KGI Asia Commentary

Hang Seng Index rose 354 points on Tuesday

The Hang Seng Index rose 354 points or 1.9% to 19,148 on Tuesday. HSTECH rose 100 points or 2.6% to 3,972 and HSCEI rose 132 points or 2.1% to 6,505. Daily market turnover was HK$91.7bn.

S&P, Nasdaq rise more than 1%, led by tech stocks

Shares of popular technology and artificial intelligence companies such as Nvidia, Meta Platforms and Microsoft rose on Tuesday, reversing Monday's sell-off and boosting the tech-heavy Nasdaq. The Dow Jones Industrial Average rose 212.03 points, or 0.63%, to 33,926.74. The S&P 500 gained 1.15% to close at 4,378.41 and the Nasdaq Composite gained 1.65% to close at 13,555.67. Consumer discretionary and travel stocks were also higher after Delta Air Lines raised its financial forecast. Shares of the airline surged 6.8%. Despite Tuesday’s broad market rally, Walgreens fell 9.3% after it slashed its full-year profit forecast and reported weaker-than-expected earnings.

Economic data beat expectations

The U.S. released a slew of new economic data that showed the economy's resilience despite fears of a looming recession. Durable goods orders rose unexpectedly in May and consumer sentiment improved more than expected in June. New home sales also beat expectations. Durable goods orders rose 1.7% in May, well above expectations for a 0.9% decline. The data is a closely monitored gauge of business spending. Core goods orders rose 0.6%, also beating expectations. Consumer confidence was also stronger than expected at 109.7. Analysts had expected the index to come in at 103.9. New home sales surged to 763,000, beating expectations for 675,000.

Fed's next interest rate move in focus

Investors worry that further rate hikes could eventually lead to a recession, though Wall Street economists have scaled back their forecasts in recent weeks. The Fed said it has been making decisions based on data, and a key report this week will be inflation data for May. The PCE price index is expected to rise 4.6%. Futures traders see more than a 75 percent chance the Fed will raise rates by another 25 basis points in July. Investors will hear more from policymakers, including Federal Reserve Chair Jerome Powell, at the European Central Bank Forum in Portugal this week.

Hong Kong Stock Connect had a net outflow of HK$7.35bn on Tuesday, of which Tencent (700) had the largest net inflow, reaching HK$0.29bn; followed by Bank of China(3988). Tracker Fund (2800) recorded the largest net outflow at HK$5.23bn, followed by HSCEI ETF (2828).