Hong Kong's three major stock indices were all lower in the morning session. At the midday close, the Hang Seng Index was down 1.4% at 25,274.45, the Hang Seng Tech Index fell 1.43%, and the Hang Seng China Enterprises Index declined 1.06%.

Key Market Moves

Technology stocks were broadly lower, with Lenovo Group Ltd shares dropping over 3%. Shares of Alibaba Group Holding Ltd, Meituan, and Baidu Inc all fell more than 2%.

The semiconductor sector bucked the downtrend to move higher. GigaDevice Semiconductor Inc shares surged over 9%.

Lithium battery stocks retreated, with Contemporary Amperex Technology Co Ltd (CATL) shares down more than 5%.

The non-ferrous metals sector weakened, with China Molybdenum Co Ltd shares declining over 5%.

Semiconductor Sector Gains Ground

The semiconductor sector was a notable outperformer. The World Semiconductor Trade Statistics organization released a forecast report on June 2, predicting that the global semiconductor market size is expected to grow by nearly 90% year-on-year by 2026, surpassing $1.5 trillion, driven by rapidly expanding demand for artificial intelligence. Analysts point out that the global memory industry is entering a new super-cycle propelled by explosive demand for AI computing power. After nearly a decade of continuous investment and technological accumulation, China's memory industry is also beginning to enter a phase of industrial realization.

Lithium Battery Stocks Under Pressure

Lithium battery stocks faced selling pressure. Analysts suggest that the lithium battery industry is experiencing a recovery in overall sentiment driven by high growth in downstream demand. Current industry production schedules are active, material prices have increased year-on-year, and the industry cycle has entered an upward phase, suggesting potential profit recovery opportunities for leading companies in the lithium battery materials segment.

Metals Sector Weakens

The non-ferrous metals sector moved lower. The latest economic survey from the U.S. Federal Reserve indicated that rising energy prices are pushing inflation higher. Since the second quarter, repeated rebounds in U.S. inflation data, stronger-than-expected resilience in the job market, coupled with renewed strength in global energy prices, have led to a fundamental shift in market expectations regarding the Fed's monetary policy. A Federal Reserve official noted on Tuesday that if currently high inflation pressures continue to intensify, the Fed may need to restart interest rate hikes soon.