China-Hong Kong Shares Stumble Post Middle East Ceasefire Rally

China and Hong Kong shares saw declines after a surge due to a Middle East ceasefire. The Shanghai Composite fell 0.2%, while the Hang Seng weakened by 0.6%. Analysts advise caution due to potential volatility linked to U.S. trade policies and earnings season uncertainties.

China and Hong Kong shares faltered on Thursday, following a brief rally fueled by a ceasefire in the Middle East. The Shanghai Composite Index dipped by 0.2%, momentarily reaching heights unseen since December before retreating. The blue-chip CSI300 index also fell, losing 0.4% amidst sectoral declines in the brokerage and rare earth sectors.

Conversely, China's defense index showed modest gains of 0.4% while banking shares edged up by 1%. However, in Hong Kong, the Hang Seng Index slumped by 0.6%, snapping a four-day climb and retreating from a three-month peak noted at the prior closing.

As markets digest the recent geopolitical developments, looming U.S. trade obligations add another layer of uncertainty. Analysts warn of potential volatility from July onwards and urge investors to proceed with caution, highlighting that while trading activity is up, focus remains on the forthcoming earnings reports and corporate guidance.

(With inputs from agencies.)