The Chinese stimulus program is disappointing: the stock market in Hong Kong falls by about 8%

Trade overview: current reports, trends, indices, stock prices, bonds, foreign exchange and commodities and analyst recommendations

07:25

The trading day in Asia opened with a shake-up and sharp declines of about 6% in Hong Kong’s Hang Seng index. The reason: the stimulus program introduced by China disappointed investors. Earlier the declines were even sharper, peaking at about 10%.

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China’s National Development and Reform Commission held a briefing where it presented the next planned steps to support the markets, but refrained from announcing a new market support plan.

On the other hand, the Shanghai Stock Exchange jumps by about 5% and the Nikkei index falls by 1.2%. The Kospi index falls by 0.4%.

Samsung is down about 1.5% this morning on the South Korean stock market after reporting that it expects weak earnings in the third quarter of this year. The largest manufacturer of memory chips in the world estimates that the operating profit in the third quarter of this year is expected to be 9.10 trillion won, marking a jump of 274% compared to 2.43 trillion Korean won in the corresponding quarter. However, the data disappointed early forecasts that expected operating profit to reach 11.456 trillion Korean won ($7.7 billion). Samsung’s revenue for the quarter is expected to reach 81.96 trillion won ($61 billion), according to early forecasts.

Samsung Vice Chairman Jun Young-hyun, who serves as head of the company’s new device solutions division, noted that the performance of Samsung’s memory business declined due to “one-time costs and negative impacts,” including inventory adjustments by mobile customers and increased supply. of legacy products by Chinese memory companies.

The declines in Asia come after a red close in New York, the Nasdaq fell 1.2%, the S&P 500 shed about 1% and the Dow Jones fell by a similar amount.

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Super Micro Computer It jumped 15% last night, after the chip company reported that it deployed more than 100,000 GPUs in the quarter and provided liquid cooling solutions to some of the largest artificial intelligence factories built. Yesterday’s jump in the stock marks Super Micro’s biggest jump in seven months.

Mobileye The Israeli company plunged 5% last night on Wall Street after JP Morgan lowered their recommendation on the stock to “underweight” from “neutral” and noted that their confidence in the company is decreasing.

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also dark decreased by about 2.2% after Jefferies lowered their recommendation from “buy” to “hold”, the bank wrote that near-term expectations for the iPhone 16 and 17 were too high in light of the initial demand that was weaker than expected, and that the AI ​​capabilities in question are still immature ink.

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In the US debt market, government bond yields jumped following the strong employment report published in the US last Friday. The 10-year yield traded at a two-month high, around a level of 4%. The two-year yield also rose to the level of 4%.

The Capital Markets Leader noted in their review that after an accumulation of positive data in the US, and employment data in particular, the expectations in the market are for an interest rate cut of 0.25% in the upcoming interest rate decision on 7.11 (and not 0.5%): “We do not rule out no change in interest rates, in particular if data Inflation in September (which will be published on Thursday) will surprise slightly upwards. This is a completely possible scenario that may support the continued rise in government bond yields.”

This morning (Tuesday), government bond yields in the US are falling slightly.

Oil prices jumped last night (Mon) by about 4% in light of global concerns about tensions in the Middle East and especially from Israel’s attack on Iran. The price of a Brent barrel jumped to $80.6, the highest level recorded since the end of August. The price of a WTI barrel rose to the level of 76.9 dollars. This morning, oil prices are down about 1.5%.

In the macro sector, this coming Thursday the US inflation data for the month of September is expected to be published. According to the early forecasts, the annual inflation is expected to decrease from 2.5% to 2.3%.

Alex Zbzinski, Chief Economist at Meitav Investment House, explains in his review that “in the coming months, inflation should not prevent the central bank from lowering interest rates, but the financial conditions are very easy and may slow down the rate of interest rate cuts. Not only is the stock market at its peak, but corporate bond yields dropped almost to a historic low. Overheating in the markets increases financial risk and increases the degree of monetary policy easing to levels that the Fed is not sure interested in.”

Zabrzynski adds that “in accordance with the Fed’s policy to respond to current data, the interest rate is expected to decrease at a moderate and gradual rate in the upcoming decisions. The interest rate forecast until the end of 2025 that is embodied in the contracts is now almost identical to the Fed forecast published in August. According to this forecast, the interest rate will decrease at each of the two Fed meetings which remain until the end of the year at 0.25% and another 1% next year.”