Overnight, the U.S. 30-year Treasury yield briefly touched 5.731%, marking a new high since May 2002, while the Federal Reserve's September meeting minutes showed most officials believe another rate hike may be needed this year, sending Hong Kong stocks lower on the open.

By the close, the Hang Seng Index fell 1.43%, or 344.71 points, to 23,785.79, with full-day turnover of HK$207.255 billion; the Hang Seng China Enterprises Index dropped 0.89% to 8,010.58; and the Hang Seng Tech Index declined 2.89% to 4,073.38.

Among the larger Hong Kong ETFs, the Tracker Fund of Hong Kong (02800) fell 1.37% to HK$24.42; the Hang Seng China Enterprises ETF (02828) dropped 1.11% to HK$81.96; and the CSOP Hang Seng Tech Index ETF (03033) declined 2.87% to HK$3.994.

In sector performance, ongoing Middle East geopolitical tensions drove oil and gas ETFs sharply higher.

By the close, the F Samsung Crude Oil Futures ETF (03175) rose 1.78% to HK$12.02; on the A-share side, the S&P Oil & Gas ETF Jiashi (159518.SZ) surged 9.99% to 1.332 yuan; and the S&P Oil & Gas ETF Fullgoal (513350.SH) gained 9.85% to 1.405 yuan.

U.S. President Donald Trump said on October 7 local time that he no longer wishes to reach an agreement with Iran; Iran had previously said it would close the "illegal waterway" of the Strait of Hormuz.

According to U.S. media reports, the Pentagon has instructed Central Command to complete preparations within days to restart military operations against Iran, potentially carrying out "large-scale bombing" of Iranian energy and nuclear targets, possibly before the midterm elections, though Trump has not made a final decision.

On the same day, fighting escalated in Yemen, with Houthi forces attacking two Saudi airports, killing 3 and wounding 36, as the two sides battled around the Bab-el-Mandeb Strait.

On October 8, geopolitical premiums rebounded, with Brent crude rising to $104.

AI hardware stocks sold off, and Hong Kong AI-themed ETFs declined collectively.

By the close, the Hang Seng AI ETF (03438) fell 5.76% to HK$6.135; the Value Partners Optical Communication Active ETF (02811) dropped 4.75% to HK$14.65; and the Bosera HK-Korea Semiconductor ETF (03516) declined 4.50% to HK$9.24.

Morgan Stanley released an optical communications research report on October 1, predicting that U.S. Federal Communications Commission (FCC) restrictions on Chinese-made optical modules are most likely to be implemented in phases starting from the 3.2T generation, and may set an exemption threshold requiring "U.S. company value in the bill of materials to reach 65%," with the combined value of U.S.-made DSPs and lasers already approaching that threshold; the bank also emphasized that 3.2T is not expected to ramp up until 2028, giving the supply chain about a two-year buffer period.

On the storage side, Samsung Electronics announced preliminary third-quarter results on October 8, with operating profit up nearly 8-fold year-on-year but still falling short of some market expectations.

Overnight, affected by the rise in 10-year U.S. Treasury yields, the Philadelphia Semiconductor Index fell 1.15%, optical communications stocks declined broadly, and sentiment transmitted to Hong Kong.

Innovative drug ETFs also dropped.

By the close, the CSOP Hang Seng Biotech ETF (03174) fell 3.78% to HK$3.772; on the A-share side, the STAR Market Innovative Drug ETF Guotai (589720.SH) dropped 6.95% to 0.857 yuan; and the Hang Seng Biotech ETF Huatai-PineBridge (513930.SH) declined 5.29% to 1.056 yuan.

The U.S. 30-year Treasury yield briefly touched 5.731% during intraday trading on October 7, marking a new high since May 2002; as long-duration assets, innovative drugs are highly sensitive to discount rates in their valuations, and global biotech assets came under synchronized pressure.

However, during the National Day holiday, Abogen Biosciences reached an mRNA platform licensing deal with Novartis worth up to approximately $7.775 billion, and Asiange Pharma also signed an overseas licensing deal worth over $250 million; the ESMO annual meeting in late October will feature multiple China-led studies, and the sector's overseas expansion logic remains intact.

Amid the broader market correction, dividend ETFs rose against the trend.

By the close, the Ping An Hong Kong High Dividend ETF (03070) gained 0.77% to HK$41.80; the Global X Hang Seng High Dividend Yield ETF (03110) rose 0.27% to HK$29.26; on the A-share side, the Dividend Low Volatility ETF Huatai-PineBridge (512890.SH) gained 1.34% to 1.212 yuan.

Under the broader market correction, low-valuation, high-dividend sectors such as banking, coal, oil, and power strengthened against the trend, with ICBC and Bank of China A-shares hitting record intraday highs, as stable cash flows and sustained dividend capacity drew investor attention in the volatile market.

Southern Fund said the fourth quarter has traditionally been an important allocation window for dividend assets, and the gradual launch of interim dividends by listed banks constitutes a short-term catalyst.

On institutional views, Goldman Sachs said that due to limited refining capacity across countries, combined with demand recovery driven by government and corporate restocking, diesel prices may remain elevated until the end of 2027.

Nikhil Bhandari, the bank's co-head of Asia-Pacific natural resources research, said refined product prices need to be kept high enough to sustain a certain degree of demand suppression through next year.

Guotai Fund suggested that investors could consider maintaining an "AI main line plus moderate style balance," potentially adding to gold allocations if there is a correction, holding dividend assets primarily while being cautious about chasing rallies, and waiting for interest rates to stabilize before capturing resonance with overseas tech stocks.

Xiangcai Securities said it expects the three-dimensional model to maintain a "strong-weak-strong" pattern for most of the fourth quarter of 2026; as the macro short cycle shows signs of peaking, future investment focus will shift toward midstream and downstream sectors, and it recommends continued attention to dividend-related defensive sectors.