China stocks fall most in 3 weeks on hawkish Fed, COVID worries

** "I think the worst is actually behind us when it comes to the Omicron variant" said David Chao, Global Market Strategist, Asia Pacific (ex-Japan) at Invesco. ** "While we see growth challenged in the first half of 2022, we expect a rebound in the second half driven by a combination of fiscal and monetary policy measures in contrast with many Western developed countries." ** Growth stocks led a decline across the board, with semiconductors and new energy shares slumping 5% and 4%, respectively. ** Tech giants listed in Hong Kong dropped 1.7%, with e-commerce giant Alibaba Group down 4.2%.

China stocks saw their biggest intraday slump since May 24 on Tuesday, after U.S. stocks tumbled overnight on fears of aggressive U.S. interest rate hikes, while a new COVID-19 outbreak in Beijing raised concerns over an economic recovery. The CSI300 index fell 1.9% to 4,109.87 at the end of the morning session, while the Shanghai Composite Index lost 1.6%, to 3,203.62.

The Hang Seng index dropped 0.9% to 20,876.31. The Hong Kong China Enterprises Index lost 1.1%, to 7,259.59. ** Wall Street hit a confirmed bear market milestone, which saw Goldman Sachs forecast a 75 basis point interest rate hike at the Federal Reserve's next policy meeting on Wednesday.

** "U.S. inflation has a direct impact on A-shares, as we can see from the performance in recent two days," said Wang Mengying, a stock index futures analyst at Nanhua Futures. "China stocks performance will eventually depend on expectations of domestic economic recovery." ** "However, if more aggressive rate hikes led to less aggregate global demand, domestic expectations would also be hit."

** Authorities in China's capital Beijing are rushing to contain a COVID-19 outbreak traced to a 24-hour bar, with a health official saying the outbreak was "still developing". ** "I think the worst is actually behind us when it comes to the Omicron variant," said David Chao, Global Market Strategist, Asia Pacific (ex-Japan) at Invesco.

** "While we see growth challenged in the first half of 2022, we expect a rebound in the second half driven by a combination of fiscal and monetary policy measures in contrast with many Western developed countries." ** Growth stocks led a decline across the board, with semiconductors and new energy shares slumping 5% and 4%, respectively.

** Tech giants listed in Hong Kong dropped 1.7%, with e-commerce giant Alibaba Group down 4.2%.