China's stock markets showed modest gains as agriculture, energy, and gold stocks rose, offsetting declines in technology shares. The CSI 300 Index increased by 0.1% by midday, while the Shanghai Composite gained 0.4%, stabilising after a mid-year sell-off.
Agriculture-related stocks surged 4.6% following the central government's announcement of a plan to enhance funding for rural revitalisation, boosting expectations of policy support for the sector. Energy stocks also advanced due to rising oil prices amid escalating tensions in the Middle East, with Iran threatening the United States with economic retaliation.
Gold stocks benefited from a strengthening bullion market as the US dollar weakened. Investors continue to favour gold amidst fiscal concerns and geopolitical risks, with Schroders portfolio manager James Luke noting the strong structural factors supporting gold prices.
“The structural factors supporting gold prices remain strong, particularly against the backdrop of mounting US fiscal pressure.”
James Luke, Schroders Portfolio Manager
Conversely, technology stocks in China and Hong Kong faced pressure, reversing some of Monday's gains. Sectors such as computer, information-security, new-energy, and chipmaking saw declines of approximately 1%.
Investors are closely monitoring upcoming US inflation data, which could influence the Federal Reserve's policy decisions. The data is expected to provide insights into US interest rate trajectories, impacting global equities, currencies, and commodities.
Background
China's stock markets have been volatile this year, with a mid-year sell-off erasing earlier gains. The recent stabilisation reflects a balancing act between domestic policy initiatives and external geopolitical and economic pressures.
Looking ahead, market participants will continue to weigh domestic policy support against external risks, including developments in the Middle East and US monetary policy outlook.
