Alibaba, Tencent gain as Hong Kong stocks snap 2-day slump on China data while markets eye Fed rate cut in May

The Federal Reserve kept its target rate unchanged, pushing back market expectations for a rate cut to the third policy meeting in May

Hang Seng Index ended January as the worst performer among major world equity benchmarks amid worries about China’s economy

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A person walks in front of an electronic stock board showing major stock indices in Tokyo on January 22, 2024. Photo: AP

Published: 10:37am, 1 Feb 2024Updated: 4:45pm, 1 Feb 2024

Hong Kong stocks rose after the Federal Reserve left the door open on monetary policy easing, with traders delaying their rate-cut bets to May. A private survey showed China’s manufacturing industry expanded for a third month in January.

The Hang Seng Index advanced 0.5 per cent to 15,566.21 at the close, halting a two-day, 3.7 per cent slump. The Tech Index surged 2 per cent, while the Shanghai Composite Index lost 0.6 per cent.

Alibaba Group rebounded 2.2 per cent to HK$71.05, snapping a two-day slide. E-commerce peer JD.com added 0.8 per cent to HK$87.50 and Tencent advanced 0.4 per cent to HK$271.60. Online games operator NetEase rallied 2.8 per cent to HK$155.80 and Baidu climbed 1.4 per cent to HK$102.80.

Chinese hotpot restaurant operator Haidilao surged 4.6 per cent to HK$12.82 and Chinese sportswear make Li Ning advanced 6.1 per cent to HK$17.62.

The Fed kept its target range for funds rate at 5.25 per cent to 5.5 per cent, unchanged for a fourth straight meeting on Wednesday in Washington. The decision prompted traders to bets on a rate cut at the Fed’s third meeting in early May, after Chair Jerome Powell suggested it would be premature to do so in March.

The odds of a rate cut in March fell overnight to about 35 per cent from about 73 per cent a month ago, according to data compiled by CME Group. There is about 61 per cent chance of a cut on May 1, versus 53 per cent a week ago, and 11 per cent a month earlier.