KGI Asia Commentary

Hang Seng Index fell 237 points on Thursday

The Hang Seng Index fell 237 points or 1.2% to 18,934 on Thursday. HSTECH fell 68 points or 1.7% to 3,933 and HSCEI fell 94 points or 1.5% to 6,426. Daily market turnover was HK$82.17bn.

Banks passed the stress test, the Dow closed up more than 200 points

The Dow rose on Thursday as big banks passed the Federal Reserve's annual stress test and an upward revision to GDP data eased some fears on Wall Street about a recession. Boosted by major banking stocks, the Dow rose 269.76 points, or 0.8%, to close at 34,122.42. The S&P 500 gained 0.45% to close at 4,396.44, while the tech-heavy Nasdaq Composite closed flat at 13,591.33. JPMorgan and Goldman Sachs rose more than 3 percent each, while Wells Fargo rose 4.5 percent. All 23 institutions participating in the annual stress test are well capitalized and can withstand a severe recession, the Fed said. Other financial stocks hit by this year's banking crisis also rose, including Charles Schwab, Western Alliance and Zions Bancorporation. A string of positive economic data points to the economy's resilience despite fears of a looming recession. These included a sharp upward revision to first-quarter GDP and weekly jobless claims falling to the lowest level in many months.

Weekly U.S. jobless claims post biggest drop in 20 months

A separate economic report on Thursday showed job cuts were far lower than expected. Initial claims for state unemployment benefits fell by 26,000 to a seasonally adjusted 239,000 for the week ended June 24, lower than expected 265,000. This is the largest drop since October 2021.

First-quarter GDP revised up to 2%

Economic growth in the first quarter was actually 2%, up from a previously reported 1.3%. The upward revision helped dampen widespread expectations that the U.S. is heading for a recession. The change was largely due to stronger-than-expected consumer spending and exports, according to a summary from the Bureau of Economic Analysis. Consumer spending, as measured by personal consumption expenditures, rose 4.2%, the fastest quarterly pace since the second quarter of 2021. The personal consumption expenditures price index excluding food and energy prices rose by 4.9%, a downward revision of 0.1 percentage points.

Hong Kong Stock Connect had a net outflow of HK$3.58bn on Thursday, of which China Mobile (941) had the largest net inflow, reaching HK$0.24bn; followed by ICBC (1398). Tracker Fund (2800) recorded the largest net outflow at HK$3.3bn, followed by HSCEI ETF (2828).