The Hang Seng Index fell below 19,000 once again following an announcement by the US Federal Reserve of its intention to raise rates in coordination with central banks in Europe and England, while the yuan rebounded with the assistance of state-owned banks’ intervention.

The HSI ended up down by 1.24 percent to 18,934 points.

Top central banks reaffirmed Wednesday they think further tightening will be needed to tame stubbornly high inflation but still believe they can achieve that without triggering outright recessions.

Fed chief Jerome Powell kept rate hikes on the table while European Central Bank boss Christine Lagarde cemented expectations for a ninth consecutive rise in July.

Meanwhile, economist Paul Krugman said inflation has fallen more quickly in the United States than in other countries.

The news came as the overnight Hong Kong interbank offered rate jumped to 5.5 percent, a new 17-year high, and surpassed the US interest rate again, indicating the intensified liquidity stress in the city.

China stepped in to support the yuan for a third time this week, with the People’s Bank setting its daily reference rate for the currency at a stronger-than-expected level.

The so-called fixing came in at 7.2208 per US dollar, 311 pips stronger than the average estimate in a Bloomberg survey.

Offshore yuan flipped to a gain of 0.1 percent at 7.2379, but the Bank of East Asia (0023) warned that yuan could further depreciate to 7.3 in the short run.

Invesco said Hong Kong stocks can benefit if China cuts the interest rate further, but the boost would not be substantial.

https://www.thestandard.com.hk/section-news/section/2/253758/HSI-slips-as-inflation-bites-in-West

Category: Hong Kong