KGI Asia Commentary

Hang Seng Index fell 105 points on Wednesday

The Hang Seng Index fell 105 points or 0.5% to 19,762 on Wednesday. HSTECH rose 12 points or 0.3% to 3,811 and HSCEI fell 51 points or 0.8% to 6,683. Daily market turnover was HK$98.8bn.

Nasdaq closes 1% higher on Wednesday after inflation data misses expectations

The Dow closed slightly lower on Wednesday, as a surge in big tech stocks helped offset losses in energy and financials. The Nasdaq Composite closed higher after inflation data came in below expectations. Nasdaq, which is dominated by technology stocks, rose 1.04% to close at 12306.44 points. The S&P 500 gained 0.45% to close at 4,137.64. In the end, the Dow Jones Industrial Average edged down 0.09%, or 30.48 points, to end at 33,531.33. U.S. Treasury yields fell after the report, further supporting growth stocks. The yield on the 2-year Treasury note fell about 11 basis points to 3.91%, and the yield on the 10-year Treasury note fell 8 basis points to 3.44%. Shares of Apple Inc., Amazon.com Inc., Microsoft Corp. and Alphabet Inc. rose. Alphabet shares rose more than 4% as the company unveiled a slew of new products, including a new folding smartphone, and announced it would integrate generative artificial intelligence into Google Search. On the earnings front, Airbnb was in the spotlight for investors, down more than 10%, as downbeat guidance from the company offset better-than-expected first-quarter revenue. The company expects bookings to grow at a slower rate than revenue in the second quarter of this year, with average daily rental rate to be "slightly lower" than the same period last year.

Inflation falls to 4.9% in April, below expectations

The consumer price index rose 0.4 percent last month, driven by higher prices for housing, used cars and gasoline. The increase was in line with Wall Street expectations. On an annual basis, inflation came in at 4.9%, just below expectations for 5% and the slowest annual rate since April 2021, offering some hope that the inflation trend is down. The year-on-year increase in March was 5%. Shelter costs, which account for about one-third of the CPI's weight, rose another 0.4 percent in the month, or 8.1 percent year-on-year. The monthly gain eased from previous months but still suggested a key inflation driver was on the rise. After excluding the volatile food and energy categories, the core CPI rose 0.4% month-on-month and 5.5% year-on-year, both in line with expectations. According to FedWatch, traders lowered the chances of a rate hike at the Fed's June meeting to 20 percent.

Hong Kong Stock Connect had a net outflow of HK$0.23bn on Wednesday, of which Tencent (700) had the largest net inflow, reaching HK$0.60bn; followed by HSCEI ETF (2828). CCB (939) recorded the largest net outflow at HK$0.59bn, followed by China Mobile (941).