KGI Asia Commentary
Hang Seng Index rose 390 points on Tuesday
The Hang Seng Index rose 390 points or 2.4% to 16,931 on Tuesday. HSTECH rose 65 points or 1.9% to 3,543 and HSCEI rose 149 points or 2.6% to 5,960. Daily market turnover was HK$144.1bn.
Dow drops nearly 400 points, falling for second day in a row
The Dow fell for a second straight day, extending a lackluster start to the quarter on Wall Street as bond yields rose and traders lowered expectations that the Federal Reserve will cut interest rates in June. The Dow Jones index fell 396.61 points to close at 39170.24 points, a decrease of 1%. At the intraday low, it fell more than 500 points. The S&P 500 fell 0.72% to close at 5,205.81 points. The Nasdaq fell 0.95% to close at 16,240.45 points. It was the Dow and S&P 500's worst day since March 5. Healthcare stocks including Humana Corp., UnitedHealth Group Inc. and CVS Health Inc. led the market lower with sharp losses, as the Centers for Medicare and Medicaid Services private health care rates will increase an average of 3.7% starting in 2024. The rates are unchanged from the original proposal in January, suggesting insurers' profit margins will remain under pressure next year. Tesla shares fell 5% after the electric car maker reported first-quarter delivery figures that were well below expectations. According to Bloomberg consensus, the electric vehicle giant delivered 386,810 vehicles, compared with the previous forecast of 449,080 vehicles.
U.S. Treasury yields continue to rise, with Fed speakers signal higher for longer
U.S. Treasury yields extended their daily gains as recent stronger economic data and comments from the Federal Reserve cooled expectations for an early rate cut. Regional Fed Presidents Mary Daly of San Francisco and Loretta Mester of Cleveland both said on Tuesday they expected to cut interest rates this year but not start easing anytime soon. The CME Group's FedWatch tool now sees a roughly 62% chance of a rate cut by the Fed in June, down from about 70% a week ago. In addition, data showed that job openings increased to 8.756 million in February from 8.748 million in January, but slightly lower than expectations of 8.76 million. Employment data will continue to be in focus, with the March non-farm payrolls report scheduled for release on Friday.
Hong Kong Stock Connect had a net inflow of HK3.69bn on Tuesday, of which Tracker Fund (2800) had the largest net inflow, reaching HK$1.52bn; followed by Li Auto (2015). Xiaomi (1810) recorded the largest net outflow at HK$0.99bn, followed by Sciclone (6600).
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