Hong Kong stocks retreated for a third day, keeping the city’s benchmark gauge at a six-week low, on concerns a robust US labour market will restrain the Federal Reserve from more rate cuts while China struggles to end sticky deflation in the economy.

The Hang Seng Index fell 1.2% to 19,217.45 at 11.05am local time, heading for the lowest close since November 26. The Tech Index dropped 1.6%.

Chinese EV maker NIO fell 7.4%, Li Auto fell 1.1%, while XPeng rose 2.2%.

Smartphone maker Xiaomi slid 4%.

Tencent Holdings slid 2.5%, adding to a 7.3% slump on Tuesday after being labelled with dozens of firms as “Chinese military companies operating in the US.”

A US government report on Tuesday showed job openings unexpectedly rose in November while hiring softened, suggesting America’s labour market conditions would not pressure the Fed to cut rates in 2025 by as many times as predicted by Wall Street economists.

Meanwhile, producer prices in mainland China probably fell 2.4 per cent in December, according to consensus among economists tracked by Bloomberg before a statistics bureau report on Thursday. It would mark a 27-month streak of deflation. Consumer prices are forecast to increase by 0.1 per cent.