** The market had previously expected more interest rate cuts from the Chinese central bank to support the economy. But with the U.S. Federal Reserve now expected to keep rates higher for longer, further rate cuts from China could widen the policy rate gap between the two countries and pose more challenges for China to stablize its economy.
** China's blue-chip CSI300 Index dropped 0.48% by
the lunch break, while the Shanghai Composite Index lost
0.16%.
** Hong Kong benchmark Hang Seng was down 0.58%.
** Asian equities slipped, while the dollar hovered around
six-week highs as economic data and hawkish comments from Fed
officials revived fears that the U.S. central bank will stick to
its monetary tightening path.
** U.S. producer price index (PPI) rebounded 0.7% in
January, the largest increase since June.
** "The stronger than expected monthly PPI data, combined
with the sticky consumer inflation released earlier this week,
are clouding the Hong Kong and China markets," said Kenny Ng,
securities strategist, Everbright Securities International.
** "Investors worry that if U.S. rate stays higher for
longer, this would narrow the room for China's central bank to
ease interest rates further, as a widening of the gap between
the two countries' interest rates would fuel portfolio outflow."
** CSI Computer Index lost 3.25%, while the CSI Internet Finance Index fell 2.53%.
** Hang Seng Tech Index lost 1.46 %, weighed down
by China internet search engine giant Baidu Inc. , and
Kingsoft .
** Shares of China Renaissance , a boutique
investment bank active in underwriting Hong Kong IPOs, plunged
26.5% to a record low, after the company said it was unable to
contact its chairman and chief executive Bao Fan.
(Reporting by Georgina Lee, Hong Kong Newsroom)
