《Economic Information Daily, October 30》Overnight U.S. Treasuries continued to be sold off, with the 10-year Treasury yield reaching as high as 5.296%, a 19-year high, while the 30-year Treasury yield hit 5.618%, a 24-year high. However, New York Fed President Williams said the Fed still has time to observe data before deciding on rate hikes, causing rate hike expectations to ease slightly. The decline in the three major U.S. indices narrowed, with the Dow Jones falling 131 points to 51349, the Nasdaq down 22 points to 26797, and the S&P 500 dropping 12 points to 7670.
*Chinese ADRs, ADRs weaker*
Chinese ADRs were soft; Alibaba fell 0.94% to 107.74 USD, Pinduoduo declined 1.26% to 77.50 USD, JD.com dropped 1.16% to 26.30 USD, Baidu fell 0.30% to 86.71 USD, Li Auto declined 4.10% to 11.23 USD, NIO dropped 5.29% to 3.40 USD, XPeng fell 4.82% to 9.47 USD, Beike dropped 2.06% to 16.60 USD, and Trip.com declined 3.16% to 38.64 USD.
ADRs generally underperformed their Hong Kong counterparts; Tencent (00700) ADR was 1.01% lower than its Hong Kong share, equivalent to HKD 427.6; Xiaomi (01810) ADR was 0.75% lower, equivalent to HKD 25.0; Meituan (03690) ADR was 0.89% lower, equivalent to HKD 69.8; AIA (01299) ADR was 0.21% higher, equivalent to HKD 74.1; HSBC (00005) ADR was 0.61% lower, equivalent to HKD 158.0; HKEX (00388) ADR was 0.25% lower, equivalent to HKD 385.8.
*Odds of a rate hike or no hike by late October return to 50:50, Hong Kong stocks likely to drift lower amid uncertainty*
The position of New York Fed President differs from other regional Fed presidents, as it does not rotate voting rights on the FOMC, similar to the Fed Board of Governors, holding a fixed voting seat throughout the term, thus carrying greater influence. Interest rate futures currently indicate a 50:50 chance of a 25-basis-point rate hike by the Fed in late October. Meanwhile, it has been noted that the Fed has not raised rates in October, the month before midterm elections, in the past 35 years, to avoid exacerbating political and economic conditions, further weakening expectations of a rate hike in October.
Asian markets performed well this morning, with Japanese stocks rising 1.4% and South Korean stocks up 0.9%. The so-called "black week" HS50 index, reflecting expectations for Hong Kong stocks, is currently at 24399, down 63 points, 124 points below the spot Hang Seng Index, suggesting the Hang Seng Index is likely to open about 100 points lower. With overnight U.S. Treasury yields remaining high, overall sentiment remains suppressed. Moreover, Hong Kong stocks are about to face a one-week halt in northbound flow, further weakening investors' willingness to hold positions. Referring to the distribution of Hang Seng Index bull and bear warrants, bearish positions net decreased by 809 contract equivalents after taking profits during yesterday's decline, while bullish positions further bet that the index will not break lower, with a net increase of 895 contract equivalents. Bullish funds mainly expect the Hang Seng Index will not fall below the recent low of 24275. The 24200 to 24299 strike price zone has accumulated 1019 contract equivalents, suggesting 24300 could be a significant support level before the release of non-farm payroll data. (hc)
*Chinese ADRs, ADRs weaker*
Chinese ADRs were soft; Alibaba fell 0.94% to 107.74 USD, Pinduoduo declined 1.26% to 77.50 USD, JD.com dropped 1.16% to 26.30 USD, Baidu fell 0.30% to 86.71 USD, Li Auto declined 4.10% to 11.23 USD, NIO dropped 5.29% to 3.40 USD, XPeng fell 4.82% to 9.47 USD, Beike dropped 2.06% to 16.60 USD, and Trip.com declined 3.16% to 38.64 USD.
ADRs generally underperformed their Hong Kong counterparts; Tencent (00700) ADR was 1.01% lower than its Hong Kong share, equivalent to HKD 427.6; Xiaomi (01810) ADR was 0.75% lower, equivalent to HKD 25.0; Meituan (03690) ADR was 0.89% lower, equivalent to HKD 69.8; AIA (01299) ADR was 0.21% higher, equivalent to HKD 74.1; HSBC (00005) ADR was 0.61% lower, equivalent to HKD 158.0; HKEX (00388) ADR was 0.25% lower, equivalent to HKD 385.8.
*Odds of a rate hike or no hike by late October return to 50:50, Hong Kong stocks likely to drift lower amid uncertainty*
The position of New York Fed President differs from other regional Fed presidents, as it does not rotate voting rights on the FOMC, similar to the Fed Board of Governors, holding a fixed voting seat throughout the term, thus carrying greater influence. Interest rate futures currently indicate a 50:50 chance of a 25-basis-point rate hike by the Fed in late October. Meanwhile, it has been noted that the Fed has not raised rates in October, the month before midterm elections, in the past 35 years, to avoid exacerbating political and economic conditions, further weakening expectations of a rate hike in October.
Asian markets performed well this morning, with Japanese stocks rising 1.4% and South Korean stocks up 0.9%. The so-called "black week" HS50 index, reflecting expectations for Hong Kong stocks, is currently at 24399, down 63 points, 124 points below the spot Hang Seng Index, suggesting the Hang Seng Index is likely to open about 100 points lower. With overnight U.S. Treasury yields remaining high, overall sentiment remains suppressed. Moreover, Hong Kong stocks are about to face a one-week halt in northbound flow, further weakening investors' willingness to hold positions. Referring to the distribution of Hang Seng Index bull and bear warrants, bearish positions net decreased by 809 contract equivalents after taking profits during yesterday's decline, while bullish positions further bet that the index will not break lower, with a net increase of 895 contract equivalents. Bullish funds mainly expect the Hang Seng Index will not fall below the recent low of 24275. The 24200 to 24299 strike price zone has accumulated 1019 contract equivalents, suggesting 24300 could be a significant support level before the release of non-farm payroll data. (hc)
