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S&P 500 and Nasdaq Composite Recovery Rally Stalled Ahead of Nvidia Earnings

Barry Adams
27 Aug, 2024
New York City

Stocks struggled to advance on Wall Street ahead of widely anticipated earnings from Nvidia, a bellwether for artificial intelligence-related tech stocks.

Market sentiment was cautiously optimistic as investors are hoping that Nvidia will deliver another quarter of a sharp increase in revenue and earnings amid rising acceptance of its hardware and software platforms for AI-related applications.

Nvidia is a key beneficiary of a sharp jump in capital spending by Amazon, Microsoft, Alphabet, and other leading tech companies developing artificial intelligence-linked applications.

Analysts are estimating the company to deliver between 64 cents and 71 cents per share in the latest quarter ending in July, sharply higher than 25 cents in the corresponding quarter a year earlier.

Revenue in the quarter is expected to soar to $28.68 billion from $13.51 billion a year earlier.

Nvidia sales have been on a tear, and the company has benefited from its leadership positioning in the market and accelerated its quarterly sales growth between 80% and 100% for eight quarters in a row.

Nvidia's quarterly earnings per share have also exceeded between 5 cents and 6 cents from the consensus earnings estimates of analysts.

U.S. Indexes and Treasury Yields

The S&P 500 index decreased 0.3% to 5,599.61, the Nasdaq Composite fell 0.8% to 17,575.39, and the Russell 2000 index declined 0.6% to 2,205.89.

The yield on 2-year Treasury notes edged higher to 3.96%, 10-year Treasury notes increased to 3.86%, and 30-year Treasury bonds inched higher to 4.16%.

WTI crude oil decreased $0.83 to $76.59 a barrel, and natural gas prices edged down 2 cents to $1.93 a thermal unit.

Gold fell by $4.69 to $2,510.75 an ounce, and silver increased by $0.07 to $29.94.

The dollar index, which weighs the US currency against a basket of foreign currencies, edged higher to 100.81.

U.S. Stock Movers

Nvidia Corp. edged down 1.1% to $125.05, and investors are estimating that the company will deliver another quarter of strong revenue and earnings growth and surpass earnings per share expectations of 64 cents.

Cava Group declined 8.2% to $115.60 after several corporate insiders and a key investor disclosed their plans in regulatory filings to trim their holdings.

Apple Inc. decreased 0.8% after the company said chief financial officer Luca Maestri will step down on January 1, 2025, and be replaced by the current vice president for financial planning and analysis, Kaven Parekh.

Maestri will continue to lead a group responsible for real estate development, information technology systems, and security.

Europe Movers: Bunzl, Flughafen Zuerich, Mining Companies, Rhienmetall, Sandvik

Inga Muller
27 Aug, 2024
Frankfurt

European markets lacked direction as investors reviewed the latest economic updates.

Germany's second quarter GDP contracted as previously estimated, consumer morale worsened, and UK shop prices fell at the fastest pace in nearly three years.

The DAX index increased by 0.5% to 18,595.71; the CAC-40 index rose by 0.5% to 7,560.72; and the FTSE 100 index advanced by 0.3% to 8,312.02.

The yield on 10-year German bonds edged higher to 2.28%, French bonds inched up to 3.01%, the UK gilts edged higher to 3.98%, and Italian bonds increased to 3.67%.

Flughafen Zuerich AG decreased after the Swiss airport operator reported weaker-than-expected first-half results.

Sandvik AB decreased 0.2% to DKK 214.0, and the Swedish engineering company agreed to acquire Universal Field Robots.

Mining companies advanced in London after copper futures prices advanced to a six-week high in the hopes of a rate cut by the U.S. Federal Reserve next week.

Antofagasta increased 1.3% to 1,901.50 pence, Anglo American increased 2.3% to 2,302.50 pence, and Glencore added 0.4% to 412.80 pence.

Rheinmetall AG decreased 0.4% to €532.80, and the arms and automotive company said it won an order to build exhaust gas recirculation valves for a "renowned car manufacturer."

Bunzl plc jumped 7% to 3,440.0 pence after the diversified distribution and outsourcing group reported better-than-expected first-half results and announced a stock buyback plan.

Revenue in the first half decreased 3.3% to £5.7 billion from £5.9 billion; pre-tax profit dropped 11.9% to £279.4 million from £317.1 million; and earnings per share fell 16.4% to 59.2 pence from 70.8 pence a year ago.

The company also launched a £250 million stock repurchase plan to be completed before March 3, 2025.

The diversified conglomerate increased its interim dividend by 10.4% to 21.1 pence from 18.2 pence a year earlier.

European Markets Brave Higher Despite Weak Economic Data

Bridgette Randall
27 Aug, 2024
London

In cautious trading across Europe, stocks struggled to advance as investors reviewed the latest batch of economic updates on Tuesday.

Benchmark indexes in Frankfurt and Paris edged up 0.5%; in London, they advanced 0.3% after Germany's GDP in the second quarter shrank as expected.

Meanwhile, the hopes of a second-half economic recovery led by consumers in Germany got another hit after consumer morale weakened significantly.

The seasonally adjusted GDP in the second quarter contracted by 0.1% from the previous quarter and advanced by 0.3% from a year ago, the Federal Statistics Office, or Destatis, reported Tuesday.

As initially estimated, weak household spending and investment negatively impacted activities in the second quarter, following a 0.2% rise in the first quarter.

Overall consumer spending was stable compared to the previous quarter, increasing slightly by 0.1% after adjusting for price, seasonal, and calendar effects.

Private consumption decreased by 0.2% after increasing at the beginning of the year; however, government spending rose significantly by 1.0%.

German consumer morale is expected to weaken in September as fears of mounting job losses, rising insolvencies, and weakening economic activities weigh.

The forward-looking consumer sentiment index dropped to -22.0 from -18.6 in August, according to a joint survey published by GfK and Nuremberg Institute for Market Decisions on Tuesday.

UK shop prices eased for the first time in nearly three years in August, according to data released by the British Retail Consortium on Tuesday.

The shop price index dropped 0.3% in August, reversing the 0.2% increase in July, after retailers enlarged discounts to clear summer stocks and pushed down overall non-food prices.

Europe Indexes and Yields

The DAX index increased by 0.5% to 18,595.71; the CAC-40 index rose by 0.5% to 7,560.72; and the FTSE 100 index advanced by 0.3% to 8,312.02.

The yield on 10-year German bonds edged higher to 2.28%, French bonds inched up to 3.01%, the UK gilts edged higher to 3.98%, and Italian bonds increased to 3.67%.

The euro edged down to $1.12; the British pound inched higher to $1.32; and the U.S. dollar weakened to 84.65 Swiss cents.

Brent crude decreased $0.40 to $81.02 a barrel, and the Dutch TTF natural gas fell by €0.67 to €36.42 per MWh.

Europe Stock Movers

Flughafen Zurich AG decreased after the Swiss airport operator reported weaker-than-expected first-half results.

Sandvik AB decreased 0.2% to DKK 214.0, and the Swedish engineering company agreed to acquire Universal Field Robots.

Mining companies advanced in London after copper futures prices advanced to a six-week high in the hopes of a rate cut by the U.S. Federal Reserve next week.

Antofagasta increased 1.3% to 1,901.50 pence, Anglo American increased 2.3% to 2,302.50 pence, and Glencore added 0.4% to 412.80 pence.

Rheinmetall AG decreased 0.4% to €532.80, and the arms and automotive company said it won an order to build exhaust gas recirculation valves for a "renowned car manufacturer."

Bunzl plc jumped 7% to 3,440.0 pence and traded at a new record high after the diversified distribution and outsourcing group reported better-than-expected first-half results and announced a stock buyback plan.

Revenue in the first half decreased 3.3% to £5.7 billion from £5.9 billion; pre-tax profit dropped 11.9% to £279.4 million from £317.1 million; and earnings per share fell 16.4% to 59.2 pence from 70.8 pence a year ago.

The company also launched a £250 million stock repurchase plan to be completed before March 3, 2025.

The diversified conglomerate increased its interim dividend by 10.4% to 21.1 pence from 18.2 pence a year earlier.

Japan's Nikkei Rebounds Following the Yen's Decline Ahead of Key Economic Updates

Akira Ito
27 Aug, 2024
Tokyo

Market indexes in Tokyo rebounded following a pullback in the yen.

The Nikkei 225 gained 0.5% and the broader Topix index increased 0.7% in Tuesday's trading and erased losses from the previous session after the yen edged slightly lower.

Stocks have lacked direction and danced around following the volatility in the yen amid rate path uncertainty and ongoing anxieties about the appropriate level of the currency.

Investors are hoping the yen will be less volatile in the months ahead if the U.S. Federal Reserve embarks on its rate-cut cycle while the Bank of Japan lifts its rates higher.

The moves in the opposite direction by two central banks would accelerate the unwinding of the yen carry trade, lowering yen volatility and stabilizing market sentiment.

Japan Stock Movers

The Nikkei 225 Stocks Average rose 0.5% to 38,288.62, and the Topix index advanced 0.7% to 2,680.80.

Semiconductor equipment makers were in focus ahead of the release of Nvidia's earnings after the close on Wednesday in New York.

Tokyo Electron, Advantest, Lasertec, Disco Corp., and Screen Holdings decreased between 0.5% and 4.5%.

Export-driven stocks closed higher after the yen edged lower but traded in a tight range and stabilized.

Toyota Motor added 1.8% to ¥2,644.0, Honda Motor gained 1.8% to ¥1,561.0, and Nissan Motor increased 1.7% to ¥430.50.

Retailers were in focus for the second week in a row as foreign tourists took advantage of the weak yen and drove retail sales higher at department stores and luxury boutiques.

Isetan Mitsukoshi added 0.5% to ¥2,187.50, Seven & I jumped 4.2% to ¥2,122.0, Fast Retailing Co jumped 0.6% to ¥46,620.0, Aeon Co fell 0.7% to ¥3,743.0, and Nitori Holdings declined 0.2% to ¥22,340.0.

China Indexes Extend Losses; PDD Holdings, Trip.com, and Petro China in Focus After Earnings

Li Chen
27 Aug, 2024
Hong Kong

Stocks in China faced selling pressure amid ongoing worries about weak economic growth and earnings outlooks.

Benchmark indexes in Hong Kong edged lower by 0.2%, and in mainland China, they declined by 0.3%.

Stocks faced selling pressure after the parent company of Temu, PDD Holdings, said the current rate of sales growth is unsustainable and lowered its earnings outlook.

Last week, Walmart sold its stake in JD.com at a discount of $3.6 billion and ended its 8-year-long partnership.

Investors have been selling stocks in Hong Kong after a reversal in sentiment amid a growing worry about an earnings slowdown.

Moreover, investors in China have been allocating new capital to luxury residences in Shanghai and Beijing as property values continue to appreciate in top-tier cities, seeking safety in Chinese government bonds, and investing in ETFs focused on Japanese and U.S. stocks.

China Stock Movers

The Hang Seng index decreased 0.2% to 17,835.44, and the CSI 300 index fell 0.6% to 3,304.46.

PDD Holdings dropped 29% to $98.70 after the parent company of China-based Temu lowered its revenue and earnings growth expectations for the current quarter amid intensifying competition and the need for higher capital expenditure on new projects.

Revenue rose 86% to $13.4 billion, or 97.1 billion yuan, and adjusted earnings per ADS rose to $3.20, or 23.24 yuan, from 10.157 yuan a year ago.

Trip.com Group soared 9.4% to HK $366.40 after the dominant online travel platform reported better-than-expected second quarter revenue and earnings.

Revenue increased 13.% to 12.8 billion yuan from 11.2 billion yuan, and earnings rose to 3.83 billion yuan, or 5.57 yuan per share, compared to 0.63 billion yuan, or 0.94 per share, a year earlier.

Excluding items, the company reported adjusted earnings of 4.99 billion yuan, or 7.25 yuan per share, for the period.

PetroChina jumped 4.5% to HK $7.18, and the oil and natural gas exploration company reported record operating profit in the first half amid rising energy production.

Net income rose 3.9% to 88.6 billion yuan, or $12.6 billion, benefiting from higher international oil prices, but weak domestic demand kept processed crude oil production increasing to 3%, while refined crude production advanced only 2.1% from a year ago.

Jet fuel production soared 42% from a year ago, following a rebound in demand for air travel.

India Movers: Bondada Engineering, GPT Infraprojects, MedPlus Health Services, Hindustan Unilever

Arun Goswami
27 Aug, 2024
Mumbai

Stocks in Mumbai edged higher in cautious trading amid rising tensions in the Middle East.

Crude oil prices advanced and gold traded near record highs as investors anticipated less-restrictive monetary policy from major central banks.

The Sensex index increased by 0.3% to 81,747.67, and the Nifty index rose 0.1% to 25,022.15.

On the Mumbai stock exchange, 262 stocks traded at their 52-week highs, and 17 stocks traded at their 52-week lows.

The yield on the 10-year Indian government bonds inched lower to 6.85%, and the Indian rupee weakened to 83.93 against the U.S. dollar.

Medi Assist Healthcare Services advanced 8.5% to ₹609.50, and the company agreed to acquire Paramount Health Services and Insurance TPA from Fairfax Asia.

GPT Infraporjects added 1.8% to ₹188.19, and the company announced its plans to launch a secondary offering for institutional investors with a floor price of ₹183.83 per share.

MedPlus Health Services rose 3% to ₹655.20, and Lavender Rose Investment sold its entire 11.35% stake in the company for ₹836 crore.

ICICI Prudential Mutual Fund acquired a 4.3% stake at an average price of ₹616 per share, and the pension fund controlled by the Government of Singapore purchased a 0.97% stake for ₹616.20 per share.

Bondada Engineering jumped its daily trading limit of 5% to ₹3,684.45, and the company won a new order worth ₹575.7 crore.

Hindustan Unilever declined 0.7% to ₹2,801.80, and the company received a demand for ₹962.75 crore from tax authorities for non-collection of TDS for purchase payments.

The Risk of a Wider War In the Middle East Weigh On Global Stock Markets

Alexander Garcia
26 Aug, 2024
Miami

Stocks turned lower in afternoon and lost early momentum as investors rotated to energy and small-cap stocks.

Stocks opened higher in Monday's trading, and benchmark indexes approached record highs after Fed Chair Powell signaled a possible rate cut in the future.

U.S. stocks escalated their advances in Friday's trading after comments from Fed Chair Powell suggested a possible rate cut in the future.

Fed Chair Jerome Powell suggested that a policy adjustment is needed and a possible rate cut is likely; however, Powell fell short of indicating the amount and timing of future rate cuts.

Investors were quick to bid up stocks following Powell's comments and interpreted that the central bank is likely to begin interest rate cuts as early as September 19, after the next policy meeting.

Despite the market's enthusiasm for possible imminent rate cuts, inflation is still well anchored in the economy and has stalled near the 3% level for several months, well above the Fed's target of 2%.

Any premature rate cut would only stoke inflationary forces to rebound later in the year and also dent the Federal Reserve's credibility.

The Federal Reserve's talk of declaring victory sounds hollow to most Americans when prices are still rising from a higher base.

Moreover, policymakers have no plans or intention of bringing down the sky-high home prices and cost of living experienced by most families.

While the Federal Reserve takes credit for bringing inflation down from near 9%, it was the Federal Reserve's reckless printing of money during the COVID-19 pandemic that drove inflation to a four-decade high in the first place.

The Federal Reserve has lifted rates 11 times over 2022 and 2023, yet inflation is stalled at 3% and shows no sign of easing, and home prices, wages, food prices, and the cost of various personal services are still rising faster than 4%.

In the week ahead, investors are looking forward to the release of U.S. durable goods orders, metropolitan home prices to continue to rise at an elevated pace of above 5%, and a second estimate of the second quarter GDP to confirm the preliminary estimate.

Investors are also looking forward to the release of personal income, outlays, and the PCE Price Index, the alternative measure of inflation.

Durable goods orders jumped 9.9% from the previous month in July, reversing the downwardly revised 6.6% decrease in the previous month, the Census Bureau reported Monday.

Orders rose 10.4% after excluding defense orders and excluding transportation orders by 0.2%.

The latest data contrasted with the prevailing narrative that the manufacturing sector is losing steam, and transportation orders soared 34.8% from the previous month.

However, from a year ago, new orders declined 1.4% in July, orders excluding transportation increased 1.4%, and excluding defense fell 1.2%.

Nondefense capital goods orders, excluding aircraft orders, which is generally seen as a barometer for business spending, decreased 0.1% from the previous month and edged up 0.5% from a year ago.

U.S. Indexes and Treasury Yields

The S&P 500 index decreased 0.2% to 5,623.35, the Nasdaq Composite decreased 0.8% to 17,738.37, and the Russell 2000 index rose 0.4% to 2,227.58.

The yield on 2-year Treasury notes edged lower to 3.92%, 10-year Treasury notes decreased to 3.81%, and 30-year Treasury bonds inched higher to 4.10%.

WTI crude oil increased $2.40 to $77.23 a barrel, and natural gas prices edged down 4 cents to $1.97 a thermal unit.

Gold fell by $12.62 to $2,521.49 an ounce, and silver increased by $0.14 to $29.97.

The dollar index, which weighs the US currency against a basket of foreign currencies, edged higher to 100.80.

U.S. Stock Movers

Boeing declined 0.7% to $173.69, and NASA said it plans to use SpaceX to bring back two astronauts from the International Space Station.

Earlier, Boeing had repeatedly said its aircraft were safe for the return journey; however, NASA did not agree with Boeing's assessment.

Nvidia Corp. jumped 0.3% to $129.78, and the advanced chip designer is scheduled to release its quarterly earnings on Wednesday as investors are looking for signs of capital spending by leading mega-cap tech companies.

Uber Technologies declined 1.7% to $72.97, and the online ride-hailing platform was fined $324 million by Dutch regulators for transferring driver data to the U.S.

Nordstrom was nearly unchanged at $21.75 ahead of the luxury retailer's quarterly results on Tuesday after the close of regular trading hours.

The retailer reported revenue increased 4.8% from a year ago to $3.34 billion in the previous quarter, and analysts are estimating the company to report at least $3.89 billion in revenue and adjusted earnings per share of 73 cents in its latest quarter.

PDD Holdings dropped 29% to $98.70 after the parent company of China-based Temu lowered its revenue and earnings growth expectations for the current quarter amid intensifying competition and the need for higher capital expenditure on new projects.

Revenue rose 86% to $13.4 billion, or 97.1 billion yuan, and adjusted earnings per ADS rose to $3.20, or 23.24 yuan, from 10.157 yuan a year ago.

European Markets Lacked Direction Ahead of Key Inflation Data

European markets traded mixed in Monday's trading after advancing in the previous three consecutive sessions amid a lack of domestic catalysts.

Benchmark indexes in Paris, London, and Frankfurt lost early morning momentum amid rising tensions in the Middle East.

Israel conducted a massive "preemptive" strike with 100 jets on Hezbollah-controlled military installations in southern Lebanon.

Israel's military said it conducted the strike on early Sunday morning at 5:00 a.m. after it detected Hezbollah rocket launchers were preparing to attack central Israel.

While the Lebanese group said it launched hundreds of rockets and drones targeting locations in northern Israel,.

Following the exchange of fire, British Airways suspended all flights from Israel, and Air France said it would halt all flights to Tel Aviv and Beirut until Monday.

Last week, Delta extended its flight suspension until the end of October, following a similar announcement by American Airlines.

Gold continued to trade higher and traded above $2,500 an ounce amid expectations of a dovish interest rate outlook in the U.S. and Europe.

Europe Indexes and Yields

The DAX index decreased by 0.1% to 18,617.02; the CAC-40 index rose by 0.2% to 7,590.37; and the FTSE 100 index advanced by 0.5% to 8,327.78.

The yield on 10-year German bonds edged lower to 2.23%, French bonds inched higher to 2.94%, the UK gilts edged lower to 3.91%, and Italian bonds inched down to 3.58%.

The euro edged down to $1.11; the British pound inched higher to $1.31; and the U.S. dollar weakened to 84.65 Swiss cents.

Brent crude increased $2.02 to $81.10 a barrel, and the Dutch TTF natural gas roes by €1.12 to €37.73 per MWh.

During this week, investors are looking forward to the release of Germany’s second quarter GDP, inflation rates in the Euro Area, Germany, and Spain, the jobless rate in Italy, and retail sales in Spain.

The release of inflation and second-quarter GDP data would provide additional insights into the inner workings of the economy ahead of the monetary policy announcement on September 12.

Investors are concerned about the European Central Bank's rate decisions, and most are looking for a rate cut of 25 basis points, but many are also expecting the central bank to hold rates steady.

Europe Stock Movers

Bakkafor PLC declined 0.5% to 155.0 pence after the Faroese salmon farming company's second quarter revenue was below market expectations.

Oil exploration companies advanced following higher crude oil prices and rising tensions in the Middle East.

TotalEnergies SE jumped 0.6% to €62.56, Eni SpA gained 1.1% to €14.76, Repsol SA added 2.2% to €12.91, BP plc increased 0.7% to 429.31 pence, and Shell PLC advanced 0.9% to €32.59.

Banks and insurance companies were among the leading decliners amid mixed trading in Europe.

UniCredit SpA decreased 0.3% to €36.42, Banco Santander fell 0.4% to €4.34, Deutsche Bank declined 0.7% to €14.59, and Societe Generale eased 0.2% to €21.44.

Luxury stocks in Paris advanced despite the market weakness in mainland China, and the yield on the Chinese 10-year bond hovered at a record low of 2.14%.

Hermes International SCA added 1.1% to €2,202, LVMH gained 0.3% to €682.90, and Kering SA increased 0.1% to €260.30.

BMW added 0.6% to €84.94, Mercedes-Benz Group gained 0.6% to €62.48, and Volkswagen Group added 0.3% to €97.24.

Japan's Rate Uncertainty Weighed On Stocks

Stocks in Tokyo reversed the previous session's gains despite Friday's advance in New York as investors reacted to the strengthening yen.

The Nikkei 2225 stock average and the Topix index fell 1% after the yen advanced and investors reassessed their rate outlook following comments from Bank of Japan Governor Kazuo Ueda.

The yen advanced to 144.13 against the U.S. dollar after BoJ Governor Ueda said in a testimony to lawmakers on Friday that the central bank is ready to raise rates if ongoing economic data support the move.

The prospect of a higher interest rate in Japan, coupled with a negative rate outlook in the U.S., supported the yen's advance for the second week in a row.

A stronger yen dampens the earnings outlook of Japanese exporting companies and also forces speculators to unwind the yen carry trade.

Investors remained on the sidelines amid the growing possibility of a rate hike at the end of the next policy meeting in Tokyo.

U.S. Federal Reserve Chair Jerome Powell sent his clearest signal so far: that the central bank is ready to adjust its monetary policy and may lower rates if there is ongoing economic data.

Powell did not say the amount and timing of the rate cut, but traders are anticipating at least a 25 basis point rate cut after the policy meeting on September 19, followed by additional rate cuts of at least another 50 basis points over the next policy meetings in 2024.

The dovish comments from Fed Chair lifted market indexes by as much as 1.4% in New York in Friday's trading, but that also raised the prospect of more yen carry trade unwinding in Tokyo, putting additional pressure on stocks.

Japan Stock Movers

The Nikkei 225 stock average decreased 0.9% to 38,024.32, and the Topix index declined 1% to 2,657.0.

Tech stocks were among the leading decliners in Monday's trading in Tokyo, and SoftBank, Disco Corp., Screen Holdings, Tokyo Electron, Advantest, and Lasertec declined between 0.5% and 2.5%.

Retailers were under pressure following the yen's rise, as a higher yen dampens tourist spending at Japanese stores.

Isetan Mitsukoshi dropped 6.3% to ¥2,180.0, Seven & I declined 0.7% to ¥2,041.0, and Mercari dropped 3% to ¥2,269.0.

Mitsubishi UFJ Financial dropped 1.9% to ¥1,495.50, Sumitomo Mitsui fell 3.2% to ¥9,578.0, and Mizuho Financial declined 2.6% to ¥2,995.0.

Toyota Motor declined 3.5% to ¥2,589.50, Honda Motor decreased 2.9% to ¥1,533.50, and Nissan Motor fell 4% to ¥422.80.

Weak Outlook Kept Gains In Check In Hong Kong, Shanghai Indexes Traded Down

Stocks in Hong Kong advanced but fell in Shanghai amid lingering worries about economic growth and corporate earnings.

The Hang Seng index advanced 0.8% in the hopes that the Hong Kong Monetary Authority would lower rates in about three weeks following a possible rate cut in the U.S.

Federal Reserve Chair Jerome Powell sent his clearest signal so far: that the central bank is ready to adjust its monetary policy and may lower rates if there is ongoing economic data.

Powell did not say the amount and timing of the rate cut, but traders are anticipating at least a 25 basis point rate cut after the policy meeting on September 19, followed by additional rate cuts of at least another 50 basis points over the next two policy meetings in 2024.

The Hong Kong Monetary Authority would follow similar rate cuts to keep the Hong Kong dollar parity with the U.S. dollar.

The prospect of an imminent rate cut in Hong Kong lifted the benchmark Hang Seng index, but market sentiment remained weak in mainland China markets.

Investors have been shunning stocks amid a weak economic outlook and a lack of earnings visibility, and investors are pouring new assets into exchange-traded funds, or ETFs, that track investments in Japan and the U.S. and snapping up luxury properties in Shanghai and Beijing.

Stock turnover in China's stock markets dropped to a four-year low, according to the data released by the China Securities Regulatory Agency, amid the waning effect of market-supportive measures released by policymakers in May.

The 10-year China government bond yield hovered near a record low of 2.14%, as investors prefer steady income from bonds over persistent losses from stocks.

Meanwhile, the PBoC held its one-year medium-term loan facility rate at 2.13% on Monday, after lowering rates in the previous month.

China Stock Movers

The Hang Seng index advanced 0.8% to 17,756.09, and the CSI 300 index fell 0.1% to 3,324.89.

Tech stocks advanced in Monday's trading in Hong Kong, tracking gains in Friday's trading in New York.

Baidu increased 1.9% to HK $83.75, Meituan added 0.6% to HK $108.20, and Tencent Holdings gained 1% to HK $379.40.

Alibaba Group Holding decreased 0.6% to HK $82.15, and the e-commerce marketplace is set to change its Hong Kong listing to a dual-primary listing on August 28.

Property stocks in Hong Kong advanced following the prospect of rate cuts in the U.S. starting as early as mid-September.

Longfor Group Holdings gained 2.6% to HK $8.71; China Resource Land added 0.9% to HK $21.85; Sun Hung Kai Properties gained 3.5% to HK $74.40; and Henderson Land Development advanced 3.8% to HK $23.0.

Rate-cut Expectations Support Upward Move In Stocks On Wall Street

Barry Adams
26 Aug, 2024
New York City