Hong Kong stocks suffer worst sell-off in 2 months on Fed inflation warning, oil jitters
Fed Chair says increases in tariffs are likely to stoke prices, with officials waiting to assess the impact when a truce expires on July 9
The Hang Seng Index tumbled 2 per cent to 23,237.74 on Thursday to mark the worst sell-off since the 13 per cent drop on April 7 when US President Donald Trump announced the so-called reciprocal tariffs. All but nine of the 85 index members dropped.
The Hang Seng Tech Index lost 2.4 per cent. The CSI 300 Index and the Shanghai Composite Index of onshore stocks both retreated by 0.8 per cent.
Alibaba Group Holding slid 2 per cent to HK$110, and Tencent Holdings also fell by 2 per cent to HK$498. Hong Kong developers fell as the room to cut rates narrowed, with Sun Hung Kai Properties losing 2.1 per cent to HK$83.45 and Hang Lung Properties slipping 2.2 per cent to HK$6.68.
The Fed kept borrowing costs unchanged for a fourth time this year. A flare-up in inflation from a tariff war, combined with a spike in oil prices following the Israel-Iran conflict, could delay further rate cuts predicted by economists this year and dent the outlook for equity markets.
“Trade policy, fiscal policy, and unintended consequences of policies from the Trump administration are contributing to market volatility in the second half of this year,” said Tai Hui, a strategist at JPMorgan Asset Management in Hong Kong. “We continue to advocate for international diversification in equities and income generation from multiple sources.”