KGI Asia Commentary

Hang Seng Index rose 395 points on Friday

The Hang Seng Index opened 63 points higher last Friday, at 16,007 points, and the day's gain expanded to 395 points, or 2.5%, to 16,340 points. The HSCEI rose 148 points, or 2.7%, to 5,559 points; the Hang Seng Technology Index rose 120 points, or 3.7%, to 3,343 points. The market turnover for the whole day was HK$70.6 billion. WuXi’s rebounded, with WuXi Biologics (2269) rising more than 12%, WuXi AppTec (2359) rising 4.5%, and WuXi XDC (2268) rising 11.8%. Major technology stocks also helped drive the market higher, with Meituan (3690) rising 4.6% and Alibaba (9988) rising 2.4%.

U.S. PPI in January was higher than market expectations

U.S. stocks closed lower on Friday. The Dow Jones index fell 145 points, or 0.37%, to 38,628 points; the Nasdaq index fell 131 points, or 0.82%, to 15,776 points; the S&P 500 index fell 24.16 points, or 0.48 points. %, reported at 5,006 points. All three major U.S. stock indexes recorded losses last week, with the Dow falling 0.12% for the week, the Nasdaq falling 1.34%, and the S&P 500 falling 0.42%. At this point, all three major stock indexes ended their previous five consecutive weeks of rising trends.

In terms of economic data, January's PPI data was released last Friday, but this time the data were higher than market expectations. The overall PPI rose by 0.9% year-on-year, which was higher than market expectations of a rise of 0.6%; it rose by 0.3% month-on-month, which was higher than market expectations of 0.1%. The core PPI rose by 2% year-on-year, market expectations were 1.6%; it rose 0.5% month-on-month, against market expectations of 0.1%. On the other hand, the University of Michigan consumer confidence index in January was 79.6, slightly lower than market expectations of 80, but still higher than the previous value of 79, rising for three consecutive months, reflecting that the market is still willing to spend; at the same time, Michigan University inflation expectations also rebounded to 3%.

PPI is higher than market expectations, cooling market interest rate cut expectations

The performance of the US PPI index made the market worried that inflation may not cool down to the Federal Reserve's 2% target as quickly as earlier expected. After the data was released, U.S. Treasury bond yields also rose, with the 10-year Treasury bond yield rising 6 points to 4.293%. Currently, according to the Fed Watch tool, interest rates may only be cut by 1% this year, and the first interest rate cut this year may occur in June.

The Hong Kong Stock Connect was closed last week for Chinese New Year holiday and the market will be reopen today.