HONG KONG: China and Hong Kong stocks fell more than 1% on Wednesday, after sharp gains in the previous session, weighed by Wall Street’s overnight selloff and fresh geopolitical tensions.

China’s blue-chip index CSI300 lost 1.5% and the Shanghai Composite Index declined 1.4%. Both indices posted their biggest daily percentage loss since May 24, but they are still nearly 20% away from their April 27 lows.

Hong Kong’s benchmark index Hang Seng lost 1.9%. The Hang Seng tech index slumped 3.3% after touching a near four-month high in the previous session.

The benchmark S&P 500 tumbled 2% overnight as dire consumer confidence data dampened investor optimism and fuelled worries over recession and the looming earnings season.

Meanwhile, US President Joe Biden’s administration added five companies in China to a trade blacklist on Tuesday for allegedly supporting Russia’s military and defense industrial base.

“Geopolitical tensions between China and other major economics, especially the US and its allies, will likely remain elevated,” rating agency Moody’s said on Wednesday.

The strong rebound in the previous session was triggered by hopes that Beijing would gradually ease COVID-19 curbs to revive a struggling economy.

On Wednesday, Shanghai, which came out of a two-month COVID-19 lockdown on June 1, officially resumes dining-in, with the city continuing to ease restrictions.

China on Tuesday also halved the mandatory centralized quarantine time for inbound travellers to seven days, while Hong Kong’s incoming Chief Executive John Lee said the further relaxation of mandatory quarantine time for inbound travellers is under consideration.

However, Premier Li Keqiang cautioned that although China’s economy has recovered to some extent, its foundation is not solid.