The Hang Seng Index fell 0.2%, or 59 points, to 24,893 on Thursday, tracking overnight losses on Wall Street after the Federal Reserve left interest rates unchanged while signaling persistent inflation risks.
In line with the Fed's decision, the Hong Kong Monetary Authority kept its base rate unchanged at 4.0% under the city's Linked Exchange Rate System.
Investor sentiment was further weighed by a sharp rise in longer-dated Treasury yields, renewed concerns over AI-related spending following mixed US tech earnings, and escalating Middle East tensions that sent Brent crude nearly 8% higher.
The weakness persisted despite the strong debut of AI optical-module maker Zhongji Innolight, which raised HK$53.4 billion in Hong Kong's largest IPO in seven years.
On the data front, investors also remained cautious ahead of China's PMI data due on Friday.
Among notable laggards were Tencent (-0.7%), Xiaomi (-3.0%), Z.AI Co. (-5.2%), SMIC (-2.8%), and Meituan Class (-1.3%).