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SCMP Reporter

Hong Kong stocks fell for the fifth straight trading day yesterday, hurt by losses on Wall Street and fears that US interest rates will rise.

  Brokers said last week's decline in US stocks had soured sentiment and made investors cautious about the short-term outlook.

  Rising US bond yields also spooked the market as this signalled inflation might be rising fast enough to prompt the Federal Reserve to raise interest rates soon.

  The Hang Seng Index closed 84.65 points lower at 13,294.9. The recovery in the afternoon came as the 13,200 level provided some support.

  Turnover fell to $8.61 billion from $11.12 billion on Friday.

  Andrew Fernow, research director at Vickers Ballas Securities, said: 'There was follow-through selling from last week's falls in the US.

  'We are seeing an increase of fears about inflation.'   The Dow Jones Industrial Average lost 59.27 points on Friday.

  At the same time, US long-bond yields - which anticipate inflationary trends - rose seven basis points to 6.89 per cent over the week.

  The climb in long-bond yields was taken as a sign there will be added pressure on the US Federal Open Market Committee (FOMC) to raise key interest rates when the body meets next Tuesday.

  Brokers said many local investors were tempted to sell out ahead of the meeting just in case the FOMC did plump for an interest rate rise.

  Political concerns were also said to be weighing on the minds of investors.

  Brokers said criticism from US congressmen about the appointment of the provisional legislature last week had increased fears another US-China trade war could be brewing.

  Among the 33 Hang Seng Index constituents, eight advanced, seven closed unchanged, and 18 lost value.

  Banks and conglomerates led the way down.

  HSBC, the biggest stock in the index by market capitalisation, fell $2 to $175.50 and Bank of East Asia lost 30 cents to $35.20.

  Among conglomerates to slip, Swire Pacific dropped $1.75 to $72 and Hutchison Whampoa shed $1.50 to $59.75.

  Property stocks, which fell heavily last week, were mixed.

  Utility China Light & Power was one of the best performers, adding 60 cents to $33.70 after reporting better than expected first-quarter sales on Friday.

  Looking ahead, brokers see the market remaining weak as investors await more economic data from the US.

  Edwin Cheung, dealing director at Taiwan Securities, said: 'The market is not very strong, but if the Fed leaves interest rates unchanged next week we could see a turnaround.' 



Dow's drop sours sentiment