KGI Asia Commentary

Hang Seng Index rose 13 points on Wednesday

The Hang Seng Index rose 13 points or 0.1% to 16,543 on Wednesday. HSTECH rose 22 points or 0.7% to 3,551 and HSCEI rose 23 points or 0.4% to 5,803. Daily market turnover was HK$85.3bn.

After the Federal Reserve announced three interest rate cuts, the Dow rose 400 points and hit a new closing high.

The three major stock indexes closed higher on Wednesday, hitting record highs, after the Federal Reserve maintained expectations for three interest rate cuts by the end of 2024. The Dow Jones Industrial Average rose 401.37 points to close at 39,512.13 points, an increase of 1.03%; the S&P 500 Index rose 0.89% to close at 5,224.62 points, breaking through the 5,200-point mark for the first time in history. The Nasdaq rose 1.25% to close at 16,369.41 points. Financial stocks rose after the Fed's decision, as investors hoped that rate cuts this year would sustain economic growth. American Express rose 2.8% and the SPDR S&P Regional Bank ETF gained more than 3%. Big technology stocks, which have driven recent gains in stocks, rose as investors bet that technology stocks will benefit most from interest rate cuts. Alphabet, Amazon, Microsoft and Nvidia rose about 1%, while Meta Platform rose 1.9%. Recent market laggards Apple and Tesla gained 1.5% and 2.5% respectively. In corporate news, Intel shares fell 0.4% despite the Biden administration's announcement that it will provide Intel with nearly $20 billion in grants and loans to increase U.S. chip production. Tesla shares rose more than 2% after electric car maker Tesla confirmed it would raise prices for its Model Y cars produced in China starting April 1. The news follows recent price increases announced in Europe and the United States and marks a reversal from a series of cuts Tesla has implemented throughout 2023. Processed food giant General Mills' shares rose 1% after the company reported a smaller-than-expected quarterly sales decline, with higher prices for breakfast cereals, snack bars and pet food helping to cushion the blow from slowing demand. Boeing shares rose more than 3% even as the planemaker's chief financial officer Brian West said cash flow would be worse than the company had projected as early as January as the company The troubled aircraft manufacturer has focused on quality after a series of accidents.

Powell says strong employment won't prompt Fed to delay rate cuts

The Federal Reserve left interest rates unchanged and stuck to its forecast of three rate cuts. Federal Reserve Chairman Powell pointed out at a press conference that a strong job market will not prevent the Federal Reserve from cutting interest rates. But he said “Nonetheless, we’re looking for data that confirm the low readings that we had last year,” Powell continued. “And give us a higher degree of confidence that what we saw was really inflation moving sustainably down to 2%.”

Hong Kong Stock Connect had a net inflow of HK6.39bn on Wednesday, of which BOC (3988) had the largest net inflow, reaching HK$0.58bn; followed by Tencent (700). Shenhua (1088) recorded the largest net outflow at HK$35.9mn, followed by CCB (939).