Hang Seng finishes 0.3% lower

The Hang Seng Index fell 81 points or 0.3% to close at 23,980 on Tuesday, reversing gains from the previous session as broad-based sector weakness and renewed geopolitical concerns weighed on investor sentiment. Market mood soured following U.S. stock futures turning sharply lower, triggered by President Trump’s sudden departure from the G7 Summit in Canada, which reignited fears of heightened global diplomatic strain. Additionally, Israel-Iran tensions entered a fifth consecutive day, with further reports of strikes on strategic infrastructure raising the risk premium across global markets.

Traders also adopted a cautious stance ahead of the U.S. Federal Reserve’s two-day policy meeting, which begins today. While the Fed is widely expected to leave interest rates unchanged for a fourth straight time, recent surges in oil prices and rising geopolitical uncertainty have tempered expectations for any imminent rate cuts. Investors will be closely parsing Fed Chair Powell’s remarks for clues on the central bank’s forward guidance and inflation outlook.

Locally, financial stocks led the decline after China’s May new yuan loan figures came in significantly below expectations, despite showing a mild recovery from April’s multi-decade low. The data underscored persistent weakness in credit demand and raised concerns about the effectiveness of Beijing’s recent support measures. Ping An Insurance and HSBC each dropped 0.7%, while Hang Seng Bank fell 0.4%.

Losses extended to other key sectors as well. Consumer, tech, and property stocks slipped amid growing unease over tariff-related pressure and mixed Chinese activity data for May. Retail jewelry giant Chow Tai Fook plunged 7.3% after announcing plans to raise $1 billion via convertible bonds, a move that investors viewed as potentially dilutive. In the tech space, shares of Tencent and Alibaba declined modestly, while property developers like Country Garden and Longfor also closed lower as sentiment weakened around real estate demand.

Despite the pullback, some defensive names in utilities and healthcare saw marginal gains as investors rotated into safer assets amid the global uncertainty. Looking ahead, markets will remain sensitive to developments from the Fed meeting, Middle East tensions, and any progress in U.S.-China trade diplomacy, all of which continue to shape the near-term risk environment.