1%. Social media giant Meta Platforms plunged 15% in after-hours trading after issuing lower-than-expected second-quarter revenue guidance. International Business Machines shares fell 8% after the company reported first-quarter revenue that fell short of consensus estimates. A rise in U.S. Treasury yields on Wednesday put downward pressure on stocks. The S&P 500 edged up 0.02% and the Nasdaq rose 0.1%. The Dow Jones Industrial Average fell 0.11%. Tesla shares have rebounded 12% from a 15-month low hit earlier this week as the electric car maker said it would accelerate the launch of new electric vehicle models, including more affordable options. Boeing shares fell more than 2% after Moody's downgraded its credit rating to Baa3 from Baa2, just one notch above junk status. Meanwhile, United Parcel Service also dragged down the industrial sector. The express delivery service reported mixed first-quarter earnings, with earnings beating expectations but revenue falling short of expectations as shipment volumes fell 3.2%. Uber shares fell 2%, as worries about increased competition also weighed on industrial stocks after Tesla said it planned to expand into ride-hailing services. Hasbro shares rose nearly 12% after the company reported a smaller than expected first-quarter sales decline and better-than-expected profits. The March PCE index, the Fed's most important inflation gauge, will be released on Friday. Economists expect U.S. PCE to grow 0.3% from the previous quarter and jump 2.6% from the same period last year. These data points will provide guidance on the future direction of central bank interest rate policy. Federal funds futures trading suggested the first rate cut could come at the Fed's September meeting, according to CME Fed watch Tool.

BOJ will discuss the impact of the rapid yen depreciation at its policy meeting this week

Bank of Japan policymakers are expected to focus on the impact of the yen's rapid depreciation at a two-day meeting starting on Thursday. The Bank of Japan is widely expected to keep its benchmark interest rate unchanged, with investors focused on whether the central bank's dovish tilt will weaken as the yen hovers near a 34-year low. However, most market observers do not expect the Bank of Japan to further adjust policy at its upcoming meeting. According to QUICK’s monthly survey released on April 15, 22% of respondents expected the next interest rate hike to be in October, and 18% expected a rate hike in September. Only 2% believe that interest rates will be raised in April.

Hong Kong Stock Connect had a net inflow of HK1.99bn on Wednesday, of which BOC (3988) had the largest net inflow, reaching HK$0.77bn; followed by HKEX (388). Meituan (3690) recorded the largest net outflow at HK$1.54bn, followed by HSBC (5).