KGI Asia Commentary
HSI rose 44 points on Tuesday
The Hang Seng Index rose 44 points or 0.2% to 18,595 on Tuesday. HSTECH rose 54 points or 1.5% to 3,702 and HSCEI rose 32 points or 0.5% to 6,283. Daily market turnover was HK$94.5bn.
Dow ends lower as rally in chip stocks cools
The Dow fell on Tuesday as Wall Street focused on the likelihood of Congress passing a tentative deal on raising the U.S. debt ceiling. The S&P 500 closed flat, the Dow Jones Industrial Average fell 0.2%, or 50 points, and the Nasdaq rose 0.3%. Technology stocks lost some of their bright spots after chip stocks gave up intraday gains, even as Nvidia's recent gains pushed the chipmaker's market capitalization above $1 trillion for the first time. Meanwhile, the consumer discretionary sector was boosted by the arrival of Elon Musk, chief executive of electric car maker Tesla, in China. China is a key market for Tesla amid growing domestic competition. Tesla shares rose more than 4%. On the economic front, data showed consumer confidence beat analysts' forecasts in May, underpinning continued bets that the Federal Reserve will raise interest rates again next month. Concerns over the possibility of another rate hike also weighed on investor sentiment. Traders are pricing in a 68.8 percent chance the Fed will raise rates next month, according to CME Group's FedWatch tool.
Obstacles remain on the path to passage for Debt limit deal
The debt ceiling bill will first be approved by the House of Representatives Rules Committee on Tuesday, before being voted on in the House on Wednesday and the Senate later this week. The bill needs votes from both sides of the political aisle by June 5 to pass into law. The time frame for the bill to pass both houses of Congress and be signed into law is tight. Lawmakers are racing against the clock to avoid a catastrophic default by June 5. The U.S. Treasury Department has said it will no longer be able to pay all U.S. debt in full and on time on June 5.
Hong Kong Stock Connect had a net inflow of HK$1.40bn on Tuesday, of which Tracker Fund (2800) had the largest net inflow, reaching HK$0.38bn; followed by Meituan (3690). CCB (939) recorded the largest net outflow at HK$0.19bn, followed by BYD (1211).
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