Hong Kong's property sector traded lower, weighed down by a shift in expectations for U.S. monetary policy.

At the time of writing, shares of Hang Lung Properties Ltd. (00101) were down 2.92% to HK$7.31. Hysan Development Co., Ltd. (00014) fell 2.62% to HK$16.37. Sun Hung Kai Properties Ltd. (00016) declined 2.27% to HK$112, while Sino Land Co. Ltd. (00083) dropped 1.75% to HK$10.67.

The market movement follows the latest policy announcement from the U.S. Federal Reserve. As expected, the Fed kept its benchmark interest rate steady within the 3.5% to 3.75% range. However, officials' projections, known as the "dot plot," indicated a median expectation for the federal funds rate to reach between 3.75% and 4% by the end of 2026.

Adding to the hawkish sentiment were comments from the Fed's new Chair, Kevin Walsh. He emphasized a firm and unwavering commitment to bringing inflation down to the 2% target, noting the central bank's five-year failure to achieve this goal and the need for corrective action.

In response, traders have fully priced in a rate hike by October 2026, with market-implied odds of a move within this year now standing at 100%. The prospect of higher-for-longer U.S. interest rates pressures interest-rate-sensitive sectors like property, contributing to the weakness in Hong Kong-listed real estate stocks.