KGI Asia Commentary

2024.09.11 10:00

Hang Seng Index rose 37 points on Tuesday

The Hang Seng Index closed at 17,234 points for the day, rose 37 points or 0.2%. The Hang Seng Technology Index reported at 3,450 points, rose 13 points or 0.4%. The HSCEI Index rose 23 points, or 0.4%, to 6,026 points. The market turnover was HK$107.3 billion.

 

S&P 500 shrugs off declines in energy, financial stocks as tech stocks shine

The S&P 500 ended higher on Tuesday, as gains in technology stocks helped offset weakness in the energy and financial sectors ahead of a key U.S. inflation report. The S&P 500 rose for a second straight session on Tuesday as Wall Street tried to find its footing during a tumultuous September. The index rose 0.45% to close at 5,495.52 points; the Nasdaq rose 0.84% to close at 17,025.88 points. The Dow Jones Industrial Average fell 92.63 points, or 0.23%, to close at 40,736.96. Nvidia closed up 1.5%, boosting the S&P 500 and the tech-heavy Nasdaq. AMD and Microsoft shares were also higher. On the earnings front, cloud platform company Oracle reported better-than-expected first-quarter earnings and announced a partnership with Amazon Web Services to provide database services, sending its shares soaring more than 11%. Bank stocks weighed on the overall market. JPMorgan shares fell more than 5% after the company made cautious comments about 2025 net interest income at an industry conference. JPMorgan Chase was also the biggest loser among the 30 Dow components. Energy stocks fell 2%, leading the broader market lower, dragged down by a more than 4% drop in oil prices. Concerns about oversupply are growing as the demand outlook dims. OPEC said it now expects demand to increase by about 2 million barrels per day this year, down from the 2.1 million barrels per day expected in August. This is the second month in a row that the organization has lowered its forecast.

 

Keep an eye on inflation data

Traders are keeping a close eye on two important economic reports that could serve as the next catalyst for stocks. The CPI for August will be released on Wednesday, and the PPI will be released on Thursday. Investors are betting that a widely expected rate cut by the Federal Reserve at its Sept. 17-18 meeting could help ease concerns about economic weakness.

Hong Kong Stock Connect had a net inflow of HK9.28bn on Tuesday of which Alibaba (9988) had the largest net inflow, reaching HK$8.47bn; followed by CCB (939). HKEX (388) recorded the largest net outflow at HK$0.76bn, followed by Meituan (3690).

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The market is concerned that interest rate cuts in the United States will help drive demand for real estate, and investors can pay attention to related concepts. Techtronic Industries is mainly engaged in power tools and floor care business, and its core brands include MILWAUKEE and RYOBI. TTI delivered strong 1H24 results, growing sales 6.3% to US$7.3 billion and net profit 15.7% to US$550 million. MILWAUKEE delivered double-digit sales growth and RYOBI outperformed the market. Gross margin improved 67 bps to 39.9% in 1H24. The company has competitive advantages in innovative rechargeable technology and new product development. As many jurisdictions begin to restrict noise and carbon emissions, the demand for the transformation of plug-in products is increasing. Since 2018, the company has expanded its production operations beyond its Chinese production plants and established start-up plants in Vietnam, Mexico and the United States. Diversification of manufacturing facilities enables companies to mitigate supply chain risks amid global decoupling trends. Target price: $110; Stop- Loss price: $92.

Wen Kit Kenny is a SFC licensed person accredited to KGI Group to carry on regulated activities (for details, please refer to:https://apps.sfc.hk/publicregWeb/indi/AJF244/details). He and/or his associate do not have any financial interest in the recommended issuer or new listing applicant.

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