US Rate Fears Weigh On HSI, Shanghai Gains

Hong Kong stocks finished Thursday morning more than 1 percent lower following the release of Federal Reserve minutes that fanned expectations US interest rates will rise further than previously expected.

The Hang Seng Index lost 1.1 percent, to sit at 31,095 by the break.

On the mainland, the Shanghai market jumped 1.9 percent, to 3,258 and the Shenzhen shares gained 1.8 percent, to 1,769 as mainland traders returned from a week-long break for the Lunar New Year celebrations.

Tokyo ended the morning 1.2 percent lower, Sydney gave up 0.2 percent and Singapore was off 0.9 percent. Seoul shed 0.6 percent, Taipei was off 0.7 percent and Manila dropped 0.9 percent.

The much-anticipated notes from the Fed's January policy meeting showed the board thought Donald Trump's sweeping tax cuts would fire up the already humming economy, pushing inflation higher.

Analysts speculate that the Fed will lift interest rates at its next meeting in March but there is debate about whether it will carry out three increases – as many have predicted – or four, in light of the recent spate of strong data.

With rates expected to rise, the US dollar rallied against its main peers on Wednesday and extended gains against the pound and euro in Asia. However, the yen rebounded and pushed higher as traders flocked to the Japanese unit, which is considered a safe-haven asset in times of volatility and uncertainty. (AFP)

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