KGI Asia Commentary

HSI rose 91 points on Tuesday

The Hang Seng Index rose 91 points or 0.6% to 16,247 on Tuesday. HSTECH rose 11 points or 0.3% to 3,264 and HSCEI rose 34 points or 0.6% to 5,519. Daily market turnover was HK$76.9bn.

U.S. stocks closed lower on Tuesday, dragged down by Nvidia

U.S. stocks fell on Tuesday as investors became cautious about Nvidia ahead of the company's quarterly results, while minutes from the Federal Reserve's January meeting are due later this week. The Dow Jones Industrial Average fell 64.19 points, or 0.17%, to close at 38,563.80 points. The S&P 500 fell 0.60% to close at 4,975.51 points. The Nasdaq index, which is dominated by technology stocks, fell 0.92% to close at 15,630.78 points. Nvidia's shares fell nearly 4.4%. The company is scheduled to report results after the bell on Wednesday. While Nvidia is expected to report impressive results, investors are concerned about its lofty valuation. Amazon shares fell 1.4%, while Microsoft and Meta shares fell about 0.3% each. However, Intel Corp. escaped losses in chip stocks, rising more than 2% after Bloomberg reported late last week that the Biden administration was negotiating more than $10 billion in subsidies to semiconductor companies. Low-cost retailer Walmart reported fourth-quarter U.S. sales and earnings that beat expectations, prompting the retail giant to raise its annual dividend by 9%. The stock rose more than 3%. Walmart is a major component of the Dow Jones Industrial Average. Elsewhere in retail stocks, Home Depot ended just above flat as the home improvement retailer reported fourth-quarter comparable sales fell from a year earlier as cash-strapped consumers spent less on major property improvements, choosing instead to focus on smaller and lower-cost projects.

Fed meeting minutes will guide rate cut ideas

Consumer and producer price data released last week raised concerns that the Federal Reserve will keep interest rates at current levels longer than expected at the beginning of the year. The minutes of the Federal Reserve's January meeting will be released on Wednesday, which may provide more insight into the Fed's thinking. The market currently expects that starting in June this year, the Federal Reserve will cut interest rates four times, each time by 25 basis points. A series of Fed official speeches this week could provide further potential clues on monetary policy.

Hong Kong Stock Connect had a net outflow of HK3.47bn on Tuesday, of which CNOOC (883) had the largest net inflow, reaching HK$0.91bn; followed by China Mobile (941). Tencent (700) recorded the largest net outflow at HK$0.20bn, followed by SMIC (981).