HONG KONG (Nikkei Markets) -- Hong Kong shares ended little changed Thursday as robust gains by HSBC Holdings after an upbeat first quarter helped erase most early losses stemming from concern about a Federal Reserve rate increase next month.
The Hang Seng Index ended less than 0.1% lower at 24,683.88 after falling as much as 0.7% earlier. Heavyweight HSBC rose 3% for its best performance this year after the lender reported a better-than-expected 12% increase in adjusted pre-tax profit for the March quarter. The Hang Seng China Enterprises Index of mainland companies fell 0.8% to a two-week low as sentiment soured after a private survey showed China's services sector expanded at the slowest pace in nearly a year. Galaxy Entertainment Group retreated 2%, trimming year-to-date gains to 26%, after reporting a 5% increase in first-quarter revenue and a 31% jump in adjusted earnings before interest, tax, depreciation and amortization.
The Fed sounded a positive note about the U.S. economy Wednesday as it kept interest rates steady, fuelling gains for the dollar index. The dollar's strength is often interpreted in Asia as a negative because it could spark outflows from the region. The central bank, which raised interest rates in March, has signaled the possibility of two more rate increases this year. Two of the three U.S. benchmark indexes ended lower Wednesday.
"To what extent Fed rate hike expectations will hurt Hong Kong and other Asian markets will depend on what happens to the dollar," said Ronald Wan, chief executive at Partners Capital International. "It is difficult to see equities continuing the recent good run if the dollar starts to climb significantly higher."
The greenback was higher against most Asian currencies on Thursday and the dollar index is on course for its first weekly advance in four weeks. The yuan traded onshore was little changed at 6.8952 against the U.S. currency.
PetroChina dropped 1.5%, pacing declines by energy stocks after Brent crude fell 0.7% to near five-month lows Thursday.
Ping An Insurance Group dipped 0.3%. The insurer said it is launching an overseas fund to invest in financial and healthcare technology worldwide, Reuters reported, citing a company statement Thursday.
Trading in Glencore shares was halted on Thursday. Glencore is in talks to sell a portfolio of royalties, Reuters reported late Wednesday, citing four people familiar with the process.
Zhejiang Expressway slipped 1.7%, cutting year-to-date gains to 29%. China's securities regulator approved the proposed spin-off and separate listing of its indirectly owned subsidiary on the Shanghai Stock exchange.
LeSports, the sports media arm of LeEco, cancelled the live stream of a football match at the last minute, raising concerns over its finances, according to a Caixin report. Trading in LeEco's Shenzhen-listed unit Leshi Internet Information & Technology has been halted since April 17, pending an announcement related to asset restructuring.
Mainland property developers China Resources Land and China Overseas Land & Investment fell at least 0.7% amid concern about a challenging policy environment. Banks in Shanghai and Beijing have raised interest rates for home buyers, according to separate reports by Caixin and Reuters.
Fullshare Holdings jumped 18%, its best performance since July 2015, as trading resumed after it dismissed claims by short-seller Glaucus Research that it had manipulated stock prices.
Guangzhou R&F Properties dropped 4% after its net profit tumbled 96%.
--Nimesh Vora and V. Phani Kumar
--Nikkei Markets is a real-time financial news service for South East Asia's markets published by Nikkei NewsRise Asia Pte Ltd, a Nikkei and NewsRise joint venture company. Nikkei Markets provides wide companies coverage in the region, including the Nikkei's Asia300 companies.