Chinese stocks showed signs of recovery on Friday as the blue-chip CSI300 Index and the Shanghai Composite Index both rose by 0.4% by midday. Meanwhile, Hong Kong's Hang Seng Index surged 2.1%, driven by gains in technology stocks.
Consumer staples led the gains in mainland markets, climbing 2.6% as investors shifted focus from AI supply-chain stocks to more traditional sectors. Shares of Chinese liquor giant Kweichow Moutai rose 2.4%. Conversely, the technology-focused STAR50 Index fell 0.7% and was down nearly 4% for the week, while the CSI Artificial Intelligence Index edged 0.2% lower.
Hong Kong equities benefited from positive investor sentiment following comments by Christopher Waller, suggesting that U.S. interest rates might remain unchanged if inflation data continues to show easing price pressures. This optimism lifted Hong Kong's technology stocks, with Alibaba gaining 3.4% and Xiaomi climbing 3.1% after announcing a deal with German auto dealers.
Despite the rebound, sentiment in China's onshore A-share market remained subdued due to concerns over higher U.S. yields and weak domestic economic data. Morgan Stanley analysts have lowered their targets for Chinese equity indexes, citing a weaker growth outlook and rising regulatory uncertainty.
The broader market remains sensitive to developments in U.S. monetary policy, with movements in Treasury yields influencing global investor appetite for riskier assets. For Chinese equities, domestic economic data and policy signals are closely watched for signs of a stronger recovery.
Background
The performance of Chinese stocks is closely tied to both domestic economic conditions and international factors such as U.S. monetary policy. Recent concerns over higher U.S. yields and weak domestic data have weighed on investor sentiment, prompting a shift from technology to traditional sectors.
Looking ahead, investors will continue to monitor U.S. monetary policy and domestic economic indicators for further clues on market direction. The performance of traditional sectors versus technology stocks will also be a key area of focus.
