KGI Asia Commentary
Hang Seng Index fell 18 points on Thursday
The Hang Seng Index fell 18 points or 0.1% to 19,743 on Thursday. HSTECH rose 51 points or 1.3% to 3,862 and HSCEI rose 11 points or 0.2% to 6,695. Daily market turnover was HK$97.0bn.
Dow closes down more than 200 points, weighed down by Disney
The Dow Jones Industrial Average and the S&P 500 opened lower on Thursday, weighed down by a drop in shares of Walt Disney Co after it reported lower user growth, while a drop in PacWest deposits sparked another rout in regional banks. The Dow opened down 147.44 points, or 0.44%, to 33,383.89. The S&P 500 opened 5.40 points, or 0.13%, lower at 4,132.24, while the Nasdaq Composite opened 14.82 points, or 0.12%, higher at 12,321.26. Shares of Disney fell 8% after the entertainment company reported quarterly earnings in line with profit expectations and better-than-expected revenue, but a surprise drop in Disney+ subscribers. Regional banks remained on fire, with PacWest Bancorp (PACW) plunging 22% after reporting a 9.5% drop in deposits for the week to May 5. Alphabet led the big tech gains for the second day in a row, with the tech giant receiving positive reviews from Wall Street for its announcement that it will integrate generative artificial intelligence into its products, including search. Meanwhile, falling U.S. Treasury yields continued to support growth stocks such as technology stocks, as data showed signs of a further slowdown in inflation and rising jobless claims, underpinning bets on a Fed rate cut. The S&P 500 fell 0.17% to close at 4,130.62. The Dow fell 221.82 points, or 0.66%, to close at 33,309.51 points. The Nasdaq Composite gained 0.18% to close at 12,328.51.
Data showing further signs of easing inflation and a rise in jobless claims
The Labor Department announced on Thursday that U.S. PPI rose 0.2% in April. On an annualized basis, PPI grew 2.3%. It followed a 2.7% gain in March. This is the lowest level since January 2021. Meanwhile, weekly initial jobless claims rose 22,000 to 264,000 for the week ended May 5. That was the highest level since Oct. 23, signaling cracks in the labor market as demand slows, potentially giving the Fed room to halt further rate hikes next month.
Hong Kong Stock Connect had a net inflow of HK$2.10bn on Thursday, of which Tracker Fund (2800) had the largest net inflow, reaching HK$1.3bn; followed by HSCEI ETF (2828). Li Auto (2015) recorded the largest net outflow at HK$0.46bn, followed by China Mobile (941).
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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