KGI Asia Commentary
HSI rose 14 points on Monday
The Hang Seng Index rose 14 points or 0.1% to 19,404 on Monday. HSTECH rose 10 points or 0.3% to 3,944 and HSCEI fell 3 points or 0.1% to 6,585. Daily market turnover was HK$80.2bn.
Dow closes higher, tech gains ahead of Fed meeting
The Dow opened stronger on Monday as investors continued to pile into technology stocks. New inflation data will be released soon, along with a two-day meeting of the Federal Reserve. The Dow Jones Industrial Average rose 0.5%, or 189 points, the Nasdaq rose 1.5%, and the S&P 500 rose 1% to hit a 13-month high. Apple Inc. and Alphabet Inc. led gains in big tech stocks as investors continued to pile into technology shares, while the Federal Reserve was likely to keep interest rates on hold on Wednesday. Inflation data due on Tuesday, meanwhile, is not expected to change the Fed's decision, but could prompt the central bank to take a less hawkish stance if it matches expectations and shows that price pressures have eased. Chip stocks continue to benefit from optimism about artificial intelligence, with chipmaker Advanced Micro Devices Inc. holding an investor day on Tuesday where it is likely to release data on its data center and artificial intelligence technologies latest situation. After the recent stock market rally pushed the S&P 500 into bull market territory (i.e. a 20% gain from its recent lows), some on Wall Street have turned bullish on stocks, predicting that the recent gains in technology stocks will extend to other sectors. In other news, NIO rose about 8% after cutting car prices.
Tuesday's inflation report will be crucial for Fed's policy direction
Inflation data for May will show that price increases that have plagued consumers for the past two years are slowing. But the question is whether this deceleration will be enough to convince Fed officials that they can stop raising rates. The U.S. Consumer Price Index (CPI) is scheduled to be released Tuesday at 8:30 a.m. ET. The index was widely expected to show that inflation across all items rose just 0.1% last month, or a 4% annualized rate. Excluding the volatile food and energy components, the CPI is expected to rise by 0.4% month-on-month and 5.3% year-on-year, respectively.
Hong Kong Stock Connect had a net inflow of HK$4.56bn on Monday, of which Tracker Fund (2800) had the largest net inflow, reaching HK$3.76bn; followed by HSCEI ETF (2828). Tencent (700) recorded the largest net outflow at HK$0.36bn, followed by ICBC (1398).
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