The Hang Seng Index fell 1.4 per cent to 23,371.82 as of 11.12am, heading for the lowest close since June 3. The Hang Seng Tech Index shed 1.6 per cent. On the mainland, the CSI 300 Index and the Shanghai Composite Index retreated at least 0.4 per cent.
All but five stocks on the 85-member Hang Seng Index dropped, with rate-sensitive names such as Sun Hung Kai Properties (SHKP) dropping after the Fed kept borrowing costs unchanged for a fourth time this year.
Fed Chair Jerome Powell said at the rate-decision meeting on Wednesday in Washington that increases in the Trump administration’s tariffs are likely to boost prices and that the effects on inflation could be more persistent. While the US central bank still has two more rate reductions pencilled in this year, it cut the forecast for economic growth and raised the projections for inflation.
“Increases in tariffs this year are likely to push up prices and weigh on economic activity,” Powell said. “This is something we know is coming, we just do not know the size of it.”
Speculation is also mounting that the US will get directly involved in the conflict between Iran and Israel, escalating the situation in the region that supplies the bulk of the world’s oil. Strained fuel supply would add more pressure on inflation and complicate the Fed’s task of controlling prices.
