Hong Kong stocks retreat as traders temper US rate-cut bets amid worries about sticky inflation
- Traders continue to dial back hopes for a Fed rate cut in June meeting amid signs of sticky inflation
- The Hang Seng Index remains 0.1 per cent higher in trading-shortened week; financial markets in mainland China are closed for a holiday
The Hang Seng Index weakened less than 0.1 per cent to 16,723.92 at the close of Friday trading, after an earlier loss of as much as 1.5 per cent. The Tech Index declined 0.3 per cent. Financial markets in mainland China are closed for a public holiday.
WuXi Biologics slumped 4.8 per cent to HK$13.36 while its affiliate WuXi AppTech tumbled 5.6 per cent to HK$35.10. Alibaba Health slid 5.7 per cent to HK$2.80 and peer JD Health lost 4.4 per cent to HK$25.25. Longfor declined 2.5 per cent to HK$10.20, leading losses among mainland Chinese developers.
Limiting losses, Tencent gained 1 per cent to HK$311.60 and food delivery platform Meituan strengthened 1.8 per cent to HK$100.70. HSBC Holdings jumped 2.1 per cent to HK$62.70.
“If we continue to see inflation moving sideways, then that would make me question whether we need to do those rate cuts at all,” said Kashkari, who last month projected two rate cuts in 2024. “There’s a lot of momentum in the economy right now.”
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As of Friday the chance of a rate cut at the Fed’s June meeting stands at 54.3 per cent, compared with 61.8 per cent on Thursday, according to data compiled by CME Group based on Fed fund futures. US consumer prices rose at an annual pace of 3.2 per cent in February, quickening from 3.1 per cent in January.
“Expectations of Fed rate cuts have been fluctuating,” dampening a recent recovery in risk appetite, analysts at China Merchants Bank said in a note. Hong Kong’s stock market is likely to see more near-term volatility, they said.
The Hang Seng index gained 1.1 per cent this week, adding to a 0.3 per cent gain in the preceding week. Due to public holidays, some HK$105.8 billion worth of stocks have changed hands so far this week, versus HK$113.5 billion last week, according to Bloomberg data.
Other key Asian markets fell. The Nikkei 225 Index in Japan lost 2 per cent while the Kospi Index in South Korea declined 1 per cent and the S&P/ASX 200 in Australia declined 0.6 per cent.
