The June US CPI released on Thursday showed that domestic inflation in the United States cooled across the board, with both CPI and core CPI slowing more than expected in June, with CPI up 3% year-on-year and down 0.1% year-on-year, the first negative growth since May 2020. Core CPI grew 3.3% year-on-year and 0.1% year-on-year, the lowest growth rates since April 2021 and August 2021, respectively. The more than expected cooling of inflation data strengthened bets on a Fed rate cut. Traders are betting almost entirely that the Fed will cut interest rates twice in September and December.

Expectations for a US interest rate cut have risen, and as of Friday's close, the Hong Kong stock market has risen more than 400 points to regain the 18,000 point mark. The Hang Seng Index opened 187 points higher, then widened its gains, eventually rising 461 points to close at 18,293 points, with a turnover of $119.4 billion. The technology index rose 2.3% to 3,782 points.

(Source: uSMART)

Blue-chip stocks achieved an overall strong gainAmong them, Chinese and Hong Kong real estate stocks performed strongly, with Hang Seng Properties (00012.HK) up more than 7% and Longhu Properties (00960.HK) up more than 8%. Changhe Group performed well, with Changhe (00001.HK), Changjian (01038.HK) and Changhe (01113.HK) all up more than 5% to 6%. Chip, gold and shipping-related stocks fell against the market, with China Hongqiao (01378.HK) leading the decline of 3.12 percent, Lenovo Group (00992.HK) down 2.27 percent and China Resources Power (00836.HK) down 2.6 percent.

The impact of interest rate cut expectations on blue-chip stocks

Analysts say that as an offshore market, Hong Kong’s liquidity and risk appetite resonate with the global macro environment. Among them, the HK stock market is more significantly affected by the Federal Reserve’s monetary policy, and there is obvious and rapid feedback to it, mainly because the source of HK stock funds is mostly related to the United States. If the Fed gradually enters a cycle of interest rate cuts, the valuation of HK stocks is expected to improve significantly based on the Hong Kong dollar anchoring the dollar and Hong Kong's interest rate levels basically consistent with the Fed trend.The rising expectations of this rate cut means that the market is more relaxed about the future interest rate environment, which will help boost the market's risk appetite and attract investors to re-enter the stock market, especially those blue-chip stocks with solid financial positions and good earnings prospects.Below-expected inflation data could ease investor concerns about an overheating economy and potential interest rate hikes, further stabilizing market sentiment. Increased liquidity of funds and reduced financing costs will make the operating environment for enterprises more relaxed, which will help improve their profitability and valuation standards. In addition, the dollar may weaken, which is a boon for assets denominated in Hong Kong dollars (such as HK stocks), which become more attractive to international investors.For Hong Kong blue-chip stocks, their performance largely reflects the overall health of the market as they typically represent various important areas of the economy, such as finance, real estate, technology and consumer goods. Amid rising interest rate cut expectations, financial stocks may benefit from an improved interest rate environment, real estate stocks may perform well due to lower financing costs, and technology stocks may receive more inflows due to improved market risk appetite.

However, despite the fact that the overall trend may be positive, the specific reaction of the market is subject to observation of other influencing factors such as the global economic environment, geopolitical risks and the fundamental situation of the company itself. Therefore, although the rise in interest rate cut expectations usually has a positive impact on blue-chip stocks in Hong Kong, the actual effect needs to be comprehensively evaluated by combining several factors.

How to buy Hong Kong's top 10 blue-chip high-yield stocks on uSMART?After logging in to uSMART APP, click from the bottom of the page to select "Quotes", then click "HK Stock" at the top of the page and click the search icon in the upper right corner, enter the code of Hong Kong blue-chip high-yield stocks to find the blue-chip stocks you want to invest in, and finally click right In the lower corner "Transaction", select the buy/sell function, and finally select the stock price, number of shares, and trading conditions and send the order;