KGI Asia Commentary
HSI rose 227 points on Monday
The Hang Seng Index rose 227 points or 1.2% to 19,678 on Monday. HSTECH rose 81 points or 2.1% to 3,903 and HSCEI rose 99 points or 1.5% to 6,693. Daily market turnover was HK$93.97bn.
Dow falls 140 points as investors await debt ceiling deal
U.S. stocks stalled on Monday as investors awaited clarity on the outcome of debt-ceiling talks. The S&P rose 0.02% to 4,192.63 and the Dow Jones Industrial Average fell 140.05 points, or 0.42%, to 33,286.58. The Nasdaq Composite gained 0.5% to close at 12,720.78. U.S. President Joe Biden and House Speaker McCarthy are scheduled to meet at 5:30 p.m. ET on Monday to continue negotiations on the debt ceiling. There are now just 10 days to the earliest date that U.S. Treasury Secretary Janet Yellen said the U.S. could actually default. Negotiators from both sides resumed talks on Monday morning, but mandatory government spending cuts remained a major hurdle. Republicans have insisted on spending cuts to a 2022 baseline, but Biden has said any sweeping cuts are out of the question without additional tax increases. On Sunday, China banned sales of some chips from Micron Technology Inc. to key Chinese industries, citing national security concerns. Micron shares fell 2.8%. Shares of Facebook parent Meta rose 1.8% despite a $1.3 billion fine from EU privacy regulators.
St. Louis Fed President James Bullard foresees two more rate hikes this year
St. Louis Fed President James Bullard said on Monday he thinks the central bank will need to raise interest rates two more times this year because economic growth has been surprisingly strong and inflation isn't slowing fast enough. He favored these hikes "sooner rather than later," without specifying a date. On the other hand, his counterpart at the Minneapolis Fed, Neel Kashkari expressed support for a pause in rate hikes in June. Minutes of the Federal Reserve's May meeting, released on Wednesday, are likely to shed light on how central bankers think about the likelihood of further rate hikes. In addition, the Fed will release the personal consumption and expenditure index for April on Friday, a closely watched inflation measure by the central bank.
Hong Kong Stock Connect had a net outflow of HK$2.16bn on Monday, of which Tencent (700) had the largest net inflow, reaching HK$0.84bn; followed by Meituan (3690). Tracker Fund (2800) recorded the largest net outflow at HK$2.45bn, followed by HSCEI ETF (2828).
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