US equities slumped overnight amid steep losses in regional bank stocks after regulators seized First Republic Bank
The Federal Reserve is widely expected to raise its target rate again later today in what analysts said could be the final hike in 2023
Hong Kong stocks tumbled to a one-week low as renewed concerns about bank failures in the US infected local market sentiment. Investors dumped riskier assets in the region before another likely interest-rate increase in the US and at home.
The Hang Seng Index lost 1.6 per cent to 19,615.28 at 10.35am local time, as all 11 members in the finance gauge weakened. The Tech Index slumped 2.3 per cent to the lowest in seven weeks. Financial markets in mainland China are closed through Wednesday for the May Day holiday.
Alibaba Group plunged 2.5 per cent to HK$80.25 while Tencent slid 2 per cent to HK$338.80. Chip maker SMIC declined 3.3 per cent to HK$21.75 while developer Country Garden slumped 3 per cent to HK$1.92. HSBC led banks lower, losing 0.9 per cent to HK$58.15 while ICBC fell 1.2 per cent to HK$4.15. NIO plunged 4.8 per cent to HK$58.05.
The S&P 500 Index lost 1.2 per cent overnight, with regional lenders PacWest Bancorp and Western Alliance Bancorp crashing by more than 15 per cent. Efforts to restore confidence failed, even after regulators seized First Republic Bank and sold the lender to JPMorgan Chase.
The market is also bracing for the fallout from another likely round of policy tightening in the US. The Federal Reserve is expected to raise its key rate by 25 basis points to a range of 5 per cent to 5.25 per cent later today, according to fed fund futures, with the Hong Kong Monetary Authority to follow in lockstep by policy design.
Major Asian markets traded lower. The Kospi in South Korea fell 0.7 per cent while the S&P/ASX 200 in Australia weakened 1.2 per cent. Markets in Japan are closed for a public holiday.
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