Market Stagnation: Awaiting U.S. Tariff Deadline Impact

China and Hong Kong stock markets remained largely unchanged as caution prevailed ahead of U.S. tariff deadline. The CSI300 Index slightly rose while the Hung Seng dropped marginally. Economists predict potential growth challenges for China, urging potential stimulus measures for economic stabilization.

On Monday, stocks in China and Hong Kong displayed minimal movement as investors approached U.S. President Donald Trump's looming tariff deadline with caution and a lack of fresh market stimulus. China's blue-chip CSI300 Index experienced a minor increase of 0.2% by midday, contrasting with the Shanghai Composite Index's 0.3% decline. Similarly, Hong Kong's Hang Seng Index fell by 0.1%.

In a strategic move, U.S. trade leader Jamieson Greer is set to converse with his Chinese counterpart amidst anticipations of new tariffs against countries taxing U.S. imports. This includes potential measures targeting China. Concurrently, U.S. Senator Steve Daines, along with prominent U.S. executives, engaged with Chinese Premier Li Qiang, following the annual business summit in Beijing attended by top corporate figures.

Ting Lu, Nomura's chief China economist, warned about the possible strain on the economy due to U.S.-China tensions, potentially affecting external demand and domestic investment. As stronger headwinds loom, Lu suggests Beijing might consider further stimulus to sustain growth, especially in service consumption. Additionally, China's central bank reaffirmed its intentions for strategic rate cuts, while Morgan Stanley increased China's GDP growth forecast for 2025 to 4.5% amid emerging economic recovery signs.

(With inputs from agencies.)