Mainland China, Hong Kong shares slip as Fed hike bets, regional weakness weigh

SHANGHAI: Mainland China and Hong Kong shares slipped on Tuesday, tracking weakness in regional peers amid rising bets of a Federal Reserve interest rate hike, while investors also monitored developments around the US-Iran peace talks. 

At the midday break, the benchmark Shanghai Composite index eased 0.4%, while the blue-chip CSI300 index lost 1.5%.

Asian stocks mostly eased and oil prices regained strength after the US waived sanctions on Iran, while traders grappled with rising expectations the Federal Reserve may take more aggressive action to tackle inflation.

US Treasury yields climbed with interest-rate-sensitive 2-year yields touching a 16-month high, as traders positioned for the prospect of Fed rate hikes later this year.

US dollar strengthened and pressured gold prices and non-ferrous metal shares, with a sub-index tracking the industry shedding 6.6% in morning deals. “Weak headline macro data and regulatory scrutiny of technology firms continue to dominate the narrative,” said Wee Khoon Chong, APAC macro strategist at BNY.

“Yet the growth engine is clearly in high-tech industries … Investors should focus on where growth is occurring rather than where it is slowing,” he said, adding that a break above current SSEC levels would clear key long-term barriers and bolster the bullish case for Chinese equities.

In Hong Kong, the benchmark Hang Seng Index fell 1.1% and the city’s tech shares dropped 2.2%. Weakness in tech shares were tracking regional peers, such as South Korea, where benchmark KOSPI fell more than 6% at one point, as investors booked profits after recent sharp gains in chipmaker stocks.

Consumption in the world’s second largest economy remained subdued.

China’s mid-year “618” shopping festival, once a showcase for the country’s booming e-commerce sector, has drawn to a fanfare-free close as prolonged discounts and cautious households blunt the impact of one of the world’s largest retail events.

Hong Kong shares of e-commerce giant Alibaba lost 3% to the lowest since April 2025. ‑Reuters