Chinese stocks rally as trade negotiations bear fruitful results


Devdiscourse News Desk | Beijing | Updated: 10-05-2019 08:10 IST | Created: 10-05-2019 07:42 IST
Chinese stocks rally as trade negotiations bear fruitful results
The financial sector sub-index added more than 3 per cent, the consumer staples sector was up 3.6 per cent and real estate firms gained 2.5 per cent. Image Credit: Pixabay
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  • China

Chinese shares jumped in early trade on Friday, and the yuan strengthened as Chinese and U.S. negotiators concluded the first of two days of talks to rescue a trade deal that is close to collapsing, hours before a tariff hike takes effect.

In early trade, the benchmark Shanghai Composite index was up 2.5 per cent, having ended at an 11-week closing low in the previous session. China's blue-chip CSI300 index was up 2.9 per cent, with strong gains spread across sectors. The financial sector sub-index added more than 3 per cent, the consumer staples sector was up 3.6 per cent and real estate firms gained 2.5 per cent.

In Hong Kong, the Hang Seng Index was up 1.6 per cent while H-shares added 1.8 per cent. The smaller Shenzhen index was up 2.8 per cent and the start-up board ChiNext Composite index was higher by 3.3 per cent.

China's yuan surged 0.3 per cent in early trade to 6.8023 per dollar, despite China's central bank setting the midpoint of the currency's daily trading band at its weakest level in 3-1/2 months before the market open, at 6.7912 per dollar. "The market is not in as much fear anymore. The scale of the rally depends on whether the tariff increases will still go ahead at noon, whether two sides agree to carry on talking, and whether the U.S. president will meet with Liu He," said a Shanghai-based trader at a Chinese bank, commenting on the yuan.

The soft fix came after a tariff war-inspired sell-off in the spot market on Thursday. Traders had expected it to come in even lower. The offshore yuan strengthened 0.2 per cent to 6.8263 per dollar, after weakening to a low of 6.8363 per dollar on Thursday.

Chinese Vice Premier Liu He, U.S. Trade Representative Robert Lighthizer and U.S. Treasury Secretary Steven Mnuchin talked for 90 minutes on Thursday and were expected to resume talks on Friday. Officials did not speak to reporters as they left the talks. Higher tariffs on Chinese goods are set to take effect at 0401 GMT on Friday.

(With inputs from agencies.)

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