Hang Seng Drops After Fed Rate Hike

The Hang Seng Index slipped 1.4%, or around 330 points, to 24,380 on Thursday, amid a cautious market backdrop after the US Federal Reserve raised interest rates by 25 basis points to 3.75%-4.00% and signaled the possibility of another hike later this year. The move strengthened the US dollar and pushed Treasury yields higher, potentially weighing on liquidity and rate-sensitive Hong Kong equities. The Hong Kong Monetary Authority also raised its base rate by 25 basis points to 4.25%, following the Fed's decision. However, CICC said Hong Kong stocks could experience greater volatility from renewed US monetary tightening, but the impact should be short-lived unless the Fed begins a sustained rate-increase cycle. Meanwhile, easing oil prices offered some relief as Saudi Arabia moved to restore damaged pipeline capacity. Among notable stocks, Tencent (-1.4%), AIA (-0.6%) and Xiaomi (-1.2%) declined, while Z.AI Co. (+4.2%), Kingboard Laminates (+4.9%) and Lenovo (+1.9%) rose.