China-Hong Kong Stock Markets Dip Amid U.S.-China Trade Negotiation Uncertainty

China and Hong Kong stocks fell on Tuesday, reversing early gains, as investors exercised caution amid ongoing U.S.-China trade talks in London. The discussions, focused on tariffs and rare earths, extend into a second day, contributing to market uncertainty despite rallying rare earth stocks.

On Tuesday, China and Hong Kong stock markets saw their early gains evaporate as investor caution grew ahead of the ongoing U.S.-China trade negotiations in London. The discussions extend into another day, with the world's top economies striving to ease a protracted trade dispute.

Indices showed declines, with China's CSI300 dropping 0.5% and the Shanghai Composite falling 0.4%, ending a five-day winning streak. Meanwhile, Hong Kong's Hang Seng dipped slightly by 0.1%. The negotiations involve complex issues like rare earths, semiconductors, and student visas, leaving markets uncertain.

Trade tensions and weak economic indicators, like China's 34.5% plunge in exports to the U.S., coupled with domestic deflation, compound market pressures. Despite this, rare earth stocks gained, with China Rare Earth Holdings climbing 13%, as investors anticipate potential government stimulus in light of disappointing trade data.

(With inputs from agencies.)