China Stocks Drop Amid Fragile Consumer Sentiment

China's stock market took a hit on Tuesday, led by declines in liquor and consumer-related shares, despite recent interest rate cuts aimed at boosting growth. The Shanghai Composite Index fell by 0.59%, with key indexes and sectors also seeing losses. Analysts suggest that the monetary easing signals intent to expand domestic demand.

China's stock market experienced significant declines on Tuesday, primarily dragged down by liquor and consumer-related shares. Despite the government's recent efforts to stimulate domestic consumption and growth through cutting interest rates, market pessimism remained.

On Monday, China surprised markets by reducing a range of major short- and long-term interest rates. This move, while not substantially altering growth projections, sends a strong signal of the authorities' commitment to 'actively expand domestic demand' as stated in their Third Plenum, according to analysts at TD Securities.

By midday, the Shanghai Composite index had fallen by 0.59% to 2,946.63 points. China's blue-chip CSI300 index declined by 1.05% despite a 0.59% rise in its financial sector sub-index. Consumer staples were down by 2.13%, real estate declined by 0.86%, and healthcare lost 2.06%. Around the region, MSCI's Asia ex-Japan stock index increased by 0.67%, while Japan's Nikkei index dipped by 0.02%. The yuan remained stable at 7.2737 per U.S. dollar.

(With inputs from agencies.)