Hong Kong stocks fall for a second straight day as investors await US inflation data, progress on debt-ceiling talks

Hong Kong stocks retreated as investors waited on the sidelines ahead of US inflation data, with the US debt-ceiling impasse further souring sentiment. Longfor Group led the decline in property developers while a rally in state-owned firms lost traction.

The Hang Seng Index fell 0.7 per cent to 19,723.86 at the noon trading break, following the 2.1 per cent pullback on Tuesday. The Tech Index retreated 0.5 per cent, while the Shanghai Composite tumbled 1.4 per cent. A gauge tracking US-listed Chinese stocks tumbled 2.3 per cent overnight in New York.

Alibaba Health slipped 2.9 per cent to HK$5.03, Tencent Holdings lost 0.4 per cent to HK$327.20, while Meituan dropped 2.3 per cent to HK$127.30. Property developers Longfor tumbled 3.9 per cent to HK$20.70 and Country Garden retreated 1.5 per cent to HK$1.96, while China Resources Land dropped 2.5 per cent to HK$34.80.

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Bank of China lost 2.7 per cent to HK$3.28, while ICBC dropped 2.6 per cent to HK$4.49, leading a retreat among state-linked stocks as a bull run started to lose traction. A gauge tracking state companies listed in Hong Kong slid 1 per cent.

The US consumer price data, due later on Wednesday, is expected to rise 5 per cent year on year in April, according to a consensus of analysts compiled by Bloomberg. The CME's FedWatch tool shows the market is now pricing in a 77.7 per cent chance of the Fed pausing on rates next month, compared with 84.5 per cent two days ago.

"Disappointment may be in store" due to potentially tighter monetary conditions, slowing growth and economic uncertainty, strategists at BCA Research including Irene Tunkel wrote in a note to clients on Wednesday. "We remain defensively positioned."

Investors are also watching the debt-ceiling discussions between US President Joe Biden and congressional leaders to see if the country will further lift the borrowing limit or default on its debt.

Elsewhere, two stocks debuted on Wednesday. Semiconductor Manufacturing El jumped 11.6 per cent to 6.35 yuan in Shenzhen, while Zhejiang Wanfeng Chemical surged 36 per cent to 19.83 yuan in Shanghai.

Major Asian markets declined on Wednesday. The S&P/ASX 200 in Australia fell 0.2 per cent and the Kospi in South Korea declined 0.3 per cent. The Nikkei 225 in Japan retreated 0.5 per cent.

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