THE Lunar New Year break will have done little to calm frayed nerves in Hong Kong as events overseas continued to unsettle global markets last week.
The traditional rally accompanying the first day of trading for the Chinese New Year would be conspicuous by its absence tomorrow, brokers said.
Worse-than-expected producer prices in the US pointing to rising inflation, and the collapse of trade talks between President Bill Clinton and Japanese Prime Minister Morihiro Hosokawa have set investors on edge, according to Barry Yates, former head of research at Vickers Ballas and now an independent stockbroker.
Hong Kong share prices in London fell 400 points on Friday on news that US producer prices - the price of goods leaving the factory gate and a key indicator of inflation pressures - jumped 0.4 per cent in January, the biggest rise for a year.
Although the reaction might have been a little overdone, investors remain highly sensitive to any news which could prompt the US Federal Reserve to tighten interest rates again following its 0.25 per cent increase to 3.25 per cent on February 4.
Borrowing costs have not yet risen in the territory in response to the Fed's move but senior bankers here meet on Friday to look at the issue.