Optimism in the Air as U.S.-China Trade Talks Loom

China and Hong Kong stocks rose as investors keenly awaited U.S.-China trade discussions in London. Gains in the rare-earth and technology sectors boosted the market, with expectations of a positive breakthrough in ongoing trade negotiations. Meanwhile, China's economy faces challenges, including deflation and housing market struggles.

China and Hong Kong stock markets experienced a lift on Monday, buoyed by the performance of the rare-earth and technology sectors, as anticipation grew around the imminent high-level trade talks between the U.S. and China in London.

The Hang Seng Index in Hong Kong surpassed the significant 24,000 level for the first time since March, driven by cautious optimism ahead of discussions involving top officials, including U.S. Treasury Secretary Scott Bessent and China's Vice Premier He Lifeng.

The diplomatic meeting follows a significant communication between Chinese President Xi Jinping and U.S. President Donald Trump, signaling potential progress in the trade dispute. Meanwhile, China's internal economic challenges persist, with declining consumer prices and deepening producer deflation amid trade tensions and housing market issues.

(With inputs from agencies.)