Hong Kong, Shanghai Stocks Join Asian Retreat

Hong Kong stocks dropped sharply in the morning session on Thursday after the Federal Reserve fanned concerns about the US economy while lawmakers in Washington struggle to agree a new stimulus package.

The Hang Seng Index sank 2.1 percent, to 24,662.

On the mainland, the Shanghai Composite Index fell 1.1 percent to 3,371, while the Shenzhen Composite Index lost over 1 percent, to 2,229.

Tokyo went into the break 0.7 percent lower while Sydney shed 0.9 percent.

Taipei and Seoul both lost more than 2 percent, and Singapore was off more than 1 percent. Manila and Wellington were also well down.

"Without the Fed air balloon floating markets... stocks are temporarily succumbing to forces of gravity," said Stephen Innes at AxiCorp.

But he added that with borrowing costs expected to sit around record lows for up to three years, "it is unlikely US stocks will have to deal with a particularly deep or intense air pocket as the wall of money argument seems always to win out".

Adding to the downward pressure were ever-present China-US tensions, with the White House on Wednesday withdrawing from three bilateral deals with Hong Kong on extradition and taxation over the city's controversial security law. (AFP)

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