Hong Kong stocks rise for second day as cooling US inflation spurs optimism over smaller Fed rate hike
- The city’s benchmark Hang Seng Index advanced by 0.4 per cent at the close, while the Hang Seng Tech Index climbed by 0.3 per cent
- Mainland Chinese markets were mixed, with the Shanghai benchmark climbing less than 0.1 per cent, while the Shenzhen gauge edged down by 0.1 per cent
Hong Kong stocks rose for the second day this week on Wednesday, after US consumer prices increased at a slower-than-expected pace, bolstering the case for the Federal Reserve to end its aggressive interest-rate increases.
The city’s benchmark Hang Seng Index advanced by 0.4 per cent to 19,673.45 at the close, while the Hang Seng Tech Index climbed by 0.3 per cent. The Shanghai Composite Index rose less than 0.1 per cent and the Shenzhen Composite Index slipped 0.1 per cent.
US consumer prices increased by 7.1 per cent in November, a weaker pace than the 7.3 per cent consensus estimate, and a cool-down from October’s 7.7 per cent. The data shows that the Fed’s volley of high interest rates has delivered its intended effect, paving the way for the central bank to loosen its monetary policy, which would be positive for the equity markets.
Chinese technology stocks led gainers in Hong Kong. Baidu, the Chinese search engine operator, jumped 3.6 per cent to HK$118.20, while Techtronic Industries rallied 4.6 per cent to HK$96.25. Alibaba Group Holding, this newspaper’s owner, gained 1.3 per cent to HK$89.50. Tencent Holdings, the world’s largest publisher of mobile games, advanced 2.1 per cent to HK$325.
Easing inflation “supports the idea that the Fed could be done with hiking rates after the February meeting”, said Edward Moya, an analyst at Oanda. “The Fed might not have to take rates to 5 per cent or higher and that is surprising news for stock traders. Fed tightening is looking like it will just need a half-point increase tomorrow and a 25 basis-point increase in February.”
The Hang Seng Index trimmed a gain of as much as 1.3 per cent as traders are braced for a set of weak China November economic data due on Thursday and are monitoring the surge in Covid-19 cases in big cities such as Beijing and Guangzhou, where the healthcare systems are being put to the test.
Retail sales probably slumped 4 per cent from a year ago, deepening from a 0.5 per cent decline for the previous month, and industrial production growth may have moderated to 3.5 per cent from 5 per cent, according to the consensus estimate of economists tracked by Bloomberg.
Three companies started trading in Hong Kong and Beijing on Wednesday. Meihao Medical Group, an operator of dental hospitals, slid 14 per cent to HK$0.72 on the first day of trading in the city. CHNV Technology, a maker of chemical products, lost 7.5 per cent to 6.01 yuan on the Beijing exchange and Shenzhen Baixinglong Creative Packaging dropped 6.8 per cent to 11 yuan.
Other major Asian markets all rose. Japan’s Nikkei 225 and Australia’s S&P/ASX 200 climbed both 0.7 per cent per cent, while South Korea’s Kospi rose 1.1 per cent.