Hong Kong shares fall on Powell's hawkish tone, set for worst week since March

Hong Kong stocks fell on Friday and were set for their sharpest weekly decline since March as hawkish comments by U.S. Federal Reserve Chair Jerome Powell dampened market sentiment. ** Hong Kong's Hang Seng Index dropped 1.94% by the midday break, while the Hang Seng China Enterprises Index declined 2.06%.

Hong Kong stocks fell on Friday and were set for their sharpest weekly decline since March as hawkish comments by U.S. Federal Reserve Chair Jerome Powell dampened market sentiment.

** Hong Kong's Hang Seng Index dropped 1.94% by the midday break, while the Hang Seng China Enterprises Index declined 2.06%. ** The HSI index is down 6% this week, on track for its biggest weekly drop since March 10.

** Tech giants listed in Hong Kong lost 2.6% to lead the decline. Index heavyweight AIA Group fell 2.8%. ** China's mainland financial markets were closed on Friday for the Dragon Boat Festival holiday. Markets will resume trading on Monday, June 26.

** Broader Asian shares fell, as a string of hotter-than-expected inflation prints and hawkish central bank surprises made investors nervous about the economic toll of taming runaway prices. ** MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.7% and is down 3.6% for the week, its biggest setback since March.

** Fed's Powell reiterated his hawkish stance on Thursday and suggested that the central bank had not reached the end of its tightening cycle. ** Overnight, Bank of England delivered a surprising 50 basis point hike.

** Hong Kong stocks face external risks from both the U.S. rate hike uncertainties and geopolitical issues, Dang Chongyu, an analyst at Sealand Securities, said in a note. "It's too early to say in which month will be the lowest point of the year, as it depends on China domestic policies and external risks," he said.

** Hong Kong's Cathay Pacific Airways dipped 0.5%, even as the carrier forecast its first half-year profit in three years, buoyed by a strong rebound in travel demand and one-off gain from a stake sale in Air China.