KGI Asia Commentary
Hang Seng Index rose 180 points on Tuesday
The Hang Seng Index rose 180 points or 1.0% to 18,659 on Tuesday. HSTECH rose 57 points or 1.5% to 4,003 and HSCEI rose 60 points or 1.0% to 6,295. Daily market turnover was HK$83.9bn.
Dow up more than 300 points ahead of inflation report
U.S. stocks closed higher on Tuesday, with energy and big tech stocks surging as investors awaited an inflation report due later this week. The Dow Jones Industrial Average rose 317.02 points, or 0.93%, to end at 34,261.42. The S&P 500 gained 0.67% to close at 4,439.26. The tech-heavy Nasdaq Composite rose 0.55% to 13,760.70. Energy prices climbed as oil prices rose as the demand outlook improved. Expectations are growing that oil markets could tighten in the second half of the year amid signs of falling crude output and Saudi Arabia's recent pledge to cut output by 1 million barrels per day in July. Elsewhere, sentiment among energy stocks was also boosted by reports that China, the world's largest energy importer, is considering further economic stimulus measures. Salesforce rose nearly 4% after it announced that it would raise prices across the board in August. Shares of Activision Blizzard jumped 10% after a federal judge rejected the FTC's request for a preliminary injunction against Microsoft's acquisition of Activision Blizzard. The decision means the companies are one step closer to closing the deal.
Markets focus on key consumer inflation report and corporate earnings
The consumer price index (CPI) for June and the producer price index (PPI) for June, due on Wednesday, will reveal whether inflation continues to decline and provide context for the future direction of interest rates. Economists expected the index to rise 3.1% from a year earlier. Meanwhile, the second-quarter earnings season kicks off later this week with results from"significant financial institutions" such as JPMorgan Chase, Wells Fargo and Citigroup, as well as BlackRock (BlackRock), PepsiCo (PepsiCo) and UnitedHealth (UnitedHealth).
Hong Kong Stock Connect had a net outflow of HK$2.0bn on Tuesday, of which CNOOC (883) had the largest net inflow, reaching HK$0.30bn; followed by Li (2015). Tracker Fund (2800) recorded the largest net outflow at HK$1.41bn, followed by HSCI ETF(2828).
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