Hong Kong stocks slip as property and banking shares drop after US data dims rate cut view

The Hang Seng Index dropped 1 per cent to 16,760.52 as of 11.20am local time, after surging 2.4 per cent on Tuesday. The Tech Index lost 1.6 per cent, while the Shanghai Composite Index declined 0.3 per cent.

Shares of banks and property companies, which are sensitive to interest rate changes were the major decliners. HSBC lost 1.3 per cent to HK$61.10, Hang Seng Bank lost 1.4 per cent to HK$88.90 and Sun Hung Kai Properties declined 2 per cent to HK$75. Xiaomi lost 3.8 per cent to HK$15.66 after it gained 9 per cent on Tuesday following the launch of its first electric car.

Overnight, US job openings edged up and new orders for factory goods rebounded more than expected. That prompted traders to rein in their interest rate cut expectations. Markets now see a 56 per cent chance of a reduction of interest rates by the US Federal Reserve in its June meeting, down from the 69 per cent chance ahead of the data dump.

“It’s hard to get a clear read on the liquidity conditions as expectations for rate cuts keep fluctuating,” Shen Fanchao, an analyst at Zheshang Securities in Hong Kong said in a note on Wednesday. Investors should remain cautious about the near-term trajectory as the outlook for Hong Kong’s market fundamentals has yet to substantially improve, he added.

Elsewhere, Alibaba jumped as much as 1.2 per cent after the company said it bought back US$4.8 billion worth of its own shares last quarter to protect the stock price. It surrendered all gains later to trade 0.3 per cent lower at HK$70.75.

Other key Asian markets weakened, following the overnight decline on Wall Street. Japan’s Nikkei 225 slipped 1.2 per cent, while South Korea’s Kospi lost 1.4 per cent Australia’s S&P/ASX 200 weakened 1.1 per cent.