China and Hong Kong Stocks Sink Amid Banking and Energy Losses

Most of China and Hong Kong's benchmark stock indexes fell on Tuesday, dragged down by banking and energy sectors. Disappointing manufacturing data from China and expectations of U.S. Federal Reserve rate cuts in September influenced the market sentiments. Banking stocks were the top losers, while some tech-focused indexes showed gains.

China and Hong Kong's leading stock indexes faced a downturn on Tuesday, influenced heavily by substantial declines in the banking and energy sectors. Investors grappled with disappointing August manufacturing activity data from China.

The anticipation of U.S. Federal Reserve rate cuts in September is now a firm expectation, offering China potential flexibility in its monetary policy. Friday's upcoming U.S. non-farm payrolls data is highly anticipated, following Federal Reserve Chair Jerome Powell's recent support for imminent rate cuts to address labor market concerns.

As of midday, the Shanghai Composite index had dropped by 0.52% to 2,796.48 points, while the CSI 300 index saw a slight increase of 0.04%. Notably, banks were among the top losers, with sector indices falling by 2.02%. Energy stocks also contributed to the market's decline, dipping by 2.45% during morning trading. Conversely, the Shenzhen index rose by 0.57%, the ChiNext Composite index climbed by 0.9%, and the STAR50 index increased by 0.62%. In the broader Asian market, MSCI's Asia ex-Japan stock index was down 0.43%, and Japan's Nikkei index fell by 0.12%.

(With inputs from agencies.)