Hong Kong Stock Market Update | Tech stocks continue to decline in early trading, with the Hang Seng Tech Index falling more than 1.5%. Market bets on interest rate cuts are lowered due to the release of the Federal Reserve meeting minutes.
The tech stocks on the Kewang Stock Exchange opened lower, with the Hengke Index falling more than 1.5%. The stock prices of Alibaba, Tencent, and CHINA LIT all declined. The minutes of the Federal Reserve meeting showed that the rate hike cycle may have ended, but the timing of rate cuts is uncertain. It is expected that the US economy will enter a recession, and the Federal Reserve may cut rates around the middle of this year. Short-term US bond rates may experience wide fluctuations, and bond rates may decline before the rate cut.
Zhitong App learned that the technology stocks continued to decline in early trading, with the Hang Seng TECH Index falling 1.5% at one point. As of the time of writing, BABA-SW (09988) fell 2.77% to HKD 72; Tencent (00700) fell 1.67% to HKD 293.8; and China Literature Group (00772) fell 1.6% to HKD 27.75.
On the news front, the minutes of the Federal Reserve meeting showed that Fed officials unanimously believed that the rate-hiking cycle may have ended and there was no discussion of when to start cutting rates. According to market surveys, it is a common view that the Fed will start cutting rates in mid-2024, but the magnitude and speed may be less than market expectations. According to CME's "FedWatch," the probability of the Fed maintaining rates in the range of 5.25%-5.50% in February is 93.3%, and the probability of a 25 basis point rate cut is 6.7%.
CITIC Securities pointed out that looking back at history, it can be seen that after the Fed stops raising rates, short-term US bond rates, which are more affected by monetary policy, tend to decline more, while long-term US bond rates may fluctuate or rise in the short term due to factors such as future inflation pressures and uncertainty about the timing of rate cuts. It is expected that the US economy will enter a recession in the first half of this year, and the Fed may cut rates around the middle of the year. Short-term 10-year US bond rates may fluctuate widely, and bond rates may start to decline on the eve of rate cuts.