KGI Asia Commentary
Hang Seng Index rose 275 points on Wednesday
The Hang Seng Index rose 275 points or 1.7% to 16,438 on Wednesday. HSTECH rose 88 points or 2.7% to 3,412 and HSCEI rose 110 points or 2.0% to 5,672. Daily market turnover was HK$102.3bn.
The S&P and Nasdaq closed higher on Wednesday
The S&P closed higher on Wednesday as technology stocks began to rebound as Federal Reserve Chairman Jerome Powell stepped up expectations for a rate cut later this year. The S&P 500 rose 0.51% to 5,104.76 points, and the Nasdaq rose 0.58% to 16,031.54 points. The Dow Jones Industrial Average rose 75.86 points, or 0.2%, to close at 38,661.05 points. Technology stocks regained the upper hand, pushing the broader market higher as recent declines in chip stocks attracted bargain hunting, with Nvidia, Intel, TSMC and Wolfspeed among the top gainers. TSMC closed nearly 5% higher. JPMorgan Chase raised TSMC’s target price from NT$770 to NT$850, citing market optimism about demand for artificial intelligence-related chips. In terms of financial reports, the stock price of cybersecurity company CrowdStrike surged about 11% after it announced quarterly earnings and financial forecasts that exceeded market expectations. Campbell Soup shares rose nearly 1% after the company reported fourth-quarter results that beat analysts' expectations, boosted by a price increase, and reiterated full-year guidance. Luxury department store chain Nordstrom's shares fell 16% after the company reported disappointing annual earnings forecasts.
Powell says Fed will act "carefully" but reiterates imminent rate cuts
Federal Reserve Chairman Jerome Powell reiterated on Wednesday that he expects interest rates to start falling this year but is not yet ready to say when. “The Committee does not expect that it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent,” Powell said. He noted again that lowering rates too quickly risks losing the battle against inflation and likely having to raise rates further, while waiting too long poses danger to economic growth.
Hong Kong Stock Connect had a net inflow of HK1.15bn on Wednesday, of which Tencent (700) had the largest net inflow, reaching HK$0.60bn; followed by China Mobile (941). PetroChina (857) recorded the largest net outflow at HK$0.23bn, followed by ICBC (1398).
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