Hong Kong stocks trade close to 2-week low as Fed minutes curb wagers on aggressive rate cuts

Hong Kong stocks hovered near a two-week low as the latest minutes from the Federal Reserve suggested interest rates would remain higher for longer, offsetting a report showing an improvement in China’s services industry.

The Hang Seng Index fell 0.5 per cent to 16,563.38 as of 10.08am local time, heading for the lowest close since December 22. The Hang Seng Tech Index slipped 0.1 per cent, while the Shanghai Composite Index retreated 0.4 per cent.

Anta Sports Products fell 3.3 per cent to HK$69.85 and Chinese property developer Longfor Group lost 2.1 per cent to HK$11.08. Hang Lung Properties eased 1.9 per cent to HK$10.32 and Wharf Real Estate Investment shed 2.9 per cent to HK$23.70 after home transactions in Hong Kong slumped to a 33-year low in 2023.

Limiting the losses, CNOOC advanced 2.8 per cent to HK$13.36 and PetroChina added 2.1 per cent to HK$5.34 after crude oil futures rose above US$73 a barrel for the biggest gain in almost seven weeks.

Technology stocks led the declines in US equities overnight and gold futures trended lower after the Fed dampened bets on aggressive cuts in borrowing costs.

Meanwhile, the Caixin purchasing managers’ index (PMI) of the services industry rose to 52.9 in December from 51.5 in the previous month, remaining in the expansionary zone for 12 months in a row.

Hong Kong stocks have extended their weakness into the new year, as worries about China’s growth outlook lingers and overseas traders tamp down their expectations about an imminent rate cut in the US. The Hang Seng Index fell 2.4 per cent over the past two trading days after a 14 per cent decline last year.

Other major Asian markets fell. Japan’s Nikkei 225 slid 1.4 per cent as the market started trading for the first time in 2024. South Korea’s Kospi retreated 0.7 per cent, while Australia’s S&P/ASX 200 lost 0.3 per cent.

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