On Monday, China’s CSI300 Index slightly increased by 0.2%, while the Shanghai Composite and Hong Kong’s Hang Seng Index declined. Investor caution prevails due to potential U.S. tariffs as discussions between U.S. officials and China continue. Concerns regarding external demand and domestic growth remain prominent, with expectations for further stimulus measures from the Chinese government.

On Monday, stocks in China and Hong Kong exhibited little change as investors remained cautious with the impending tariff deadline from U.S. President Donald Trump. The blue-chip CSI300 Index rose marginally by 0.2%, while the Shanghai Composite Index saw a decline of 0.3%. The Hang Seng Index in Hong Kong fell by 0.1% during the same period.

As the tariff deadline approaches, Jamieson Greer, a top trade official under Trump, is scheduled to discuss trade matters with his Chinese counterpart this week. This dialogue precedes the potential announcement of new U.S. tariffs, possibly targeting China. Investors are vigilant for updates on tariff developments that could impact the market.

In a related diplomatic effort, U.S. Senator Steve Daines met with Chinese Premier Li Qiang in Beijing along with a delegation of American executives. This meeting followed a significant business summit that featured major foreign corporate leaders, indicating ongoing engagement between the two nations.

Ting Lu, chief economist at Nomura, expressed concern that ongoing tensions between the U.S. and China might dampen demand, negatively affecting domestic investments and manufacturing profitability. He indicated that growth could encounter significant challenges in the latter half of the year, suggesting that the Chinese government may need to implement additional stimulus measures to support growth in services.

The People’s Bank of China reaffirmed its commitment to adjust the banks’ reserve requirement ratios and interest rates when deemed appropriate, signaling potential monetary easing to bolster economic activity. Meanwhile, Morgan Stanley has adjusted its GDP growth forecast for 2025, increasing it by 50 basis points to 4.5% due to positive effects from stimulus measures on local government and consumption.

In summary, the Chinese and Hong Kong stock markets displayed a stable performance amid investor caution regarding upcoming U.S. tariffs. Key trade discussions are set to take place, with substantial government actions expected to address growth challenges. Analysts are closely monitoring how these developments will impact the economy going forward, particularly in the face of ongoing U.S.-China tensions.

Original Source: www.tradingview.com

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